Galapagos (NASDAQ:GLPG) executives used the company’s year-end 2025 financial results call to outline a strategic reset centered on business development, following a decision to wind down its cell therapy activities. Management emphasized that the company ended 2025 with roughly €3 billion in cash, which it views as a key source of flexibility as it searches for “transformative” deal opportunities, primarily in inflammation and immunology (I&I) and oncology.
Strategy shift: from cell therapy to business development
Chief Executive Officer Henry Gosebruch said 2025 was “transformative,” focused on “turning the page from cell therapy,” implementing a new strategic direction, and building a foundation for long-term value creation. He said the company has assembled a new leadership team with extensive transaction experience and has also refreshed its board with five new directors with capital allocation and operating backgrounds.
GLPG3667 update and partnering stance
Gosebruch provided an update on Galapagos’s legacy R&D asset, the TYK2 inhibitor GLPG3667. He noted that the company announced top-line Phase 2 results in December for studies in dermatomyositis and systemic lupus erythematosus (SLE). According to management, GLPG3667 met the primary endpoint in dermatomyositis, showing a statistically significant clinical benefit and improvements on secondary measures versus placebo.
In the Q&A, Gosebruch said the “bar is high” for investing further in GLPG3667 internally, adding that the same standard applies to any asset the company evaluates, internal or external. He said the company is still receiving additional data beyond the top-line release and is in discussions with potential partners. He also said Galapagos does not have the full infrastructure to take the program into Phase 3 on its own, making partnership a potentially more capital-efficient way to advance development.
2025 results: operating profit driven by deferred income recognition
Chief Financial Officer Aaron Cox reported that operating profit from continuing operations was €295.1 million in 2025, compared with an operating loss of €188.3 million in 2024. Cox said the 2025 operating profit was primarily due to the recognition of the remaining deferred income balance of €1.069 billion tied to exclusive access rights granted to Gilead under the OLCA.
Cox explained that Galapagos originally recognized a contract liability of approximately €2.3 billion in 2019, to be recognized as revenue on a straight-line basis over a 10-year term. Following OLCA amendments, the intention to wind down, and related events in 2025, management assessed that as of Dec. 31, 2025 there were no remaining obligations that justified maintaining that contract liability under IFRS. Cox added that the company did not expect any cash tax impact in 2025 related to the revenue recognition.
While Cox said the OLCA remains in force, he also stated that the company expects future business development transactions to be completed under terms different from the current OLCA terms.
Wind-down costs, restructuring, and cash position
Cox said operating expenses were negatively impacted by €399.8 million tied to the decision to wind down cell therapy activities and a strategic reorganization of the small molecule business.
- Cell therapy wind-down impact: €275 million, including impairment of €228.1 million, severance costs of €33.3 million, early termination of collaborations of €16.3 million, deal cost of €10.1 million, additional accelerated non-cash costs for subscription right plans of €1.5 million, and €7.5 million of other costs, partly offset by a positive fair value adjustment of contingent consideration payable of €21.8 million.
- Small molecule strategic reorganization: €124.8 million, announced in 2025.
Galapagos ended 2025 with financial investments in cash and cash equivalents of €2.998 billion, down from €3.317.8 billion at the end of 2024. Cox noted that the company’s cash and cash equivalents and current financial investments included $2.159 billion held in U.S. dollars at year-end 2025, up from $726.9 million at the end of 2024 (translated at an exchange rate of 1.175). Since year-end, the company has continued converting euros to dollars and now holds approximately 72% of its cash in U.S. dollars and 28% in euros, with plans to increase the U.S. dollar share over time.
In response to an analyst question about the rationale for shifting more cash into U.S. dollars, Cox said the move began mid-2025 and was driven by expectations that business development activity and the cost base would be increasingly U.S.-based. He also cited higher interest rates on U.S. dollar balances relative to euros, estimating euro earnings around 2% versus U.S. dollar earnings around 4%, while noting exchange rates can fluctuate.
2026 guidance: timeline for wind-down and cash flow expectations
For 2026, Cox said the cell therapy wind-down is expected to be “substantially completed” by the end of the third quarter of 2026. He guided to an operating cash outflow of up to €50 million in the first quarter of 2026 related to the wind-down, plus a one-time restructuring cash impact of €125 million to €175 million for 2026, a €25 million reduction from the prior €150 million to €200 million range.
Additional 2026 spending expectations included approximately €35 million to €40 million for final implementation of the restructuring announced in January 2025, and up to €40 million in costs related to the ongoing SIC2 program, including completion of Phase 2 trials in dermatomyositis and SLE and support to advance toward Phase 3 development.
Balancing those items, Cox said the company continues to expect cash inflows from interest, income, royalties, and tax credits, and therefore expects to be “cash flow neutral to positive by the end of 2026.” He also projected year-end 2026 cash equivalents and financial investments of approximately €2.775 billion to €2.85 billion, excluding any business development activity or currency fluctuations.
In the Q&A, management declined to provide additional forward guidance on whether wind-down costs could fall further, stating it would update investors as execution progresses. When asked about break-even timing, Cox reiterated the expectation for cash flow neutrality to positivity by year-end 2026, while noting the timing of wind-down costs could be “chunky” and difficult to forecast by quarter.
Gosebruch closed by calling 2026 a “pivotal year” focused on executing business development, capital allocation, and leveraging the Gilead relationship. He also said the company’s shares remain at a significant discount to the cash levels discussed on the call, and that management intends to focus on closing that gap through execution and shareholder engagement.
About Galapagos (NASDAQ:GLPG)
Galapagos NV (NASDAQ:GLPG) is a clinical-stage biotechnology company headquartered in Mechelen, Belgium, focused on the discovery and development of novel small-molecule therapies. Established in 1999 through the merger of Tibotec and Progenix, Galapagos has built a research platform targeting chronic inflammatory diseases, fibrosis and oncology. The company’s discovery engine integrates human genetics, translational biology and medicinal chemistry to identify and optimize drug candidates with unique modes of action.
The company’s pipeline encompasses multiple programs across various stages of development.
