Welcome all to the Galapagos Capital Markets Day and Third Quarter Results. This presentation is webcast and accessible via the Galapagos website home page. The presentation 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 of the pipeline in our company and possible changes in the industry and competitive environments. Because these forward-looking statements involve risks and uncertainties, Galapagos' actual results may differ materially from results expressed or implied in these statements. We start today with a strategic and financial update, followed by a deep dive in our efforts in oncology. Next, we'll discuss our immunology franchise and commercial capabilities, followed by Q&A. And with that, I'll now turn it over to Paul. Thank you.

Well, thank you, Sofie, and welcome to the Galapagos R&D Day. Happy to be here in New York today and thank you for joining. My name is Paul Stoffels. I'm the Chairman and CEO of Galapagos. I'm a physician, scientist and headed R&D at J&J for the last 12 years before joining -- before I retired from J&J at the end of last year. In April this year, I took over from the CEO, Onno van de Stolpe, and have been working with the teams on the renewed strategy since then. I cofounded Galapagos back in 1999 as a target discovery company and have been working alongside Onno over a long time, but this was done at a time before the human genome was sequenced. So it was, at that moment, a transformational company with a breakthrough new technology. And the company was successful in putting its first medicine on the market, Jyseleca, in Europe, which was a big achievement for a company to go end to end, from a start of a new target to getting a product on the market. Galapagos evolved from a target discovery company to a fully integrated biopharmaceutical company over the last 20 years, focused on small molecule drugs in fibrosis and inflammation. Today, we will talk about our plan to accelerate our path to new medicines, focus on our strategy on immunology and oncology and broadening our platforms, including biologics and CAR-T. We will expand external innovation efforts to bring new medicines in late preclinical or early clinical to Galapagos. And this should result in a strong late-stage portfolio in 2028 and potentially already one new medicine on the market. Last but not least, we continue to build on a strong relationship with Gilead to commercialize outside of Europe. Next. While we were…

Thank you, Paul, and good morning, everyone, here in New York, also from me, and good afternoon for those of you that are in the webcast in Europe. Thanks for joining. Let me say a few words about the financials, about capital allocation, but it's also our Q3 release. So there's also a bit of, I would say, corporate housekeeping here in terms of clarifying the numbers for the Q3 report that went out yesterday. So first, I always start -- let me see if I can get this working -- yes, with the cash balance, EUR 4.4 billion at the end of September. A very healthy cash balance, obviously, for our company. We reiterate our guidance for the year, still between EUR 480 million and EUR 520 million, as we announced at the end of Q2. Our cash burn itself over the first 9 months has been EUR 340 million. And you see two additional impacts that sort of wash out. One is that we have had the benefit of the dollar appreciation over the first 9 months of the year that has offset the investments that we've done in -- on acquisitions, most notably the acquisitions for CellPoint and Abound. On the P&L side, revenues, EUR 440 million. That always includes two noncash items that are recognition of accounting revenue for filgotinib and recognition of accounting revenue for the Gilead transaction that we signed in 2019. But there's also now a significant portion here in cash revenue that's coming to be part of our P&L. And we're very proud with the sales number of Jyseleca. We have EUR 60 million of sales in the first 9 months of the year. And with that, we are also increasing further our guidance for Jyseleca for the full year to EUR…

So let me give a short introduction. Thank you, Bart, for the financial review. Does it work? Can I have next slide? We can operate the CAR-T, but we can't operate slides. So -- well, thank you. Well, before we dive into oncology, I just want to give a short top line introduction on what we'll talk today. We have 2 opinion -- key opinion leaders here in the field with us, Rimas Orentas and Sébastien Anguille. They will contribute as experts in the areas and physicians treating patients on what we are doing here. And then we have Tol Trimborn and John Mellors, who will talk about our CAR-T production system in early-stage development as well as our R&D portfolio. But the aim, what I indicated earlier on our 2028 road map, is that we aim to have 3 next-generation cell therapies in 3 years. And in the short term, the focus is on how can we validate the decentral CAR-T delivery model with proven therapies. If you develop new technology, you want to have stability on one of the parameters. And that's -- here, we have 2 therapies which are proven in the clinic and where we are going to use the CAR-T delivery platform in order to be able to show that we can do this on a large scale and bring this to patients. The medium term, the 2023-2025, our focus is on how can we get to best-in-class cell therapies for hematological malignancies. And what we learned today is there is a lot of high medical need still even with the current therapies, which are coming into the market as well as how can we globally scale the CAR-T platform. At the moment, our CAR-T platform is being tested in Europe. Very quickly, we'll be…

Thanks very much, Paul, and thank you, Professor Orentas, for being here. Maybe you can start with a bit of background. We have your profile there, but maybe where your interest in the cell therapy space lies.

Okay. Thank you. Okay. I'll use this microphone. Good morning, everyone. My name is Rimas. And I'm here due to a long-term friendship with Dr. John Mellors and Mitko, Dimiter Dimitrov. I came through the Abound portal. I've been creating CAR-T cell products for quite some time at the NCI. This is now more than a decade ago. Mitko and I created a CD22-specific CAR, which is still best in class. And currently, I'm a Professor of Pediatrics at the University of Washington School of Medicine, although that's not the capacity I'm here today, and I'm also a Scientific Director of a nonprofit called Caring Cross. And our job there is to bring cell and gene therapies to low- and middle-income countries. So I have great interest in excellent CAR-T cells, curative CAR-T cells as well as access to them.

