Executive Summary / Key Takeaways

• Galapagos NV is undergoing a profound strategic transformation, pivoting to become a focused leader in cell therapy, particularly in oncology, by leveraging its innovative decentralized manufacturing platform. This shift is designed to unlock significant value by addressing high unmet medical needs with potentially superior therapies.
• The company's core technological differentiator is its decentralized manufacturing unit (DMU) platform, which enables a rapid 7-day "vein-to-vein" time for CAR-T cell delivery. This approach yields "fresh, fit, stem-like cells" that have demonstrated high complete response rates and a favorable safety profile in clinical trials, offering a significant advantage over traditional centralized manufacturing.
• GLPG5101, the flagship CD19 CAR-T program, is advancing rapidly, with Mantle Cell Lymphoma (MCL) selected as a lead indication for pivotal development in 2026 and anticipated approval in 2028. This program targets a substantial market with high unmet medical need.
• Financially, Galapagos maintains a strong cash position of approximately €3.1 billion as of June 30, 2025, providing a projected runway to fund operations until 2028, even with a normalized annual cash burn of €175 million to €225 million post-separation. This capital underpins its ambitious R&D and manufacturing expansion.
• The planned separation of SpinCo, capitalized with €2.45 billion, further sharpens Galapagos' focus while creating a new entity poised for transformative business development, potentially in oncology, immunology, and virology.

The Genesis of a Cell Therapy Leader

Galapagos NV, incorporated in 1999, has embarked on a transformative journey, evolving from a diversified biotech with a small molecule focus to a specialized leader in cell therapy, particularly within oncology. This strategic pivot, initiated in 2024, saw the company streamline its operations, divest its Jyseleca business to Alfasigma for approximately €200 million in savings, and announce a planned separation into two distinct entities. The new Galapagos is now singularly focused on accelerating global oncology leadership through innovative cell therapies, while SpinCo, a newly formed entity, is tasked with building a pipeline of innovative medicines via transformational transactions. This decisive shift underscores a commitment to maximizing value by concentrating resources on areas of highest potential impact and competitive differentiation.

The company's history, marked by its 2019 global Option License and Collaboration Agreement (OLCA) with Gilead Sciences , has now paved the way for greater autonomy. Post-separation, SpinCo will assume the OLCA, freeing Galapagos to fully invest in and partner its cell therapy assets and manufacturing platform. This strategic realignment, coupled with leadership changes including the appointment of Henry Gosebruch as CEO and Aaron Cox as CFO in mid-2025, signals a clear intent to aggressively pursue its new mandate.

Technological Vanguard: The Decentralized Manufacturing Platform

At the heart of Galapagos' re-envisioned strategy is its innovative decentralized cell therapy manufacturing platform. This proprietary technology, comprising the xCellit workflow management system, Lonza's Cocoon automated manufacturing platform, and a specialized quality control and release strategy, is designed to overcome the significant limitations of traditional centralized CAR-T manufacturing. Centralized models often entail high costs, lengthy production and delivery times, and the need for cryopreservation, which can compromise cell quality.

Galapagos' platform offers several tangible and quantifiable benefits. Crucially, it achieves a median "vein-to-vein" time of just seven days, a rapid turnaround that is vital for critically ill patients who cannot afford prolonged waiting periods. This speed is not merely a logistical advantage; it is designed to provide "fresh, fit, stem-like early memory cells" that are believed to be "less exhausted, less toxic, and persist longer," thereby enhancing the therapeutic profile. A publication in Blood Advances highlighted that reducing vein-to-vein time can substantially improve life expectancy by up to 3.2 years, directly validating the strategic importance of Galapagos' approach .

Clinical data for GLPG5101, the company's flagship CD19 CAR-T candidate, underscore these benefits. In the ATALANTA-1 study, GLPG5101 demonstrated high overall response and complete response rates, including 100% complete response in relapsed/refractory Mantle Cell Lymphoma (MCL) patients, 95% in follicular and marginal zone lymphoma, and 54% in diffuse large B-cell lymphoma . These compelling results were achieved with a reassuring safety profile, characterized by low levels of ICANS (Immune effector Cell-Associated Neurotoxicity Syndrome), translating to less time in intensive care and hospital . Furthermore, the platform has shown a remarkably low 5% patient attrition rate, significantly below industry benchmarks that can reach up to 30% . This technological edge forms a robust competitive moat, enabling Galapagos to potentially offer superior clinical outcomes, faster patient access, and a scalable, cost-effective manufacturing model that can drive market penetration and long-term growth.

Galapagos is actively expanding its decentralized manufacturing unit (DMU) network across the U.S. and Europe through strategic collaborations with partners such as Lonza (LZAGY), Thermo Fisher Scientific (TMO), Catalent (CTLT), Moffitt Cancer Center, NecstGen, and Excellos. The company has also established operations in China, aiming to leverage its unique manufacturing platform to accelerate the development and value creation of its next-generation cell therapy pipeline globally .

