Elizabeth Goodwin – Investor Relations Onno van de Stolpe – Chief Executive Officer Bart Filius – Chief Operating Officer and Chief Financial Officer Walid Abi-Saab – Chief Medical Officer Piet Wigerinck – Chief Scientific Officer

Mattew Harrison – Morgan Stanley Nick Nieland – Citi Brian Abrahams – RBC Capital Markets Sandra Cauwenberghs – KBC Securities Emily Field – Barclays Phil Nadeau – Cowen and Company Peter Welford – Jefferies Anastasia Karpova – Kempen Hugo Solvet – Bryan Garnier

Thank you and welcome all to the audio webcast of Galapagos first half 2018 results. I am Elizabeth, Investor Relations and I'll be hosting today’s event.

This recorded webcast is accessible via the Galapagos website home page and will be available for replay later on today. So that your questions can be included, we request that you call into the telephone number given in the press release from last night.

I’ll give you the Belgium that’s 32 for Belgium 24040659 and our code is 1122269. 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 participants include Onno van de Stolpe, our CEO; and Bart Filius COO and CFO who will go through some prepared remarks. And then they will be joined by Walid Abi-Saab our CMO and Piet Wigerinck, our CSO for the Q&A Session.

So at this point I’d like to hand over to Onno to start the talk of the prepared remarks.

Thank you, Elizabeth. And thank you for joining in this webcast around the first half results 2018.

At first have a look at the deliveries in the first half and specifically around the developments. Results that we have achieved an inflammation, we saw very nice results in psoriatic arthritis with filgotinib in the EQUATOR trial.

We also were very pleased that in the selection trial in ulcerative colitis filgotinib moved from a Phase II to Phase III trial there. This is done in collaboration of course all with our friends from Gilead.

Then in osteoarthritis, we started ROCCELLA, which is the Phase II trial with 1972 in collaboration with our friends from Servier and with our friends of MorphoSys we started our Phase II in atopic dermatitis in the IGUANA trial. So a lot of activities there.

In IPF, our proprietary programs, we started ISABELA 1 and 2, which is our first proprietary Phase III program that we are running for ‘1690, everything is okay, there and the first patients will be dosed in the next quarter – or this quarter. And the winter trial, which is another mechanism of action, ‘1205 moving to Phase II in idiopathic fibrosis.

So lots of activities there. In CF, we shared the results of the PELICAN study, the ‘2737 program.

We started our first triple combo trial so three individual components together in the FALCON trial and that is now fully screened and we are moving forward with that data set. And then, unfortunately, have we decided not to advance our second triple combo we were planning to start that last month and you have seen that in a press release that was halted.

So as a result, we are reviewing the status of that collaboration with AbbVie. All in all, fantastic results here in the development front.

Of course also a lot of activities in research that will highlight at the future R&D day and all of that with substantial cash balance of €1.1 billion by half year. To briefly show you the results again of the arthritis trial with filgotinib because these data were quite spectacular.

We reached the ACR scores, similar to what we have seen in rheumatoid arthritis with an ACR20 of 80 and an ACR60 of almost 48%. And clearly these are the best Phase II data ever reported for any potential drug in psoriatic arthritis.

So we and our partner Gilead were extremely pleased to share these results with you. And clearly everything is being prepared to make the decision to move that into a Phase III trial.

So lots of Phase II and Phase III trials are being planned or are on the way. This is a portfolio that Galapagos has never seen and shows the maturation of the company moving into a fully fledged development organization.

The ISABELA program is our biggest program as Galapagos where we are running two identical Phase III programs with 1,500 patients in total in idiopathic pulmonary fibrosis. A large program, it’s going to take quite a long time to recruit and to run for 52 weeks, but a lot of excitement in the community around this program as well as on the trial design.

With MOR106, we have started the IGUANA trial, also a light trial for 12 weeks or shorter duration. Then in osteoarthritis with '1972, together with our partner Servier, we are doing 850 patients, 52-week trial around the world in the ROCCELLA trial.

