Galapagos NV (GLPG) Q4 2020 Earnings Call Transcript

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Galapagos NV (GLPG -0.03%)
Q4 2020 Earnings Call
Feb 19, 2021, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Galapagos Conference Call.

I would now like to hand the conference to your speaker today, Elizabeth Goodwin. Please go ahead.

Elizabeth Goodwin -- Vice President, Investor Relations

Thank you and welcome all to the audio webcast of Galapagos' full year 2020 results. I'm Elizabeth Goodwin, Investor Relations, also representing a great reporting team at Galapagos. This recorded webcast is accessible via our website homepage and will be available for download and replay later 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 in 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 Onno van de Stolpe, CEO and Bart Filius, COO and CFO. Onno will reflect on our operational highlight and then Bart will go over the financial results and end with expected news flow for the year. You'll see a PowerPoint presentation on screen. We estimate that their prepared remarks will take about 10 minutes and then we'll open it up to Q&A with Bart and Onno joined by the rest of our management board.

And with that, I'll now turn over to Onno. Go ahead, Onno. Thank you, Elizabeth. And welcome everybody to this webcast. Before going into 2020, we have overview. Let's just spend a couple of minutes on the ISABELA discontinuation last week. The independent Data Safety Monitoring Board's contact with Galapagos with the fact that they have seen a dose-dependent mortality in the study, meaning that the arms treated with ziritaxestat showed more mortality than the placebo and clearly that was a kiss of death for this program. We immediately stopped the trial and informed the markets within 24 hours after the information was brought to our attention and after we could have analyzed the data. On top of that, we also saw when the data were unblinded that the efficacy was below expectations, which was a disappointment as well. As a consequence, we have stopped all activities with ziritaxestat, all the trials and all further analysis for now. Clearly a big disappointment. We had worked long and hard on this program, the original 60-90 program, which was a big hope for IPF patients. The community was looking forward to the outcome of this trial with a potential solution to this deadly disease, a big blow for Galapagos, but we stay firm with regard to our commitment to IPF. We have four development programs and a number of preclinical programs aimed at fibrosis. So we will be back in the IPF space with more emotive actions with more trials. We think it's an area that needs new effective treatments and we think we have a good franchise here. It's unfortunate that this has happened, but this is the risk we're running with new motive actions. Galapagos goes onwards that nobody else has gone before. And that means that we accept the risk associated with the novelty and the causality that we have seen here with ziritaxestat as part of the business we're in. We will overcome this and we'll come back with new mode of actions for IPF. If we can go to 2020 and reviewed and clearly ziritaxestat discontinuation followed a couple of other disappointments over the last year, most notably the complete response letter that we received for filgotinib in the US for rheumatoid arthritis. Our partner, Gilead received that letter. And based on that, the analysis with the FDA decided not to launch filgotinib in the United States for RA. That doesn't say anything about other applications of filgotinib. We have a big trial going in Crohn's disease and we have the data in ulcerative colitis. So it's not that filgotinib is dead in the US, but for RA, Gilead is now going to file the low dose. On top of that, we also had a failure in new mode of action program with GLPG1972 in osteoarthritis. In the ROCCELLA trial, we didn't see efficacy there. It was a Phase 2b trial that we executed here. Unfortunate, but like with ziritaxestat, this is part of the business we're in that the new mode of actions you have a high chance that programs don't reach the finish line. I used to show a graph where we saw the attrition rate from 12 targets -- 12 novel targets leading to one program in Phase 3 and these fallouts are part of this attrition that is the nature of the business we're in. We also saw a number of very positive news over 2020 although they were overshadowed by the negatives. We had although they were overshadowed by the negatives. We had Jyseleca, of course initiated on the European market, the EMA approved filgotinib/Jyseleca on the market and we started commercialization in Germany and in the Netherlands. And we anticipate the other countries to follow shortly here in Europe. As part of the restructuring of the filgotinib franchise, we were able to retain all European rights on the filgotinib in Europe. And we will be now marketing Jyseleca all over Europe under the Galapagos name. So that has been a big step forward for us, a firm commercial organization in Europe has always been our ambition and with Jyseleca we can achieve that. We're also very active on the licensing ends where we've got a number of new molecules -- early molecules into the pipeline. The last one that we announced and the biggest one actually was OncoArendi, which is a molecule that we are developing for fibrosis, which is Phase 2 ready, so an exciting program. We're very pleased with that license with the -- from the Polish company. We also did the divestiture. We sold Fidelta, our service division in Croatia successfully. We think it's in the win-win both for Galapagos as well as for Fidelta because they are now part of a bigger CRO activity, where they're playing a very important role in the growth of that business, whereas within Galapagos they were not very visible. So I think it's good for Fidelta. It's also good for us to focus on our core, core being developing new mode of actions. And then we had a lot of a clinical progression. We started our Toledo program in patients, the SIK2/3 inhibitor GPLG3970 that we started in three proof-of-concept trials. We started the SIK2 program in psoriasis, we had positive data of GLPG1205 in the PINTA trial. So, a lot happened over the year and this is really the beginning of a whole range of clinical data that we will see over '21 as well, and that is based on this deep R&D portfolio that we have been developing for a number of years where we always focusing on quite a large number of validated targets that we progress through lead optimization toward pre-clinical candidates and then into clinical stage programs. And here you see again the attrition as well, but also the broadness of the pipeline, we are starting at the moment from 27 targets, we currently have 10 clinical stage programs. So it's a pipeline that will deliver a number of programs into patient trials over the years to come and we remain extremely excited about this pipeline. As you can see on the next slide, it's quite broad especially on inflammation and fibrosis, inflammation with filgotinib being our lead program there with the trade name Jyseleca, of course, approved now for RA. It's submitted for ulcerative colitis in the EU, and we are expecting full recruitment of the Crohn's disease trial this year. So it remains an very important part of the Galapagos business. Then a whole range of other molecules with different mechanisms, the Toledo programs with SIK2/3 inhibitor, but you also see lower on the list, SIK3 '4399 which we are developing for inflammation. And other SIK inhibitors in there, other JAK, SIK inhibitors. We are continuing to broaden this pipeline, the whole range of new modes of actions that are in pre-clinical are moving toward Phase 1. The same holds true for fibrosis, which is now led by '1205, a molecule that has been in the PINTA Phase 2a. We are preparing for a Phase 2b there, with the target here GPR84, and you can see that we have a range of different mechanisms here in the fibrotic pipeline including also a Toledo program '4605. We remain committed to IPF and to fibrosis in general, and you can see that with this broad pipeline. And then we have a couple of other programs outside these areas, one that we bill expense further is in kidney disease. It's an area that we think is very interesting. Our first program is in the CFTR inhibitor and in PCKD. That program is in Phase 2, so hopefully we can get -- can show positive results there. So all in all, I think a pipeline that we can still be very proud about, it's progressing rapidly. We have the resources, the people as well as the financials to move those forward, and hopefully they will deliver the data that we all are waiting for. With that, I would like to hand it over to Bart to continue with the commercial footprint. Bart, over to you.

