Galapagos NV (NASDAQ:GLPG) Q4 2023 Earnings Call Transcript

Galapagos NV (NASDAQ:GLPG) Q4 2023 Earnings Call Transcript February 23, 2024

Galapagos NV beats earnings expectations. Reported EPS is $2.39, expectations were $-2.23. Galapagos NV isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, and thank you for standing by. Welcome to the Galapagos Full-Year 2023 Financial Results Call and Webcast. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please note that we will be taking only one question per participant today. And please note that today’s conference is being recorded. I would now like to turn the conference over to your first speaker, Sofie Van Gijsel from Investor Relations. Please go ahead.

Sofie Van Gijsel: Thank you, operator, and thank you all for joining the audio webcast of Galapagos’ full year 2023 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 download 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 environment. 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 highlights of 2023 and present a corporate and pipeline update. Thad will provide an operational update and go over the financial results. Paul will 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 Daniele D’Ambrosio, Head of Immunology. And with that, I’ll now turn it over to Paul.

Paul Stoffels: Thank you all for joining today’s webcast. I would like to take a moment to look at the turnaround we are realizing and how we set up the company for future growth and value creation. First of all, we redesigned our scientific approach and now we have a patient-centric focus on two therapeutic areas, immunology and oncology. In our core therapeutic areas, we pursue best-in-class medicines with multiple modalities. Today, we are a pure-play biotech with strong end-to-end R&D capabilities. We focus on breakthrough medicines and high unmet medical needs. We took a fresh look at our early-stage discovery work and broadened our modalities beyond small molecules. Our aim is to nominate a set of preclinical candidates this year that have the potential to enter the clinic next year.

We also expanded our scope to bringing in external innovation as we believe that combining internal and external innovation is the best approach to accelerate our pipeline. Importantly, last year, we embarked on a strategic review of our commercial product Jyseleca and now transferred the product, the dedicated teams and related activities to Alfasigma. We strongly believe that our transformation to a pure-play biotech company allows us to focus on our research and development efforts. We have expanded our end-to-end R&D capabilities, especially in our more recently added therapeutic area of oncology. Today, we are a smaller, focused organization with approximately 700 employees. As a result of the organization measures we took, we were able to significantly bring down our cash burn.

Thad will come back on how this frees up resources to redeploy in future growth. Conclusion, we believe that we have made significant progress in resetting the company to drive value in 2024 and going forward. As I mentioned, we have broadened our biological scope from small molecules to cell therapy and biologics. We have a long history and strong legacy of small molecule research and development in immunology and we have now expanded our small molecule efforts into oncology. Thanks to the acquisition of AboundBio and CellPoint in 2022, we added cell therapy and biologics to our capabilities. In cell therapy, we have an innovative decentralized manufacturing platform for CAR-T, a clinical pipeline and groundbreaking research capabilities. We will continue to build expertise to discover novel biologics.

The teams are working hard to progress our discovery and development efforts across the three modalities with a laser-sharp focus on finding solutions for high unmet medical needs with an aim to accelerate time to patients. Now let’s have a look at our pipeline today. In immunology, you can see that filgotinib has been removed following the transfer of Jyseleca. We have trials running with our selective TYK2 inhibitor 3667 in dermatomyositis and SLE. Recruitment is progressing and we are on track for Phase II readouts in ’25 and ’26, respectively. For strategic reasons, we decided to discontinue the development of our CD19 CAR-T in refractory SLE. We have seen multiple players entering this area in a short time frame. The field has become highly competitive and in light of the risk benefit and time to develop, we made this decision.

We believe that the cell therapy approach will be a game changer for patients with autoimmune diseases, but for the long term success, it will be important to have an approach providing CD19 CAR-T like benefits with an optimal safety profile. Summary, we remain committed to immunology as a core therapeutic area and in our early research, we are working on multiple preclinical targets with small molecules and other modalities and continue to pursue external opportunities. In oncology, we made important progress with our three clinical-stage programs, the CD19 CAR-T 5101 in non-Hodgkin lymphoma, the CD19 CAR-T 5201 in chronic lymphocytic leukemia and Richter’s transformation patients, and also with our program in BCMA-directed CAR-T 5301 in multiple myeloma.

