Galapagos Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 4, 2023

There are 12 speakers on the call.

Operator

Welcome to the Galapagos H1 2023 Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sophie Van Geisel.

Operator

Please go ahead.

Speaker 1

Thank you, operator, and welcome all to the audio webcast of Galapagos' H1 2023 results. I'm Sofie Van Gietel, Investor Relations, representing the reporting team at Galapagos. This recorded webcast is accessible via the Galapagos website homepage and will be available for download and replay later on today. I would like to remind everyone that we will be making forward looking statements during today's webcast. These forward looking statements include remarks concerning future developments

Speaker 2

of the pipeline and our

Speaker 1

company and possible changes in the industry and competitive environment. Because these forward looking statements involve risks and uncertainties, Galapagos' actual results may differ materially from the results expressed or implied in these statements. Today's speakers will be Paul Stoffels, CEO and Ted Hudson, CFO and COO. Paul will reflect on the operational highlights and provide an update on our pipeline. Ted will go over the commercial and financial results.

Speaker 1

You will see a presentation on screen. We estimate that the prepared remarks will take about 25 minutes. Then we'll open it up to Q and A with Paul and Seth joined by Michele Monto, Chief Commercial Officer and Daniele D'Ambrosio, Head of Immunology. And with that, I'll now turn over to Paul.

Speaker 3

Thank you, Sophie, and thank you all for joining today's webcast. I'm very pleased to introduce to you Thad Huston. Thad joined Galapagos as our new CFO, COO as of July 1. Over the years, Thad gained experience through several positions in finance, commercial, BD and operations. He joined us from Kite Pharma, where he was Senior VP Finance and Corporate Operations.

Speaker 3

And before, he was CFO of LivaNova, A listed medtech company that was the CFO of J&J Medical Devices and CFO of Janssen R and D in earlier years. Thad spent 4 years in China as the President of Janssen China for Janssen.

Speaker 2

Thad and

Speaker 3

I have known each other for quite some time. I worked together with Thad at J&J where he held a number of leadership positions for more than 25 years. And he was instrumental in transformational phase It goes without saying that this knowledge of R and D and cell therapy is a perfect fit for our company. We are very excited to have Thad on the board. On today's call, Thad will present the operational and financial section.

Speaker 3

Pat?

Speaker 4

Thanks for the introduction, Paul, and it's great to be here. I'm so excited to be joining forces with you again, Paul, and to work together with the Galapagos team to create value for our stakeholders.

Speaker 3

Thank you, Thad, and happy to work again together and work with the teams. Here you see a slide summarizing our vision and mission statement. At Galapagos, we want to transform patients' outcome to life changing science and innovation aiming at bringing more years of life and quality of life. In order to achieve this, we go for groundbreaking science with an entrepreneurial spirit and a collaborative mindset. At our R and D Day back in November of 2022, we introduced a course that we have set out for the company in order to unlock significant value.

Speaker 3

On this slide, you see a snapshot of how we have been executing on the transformation of the company over the last 18 months. We continued to roll out a commercial organization in Europe for our first product, In mid-twenty 2, we announced the acquisition of CellPoint and Abound Bio, propelling us into the space of next generation CAR T therapeutics. We refocused the R and D organization on 2 therapeutic areas, immunology and oncology. And late last And early this year, we presented encouraging initial safety and efficacy data on the 2 CD19 CAR T trials in relapsedrefractory NHL and CLL in point of care setting with our Cocoon platform. In parallel, we accelerated the discovery portfolio both in Small Molecules and Biologics.

Speaker 3

And we also announced and completed the restructuring of our discovery activities. We transitioned the Romanville discovery activities to Novalex in France. Let's move on to our pipeline as it stands today. As mentioned, the pipeline is refocused on 2 therapeutic areas, Immunology and Oncology. I will come back on some of the programs in more detail below.

Speaker 3

In summary, In immunology, unfortunately, the Phase III trial in Crohn's disease did not bring us the results we had hoped for, but we have RA and UC on the market with a registrational trial in AKSPA out of the gate now. We are progressing our TYK2 in dermatomyositis and SLE and aim to start a patient study with our CD9 CAR T5,101 this year in severe refractory lupus. Meanwhile, we are working on multiple exciting preclinical targets that we are eager to push forward if we see a best in class potential. In oncology, we made good progress with the CD19 programs. I will come back on that later.

