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Galapagos: a new force in drug discovery

Galapagos: a new force in drug discovery. Onno van de Stolpe – CEO IEX Beleggen in Biotech Dag May 20, 2006. 2005 – The year of ‘bold moves’. May: IPO on Euronext Brussels & Amsterdam September: Successful bid on BioFocus – listing on AiM. 2005 – The year of ‘bold moves’.

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Galapagos: a new force in drug discovery

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  1. Galapagos: a new force in drug discovery Onno van de Stolpe – CEO IEX Beleggen in Biotech Dag May 20, 2006

  2. 2005 – The year of ‘bold moves’ • May: IPO on Euronext Brussels & Amsterdam • September: Successful bid on BioFocus – listing on AiM

  3. 2005 – The year of ‘bold moves’ Offer on BioFocus closed Offer on BioFocus unconditional Bid on BioFocus Raises € 22M with IPO + 32% Up 32% since IPO, market cap ~ € 115M biotech IPO Europe 14%, US -10%

  4. Share capital & history • Founded 1999 by Crucell & Tibotec • € 23 M financing: top tier VC’s 2002 • IPO: € 22 M raised • BioFocus acquisition: 29% of Group shares VC's - VC's Abingworth - Apax 11% 10% VC's -Alpinvest 4% VC's -Burrill 7% Free float 50% Crucell 9% Tibotec 9% • Shares: 13,050,743 April 2006

  5. Galapagos: from protein to drug ClinicaltrialsI, II, III Preclinicaltesting Target identification Target validation Leadoptimization Assay development Screening Identify chemical compound that binds to protein Find human protein responsible for disease Develop compound into drug candidate Test drug candidate Too much/little of target protein Correct level of target protein

  6. Galapagos group – business model Partnering in: NL & UK 160 employees pre - clinical phase I phase II fee for service offering Proprietary € target & drug discovery platform bone & joint diseases novel drug candidates Belgium 60 employees therapeutic programs

  7. High value deals within reachBioFocus participates in € 3- 4 B drug discovery service market BioFocus: gene-to-candidate-drug capabilities ClinicaltrialsI, II, III Preclinicaltesting Target identification Target validation Assay development Leadoptimization Screening • Market set to grow at > 18 % growth per year • Pharma key drivers R&D outsourcing: • focus on core competencies • access novel technologies • improve speed to market

  8. From idea to preclinical candidateTurnkey deal negotiation: multi year alliance • target identification • assay development • screening • medicinal chemistry • preclinical development Time per phase To targets 1.5 year To Proof of Concept 1.5 year To drug candidate 2 years

  9. Galapagos internal programs Ageing population Diseases Bone & joint diseases Osteoarthritis Underserved medical need Rheumatoid arthritis Osteoporosis market estimate: €21 billion

  10. 2006-2007 2007-2008 2009 2010 2011 2013 Road to a new drug Scenario for Galapagos RA program Lead optimization Pre-clinical studies Phase I Phase II Phase III Phase Year out licensing to big pharma

  11. RA program: from target to drugSmall molecules inhibiting cartilage degradation screened genes 4,611 Inhibition of cytokine-induced MMP1 323 Inhibition of cytokine-induced collagen degradation 192 LPS/TNF profiling 152 IP/literature/drugability/safety profile 48 Expression profiling/knock-in validation 14 Targets to enter drug discovery, including target GT418

  12. Proof of Principle in RA RA mouse model treated with Galapagos molecule (40mg/kg, oral) 100 80 60 % cytokine 40 20 0 Treated Treated Treated Treated Untreated Untreated Untreated Untreated IL-4 TNF-a IL-6 GM-CSF Significant reduction in disease-causing cytokines Minimal impact on other cytokines

  13. From target to Proof of Concept • Discovered protein responsible for RA in human primary cells • Identified molecule that binds to protein • Chemical molecule effective in mouse RA model • Reduction in cytokines • Reduction in paw swelling development Improved chance that molecule will be effective in human RA patients

  14. Acceleration at a glance R&D EXPENSE CASH POSITION REVENUES in € millions in € millions in € millions 23.6 9 25 12 11.2 8 10 20 6.7 7 7.8 5.4 6 8 5.4 6.5 15 13.0 5 6 10.3 4 10 3 4 2 5 2 1 0 0 0 03 04 05 03 04 05 03 04 05

  15. Group revenues guidance in € millions 25 - 30 30 25 20 15 10 5 Galapagos 2006 Guidance on 40-70% growth on pro forma 2005 17.5 7.8 6.5 03 04 05 06

  16. R&D expense drug discovery in € millions 9.0 8 6 4 2 Increase in R&D 2005: 24% 2006: 34% (guidance) 6.7 5.4 5.4 03 04 05 06

  17. Become Europe’s leading biotech • Bring own products into clinic • Grow service business through organic growth and acquisitions • Establish strategic alliances through turn key deals with big pharma • Use BioFocus as cash generator for internal development

  18. 2006 outlook • Drive internal drug discovery programs • Lead optimization RA • Proof of Concept in OA and/or OP • Strengthen pipeline • In-license candidate drug, or • Acquire product company • Sign turn key alliance with big pharma • Grow service business through organic growth and acquisitions • Grow revenues with 40-70% Strong newsflow

  19. Analyst recommendations • Fortis Buy € 12 Geraldine O’Keeffe • KBC Outperform € 10.5 Christophe Van Vaeck • Kempen Buy € 12 Mutlu Gundogan • Rabobank Hold € 9.5 Mark van der Geest

  20. www.glpg.com

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