I’ll come back to very encouraging preliminary data in NHL and CLL in a moment. Also in oncology, we are progressing multiple targets across modalities and are on track to nominate preclinical candidates over the course of 2024. At ASH, in December last year, we presented encouraging safety and efficacy data for our EUPLAGIA program in CLL and Richter’s transformation with 5201 in a heavily pretreated patient population. I will not go off of the results in detail, but summarizing, we observed an objective response rate of 93% and a complete response rate up to 63% at dose level 2. Moreover, at dose level 2, 100% of the Richter’s transformation patients responded to treatment. We also observed encouraging safety results with no CRS higher than or equal to Grade 3 and no ICANS reported.

The data informed our decision to select dose level 2, 100 million cells as a recommended dose for the Phase II part of the study. The study is ongoing and we continue to collect more follow-up data. We now have the first patient in an ongoing response for over one year. Turning to our ATALANTA program in NHL for which we presented Phase I and II data at ASH last year, we observed encouraging efficacy in patients with multiple subtypes of relapse or refractory NHL, again in heavily pretreated patients. Overall, an objective response rate of 86% was observed with high rates of complete response. Also, for ATALANTA, we observed an encouraging safety profile. The study is ongoing and we are collecting data on more patients with longer follow-up time.

We now have the first patients also in this study in an ongoing response for over one year. 2023 was also a busy year in building out a global point-of-care network. You will remember that we have an exclusive global license with Lonza for the Cocoon point-of-care device in blood cancers. We started the tech transfer to our first U.S. site, Landmark Bio, and hope to finish this in the coming months. This is an important step in the roll out of our clinical trials as the tech transfer data will be part of the anticipated IND submission with the FDA. We recently entered into a strategic collaboration agreement with Thermo Fisher out of the Bay Area and we aim to sign on additional manufacturing sites in the near future. Our aim is to establish a proximity network of sites that can deliver to hospitals in the vicinity.

In Europe, we have five clinical trial centers up and running across three countries, Spain, Belgium, and the Netherlands, and we are actively working on opening additional centers. Late December, we launched our third clinical study on the Cocoon with the BCMA CAR-T 5301 in multiple myeloma. Internally, we also strengthened and continue to strengthen our capabilities in oncology. This includes quality assurance, clinical, and regulatory talent both in Europe and the U.S. I would now like to hand it over to Thad for the operational and financial update. Thad?

Thad Huston: Thank you, Paul, and thank you everyone for joining the call. As Paul indicated, 2023 was a turnaround year and we now have a focused R&D organization ready to accelerate our pipeline and create value. We completed our transactions with NovAliX for our Romainville site in France and with Alfasigma for Jyseleca. These transactions enable us to significantly reduce our cash burn while allowing for the redeployment of resources in building our portfolio. We continue to be disciplined in our cash use internally, but also when assessing and executing business development opportunities to accelerate and expand our pipeline. Meanwhile, we have significantly increased our capabilities and expertise to support our growth in our key therapeutic areas of interest, immunology and oncology as we continue to build on our R&D organization, including in the U.S. As Paul stated, we successfully closed the transfer of Jyseleca to Alfasigma in January of this year.

Galapagos transferred the entire Jyseleca business to Alfasigma including the European and U.K. marketing authorization, sales marketing and all filgotinib development activities as well as approximately 400 employees across our European operations. Upon closing, Galapagos received EUR50 million upfront and is entitled to potential sales-based milestones up to EUR120 million. In addition, Alfasigma will pay royalties in the mid-single to mid-double-digit on European sales to Galapagos. Galapagos will pay up EUR40 million in development cost to Alfasigma before June 2025. We also streamlined our remaining workforce and operations to align with the renewed focus on innovation. This had an impact of approximately 100 positions throughout the organization.