Thank you so much. How would you describe current patient access to CAR-T therapy?

Well, I think everyone realizes that access is a problem, and access is driven by lots of things, both by the ability to produce CAR-T cells to get slots for production, also the cost. So at least 2/3 of the providers or insurers in this country restrict CAR-T access to some degree by how they pay. And just by availability, there's academic studies that are published. I can give you details. It's maybe only 20% of the CAR-T patients who are in Italy actually get a CAR-T due to access issues. So it's production issues as well as cost issues that's driving a real bottleneck in terms of accessibility for this therapy. And that's why I'm excited to be here because I believe there's a Galapagos solution for accessibility.

Thank you. And do you see point of place, as you have called it in the past, or point of care as a potential solution here?

And I think that is the solution is point-of-care manufacturing. Point-of-care manufacturing, not just for biologics, but for drug therapies is not the wave of the future. It is the future. And I think it's going to decrease costs just because of logistics and supply chain and including the providers, not just in the decision process of which drug or which biologic to get, but including the providers in the value chain as well because the hospital or clinic that implements local manufacturing then can decide when, where and how to use it and can actually come up with the cost structure that makes sense for them.

Thank you. And then the question that we always get at Galapagos is, how does regulator look at this? How does the regulator look at point-of-care, maybe specifically the FDA? Do you have any viewpoints there?

Yes. I have a lot. I have specific quotes actually I want to share. I mean Dr. Janet Woodcock, when she was FDA Acting Commissioner said, "We need to enable regulatory procedures that will accommodate new methods" in reference to point-of-care manufacturing of cell products, specifically CAR-T cell products. Peter Marks, Head of CBER, which is the biologics branch, is also looking to enable point-of-care manufacturing of CAR-T cell products. Earlier this spring, the FDA issued guidance for production of CAR-T cell therapies. It's a wonderful document. It's only about, I don't know, 6 or 8 pages. Every question you have about CAR-T cell and regulatory aspects and product quality, it's all in there. Whoever wrote it did a great job, so I just want to call out the agency for it. And it'll actually show you that there's lots of room in the regulatory world for point-of-care manufacturing. And that machine over there, I think, is what we're going to talk about later. But I think that's one of the two major ways that are now market-ready, that are already producing CAR-T cells. That's it. There's two. The U.K. has issued a consultation for point-of-care manufacturing. The point of comment is over, but the U.K. is getting ready to do this. So the U.K. realized is that point-of-care is the way to create accessibility and affordability for CAR-T cell products. Two other European countries. Switzerland is doing a network of local production of CAR-T cells, and they're predicted to drive the cost down by half. And the best-known example is, of course, Spain, which has multiple centers producing CAR-T cells at multiple sites. And in Spain, that's how you're going to get your CD19 CAR-T cell product. It's through this local network of manufacturing, what's it called? It's -- they have prime designation in, [ yes, the RA one ]. So I think point-of-care manufacturing is here. So what are the regulators looking for? How is this a provocative new statement? They're looking for not just a one-off, right? The FDA doesn't want to have 100 different hospitals and clinics each making an IND application, right? So what they're looking for is a framework with a centralized reporting showing that at each of these sites, we're having consistent, safe and effective products. And if you can combat as a single report through those multiple sites, the agency is just waiting for that. And I think the last comment again to show you how ready the agency is, the CDER, C-D-E-R, which is the drug branch, not the biologics branch, has also issued guidance for local manufacturing, right? So this isn't theoretical. The agency is waiting, whether it's in biologics or in drugs to start approving point-of-care production of CAR-Ts and other products.

Thank you so much, Professor Orentas. This is very insightful. Thank you for being here.

All right. Thank you, Sofie.

Good morning to you all. My name is Tol Trimborn, and I'm going to explain you a little bit about our new manufacturing platform that we have established to be able to make CAR-Ts, in our case, more accessible to patients. And as Professor Orentas already pointed out here, we still -- a lot of the patients are still -- that are eligible for receiving a CAR treatment are not getting it. And that's why we came up with a new manufacturing at the point-of-care. So CAR-T patients, the T cells are at the clinical site where this patient is being treated are converted into CAR-T cells and only 7 days later that patient will be able to get this treatment. So it's very rapid. As I said, we currently have a short manufacturing protocol, and it's also very scalable. So makes it very easy if there are more patients or if we enter more products into the pipeline to add more fully automated machines. So it's all based on a machine called Cocoon made by Lonza, our partner, is one example, we're currently provided by Lonza today. We can show you later on how the machine actually works in a bit more detail. But we feel this is very disruptive and then we are the first and only company that's currently developing this at the point-of-care platform in a very centralized way. We have full control of all the steps and everything that's taking place at all these different individual manufacturing sites. But I will guide you through it in a bit more detail. So this is the Cocoon machine that we have decided to work with. It's a fully closed and automated bioreactor that can actually manufacture, in this case, T cells. Of course, it's sterile. So if…

