Good day, welcome to the Galapagos Full Year 2019 Results Webcast and Conference Call. At this time, I would like to turn the conference over to Elizabeth Goodwin. Please go ahead.
Thank you. Welcome all to the audio webcast of Galapagos' full year 2019 results. I'm Elizabeth Goodwin, investor relations. This recorded webcast will be accessible via the Galapagos website homepage and will be available for replay later on today. That your questions can be included, we request that you call in to one of the telephone numbers given in last night's press release. Here's the one for Belgium, 32-2404-0659, and the code is 8371984. I'd like to remind everyone that we will be making forward-looking statements during today's webcast. These forward-looking statements include remarks concerning future developments of the pipeline and our company and possible changes in the industry and competitive environment. Because these forward-looking statements involve risks and uncertainties, Galapagos' actual results may differ materially from the results expressed or implied in these statements.
Today's speakers will be Onno van de Stolpe, CEO, and Bart Filius, COO and CFO. Onno will go through the operational highlights. Bart will explain the financial results. We'll end with the expected future news flow. You will see a PowerPoint presentation on screen. We estimate that this presentation will take no more than about 15 minutes, and then we'll open up the call to a Q&A session, including Bart and Onno, who will be joined by Walid Abi-Saab, CMO, Piet Wigerinck, CSO, and Michele Manto, Chief Commercial Officer. With that, I would now like to hand over to Onno. Please go ahead.
Thank you, Elizabeth. Good morning. Good afternoon. What a fantastic year we have had. Our anniversary year, 20 years, has been a hallmark year for the company. We saw fantastic, great clinical progress in our programs, exciting research results, and a substantial growth of the organization. With our real hallmark moment of the year was the announcement of the strategic alliance with Gilead for a 10-year period. You see on the slides the data on that alliance. For us, it's very important that we now have a 10-year independent future as a company where we can build out into a global leader in this sector. Gilead obtained an option to license-in programs after phase II-B for the whole world, except for Europe. In Europe, we will build our own commercial organization. They paid us an upfront of almost EUR 4 billion.
They paid EUR 1.5 billion as an equity investment to get up to 25% of stock in Galapagos. We made a very nice option arrangement where when they license-in a program, they pay us a milestone, and they pay us royalties between 20% and 24%. This deal is unique in the life sciences. It's really a science-related deal. We are jointly going to work on new mode of actions that we're going to move to the clinic as fast as possible. Galapagos is in the lead in any therapeutic area that we choose up to the end of phase II, after which Gilead has the option to opt in. After that, it's a joint program. We are very excited about it.
We believe this will greatly accelerate our programs and help to build a pipeline for Gilead, but really for us to build first a European organization and in the end a global organization to market our new mode of actions. If you look at the pipeline development, we saw really good progress in all the programs. Of course, with filgotinib, we saw the FINCH 1 and FINCH 3 data in rheumatoid arthritis, which really supports the potential best-in-class profile of the filgotinib molecule. Based on the FINCH data, we submitted, or Gilead submitted, for approval in Europe, U.S., and Japan. In the U.S. and Europe, we expect filgotinib to be entered into the market after the summer. We also initiated with Gilead the phase III program in psoriatic arthritis, the PENGUIN program. We also saw a lot of other progress in other programs.
In osteoarthritis, the ROCCELLA trial was fully recruited, and we are expecting readout in the second half of this year. Same with the NOVESA 1690 trial in systemic sclerosis. We are expecting the readout in the second half of this year. This program is the second indication for GLPG 1690 after IPF, the program that is ongoing. Really expanding the opportunity for this molecule. In IPF, we saw the second molecule in phase II, GLPG 1205, going into the PINTA trial, of which we're also expecting the results in the second half. ISABELA, the phase III program in GLPG 1690, is going extremely well. The recruitment at the end of the year, we had over 600 patients recruited already, and we're on track to reach full recruitment near the end of this year.
Our Toledo program, the program with the code name Toledo, of which we will give more information after the summer. We are moving forward with a number of different molecules, and actually, the first two molecules hit the clinic last year, GLPG 3312 and GLPG 3970. We're very excited about that program. Of course, there's much more behind this. We're seeing a very nice progression in the research activities, and you can expect significant news flow in 2020.
filgotinib, if you look at the pipeline now, clearly has reached the point of approval, but many different disease indications are being tested. Look at IPF and fibrosis, where we have multiple programs in research, phase I, phase II. In osteoarthritis, the GLPG19 72 program, we're waiting for the outcome, but we also initiated research activities there that hopefully are going to bring multiple molecules for OA also into the clinic.
Toledo already discussed it, a number of different programs, and then in the research in various different research areas, we have over 30 programs. A very exciting pipeline that we're extremely proud about. If we go to the next slide, look at our commercial organization build-up. Last year, we have made very good progress in building a commercial organization in Holland and Belgium and France, Italy and Spain. We are completing that commercial organization in the coming months to be prepared for the launch of filgotinib in rheumatoid arthritis. That is our first step into commercialization. When filgotinib is hopefully getting approved in ulcerative colitis in 2021, we will market filgotinib for that area in the Benelux as well as in England and the U.K. and Germany.
We do a step-wise approach in building the commercial organization, and that should then be followed up, hopefully with 1690 IPF, where we are going to market all over Europe, but that will be beyond 2022. That is how we are moving forward in the commercial activities. With that, I would like to hand it over to Bart to talk about the financials. Bart?