Speaker 3

We plan to start BCMA program in multiple myeloma with 5,301 after the summer. Meanwhile, with BanBio As well as via external collaborations that we intend to close, we keep working on next generation CAR T and leverage our point of care Cocoon platform for those. Here is a reminder of our progress with TYK2, 3,667. We initiated the Phase 2 trial in dermatomyositis And those are first patients with top line results expected in 2025. We also progressed 367 in a lupus trial We opened the 1st study centers that are in the process of screening patients and there the top line results are expected in 2026.

Speaker 3

Now let's move to oncology. Today, the approved CAR T products are manufactured through central production, which has several limitations. For example, product needs to be frozen and needs to be shipped. As mentioned with the acquisition of CellPoint last year, We've pivoted into cell therapy with a point of care solution striving for infusion of fresh cells a fresh cell product It's a 7 day vein to wait time in a decentralized setting close to the patient. Here you see a picture of that many of you have seen before of the Cocoon Point of Care solution.

Speaker 3

We have exclusive license for hematological cancers with Lonza for the Cocoon In the point of care setting, allowing us to invest in that platform and get and give provide global access to hospitals. The teams are further optimizing the CAR T production process and automating the quality release testing, simplifying the point of care manufacturing on-site. Today, only a small portion of patients that are eligible for CAR T received a treatment. High unmet need cancer patient populations that are not helped today would benefit from CAR T therapy. These are patients with fast progressing cancers that can be helped by quick access and a 7 day vein to wait time as well as patients with poor prognosis or with cancers for which no standardized treatment strategy is available today.

Speaker 3

And as mentioned before, within the pool of patients that have been found eligible for CAR T treatment, we see that today only 10% to 20% Our aim is to increase the addressable patient population leveraging the point of care model. Let's move to the progress update on our CD19 CAR T trials. Here you see the design of the CD19 CAR T Phase III trial in relapsed refractory NHL. This is a basket trial recruiting patients with diffuse large B cell lymphoma, follicular lymphoma, mantle cell lymphoma And Marginal Zone Lymphoma. Encouraging initial results have been communicated on 7 patients with an overall response rate of 86% and the complete response rate in all of the 86% of the overall responders.

Speaker 3

Only mild ICANS and CRS We reported and the median vein to vein time for administration was 7 days. This quarter, we made an important progress in our Phase 1 trial in NHL. We decided to recruit additional patients to generate larger datasets for specific subpopulations of patients with high unmet medical needs. This allows us to build a robust package in support for our pivotal study. We submitted an abstract to a future scientific conference and plan to provide updated safety and efficacy data on the NHL trial before the year end.

Speaker 3

The Phase 2 expansion part of the NHL is already open and we are actively dosing the first patients in indolent lymphoma as well as in mantle cell lymphoma in those cohorts. We selected our 1st U. S.-based point of care manufacturing site and tech transfer activities have started. We are preparing an IND submission, which we'll plan to submit in the first half of twenty twenty four. Here you see the design of the CD19 Phase III trial in relapsedrefractory CLL.

Speaker 3

Earlier this year, we announced encouraging initial results on 7 patients with an overall response rate of 100% and a complete response rate of 86%. Advanced CLL and especially patients with remain a high unmedical need patient subgroup and as announced earlier this year, we are encouraged by the initial safety and efficacy results. No CRS above grade 3 And no icons were reported and the patient mentioned the median vein to vein time was 7 days for this initial patient population. The first half of the year, we made important progress in our CLL clinical trial and we are now closing To complete the Phase 1 recruitment with the last patient identified, in the first half of twenty twenty four, we aim to initiate the Phase 2 dose expansion part of the study And we established the recommended Phase 2 dose based on the safety profile efficacy observed. As for the NHL study, we submitted an abstract to a future scientific conference and plan to provide updated safety and efficacy data on the CLL trial before the year end.

Speaker 3

Now over to our Discovery portfolio. Last year, we implemented a new operating model and R and D strategy with a goal to accelerate innovation and rebuild our product pipeline to achieve shorter time to patients. We built on strong therapeutic area expertise in immunology and added oncology bringing in new top talent and capabilities. Additionally, to complement our internal discovery, we are combining internal and external innovation. We now apply Best in class target approach going for transformational products in high unmet medical needs.