Bart Filius -- Chief Operating Officer & Chief Financial Officer

Thank you, Onno. And good morning everyone in the States and good afternoon in Europe, listening into this webcast. I'd say quick few words about our efforts to build out our European commercial footprint, then I'll move into the financials and the outlook, and then we'll conclude the presenting part and then we'll go into Q&A afterwards.

So on this one, we are very, very busy at the moment trying to roll out Jyseleca, we're rolling out the infrastructure at Galapagos and we are in the process of negotiating with the various payers throughout Europe to get reimbursement for the products. We had very interesting news earlier in the year that we have a positive nice recommendation on Jyseleca, also for the moderates RA population, which is actually a novelty in -- not just in the class of JAKs, but actually in all advanced therapies that previously these have not been available yet for patients with moderate RA and only for severe RA. So we're very happy with that particular bit of news and we look forward to launching in the U.K. in the next coming months.

In Germany, the launch is on track. As you know, the German launch is run on the Gilead side, so also numbers are reported by Gilead. Now it's early days, obviously it was first product sales in November and in December, so it's early days, but so far so good. We are happy to see -- with the numbers that we've seen, so launch on track there. And as Onno mentioned, in the Netherlands, we're also now in the markets since a couple of months, but actually, in reality, mostly since 1st of January as the contracts period starts in January in Ireland. In other countries, the process is ongoing and that includes countries such as France, Italy, Spain, Belgium, but we're also now looking at the Nordic countries and Austria and Switzerland will follow thereafter.

All in all, we are planning to complete the transition of Jyseleca from the co-promotion structure that we had with Gilead where it was 50-50 between the two companies to full operation run by Galapagos by year-end. It's quite a bit of background work that needs to be done. The marketing authorization is going to be transferred, structures are being put in place, but by year-end we should be running this fully independently and in the meantime, we'll make sure that's we keep our eye on the ball with regard to the launch and make sure that we make a success out of the products in Europe.

Then moving on to the financials. As usual, I'll start with a perspective on cash. And as you can see here, and as was highlighted in our press release as well, we have landed the year with a cash burn of EUR517 million, which is in line with the guidance that we gave, which is between EUR490 million and EUR520 million and this includes also the cash out for, example, for the licensing efforts that's we've done on the OncoArendi compound in November.

What we always exclude from this cash burn are, on one hand and the cash proceeds from equity. In this case, this is relatively small amount of EUR28 million due to warrant exercises. And we also excludes currency translation effects, and those are meaningful in the year, the dollar has weakened significantly above 10% over the year. We've seen this in all of the quarters of the year already reflected in our cash balance. These are non-realized effects because this is purely representing the dollar position that we hold, which is roughly between 20% and 25% of our total cash balance. At the end of the year, we are -- we have a cash balance of about EUR5.2 billion.

Then on the P&L and the key financials for the year, maybe a couple of highlights there. First of all, on revenues, we have -- had a year by EUR530 million of revenues, and those are largely accounting revenues related to filgotinib on one hand, where we are recognizing overall milestones, license income and portion of the Gilead's periods of executing the development plan. And in the year 2020, we have recognized, little less than EUR230 million for [Technical Issues].

We've also had royalties about EUR16 million. Those are mainly related to our portion of milestones received by Gilead from Eisai for their partnering in Japan. And then on the platform, we are recognizing in a straight line over a 10-year periods, the portion allocated to the platform as part of the 2019 Gilead due to the EUR230 million that you see here is reflecting that straight line revenue recognition and that will be continuing for the years to come.

And as a reminder, this number is lower in revenues and previous years than previous year, I should say in 2019, we were recognizing one shots EUR667 million for ziri and that explains down in revenue on the top line. Operating costs are up by about 35%. The increase is really driven by three key elements. First of all, filgotinib, to a certain extent that's mechanical because we're now being 50% of the total government costs and that's been reflected on the revenue recognition side in revenues as well. And previously we were paying 20% in 2019, still for half a year. So there is a mechanical increase on filgotinib.

