Galapagos NV

Thank you all for joining us for Galapagos' first quarter 2025 financial results and business update conference call. Last evening, we issued a press release outlining these results. This release, along with today's webcast presentation, can be found on the Galapagos website. Before we begin, I would like to remind everyone that we will be making forward-looking statements. These forward-looking statements include remarks concerning future developments of our company, and our pipeline and possible changes in the industry and competitive environments. Actual results may differ materially from those indicated by these statements and are accurate only as of the date of this recording, April 24th, 2025. Galapagos is not under any obligation to update statements regarding the future or to conform to these statements in relation to actual results unless required by law. Joining us on today's call from Galapagos' senior management team are Dr. Paul Stoffels, Chair and Chief Executive Officer, and Thad Houston, Chief Operating and Chief Financial Officer of the company. We are also joined by Drs. John Mellors, Head of Cell Therapy Discovery, Wolf Bucher, Head of Immunology, and Omataya Fasan, Clinical Program Head, Oncology, and they'll be available during the Q&A session. With that, let me now turn the call over to Paul.

Thank you, Glenn. Before starting the Q1 financial update, I want to provide some color on the recently communicated executive leadership changes. We are very pleased with the appointment of Henry Goesbroek as the founding CEO of SpinCo. This is an important milestone in the planned separation of SpinCo, as announced earlier this year. Henry has deep experience in M&A, business development and capital allocation, through his past roles as president and CEO of Nomura, Executive VP and Chief Strategy Officer at AbbVie and M&A Co-Head at G.P. Morgan. We welcome Henry into his new role and we look forward to introducing him to you in the coming weeks. I would like to provide some color on my intent to retire from my role as CEO of Galapagos in the next 12 months once a successor has been appointed. I want to underscore that I am fully committed to supporting Galapagos as its CEO and Chair of the Board. Upon a CEO successor being appointed, my intention is to serve as non-executive chair of the board of Galapagos, continue to provide strategic guidance and support. Galapagos has strong foundations in place to create value for all its stakeholders. We have built a strong company with top talent in Europe, the US and China as we continue to attract experts in cell therapy. Together, we are transforming Galapagos into a focused cell therapy company that is offering real hope to people facing cancer. I also want to thank Tad for his contribution to Galapagos. As CFO and COO, he supported the transformation of Galapagos into the dedicated cell therapy company that we are today. He will remain with the company until August 1 to ensure a smooth transition and andover of responsibilities. Let now move to our Q1 financial results and business update. We continued to make meaningful progress, advancing our clinical pipeline and expanding global access for our innovative manufacturing platform and decentralized manufacturing units, or DMUs. As we announced in a press release last night, We are particularly pleased that we have dosed our first U.S. patient in the Atalanta 1 study of GLPG5101, where in combination with our ongoing European sites, we are evaluating a novel CD19 CAR-T candidate in eight hematological malignancies with high unmet medical need. In addition, we completed enrollment of the Indolent NHL cohort, added the diffuse large B-cell racial transformation cohort, and are in the process of adding the CLL cohort to the study. All other cohorts are open and enrolling. Importantly, we have selected MCL as a lead indication to take forward in a pivotal trial and are very optimistic for our prospects with this indication, which I will discuss in greater detail in a moment. We made great progress with the earlier stage discovery programs and expect to initiate clinical development of a novel CAR-T candidate and to select at least one program for IND-enabling studies this year. In 2026, the pipeline is expected to be further expanded with at least one additional next-generation program. Throughout the first quarter, we continued to make platform and process improvements to support pivotal studies and commercial readiness by expanding our decentralized manufacturing network in the US and Europe, giving patients direct access to our therapies and limiting logistical constraints. In collaboration with our partner Adapt Immune, We also advanced preparation to develop UsaCell for solid tumors, such as head and neck cancer, and plan to initiate proof-of-concept studies in 2026. Finally, we are working towards separation and, as I mentioned at the beginning of the call, we recently announced the appointment of the founding CEO of SpinCo, Mr. Henry Goesbroek. That will talk about SpinCo in greater detail later on today's call. We have as well advanced the two phase three enabling studies in SLE and dermatomyositis with our TIK2 inhibitor, GLPG3667, and are actively seeking partners to acquire the program. Core to our strategy to build a leadership position in cell therapy in oncology is a decentralized manufacturing that was designed to overcome the limitations of current cell therapy manufacturing, which is centralized and bears high cost burdens with longer production and delivery times that require cryopreserving cells and the need for bridging therapy. A seven-day vein-to-vein time is designed to provide fresh stem-like cells, which we believe enhance the therapeutic profile by producing highly potent cells that are less exhausted, less toxic, and persist longer. In addition to logistical advantages, our DMUs are designed to enable scalable and consistent products near the clinic. We believe this approach will be more cost-effective and provide greater access to these potentially life-saving cell therapies. We are unlocking the broad-reaching potential of this decentralized cell therapy manufacturing platform as we advance our robust cell therapy pipeline. 0PG5101 is our most advanced CAR-T asset that is in clinical development in the U.S. and Europe in the Atalanta I Phase I-II clinical study in eight hematological malignancies. As I mentioned earlier, we initiated dosing of patients in the U.S. and expect enrollment to accelerate as more sites are activated. We fully enrolled the Inland NHL cohort and expect to present these top line data at the medical meeting in mid-25. Enrollment continues well in the Mantle Cell Lymphoma, or MCHL cohort, which we have selected as our lead indication to take into pivotal studies. Our plan is to start pivotal development in 2026 with an anticipated approval in 2028. We're progressing the enrollment of patients in the Phase I-II papillose study of GLPG5301, or BCMA CAR-T, as a treatment for relapsed refractory multiple myeloma. Here we expect to have top-line data in 2026. These data will direct our development plans for this product candidate. As noted earlier, we continue to build value by strengthening and advancing our early-stage pipeline of next-generation multi-targeting armed cell therapies for hematological and solid tumors. We believe that the combination of fresh, fast, and fit cells has the potential for transformative impact. And we can see that from the data recently presented at ASH, which demonstrated a promising safety and efficacy profile for GLPG5101 in patients with mantle cell lymphoma, marginal zone lymphoma, follicular lymphoma, and diffuse large B-cell lymphoma. As of April 25, 2024 data cutoff, 49 patients received CD19 CAR-T cell therapy infusion and safety and efficacy results were available for 45 patients and 42 patients respectively. As you can see, we observed high overall response and complete response rates. Here we show 100% of patients with relapsed refractory mantle cell lymphoma, 95% of patients with relapsed refractory follicle and marginal zone lymphoma, and 54% of patients with relapsed refractory DLBCL achieved a CR. Of available patients achieving CR, 80% were MRD negative and remained in CR at the time of data cutoff. Of note, strong and consistent in vivo CAR T expansion levels and products consisting of stem-like early member phenotype cells were observed in all doses tested, further supporting our innovative platform technology. And we are seeing these compelling results with very reassuring safety data with low levels of ICANs. This translates to less time in the ICU, in hospital, and more time at home with family. Importantly, the eight hematological malignancies we are evaluating have greater than 2 billion euro in peak sales potential in the US and the EU5 alone. We are excited to move forward with MCL as our lead indication for pivotal studies. We made this determination based on a number of factors, including the high medical need, strong initial data from this patient cohort, and the fact that MCL accounts for approximately 6% of all NHL cases in the U.S., all combining to make this an attractive lead indication for GLPG 5101. Patient enrollment in this cohort of Atalanta 1 is going well, and we expect to present new data from this cohort at the medical meeting in the second half of this year. Our strategic focus on MCL, supported by strong data and significant unmet medical need, positions us for pivotal development in 2026 and potential first approval in 2028, marking a major step forward to provide greater access to new medicines for patients in need. Our mission is also grounded in providing greater access to these new medicines via our DMUs, which require securing the capacity for clinical studies and commercial readiness. Our efforts here are supported by strong collaborations with Lonza for the Cocoon platform and Thermo Fisher Scientific for the development of an ultra-rapid PCR sterility test together with MyDiagnostics. We are also expanding our network of DMUs with our collaborations with Catalan for the New York, New Jersey, and Pennsylvania area, Moffitt Cancer Center in Florida region, and NextGen in the Benelux region, Collectively, these networks target nearly 250 million patients. Additional DMUs will be integrated into the company's network in the US and Europe to ensure sufficient capacity for clinical and future commercial supply in key regions. Most recently, And as announced in our press release, we have established operations in China that enable us to leverage our unique manufacturing platform and to accelerate the development and value creation of our next-generation cell therapy pipeline. With that overview of our cell therapy business, let me turn the call over to my colleague, Pat Houston, for a review of our financial and our progress on the intended separation. Pat?

