Good day and thank you for standing by. Welcome to the Galapagos First Half 2024 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be the question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Sofie Van Gijsel. Please go ahead.

Thank you, operator, and welcome all to the Audio Webcast of Galapagos H1 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 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 and 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 the results expressed or implied in these statements. Today's speakers will be Paul Stoffels, CEO; and Thad Huston, CFO and COO. Paul will reflect on the first half of 2024 and discuss our pipeline and programs. Thad will provide a financial and operational update and discuss the outlook for 2024 and present concluding remarks. You will see a presentation on screen. We estimate that the prepared remarks will take about 20 minutes. Then we'll open it up to Q&A with Paul and Thad, joined by Jeevan Shetty, Head of Development Oncology. And with that, I'll now turn it over to Paul.

Thank you, Sofie, and good afternoon everyone. I would like to start with bringing back this slide that we showed at our first quarter results, summarizing our vision and our strategy to drive value creation for all stakeholders. We transformed Jyseleca and successfully transformed Galapagos into a pure-play biotech with a revitalized pipeline and we are investing in the elements that we believe we need to make our strategy successful. We focus on our key therapeutic areas, oncology and immunology, where significant unmet medical needs remain for patients. Our strategy is to spearhead our efforts with indications that have breakthrough designation potential in oncology and immunology and we are building a broad pipeline of potential best-in-class cell therapies and small molecule drugs. We put in place strong leadership with a track record of delivering transformative drugs to patients around the globe, taking a collaborative approach combining internal and external innovation. And finally, our strategy is supported by a strong cash position of EUR3.4 billion at the end of June 2024. We are building a pipeline and a manufacturing network to support our cell therapy vision and we are optimistic that it will enable us to accelerate future growth. In the first half of this year, we delivered on a number of important milestones. Let's start with our regulatory achievements. We are pleased to share that we have submitted the IND for the FDA for ATALANTA Phase 1/2 study of 5101 in refractory/relapsed non-Hodgkin lymphoma. Obtaining regulatory approval is a crucial step to conduct clinical trials with our cell therapies in the US, which is a key element of our growth strategy. We submitted a CTA with the European Authorities for the EUPLAGIA Phase 1/2 study of 5201 in refractory/relapsed chronic lymphocytic leukemia and Richter transformation. We made important clinical progress…

Thank you, Paul, and thanks everyone for joining today. Let's take a look at the financial results for the first half of 2024. During the first half of 2024, we have worked on strengthening the foundation for future growth. We divested Jyseleca, which enabled us to focus on our priority programs and invest in our pipeline in building our global cell therapy network. You will see our strategy reflected in our financial results. In January of 2024, we transferred the Jyseleca business to Alfasigma, as a result the Jyseleca results moved to discontinued operations. For our continued operations, revenue remained fairly stable year-over-year and mainly consists of the linear recognition of the platform for the Gilead collaboration. A small part is coming from the remaining Jyseleca royalty income and inventory sale of the product to Alfasigma. As explained in our Q1 earnings call, we see an increase in R&D costs as compared to last year, which is mainly driven by our investments in oncology, both in cell therapy and small molecules. We reported a net profit driven by fair value adjustments in Forex as well as EUR49 million in interest income. Also we reported net profit from discontinued operations of EUR71 million, mainly driven by the one-time gain of EUR52 million for the Jyseleca transaction with Alfasigma. Now over to our 2024 guidance. Excluding business development activities to-date, we reconfirm our full year cash burn guidance of EUR280 million to EUR320 million. The updated cash burn guidance accounting for the deals that we executed in the first half of the year is EUR370 million to EUR410 million for 2024. This is mainly driven by the Adaptimmune collaboration which accounts for EUR79 million. We reported an operational cash burn of EUR250 million in the first half of 2024. Note that this…

Thank you, Paul and Thad. That concludes the presentation portion of today's audio conference call. I would now like to ask the operator to open up the line for Q&A.

Thank you. [Operator Instructions] And now we're going to take our first question. And the first question comes from the line of Brian Abrahams from RBC Capital Markets. Your line is open. Please ask your question.

Hi, there. Thanks so much for taking my question. Congrats on the progress. I'm wondering if you could maybe talk about some of the key aspects that you were able to kind of get through with regards to manufacturing site readiness, QC to get the FDA, I guess, over the line and facilitate IND submission for 5101. And then kind of along those lines curious, what's left to be done for 5202 in order to facilitate that IND filing? Thanks.