So also a very exciting molecule, a very exciting program that potentially has tremendous value for both Galapagos and Servier. And then we have the PINTA trial, which is a new mechanism, ‘1205 that we’ve previously tested in ulcerative colitis and now in IPF.

We were running that for in a 26-week trial with 60 patients. So all in all, we are moving over 2,500 patients in these programs.

These are numbers that Galapagos has never seen before. So it shows how this company is developing in time.

So I'm bringing you to the next slide, which is the slide we have shown before which you can expect in 2018 regarding our late-stage clinical news flow, so this excludes early programs, as well as the whole research pipeline, but these were the objectives that we shared with you previously and you see we have most of them already achieved. One big wet cost at the second triple combo because as we decided not to move that forward, but all the others are nicely moving along with three achievements still to be made, clearly the FINCH 2 data are eagerly expected by the market, which will be in Q3, which is filgotinib in RA.

This is the first Phase III readout that Galapagos will ever have. So it's going to be eagerly awaited by us, Gilead and of course everybody that follows Galapagos.

But we’re also very excited about the Phase II trial of filgotinib in ankylosing spondylitis, the TORTUGA trial of which the data will also be presented in Q3. So these are very important moments in the history of the company.

And then we also will present in the second half, the FALCON data, the triple combo in cystic fibrosis. As I said, this is fully screened and the whole timing of that trial is according to planning.

So all in all, I think, 2018 is going to look like a fantastic year for the company to – with regard to the development objectives that we set. We also signed in this quarter, the licensing deal around MOR106 with Novartis.

MOR106 is a partnership around an antibody that's targeting IL-17C that we have in combination with MorphoSys. We have this target originated from the target discovery engine of Galapagos and we have jointly moved this forward through discovery and through development where we showed the proof of concept data to the market and based on that we started our Phase II trial and we initiated discussions with parties to see if we find the right licensing partner for this program, and ultimately we are very pleased to sign this deal with Novartis, of course one of the leading pharma companies in the world, very well respected partner and we are extremely excited because of the plans that Novartis has with this molecule and antibody that we have.

They will move this in multiple indications. They have committed to at least two new indications, so on top of the current indication in atopic dermatitis.

Also nice is that they are going to pay for all the cost that we further incur on Phase II trials. So they take over the complete expenses of that program and that's considerable because it's a large program that we are executing.

They are responsible for the whole Phase III and commercialization. And in exchange for this license of the program, they change – they pay MorphoSys and Galapagos an upfront of $111 million that we share fifty-fifty, milestones up to $1 billion and royalties in the low teens and low 20s.

The deal has been signed, but still needs antitrust clearance that we're expecting in the not too far future. So an exciting deal, we think it's the right thing to do for this program to partner at this stage.

The terms are nice, the partner is fantastic and we will be running this Phase II program as we had planned. So we're still in charge there.

So all in all, I think, we can be very proud of this program, and the results. So with that, I would like to hand it over to – no, is it the next slide?

Alright, to Bart.

Thank you, Ono. Let me show you a couple of slides on the key financials.

And as usual I will start with cash burden over the first six months of the year has been €95 million. As you can see on this slide, we've had the small positives from small capital increases as the result of warrant exercises, as well as a small currency translation effect, which is positive this first half year.

Those two we never take into account in our operational cash burden. Our cash burden definition includes cash income from milestones and all other cash expenses leading to a result of €95 million over the first half year, and giving us a cash position of €1.67 billion by the end of June.

Then key P&L figures on the next slide, revenues are up by almost €30 million to a little over a €100 million. Be aware that this to a large extent driven by accounting treatments.

There is clearly an increase in the recognition of deferred revenues that are associated to the upfront that was paid to us by Gilead for the filgotinib transaction in 2016. And at the same time, there's also a change in accounting standards with the implementation of IFRS 15, which had a net positive effect little over €10 million over the first half year.

Operating costs are expenses associated mainly with research and development clearly. Research expenses slightly up, but the real increase is in development expenses and clearly associated with filgotinib, '1690 and CF.

