Good day, and thank you for standing by. Welcome to the Galapagos Q3 2024 Financial Results Audio Webcast. 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, Sofie Van Gijsel, please go ahead.

Thank you, and welcome to the audio webcast of Galapagos' Q3 2024 results. I'm Sofie Van Gijsel, Investor Relations representing the reporting team at Galapagos. This recorded webcast is accessible via the Galapagos website homepage and will be available for downloads and replay later today. We 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 of the pipeline and our 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 are Dr. Paul Stoffels, CEO and Chair; and Thad Huston, CFO and COO. Paul will present the Q3 key takeaways, and Thad will provide a financial update. We will also discuss the anticipated milestones and present concluding remarks. Please follow the presentation on your screen as we go through the call. We estimate that the prepared remarks will take approximately 20 minutes. We will then open the line for Q&A with Paul and Thad who will also be joined by Dr. Jeevan Shetty, Head of Development Oncology; and Dr. Wulf Bocher, Head of Immunology. And with that, I'll now turn over to Paul.

Thank you, Sofie, and good afternoon, everyone. I would like to take a moment to share the strong foundation that we are building and how we have set up Galapagos for value creation. Today, we are a pure-play biotech with a renewed R&D strategy to accelerate and bring innovative medicines to patients. We are moving forward faster with a focused, differentiated, and expanding R&D pipeline and competitive technology platforms. We're also making important regulatory and operational progress with our decentralized CAR-T network in Europe and the U.S. This slide summarizes our efforts to build a robust product pipeline that will enable us to accelerate future growth and drive value creation for all stakeholders. In doing so, we will focus on our key therapeutic areas of oncology and immunology to advance our R&D pipeline of potential best-in-class cell therapies and small molecule drugs. Today, we are developing four clinical candidates for 11 indications, and we have more than 15 preclinical programs. For further expansion and progress of our pipeline, we take a collaborative approach combining internal and external innovation. And finally, our strategy is supported by a strong cash position of EUR3.3 billion at the end of September 2024. In the third quarter of this year, we delivered on several important milestones. Let's start with the regulatory achievements. We are very pleased to have received the IND clearance from the FDA for GLPG5101, for which we have generated encouraging results in the Phase I/II ATALANTA study in Europe. We now plan to enroll our first patient in the U.S. in the Phase II expansion part of the ATALANTA study in non-Hodgkin lymphoma before year-end. Obtaining the IND clearance for our seven-day vein-to-vein fresh CAR-T decentralized manufacturing process was a crucial achievement for expanding the development of our cell therapies in the U.S. In Europe, we resumed recruitment for the GLPG5301 Phase I/II study in multiple myeloma following the announcement during our half-year results of a study pause. We are confident that we have put the right measures in place to resume the study. We are making significant progress with our proprietary pipeline that includes more than 15 programs, and we have selected two early-stage pipeline candidates for clinical development. I will provide more information on this in the following slides. We continued the enrollment for the GLPG3667 Phase II studies in dermatomyositis and lupus, with top-line data expected in 2025 and 2026, respectively. We also selected the first decentralized manufacturing unit, Excellos in San Diego, within the nationwide network of Blood Centers of America. This is an important step in the expansion of the footprint of our cell therapy manufacturing network across the U.S. Let's come back to the key achievements on the regulatory front. The FDA's IND clearance of the ATALANTA study for GLPG5101 in patients with non-Hodgkin lymphoma produced on a decentralized manufacturing platform marks an essential step towards realizing our