Then Toledo is clearly an investment focus for the Company and we've seen increases in investments in Toledo program. And then finally, SG&A has gone up between the two years, reflecting the increase of the organization and specifically the rollout of our commercial efforts throughout Europe. And then final comment here on the net loss that includes the financial expenses of about $134 million. There's a couple of things on the line but I like to highlight that more than 90% of this is non-cash to yield the translation effect of the dollar position that I was also showing on the previous slides on cash.

Then on the outlook on the next slide, first, maybe on the key events for the year and then I'll say a few words about our outlook on the cash burn as well. So key events on filgotinib we file in Japan for ulcerative colitis. We also anticipate the first half of this year to get insights into the MANTA and MANTA/Ray trials. We anticipate an approval decision for ulcerative colitis in Europe. And finally, for the second half of the year, on filgotinib, we think that Gilead have fully recruited the DIVERSITY trial, which we are running for Crohn's disease.

And then, other readouts, the most meaningful ones there, Toledo, there are three pots where we think we are going to have data, psoriasis, RA and UC. Then we also have in January disclosed a program and we disclosed a target -- two targets here where we're running a Phase 1b in psoriasis and we anticipate data from patients there as well. And then, finally, GLPG0555 is a JAK1 inhibitor that we're evaluating in osteoarthritis and we should see patient data on that program as well during the year 2021.

Then I'll conclude on -- a couple of words on cash burn. We have refrained from giving a specific guidance as you've seen in our press release of last night. Now, in January, I think I have given some pretty clear direction as to where the cash burn would have landed and that number would be around EUR670 million, which is basically an increase of about EUR50 million expenses compared to last year. And those are connected to the launch build up in Europe. Now, obviously after the news last week on ziri, we've decided to take a good look at our portfolio and our cash burden. There will be an immediate positive impact on our cash burn from the fact that the ziri trial is stopping. And beyond that, we will be coming back to you hopefully shortly with some further details about that exercise at the direction of the cash burn clearly is down and not up compared to the numbers that I have previously been talking about.

With that, I'd like to conclude and give the floor back to Elizabeth for Q&A.

Elizabeth Goodwin -- Vice President, Investor Relations

Thank you, both. And that does conclude the presentation portion of the audio conference call. I'd like to ask our operator, Annette, to connect us to any callers with questions for the executives. Go ahead, Annette.

Questions and Answers:

Operator

[Operator Instructions]

Elizabeth Goodwin -- Vice President, Investor Relations

Operator, could you please go ahead and open the line for the first person in the queue?

Operator

Of course, one second please. And the first question comes from the line of Laerke Engkilde from JPMorgan. Please ask your question. Your line is now open.

Laerke Engkilde -- JPMorgan -- Analyst

Hello. Thanks for taking my question. Laerke Engkilde from JPMorgan. Two please. Firstly, of course, I appreciate that you're not going to give quantitative guidance on operational cash burn, but any further qualitative commentary you can make on how you see the development of sales and marketing spend in light of the discontinuation of ziritaxestat. And when you expect to have more clarity on the R&D outlook would be much appreciated. And then, maybe secondly, how do you plan to address the sort of potential gap in the pipeline with the Toledo program unlikely to yield an approved therapy before the 2025 and beyond assuming success? Thank you very much.

Bart Filius -- Chief Operating Officer & Chief Financial Officer

Yeah. Maybe let me take the first question and then the second question, although, I guess you will take that one. The sales and marketing spend evolution, so first of all, important to highlight that's the business case for taking on Jyseleca fully in Europe was not built on ziritaxestat, it was built on filgotinib itself. And in January, we have highlighted a bit some key numbers in terms of our expectations for Jyseleca. We anticipate that we can make this a EUR0.50 billion product in the second half of this decade. We also anticipate that by then this can be a contribution margin of approximately 50%.

And we've also highlighted that we think that this is going to be breakeven in 2024 after three years of investments. So that's -- that should give you some direction as to how we think our spend would evolve. We do believe that by the end of this year, the structure is fully in place in Europe, maybe a bit of full year effect in '22, but that should be it. So that is unchanged as a result of the ziri news. Time for when we can give you further direction, at this stage, no precise timeline, but I would estimate that latest by our Q1 reporting, which is end of April beginning of May, we should be giving you some further clarity.

Onno van de Stolpe -- Chief Executive Officer

So, this is Onno to address the second question regarding the gap in our pipeline. It's clear that ziri out of there, we have a gap between the commercial product Jyseleca and our Phase 2 programs and we would like to fill that. So we will be active on the in-licensing M&A activity this year to see if we can find a program likely in the fibrosis inflammation area to fill that gap. And I think there are opportunities out there, we have an interesting alliance of course at Gilead. There, Gilead will take on the -- has an option to take on the non-European rights. So even foreign in-license program, they will get the option to take the non-European rights. So we have a solid partner there to market the product when it's in-license. So I think we are a good party to talk to. We are already quite active to analyze the opportunities and hope to find an attractive molecule. With that said, it's clearly that we will remain focused on new mode of actions novel targets, so that is also criteria for any program that we will in-license.

Laerke Engkilde -- JPMorgan -- Analyst

Thank you.

Operator

So our next question comes from Laura Sutcliffe from UBS. Go ahead, Laura. Your line should be open.