And that's a trend that we will expect to see also going forward in terms of increases as these programs that Onno was just describing are coming online. And we are running more of our proprietary programs.

Net result is negative €59 million, which is €10 million worse than the first half of 2017, which is the combination of the two previous components, as well as some currency translation effects in between again, the large extent driven by accounting treatments. Then finally, maybe a quick word on guidance.

We’ve lowered our cash burn guidance for the year 2018, originally we had €220 million to €240 million as a range. We expect to receive 50% upfront that was paid or that will be paid by Novartis for the MOR106 transaction and as a result, we're lowering the guidance for the full year 2018 to a range of €180 million to €200 million.

And with that, I think, we will close our prepared remarks and we’ll hand it over to – back to Elizabeth for the Q&A.

Okay, thank you. And that does indeed conclude the presentation portion.

I'd now like to ask the operator Abby to connect us to any callers with questions. Abby, go ahead.

Great, good morning. Thanks for taking the questions.

Two from me. So both related to filgotinib, I guess, the first question is can you just give us an update on the male toxicity study.

On clinicaltrials.gov it suggests that won't read out till 2021. I'm just wondering how that impacts timelines for filgotinib and how enrollment is going with that study?

And then, secondly could you just also talk about, I noticed that you started filgotinib study or may be Gilead did with hepatic impairment. Is there a specific reason for starting that study or is that just a standard requirement as part of the package you need to deliver to the FDA?

Thanks.

Hi Matthew, this is Walid. I'll take both questions.

I will start with the easier on first. So for the hepatic impairment study this is the usual clinical pharmacology package that one does when submitting scrips so there is no particular reasons why we did it in the case of filgotinib, is that a regular completing the package and preparing for filing.

Regarding the male toxicity study or sperm toxicity study, as you heard last week in the Gilead Q2 results that this will be part of the overall package that we submit to the FDA. Gilead is doing everything they can to work on Manta Recruitment and move it as quickly as possible.

I like to point out that we have been quite impressed with the speed with which Gilead performed our FINCH trials as we should recall we kind of wrap those up a bit one year ahead of schedule. That also included an update on what's available on clinicaltrials.gov, which sometimes lags behind how things are progressing.

So what I can tell you is Gilead is working diligently to recruit the MANTA study. They are quite focused on this and moving this along.

And once we have more information, we will be able to share with you an update on timing of the filing for filgotinib.

Great, thanks very much appreciate it.

Thanks for taking the question. I've got three, please.

So just to clarify on the last question, what's the earliest possible timing do you think for filing of filgotinib in RA? You have to wait for the final FINCH 1 and 3 data.

And you have to wait for the MANTA trial to actually read out before you can actually submit that package? And then secondly, do you think that Gilead will use the product to review voucher for that filing?

Second question is on cystic fibrosis. Is it your intention to take the second set of combination into Phase II once you resolved the is dispute with AbbVie?

And is that likely to involve another partner or is that something you could take on yourselves? And then just how much should we expect R&D to ramp up now in second half of 2018 and 2019 given all of these successful progression of your pipeline?

Thank you.

Okay, so maybe I will take the filgotinib question regarding MANTA. So at this point, we are not really prepared to share any specific timing regarding the filing.

As you know we need to complete the whole program, and it has been communicated, we will get results from FINCH 2 later this quarter and then FINCH 1 and 3 will be in early 2019. And then we will have to look at the totality of the data and include the data from the MANTA into the package.

So at this point, we cannot guide on the exact timing, but we're doing the best we can to move forward. Regarding Gilead's use of priority review, I think, this is the question that's probably better.

Addressed to Gilead, I cannot make a comment on this at this point. But we should hope they will.

That is our position.

Yes I will answer on the CF question. There's not much we can tell at this point in time, over what we have expressed in our press release, the fact that we are clearly – we’re not pleased by the decision by AbbVie not to move the second triple into patients.

