Galapagos delivers pre-clinical candidate drug in alliance with GlaxoSmithKline and receives EUR 7.6 million in milestone payments

Galapagos NV (Euronext: GLPG) announced today that it has successfully achieved a pre-clinical candidate drug in its osteoarthritis alliance with GlaxoSmithKline (GSK). Galapagos also reached milestones on other compounds in the alliance, triggering payments totaling EUR 7.6 million to Galapagos. To date, Galapagos has earned a total of EUR 25.5 million in payments from GSK under this alliance.

The pre-clinical candidate drug is a small molecule that meets all the chemical and biological criteria set by GSK for a potential new drug. The candidate was developed by Galapagos against a novel target discovered with Galapagos' proprietary platform. The molecule is now ready for scale up chemistry and comprehensive safety evaluation, with the aim to enter the clinical research phase within a 12-month time frame.

In June 2006, GSK and Galapagos initiated a program to discover and develop disease-modifying drugs for GSK's global R&D organization. Through the agreement, Galapagos broadened its drug discovery portfolio in the field of osteoarthritis, with the aim to develop candidate drugs through to successful Proof of Concept in clinical research Phase IIa. GSK has exclusive options to further develop and commercialize these compounds on a worldwide basis. In July 2007, GSK and Galapagos signed an expansion to include two selected GSK targets. In December 2008, the companies further broadened the scope of the alliance through the inclusion of two more drug targets.

"Today's announced milestones are strong evidence of Galapagos' ability to deliver consistently on its alliances," said Onno van de Stolpe, Chief Executive Officer of Galapagos. "In the osteoarthritis alliance with GSK we have moved from target to a pre-clinical candidate drug in less than 2.5 years for the lead program and have multiple additional compounds in progress. With this broad portfolio of compounds, the alliance is well positioned to deliver disease-modifying drug candidates to GSK."

About osteoarthritis

Osteoarthritis (OA) is the most common form of arthritis, typically affecting people aged 45 and older. It is a degenerative disease characterized by joint destruction and loss of articular cartilage. Cartilage is the slippery tissue that covers the ends of bones in a joint. Healthy cartilage allows bones to glide over one another. It also absorbs energy from the shock of physical movement. In OA, the surface layer of cartilage breaks down and wears away. This allows bones under the cartilage to rub together, causing pain, swelling, and loss of motion of the joint. Over time, the joint may lose its normal shape. Also, bone spurs - small growths called osteophytes - may grow on the edges of the joint. Bits of bone or cartilage can break off and float inside the joint space. This causes more pain and damage. No currently available treatments prevent OA or even reverse or block the disease process. Treatment of OA involves pain control, weight control, and exercise. Many OA patients have pain that persists despite these measures. Most of these patients use non-steroidal anti-inflammatory drugs (NSAIDs) that relieve the symptoms without changing the course of the underlying disease. Healthcare providers are concerned about long-term NSAID use due to serious possible side effects. It is expected that with the aging of the population, more individuals will be prone to develop OA. As mobility of seniors is of high importance to maintaining a high quality of life, preventing the severity of OA is seen as an immense clinical need over the next decade. The market potential of a disease-modifying drug could exceed $8 billion annually[1], based on the current market and the absence of disease-modifying treatment.

Galapagos' osteoarthritis program

Galapagos focuses its osteoarthritis research programs on chondrocytes, the main cell types in cartilage. These programs will be the basis of the alliance with GSK. Galapagos has identified a number of novel targets that have been validated in cellular disease models and has progressed these into drug discovery. Modulation of these targets in human chondrocytes should lead to a net production of stable cartilage and should therefore be able to prevent and repair damage to this cartilage in arthritis patients.

In February 2008, Galapagos announced achievement of a Proof of Principle (reduction of a disease marker) and Proof of Concept (reduction of targeted symptoms) in pre-clinical models in its osteoarthritis (OA) program. Galapagos compounds block cartilage degradation in diseased cartilage explants, while diseased mouse joints treated with this compound also showed reduced cartilage destruction. Galapagos' osteoarthritis program has progressed from validated target to pre-clinical drug candidate in less than 2.5 years, in this challenging area where there are currently no marketed disease-modifying drugs.

About Galapagos Galapagos (Euronext Brussels: GLPG; Euronext Amsterdam: GLPGA; OTC: GLPYY) is a drug discovery company with pre-clinical programs in bone and joint diseases and bone metastasis. Its division BioFocus DPI offers a full suite of target-to-drug discovery products and services to pharmaceutical and biotech companies, encompassing target discovery and validation, screening and drug discovery through to delivery of pre-clinical candidates. BioFocus DPI also provides adenoviral reagents for rapid identification and validation of novel drug targets, compound libraries for drug screening as well as ADMET products to select compounds. Galapagos currently employs 460 people and operates facilities in six countries, with global headquarters in Mechelen, Belgium. More information about Galapagos can be found at www.glpg.com.

Galapagos' alliance strategy

Through its risk sharing alliances with big pharma, Galapagos is eligible to receive in excess of EUR 1.7 billion in success-dependent milestone payments plus double-digit royalties on the worldwide sales of medicines that may result from these programs. These payments contribute to the expansion of Galapagos' R&D to over 30 programs in bone and joint disease. The first alliance program based on a novel Galapagos target is scheduled to enter Phase I clinical trials in 2009.

This release may contain forward-looking statements, including, without limitation, statements containing the words "believes," "anticipates," "expects," "intends," "plans," "seeks," "estimates," "may," "will," "could," "stands to," and "continues," as well as similar expressions. Such forward-looking statements may involve known and unknown risks, uncertainties and other factors which might cause the actual results, financial condition, performance or achievements of Galapagos, or industry results, to be materially different from any historic or future results, financial conditions, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, the reader is advised not to place any undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date of publication of this document. Galapagos expressly disclaims any obligation to update any such forward-looking statements in this document to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, unless required by law or regulation.

[1] Galapagos estimates based on Datamonitor Market Research, "Global Overview Arthritis," January 2004

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