The transaction allows us to realize considerable savings to invest in future growth and we expect annualized savings between EUR150 million and EUR200 million as of 2025. Here you see the Jyseleca performance. We realized EUR112 million in net sales in 2023 and EUR30 million in the fourth quarter, delivering on our restated guidance of EUR100 million to EUR120 million. Jyseleca is approved across Europe for RA and UC and currently over 21,000 patients benefit from the drug. With the transfer of Jyseleca at Alfasigma, we believe we’ve secured the best option for patients, our people, and the product. Let’s first go over the key financials for 2023. With the transfer of Jyseleca, the Jyseleca financials are now moved to discontinued operations.

We will continue to receive royalties for sales by Gilead and Alfasigma going forward. In our full-year 2023 revenues, you will see EUR230 million of revenue recognition related to the Gilead collaboration. As a reminder, this is a linear recognition of revenue for the value of the platform. I would also like to point out the reduction in OpEx, down 8% year-over-year due to a decrease in R&D costs and SG&A. We delivered a net profit for the year mainly driven by increased collaboration revenue due to the positive catch-up effect of the revenue recognition from the government. We also report higher financial income as a result of our capital in 2023 versus 2022, driven by an increase in interest income and money market funds, in part offset by a decrease due to exchange rates.

Here you see a clear split between our continuing and discontinued operations per financial item. As you can read from the slide, our discontinued operations for the Jyseleca business had a positive contribution to the bottom line of our P&L with a net profit of discontinued operations of EUR216 million. As explained, this is driven by positive catch-up effect in the revenue recognition for filgotinib. Now a few words on our cash position and guidance. Our cash and cash equivalents were EUR3.7 billion at year-end 2023. Our operational cash burn for 2023 reached EUR415 million. This lands within our 2023 guidance range of EUR380 million to EUR420 million. Thanks to the transfer of Jyseleca, we expect to realize significant savings and our 2024 guidance is now within the range of EUR280 million to EUR320 million.

The transfer also allows us to redeploy resources to invest in our business and pipeline, and we will continue to be focused on managing our resources effectively. Please note that our guidance excludes potential future business development activity. And that brings me to the next slide. We’ve been very focused on our plans to execute one or more additional deals to accelerate our pipeline in oncology and immunology across modalities. We put the bar high, taking a science-driven approach and a focus on strategic, highly selective partnering. As you know, we have a partnership in place with Lonza and in 2023, we entered into partnerships with Landmark Bio and Thermo Fisher as manufacturing sites for our CAR-T network. In January, we announced the collaboration with BridGene.

While early stage, we believe that the collaboration has the potential to accelerate our internal efforts in precision oncology with small molecules. Last night, we announced that we participated in a Series C financing round with Frontier Medicines, a U.S.-based biotech company. Frontier Medicines is a pioneer in precision oncology with a unique technology platform and a pipeline of potential best-in-class assets that fit with our oncology strategy. We are excited about the company and the potential of a future collaboration. We continue to explore the possible acquisitions and licensing opportunities as a key priority for our operations. I’ll now hand it back over to Paul for the outlook and concluding remarks.

Paul Stoffels: Thank you, Thad. For 2024, we anticipate important regulatory progress with our CAR-T trials in the U.S. Mid this year, we aim to submit the IND for our NHL trial, building on the tech transfer to our first U.S. site, Landmark Bio. In the second-half of the year, we aim to submit an additional IND for 5201 in CLL and Richter’s transformation. In terms of trial progress, pending IND approval, we plan to start the Phase II expansion cohort over ATALANTA trial in NHL in the U.S. We also aim to expand our Phase II EUPLAGIA trial in CLL and Richter’s transformation in Europe, opening additional clinical trial centers for the study, and expand their Phase I/II PAPILIO study in multiple myeloma across Europe as well.