Good morning. It's great to be here back in New York. I grew up in New York. I did my training at Yale, so I feel at home. And it's really exciting to witness that this machine is going to revolutionize therapy and save lives. This is the future. So who am I? I'm the CEO of Abound. I trained and grew up at Yale and Pittsburgh. My co-founder, Mitko Dimitrov, poor guy, everybody butches his name, but he is well-known internationally as an expert in antibody discovery, engineering and application for medical purposes. His antibodies have landed in really good places. So what does antibody have to do with CAR? The binding side on a CAR that directs it to malignant cells is derived from an antibody. I professionally have witnessed the transformation of an untreatable lethal disease, HIV and AIDS, to a currently manageable and life-saving therapy for that disease. And I'm anxious to see that same transformation for hematologic malignancies and for solid tumors. I only have 3 slides, so we'll get through them relatively quickly. So what are our scientific capabilities at Abound? Abound was acquired in June and is a fully owned subsidiary of Galapagos. Well, rapid antibody discovery in whatever format is potentially useful, single chain, Fab, VH, also known as nanobodies. We have proprietary libraries I'll describe on the next slide and incredible expertise in finding the right binder, and we have expertise in designing state-of-the-art CAR-T cells with the help of many individuals, including Dr. Orentas. So we have a proven approach to rapid antibody discovery. We have very large libraries of fully human antibodies as opposed to mouse or llama that tend to be immunogenic. These are fully human derived from over 500 donors. By large, I mean, 1 trillion specificities.…

Thanks, John. Hi, Professor Anguille. We're very excited to have you here today. Sébastien Anguille: Good morning.

Good morning. Especially because you are effectively participating in one of the trials that is currently being run on the CellPoint's device. So maybe could you first say what made you decide to participate in the trial? Sébastien Anguille: Yes, that's right. So my name is Sébastien Anguille, I'm Head of the Division of Hematology at the Antwerp University Hospital and one of the PIs on this CellPoint CD19 CAR-T cell trial. Regarding the reasons to participate, let me first describe the context. We have CD19 CAR-T cell therapies on the market. We know these therapies work. They can save lives for patients with a certain type of blood cancer, especially lymphoma. But nevertheless, despite the fact that we have availability of these CAR-T cells, a lot of lymphoma patients do not get the CAR-T cell treatment. And that was, for me, the main reason to participate. That is there are indeed a lot of patients that still do not get the treatment. We know that only certain types of lymphoma patients, patients with certain types, are eligible for regular CAR-T cell treatments. And actually, this trial allowed us to treat the main types of lymphoma. So more lymphoma types are eligible in this trial. And there is a high need. We know these treatment works also in other types of lymphoma. So that was the main reason actually for us to participate. I will show the story or present a story of Tom, who was the very first patient treated on this trial. And he actually had a type of lymphoma that was not eligible for the current or the regular CAR-T cell treatments. Second reason, and this is more regarding or about the point-of-care model. The decentralized production is a patient like Tom, whose story will be presented soon, is a patient that would never have made it through the centralized manufacturing process because that takes time. It's quite slow. It's a black box. Here, we have more control. We can go very fast, and this is needed in certain patients with a very highly aggressive disease course.

Thanks so much. So if I hear you, the fact that you give power to the physician to rapidly select patients, that's the biggest advantage of the point-of-care? Sébastien Anguille: Yes. I think that's true. You give power to the physician but also to the patient. We become part of the production process of the entire process. And actually, we now drive the CAR. It's not...

The opening sentence. Sébastien Anguille: Yes. It's not putting the patient on a waiting list and hope for the best that we can have the treatment rapidly. For example, with Tom, we needed to go -- we needed to drive really fast. And what we did is actually, in his case, we did the apheresis, so we took out the cells. The data thereafter, we already started his preparatory chemotherapy. And 1 week after we took out the cells, we already gave them back. So in just 1 week, a little bit more, a little bit longer, we already could treat him with these CAR-T cells.

Which compares to what's with the standard of care? Sébastien Anguille: Well, it's not only -- like Tol said, it's not only the production time. Here, it's 1 week, 7-day vein-to-vein time, but it's the entire process, selecting a patient, having him put on the waiting list, waiting for a manufacturing slot, this can last several months in real world.

Okay. So we're all cognizant. It's early days. It's -- we're still in the trials, but can you say something about what you see so far in your clinical study? Sébastien Anguille: Yes. Not going into detail about clinical results, which look very encouraging, which is what we also expect because these CAR-T cell treatments targeting CD19, it works. But for me, my experience is that in the short time frame, this trial is now 6 months going on, we already treated more patients than we did with regular CAR-T cell treatments. And that proves the point, I think, and also proves the need for a decentralized or point-of-care manufacturing process. And maybe because my patient, Tom, actually wanted to share his story. Maybe it's good that we -- because ultimately, we do this for patients. We hope to treat patients and save lives. Maybe we can share his story.

Yes. [Presentation]

Thank you. So maybe say a bit about how the patient is doing today. Are you still in touch with him, I assume so, for the follow-ups? Sébastien Anguille: Yes. His words were prophetical actually because we're now 6 months later, we just recently, a few weeks ago, we did his 6-month PET scan and he's in a complete remission. So he's actually really doing well. If you looked at him there, he was very sick, and now he is doing really well. He's traveling. He's working back again, and he's living actually a normal life.

Thanks so much, Professor Anguille. Sébastien Anguille: Thank you.

Thank you.

Well, thank you, Professor Anguille. There are always people like you with a lot of courage to start, for the first time, a new procedure, new technology in your hospital, but having this type of results is really encouraging. And so thank you very, very much for what you do for the trial, also for your patience, and we'll hope to hear more soon. With this, I would like to introduce Walid Abi-Saab, our Head of R&D, who is going to introduce the immunology topic. Thank you.