And we are reviewing our partnership and that's the only comment I can make regarding CF at this in time.

Then I’ll take the last question Nick around the ramp up of R&D expenses for the second half of the year. So our guidance points towards to the higher end of that range was €200 million, which includes, I'm rounding now roughly €50 million of income from the Novartis transaction.

So the actual gross expense expected for the second half of the year is around €150 million. And that's a number that we will expect to continue into 2019.

I'll get back to you all with more detailed guidance as usual around the full year result’s core information, but clearly that number will not go down, it will rather go up from that level.

Okay, thank you.

Hi there thanks so much for taking my questions. One on MOR106 and one on CF.

So on MOR106, wondering if you could talk a little bit about some of the other indications that might be contemplated beyond atopic derm? And also could you give us any sense as to how the overall milestones may be allocated?

Should we think of those as primarily regulatory commercial, or might you realize material amounts for development in the coming years. And then on CF, on the PELICAN study, wondering if you guys have seen any evidence that the [indiscernible] backbone might've interfered, if not with exposure then maybe with measurement of FEV1 such that we might expect the triple combo to show more impressive benefits overall when we see the FALCON data.

Thanks.

Brian sincere thanks for asking the question on MOR106. For the extra indications, I think, the easiest way to answer the question is to refer you to the pens and paper, which came out a couple of months ago.

And, which is a very nice piece of research there are three points to the importance of the activity and part in a number of [indiscernible] 17 induced diseases. So I don’t comment on specific indications because we will do – at the moment we in other study, but we've had a very interesting and deep discussion with Novartis as you can imagine on how we want to develop MOR106 broadly and that paper really points you to a number of diseases, which are on the board now.

And we will keep you informed as we move forward. But that pens and paper 2018 gives you nice indications.

Then on CF, moving to CF, the PELICAN study, so prior to starting the PELICAN study, we had good idea on how much of PK interaction we expected from the Orkambi let's call it treatment on 2737. In terms of exposures, we were fully in line with our expectations with patients and we really reached our target levels there.

And so for sure, it's not and PK interaction, what should I point to is sometime negative impact of Orkambi on lung function. We don't have the impression that has happened, that typically happens after the start of treatment of Orkambi and then goes away over time, but that effectiveness is at the beginning and most of these patients were on treatment for average couple of years so we don't expect that plays a significant role.

Unfortunately, the limited efficacy we saw in the PELICAN study. And I think I answered your questions.

And there was a question for [indiscernible] of the MOR106 extra milestones. Bart, do you will tackle that?

I’ll take that piece. Yes, Brian, the question you had on milestones, so will not detail all the milestones stage by stage, but what I can tell you is that a significant majority of the milestones are associated with development and regulatory events and minority is associated with sales figures.

And obviously within development regulatory the larger numbers are around regulatory events and the smaller numbers are around development, but not insignificant for us either.

Right, helpful. Thanks.

Hi, I have one other question on MOR106. I was wondering besides the other indications if there have been any communications on potential combination trial for instance with Cosentyx or if that could be an interesting rationale?

And with regards to GLPG1690, if you could give us some information on the timelines of the two global trials, total duration, recruitment time, et cetera? Thank you.

Okay, this is Walid. I will take the GLPG1690 question first.

So as we've communicated before, these will be two large identical studies, 750 patients each conducted worldwide for a total of 1,500 patients. The in-life phase of the trial is 52 weeks, but there were some specific elements in that the patients will continue on the randomized treatment until the last patient finishes 52 weeks of treatment.

We expect to start the trials as Onno mentioned very shortly and those will be conducted worldwide. In terms of the duration of the trials, we were not guiding yet on how long it will take us to recruit simply because it's too early.

We haven't yet seen any performance how it goes and so on and so forth. As you know our trials are really on top of center of care, including those who are on anti-fibrotic treatment such as pirfenidone and nintedanib and those are on none.

So we believe this will make it relatively easier to remove some of the hurdles. Yet we're dealing still with rare disease and we're talking about a large program of 1,500.