In 2024, we expect to present program updates on our ongoing clinical studies in NHL, CLL, and Richter’s transformation as well as multiple myeloma at key scientific conferences. As I mentioned, we remain very active in business development. We are exploring additional partnerships for a CAR-T point-of-care network across the globe. We also aim to execute on additional license agreements and acquisitions, as well as research collaborations and strategic equity investments. Our business development efforts serve our overarching purpose of accelerating breakthrough therapies to patients in need. Let me conclude by coming back to the strong fundamentals that we put in place to build a global, innovative biotech company and a clear path we have towards value creation.

We are progressing our early-stage pipeline, building on our renewed discovery portfolio based on validated targets towards best-in-class medicines. We aim to deliver on our scientific progress in our key therapeutic areas of immunology and oncology, and continue to focus on business development. We are strengthening our R&D team capabilities and building a world-class team in Europe and the U.S. We benefit from a very strong balance sheet and we commit to staying disciplined in our use of the cash to focus our investment to maximize value. We want to thank our investors for their continued support as we deliver on our strategy to generate sustainable long-term value. Thank you.

Sofie Van Gijsel: 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.

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Q&A Session

Operator: Thank you. [Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Brian Abrahams from RBC Capital Markets. Please ask your question.

Brian Abrahams: Hi, there. Thanks so much for taking my question. I was wondering if you could elaborate a little bit more on where you are with regards to the tech transfer and the potential U.S. IND filing. It looked like maybe the timelines were pushed back just a little bit. And I guess I’m curious where you are with respect to overall standards and quality measures with relation to the FDA requirements for the IND, whether U.S. manufacturing is up and running yet, and the number of runs that you’ve had so far, your expectations, I guess, for what else needs to be fulfilled in order to file those INDs. Thanks so much. Congrats on the progress.

Paul Stoffels: Yes, we are on track with the transfer. We are in the middle of the validation runs. We are expecting outcomes there. We are preparing the analytics, et cetera, that is all going on, transferring all of the different capabilities and, yes, that will take the following months in order to be able to submit around mid this year an IND. Technically, the NHL came faster than the CLL to all the technical steps. But we do first now the NHL transfer and then very quickly afterwards because that’s the opening IND, and then the second one will be the CLL IND later this year. So that is the current timelines, of course, all pending technical success and regulatory, but we aim to submit two INDs this year, one after the other.

Brian Abrahams: Thanks very much, Paul.

Operator: Thank you. We are now going to proceed with our next question, and the questions come from the line of Xian Deng from UBS. Please ask your question.

Xian Deng: Hi. Thank you so much for taking my question. So my question is around your determination — sorry, your discontinuation of the CD19 in lupus. I was just wondering if you could elaborate a bit more on your decision-making process here. I mean, how much is this actually to do with the FDA investigation on the T-cell malignancies? And also, just wondering, since you discontinued this program, does it mean that you don’t think CAR-T in general is a good idea in lupus, or you just think the current version you have is probably not good enough? So maybe, I don’t know whether you think — you probably want a new target or maybe new conditional activation or things like that. Any thoughts on that will be great. Thank you.

Paul Stoffels: First, you have seen yourself that many, many companies entered the space and started a CD19, CAR-T in lupus, companies with CD19s which much more advanced than ours. We are developing that at the moment in oncology. We don’t have a product approved. Other companies can use their approved products in that space, and that is competitively very difficult to catch up with. Second, yes, we believe very much in CAR-Ts for autoimmune diseases and the malignancy, while it is extremely — while in CAR-Ts in oncology, having a very high benefit risk profile as life-saving medicines, in autoimmune diseases, it’s in people who have a very significant unmet medical need. But the benefit-risk profile for the long time we think could be overcoming, hopefully, the malignancies challenge.

That will give us the opportunity to then continue with new types of technologies in CAR-T or in other modalities in this space. But we all recognize that this was the breakthrough in autoimmune disease over the last year or two years, and that the progress there is fantastic. But for us, at this moment, to devote a significant investment into it was not justified.

