Galapagos NV

Good day, everyone. This is Glenn Shulman, Head of Investor Relations, and I'd like to thank you all for joining us today as we report Galapagos' full year 2025 financial results and fourth quarter business update. Last evening, we issued a press release outlining these results. This release, along with today's presentation, can be found on the Galapagos Investor website at www.glpg.com. 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 environment. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies, and prospects which are based on the information currently available to us and on assumptions we have made. Actual results may differ materially from those indicated by these statements and are accurate only as of the date of this recording, February 24, 2026. 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. You are cautioned not to place any undue reliance on these statements. Joining us on today's call from the executive team are Henry Ghostbrook, Chief Executive Officer, Aaron Cox, Chief Financial Officer, Suen Kwan, Chief Business Officer, and Dan Grossman, Chief Strategy Officer of the company, all of whom will be available during the Q&A session. With all that, let me now turn the call over to Henry Ghostbrook, CEO of Galapagos. Henry?

Thank you, Glenn, and thank you all for joining us today. Galapagos had a transformative 2025 focused on turning the page from self-therapy, implementing a new strategic direction, and laying a strong foundation for long-term value creation. We are entering this new chapter with approximately 3 billion euros in cash at year-end 2025 in a strong position to pursue transformative business development opportunities with significant strategic flexibility. The new team is in place to execute on the strategic vision. We have been very deliberate in assembling the right leadership team to execute the strategy, and I could not be more pleased with the level of talent we've been able to attract to Galapagos. We've assembled a management team with world-class business development expertise and a shared mission of leveraging our unique position to create significant shareholder value. Collectively, our team has executed hundreds of transactions in the life sciences sector, and it's working well together with the goal of creating value for our shareholders. We have also evolved our board composition, welcoming five new directors who bring the deep transaction capital allocation and operating experiences needed for this next phase of growth. Our objective is not incremental rebuilding. but a fundamental reshaping of the company around programs we believe are capable of delivering meaningful patient impact and sustainable shareholder returns. We are aggressively evaluating opportunities across our focus areas and maintaining a broad dialogue with companies and innovators globally. We are encouraged by the level of potential transactions we have in our deal pipeline and our opportunity to become a unique player in the biotech deal ecosystem and carve out niches where we can be competitively differentiated. At the same time, we are disciplined and selective. We will allocate our capital carefully and thoughtfully with clear financial metrics in mind. Our focus remains on clinically de-risked opportunities in areas where we are able to bring unique insights that represent competitive advantage. Lastly, Our collaboration with Gilead remains a key strategic advantage and potential competitive differentiation. We are working very closely with Gilead and continue to have active and constructive dialogue as we evaluate opportunities. Their global development and commercialization expertise, combined with our capital-based agility and deal-making skills, creates a powerful platform as we shape this next phase of growth for Galapagos. Let me briefly provide an update on our legacy R&D asset TIK2 or GLPG3667. In December, we announced topline phase two results for GLPG3667 in patients with dermatomyositis and systemic lupus erythematosus, or SLE. GLPG3667 met the primary endpoint in the dermatomyositis study, demonstrating a statistically significant clinical benefit and meaningful improvements on secondary measures of disease activity compared to placebo. We are currently evaluating all strategic options for this program, including pursuing potential partnerships with other I&I players to accelerate the development of GLPG3667. In conclusion, Galapagos is well positioned for the future. Our year-end cash position of approximately 3 billion euros, our strong business development and capital allocation experience, provide the strategic flexibility to pursue business development opportunities while maintaining a disciplined focus on value creation. With that overview, I would like to now turn the call over to Aaron Cox, our CFO, to review our full year 2025 financial results and 2026 guidance. Aaron?

Thanks, Henry, and hello, everyone. In the press release issued last night, we detailed our full year 2025 results provided an update on fourth quarter performance, and shared our 2026 guidance. Total operating profit from continuing operations amounted to 295.1 million euros in 2025, compared to an operating loss of 188.3 million euros in 2024. This operating profit was primarily due to the release in revenue of the remaining deferred income balance of 1,069 million euros associated with the exclusive access rights granted to Gilead under the OLCA. As a reminder, in conjunction with this transaction in 2019, Galapagos recognized a contract liability of approximately 2.3 billion euros, which was to be recognized as revenue on a straight-line basis over the 10-year term of the agreement. Following the 2025 OLCA amendments, the intention to wind down and related events in 2025 As of December 31st, it was assessed that there were no remaining obligations that would justify this specific contract liability to be maintained in our IFRS financial statements. We do not expect any cash tax impact in 2025 related to this recognition of revenue. Importantly, while the OCA still remains in force, We expect that any future business development transaction will be completed under terms that would be different than the existing terms of the OCA. Now turning to expenses. Operating expenses were negatively impacted for a total of 399.8 million euros by the decision to wind down the cell therapy activities with an impact of 275 million euros, consisting of an impairment of the cell therapy activities of 228.1 million euros, severance costs of 33.3 million euros, costs for early termination of collaborations of 16.3 million euros, deal costs of 10.1 million euros, 1.5 million euros for additional accelerated non-cash costs recognition for subscription right plans, and 7.5 million euros of other costs, partly offset by a positive fair value adjustment of the contingent consideration payable of 21.8 million euros. Additionally, the executed strategic reorganization related to the small molecule business announced in 2025 for 124.8 million euros. Financial investments in cash and cash equivalents totaled 2,998 million euros on December 31st, 2025. as compared to 3,317.8 million euros on December 31, 2024. Our cash and cash equivalents and current financial investments included 2,159 million held in U.S. dollars versus 726.9 million on December 31, 2024. These U.S. dollars were translated to euros at an exchange rate of 1.175. Since year end, we have converted more euros to U.S. dollars and now hold approximately 72% of our cash in U.S. dollars and 28% in euros. We expect to continue increasing the portion of cash in U.S. dollars as the year progresses. Turning now to our guidance for 2026. As part of the transformation to the new Galapagos, we announced our intention to wind down our cell therapy activities last fall. and we are now executing on this process following the Works Council processes that were completed last month. Given the progress we've made on this execution, I can now share that we expect the cell therapy wind-down to be substantially completed by the end of the third quarter of 2026. In connection with the wind-down of the cell therapy activities, we expect an operating cash outflow of up to 50 million euros in Q1 2026 as well as one-time restructuring cash impact of 125 to 175 million euros in 2026. This reflects a 25 million euro reduction compared to the prior guidance range of 150 million to 200 million euros. In addition, we anticipate cash costs of approximately 35 million to 40 million euros for the final implementation of the restructuring announced in January 2025. Costs related to the ongoing TIC-2 program, including completion of the Phase II clinical trials in DM and SLE, as well as ongoing support to advance the program toward Phase III development, are expected to be up to 40 million euros in 2026. Away from the spend items, we continue to expect meaningful cash flow to come from interest income, royalties, and tax credits. As a result, We expect to be cash flow neutral to positive by the end of 2026. We also anticipate we will have approximately 2.775 billion to 2.85 billion euros in cash, cash equivalents, and financial investments at December 31st, 2026, excluding any business development activities or currency fluctuations. Now let me turn it back to Henry to wrap up.