All right. Good morning, everybody. Thank you, Paul. Thank you, everybody. It's really been a very exciting half an hour -- the last half an hour, culminating with this wonderful testimonial. So yes, hang in there. Fingers crossed. The future looks very bright and exciting. So let me tell you a bit about the immunology franchise. As you guys know, Galapagos has been very active in this field for the past 2 decades. We've developed a deep expertise. And as you heard in the earlier introduction, we've gone through a series of portfolio assessment and focusing to try and streamline our portfolio and actually focus on medication that will make a big difference to people and add years of life and quality years of life to these patients. And with those foundations, we are moving forward with these key foundations in our immunology portfolio. Of course, filgotinib is on the market and doing very well, and Michele will tell you a little bit more about it in a few minutes. I'll say a few words about it as well. But we also have 2 other key programs that I want to talk about, our TYK2, which is ready to go into Phase II, as you've heard earlier, and our program, the salt-inducible kinase, which is an interesting target that we are now focusing on the next stage of growing it. So with the pipeline that covers from discovery all the way to Phase IV in immunology and the background that we have, I think this forms a very strong second pillar in the strategy for Galapagos as we move forward. So the salt-inducible kinases are -- have been an interest to us for a long, long time. We've developed a deep scientific knowledge of that space. It's a novel mechanism…

Thank you, Walid, and thanks, everybody. Great to be here with you this morning in New York and then connected with the folks in Europe for this afternoon. So let's move to some reflections and observation on how Jyseleca is doing actually today with patients and on the market in Europe, especially. So the profile of Jyseleca is consolidating as the next-generation preferential JAK1 inhibitor and actually being approved in Europe, U.K., Japan, in 2 indications, RA and UC, and actually being the only one approved in both indications with 2 doses, the 100 milligrams and 200 milligrams. And as we expect, also this flexibility in dosing will provide, even more important, with the reflections that Walid also mentioned from the PRAC. That adds, of course, to the convenience of once-daily overall dosing, remembering, so these are patients that are -- have been treated for the past many years with biologics, infusion, subcu injections and, of course, oral is a patient-friendly modality. That adds, of course, to the clinical results from our studies, that confirms the fast onset and lasting activities across the indications and actually adding now with these recent results from the MANTA, MANTA/RAy studies and the CHMP opinion in Europe about the no impact of -- on testicular function. So that was indeed something we had and -- to study. And actually, we are the only drug - we have the only drug, which has been studied for that, which has demonstrated in the studies that there is no such an impact. So this been the profile. But as we launched Jyseleca in these past years, we haven't done just that. Also, at Galapagos, we actually established Galapagos as a commercial operating company in Europe. So we set up in, more or less 2 years, 2 therapeutic…

Well, thank you, Michele. As we come to the conclusion of the presentations, I hope we have been able to give you a good insight on who we are, what we do and how we are changing the company fast forward into a financially sustainable biopharma. Starting in '99, as I said earlier, with novel mode of actions, reaching big step on being able to launch our first drug in Europe and Japan. Now building on that with additional indications as we go forward, bringing in oncology as a new portfolio hopefully by 2028 having 5 pivotal late-stage molecules and one cell therapy drug in multiple indications. Let's hope it is really our objective to be able to do that, and I hope we have been able to show you that the company is capable of doing great things, and we'll work towards that. So with that, I would like to thank all the presenters and our key opinion leaders for the contribution and give it to Sofie for kicking off the question and answers. Thank you.

[Operator Instructions] Susan, I think there's a question here. Okay, Brian.

Brian Abrahams from RBC. Can you talk a little bit more about some of the PK dynamics you're seeing for the CAR-T therapy? And then I guess I'm curious to learn more about the higher peak T cell levels. What you think the implications there might be for efficacy, if you are seeing or expecting to see more robust responses there? And then on the safety side, it seems like you're seeing pretty clean safety with the low dose, but just want to understand the long-term implications for safety as well as durability for the unique PK profile.

I think this is, of course, a very good question. We are very excited about these higher peak levels. And it's a bit too early to tell what the effect will be. And of course, as we set out to -- on this endeavor, to set up this new platform, the key driver was to try to make a better product with some of the key parameters that we changed compared to some of the other, say, companies that are using the early generation one manufacturing processes. So again, shorter, fresh, mild conditions. I didn't touch on that a lot. But good questions. But to be honest, it's very -- yes, of course, in theory, we hope we have made a better product, and this will result in better persistence. Again, we will show data on ASH on the first patients, on the first cohorts, and that will guide you already a little bit better.

Great. And then maybe just kind of bigger picture along those lines. Obviously, you have a close partner who is a world leader in the cell therapy space. So just wondering to what degree you can or plan to leverage your partner's capabilities either in terms of moving the cell therapy program into the U.S. and/or perhaps leveraging some of the constructs and programs they might have to be manufactured using your technology?

We are in constant -- can you hear me? Yes. We are in constant discussion and collaboration with Gilead. They were very instrumental in bringing CellPoint and Abound on board. For Gilead, this is an opportunity for next-gen CAR-T going forward. And at the same time, they are very collaborative in being able to -- enabling us to go forward. So further news on that later as we go forward, but it has been a very positive collaboration so far on this space.

Peter Verdult, Citi. Just a few quick ones. Maybe just starting with Tol. Are we going to see anything in addition to what we saw in the abstract yesterday at ASH in terms of more patients or a longer duration of follow-up? I know you can't talk to the data, but will there be anything incremental when we actually see that data next month?

