Galapagos (GLPG) AI Stock Analysis

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Galapagos

(NASDAQ:GLPG)

Rating:53Neutral

Price Target:

$27.00

▼( -6.02% Downside)

Galapagos's overall stock score is driven by its financial stability and strong cash reserves, offset by significant profitability and cash flow challenges. Technical indicators show a mildly positive trend, while valuation remains unattractive due to negative earnings. The earnings call highlights strategic initiatives and a robust pipeline, but high restructuring costs and expected cash burn are notable risks.

Positive Factors

Financial Stability

The company expects a cash runway extending to 2028, suggesting financial stability for ongoing projects.

Separation Benefits

One benefit of the separation is that the RemainCo will get better economics on its cell therapy assets.

Strategic Focus

Galapagos NV is prioritizing the development of GLPG5101 due to logistical advantages, which could streamline the manufacturing process.

Negative Factors

Competitive Challenges

There is caution on GLPG's novel CAR-T approach given lack of clear clinical advantages, a tough competitive landscape, and logistical complexity.

Market Performance

GLPG had been trading at a negative enterprise value as lead pipeline assets are still several years from commercialization with unclear differentiation.

Strategic Uncertainty

The absence of updates on the proposed spinoff indicates uncertainty about the company's strategic direction.

Galapagos (GLPG) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$1.91B

Dividend YieldN/A

Average Volume (3M)525.64K

Price to Earnings (P/E)21.2

Beta (1Y)0.83

Revenue GrowthN/A

EPS GrowthN/A

CountryUS

Employees704

SectorHealthcare

Sector Strength40

IndustryBiotechnology

Share Statistics

EPS (TTM)-2.67

Shares Outstanding65,897,070

10 Day Avg. Volume634,497

30 Day Avg. Volume525,642

Financial Highlights & Ratios

PEG Ratio0.03

Price to Book (P/B)0.56

Price to Sales (P/S)0.00

P/FCF Ratio-4.97

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$24.50

Price Target Upside-14.72% Downside

Rating ConsensusHold

Number of Analyst Covering4

Galapagos Business Overview & Revenue Model

Company DescriptionGalapagos NV, an integrated biopharmaceutical company, engages in the discovery, development, and commercialization of various medicines for high unmet medical need. Its pipeline products include filgotinib, a JAK1 inhibitor that is in various phases of clinical trials for the treatment of rheumatoid arthritis, Crohn's disease, ulcerative colitis, small bowel CD, fistulizing CD, ankylosing spondylitis, psoriatic arthritis, and uveitis. The company's pipeline products also comprise GLPG1972 that has completed Phase 2b trial for treating osteoarthritis; Toledo molecules, including GLPG3970, GLPG4399, and GLPG4876 for inflammation; and GLPG4716 and Ziritaxestat to treat idiopathic pulmonary fibrosis. In addition, its other pipeline products include GLPG2737, a cystic fibrosis transmembrane conductance regulator that is in Phase 2 clinical trials to treat patients with autosomal dominant polycystic kidney disease; and GLPG0555, a JAK1 inhibitor, which is in Phase 1b for treatment of patients with osteoarthritis. The company has collaboration agreements with Gilead Sciences, Inc.; AbbVie S.à r.l.; and Novartis Pharma AG. Galapagos NV was incorporated in 1999 and is headquartered in Mechelen, Belgium.

How the Company Makes MoneyGalapagos generates revenue primarily through collaboration agreements with larger pharmaceutical companies, which often involve upfront payments, milestone payments, and royalties on potential future sales of licensed products. Key partnerships, such as those with Gilead Sciences, provide significant financial support and resources for the company's research and development activities. Additionally, Galapagos may earn revenue from government grants and research subsidies, as well as commercialization of its own products, should they receive market approval.

Galapagos Financial Statement Overview

Summary

Galapagos shows financial stability through a strong balance sheet with low leverage, but significant profitability and cash flow challenges remain. The company's inability to generate positive net income and cash flows presents risks, although substantial cash reserves offer some financial flexibility.