Speaker 3

The research teams have performed an internal exercise and identified and selected a set of targets and indications in immunology and oncology. We can now build on both our expertise in small molecules and our innovative biology discovery platforms with the team of Aban Bio. For immunology, on the cell therapy front, we have nominated a preclinical candidate that is a fully human CD19 CAR T targeting a unique epitope and with differentiated binding kinetics. And the small molecule teams identified over 5 targets across several immune indications that fit with our renewed approach and that are currently in different stages of preclinical development Preclinical Development, sorry. For oncology, the team of Abboud identified over 5 targets across hematology and solid cancers indications And multiple differentiated armoring strategies have been set forward alongside a multi targeting approach.

Speaker 3

We certainly see an opportunity to leverage our small molecule expertise in oncology, which ties in with our aim to deliver precision medicine. A review of the landscape has been done and the teams have identified 5 targets across cancer types. Our aim is again to nominate the 1st clinical candidate Discovery Portfolio in 24. So this concludes my review of R and D with the strategic change we made over the last 12 months. And now I hand it over to

Speaker 4

Pat.

Speaker 3

Pat?

Speaker 4

Thank you, Paul. I will provide an operational financial update for our first half results And then I'll open the call for Q and A. We had another soft quarter in Q2 for JAYCELLICA With the sales coming in at €28,000,000 or €54,000,000 for the first half of twenty twenty three, We see a number of headwinds for Giselleca with the slowdown of the JAK class, reflecting the impact of the Article 20 outcome And label change, increased competition in UC and the effect of the miss in Crohn's disease is a third indication. We are evaluating various strategic options for Gyselica and more information will follow later this year. As a result of the slower growth in sales for the first half of twenty twenty three, we have lowered our 2023 net sales guidance to €100,000,000 to €120,000,000 for the year.

Speaker 4

A few words on our cash position. Our cash and cash equivalents reached €3,900,000,000 at the end of Q2 2023. Our operational cash burn for the first half of twenty twenty three reached €224,000,000 Although the 2nd quarter burn is higher compared to Q1, we are confirming our full year cash burn range of €380,000,000 to €420,000,000 The higher burn in Q2 is partly due to a prepayment for future services from Novalex as part of the collaboration agreement with Novalex in Q1. Also for our cash balance at the end of the year, we anticipate a positive contribution from interest income offsetting the higher burn rate in Q2, And we expect approximately 3% return on our outstanding cash balance. Finally, we continue to be disciplined and remain focused on managing our resources effectively, while we continue to pursue opportunities to drive value and grow.

Speaker 4

Going to our P and L. We reported a net profit of €28,000,000 in the first half of twenty twenty three, in part driven by higher revenue recognition for filgotinib. Collaboration revenues increased Mainly due to revenue recognition related to the collaboration agreement with Gilead for filgotinib development amounting to €155,000,000 in the 1st 6 months of 2023 compared to €115,000,000 in the same period last year. This increase is primarily driven by a positive catch up of revenue explained by decrease in the total estimated remaining cost to complete Filgotinib Development. This was a consequence of the top line results from the Phase 3 diversity trial filgotinib in Crohn's disease and our decision not to submit a marketing authorization application in Europe.

Speaker 4

The revenue recognition for the platform is stable quarter over quarter at €115,000,000 year to date. €54,000,000 in the first half of twenty twenty three and we received a sales milestone of €1,000,000 and €3,000,000 in royalties for expenses of €50,000,000 were down 13% versus prior year due to lower R and D expense in Q2, primarily due to a prior year impairment and a decrease in subcontracting costs due to portfolio rationalization as well as lower sales and marketing expenses in Q2. And we also received higher interest income in the first half of 2023. Before we move on to the outlook for 2023, a small word on our BD approach. I want to highlight that BD is key to our vision to create shareholder value.

Speaker 4

M and A is essential to our success and we have a clear M and A roadmap And we will deploy capital to broaden and strengthen our portfolio. Let's look ahead with the outlook for the remainder of 2023. It's important to note that our next progress update on 5,101 and 5,102 in NHL and CLL will be in Q4 2023. We hope to confirm the encouraging safety and efficacy data on a larger patient pool and present more durability data to further validate our point of care approach with the Cocoon platform. Also in oncology, we aim to make regulatory progress with an IND submission for a CD19 in the first half of twenty twenty four.