Xian Deng: Thank you so much.

Operator: Thank you. We are now going to proceed with our next question, and it comes from the line of Phil Nadeau from TD Cowen. Please ask your question.

Phil Nadeau: Good morning. Thanks for taking our question. We were curious on 3667, the TYK2. Obviously, that’s another competitive area. Can you give us some sense of what you need to see in the ongoing studies to be confident that 3667 is sufficiently differentiated to warrant further investment in later-stage studies? Thanks.

Paul Stoffels: Daniel, can you answer this question?

Daniele D’Ambrosio: Yes, sure. Thank you. Thank you for the question. As you know, we have our TYK2 inhibitor in two Phase II studies ongoing, one in dermatomyositis studies, one in lupus. They’re going to read out in 2025 and 2026, respectively. What we’ve been looking for is a best-in-class profile for this molecule. And we believe, based on the preclinical data we have and the initial promising data in psoriasis, that this molecule is differentiated in term of cytokine inhibition profile. And of course, the data will tell when we have the release, the readout next year, basically.

Phil Nadeau: Thank you.

Operator: Thank you. We are now going to proceed with our next question, and the questions come from the line of Jacob Mekhael from KBC Securities. Please answer your question.

Jacob Mekhael: Hi there, and thanks for taking my question. Based on the two manufacturing agreements in the U.S., your approach seems to be more of a near point-of-care rather than at the point-of-care. Will this be the way forward in the U.S., or do you also plan to work with hospitals to manufacture at the point-of-care?

Paul Stoffels: Yes, we do think that this is going to be more of the model for the U.S., as you have basically third-party manufacturing sites that are near the hospital. So creating a hub environment in major metropolitan areas, not necessarily specifically in the hospital setting.

Jacob Mekhael: And will you still be able to deliver fresh cells and maintain the seven day vein to vein time with those agreements?

Paul Stoffels: Yes, we do believe that, and we’re looking actively to expand our network to cover the U.S., at least for the clinical phase, and then expand further from there. So we think that the seven day fresh cells are obviously good for patients and also showing the initial data with a really strong safety profile and efficacy. So we’re going to be looking to expand our network in 2024 and beyond.

Phil Nadeau: Okay, that’s great. Thank you.

Operator: Thank you. We are now going to proceed with our next question, and it’s from the line of Jason Gerberry from Bank of America. Please ask your question.

Jason Gerberry: Hey, guys, thanks for taking my question. Just to follow up on the CD19 SLE question. So do you see there being other opportunities in autoimmune diseases that you’d consider moving forward in with development programs? Maybe categories with fewer ongoing studies or less crowded? It seems like there’s a big disadvantage to being late order of entry in this space, and maybe from a regulatory development perspective, maybe that gets more complicated. So, wondering just kind of how you see the broader autoimmune landscape from a development standpoint.

Paul Stoffels: Daniele, can you start?

Daniele D’Ambrosio: Yes, sure. Thank you for the question. Indeed, we do see opportunities across a number of indications for this approach. This is extremely promising. As Paul was mentioning before, there are a number of different B-cell-driven diseases which can be targeted. The question here is to make sure that we have the optimal CAR-T, the optimal product to develop in these indications. And this is where we think we will look for the best possible modalities to be successful in this area. So there is potential across number of different indications. We are not going to exit this, but we are going to look for best-in-class approaches.

Paul Stoffels: And we have also been looking, in addition to that, to neuroscience indications like multiple sclerosis and myasthenia gravis. There are very extensive possibilities, as well as probably eventually entering not just into very late-stage patients, but much earlier in the disease, and then also in other diseases like Crohn’s disease and diseases which today, late-stage people with very, very challenging situations in the IBD, there are multiple possibilities here which are possible. So the future, I think, with this discovery is very, very good.

Jacob Mekhael: Okay, Thank you.

Operator: Thank you. We are now going to proceed with our next question, and it’s from the line of Emily Field from Barclays. Please ask your question.