Yeah. So we've been working actively, obviously, to prepare for some time with the tech transfer to Landmark Bio to help set up the IND filing. We have completed that process and have just recently submitted the IND.

Let me add, Brian, we had multiple interactions with the FDA pre-IND submission in order to be able to understand what the expectation was and so we could optimize our proposal for the FDA. And we just now submitted and is being evaluated and we'll follow-up as we get more questions through the process and hopefully finish this within the timeframe.

Then we anticipate we're going to file the 5201 later this year.

Yeah. We first had to get, like we said before, we first had to have the transfer of technology to Landmark Bio. And so the second one, as we complete the first one, we'll start to continue with the second one hopefully before the end of the year. That's the goal.

Great. Thanks so much.

Thank you. Just give us a moment. Now we're going to take our next question. And the next question comes line of Philip Nadeau from TD Cowen. Your line is open. Please ask your question.

Good morning. Thanks for taking our question. We just had one on the Parkinsonism that you mentioned for 5301. Is that similar to what's been seen for the other BCMA CAR-Ts? Any difference in the severity or quality of the side effect? And can you go into a bit more detail about the protocol amendments that were submitted? Were those changes to monitoring or were there dosing changes recommended? Thanks.

Thank you. Thank you very much for the question. With regard to the PAPILIO study and the case that you're describing, it is a feature of patients increasingly more so with the increasing use of BCMA-targeted CAR-T therapies is becoming more recognized. We haven't seen anything in this particular patient which was an atypical patient presentation that is different from what is out there in the limited literature that there actually is. In an abundance of caution, we ourselves undertook to pause the study and really interrogate this particular patient history. And we did this by internally reviewing all the components of the patient's characteristics as well as seeking external guidance and advice. And it's consistent with what has previously been recognized. We have undertaken a number of steps, additional specific safety measures. So moving forward, we feel very comfortable with the continuation of the study and in fact have submitted the protocol to the EMA in June and we anticipate resuming the recruitment imminently. I concur with you that the changes that we've made are to components of monitoring and I hope that answers your question.

That's very helpful. Thank you.

Thank you. Now we're going to take our next question. And the next question comes from the line of Judah Frommer from Morgan Stanley. Your line is open. Please ask your question.

Yes. Hi, thanks for taking the questions and congrats. Just a couple on Adaptimmune. I guess, first, just any thoughts you can share on how the first-gen afami-cel asset may have influenced your decision to partner on the next-gen asset? And then secondarily, I guess, from a size perspective and from an indication perspective, I think, you said this is fairly indicative of what business development efforts could look like going forward. Just could you be a little more specific on whether that's modality indication or just the size of the deal? Thank you.

Yeah. Let me say we were very impressed with the Adaptimmune team as well as with what they have been doing in the clinic and the result on afami-cel. As we saw that initially 12 months ago, even 15 months ago when we started the discussion on the TCR-T, which peaked their interest since a long time. And so that led to evaluating whether we could produce the TCR-Ts on our platform. We took about 12 months to do that and came out with, as I said in my prepared remarks. Well, there's some feedback here, in my prepared remarks that the phenotype which could create in our seven-day production process was very encouraging for potential additional benefit with the TCR-T product. That led us to a further discussion and conclude a collaboration on uza-cel, starting with head and neck where they had their initial data. As I remarked on four out of five patients are responders and there we are starting now collaborating on expanding those studies and working together on uza-cel. But, yes, afami-cel was a very important driver for us to start a discussion and led to the conclusion.

Yeah, I would just add, I think, I mean, to me, it's clear that business development is going to be key to broadening our portfolio. And, of course, doing great licensing deals with great partners like Adaptimmune is one way to do that. We also continue to look at doing acquisitions as well and to try to find potential partners. We see that we have and are building a nice pipeline in cell therapy as well as small molecules. You also see our early pipeline in discovery can really be complemented through business development activities as well.

Thanks.

Thank you. Now we're going to take our next question. And the next question comes from the line of Brian Abrahams from RBC or maybe his colleague. Please ask your question. Okay. Just give us a moment. There are no questions from this line. Now we're going to take our next question. And the next question comes from the line of Jason Gerberry from Bank of America. Your line is open. Please ask your question.

Hey, guys. Thank you for taking my questions. Just one quick follow-up on the protocol amendment. It sounds like I just want to confirm this is more to do on the monitoring side rather than the mitigation side as I guess the understanding out there is that there's limited strategies you can incorporate to mitigate the severity of the parkinsonism. And how many patients did you dose with 5303 before you saw it? And with the onset of action consistent with what we've seen with other CAR-Ts, which is typically kind of 90 days to 120 days after the infusion? Thanks.