Pipeline Powering Growth

Galapagos' pipeline is now sharply focused on cell therapies, with GLPG5101 leading the charge. This CD19 CAR-T candidate is currently in the ATALANTA-1 Phase 1/2 clinical study across eight hematological malignancies. Mantle Cell Lymphoma (MCL) has been strategically selected as the lead indication for pivotal trials, driven by its high unmet medical need, strong initial data, and the fact that MCL accounts for approximately 6% of all non-Hodgkin lymphoma (NHL) cases in the U.S. . The company plans to initiate pivotal development for GLPG5101 in MCL in 2026, with an anticipated approval in 2028 . The market potential for the eight hematological malignancies targeted by GLPG5101 is substantial, exceeding €2 billion in the U.S. and €5 billion in the EU alone .

Beyond GLPG5101, Galapagos is advancing GLPG5301, a BCMA CAR-T candidate for relapsed/refractory multiple myeloma, with top-line data expected in 2026 . The company is also building a robust early-stage pipeline of next-generation multi-targeting armed cell therapies for both hematological and solid tumors. These programs aim to address the limitations of current therapies, such as CD19 escape, by combining validated targets with novel ones and armoring cells to resist the tumor microenvironment. Galapagos expects to initiate clinical development of a novel CAR-T candidate and select at least one program for IND-enabling studies in 2025, with further expansion of the next-generation pipeline in 2026 .

In solid tumors, Galapagos has partnered with Adaptimmune (ADAP) to develop uza-cel, a TCR T-cell therapy for head and neck cancer. Initial in-vitro results suggest that uza-cel produced on Galapagos' decentralized platform yields fresh, fit early phenotype T cells, potentially improving efficacy and durability compared to centrally manufactured versions . Proof-of-concept studies for uza-cel are planned for 2026 .

While the core focus is cell therapy, Galapagos is actively seeking partners to acquire its small molecule programs, including the TYK2 inhibitor GLPG3667, which is in Phase II studies for Systemic Lupus Erythematosus (SLE) and dermatomyositis (DM). GLPG3667 is differentiated by its selective and potent inhibition of TYK2 while preserving the IL-10 pathway, a critical immune regulatory feedback loop . Top-line results for GLPG3667 in SLE and DM are anticipated in the first half of 2026 .

Financial Fortitude Amidst Transformation

Galapagos' strategic transformation is underpinned by a strong financial foundation, despite the significant investments and restructuring costs associated with its pivot. For the first quarter of 2025, the company reported total net revenues of €75 million, an increase from €62.4 million in Q1 2024 . This included €14 million from Jyseleca supply revenues and €61 million in collaboration revenues . However, R&D expenses surged to €182.7 million in Q1 2025, up from €71.6 million in Q1 2024, reflecting the accelerated clinical expansion in oncology CAR-T and the build-out of the DMU network . Operating expenses also included €111 million in restructuring costs related to severance, early collaboration terminations, and asset impairments . Consequently, Galapagos reported a net loss of €153.4 million for Q1 2025, compared to a net profit of €90.2 million in Q1 2024 .

Looking at the full year 2024, total net revenues were €275.6 million, an increase from €239.7 million in 2023 . R&D expenses for 2024 rose by 39% year-over-year to €335.5 million, primarily driven by cell therapy programs . The company posted a net profit of €74.1 million in 2024, down from €211.7 million in 2023, largely due to the one-time gain from the Jyseleca sale in 2023 .

Despite these current losses, Galapagos maintains a robust liquidity position. As of March 31, 2025, the company held approximately €3.3 billion in cash and financial investments, further solidifying to €3.1 billion by June 30, 2025 .

Upon the planned separation, Galapagos is expected to retain approximately €500 million in cash, which is projected to provide a runway to fund operations until 2028 . The normalized annual cash burn for Galapagos post-separation is guided to be between €175 million and €225 million, excluding restructuring costs . This substantial capital ensures the company can execute its ambitious clinical development and manufacturing expansion plans.

In comparison to its larger, more diversified competitors, Galapagos' financial profile reflects its current transitional phase. While its TTM Gross Profit Margin stands at a healthy 87.59%, its Operating Profit Margin of -120.74% and Net Profit Margin of -103.14% underscore the heavy R&D investment and restructuring costs . This contrasts with established players like Gilead Sciences and Johnson & Johnson , which exhibit positive P/E ratios (22.40 and 18.75, respectively) and more stable profitability, indicative of mature product portfolios . Galapagos' lower Price-to-Sales (P/S) ratio of 6.73 and Price-to-Book (P/B) ratio of 0.70 compared to some peers could suggest potential undervaluation relative to its assets or future sales, but also reflects its earlier stage of commercialization for its new strategic focus.

Competitive Arena: Differentiating in a Crowded Field

The biopharmaceutical landscape, particularly in oncology and immunology, is intensely competitive, populated by industry giants like AbbVie (ABBV), Gilead Sciences , Johnson & Johnson (JNJ), Novartis (NVS), and Pfizer (PFE). Galapagos, as a more specialized player, strategically positions itself by focusing on innovation and addressing high unmet medical needs with its differentiated cell therapy platform.