vision of transforming patient outcomes through life-changing science and innovation. As a brief reminder, our decentralized cell therapy platform is a novel point-of-care solution that offers the potential for efficient medium seven-day vein-to-vein time and avoids complex logistics, thereby addressing important limitations of current CAR-T treatments. The proprietary platform consists of our end-to-end workflow management and monitoring software system, a decentralized functionally closed automated manufacturing platform for cell therapies, and the proprietary quality control testing and release strategy. Together, this allows for greater physician oversight and for a production model near the patient that is globally scalable. Currently, we have three clinical trials running on the cell therapy platform. With IND cleared, we can now start recruiting U.S. patients into the Phase II expansion cohort of the ATALANTA study, and we are actively initiating clinical trial sites in the Boston region, and we plan to start enrolling patients with non-Hodgkin's lymphoma in the study before year-end. We will leverage the learnings from GLPG5101 prior to the submission of the GLPG5201 IND for the EUPLAGIA study in CLL, which we will now target to submit in early 2025. Before we move over to our pipeline overview, we wanted to highlight a recent publication in Blood Advances that analyzes several large CAR-T clinical trials. The analysis points to vein-to-vein time as an important predictor of patient outcomes, where reducing vein-to-vein time can substantially improve life expectancy by up to 3.2 years. The paper states that aiming for short manufacturing product release shipping and infusion times may be key to further improving outcomes for patient treatment with CAR-T. We believe that these data underscore the importance of our efforts in this field. Let's look at our clinical pipeline. In oncology, we are progressing our Phase I/II CAR-T program, GLPG5101 in NHL. As you know, ATALANTA is a basket trial in a number of indications, which you see listed here on the slide. We are also progressing GLPG5201 in CLL and Richter's transformation. And as mentioned earlier, we have resumed recruitment into the Phase I/II GLPG5301 study in multiple myeloma. I'm also pleased to announce that we will present new data from the ATALANTA and EUPLAGIA studies at the American Society of Hematology Annual Meeting in December. We added TCR T cell therapy to our pipeline following the clinical collaboration agreement with Adaptimmune that was announced at the end of May. The agreement gives Galapagos the option to exclusively license Adaptimmune's next-generation TCR T therapy, uza-cel, targeting MAGE-A4 for head and neck cancer and potentially future solid tumor indications. Initial in-vitro results suggest that uza-cel, developed by Adaptimmune and produced on Galapagos' decentralized manufacturing platform, yields fresh fit early phenotype T cells. These cells could potentially improve efficacy and durability compared to the uza-cel centrally manufactured on Adaptimmune's platform. Together with Adaptimmune, we will present these preclinical data at ASH. In immunology, we are progressing our Phase II study with GLPG3667 in dermatomyositis and lupus with top-line results expected in 2025 and 2026, respectively. As we work to advance our programs in development, we are also investing in our discovery portfolio to identify future programs. We are making important progress in all our therapeutic areas. We have more than 15 internal programs in discovery across oncology and immunology with cell therapies and small molecules. From this discovery portfolio, we selected the differentiated next-generation armed bispecific CAR-T candidate in hemato-oncology. In addition, we selected the potential best-in-class small molecule candidate in immunology, targeting clinical development in '25 '26. We also continue to scout for external innovation to further build our early-stage pipeline. In 2025, we expect to initiate at least four IND or CTA-enabling studies and at least one first in human study. From 2026 onwards, our aim is to fuel the clinical pipeline with at least two new clinical assets annually across cell therapy and small molecules.