Income Statement

Neutral

Galapagos has experienced volatility in its revenue with a recent decline and negative net income, indicating challenges in profitability. The gross profit margin for TTM stands at 50.3%, but the net profit margin is negative at -58.8%, highlighting significant operational inefficiencies. Revenue growth has been inconsistent, with recent contractions. The company also has negative EBIT and EBITDA margins, suggesting ongoing struggles to cover operating expenses.

Balance Sheet

Neutral

The balance sheet shows a solid equity base with a debt-to-equity ratio of 0.004 in TTM, demonstrating minimal leverage. The equity ratio is 68.3%, indicating strong financial stability. However, the company's return on equity is negative due to net losses, signaling inefficiencies in generating shareholder returns.

Cash Flow

Negative

Galapagos faces challenges with negative operating and free cash flows, as seen in the TTM data. Free cash flow growth is negative, reflecting pressure on liquidity. The operating cash flow to net income ratio is also negative, suggesting issues with converting income into cash. Despite these challenges, the company maintains significant cash reserves, providing a buffer against short-term liquidity concerns.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
288.19M	275.65M	239.72M	505.28M	484.85M	478.05M
	Gross Profit
144.96M	-94.67M	203.74M	493.20M	483.22M	-45.61M
	EBIT
-321.17M	-188.34M	-88.26M	-267.52M	-165.60M	-178.63M
	EBITDA
-256.06M	-152.94M	51.04M	-33.37M	-100.93M	-294.52M
	Net Income Common Stockholders
-169.54M	74.08M	211.70M	-217.99M	-125.42M	-311.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.30B	3.12B	3.68B	4.09B	4.70B	5.16B
	Total Assets
4.02B	4.14B	4.36B	4.73B	5.19B	5.72B
	Total Debt
10.86M	11.72M	9.60M	21.90M	26.86M	29.44M
	Net Debt
-97.21M	-52.52M	-157.21M	-486.22M	-2.21B	-2.11B
	Total Liabilities
1.27B	1.24B	1.56B	2.21B	2.55B	3.05B
	Stockholders Equity
2.75B	2.90B	2.80B	2.53B	2.64B	2.67B
Cash Flow		Free Cash Flow
-312.11M	-402.14M	-425.24M	-537.49M	-561.71M	-518.65M
	Operating Cash Flow
-231.29M	-320.03M	-405.97M	-500.54M	-503.83M	-427.34M
	Investing Cash Flow
270.77M	220.60M	71.19M	-1.25B	541.24M	757.29M
	Financing Cash Flow
-4.77M	-4.92M	-5.00M	-1.49M	-3.88M	22.04M

Galapagos Technical Analysis

Technical Analysis Sentiment

Positive

Last Price28.73

Price Trends

50DMA

25.82

Positive

100DMA

25.54

Positive

200DMA

26.70

Positive

Market Momentum

MACD

0.84

Negative

RSI

67.76

Neutral

STOCH

86.37

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GLPG, the sentiment is Positive. The current price of 28.73 is above the 20-day moving average (MA) of 27.06, above the 50-day MA of 25.82, and above the 200-day MA of 26.70, indicating a bullish trend. The MACD of 0.84 indicates Negative momentum. The RSI at 67.76 is Neutral, neither overbought nor oversold. The STOCH value of 86.37 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GLPG.

Galapagos Risk Analysis

Galapagos disclosed 79 risk factors in its most recent earnings report. Galapagos reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

We are dependent on the transfer of the Jyseleca business, including the European and UK Marketing Authorizations, the commercial, medical affairs and development activities for Jyseleca and approximately 400 Galapagos positions in 14 European countries, to Alfasigma. Q4, 2023

Risks associated to the legal uncertainty around the Unitary patent court in Europe Q4, 2023

If approved, our investigational products regulated as biologics may face competition from biosimilars approved through an abbreviated regulatory pathway. Q4, 2023