Emily Field: Hi, thank you for taking my question. I just wanted to press a little bit more on the lupus decision and specifically more obviously, I know you commented that it’s quite a crowded space, but malignancies are obviously a lot of approved CAR-Ts ahead of you. And the differentiation there is a point-of-care manufacturing? So I was just wondering if you could kind of walk us through why maybe that wouldn’t be of differentiation, a point of differentiation in lupus? Or are some of the competitor efforts also working with faster CAR-Ts there, so it wouldn’t have the same advantage? Just maybe a little bit more color on sort of that competitive landscape specifically. Thank you.

Paul Stoffels: Well, in the competitive landscape, first, there are many, and there are many in front of us. So I think that’s where catching up with those who are in front of us, from a development perspective, is the first challenge. And if you then want to differentiate going forward, you have to have a differentiated product which shows benefits differently than the leaders. And that’s where I think we have to step back, evaluate, and don’t invest in a product which could end up as a me-too at the time of arrival in the market. So we clearly decided with the group that we always will work on something of products where we can differentiate. And that’s including in oncology, we are looking at higher unmet medical needs, as you have seen with CLL and Richter’s.

We find a space where we think we can do better and more than others with a platform, with the way we deliver cells fresh. But that — we don’t see that a platform here delivers that type of benefit because it’s not needed in lupus or in autoimmune disease. It’s much less time-dependent. We are focusing with Richter’s on patients with one-month life expectancy, and they have time to result. Superior success is important. And so the multiple in front of us in the multiple — and so the people are far in front of us in multiple, to repeat here, didn’t give us an opportunity to be differentiated, and that’s why we discontinued.

Emily Field: Thank you.

Operator: We are now going to proceed with our next question. And the questions come from the line of Sean McCutcheon from Raymond James. Please ask your question.

Sean McCutcheon: Hi, guys. Thanks for taking the question. With your involvement in the Frontier Series C and recent discovery deal with BridGene, can you walk us through the thought process of starting to build out that deeper pipeline in oncology-specific focus areas? And can you talk a bit about the aim within targeted oncology as it relates to target selection and how all of this will inform your further BD efforts?

Paul Stoffels: Yes. So far we focused on — our focus is on precision medicine approach in oncology. And so there Frontier complements our activities internally, especially with a new very strong platform. And their proprietary chemoproteomics power drug discovery engine with covalent chemistry and machine learning is quite impressive for us to be able to get access to that type of technology for bringing best-in-class, first-in-class, and probably best-in-class drugs in the space of precision medicine. It’s all known that these groups are working on KRAS on p53 on multiple other targets. And the combination of a chemistry platform with these type of targets — equivalent chemistry platforms with these type of targets could deliver best-in-class medicines and breakthrough products for development.

And that’s why we focus on, yes, high unmet medical needs, these type of breakthrough chemistry platforms and accelerated time to patients and to results. And that’s why we made the choice to our chemistry — chemists with significant experience in the space made a choice after long consideration on this is the one we want to go forward with.

Thad Huston: Yes, I’d just add. We’re definitely going to look to deploy capital in different ways, obviously doing research collaborations, sometimes early equity investments, potentially in companies licensing acquisitions, all different types of ways to access innovative products in oncology.

Operator: Thank you. We are now going to proceed with our next question, and the questions come from the line of Peter Verdult from Citigroup. Please ask your question.

Peter Verdult: Thank you. Pete Verdult, Citi. Sorry to come back to autoimmune aspirations at Galapagos. Paul, I don’t want to put words in your mouth, but are you effectively saying that to go forward in autoimmune, you would have to have an allergenic construct rather than autologous? Is that basically the sort of long and short of it? And if that is the case, what’s the environment like or the landscape for you to get those capabilities sooner rather than later? And if I’m wrong, could you just tell me why I’m wrong and where the differentiation could be? Thank you.