Speaker 4

The CTA for our BCMA candidate 5,301 has been approved and we aim to initiate the trial this year. We also submitted the CTA for our CD195101 in refractory SLE. We also plan several trial initiations. We recently dosed the first patient in with filgotinib in the first patient in dermatomyosis with 3,667. The lupus trial with 3,667 has been initiated and we hope to dose the first patient soon.

Speaker 4

We also aim to kick off Another trial in severe lupus patients with the CD19 CAR T this year. We'll also execute on the NHL and CLL expansion cohorts with the CD19 programs and start the Phase Ib multiple myeloma with BCA CAR T5,301. As we continue to execute on our company's transformation, we are focused on accelerating our early stage pipeline, Building on our renewed discovery portfolio, we continue to broaden our late stage pipeline, pushing forward our internal programs and scouting We aim to execute on our plans in oncology, progressing our CAR T programs and expanding our footprint with our Cocoon platform. Following the changing market dynamics and revised sales guidance for We are evaluating strategic options for Giselleca, and we commit to stay disciplined in our use of cash to focus our investments to maximize value. Thank you all for your support and your interest in Galapagos.

Speaker 4

And now let's open the line up for Q and A.

Speaker 1

Thanks so much, Paul and Seth. That concludes the presentation portion of today's audio conference call. I would now like to ask the operator to open up the line for Q and A.

Operator

Thank you. We will now take the first question from the line of Brian Abrahams from RBC. Please go ahead.

Speaker 5

Hi, this is Joe on for Brian. Thank you for taking our question. Can you elaborate more on the strategic options you're considering And I guess you mentioned that you'll be looking at subgroups for your CD19 CAR Ts. Can you also talk a little more about

Speaker 3

Yes. Why don't you take the first one? I'll follow-up.

Speaker 4

Yes. So we are adapting obviously to this changing market dynamics in the environment and obviously taking our responsibility as a company to ensure that We're creating long term value. We are going to do this strategic evaluation of various scenarios and options for Giselaqa As quickly as possible, we anticipate coming with an outcome of that assessment in the coming months and we can provide an update at that point in time. So we Can't provide any further details at this call.

Speaker 3

Yes. And for the subgroups, we had, As I said indicated in the call several indications within the NHL act within the NHL And we are missing a few patients in some of the subgroups to have a complete response comparing to the competitors as well as for submission with the FDA With the regulatory authorities. And that's why we are have continued to recruit until we have in each of the subgroups The patients we need. So and that will happen in the next few weeks to 2 months or so and we'll have an update on that In before the year end.

Speaker 5

Got it. That was very helpful. Thank you. If I could ask a follow-up. On IND filing for the in the first half of next year for CAR T cells, can you also comment on the level of engagement with the FDA Ahead of the filing and some if you could just talk about some

Speaker 6

of the

Speaker 5

requirements for the filing. And can you Share with us your latest strategy there. Any specific regions of focus and how you're thinking about prepping the potential clinical sites ahead of the filing?

Speaker 3

The most important critical step for us is to have a clinical trial production center ready, which has to be submitted with the There we have done an extensive evaluation of centers and the first tech transfer to the U. S. Site is active. And so that will that is determining the timing of our submission for the IND. Before that, we had a very good engagement in a pre IND meeting with the FDA on all the aspects We need to start clinical trial.

Speaker 3

And so what I just told you was having the first center validated on U. S. Ground, on U. S. Soil It's a critical step and that's why we indicate that we'll start we'll submit an IND first half of next year.

Speaker 3

But since the first one is ongoing, I think that will be quite optimistically in the course of the earlier months in the next year. So that is that's where we are. Obviously, we are trying to focus closer by home at the moment. So we started at the East Coast And we'll reach out later to other parts of the U. S, but that's where we start the first scan of potential centers.

Speaker 3

And as we speak that's ongoing, multiple centers are in discussion and contract discussions.

Speaker 5

Great. Thanks so much.

Operator

Thank you. We would like to kindly ask participants to ask one question per person. We will now take the next question from the line of Emily Field from Barclays. Please go ahead.

Speaker 7

Hi, thanks for taking my questions.