Thank you, Paul. Now turning to some of the financial highlights from the quarter. which, as you would imagine, were impacted by our ongoing implementation of the restructuring and the SPINCO separation. Total net revenues for the first quarter of 2025 were €75 million, which includes €14 million of supply revenues related to Giseleca and €61 million in collaboration revenues. Increases to operating expenses were driven by our clinical expansion in Oncology CAR-T in the build-out of our DMU network, as well as €111 million of restructuring costs. These include severance costs, the early termination of collaborations, impairment on small molecule assets, as well as deal costs related to plant separation. Looking to our balance sheet, We report a cash balance of 3.3 billion euros at the end of the first quarter of 2025. Important to note here is the timing difference of the effective payouts related to the reorganization, which is not represented in our cash balance. Upon separation, SpinCo will have approximately 2.45 billion euros to execute its strategy for transformative transactions. Following this planned transaction, Galapagos expects the normalized annual cash burn to be between €175 million and €225 million, excluding restructuring costs. Upon separation, Galapagos will have approximately €500 million in cash to accelerate the cell therapy pipeline and expects to have runway to fund operations to 2028. Turning now to the value proposition for Galapagos and SpinCo. we remain very excited by the opportunities we can create by separating Galapagos into two entities. Following the separation, Galapagos will be focused on accelerating the development of our flagship CD19 CAR-T program through our innovative decentralized manufacturing platform. As noted, our aim is to start pivotal development in 2026 and first approval in 2028. We will continue to build value by developing next-gen cell therapy programs in hematological and solid tumors. Importantly, we will have the autonomy to partner our decentralized manufacturing platform and network, as well as our differentiated cell therapy pipeline. We also streamlined the organization to realign our footprint and reduce cash burn. As I just mentioned, upon separation, Galapagos will have 500 million euros in cash to execute this focus strategy. Turning to the opportunities we have by creating SpinCo. We are excited that Henry has joined as the founding CEO of SpinCo. Henry will be hiring the remainder of SpinCo's leadership team in the coming period. the board of SpinCo will comprise a majority of independent directors. SpinCo will be focusing on building a pipeline of innovative medicines through transformational transactions. The company will have sufficient resources to pursue high-quality assets, fund development, and to invest in its portfolio, which is expected to focus on oncology, immunology, and virology. If Gilead decides to opt in to SpinCo programs under the collaboration agreement, then SpinCo would be able to leverage Gilead's strong expertise and late-stage development and commercial capabilities in key therapeutic areas. Importantly, all Galapagos shareholders will receive shares of SpinCo on a pro rata basis based on the number of Galapagos shares that they owned as the record date to be established. And with that, I'll hand it over to Paul, who will walk us through our new near-term catalysts.