Good day, and welcome to the Galapagos Quarter One Webcast and Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Elizabeth Goodwin. Please go ahead.

Thank you, and welcome all to our results call today, I’m Elizabeth Goodwin, Investor Relations, I’ll be hosting the event. This recorded webcast is accessible via the Galapagos website homepage and will be available for replay later on today. So that your questions can be included, we request that you dial-in to the number given in press release from last evening. That’s 32 for Belgium, 24040659, and the code is 5747918. I would remind you 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. So today’s participants will be Onno van de Stolpe, CEO; Walid Abi-Saab, CMO; Piet Wigerinck, CSO; and Bart Filius, COO and CFO. We will begin with some PowerPoint slides followed by a Q&A session. And with that, I’d like to hand over to Onno. Go ahead, Onno.

Thank you, Elizabeth. Welcome everybody to our webcast. We have decided to change the format of the webcast somewhat by making the official part of the presentation quite a bit shorter to allow more time for Q&A. So I will jump right in with the first slide about the delivery in the first quarter of 2018. If you look at the inflammation part of our portfolio, we were very happy that filgotinib Phase 2 trials in psoriatic arthritis and ankylosing spondylitis were fully recruited. Very pleased that went ahead and on-time and we are awaiting the data when the results will come in. We also announced the target engagement in OA patients of 1972. Very pleased with the outcome of that and that’s the basis of the large Phase 2 study that’s being planned. We also announced the MOR106 results in atopic dermatitis at the AAD Conference. In IPF, we were very pleased that the FDA and EMA agreed to our plans to move this program directly into Phase 3 program, and we announced the planning of this program recently and I’ll come back to that. In cystic fibrosis, we completed our Phase 1 study with the second triple and we also completed the recruitment of the PELICAN study which is the combination of our C2 with Orkambi. And then finally we got approval for the FALCON first triple combo trial, so we will be moving our first triple into CF patients and I’ll layout the trial design later. On a corporate level, we announced the cash balance of EUR1.1 billion by the end of the quarter. So let’s start with the Phase 3 program ISABELA for 1690, our IPF program. We will conduct two Phase 3 programs for a total of 1,500 patients, and all these patients will remain…

Thanks, Onno and good morning everyone in the U.S. and good afternoon in Europe. Happy to give you the view on the Q1 financials as well and as usual, I’ll start off with cash, which is the slide that many of you have seen before and then with the updated numbers obviously for 2018. And we’ve closed up the quarter with a cash balance of EUR1.1 billion down from EUR1.15 billion at the end of December. Our net cash burn in our definition was EUR40 million for that quarter consisting on one hand of cash out, cash expenses of roughly EUR60 million and on the other hands cash income from milestones for little less than EUR20 million. So we’ve maintained our guidance obviously in the first quarter, we’re early on in the year between EUR220 million and EUR240 million for the full year. So we’re below that 25% mark after the first quarter. That really due to two reasons, one hands obviously as you can see the offsets of cash income from milestones and on the other hands the expenses will be gearing up towards the year, the later parts of the year when these develop program will go online in the second half. Two other elements that have influenced our cash position to a lesser extend a bit from capital increases those are in warrant exercises. And we have a currency translation effect which is really not cash in the sense that it’s not a cash expense but it’s a translation of our dollar position into euros due to the weakening of the dollar against the euro on average over the quarter. Then over the next slide, I’m summarizing the key other components of our P&L also as Onno was doing in a shortened version compared to what we’ve…

All right. Thank you very much Onno and Bart. That does conclude the presentation part of our call today. Now I’d like to ask the operator Clara to connect us to callers with questions for the team. Go ahead, Clara.

Thank you. [Operator Instructions] We will take our first question from Anastasia Karpova from Kempen. Please go ahead. Your line is open.

Hi. Two clarifying questions on the upcoming readouts. Mechanistically speaking, would you expect to have dramatically different cytokine psoriatic arthritis compared to what tofa has shown due to lack of JAK3 inhibition? And for the second, can you help me understand how aggressive is the futility threshold in the upcoming ulcerative colitis trials? Is that something very challenging ahead of available therapies or something more conservative? Thanks.