Laura Sutcliffe -- UBS -- Analyst

Hello. Thank you. Can I start with a broad question, please. So could you maybe just comment on whether in aggregate you think the pipeline as it stands has an acceptable commercial and clinical risk profile? And then, something a bit more specific, on ziritaxestat, do you have any idea why you saw what you saw on safety? I appreciate that the early days, but I was just wondering if you had learned anything so far that you could apply elsewhere. And then maybe if I can just make a third one. On the MANGROVE trials, do you think you will get any salable data from that study? Thank you.

Onno van de Stolpe -- Chief Executive Officer

Yeah. Let me start with the broad question and Walid can follow-up with the ziri question. Yes, we believe the pipeline has the right balance from a scientific point of view, which point of view, clinical point of view as well as commercial. If you look at it, we think Toledo has great potential. We also have programs with smaller potential indications in there. It of course remains all a question of getting the product through these clinical trials to the patients and with every new mode of action that this is in a more risky business than if you go for me-too products. But ultimately we strongly believe that the innovation is what should drive our industry, especially as biotech companies should focus on getting these new mode of actions to patients. We are in the situation, the lucky or the good situation that we have enough cash to support these programs that we can actually support a whole range of parallel Phase 2s and given Phase 3s. So I think we will come back with a strong Phase 3 pipeline over the coming years. And we anticipate that the number of programs will actually reach the patient there.

Walid, do you want to continue?

Walid Abi-Saab -- Chief Medical Officer

Thank you, Onno. Good morning. Good afternoon, everyone. So regarding ziri, yeah, it's a very good question. We have looked at the data. It's difficult to see a very clear signal right now that points to a -- to give us sort of, as you said, a way forward to figure out how we can derisk other programs. What we have observed is that this increase in mortality started manifesting itself when subjects have been in the trial for at least six or nine months. So it didn't come until late, this is not due to any new talk signals, like for example, a liver signal or anything else or cardiovascular signal.

If we look at the mortality, the high level, it does seem it's due to exacerbation of IPF actually, which is a bit surprising. And at this point, we need to look further into the data to look into the narrative, and it's a bit early days. But it's nothing that popped up it has linked to the mechanism of action that we could explain as of today or any tox finding that we've seen in our preclinical tox package. And we've looked at that in a lot of details, of course, as soon as we got these data.

And with that, I'll turn it over to Piet.

Piet Wigerinck -- Chief Scientific Officer

Thank you, Walid. So thanks for the question on the MANGROVE data. So MANGROVE is an Phase 2 study in ADPKD patients where we does 60 patients, it's a placebo-controlled study. So this is the first step. So, after this study if we detect a good signal, we will need to do other studies in dose ranges and a late study. So we are not pushing -- putting forward any filing data yet. Thank you.

Operator

All right. Our next question comes from Peter Welford of Jefferies. Go ahead, Peter.

Peter Welford -- Jefferies -- Analyst

Hi. I hope you can hear me. I've got three questions. And firstly, is just, I guess a bigger sort of picture question for Onno, in the sense, or maybe for Walid, in the sense. In hindsight, I guess from a strategy perspective, and do you -- this change the attitude of Galapagos toward sort of fast-tracking I guess some development program, but I mean, I think we've got -- there's been a lot of debate about discussions you have with FDA and the decision to move straight into ISABELA. I guess curious internally whether you've sort of reevaluate it from a risk perspective, what decisions you're willing to make or do you think this is just, if you like, unfortunate part of clinical development.

Secondly then, I guess a question for Bart, just on the filgotinib share, the EUR16.2 million. Am I right in saying that that's recognized in the other income part, if you like of your revenue and not in the revenue part? I'm just trying just from a accounting perspective just trying to understand where that EUR16.2 million has been recognized.

And then thirdly, just thinking about sort of the European strategy and to the cash burn, is it possible for you to give us the rough cash burn or spend of ziritaxestat in 2020. I guess just assuming from back of the envelope, it would help because, at least for the starting point have a rough idea, I guess, how much ISABELA was cash burn during 2020 to think about for '21. Thank you.

Onno van de Stolpe -- Chief Executive Officer

Yeah. Peter. I'll start, this is Onno. And the good news of the that you don't have to pronounce ziritaxestat very often anymore. So that's a [Speech Overlap]. Yeah, didn't change our appetite for risk the fast-tracking, but clearly we're going to review the various gating events and review also what we did with ziri as well as what we have done with '1972. I think one of the things we -- and may be we have said in an interview that the are maybe have been a little bit naive optimist thinking that we could target this kind of big diseases like, OA relatively simple. We had a molecule, we had good pre-clinical data, exciting Phase 1b data and healthy volunteers. And then went into a large Phase 2 with one-year treatment 900 patients and then we didn't see an effect. And now it's really getting this the stock signal and a disappointing efficacy signal. We need to rethink how we, how we move programs forward.

On the other hand, as I said at the start of the call today. This is part of new mode of action development and we will face more disappointments in the future. It's just that we need, once a while a success that brings us to the patient. And we also don't want to throw away the baby with the bathwater here. I think our innovative approach and rapid approach with small effective Phase 2s is not something to immediately abandon, but I think we might fine tune its some what to give us more certainty or at least less risky steps forward going from here.

And maybe Walid, you want to comment on that as well from a clinical point and then I'll turn we'll turn it over to Bart.

Walid Abi-Saab -- Chief Medical Officer

Yeah. Thank you, Onno. I just want to say a couple of words on this here. I mean at the time when we got the FLORA data we really debated this at length, and we didn't go in with eyes closed, I mean we had -- we went in with eyes wide open. We knew that we could take a path where we can do a Phase 2b study which would be long and costly and delay the program or take a more aggressive approach, and go straight into the ISABELA program which we ended up going.