Speaker 2

I wasn't looking if she just said to ask 1

Speaker 7

or 2, but Just on the Gyselica point, I was just wondering if while you're going through this review, Will you be making any changes to the commercial promotion of the product? I saw that you're initiating the axSpA Phase 3 studies, so one so any changes on the R and D side while this review is ongoing or anything operational that would change? If I could just slip in one more, just any initial color you could provide on the small molecule discovery program in oncology? Would this maybe move Follow tumors or would you expect this to be in hemonc? Any color you can provide would be great.

Speaker 7

Thank you.

Speaker 4

So regarding J Celica and the promotion, of course, we are going to be evaluating and doing a deep dive analysis, a very thoughtful Analysis market by market and understanding kind of how we can maximize the potential value of the asset, also looking at just The resources and obviously supporting the current promotion of the product and just seeing how we can further optimize that. And we'll come back with more details after we do this assessment.

Speaker 3

Yes. And your comment on XPAR, It will be going until we congruent on the options what we do going forward. And on oncology, we both are working in solid And heme oncology, in biological oncology. And we'll use one of the next meetings to give you further detail On the different targets of different fields and I will bring in a Head of Research for having that discussion Or having that presentation. So wait for an update there for one of the next meetings, where we'll come back.

Speaker 7

Thank you.

Speaker 8

Thank you.

Operator

Thank you. We will now take the next question from the line of Jason Jabboury from Bank of America. Please go ahead.

Speaker 9

Hi, guys. Thank you for taking my question. Mine was just as you look To move the BCMA CAR T program into the clinic, just curious sort of as you've evolved with the CD19 program and optimize the How portable is that to new antigen directed BCMA's or I guess CAR Ts In terms of the process, are there meaningful changes? Or is there a lot that you can leverage as you move into new CAR T programs? Thanks.

Speaker 3

Yes, that's a very good question. And we can leverage the entire packaging by our system. We have done the validation Of the BCMA on volunteer sample of volunteer blood, which is done. And so and now we are waiting We are starting the initiation of the study to do on patients, on patient blood. It is like very transferable And so far with good validation for the BCMA.

Speaker 3

Of course, then you work on disease material in the next phase. And so we'll be able To confirm that in our next report, but we see no issues on transferring the process. It's a very simple process, automated process, Where of course the vector is different, the cell growth has to be studied, but so far so good. We see no issues in scaling up the BCMA. And of course, what we did with CD19, we observed in the clinical trials a very good efficacy and safety profile because of The way we produce cells and the 7 days vein to vein, fresh vein to vein, very difficult to dissect what is the cause of the good efficacy, good safety, But we observe that it works and that's now the next phase for BCMA.

Speaker 3

We'll do the same. We do a study, evaluate and we'll look at the results Before making commitments to go forward with the full development. Okay.

Speaker 9

Thank you. Thank you.

Operator

Thank you. We will now take the next question from the line of Mike Ulz from Morgan Stanley. Please go ahead.

Speaker 9

Hey, guys. Thanks for taking the question. Maybe just a quick follow-up on Giselleca, just given you're starting the strategic review, Can you give us a sense of when you might be able to provide some final decisions there? Thanks.

Speaker 4

Yes. Thanks, Mike. We We're actively working on this. The process is ongoing. I think it's going to we'll have an outcome of that assessment in the coming months And we can provide an update then.

Speaker 4

I'm obviously new on board and Here just over a month. So of course, we're all working very hard to do a very thoughtful assessment.

Speaker 3

Yes, Tati did a deep dive on the whole Commercial organization, the operations in last month and now ready to engage in next steps. It will take some time and like Pat is saying next few months or a couple of months will bring clarity and an outcome. Thank you.

Operator

Thank you. We will now take the next question from the line of Brian Balchin from Jefferies. Please go ahead.

Speaker 8

Thank you. So 23 got cut for Gisela cut, but what about the peak sales target of 400,000,000 I don't think that's baked in label restriction just yet. So should we be expecting further cuts there?

Speaker 6

Yes.

Speaker 4

Sorry, go ahead, Brian. I'm sorry to interrupt. Sorry, I was there. It's fine.

Speaker 10

I was

Speaker 8

just going to squeeze in a cheeky second. How confident are you in them being able to get CAR to the market by 2026, 2027 as previously staged given push timelines?

Speaker 4

Yes, I'll take the first part on the J Celica. I mean, obviously, the higher Sales number $400,000,000 is probably given kind of where we are with sales trends, probably Not likely. So we want to do also a thorough assessment of the sales potential And revise our models and forecasts and then obviously come back when we do this assessment and Look at the overall business case.