Okay. This is Walid. I guess I’ll take both questions. So, first, let me start with the futility analysis. So the point there is to compare each dose of filgotinib to see whether it’s performing worse than placebo. And if that’s case you would meet futility; so essentially the point is that the threshold is really not very high. So in other words it’s very unlikely that we will be meeting that futility analysis, but there’s an important test that we needed to do. On your other question regarding mechanistically whether we see – we expect anything different than tofacitinib. I would expect – we should be expecting at least efficacy as good as tofacitinib, but we are hoping that we’re going to be better on the account that we are not as limited by the dose that we can give because of concerns with we’re going to sort of non-selective hitting other JAKs. So we’re quite hopeful that we will have efficacy better than tofa.

Thanks a lot.

We will now take our next question from Peter Welford from Jefferies. Please go ahead.

Hi, thanks for taking my questions. Got a couple really on the upcoming planned trials and first in cystic fibrosis. I was wondering if you could reveal the dosing schedule that you’re going to be using for the different components in the triple. Particularly, I guess with regards to potentiator, is there still a plan to do a loading dose on day one and then a lower maintenance dose? And then should we understand in the higher fixed dose combination dosing is going to be used in Part 2 of the trial? Is that a higher dose of post potentiator and corrector one or is that just a different dose of the early stage corrector that’s going to be used in our FDA? Then in a similar vein for the IPS 1690 Phase 3 ISABELA trial, I presume that one of the doses either A or B will be the dose that was used in the Phase 2a trial. But can you give us some insights into what the other dose chosen will be? And will that dose be the same in both of the Phase 3s or will one Phase 3 perhaps investigate a lower and the other a higher dose? I guess, curious with any sort of feedback you got on dose selection when you had the meetings with the regulatory authorities. Thank you.

Okay. Piet here, I will start with the question on the FALCON design. So FALCON design is the first CF study in which we will dose our fully-owned – our fully homemade triple combo in CF patients. So it’s a design where we start with the dual leading two weeks and then step up to triple for the remaining two weeks. So indeed in this study on day one the patients will get a lower dose of potentiator and maintain dose as the trial is keep quite short in terms of dozing. It’s important that we are as quickly as possible on the affected levels that we anticipate will have for both the dose A and the dose B. So at this moment we will not disclose which these doses are and what components we’re escalating that was conducted with the data. Walid, over to you for IPF.

Okay. Thanks, Piet. So the ISABELA studies are identical. Identical doses will be used in both trials. The top dose will be the one that we use in our Phase 2 study, but we’re not disclosing at this point what is the other dose, which obviously is a lower dose in that trial. So in terms of feedback, the design of the study including the dose selection was discussed with both the FDA and EMA. And there was full support for our proposal and based on that we confirm the trial that we move forward with.

That’s great, thank you. I’ll jump back in.

We will now take our next question from Brian Abraham from RBC Capital Markets. Please go ahead.

Hey, guys. Thanks very much for taking my questions, and congrats on all the progress. Couple on IPF and then on CF. On the ISABELA studies, can you maybe talk about the decision to do both combination and monotherapy in both studies rather than testing those separately? How you think about sort of powering these studies given you’ll have patients both on and off standard of care and whether you’re stratifying for patients on the individual concurrent therapies versus not on [indiscernible].

Okay. So you want me to answer this and then you will ask the CF question, Brian?

Yes.

Okay, all right. So when we look at – I mean, so just to take a step back, IPF is really a severe disease. People when they are diagnosed their median survival rate is about two years to five years after diagnosis, which puts this in the category of some of the bad cancers. But such – ethically it’s very difficult to do long enough trials to demonstrate efficacy on monotherapy. We’re essentially changing the standard of care of these patients. They don’t have one year of their lives to give up to do placebo controlled trial. This has been an issue that’s been very clear to us when we talk to the KOLs. When we talk to the Pulmonary Fibrosis Foundation which is obviously we work very closely with and also when we talk to regulators. So as a result we decided to design a study to go on top of standard of care. Now the weight in standard of care is and we mostly have that information from the U.S. where the Pulmonary Fibrosis Foundation has a good assessment of the situation. We know that about one-third of patients are on pirfedinone, about one-third roughly are on nintedanib, and one-third are on either pirfenidone or nintedanib. And that is a representative sample of the U.S. population, which is going to be forming the basis of how we’re going to be doing our trial. So eventually in our trial we will make sure that we keep people on whatever background medicine they are on. If they are on either, they can say on either and come into our trial. We will not be dictating any changes in their background therapy. But we make sure that we are adequately stratifying because we don’t want certain groups to be overrepresented in…

That’s really helpful color. And just real quick on CF, I understand you’re not disclosing the specific doses in the FALCON study, but I guess I’m just sort of wondering based on prior pre-clinical and clinical data whether you would expect the doses being used in Part 1 to be the therapeutic doses and maybe what you would see as in FEV1 bar for that Part 1. And then perhaps how the results of the upcoming PELICAN readout would influence your dose selection plan for 2737 on the second two weeks when it gets added on? I will hop back in the queue. Thanks.