However, what we did also is we put a lot of a stopgap measures, we put the Data Monitoring Committee that meets, it's a very robust committee that meets relatively frequently for a study like this to check on the safety, but also on the efficacy on an ongoing basis. And also we added a futility, and those are stopgap measures that will protect the patient and that will protect us against excessive investment.

And I like to say that actually this is -- this happened, the study stopped probably at about 50% cost of the whole program from a clinical perspective, which is -- and we know from the beginning is going to be higher than if we had done a Phase 2b, but that incremental investment could have gotten us to the patients, ultimately 2.5 years. And at the time we debated that and we knew we're taking a risk, but we thought that the incremental investment is worth that 2.5 years ahead of -- to bring to patients, which is an unmet medical need that is huge in this indication.

Of course, had we succeeded, we would been heroes, now retrospectively we are saying, OK, well maybe we should not done that. But I think as Onno said, we'll have to take a look and see how do we better balance the composition of our portfolio to have, maybe a certain limited amount of programs like IPF where you will have to invest a large time and resource and money until you get the initial results, and maybe other areas where you can have an early readout, psoriasis, RA, psoriatic arthritis and IBD. And that would be also an other way for us to balance the risk of our clinical portfolio.

And of course, also Onno mentioned has very clearly that we will be taking a critical look at our gating events, how much data do we need to have to take the next step. And that's really good housekeeping on our part and natural consequence of the disappointments that we've seen and our pipeline recently. And we'll be able to guide more of that once we have concluded our assessment. Thank you. I'll pass it on to Bart now.

Bart Filius -- Chief Operating Officer & Chief Financial Officer

Thanks, Walid. Yeah, Peter, your two questions filgotinib royalties, they're recorded in revenues, so they're not in other income, [Indecipherable]. In other income, you'll find to things like tax incentives and grants and stuff like that. So it's in revenues.

The second question cash burn ziri in 2020. We spend in 2020 about EUR55 million on ziritaxestat, that's a net number taking into account that we are sharing those cost with Gilead. And your question obviously is to what can you expect that in terms of 2021, let's say in the immediate reduction as a result of the ziri stop. I would say it's in the vicinity of about EUR40 million, Peter. So that's what I can tell you to the immediate consequences of the ziri stopping in 2021.

Peter Welford -- Jefferies -- Analyst

And so can I just follow-up just on the filgotinib royalties because I guess just a little bit confused when I do the math, because I think -- previously I think you've booked sort of a reimbursement of reimbursement income. I think in these first half of the year, it's about EUR6 million, EUR7 million or something like that. So I guess -- yeah, it looks as though that presuming there was no reimbursement or anything like that in the second half of the year or am I missing something?

Bart Filius -- Chief Operating Officer & Chief Financial Officer

Now the royalty, if you talk about the royalty, it's EUR60 million. That is all booked. That's all part of the second half of the year, so it's actually all Q4. And it's connected to the Eisai deal that Gilead just closed with Japan. There have been situations between the quarters on filgotinib revenue recognition and as a result of changes to our development plan, changes to the structure that followed the transfer of some of these trials in Q4 to address. So there's a bit of moving parts there. So the net number that you've seen on the slides is what we recognize for filgo and the EUR60 million is what's -- let's say EUR20 million royalties in 2020.

Peter Welford -- Jefferies -- Analyst

Got it. Thank you.

Operator

Right. So our next question comes from Brian Abrahams of RBC. Go ahead, Brian.

Brian Abrahams -- RBC Capital Markets -- Analyst

Hey, guys. Thanks so much for taking my questions. Two for me. I guess, first off, what do you need to provide to Europe on MANTA and MANTA/Ray. And how clear are you as to what they'll be looking for from the interim blinded data to maintain the label and our authorization of Jyseleca? And then, secondly, just as you think about future cash burn following the ziri setback, I'm just curious sort of bigger picture as your predilection to I guess reprioritize and use the cash you'd have otherwise spent on ziri to invest further in other assets or should we think about more I guess reduced spend on just I guess spend decelerating overall to preserve capital because you won't have those future revenues from the late stage assets. Thanks.

Walid Abi-Saab -- Chief Medical Officer

Thank you, Brian. This is Walid. I'll take the first question on MANTA. So MANTA and MANTA/RAy those are both like two parts of one study. As you guys might know from what's in the public domain, we look at a number of endpoints there. The primary endpoint is more than 50% reductions per concentration, but also we look at mortality, we look at morphology, we look at hormone levels and so on and so forth. And those, I think the interpretation of this has got to be difficult from the perspective of a primary endpoint is not -- also the study is not powered for statistical significance on the primary endpoint because health authorities have said that they will look at the totality of the data because there's no clear black-and-white way to interpret the data.

Of course, unless the compound is toxic and cause a lot of things then that it becomes very clear, and that we will have to report immediately. But the data will be the totality of the data and there is no clear definition of what would be an acceptable deviation and an imbalance that you would see in one, but not the other.

So, the expectation from the FDA is that we maintain those studies blinded until we finish the monitoring phase. However, we have obligations to the European authority and patients as well and in Japan where we are marketing Jyseleca to once we have the data from the 26-week that we present this data to these health authorities. And as such, we agree to the FDA. There's going to be a small unblinded team that will have access to those data in order to prepare the documents that will be needed to provide to the health authorities in Europe and Japan, so that we can adjust the label accordingly and be able to adequately inform the prescribers and the patients.