Thank you, Paul, and thanks, everyone for joining today. Let's look at the financial results for the third quarter of 2024. During this quarter, we have worked on strengthening the foundation for our future growth. We continue to keep our focus on priority programs while investing in our pipeline and building our global cell therapy network. For operations, revenue remained fairly stable year-over-year and consists mainly of the linear recognition of the platform for the Gilead collaboration. As explained in previous earnings calls, we see an increase in R&D costs compared to last year. This is mainly driven by our investments in oncology, both in cell therapy and in small molecules, and includes the expense recognition of collaborations with BridGene and Adaptimmune signed in the first half of the year. Over the first nine months of the year, we recorded a net profit of EUR49 million, driven by fair value adjustments in foreign exchange as well as EUR71 million in interest income. We also reported a net profit from discontinued operations of EUR69 million, mainly driven by the one-time gain for the Jyseleca transaction with Alfasigma as announced earlier this year. Now over to our 2024 guidance. We reconfirm our full-year cash burn guidance of EUR370 million to EUR410 million for 2024, including the business development transactions closed earlier this year. We report a net decrease in our cash position of EUR346 million for the first nine months of 2024. This decrease is composed of EUR321 million of operational cash burn, including EUR80 million related to business development activity executed in the first half of 2024. The cash out related to the Jyseleca transaction with Alfasigma and an equity investment in Q1, as well as financial transactions, including the timing of interest income. Our cash balance at the end of Q3 amounts to EUR3.3 billion, supporting the build-out of our pipeline. I would also like to mention the collaboration that we closed a few months ago with Blood Centers of America as a partner for our cell therapy platform in the U.S. This collaboration significantly advances the expansion strategy using BCA's nationwide network to manufacture our cell therapy products close to the patient. As part of the collaboration agreement, we selected Excellos in the San Diego area as our first BCA manufacturing unit to produce GLPG5101 for the ATALANTA clinical trial sites in the region. Turning to our key achievements and anticipated milestones. We received clearance for the IND application of the ATALANTA study of GLPG5101 and NHL. Our goal is to activate clinical trial sites and start enrolling patients in the Phase II dose expansion study in the U.S. before year-end. We target to submit an IND for our second CD19 CAR-T candidate GLPG5201 in early 2025 for the EUPLAGIA study in CLL and Richter's transformation. Following the submission of a CTA to the European Medical Agency for the Phase II dose expansion of GLPG5201 in CLL and Richter's transformation, we plan to start enrolling patients in 2025. We have resumed recruitment into the PAPILIO Phase I/II GLPG5301 study in multiple myeloma. We are very proud that at ASH later this year, we will present new data from the ATALANTA and EUPLAGIA studies. Together with our partner Adaptimmune, we will also present preclinical data for the TCR T cell therapy candidate, uza-cel, produced on Galapagos' decentralized manufacturing platform. We continue enrollment in the Phase II studies with GLPG3667 in dermatomyositis and lupus. We further advanced our early-stage proprietary pipeline by progressing a next-generation armed bispecific CAR-T candidate and a potential best-in-class small molecule candidate in immunology into IND-enabling studies. We are targeting clinical development in the 2025 to 2026 timeframe. We are accelerating our pipeline of more than 15 programs in oncology and immunology with the objective to launch at least four IND/CTA-enabling studies in 2025 across different modalities and indications. Following the announcements earlier this year of collaboration agreements with Thermo Fisher, Blood Centers of America, and recently Excellos, we continue to work on opening additional sites for our decentralized cell therapy manufacturing platform, both in the United States and in Europe. Earlier this year, we signed agreements with BridGene and Adaptimmune, and we continue to explore additional partnerships, research collaborations, licensing agreements, and acquisitions. Our business development efforts are focused on accelerating breakthrough medicines for patients in need. As already mentioned in the previous slide, we are building a future on strong partnerships. In the last couple of years, we closed partnerships to build our cell therapy capabilities, entered into research collaborations, licensing agreements, and executed acquisitions and equity investments. We continue to focus on strategic business development to bolster our pipeline and optimize our operations. Let me conclude by coming back to the strong fundamentals that we have put in place to build a global innovative biotech and a clear path that we have toward value creation. We are progressing our early-stage pipeline and building on our renewed discovery portfolio based on best-in-class targets to develop best-in-class medicines. While we push forward our internal programs, we remain active in business development; we continue to execute on our scientific progress in our key therapeutic areas of oncology and immunology and most notably our CAR-T programs with GLPG5101 and GLPG5201. We have invested and continue to invest in strengthening our team in key positions globally. Finally, we have the benefit of a strong balance sheet, and we commit to staying disciplined in our use of cash to focus our investments to maximize value. We want to thank our investors for their continued support as we deliver on our strategy to achieve sustainable value for shareholders. I also want to take this opportunity to thank Sofie for her many contributions to Galapagos over the past several years as she embarks on a new opportunity. Thank you, Sofie.