Speaker 3

Yes, Brian, on the timing Of the CAR T2 market, it will depend on how we choose our indications as we indicate as we have shown in the First 7 patients and then the patients within that on risk of transformation, we see like a very strong effect in a very high medical need And we are deciding as we go already based on the BOSCET study and then the broader CLL activity on where should we focus to really address a very high unmet medical needs in order to get this accelerated recruitment, but also accelerated development part. And so for now, while we set target around 27, it's 26 late 20 6, 20 7 That still would be possible if we get breakthrough designation and have a very high unmet medical need to be addressed. But to be decided When we move for the pivotal study and discussions with the regulatory authority. The demand is very, very high. So what we see in our clinical trial, especially in these indications, people flock to the clinical trials to get in.

Speaker 3

So especially in the high medical need unmet medical needs. So hopefully, we can with broadening the centers in the world, including in the U. S, recruit fast And have a very strong observation. That's what we hope. As we see in the Phase III study, if we see the same observation in the pivotal study, We can still reach this time frame.

Speaker 3

Yes. So thank you for the question.

Speaker 2

Thank you.

Operator

Thank you. We will now take the next question from the line of Tian Zhang from UBS. Please go ahead.

Speaker 2

Hi, this is Tian from UBS. Thank you for taking my question. Maybe just for one question for Pat, please. Given now this is your first appearance as a new CFO, so just wondering If you could share some of your thoughts on the first impression of Galapagos, what's your overall strategy here? I mean, of course, you have Cellica commercialization, you have internal R and D and you have, of course, M and A.

Speaker 2

And so just wondering, what do you like the most? Where do you want to change for you accelerate M and A. So, yes, any thought that would be great. Thank you.

Speaker 4

Thank you so much for your question. And Yes, I'm just incredibly excited and honored to be part of this team. I think obviously working together with Paul again, we've been through Transformations in the past and certainly we think that there's a tremendous I believe there's a tremendous opportunity for us to really drive An innovative approach to bringing lifesaving therapies to patients in Go Opagos. And I think we're doing some things that the other players are not doing that I think is really exciting. Of course, I have CAR T experience and oncology experience, I think can also be beneficial in terms of what could be done with point of care.

Speaker 4

And I also am just So excited to think about what are the possibilities for us to really allocate resources to do business development deals To further innovate and to make a difference for patients. It's not easy of course. I mean there's a lot to do, but that's also The opportunity that we have, it's not also lost on me that our where our valuations are and I see that there's a tremendous opportunity to change that.

Operator

We will now take the next question from the line of Phil Nadeau from TD Cowen. Please go ahead.

Speaker 11

Good morning. Thanks for taking our question. We wanted to ask about the program of moving your CD19 into autoimmune diseases and Particularly, lupus, given the size of the market, those programs have created a lot of excitement, for some other companies. Can you talk about the timeline of your investigations in SLE. When could that trial start?

Speaker 11

When could we see data? And then maybe more generally, what's the value proposition for point of care in a more Slow moving disease, white lupus. Thank you.

Speaker 3

Yes. The status is that we submitted in Europe by Clinical trial application, so we'll wait for the outcome and the discussion and we hope and trust that we can start the study later this year. What is attractive as a complement to our CAR T network is that, of course, the hematologist, they do The rheumatologist is the physician who treats the patient. But in this intervention, the hematologist is doing the application. And that's where this goes very well together with the point of care incentives where we have in the centers where we have today our point of care Right.

Speaker 3

They're already asking where they can participate. So they see the benefit of the manufacturing on-site. There also again, yes, will we see benefit from a fresh approach? The current approach with Airline use was a fresh sell approach done produced locally. So what are we going to see from the approach we are going to do in the clinical trial center?

Speaker 3

So I think the benefit of the complementarity on the sites where this is done as well as the approach we have taken and the The center who has done the first patient has taken to their approach on treating patients. Will we see better results or different results? Of course, to be determined. But I think before the year end, we'll be significantly on recruiting in this trial.

Speaker 2

Perfect. Thank you.

Operator

Thank you. One moment please. We will now take the next question from the line of Dane Leone from Raymond James, please go ahead.