Bart Filius -- Chief Operating Officer & Chief Financial Officer

I'll take the question, Brian, on the cash burn. No, we are not going to reallocate the ziri spend to our assets. And the idea is, we need to right-size our total expenses for the year 2021. So the number will not be lower than the number that I was guiding for in January, including the $40 million that I just mentioned on the ziri savings, including potentially a bit more.

Brian Abrahams -- RBC Capital Markets -- Analyst

That's really helpful. Thank you very much.

Operator

Great. So, the next question comes from Matthew Harrison at Morgan Stanley. Go ahead, Matthew.

Thomas Lavery -- Morgan Stanley -- Analyst

Hi. This is Thomas for Matthew. For TYK2, do you think this year's data can demonstrate any difference over the profile of the leading TYK2? Thank you.

Onno van de Stolpe -- Chief Executive Officer

Thank you, Thomas. Did I understand you correctly? You meant the psoriasis study that's what you said? I didn't hear you very well.

Thomas Lavery -- Morgan Stanley -- Analyst

TYK2 inhibitor.

Onno van de Stolpe -- Chief Executive Officer

Right. But what kind of data were you talking about?

Thomas Lavery -- Morgan Stanley -- Analyst

The psoriasis, yes.

Onno van de Stolpe -- Chief Executive Officer

Yeah, yeah. Yeah. So, I mean, that is a relatively small study. So I think directionally will tell us whether we are active, but I don't think it will give you a precision to what degree you can compare with competitors where you have much more advanced data. So I think directionally it will give you an idea and that's what we're looking for. But the study is 30-patient study, 20 on active with 10 on each dose. We're taking two doses in that study and 10 on placebo. And its duration is four weeks as well, because it's a Phase 1b. So directionally we're going to have an idea. But to be able to have the precision with which to compare against the more advanced compounds, I think it would be a bit more difficult.

Thomas Lavery -- Morgan Stanley -- Analyst

Got it. Thanks.

Operator

Okay. Now, our next question comes from Rushee Jolly at Bernstein. Go ahead Rushee.

Rushee Jolly -- Bernstein -- Analyst

Hi. Rushee Jolly at Bernstein. Thanks for taking my questions. Two, please. Firstly, I guess, the follow-on question on psoriasis. I mean, I know the data is early and you also have Toledo assets entering psoriasis. But I wanted to ask maybe kind of longer-term perspective on where you see the bar for success here and how Galapagos can differentiate themselves. And the reason I'm asking is, psoriasis is incredibly competitive as it is. But we could also expect to see another IL17AF on market later this year that perhaps does new bar in terms of efficacy.

And then, secondly, I want to ask maybe a bigger picture question on management's view of value of the company today. You have a lot of cash on balance sheet. But perhaps you could comment on maybe the balance of cash burn and the requirement to invest in the pipeline and perhaps your view of really what the current pipeline and platform represents from a valuation perspective. Thank you.

Onno van de Stolpe -- Chief Executive Officer

Okay. Let me take the first one. So, the reason we're doing the psoriasis study is to have a quick assessment in the Phase 1 setting, which this indication lends itself to, to generate some initial clinical data to see whether we have a path forward. To be able to truly see whether we are competitive, our plan is to go into a psoriatic arthritis study, which is more of an indication that fit better with our outlook. But it's a fair question. And I think the point that where we're coming from, I want to make two points. One is that we need to generate enough data with this asset, which so far looks very good. We want to generate more data with its assets so that we can ascertain is this a competitive asset to continue to push forward for later stage development or not.

And number two, psoriasis right now is not a primary indication for us. It's an initial study to tell us whether we are on the right path. Now, once we do a full evaluation and we advance forward, if the competitors are on the market with psoriatic arthritis and psoriasis, it becomes an easy way to broaden into psoriasis. But all of that will be part of our assessment with commercial and positioning to see whether we have a way forward or not. It's still a bit too early to tell. The initial data will tell us directionally whether we're heading there. And then the next question is, does it worth investing in a Phase 2b psoriatic arthritis study. So then you can have much better precision with which you can compare to the competitors and see whether you have a differentiated drug there or not to be worthwhile investing further into. Thanks.

Bart Filius -- Chief Operating Officer & Chief Financial Officer

Yeah. Let me say a few words on the second question. So, I'm sure you hold on the math. I think our total cash balance is sort of equal to about EUR79 a share. So currently in terms of the value that we are getting in the Street, we are not getting value for cash that alone we're not getting any value for our platform. We're not getting any value reflected for our pipeline that Onno was showing earlier and that includes I've -- if I've got the number right, about 10 clinical-stage compounds in developments. And it doesn't include any value for Jyseleca either which we think definitely has a value in Europe and abroad. So that's what I can say. It's not up to me to determine what the value appreciation is of shareholders in the company, but we do feel that there is a disconnect currently.

In terms of cash burn, as I highlighted, EUR5.2 billion on the balance sheet reflected if you look at the cash burn plans that we were having that's easily enough to live out the beginning of collaboration period until the end of the decade. And obviously that's a fantastic opportunity for us as a company to demonstrate that we can create value scientifically and that we can bring compounds to later stages and to the market. And we see we have opportunities of our existing portfolio of bringing other compounds to the finish line as well in that period. So definitely we should be able to create value based on that cash rather than just see it as a spend on an annual basis.

So let me conclude with that. We think that there is the technology -- the clinical compounds, the marketed compounds and the firepower finally for business developments as well that should be part of the value of Galapagos.