So we have all the resources behind it. We're well prepared for it.

But as of today, I cannot give you any guidance as to the duration of the in life or the recruitment time for this trial. Off to you, Piet.

Yes, okay, Walid, thank you. On the MOR106 question, of course Novartis was a very interesting candidate for IL-17C to license.

They are a major player in that IL-17C space. The plan currently is that we execute the Phase II plan as we had it on the books.

So this is first dose ranges IP plus a bridge to a subcu. So a subcu first in human and then later subcu efficacy study and from there on, Novartis will take over for Phase III.

And if they want to combine with IL-17A, then that will be part of that program. But I can't comment further on combo trial, that they want to plan currently.

Thank you.

Okay, thanks.

Hi this is Edwin on for Adam. Thanks for taking my questions.

My first question is on filgotinib, a more general one. So the FINCH 2 top line data around the corner.

Can you please remind us what do we expect in efficacy like ACR scores and safety from this Phase III trial? And how do we think of market positions of filgotinib relative to other JAK inhibitors in terms of developmental stage and potential usage in RA patients?

So maybe I can take this question about our expectations. You've seen the data so far with our RA program with a number of Phase II trials in RA.

You've seen the recent data in psoriatic arthritis, where filgotinib performed in this trial better than anything has been reported so far. You've seen our data also in the control trial in Crohn's disease.

I think we have a compound that so far has demonstrated time and time again in well controlled, placebo-controlled and well-designed trials, where we have remarkable performance in efficacy. In addition, our safety profile continues to demonstrate as the data are being accumulated a best-in-class profile.

And all of this as you guys know is not surprising because of the high selectivity for JAK1, which we think is where we need to be. So I would imagine that the Phase III trials or I would expect actually that the Phase III trials with filgotinib in RA and also in IBD later on will continue to demonstrate a superb efficacy along with the best-in-class safety so that we can combine to have actually an excellent or outstanding risk-benefit profile for this.

Was there a question on positioning as well? I wasn't very clear I might have not caught it.

I’m sorry Adam.

Yes, it’s in the clinical settings if it’s after approved so relative to other JAK inhibitors?

Well Look, I think, we will have to wait until we have the totality of the data for Phase III program to be able to make that statement with more confidence. But so far based on data that we have seen today and based on what we know about the drug and its selectivity, and it's emerging safety profile, we expected to be best-in- class.

And we show best-in-class you will be used much more commonly than otherwise. It's very difficult to make predictions without the data.

But so far what we know of promises to be a very good profile at the completion of Phase III.

Okay, thank you. My second question, can you may be give us some updates on ROCCELLA Phase II trial with '1972?

How many of your selective patients have been enrolled? And when do we expect some data readout?

Thank you.

Yes, good questions. So this is as you've heard a large trial, 850 patients will be randomized across the world.

We are responsible for the portion of this in the U.S., which is approximately 300 patients. This study is eminently ready to start.

So we should be recruiting in the next few weeks. Again, in terms of how long it will take to complete the trial, it's a bit premature to say at this point.

We will have to see how things go. But again we are working with a partner who is well experienced in the space.

And we have a lot of excitement as mechanism of action really promises to be very good in this space, especially having demonstrated some proof-of-mechanism in patients already with OA and the safety profile that so far looks very promising. So I think these will help us with recruitment, but I cannot really give you any guidance on timelines today.

It's a bit too early for that.

Thank you.

Hi, yes, so just on filgotinib, going to back the end of Phase II meeting, it’s sort of seen that the question of male toxicity in RA had been result given the dosing schedule that you're going into the FINCH program with. So I just wanted to confirm that nothing has changed and that there haven't been any sort of incremental safety signals that you’ve seen aside from what was initially seen in the preclinical data?

Thanks Emily for your question. No, there has been no new development that would make you feel any more concerned, or may be new data that emerge.

This is the usual point that we need to have the totality of the data. So we have to make a risk-benefit assessment across-the-board.