Okay, Brian, I’ll try to answer because you broke up for a moment while asking your question. So, the FALCON study Part 1 we should be at around EC80, EC90 level, we refer it as dose. So we really should see efficacy. It’s clear that the dose of 2222 is informed what we have done up to nine patients, which is well known to all of you. And so for the part, infect the only – a norm there is whether our assessment of active dose of potentiator 2451 is right, but we’ve chosen a dose which should clearly give us a good signal in that population. PELICAN upcoming data, in principle we don’t need those data for the FALCON study to start, it’s a study where we dose 2737 on top of Orkambi. There of course the unknown is the whole week will be the impact of lumacaftor in terms of PK interaction of 2737 as well they’re based on the study results on a DDI study with rifampin. We hope to be at around EC90 for 2737, but the bigger norm will be on how accurate the rifampin data will predict the exposure, we will observe then with 2737. So if the exposure of 2737 is high enough we should see good efficacy, but that’s on our norm and that’s what we will account in that study. Thank you.

Thank you.

We will now take our next question from Adam Walsh from Stifel. Please go ahead.

Good morning, thanks for taking my question. I guess this one’s for Walid. In terms of both the tofacitinib and baricitinib AdComs, the FDA seemed to be focused on doses tested in the clinical trial program. And it seemed like with an eye toward whether the sponsors had identified a minimally effective dose that avoids certain AEs. And obviously in the case of baricitinib the agency was focused on VTEs. So with respect to filgotinib dosing in the ongoing clinical trial program, can you just remind us of the rationale for the doses you’re currently testing and whether you’re comfortable that you’ve selected the right dose?

Thank you, Adam. If you recall in the filgotinib program we did the dose range finding entities two. And then based on these data, the doses are 100 milligrams and 200 milligrams were selected. Those doses were reviewed and discussed with the agency at the time as part of the end of Phase 2 meeting, and they were approved and endorsed. What came clear in the AdCom is that the FDA wants to see a robust database to allow adequate decision making for each of the doses. And I’m very pleased that this is exactly the plan that we and Gilead have put together not only for RA, but also for the IBD program, where we get fully 100 milligrams and 200 milligrams and not favor one versus the other. Such that at the end of the day we will have a solid database that will permit us to make the adequate risk management assessment of each dose and we able to recommend whether one, the other or both should be recommended for approval.

Okay, that’s helpful. And then just one follow-up if could on the ISABELLA Phase 3 program and IPF. Can you just give us a rough idea when we might see first data from those trials?

Yes, it’s a tough question, Brian. At this point I don’t feel comfortable guiding on the time and for the simple reason is that there’s no good way to estimate it. So now what we do our feasibility and talk to a number of people, they come back with some numbers based on their experience with pirfenidone and nintedanib in the past. But we’re dealing with a completely different situation right now; one, there’s a vastly different appreciation of the disease that we have today compared to when both the studies with nintedanib and pirfenidone were conducted in the Phase 3 programs. And number two, in our case we are going on top of standard of care whether you are on nintedanib or pirfenidone, or you’re not, and as such we believe that our inclusion exclusion criteria are also vastly different. And I think, we’re not getting accurate actually result. And I don’t feel like we should be guiding at this point before we start seeing in real life how well we’re doing with recruitment and we will be able to come back with better estimate at a regular date.

Fair enough. Thank you.

We will now take our next question from Vamil Divan from Credit Suisse. Please go ahead.