Paul Stoffels: No, I definitely don’t make the statement here that it’s allo versus autologous. I think the autologous have shown the effect and a very significant and breakthrough type of effect. It is CAR-T with the same or different targets all with the same or different production methods, which includes vectors or not. And so that is where our short-term objective will be. Can we find differentiated CAR-Ts with probably different production methods and as well as potential targets? Yes, so — but it’s not — for us, it’s not allo versus auto. We don’t have allo technology, and it’s a long way for us to enter that. And that’s not one of our strategic goals.

Peter Verdult: Very clear. Thank you.

Operator: Thank you. [Operator Instructions] We are now going to proceed with our next question. And the questions come from the line of Sebastiaan van der Schoot. Please ask your question. Your line is opened.

Sebastiaan van der Schoot: Hi, guys. Thank you for taking my question. I believe that during the strategic presentation, which was, I think, 15-months ago that you had a Vision 2028 strategy. There, you announced that you would want to produce also bispecific CAR-Ts [Technical Difficulty] during 2023 to 2025. Can you maybe expand on how…

Paul Stoffels: Sorry, Sebastian, can you get closer to your phone? Because very difficult to understand. Or can you repeat your question? Yes.

Sebastiaan van der Schoot: Is this better?

Paul Stoffels: Yes, it looks like better.

Sebastiaan van der Schoot: Okay, great. So, during, I think, the strategic update in 2022, the Vision 2028 vision, you mentioned that you also wanted to add on bispecific CAR-T’s and also ADCs into the pipeline between the period of 2023 and 2025. What is the current status on that?

Paul Stoffels: On ADCs, we have left that space. We are not going to invest in ADCs. We did extensive evaluation, but also, again, for us, we didn’t see the benefit-risk profile, the differentiation, which we thought was going to work for us to bring an ADC to the market. ADC requires totally different technology with significant expertise. And as we are developing already one new platform in the company, CAR-T, we didn’t think it was appropriate for us to take a second platform on. So that is — on bi-specific CAR-Ts where that doesn’t require us to build our internal production, manufacturing activities, we are looking at — we have certain bispecific research activities in our Pittsburgh biological research site, but also there we are looking for can we find additional products through our BD activities, whether it’s a platform or whether it’s platform or drug.

So, bispecific or multi-specific — first bispecific CAR-Ts. Sorry, I’m talking about bispecific. Bispecific CAR-Ts, yes, we have a next-generation CAR-Ts in the pipeline which we hopefully will be reporting on late next year or early next ’25 on time to clinic.

Sebastiaan van der Schoot: Okay, thank you.

Paul Stoffels: What I was mentioning also when I misspoke on the CAR-T, we have bispecific research ongoing in the company in our lab in Pittsburgh. But that is very early and nothing to report on that.

Sebastiaan van der Schoot: Okay, thank you.

Operator: Thank you. We are now going to proceed with our next question. And the question comes from the line of Shan Hama from Jefferies. Please ask your question.

Shan Hama: Hi. Thank you. So just on M&A and business development, I believe prior communication was a global deal ex-CAR-T. Could you just clarify if this still stands? Also, could you provide timing for business development and perhaps M&A firepower? Finally, just in relation, would an outright acquisition or an in-licensing deal be preferred? Thank you.

Thad Huston: Yes. Our company strategy is to look at where we can create value. We definitely see kind of early clinical assets that we think that we can — we either license or acquire would be something of interest to us in the oncology space. We look at also assets outside of CAR-T as well to diversify and broaden our portfolio. Small molecule assets as well. So we want to continually scan the universe for many different types of targets.

Paul Stoffels: Let me add, it’s a very high priority for us. Now that we transferred Jyseleca, we free up resources. We want to accelerate our pipeline and we try to add clinical-stage to our pipeline. But we have again differentiation time to market and for us capacity to develop. We evaluate that and the focus is on bringing a differentiated medicine. We have done extensive activities over the last year and we are continuing the discussions. And you can expect from us to do transactions in 2024, yes.