I mean if see in the FDA, the way they evaluated a number of compounds in this space, particularly the JAKs in addition to others, they like to look at the totality of the data. And at the end of day, it's a judgment that has to be made on the risk benefit.

But I can confirm there has been no new development that could change the course forward since we had the end of Phase II meeting.

Thank you.

Good morning thanks for taking my questions. Just a couple on cystic fibrosis.

The first is on collaboration with AbbVie. You mentioned that you are in the process of reviewing the collaboration.

What are the dispute resolution procedures in that collaboration? And according to the collaboration, can either party discontinue at their own desire or is there something else that needs to happen to get on the collaboration?

This is Onno. Unfortunately, I cannot get any more specific on the CF situation with AbbVie than what I've told previously.

So yes, I have to leave you in the dark here.

Okay, then the follow-up on the CF program, it's just on the FALCON data, I think the guidance is for that data later this quarter, will we be getting both doses in the initial release or will it just be dose A?

Okay, thanks for going back to science now. So indeed as you mentioned, we have the FALCON study ongoing so the news there is that we have recruited fully the thrust cohort and the thrust cohort will contain one dose only.

So all patients this is an open label trial so all patients are on the same regimen and that's all on the same dose.

Thank you. And when should we see dose B?

Is that sometime later this year?

Well, fully recruited and dosing is for about a month so around the end of Q3, we should have all data and have it analyzed. So it can be within Q3 or early October, something like that.

Thanks.

Hi, thanks. Couple of left on CF I think.

Just on the second triple, it was my understanding that Galapagos leave development until group of concept has been. So relationship is run, why can you not continue development of second triple as AbbVie doesn't take over the responsibility that proof of concept data have been shown.

And secondly, I think in CF a milestone, if I read the financial report right, during the second quarter triggering some money from AbbVie. Just inquiring as to what that milestone was that triggered that money in 2Q?

And then just a bit of an financial one, the depreciation, amortization kicked up quite a bit in 2Q. It's a small number, but what was the rational for that?

Thanks.

Okay, I'll take the first one. Again, I cannot go into the specifics.

It's clear that for us to take the triple patients, we need the okay from AbbVie to do so and they didn't give the okay, so we couldn't move that into patients. So that's the only thing I can say over that part of the contract.

Another questions will be answered by Bart.

Yes, Peter, so the milestone you are correct that was only one milestone that was connected to completion of the Phase I of our triple including 3067 that was completed. And the milestone achieved in the second quarter.

And on the amortization point, it's a really small amount, but there was a very early stage compounds, on which we have to amortize. I think it was a little more than €1 million amount in the second quarter results.

Thanks very much.

Hi. Two quick questions on the FINCH 2 program.

Compared to [indiscernible] trial, if you have quite higher proportion of Japanese trials. In regards to that, would FINCH program be sufficient filing in Japan as well or is there a plan for separate clinical program?

And second, do you have any significant deviations in terms of the placebo rates in Japanese populations compared to the western one? Thanks.

Okay, this is Walid. So yes, indeed the plan would be to do have enough patients to be able to file in Japan at the completion of the program that's still our plan.

In terms of difference of placebo in Japanese patients, I'm not aware of any significant differences of concern or concerns. So I'm going to say no.

Thanks.

Hi, hello thanks for taking my question. Just one on MOR106.

Could you give some indication on the positioning that will be seen by Novartis with respect to dupilumab? Thank you.

Hugo, thank you. So I think it's a little bit early to already compare MOR106 with the same disease and currently the same patients, but we are early in Phase II.

It has shown promising efficacy up par somewhat better than dupilumab. And of course over time, we will watch how long the efficacy stays to billing up and so it's a bit early I think to say there's going to be better or similar, but we're hopeful that we will at least match the efficacy once we have those data, Novartis can then decide how to position it in the market.

Thank you.

Alright. Well, thank everybody.

This does conclude the Q&A part of the call. Please note that our next planned financial results are expected on October 25.

We thank everyone for participating today and hope you have a great day. Thank you, bye-bye.