Hi. Great. Thanks so much for taking my question and thanks for the efficient call on a busy day. So just two things, one on the filgotinib side and then one on CF. So on filgotinib, if you could just provide an update on the long-term safety study and timing around when those results would be available. And just to confirm because we’ve gotten some question there, that is a requirement before you can submit the filing to the FDA or not? You can confirm that. And then going back to CF and FALCON stages with 2451. I’m just curious if there is any special sort of safety requirements incorporating to that trial given some of the previous discussion around the longer lasting metabolites. Is there anything beyond what you know and you would be doing in a trial? Thanks so much.

So may I ask a clarifying question? This is Walid. You said long-term safety.

The male safety trial.

The male safety trial, right. So the male safety trial is ongoing as we talked about – as we discussed previously. And we believe that we will have the right data set by the time, we are ready to file – to be able to have a total package that would satisfy the FDAs requirement.

Okay, Walid thanks. I’ll comment on the CF question. Well, in this – in the FALCON study, which is the first time the dose study for 51 in Phase 2. It’s launching that we want to follow up both safety and efficacy of 3451 as well as the compound is around, so what is first in the protocol, is that we – that the patients will be invited to come to the centre as long as we detect the long living [indiscernible], so the expectations is with couple of months that will disappear. But that’s what we’re seeing currently that the monitor the metabolite up to the moment where it disappears. Thank you very much.

We will now take our next question from Phil Nadeau from Cowen & Co. Please go ahead.

Good morning. Thanks for taking my questions and congratulations on the progress. Just a couple on the design of the FALCON study. Curious about a couple of things, first was on the two week lead in with the dual therapy, what’s the rational behind that. Is that to show the additive efficacy of the C2 or that to get the dual therapies up to stay at levels before adding the C2? That’s the first question. And the second question is, in Part A why are you looking at only homozygous patients why not include heterozygous patients admit patients in Part A as well or Part 1, sorry?

Okay. Thank you for the questions. On the FALCON, two weekly then dual and then to the triple, indeed the reason for that is that we really want to see what the additional benefit is of C2 to a dual therapy. If you would start with the triple therapy immediately then whatever you can – unless in terms of improvement at the end is a sum-off of three and it’s impossible then to distinguish how much comes from the C2 and how much comes from the dual platform. So there is – that’s the reason why we’ve chosen two weeks dual lead in and then at the third component, so that we have a comparison as well dual versus triple in what – how good dual platform is and how much the C2 adds to it. Now homozygous, heterozygous that more has to do then and it is the consequence of the dual lead in where infect for a heterozygous you don’t expect too much of efficacy. So that’s why we said okay putting the heterozygous patients on the two week lead in is something which okay, there is either benefit from them expected. And that’s why we have limited that to one part of the study only. That’s the reason. Thank you.

Great. And then one last follow-up question on CF. On the PELICAN trial I think, the answer to your previous question, you said, if the levels of 2737 that are achieved are sufficient you expect to see good data. I’m just curious in your mind what would be a good additive impact FEV1 on top of Orkambi.

Thank you. So I think in the previous call, I said something around 5% of additional, we view the threshold that we hope to achieve and so let’s stay with that number.

Fair enough. Thanks for taking my questions.

Thank you.

We will now take our next question from Christopher Marai from Nomura. Please go ahead.

Good morning. Thank you for taking the questions. Just first on FINCH 2 with top line data expected midyear. I was wondering if you can comment, if you would be releasing any data beyond the up primary or beyond the ACR 20, any ACR 50, 70 at 12 weeks. And then perhaps could you comment on any of the safety that you see in the ongoing trials of filgotinib maybe talk about any activity or any other signals that may have popped up? Thank you.

Okay. I guess, this one is for me. It’s Walid. Thanks Chris for the question. So with regard to the top line for FINCH 2, this is something that we have to discuss with our partner right now. We don’t have a clear visibility exactly today that we can share with you about what we will be sharing. We have to keep in mind also certain conditions about that would later not be detrimental to us being publishing these data and showing them at major conferences. But there are obviously some important information that we will have to share because they’re important for our company from material perspective. Turning to your other question on the safety. Of course, this is a heightened issue in people’s mind after the outcome also recently. So we will be presenting data from our ongoing open-label study DARWIN 3 at EULAR so that would be week one or eight, so approximately more than two years actually at this point open-label data. So I don’t want to steal the thunder from that but we’re quite comfortable with the data that is coming to date and we’ll be sharing this. But I think our DVT and thromboembolic events rate is still in the low level around 0.1 event per 100 patients here, which will actually quite pleased with so far.