Rushee Jolly -- Bernstein -- Analyst

Thank you. Very helpful.

Operator

And now, we take a question from Phil Nadeau at Cowen. Go ahead, Phil.

Phil Nadeau -- Cowen -- Analyst

Good morning. Thanks for taking my questions, two for me also. First is on commercial, curious to hear a bit more about your marketing message for Jyseleca in Europe. How are you differentiating it versus the other JAKs? And along those lines, do you think the recent data from Celgene's basically failed study helps you or does that hurt the JAK class? That's question one.

Then question two is just on the accounting. We are amortizing upfronts on the filgotinib payments over four to five years post-2019. Does the amount that we're -- we should be amortizing our model does that change post the December agreement and the cash payments that you have coming up this year or next year? Thanks.

Michele Manto -- Chief Commercial Officer

Yeah. So this is Michele here, Phil. So I'll take the first part of your question, so on the messaging. So the messaging is leveraging the strength of the balance we have with efficacy demonstrated with Jyseleca across different line of treatment so the bio-naive and the BIO-IR and actually tolerability and safety data. That's also differentiated our profile in the clinical -- in the development programs. And this is the balance that we actually are bringing to physicians. The feedback that we're getting from Germany, the Netherlands, Belgium and the countries where we have the promotion ongoing is really comforting and reflecting that. So that's really coming back also from the market researchers, advisory boards that will reflect the strength of this profile. And as Bart indicated at the beginning also reflect in the first indicators we get on the shares on in-play markets in this first weeks and months of promotional sales there.

On the impact of the sales and data that of course is a double-edged sword if you won. On one hand, it strengthens the value of our proposition because of course it gives more attention to the safety data we have in our profile. Of course, on the other hand, it requires, creates a reflection from physicians about Xeljanz [Phonetic] to know already what they are in terms of the safety from the first generation of Xeljanz [Phonetic]. And again on that, we see reflected that physicians, [Indecipherable] second generation, so the JAK1 preferential and we see an opportunity there, if this is reflective.

Phil Nadeau -- Cowen -- Analyst

That's helpful. Thank you. The second question was on -- yeah, the revenue recognition. Thanks.

Elizabeth Goodwin -- Vice President, Investor Relations

The amortization of, Phil, go upfront. [Speech Overlap]

Michele Manto -- Chief Commercial Officer

Sorry, Phil. I was disconnected from the line for a second. Can you just one more time repeat the question? Right. So after the Q3 renegotiation of the deal with Gilead, I believe we had about EUR640 million in filgotinib upfront payments to amortize over a four to five years in our model. I'm curious if that number has changed now post the December reorganization of the deal with Gilead and the payments that you expect to receive in 2021 or 2022? Is there less filgotinib upfront to amortize now over the next few years that we should take out of the model?

Bart Filius -- Chief Operating Officer & Chief Financial Officer

Yeah no, it's about EUR800 million at the end of the year, reflected in our deferred revenues. That's going to be recognized over the next couple of years. So it's because basically the extra payments that were negotiated as part of the agreement in Q4 are also partially put into the balance sheet and we recognized as the relevant costs will be incurred over the next couple of years. So it's the same period going forward. So let's say another three to four years and $800 million approximate EBIT, more than $800 million and we'll have deeper in the annual reports to be recognized over the period.

Phil Nadeau -- Cowen -- Analyst

Got it. That's very helpful. Thank you.

Operator

Okay. And then, our next question comes from Jason McCarsey of the Maxim Group. Go ahead, Jason.

Michael Okunewitch -- Maxim Group -- Analyst

Hi. This is Michael Okunewitch on the line for Jason. Thanks for taking my questions. So, I'd like to ask considering M&A seems to be -- or in-licensing as well seems to be a priority for 2021 and likely on the later stage of things. How does that work with and how do you take into account the existing agreement with Gilead? Would they have an option on in-license program? And you have to factor that into the price you're willing to pay considering they can in-license for $150 million.

Onno van de Stolpe -- Chief Executive Officer

Good question. This is Onno. Yeah, exactly. So, Gilead has an option on everything the in-license if we do it through an M&A or through a product license. They have an opt-in for the non-European right for price of $150 million, which of course has consequences of what Galapagos can do on its own regarding in-licenses or if not we need to get Gilead at the table as well, which clearly is a possibility. Gilead, as you know, is very active in in-licensing and M&A activities. So we could do a transaction where we get the rights for Europe and Gilead would get the rights outside Europe. And then we jointly do the further clinical development as in the current alliance. So that's a possibility. Not making it easier, of course, three people at the table. But our relationship with Gilead is such that I think it's a very workable way forward.

Michael Okunewitch -- Maxim Group -- Analyst

Thank you. And then I, if you don't mind, I just wanted to ask one thing on IPF specifically if 1205 and the kinase have the same combination potential as you had with theory considering both of those assets target the macro macrophage aspect of immune response

Onno van de Stolpe -- Chief Executive Officer

Piet, would you like to take this?

Piet Wigerinck -- Chief Scientific Officer

From mechanism point of view, both the chitinase and GPR84 can be combined with other mechanisms of actions. What we've seen in PINTA, what we've studied that there was the negative PK interaction between GLPG1205 and negative, I mean where we saw more of toxicity. So in that sense if we talk about the combo potential later of those two assets, we will need to find the exact dosing for GLPG1205 and [Indecipherable] PINTA might be different from the dose we could give on top of pirfenidone mechanisms point of view indeed you can combine with right pirfenidone autoimmune dynamic. Thank you.