Thanks so much, Thad, and thank you, Paul. Greatly appreciate it. That concludes the presentation portion of today's audio conference call. I would now like to ask the operator to open the line for Q&A.

Thank you. Our first question comes from the line of Xian Deng from UBS. Please go ahead. Your line is open.

Thank you for taking my question. I have just one. Regarding the BCMA CAR-T 5301 study in multiple myeloma, now that you have received trial enrollment, what is your conclusion about the case of Parkinsonism phase? Additionally, could you share any thoughts on the possible changes to future enrollment criteria related to that? That's my question. And best of luck, Sofie, in your future endeavors. Thank you.

Thank you for your question. I appreciate it. It's important to note that BCMA-targeted CAR-T therapies can lead to Parkinsonism due to the expression of BCMA targets within certain brain regions. This has been established in all CAR-T therapies available today. We have examined this closely and learned from it. While I cannot share specific details about the patient, the case did have unusual characteristics. We conducted thorough due diligence on the patient's background, reviewed relevant literature, and engaged with external experts. We have incorporated our findings into our protocol. I can say that we have enhanced communication between the medical monitor and the investigator. We are confident that, given the measures we have implemented, we can effectively proceed with treating these seriously ill patients using our platform, particularly benefiting from our seven-day vein-to-vein fresh cells and product.

Thank you.

Thank you. We will now move on to our next question. Our comes from the line of Judah Frommer from Morgan Stanley. Please go ahead. Your line is open.

Yeah. Hi. Thanks for taking the question. Congrats on the progress and best of luck to Sofie as well. I was just hoping you could share a little bit more color on the data you'll be presenting at ASH for EUPLAGIA and ATALANTA? Any detail on the nature of the data? And will we get that update only at ASH or will there be abstracts released next week? Thanks.

Thank you very much for the question. We are clearly limited by the ASH embargo and we can't really disclose any details regarding the studies themselves; abstracts are embargoed until Tuesday, November 5, at 9:00 a.m. So I encourage you to look at this, and we look forward to proactively sharing this data when the embargo is lifted. Thank you.

Thanks.

Thank you. We will now move on to our next question. Our next question comes from the line of Alexander Kelly from TD Cowen. Please go ahead. Your line is open.

Hi. Thanks so much for taking my question. Just curious if you could walk us through your approach to BD next year. What types of deals are you open to and what would be the ideal asset or assets in terms of stage, modality, target, and indication? Thank you.

Thank you for the question. We continually look to broaden our portfolio through BD. We think that there's a tremendous opportunity given our cash position and the opportunities we have. We're very focused on the fields of oncology and immunology. We do look at precision oncology as a particular area of interest as well as potential opportunities to broaden our portfolio in CAR-T as well.

Thank you.

Thank you.

Thank you. We will now move on to our next question. Our next question comes from the line of Shan Hama from Jefferies. Please go ahead. Your line is open.

Hi. Thank you. Is there any scope for your CAR-T programs, particularly 5101 to potentially enter the market earlier than 2028, and I guess similarly, how confident are you in being granted breakthrough therapy designation to actually support that potential earlier market entry? Thank you.

We just got our IND approved in the U.S. We are planning to include the first patient in the study before the year-end and expand in the course of next year to other centers in the U.S. today, the first centers will be in Boston, driven by the Landmark Bio site. So we will follow the scientific process here by doing our next phase in the expansion study of ATALANTA, discuss the data with the regulators, decide on the pivotal designs, and we'll be able to update you as soon as we are in that space. We're very confident on the strength of the data and what we have seen so far, and hopefully what you have learned from our previous disclosures on the data that efficacy and safety looks very good. We are evaluating multiple indications in the Phase II expansion study, and we'll decide on indication and size of studies competitively in the course of next year as we go through evaluating the Phase II expansion studies, and that will determine ultimate timelines whether we can launch in '28 or whether we could make it faster, but we have to follow the scientific regulatory process here.

Thank you. We will now move on to our next question. Our next question comes from the line of Brian Abrahams from RBC Capital Markets. Please go ahead. Your line is open.