Okay. Great. And then just maybe one more on Isabelle. Can you maybe comment on the recruitment across geographies for that trial and the expectation for standard of care use across geographies? And then maybe comment on any interim analysis that you may be doing futility analysis, when those might occur. And if you’re doing a sample size readjustment at any time/point in that trial? Thank you.

Thanks Chris. So geographies, we’re going to be going global U.S., big EU and also Australia around the world, honestly. But we have to be very careful with the patients that we get in. We have to make sure that the composition of our patients would reflect a standard of care that we see in the U.S. and the big EU five. That’s important because if we are going on top of standard of care we need to make sure that the standard of care that these patients are receiving are similar to our standard of care for the U.S. and the European country, so that we can be able to extrapolate with that patient group. With regard to futility analysis, yes indeed, I think it’s important for us as much as we are confident in our data from FLORA study it’s still a smaller study of a shorter duration. And now we’re taking a big leap into a robust Phase 3 program 1500 patients total for at least one year duration in this program. So it’s important for us to include a futility analysis in the event that we’re making the wrong call and the data from FLORA are actually were a fluke so to speak. So we will be conducting this. We haven’t yet precisely nailed the number of patients we need to have before we do it. But currently our thinking is, when we have about a quarter of the patients enrolled and gone through one year of treatment. We will take a – we’ll do a futility analysis, which will allow us to decide whether we should stop, if we have a futility across both doses or continue with the trial at least one dose is not futile. That’s the current plan. We do not have any plans to do sample size re-estimation based on variability, we’ve used the totality of the data from the – we were fortunate that there’s a large database filgotinib -- to give you a sense from their placebo arm but also from the treatment arm about the magnitude of the variability and standard deviation and we’ve used that full standard deviation specifically it’s 270 ml. If you guys are interested to be able to draw our sample size based on that.

Great, very helpful. Thank you.

We now take our next question from Matthew Harrison from Morgan Stanley. Please go ahead.

Hi. This is Vikram on for Matthew. So we had a question on MOR106, could you just update us on the subq formulation work you’re doing. And if you could let us know if the study that’s being conducted later in 2018 is that going to be using the subq formulation or not. Thanks.

Okay. Piet, here I’ll take the question on MOR106. So MOR106, we plan a couple of studies this year. So the first study that will kick-off and very hopeful over the coming weeks first patient that moment we will announce as well the design. It will dose range of Phase 2, where we have five doses and placebo the rest will be an IV study. And so in parallel to this Phase 2 study, we will start first into [human subq] as well this year. And so the idea is that subq study will both run as a single-dose in healthy volunteer as well in multiple dosing patients. And then the idea is to bridge the subq data from the patients with the IV data of the dose ranges to select subq doses for further development. So we’ll run both subq and IV studies this year, that’s a short answer.

Okay. Thanks.

[Operator Instructions] We’ll now take our next question from Katherine Xu from William Blair. Please go ahead.

Yes, good morning. I’m just wondering with regards to the cystic fibrosis program. Can you provide some color on why the delay in UK on start of triple FALCON study. And then does that impact the strategy on the rest two triples or they are on-track and then if you could provide timelines on those that will be helpful? Thank you.

So the questions were difficult to understand. So I’m assuming the first question was on the approval time for the FALCON study.

Yes.

Yes. So over recent years I think we’ve shown that typically we are quite reasonably good estimates of starting up timeline. FALCON fall a bit outside those estimation. So withdrawal effect -- I can’t point to a specific reason, we’ve been in contact with principal investigators in the UK. He’s been to the ethical committee as well and in fact, if you see what type of questions we did receive there were more standard questions that we could answer quickly. But for one or the other reason we don’t know why the formal procedure to get [a site] approval took a bit longer than we normally have. And then you were questioning on balance for the other triple. So the PELICAN study that is on track, so we will report out Q2. Then we plan as well to start up another triple study where 3067 is a [indiscernible] so this will be a bigger study with those ranging components of both 3067 and 2737. So we are on plan there so we’ve been asked, that we are competing the Phase 1 package for the triple both – in healthy volunteers. And we’ve been discussing those data with review authority, we'll file soon the trial application as was then previously. Those dates are what we have been given before. Thank you very much.

Thank you.

It appears there are no further questions. So I’d like to hand back the call to the speakers’ for any additional or closing remarks.