Speaker 6

Thank you for taking the questions and congratulations on all the progress. Kind of a consistent question for me that I hear from a lot of investors. You have you still have a sizable Cash balance to draw down on for more meaningful external asset acquisitions. And on kind of counterbalancing that, you still are attaining quite a high R and D burn rate, Even with Giselleca activities maybe winding down a bit or continuing to wind down a bit, how are you thinking about balancing that out going Forward and perhaps even into 2024, if you could entertain that far into the future. Are we still expecting to do something more meaningful on the business development front, perhaps away from cell therapy and And more into traditional I and I, or what we kind of see on the table from your team today It's probably going to be the core area to build out from, and we should expect maybe more bolt on acquisitions to Supplement the activities that are already ongoing internally.

Speaker 6

And what can we get that cash burn down Now that we are winding these larger INI studies down with filgotinib, well, ramping up maybe more targeted studies with the cell therapy platform? Thank you.

Speaker 3

Yes. First, let me start and that will follow-up. 1st, We absolutely just don't focus we do not focus only on CAR T. The reason we stepped into CAR T, we were able to bring 2 teams together With Avant and CellPoint, which accelerated us in oncology. And we are there now since 13 months, 13 months ago, Calabrio has no oncology.

Speaker 3

We were able with 2 teams bringing them in, the teams, the capabilities and the products to where we are today. It allows us to have a false time to market in the next 4, 5 years and that was the main reason To enter oncology via the big door and go fast in transformational therapies. In parallel, I can tell you, RBD teams Have been evaluating many options, which are not in the CAR T space, complementary with some of the capabilities we have in The company, but also considering other fields. So but we have a very high bar For bringing products in, either they come as a product with a strong team and that typically would be an acquisition Or they come in as a strong product, but the product is the core here where you have to have address a differentiated and higher medical need And where we can reach the market with a differentiated product. That is the definition for us to do a good BD.

Speaker 3

And then secondly, it has to be a global deal. We can we could consider or we can consider local deals in Europe, but that's not value creating enough for the money we spend. So we Always we'll try to go global deals, highly differentiated products in a very high unmet medical need. That was the criteria and we hold all our BD discussions we do Against that. So that's how we tackle BD and I hope we can bring significant deals in the next 18 months working on that.

Speaker 4

Yes. And addressing the cash burn, I mean, it's clear that actions have been taken this past year to reduce the cash burn from even The prior year operationally, we're going to continue to be very disciplined and focusing on managing our resources effectively to really continue to drive the Long term value and also growth and finding those opportunities. Also, as Paul mentioned, the deals are really going to That our M and A strategy and at the same time I think that we are seeing some benefits in Interest rates that also help our interest income as well as we're going to make good portfolio decisions and allocate resources appropriately.

Operator

Thank We will now take our next question from the line of Sebastian van der Schuerd from Van Langekodt Kempen. Please go ahead.

Speaker 10

Great. Thank you. Hi, thank you for taking my Question. I just wanted to ask regarding the delay in the IND filing towards H120 4. Can you maybe go into the fact that you are still discussing why the ILB has not come off the ground?

Speaker 10

And then also quickly, you talked about different CD19 CARs and also one specifically for autoimmune disease. Can you maybe highlight What the differences are between autoimmune disease and oncology that would require a different seasonality? Thank you.

Speaker 3

Yes. First on the IND, we had a pre IND discussion. And so to submit the IND, the FDA required to have a site validated on U. S. Soil.

Speaker 3

And that takes some time as we need to transfer technology, 1st install the technology, transfer the technology, validate. And that will take us up till the end of the year. At that moment, we can submit an IND when that validation is done. And that is the basic reason Why taking getting to a contract, getting to a sentence on and have that done. Took maybe somewhat longer than expected, but basically the IND requirement was the most important one That it brings it over the year end.

Speaker 3

The difference on the CD19 car, there is no clear Insight, what type of CD19 car will work best? The Erlang and Ust, the Milteni car Which is very well known. We are using a different CAR T for ours, which one developed the cells, one we So we'll use 1 of our 2 CAR Ts to go into the SLE, but it's not clear which ones They will have to experiment and be proven that they work. So it's very difficult to predict what safety and efficacy will be for the different products. So that's all I can say at this moment on that.

Speaker 10

Okay. Okay, got it. Thank you. And maybe then I can squeeze in a last question and You mentioned for non Hodgkin's lymphoma that you are already in dose expansion. Does it also mean that we will get Results from the dose expansion by year end and that you can maybe prepare for a study in 2024 for Phase II in monocyt lymphoma?

