Galapagos took a 228 million euro ($269 million) hit last year as it began to close its cell therapy business, but the Belgian biopharma is confident it can stabilize its finances by the end of the year.
The company announced in October that it was backtracking from cell therapy, only 10 months after planning to focus on this modality while spinning off another company to “build a pipeline of innovative medicines.”
Galapagos CEO Henry Gosebruch explained to Fierce Biotech in November that these plans had fallen through due to issues with the spinout structure. Galapagos tried to ship its cell therapy pipeline around to “all the strategic players,” Gosebruch told Fierce at the time, but “none of them had an interest to really go look at our business in a serious way.”
Faced with limited options, Galapagos decided to wind down the cell therapy business, which was expected to affect about 365 employees across Europe, the U.S. and China. Two facilities in the U.S., as well as one site each in the Netherlands, Switzerland and China, were also scheduled for closure.
As well as the impairment loss of 228.1 million euros from the cell therapy wind-down, Galapagos estimated that the layoffs resulted in severance costs of 33.3 million euros ($39.2 million) last year. The early termination of collaborations also dented the finances by 16.3 million euros ($19.2 million), while “deal costs” accounted for another 10 million euros ($11.8 million).
The retreat from cell therapy is expected to be completed by the third quarter and will leave Galapagos with between 35 and 40 employees spread across its headquarters in Mechelen, Belgium, and its U.S. hubs in Chicago and San Francisco.
Despite the restructuring costs, Galapagos Chief Financial Officer Aaron Cox said the company remains “robustly capitalized” with around 3 billion euros ($3.5 million) in cash and investments.
“This strong financial position underpins our ability to act decisively and allocate capital in a disciplined manner as we evaluate business development opportunities,” Cox explained in the earnings release.
“Following completion of the wind-down of the cell therapy activities, we continue to expect to be cash flow neutral to positive by the end of 2026 excluding any business development activities and currency fluctuations, and anticipate a 2026 year-end cash position in the range of 2.775 billion euros [$3.27 billion] to 2.850 billion euros [$3.36 billion],” the CFO added.
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Gosebruch explained to Fierce back in November that with the backing of Gilead Sciences—which owns 25% of the biopharma—Galapagos is seeking out clinical-stage assets in the immunology or oncology spaces, although “obviously not cell therapy.”
In yesterday’s release, Gosebruch said Galapagos is “pleased with the momentum we have built to date and will continue to apply a selective approach in pursuing the right opportunities and the right transactions.”
“Through disciplined capital allocation, we aim to build a pipeline of novel therapeutics that can deliver meaningful benefits for patients and create long-term value for shareholders,” the CEO concluded. “We are off to a strong start, and I am excited about what lies ahead.”