Galapagos Peers Comparison

Overall Rating

UnderperformOutperform

Sector (53)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KYMR	54 Neutral	$1.92B	―	-32.17%	―	-25.85%	-23.89%
AGIO	54 Neutral	$1.73B	2.64	60.26%	―	25.96%	―
GLPG	53 Neutral	$1.91B	21.22	-6.25%	―	―	―
Sector *	53 Neutral	$5.14B	3.23	-45.01%	2.85%	17.55%	-0.69%
ARWR	50 Neutral	$2.09B	―	-24.67%	―	1436.97%	68.03%
DNLI	45 Neutral	$1.95B	―	-35.21%	―	-100.00%	-144.79%
BEAM	45 Neutral	$1.69B	―	-38.04%	―	-82.38%	-164.76%

* Healthcare Sector Average

Performance Comparison

GLPG

Galapagos

28.73

1.54

5.66%

ARWR

Arrowhead Pharmaceuticals

15.13

-8.79

-36.75%

AGIO

Agios Pharma

29.80

-9.01

-23.22%

DNLI

Denali Therapeutics

13.42

-5.48

-28.99%

BEAM

Beam Therapeutics

16.83

-7.39

-30.51%

KYMR

Kymera Therapeutics

29.49

-4.04

-12.05%

Galapagos Earnings Call Summary

Earnings Call Date:Apr 23, 2025

(Q1-2025)

% Change Since: 12.67%|

Next Earnings Date:Jul 23, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a strong commitment to expanding the clinical pipeline and enhancing manufacturing capabilities, supported by a robust financial position. However, significant restructuring costs and expected high cash burn post-separation highlight ongoing financial challenges.

Q1-2025 Updates

Positive Updates

First U.S. Patient Dosed in ATALANTA-1 Study

Galapagos dosed its first U.S. patient in the ATALANTA-1 study of GLPG5101, which is a novel CD19 CAR-T candidate. This marks a significant milestone in expanding their clinical pipeline in the U.S. and Europe.

Expansion of Decentralized Manufacturing Units (DMUs)

Galapagos expanded its decentralized manufacturing network in the U.S. and Europe, improving access to therapies and reducing logistical constraints. This is a major step in supporting pivotal studies and commercial readiness.

Strong Financial Position with EUR 3.3 Billion Cash Balance

Galapagos reported a cash balance of EUR 3.3 billion at the end of Q1 2025, providing significant runway to fund operations and accelerate the cell therapy pipeline.

Appointment of Henry Gosebruch as Founding CEO of SpinCo

The appointment of Henry Gosebruch as CEO of the new entity SpinCo is a major step in the planned separation, bringing deep expertise in M&A and business development.

Negative Updates

Restructuring Costs Impacting Financial Results

Operating expenses increased due to restructuring costs amounting to EUR 111 million, which include severance costs, early termination of collaborations, and asset impairment.

High Cash Burn Expected Post-SpinCo Separation

Galapagos expects a normalized annual cash burn between EUR 175 million and EUR 225 million, excluding restructuring costs, which presents a significant financial challenge.

Company Guidance

During the Galapagos First Quarter 2025 Financial Results and Business Update conference call, several metrics were highlighted as part of the company's guidance. Galapagos reported total net revenues of EUR 75 million for the first quarter, with EUR 14 million stemming from supply revenues related to Jyseleca and EUR 61 million from collaboration revenues. The company incurred EUR 111 million in restructuring costs, which included severance, termination of collaborations, and impairment costs. Galapagos ended the first quarter with a cash balance of EUR 3.3 billion. Upon the planned separation of SpinCo, it is expected to have EUR 2.45 billion in cash, whereas Galapagos will retain approximately EUR 500 million. This financial outlook supports Galapagos’s strategy to accelerate its cell therapy pipeline and aims to sustain operations through 2028, with a normalized annual cash burn estimated between EUR 175 million and EUR 225 million, excluding restructuring. The company is also advancing its pipeline with the ATALANTA-1 study of GLPG5101 in hematological malignancies, aiming for pivotal development in 2026 and a potential first approval in 2028.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.