In the CAR-T space, Galapagos aims to "merge the best of both worlds" by offering a profile that combines the efficacy of leading therapies with a favorable safety profile . Its 7-day vein-to-vein time is a critical differentiator, significantly reducing the time patients wait for treatment. This is a substantial advantage over existing CAR-T options, where a percentage of patients often drop out between leukapheresis and infusion due to disease progression . This operational efficiency and clinical benefit provide a strong competitive edge, potentially expanding access to CAR-T therapy for a broader patient population, including those with very short life expectancies.

For its TYK2 inhibitor, GLPG3667, Galapagos highlights its mechanistic differentiation, preserving the IL-10 pathway, which is not the case for some front-runner allosteric TYK2 inhibitors . This could offer a competitive profile in indications like SLE and dermatomyositis, where IL-10 plays a crucial immune regulatory role.

While larger competitors benefit from extensive global marketing capabilities, diversified portfolios, and robust sales forces, Galapagos' strength lies in its targeted innovation and agility in clinical development for niche indications. The company's focus on developing "fresh, fit cells" through its decentralized manufacturing platform represents a technological moat that could lead to superior patient outcomes and, consequently, stronger market penetration and pricing power in its chosen therapeutic areas. However, Galapagos' smaller scale and reliance on partnerships for broader commercialization remain vulnerabilities compared to the integrated global reach of its rivals.

Outlook and Strategic Horizon

Galapagos is poised for a transformative period, with a clear roadmap for value creation. The company expects its normalized annual cash burn to be between €175 million and €225 million post-separation, excluding restructuring costs, with a cash runway extending to 2028 . This financial planning aligns with key clinical milestones, particularly the anticipated pivotal readout for GLPG5101 in MCL.

Key catalysts for 2025 and 2026 include:

• New top-line data from the indolent NHL cohort of ATALANTA-1, to be presented at a medical conference in mid-2025 .
• New data from the MCL cohort of ATALANTA-1 at a medical meeting in the second half of 2025 .
• An end-of-Phase 2 meeting for MCL to align pivotal trial design with global regulatory authorities, positioning for pivotal development start in 2026 .
• Initiation of clinical development for a novel CAR-T candidate and selection of at least one program for IND-enabling studies in 2025 .
• Expansion of the pipeline with at least one additional next-generation program in 2026 .
• Top-line data for GLPG5301 (BCMA CAR-T) in 2026 .
• Top-line results for GLPG3667 (TYK2 inhibitor) in SLE and dermatomyositis in the first half of 2026 .

The planned separation of SpinCo is also a significant strategic move. SpinCo, capitalized with approximately €2.45 billion, will focus on building a pipeline of innovative medicines through transformational transactions, with an expected focus on oncology, immunology, and virology . This independence allows for greater flexibility in capital allocation and asset acquisition, potentially leveraging Gilead's (GILD) expertise for certain programs.

Mitigating the Path Forward: Key Risks

While Galapagos' strategic pivot offers substantial upside, investors must consider several pertinent risks. The development of novel cell therapies is inherently complex and subject to clinical and regulatory uncertainties. The observed case of Parkinsonism in the GLPG5301 (BCMA CAR-T) study, while managed through protocol amendments focused on enhanced monitoring, highlights the potential for unexpected safety events in advanced therapies . Such events can lead to study delays or even discontinuation, impacting timelines and financial projections.

Furthermore, the expansion of the decentralized manufacturing network, while a core competitive advantage, presents operational challenges. Validating and ensuring comparability across multiple DMU sites globally is a complex and resource-intensive process, as evidenced by the decision to deprioritize GLPG5201 to streamline efforts for GLPG5101 . Regulatory changes, particularly at agencies like the FDA, could also impact approval pathways, although management notes that programs addressing high unmet medical needs typically receive priority . Finally, the success of the planned separation of SpinCo and the subsequent execution of its transformative business development strategy will be critical to realizing the full value proposition for shareholders.

Conclusion

Galapagos NV stands at a pivotal juncture, having decisively transformed into a focused cell therapy company with a clear ambition to lead in oncology. The core investment thesis hinges on its innovative decentralized manufacturing platform, which promises to deliver "fresh, fit cells" with a rapid 7-day vein-to-vein time, offering a compelling advantage in efficacy, safety, and patient access within the competitive CAR-T landscape. The accelerated development of GLPG5101, particularly in high-unmet-need indications like Mantle Cell Lymphoma, positions Galapagos for significant market penetration and potential approval by 2028.

Backed by a strong cash position and a disciplined financial strategy, Galapagos is well-capitalized to advance its pipeline and expand its global manufacturing footprint. While the path forward involves inherent risks associated with clinical development and operational scale-up, the company's technological leadership and strategic focus provide a robust foundation. The successful execution of its cell therapy programs and the strategic evolution of SpinCo will be key determinants of Galapagos' ability to deliver sustainable long-term value for its stakeholders, solidifying its position as a transformative force in biotechnology.