Hi, everyone. This is Nevin filling in for Brian. I have a question about 5101. Since receiving the IND clearance, have you conducted any test runs? How do the vein-to-vein time and the quality of the CAR-T product look? Have you encountered any specific challenges in manufacturing or administering the CAR-T therapy in the U.S. clinical infrastructure compared to the EU? Also, did U.S. regulators provide any specific feedback regarding the platform in comparison to the European counterpart?

Thank you for the question. I want to reassure you that we have no concerns regarding the median seven-day vein-to-vein time, which remains unchanged. In response to your question about feedback from the FDA, this represents a significant milestone for our company and the CAR-T community. We have had very productive discussions with the FDA and obtained valuable insights. Regarding our approach, there have been no specific changes; it remains consistent by design in both Europe and the U.S. The constructive feedback from the FDA puts us in a strong position to proceed with the IND, and this applies to Europe as well.

We work with Landmark Bio, which is a highly professional organization capable of making CAR-Ts. The process of transferring production involves intensive validation of the production setup as well as validation of the process on the cocoon, ensuring that we achieve the same product outcome in Europe as in the U.S. We have successfully accomplished that. It is complex and requires significant effort, but once validated, it can proceed. We are now looking forward to expanding to other locations in the U.S., including San Francisco and San Diego, as mentioned earlier by Thad. We are very confident that we will be able to deliver the product similarly to how we do in Europe.

Got it. Thank you so much.

Thank you. We will now move on to our next question. Our next question comes from the line of Jacob Mekhael from KBC Securities. Please go ahead. Your line is open.

Hi, there and thanks for taking my question. I have one on the new bispecific CAR-T that you have chosen to advance into IND-enabling studies. Just curious to learn more about your strategy there and whether you will be going after an indication without an approved CAR-T?

We recognize that the limitation of a CD19 therapy is CD19 escape, which could result in resistance early during treatment with CD19 CAR-T. Our team has conducted outstanding foundational scientific work and developed a bispecific CAR-T. The preclinical data indicates that it is prepared to move into preclinical evaluation and subsequently into clinical trials. We will provide more details about the underlying science at an R&D day that we plan to hold next year. For now, the project is advancing toward preclinical studies for IND submission and the initiation of the first human trials next year.

Thank you.

Thank you. We will now move on to our next question. Our next question comes from the line of Jason Gerberry from Bank of America Securities. Please go ahead. Your line is open.

Hello. This is Chi on for Jason. Thanks for taking our question. I have a question on the early pipeline. You mentioned advancing new programs into the clinic next couple of years, which include next-generation CAR-T for hemato-oncology and small molecule for immunology. I did not hear mention of CAR-T for autoimmune. So curious, are you no longer prioritizing CAR-T for autoimmune? Can you talk about the thinking there? And I guess, broadly, your approach for program prioritization as you move your next batch of candidates into the clinic? Thanks so much.

Let me first address the early-stage CAR-T development. We are making progress on early-stage CAR-Ts in both hemato-oncology and solid tumors. We have several programs focused on multi-targeting armoring and are conducting thorough preclinical work to select the next-generation CAR-Ts. These will utilize the seven-day vein-to-vein fresh cells, leveraging the advantages we've gained from high-memory content cells to ensure effective outcomes. Regarding immunology, I will respond to that question since Wulf is currently unable to speak. Yes, we remain interested in that area, although we acknowledge that the CAR-T field is quite competitive. We are exploring different mechanisms for B-cell depletion as we move forward. We are still interested, but we are being very selective about when to enter the market with a best-in-class product.

Thanks so much.

Thank you. We will now move on to our next question. Our next question comes from the line of Manos Mastorakis from Deutsche Bank. Please go ahead. Your line is open.

Hi. Thank you for the question. Manos Mastorakis from Deutsche Bank. So could you please give us a little bit more color on the TYK2 program and the timelines? Is there a slippage there on the timelines? And if so, just what might be the reason behind it and how do you feel about the probably the success in these two indications? Thank you.