Yeah. Thank you. Thank you for the question. Yeah, just to reiterate the, with regard to the changes made to the protocol, they are indeed to do with monitoring and to more closely follow the history of patients. As I said, this was an atypical patient, and the neurological component of monitoring has been further fortified. We will share imminently. Clearly, the study is about to be reinitiated. We will share all of the data regarding safety, efficacy, patient numbers in 2025.

Thanks.

Thank you. [Operator Instructions] And now we're going to take our next question. And the next question comes from the line of Sean McCutcheon from Raymond James. Your line is open. Please ask your question.

Hi, guys. Thanks for the question. Can you speak to the BridGene SMARCA2 project and the BridGene approach as it compares to the other assets in the space? So maybe more broadly the landscape in SMARCA2? And then beyond that, what's your view on the opportunity within SMARCA4 loss-of-function mutation, which drove you to select SMARCA2 as the first target molecule for the collaboration? Thanks.

Thank you for your question, Sean. As you know this SMARCA2, it is a dependency in the SMARCA4 deficient non-small cell lung cancer population. So we think 4% to 8% of the population, in fact. So the big challenge really is determining the selectivity against the SMARCA2. The problem of toxicity is quite well known, particularly cardiovascular, in essence. And so looking at our approach, which is really about how best to innovate and using combinatorial skill sets, the strategies that we have -- we are familiar with are really PROTAC and you know other companies that are in the space. We have a certain expertise in small molecule oral ATPase. So the strategy what we propose is really using the best of our own internal capabilities and knowledge and the best partner, which we believe is BridGene with the PROTAC. So really leveraging BridGene's PROTAC expertise with our own internal innovation machine and specifically the selective small molecule ATPase expertise. And so our intention is to build the best-in-class oral selective PROTAC and to accelerate time to patients. We believe whilst there are a number of companies working on different parts of this approach, we are combining both to what we believe will be a best-in-class product for patients. More widely, we have a significant pipeline of small molecules which we will share more information with you in the coming months and years.

Yes, as Jeevan is saying we have set up a team, which is focused on best-in-class targets, combining a lot of expertise brought together by different experts on platforms and especially small molecules. In addition, we have the CAR-T platform, but we are -- we'll start to disclose this as soon as we go into the clinic with the first ones. At the moment, we consider this as a competitive edge from our side, do not disclose yet what type of approaches we take to the new targets we have chosen.

Thank you. [Operator Instructions] And now we're going to take our next question. And the next question comes from the line of Jacob Mekhael from KBC Securities. Your line is open. Please ask your question.

Hi, there, and thanks for taking my question. I just want to come back to the adverse event that was seen in the multiple myeloma trial. Just curious, what happened to the patient and if that adverse event was reversed. And perhaps a follow-up on that, given the competitive nature of the multiple myeloma space, how much of a priority is 5301 compared to your other programs? And does this adverse event scene change how you think about this program at all? Thank you.

Yes, we have a principle, and I think it's a clinical principle, that we can't share private data on individual patients so that we can't share the status of the patient at this moment. So what -- this is the first part of this study with a dose-finding. So we evaluate further on, as the study restarts, what the doses and the safety efficacy profile will be with the fresh cell therapy production approach. And based on that, we evaluate whether there is a future for the product in the competitive landscape of the BCMA. Of course, what you have seen with CLL and NHL data, as I presented, we see very encouraging data in very advanced patients who really can benefit from our approach, close to the patient, fast access as well as a high-quality cell therapy which can be given and that resulting in good safety and efficacy. And so the 5101, 5201 are key priorities. With 5301, we are evaluating the benefit, risk-benefit safety, and we'll come back to that with the first when we have the dose findings done. So all focus on making sure we start in the US, we start our next studies in Europe, and trying to get our critical studies all started in '25 and still focusing on submission and approval in '28. Yeah. So that is the goal what the top priority for us.

Okay. Thank you.

Thank you. [Operator Instructions] Dear speaker, there are no further questions. I would now like to hand the conference over to Sofie Van Gijsel for the closing remarks. Please go ahead.

Thank you, operator. Please feel free to reach out to the IR team if you still have questions. Our next financials results call will be our Q3 2024 results on October 31st. Thank you all for participating and have a great rest of your day.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.