It's about -- I think we will report on the -- what is it? Roughly 10 patients...

28 days follow-up only.

And yes, some of them have a 6-month follow-up. I had the first one, Tom. But yes, we will report a bit more detail, there will be a poster at ASH.

Yes.

Okay. And then, John, just wanted to know when you hope to be in the clinic with your first antibody or, whatever, bispecific from the Abound platform.

So we started working full time on this in March and by the end of next year.

And then lastly for Paul. Just could you characterize the current environment for doing BD in light of what we've seen happen to the sector, rising interest rates? Just what's the environment looking like at the moment?

Yes. It's -- unfortunately, it's a good time for BD as the markets are closed for a lot of companies, and we are -- we get many inbound calls and approaches for collaboration. So it's -- we are continuously evaluating opportunities at this moment, and more to follow as we conclude on them.

Mr. Phil?

Phil Nadeau, Cowen and Company. Two questions from us, one commercial and one on the pipeline. First, commercial. I know you said that you're satisfied with the PRAC decision for the JAKs. But can you talk more broadly what you think will happen to the JAK market in Europe now post that PRAC decision? Do you think that it will relieve some pressure and there'll be more growth? Or is it likely to shrink the use of the JAKs?

Yes. Shall I take that? Thank you. So what we've been observing this year is that many rheumatologists and gastroenterologists have been very resilient in keeping the use of JAKs during the procedure. And if anything, just they believe in the drug and then they also express the intention to make the discrimination between risk patients and then select which patients actually would take a JAK and for which order of patients then a biologic will still be the better option. There's still great drugs, and they are being used. So I think the positive situation now with the PRAC is that -- and the change in label that will come is that this will clarify, take away doubt, take away speculations that Europe would go the FDA way, which is not. And actually, what we've read from the report is that actually, the PRAC is suggesting something which is very similar to what the EULAR and ECCO community have then published and then communicated during summer, which is, again, putting the physician and the patient at the center and let them decide which is the risk and how to use them. So now very difficult to drop a number and say what will happen with the class as such, but these are the direction that give confidence that the class will remain as a good therapy option for physicians and with the Jyseleca profile also that we'll stay ahead of that class.

Okay. Let's take one more question from the room. Sorry, Phil.

Just a follow-up on the TYK2 pipeline questions. The 2 indications that you've chosen, dermatomyositis and SLE, have been historically very hard indications to develop any drugs. Can you talk a little bit more about your decision to move forward in those rather than indications where maybe there's been more success historically?

Yes. No. Thank you very much. Look, in this space, we've been monitoring it very carefully. I think it comes as a surprise to us, probably to also many of you, the decision with the FDA to essentially not to include the TYK2 as part of the broad black box warning that they gave the JAKs, judging from the interactions we've had before and the way this division has behaved. But predicting people's behavior is always very difficult. And as such, this has actually played a key role in us moving forward. I think we took a decision back about a year ago that it would be, honestly, very risky for us to embark on developing a new drug for psoriasis, starting Phase III at a time when there's that risk and overhang. And at this point, considering also the way the market is and so on and so forth, while one can never say never, I think it has, to a great extent, limited the window of opportunity to go into psoriasis. So when you start looking at other indications, of course, IBD is one big one. And we continue to be very interested in that space. Of course, we're very active in that space, particularly with Jyseleca, as you heard, but we also cannot completely brush aside the failure of deucravacitinib in the proof-of-concept study in ulcerative colitis. So we're still discussing the reasons for that failure with a number of the experts because, again, we don't want to just march into that space. There are various speculations. It could be a matter of dose. It could be a matter of maybe hitting IL-10, which is kind of protective. But until we have a much better understanding of this, we're still considering it, and we're not yet ready to move. Having said that, the other 2 indications, we had much better confidence in our likelihood of success. And actually, we will see what will happen with dermatomyositis once we have results, but the data from deucra in lupus confirms actually our initial plans. And now we're accelerating the path forward. So that's kind of the rationale of how we thought about it and why we ended up with these 2 lead indications, but we're not closing the doors on additional ones as we better understand our likelihood of success and prioritize our investment in the portfolio across the board, not just immunology, but also oncology, as you heard.

Thanks, Walid. Operator, can we open the line for questions, please?

[Operator Instructions] Our first question comes from the line of Dane Leone from Raymond James.

Apologies for not being able to be there in person. Maybe, Paul, you could just take us through your journey since April of evaluating the organization really from top to bottom and making the decisions on strategy that led you to think about allocating significant resources to transition to more of a cell therapy-based organization in oncology versus the long history of immunology and inflammatory research work that you highlighted Galapagos was founded on. The reason I ask that is a lot of us had, I guess, probably hoped that there was a significant compound library available to maybe be harvested for more development work that had already existed at the organization. But at least from the presentation so far today, it seems like that might not be the case. And as you said, going forward, the organization would be more focused on development and possibly external asset acquisition versus homegrown novel targeted identification.