We are making significant progress with the proof of concept and Phase II studies in dermatomyositis and lupus. While we cannot share details about recruitment, we are optimistic that we will have data by late 2025 or early 2026. We have focused on the TYK2 mechanism because interferons play a crucial role in the progression of both diseases, and their inhibition has been clinically validated by antibodies such as anifrolumab, among others. We believe that targeting interferons provides a competitive edge, especially for these conditions. The studies are advancing well, and we will keep you updated on our progress throughout next year, with the data expected by the end of 2025 or early 2026.

Can you hear me now? Sorry.

Yeah. Now, we can hear you. I apologize.

I apologize. I had to dial back in. Is there anything left open?

Yeah, the mechanism of action and IL-10 versus the interferon, why don't you explain that in more detail as the lead scientist here?

Thank you for the question, and I apologize for the technical issues. Our TYK2 inhibitor shares similarities with the leading drugs in terms of selectivity and potency, but it is mechanistically distinct because it preserves the IL-10 pathway, an important immune regulatory feedback loop. In our in vitro comparisons with the leading allosteric TYK2 inhibitors, including the BMS and Takeda compounds, we found that they both exhibit dose and exposure-dependent partial inhibition of the IL-10 signaling pathway, which is not the case for 3667. IL-10 plays a crucial role in the development of various autoimmune diseases; it is essential for the differentiation of regulatory T cells and acts significantly on the regulatory pathway. We chose diseases that are not only driven by interferon but also related to a deficiency in regulatory T cells, both in function and numbers. We expect to gain insights from our ongoing studies about the clinical relevance of this IL-10 differentiation, and we hope to evaluate this further through the Phase II data readouts. Does that address your question?

Yes.

Yeah. Thank you.

Thank you. We will move on to our next question. Our next question comes from the line of Shan Hama from Jefferies. Please go ahead. Your line is open.

Hi. Thank you. Just a follow-up from me. In terms of capital allocation for business development, how much weight would you put on the internal pipeline versus external innovation? So is there a more important key focus at the moment? Thank you.

Yeah. I'd say, I mean we're very focused on, obviously, our internal pipeline and developing that. But given our capital position, we do think that allocating a substantial amount of that to business development makes a lot of sense to broaden our portfolio. So we do look at opportunities to bring in significant innovation.

Thank you. We will move on to our next question. Please stand by. Our next question comes from the line of Faisal Khurshid from Leerink Partners. Please go ahead. Your line is open.

Hi, guys. Thanks for taking the question. Just to clarify, do you expect to deliver on any additional BD within the year? And if so, what type of deal structure or stage of development are you considering? Thank you.

Yeah. I would say, it's hard to predict whether we have a deal closed by the end of the year or not, but we are in active discussions with different parties. There's a number of targets that we're very interested in. And we'll update you when we can.

And we follow the principle of focus on clinical assets, which can deliver a differentiated profile in oncology and immunology, but also with the potential for an accelerated development, accelerated approval focusing on very high unmet medical need and selecting very carefully the medicine which we could deliver significantly before the end of the decade.

Thank you. We will now move on to our next question. Our next question comes from the line of Sebastiaan Van der Schoot from VLK. Please go ahead. Your line is open.

Hi, team. I was wondering, I understand that you first focus on the Boston area with the CAR-T approach. But can you give some insights into what steps are that are still required to activate the other manufacturing sites? And then also give some insights into how the contracts with the U.S. manufacturing sites are structured? Is it a cut on the royalty payment? Or are they in the end take per product delivered?

Yeah. Let me take that. Obviously, the tech transfer process takes a bit of time to get one site established. Landmark Bio has been validated. And of course, we're now ready to enroll patients into that study in the U.S., which is a major milestone. We do have other sites like Thermo Fisher and now with BCA, with Excellos in San Diego. We essentially structured those deals to basically pay for their services and of course, per product provided. So it's basically the CDMO service essentially. We do think that we'll have Thermo Fisher. We're actively working on the tech transfer and we'll have that site up early next year as well.

Great. Thank you.

Thank you.

Thank you. Since there are no further questions, this concludes today's earnings call. Please feel free to reach out to the Galapagos IR team if you still have questions. Galapagos' next financial results call will be the full year 2024 results on February 13. Thank you all for participating and have a great rest of your day.