Michael Okunewitch -- Maxim Group -- Analyst

Thank you very much.

Operator

All right. Thank you. And our next question comes from Evan Seigerman from Credit Suisse. Go ahead Evan.

Evan Seigerman -- Credit Suisse -- Analyst

Hi, guys. Thank you for taking the question. So I know this has been touched on before, but current valuation suggests a negative enterprise value could imply a number of things. One being that the spend -- your spend is not generating the value essentially. And I guess, what is your plan to really reverse this trend and convince the market that the spend in investment you're engaging with the portfolio on the pipeline is going to create value for shareholders? Thank you.

Onno van de Stolpe -- Chief Executive Officer

It will come from the programs that we have, plus of course the performance of Jyseleca in the market. We got to regain the confidence of the investors we've lost that due to the CRL, due to GLPG1972 and now the ISABELA trial. And it's a normal reaction that when things fail, people turn their back on the whole technology and the company. We are strong believers that we have everything in-house to bring new mode of actions to patients. We have a very exciting pipeline and I just showed you earlier, we have to deliver on that pipeline, mainly to get programs through the various trials into Phase 3 into the patients. And if we can deliver that, I'm sure the investors will come back and the excitement will regain traction here around Galapagos. But for now, we need to focus on what we're good at and that is bringing these new mode actions through clinical development and we're going to look very closely as already was discussed about our processes, our gating events, our programs as well, and we'll report to market when we have done that analysis on what we're going to do for the years to come.

Phil Nadeau -- Cowen -- Analyst

Okay, great. Thank you.

Operator

And our next question comes from Graig Suvannavejh from Goldman Sachs. Go ahead, Graig.

Graig Suvannavejh -- Goldman Sachs -- Analyst

Thanks, Elizabeth. Thank you for taking my questions. I've got two please. My first just revisiting the current cash balance of EUR5 billion and the topic of in-licensing and M&A. Are there particular theme that you can comment on and whether it is more asset specific and is it indeed looking for something to fill in the gap in the late-stage pipeline or is it more around technologies? I know in the past, the Company has talked about interests in perhaps RNA-based therapeutics or even protein degraders. So I just wanted to visit that theme.

And then secondly, the Company is currently focused on inflammation and fibrosis and I think there is a view that inflammation is increasingly more competitive, fibrosis is a tough space generally. And so I was wondering if the Company has any interest in looking beyond inflammation and fibrosis and whether if there was, whether that would have to contemplate a conversation with Gilead to make sure there were synergy there. Thank you very much -- for my question.

Bart Filius -- Chief Operating Officer & Chief Financial Officer

Onno. He might have lost. Let me give a shot at that, Graig. First of all, in terms of BD efforts, I would say there is indeed still the need to look at the technology side, we've done quite a few licensing deals over the last 12 months as well as some smaller technology-based deals as well. And we will continue that effort because I think it's good in terms of -- that's rejuvenating the technology of our platform going forward. I think frankly in terms of size that's going to be probably smaller, I think when we are referring to larger transactions on BD where we're talking more about later-stage assets. So a more meaningful numbers as well are in terms of cash spends there on, but it doesn't preclude us from doing other efforts as well on the BD front.

And with regard to the therapy area choices, it's clear inflammation and fibrosis are committed areas. We've also announced last year that kidney is an area that we're looking for and that is confirmed. And we actually, we want to make changes on those, there is no need for us to talk with Gilead about it, it's really up to us to determine where our strengths are and where our focus should be. So that's not subject to a discussion with which our colleagues from Gilead.

Graig Suvannavejh -- Goldman Sachs -- Analyst

Thank you. Just follow-up for clarification just on M&A. Did you mean to imply that you would prefer to do smaller deals versus a larger deal. And I guess if you are contemplating "larger deals", is there a size of the transaction that you think is appropriate for the profile of the Galapagos? Thank you.

Onno van de Stolpe -- Chief Executive Officer

Yeah, I think it will be a bit too early to give specifics about exact sizes, but clearly, we're talking about something else than the EUR25 million that we were talking with OncoArendi last year. That's what I would call the smaller deals that we would continue to be interested in, to look at, to refresh our earlier pipeline. But the BD we're talking about here is clearly of larger scale and we'll take that on as our analysis and evaluations progress.

Elizabeth Goodwin -- Vice President, Investor Relations

Okay, thank you. That's all we have time for today on the call. Please reach out to the IR team, if you still have questions. Our next financial results call will be at the Q1 Results on May 7th. Thanks for participating today. Goodbye.

Duration: 63 minutes

Call participants:

Elizabeth Goodwin -- Vice President, Investor Relations

Bart Filius -- Chief Operating Officer & Chief Financial Officer

Onno van de Stolpe -- Chief Executive Officer

Walid Abi-Saab -- Chief Medical Officer

Piet Wigerinck -- Chief Scientific Officer

Michele Manto -- Chief Commercial Officer

Laerke Engkilde -- JPMorgan -- Analyst

Laura Sutcliffe -- UBS -- Analyst

Peter Welford -- Jefferies -- Analyst

Brian Abrahams -- RBC Capital Markets -- Analyst

Thomas Lavery -- Morgan Stanley -- Analyst

Rushee Jolly -- Bernstein -- Analyst

Phil Nadeau -- Cowen -- Analyst

Michael Okunewitch -- Maxim Group -- Analyst

Evan Seigerman -- Credit Suisse -- Analyst

Graig Suvannavejh -- Goldman Sachs -- Analyst

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