So thank you for the question. Let me clarify that. It's not at all that we discard the whole past. We still have a very strong small molecule research organization focused on immunology, but now also will focus on oncology. And we are in the middle of reshaping that as part of our strategy. And in the next review, we'll definitely come back on that. It is a great compound lab. It is great capabilities in the company to harness that, and we don't throw that away. We will build on that. What we first wanted to show today is that we want to accelerate our pipeline with assets in immunology, which we can -- where we can see the value in the really near future. Second, fibrosis and kidney, as we evaluated that with the team, was a very long path to success and a very high risk path with very limited biomarker and early derisking. And as a company of this size, and now in commercial, we absolutely wanted to make sure we had a certain number of drugs coming in before the end of the decade to grow the compound. If you then move into oncology, then my experience -- my previous life with CAR-T and CARVYKTI was like, wow, this is transformational immunotherapy. Can we do something transformational in Galapagos? And then looking at, yes, we can because with decentralized manufacturing existing targets and in the future, new targets, we could very quickly build out a portfolio in oncology in a different shaped way than a large pharma company would do. And so by bringing CellPoint in -- already in June in the early days, combined with Abound, we acquired the people, the capabilities and the portfolio to be able to accelerate. It was a huge motivation for the whole company to enter the oncology space with people already entering into a clinical trial where the first patient walked in was Tom, and you have like a result in your oncology. And so before going to a big change in the company, you have to balance what you break down, what you do not do any more and what you build on. And I think the whole story is working out really well with the results we see in CellPoint and what we now have been able to do with the portfolio, streamlining the portfolio, the group success with the PRAC, the TYK2, all of that now works out as a strong portfolio for the near future. So that's the short and the long of how we went through it. And I found a very strong organization, very dynamic, very entrepreneurial, and I'm happy to be back in Europe, back home with a fantastic team.

So thanks. Maybe second question from the phone.

Your question comes from the line of Jeroen Van den Bossche from KBC Securities.

Maybe a dual question here. I apologize, but I'll try to keep it very short. First, can you elaborate a little bit more on the choice of going after actual formula of prices for filgotinib? How did you come to that decision? It also being already quite, let's say, busy area. How does it look from the small molecules point of view? To be honest, I'm not 100% aware of it. And then as a follow-up, yes, at the end of the day, you're building now a company in immunology and oncology. You're going after biologicals, small molecules, CAR-T. Those are all very different indications and very different files of sales. How is that going to work? How do you see the organization develop its sales team? And is that going to be more expensive than, let's say, more close areas for an earlier-stage company as Galapagos kind of is?

So I'm going to start with the choice of indication, and I'll pass it on to Michele, because, again, it was a joint effort between R&D and commercial to decide what is the next step for Jyseleca. We clearly had good data in 2 indication where we had a clear proof of concept, ankylosing spondylitis and as a result axial spondyloarthritis, and also in psoriatic arthritis. And when we evaluated our potential going forward and the unmet medical need and looked at the competitive environment, we believe that in axial spondyloarthritis, we had a much better chance of success. And maybe I'll turn it to you, Michele, to address this point further.

Yes. So in axial, there are similar elements of unmet need as actually we'd see more in the IBD scene, right? So a more limited number of mode of actions and actually, so the opportunity for also orals to bring additional options for patients. Also -- well, we -- it was a recurring theme from our interaction actually with rheumatologists that during the launch of RA, when are you coming with axial spond? Why are you not coming with axial spond? And that's actually, so it was a decision that we've taken now after we have the device for that for Europe. And I think actually, it's very important. In fact, we found a way to run a study for approval in Europe at the moment that way. Also, our operational capabilities allow us to launch in axial spond, when the time will come very effectively, leveraging our resources and teams that we have for RA in a similar way that, of course, we can leverage the resources for UC. I mean for your second question, I wasn't sure if I got it correctly. So it was about the actual use of resources for -- across immunology and oncology. Yes, I alluded to that in my presentation. So there is a core -- sorry.

I'm mostly interested in how you're going to build synergies between those people because they do seem quite far apart.

Yes, indeed. So I would say I would distinguish 3 kind of categories of resources. So the headquarter international strategic part, that's normally a more compact team. That -- well, we have already people who have worked both in oncology and immunology inflammation that can also pivot from one to the other, and definitely we'll hire some experts the way we've done in inflammation. Looking at the countries, there are core capabilities, which are, say, the obvious place, I would say, the central in the countries like especially market access and also core or medical affairs there, the whole infrastructure that will be able to leverage. And then there are some specific roles, which are the roles of, you could say, the customer-facing, the MSLs, the sales team and then for the Cocoon we'll see how that also will connect with the Lonza teams. That part will not be, say, shared with the inflammation, but that part also is very small. That tend to be very small. We've seen that we have, like, a few centers per country. So that we can cover with the little teams at a totally different scale, different order of magnitude, smaller from what you need in specialty care for, say, rheumatology and gastroenterology. So in summary, we'll have synergies where it comes more in the central roles. And when it's a more diffused area, we'll have very small teams to cover the oncology part.

Let's move back to the room for a couple of questions. Sebastiaan, I think you have a question.

Sebastiaan from Kempen. It appears to me that success of the CAR-T strategy highly depends on the reproducibility of the Cocoon system across different clinical sites. Can you maybe expand on how many clinical sites you will have during the pivotal trials? Can you also maybe give an indication on what you expect that the different regulators will demand in terms of efficacy, endpoints and the time of follow-up? And then can you also speak to the differences that the EMA and the FDA want? And then also maybe a question for John. I'm just wondering. You also mentioned CAR-Ts in the solid space that you want to go into in that space. Can you maybe speak to the -- what the current hurdles are in that space and how you plan to circumvent those?