Speaker 3

The non Hodgkin lymphoma is divided into different buckets as I described it in my talk. 2 of them are in expansion. We'll present all of the data later this year, But we'll make a decision based on the highest unmet medical need and the most urgent clinical benefit we can deliver as the first indication we will bring forward. And that's where the diffuse large B cell is still one which we have to recruit additional patients in And that we'll do in the next, yes. So you will see all the data we'll have in that abstract, which will is submitted And will become available hopefully at an upcoming conference.

Speaker 10

Very clear. Thank you, Paul.

Speaker 3

Thank you.

Operator

Thank you. And we will now take the next question from Jacob Meychajlu from KBC Securities. Please go ahead.

Speaker 2

Hi there and thanks for taking my question. I have one Just regarding the ATLANTO-one trial, you mentioned that you will include more patients of certain subpopulations. Does that mean that the planned trial size of 45 patients will not be larger? And if so, how many patients have been recruited so far? And how many additional patients do you plan to recruit?

Speaker 2

And I have a follow-up, Doreen, as well on the IND that will be filed in the U. S. For the CD19 CAR T. Do you also plan to file an IND for the BCMA CAR T as well? And what is the expected time line for

Speaker 3

Okay. I have very difficult to understand the first part of your question. You should repeat that. But we can stand On the IND for the BCMA, yes, we'll file that. At the moment, we have our dose finding A study done in Europe.

Speaker 3

So that will take some time and that's not for this year of course. That will take another several months before that will be done. The first part of the question I missed.

Speaker 2

So just the planned trial size The ATLANTO-one trial is 45 patients. I'm just curious if that's still the same or is that going to be increased?

Speaker 3

Yes, it is in that range. The dose finding is was indicated as about 15 patients and then the Expansion dose was about 30. So the total size of the population is about 45. It depends a little bit how many patients will be in which The subgroups in the study. And we won't stop recruiting patients until we close this study.

Speaker 3

So We will be around that number at the end of the year.

Speaker 2

Okay. Thank you. And I just have one more question actually also on the IND for the U. S. Will those trials be an extension of the Phase II trials?

Speaker 2

Or would you expect that in the U. S. You will go into a larger trial there that builds on the data set generated in Europe?

Speaker 3

Yes, it's a lot of it's a lot of we want to use the data we have in Europe generated in Europe to start a pivotal study in the U. S. And Europe. And so in parallel, we'll submit an IND as well as go to the European authorities to do a clinical trial in Europe in order to get to pivotal Studies and get to the outcome.

Speaker 2

I see. All clear. Thank you.

Operator

Thank you. There are no further questions at this time. I would like to hand back over to the speakers for final remarks.

Speaker 1

Thank you very much, operator. That concludes today's earnings call. Please feel free to reach out to the IR team if you still have questions. Our next financial results call will be our Q3 2022 results on November 3. Thank you all for participating, and have a great rest of your day.

Speaker 3

Thank you all for participating. Have a good day.

Operator

That does conclude our conference for today. Thank you for participating. You may now disconnect.

Powered by Quartr

Key Takeaways

  • Sales of Gyselica reached €28 million in Q2 and €54 million in H1 2023, leading Galapagos to lower its full-year 2023 net sales guidance to €100 million–€120 million and announce a strategic review of the asset.
  • The Cocoon point-of-care CAR T platform delivered encouraging initial data in Phase I NHL (ORR 86%, CR 86%) and CLL (ORR 100%, CR 86%) trials with only mild CRS/ICANS and a median 7-day vein-to-vein time.
  • The pipeline is now focused on immunology (RA and UC approved; axSpA Phase III, TYK2 programs in dermatomyositis and SLE) and oncology (CD19 CAR T, targeted BCMA trial planned after summer).
  • Galapagos ended Q2 with a strong cash position of €3.9 billion, confirmed its 2023 operational cash burn guidance at €380 million–€420 million, and expects approximately 3% return on its cash balance.
  • New CFO/COO Thad Hudson, with deep experience in finance, R&D, commercial, BD and cell therapy, joined on July 1 to drive Galapagos’s transformational strategy and M&A roadmap.
AI Generated. May Contain Errors.
Earnings Conference Call
Galapagos Q2 2023
00:00 / 00:00