Maybe I'll start here. So good question. So as I said, we are ramping up now for the expansion phase to have at least 20, 25 sites up and running and then building on that. So we, in the beginning, on purpose, together with Lonza, decided to not -- to make sure that the quality of all those sites is really high, carefully selected them. And now where everything is set up, our training has gone up. We've boosted that level up. So we'll be opening up at least 10, 15 sites next year and build on that to -- in a commercial stage, at least have 20 to 30 sites in Europe and 20 to 30 sites in the U.S. And then again, it's very scalable, starts to do really well. For example, Ohio treats 400 patients every year. Relatively easy if Lonza has the 3 -- to put 3 there instead of 5 individual cocoons. For us, quality is most important. We've had 20 to 30 sites during expansion at the beginning of pivotal. We can treat a lot of patients. You simply multiply it by 30 to 40. So typically, in a pivotal stage, you need to treat 100, maybe 150 additional patients. So -- and coming back to that question, there is a little bit of difference between EU and the FDA requirements. We're filing the IND now. We have already had discussions with the FDA. We can be -- currently, we cannot answer the question in -- we first have to await the data of the Phase I and the early expansion cohorts to actually enter into a little bit -- into the next level of discussions with the authorities, how a design of a pivotal would look like. But clearly, if you do the analysis, you can see how others have done it. So it's quite straightforward. Typically, up to 30, 40 patients in the early stages, then a pivotal of roughly 100, 120 patients.

Thanks for the question. We could spend couple of hours talking about this. Before I get to solid tumors, we aim to improve durability of response in hematologic malignancy. That's our first goal. In terms of solid tumors, there's SSPP, okay? Specificity of the target for tumor versus host. That's essential because off-target toxicity is very difficult to manage and could be lethal. Sensitivity. We want to be able and we're able to design CARs that detect very few molecules of the target on a cell. So balancing specificity and sensitivity is key. Penetration of the cells into the solid tumor is a major challenge. There are physical barriers to that, and we aim to overcome that. And probably the most important barrier today is preservation of function once they penetrate, and there are various things we can talk about how to do that. The major initial one is prevent shutdown or exhaustion of the T cell. So we rev it up, ready to go, gets into the body, goes where it's supposed to. The door is not open. We need to open the door, get it in and not have anybody else slam on the brakes. And there are various players that try to slam on the brakes. The reason the solid tumor is successful, creating its own niche, is it -- is an immune sanctuary, right? And we need to break that down and there are various approaches to do that. We favor some over others.

Thank you. I think we have another question from Jason.

Jason Gerberry from Bank of America. Paul, a question for you. You had a front row seat really to the challenges that CARVYKTI faced scaling up. And so I'm just curious if you can speak to the point of sight model and how that perhaps is free and clear of some of the challenges that the traditional CAR-T approaches have had or are facing in terms of scaling up? And then as we think about the value proposition of this sort of point of sight model, is it greater in certain geographies than others?

Well, first, on all the first-generation CAR-Ts, people had a discovery process, which they put into an upscaling process, which people put into a manufacturing process, which was multistep, multi-quality control, and therefore, a lot of handling in the labs as well as sending the cells in and sending them back with cryo preservation. So long process, cumbersome. Now some companies have been able already to upscale well and have got a lot of efficiency, but the capacity is limited by the size of the buildings and the number of the people you have in those buildings in the large companies who do it today. So what the point-of-care and the Cocoon can do is instead of the -- of doing this step-by-step, reengineer the whole process into one continuous process, in a fully sterile environment, which takes out the -- a lot of manual handling as well as a separate instrument, which does it all, which you can put -- as was evidenced by Tol and the team, you can put in different hospitals. That takes away building buildings, having a large number of people recruited and whole logistics. And that's why we think and we are convinced that the scalability of the Cocoon is really significant as you can bring it to the hospitals in all parts of the world. Of course, in certain countries, you have good -- like in the U.S., you have good distribution and for CAR-T sending around. So it will stay next to each other, the central manufacturing and the decentralized manufacturing. Where it will be a difference is also in the rest of the world. If you go to the whole of South America, the whole of Asia or the Middle East and other countries, has very limited access today, while there is as many -- as much need as in the West. And therefore, we'll see how it goes, but the process -- the Cocoon is absolutely adaptive to the fact that it could go in different countries, and we can build on that. So it's a, yes, next-generation process, which was not inhibited by the old thinking on step-by-step, reengineer the process and had the right tool to do it in an integrated way. That is a short and the long of it.

Thank you. So we'll take a question from Matthew, and then we'll go back to the phone line.

Okay. Great. Matthew Harrison, Morgan Stanley. I guess 2 for me. So one, Walid, just on SIK. I guess it wasn't entirely clear to me. It sounds like you're hoping to achieve proof of concept in RA, but then you'll go back and look for another compound with better qualities to potentially move it ahead. And I guess the same thing on SIK2/3 targeting. Any sense for where those compounds are preclinically at least? And then the second one is just for Bart. As we think about sort of the bridge to 2028 as you're thinking about spend, I guess one of the questions I get a lot is just if you -- I mean -- I guess the real question is, I mean, are those the parameters that you would expect to be in, in terms of not really -- having a little bit of flex on R&D, but not a tremendous amount of flex on R&D? Or is there a reason where you would flex R&D pretty dramatically and ramp up the spend somewhat significantly versus where you are?

All right. Thanks, Matthew. So look, I think -- as you know, the company over the past 12 to 18 month has gone into a sort of self-reflecting period, and the salt-inducible kinase has been a major program with us that we had to reevaluate our investment there and the speed with which we're bringing molecules and why they're failing in the clinic. I'll spare you all the details. We can discuss it offline if you want. But the bottom line is that what's very clear to us is there are some inherent criteria that we need to improve about the compounds themselves. I'm talking like simple things such as a better therapeutic index, no drug-drug liability, no QT liability, no cardiovascular risk, those elements, which are inherent to the molecule itself and not the target, but there are also certain learnings that we got about the targets and where are challenges in development. So we decided, and I think you've seen the evolution of our portfolio, that a number of the molecules that we had already in there as potential to move in the clinic when we apply these new set of criteria and really set ourselves the higher standards to move forward so that they don't crash after Phase I, a lot of them actually fell out. And then we need to come up with better molecules. So we're faced with the decision. So you wait until the next molecule comes, which could take another year or 2, or actually, you test the hypothesis with a molecule, which actually can test the hypothesis. And you can never say never because depending on the result, it's all a risk-benefit assessment that we need to make. But it's important for us to say that '4399, there are some liabilities that it has. I will mention potential drug-drug interaction that will make it less likely to be able to be successful to move forward. But all of this will have to be evaluated at the end of the proof of concept. Having said that, we believe that the proof of concept will generate extremely important data to test some of the fundamental hypothesis that we've been working on and moving medications -- compounds from discovery into development. And if we are on the wrong path, that this will have a major implication for the whole platform. And therefore, it will teach us tremendously. And potentially, if we're heading the wrong path, it might be time to say, okay, stop it, guys. We're not going to continue here, because up until now, we've kept on investing a lot without having the benefit of the return and learning. And now we did. Time out. Let's do a check. So it's very important that our investments right now are targeted. We're not just marching as we've done before and throwing everything at it, including the kitchen sink. Actually, we're taking a measured approach to do that. So I hope this addresses your question.

Let me take the second part of the question in terms of R&D spend. Maybe distinguish, Matthew, between, let's say, what I showed on 2024 as opposed to 2028. Obviously, if you're looking at the shorter term, 2024, let's say, any variances compared to what I was showing should be rather moderated. The one caveat that I would put on the table is that if there's business development, things can be different, right? If you do an acquisition, and that acquisition comes with a good investment case that will come on top, we will not be necessarily able to then completely replace that from the existing envelope. But indeed, in the shorter term, the R&D spend should be in the range of what I was showing. Where you go to 2028, it becomes very difficult to predict. I think that was more symbolical of, I think, where the company is going. If we have a chance to get the cash from Jyseleca in, I think it will significantly help us to fund our R&D operations. But let's see where we are by that time in terms numbers of pivotals and in terms of numbers of molecules in the pipeline to define the precise burn in 2028.

Thanks. Operator, can we have a question from the line, please?

Our next question comes from the line of Emily Field from Barclays.

Sorry, I couldn't be there today. Just 2 questions from me. The first being, I know you mentioned string of pearls earlier. That's a strategy that's worked for a number of companies in the past. I was just wondering if you could give any more details perhaps on the length of the string or the size of the pearls, i.e., sort of what size deals would be a right fit? And how many do you think of them you could take on given this new movement into cell therapies, the company has got a lot going on? And then secondly, just on the BCMA CAR-T, assuming success in the CD19 efforts, could that have a faster speed to market? Would you have to bring on a lot of incremental sites and capacity to move that forward? Just kind of thinking about that in context of being behind the CD19.

Yes. Thanks, Emily. Let me take -- Emily, thanks for the question. Let me take the first one on business development. I think what I heard you ask was to give a little bit more feeling to what the size of any type of BD could be. Look, what we're trying to signal, I think, is that we are not intending to come out with a suddenly multibillion dollar acquisition. That's not in the books. It's not the way we want to build the company. We think and Paul called it the string of pearls approach. We think it's much more sensible to add selected assets to our pipeline. This can be through M&A as well as through licensing, but we will do it on a measured scale. I.e., this is on really the sub EUR 1 billion level in terms of cash layout. And we'll be very, very careful in doing so. Cash is an extremely important asset for the company. Let me emphasize that one more time. Even if the market for BD currently is good, if you're on the acquisition side, we still want to make sure we get good value for money here, both scientifically and in terms of financial investments. So maybe for the CD19 speed to market, why don't you take that one, Paul?

Well, I think the BCMA -- was the question on will that be able to go faster. Once the center is accredited and validated for making the CAR-T for the CD19, it's easy to add new CAR-Ts -- to new Cocoons to facilitate additional clinical trials. So it will definitely benefit the speed of being able to do new studies, will benefit from the fact that we have the frontrunner CD19 now paving the way in different countries with the regulators as well as in all the hospitals. So we hope that, that will be a smooth and fast pathway for BCMA.

Thanks. I'm just checking if there are more questions in the room. Then, I think we're good to go. So our next financial call is on February 24, 2023. I would kindly invite you - Tyrza, maybe you can stand up and wave. So Tyrza with the CellPoint team joins to showcase the CellPoint -- the Cocoon. So please, by all means, go have a look, it should be fun. We did a lot of effort to get it here. So please go check it out. Thanks very much, everyone. Paul, do you want to?

Yeah. Thank you.