Thank you, Onno. Good morning everyone in the U.S., good afternoon for those listening in here in Europe. Pleasure to give some color to the financials as well as give some perspective on what the year 2020 is going to bring us, both in terms of numbers and in terms of scientific activities. As you can see here on the first slide, let's start off with what we believe still is the most important KPI for Galapagos, which is the cash position. We've ended the year, as you have seen, with a very strong cash position of EUR 5.8 billion. It's called cash and current financial investment, so some of these are invested in short-term money market funds, hence qualification current financial investments here.
Some smaller items that are, as usual, excluded from the cash burn definition itself are the cash proceeds from warrant exercises and some currency translation effects. We get into the more meaningful elements that have given rise to the increase in the cash balance during 2019. First of all, as Onno was pointing out, the investments by Gilead in terms of equity in the company. These are all euro-denominated, EUR 1.3 billion. The actual cash flow consists of two buckets. On one hand, there is the cash flow from the upfront from Gilead. In euros, that's a net of EUR 3.5 billion. The remainder, and for transparency purposes, we've taken a separation of the two, as I've done also in the third quarter reporting, because our guidance was focusing on the cash burn, excluding the income from Gilead collaboration.
We've landed that number at EUR 334 million within the range that we were guiding for throughout the year of EUR 320 million-EUR 340 million. A very healthy balance sheet position that we have to invest in future years into our R&D platform. I would understand that the accounting of the transaction is a bit complex, and I've explained and clarified some of this as part of the Q3 results. Let me reiterate a couple of points there as well. Let's first start with the upfront, the allocation of the upfront transaction price. We started off with about $4 billion. In euros translated, that's EUR 3.5 billion. There is some accounting for the equity investment that Gilead has put into Galapagos, most notably the premium of EUR 85 million on the shares, which would also go into our deferred income total.
Then on the other hand, there was a set of warrants that we've given as part of this transaction to Gilead, one to get to the 25% level and a second one to get to the 29.9% level. That is basically resulting in a liability of about EUR 60 million, which is again, a decrease of the total purchase price that we need to allocate. That gives us EUR 3.6 billion of purchase price to be allocated. Three key components therein. First of all, in terms of immediate recognition, the license that Gilead has taken on GLPG 1690 is there for EUR 667 million. Then the two others are actually going to be recognized over the next years. First of all, filgotinib.
For filgotinib, we have allocated EUR 640 million, this will be recognized as long as the, let's say, development plan of filgotinib is still active, as long as we're still involved in participating in those expenses. We estimate this to be for a period of four to five years, given all the other indications that we're working on with filgotinib. This recognition will be over the next years in function of the completion of that development program. The remainder, about EUR 2.3 billion is allocated to the rest of our platform, the rest of our R&D activities, we'll recognize this linearly over the next 10 years. You would expect every year to find EUR 230 million of this in our top line in our P&L numbers. Overall, at this moment, we have about EUR 3 billion of deferred income on our balance sheets.
The EUR 3 billion is still to be recognized over the next 10 years. Let me get to the full year results themselves, and here as well, I've broken out both the results as reported on the far right and in orange, the impact of the Gilead collaboration, and I'll do a deep dive on that orange part in a second. As we reported, we are reporting a profit this year with EUR 150 million of net results, and we're reporting a top line of close to EUR 900 million. If we do a deep dive, actually, on the next slide, on the orange column, you see the various numbers that are a result of the Gilead collaboration. First of all, in revenues, the big impact there is the recognition, as I just pointed out, on GLPG16 90, EUR 667 million that we recognized in 2019 in one shot.
There is some movement on the remainder. On filgotinib, it's actually a negative, which might sound a little bit awkward, but this is because we are combining the 2015 agreement that we had with Gilead on filgotinib with the current agreement on filgotinib, and we're reassessing the overall completion, and that led to some derecognition of previous upfront and milestones from the 2015 agreement. That's a one-time negative in 2019. As I was just pointing out, we'll be recognizing filgotinib deferred income over the next four to five years. The platform itself, for the four months that we had the deal closed, we've recognized EUR 81 million on the platform. Operating expenses is a smaller adjustment there, but the two key components are, on one hand, that we're sharing now cost for GLPG16 90, 50/50, so that is actually a positive of EUR 18 million.
On the other hand, for filgotinib, we went from 20% to 50% of cost share, and that's in the negative of EUR 33 million. Bonuses and fees has also had a negative effect of total of EUR 23 million on the operating expenses. The last is on financial results, and this is all related to derivative accounting and FX accounting, which is to a large extent non-cash. I already reported that also back in the Q3 webcast. We are recognizing derivative accounting negative of EUR 140 million connected to the evolution of the share price of Galapagos between the signing of the deal and the closing of the deal. The other EUR 14 million are recognition of the evolution of the Galapagos share price between the approval of the warrants at the AGM in October and the actual exercise that Gilead has done in the month of November.
It's all accounting, non-cash related, but this is the way to appropriately account for both those instruments and are both a result of an increase of the Galapagos share price. On FX, EUR 58 million. Of this, EUR 35 million is realized FX, and the remainder is non-realized on the dollar position that we maintain after the Gilead collaboration. The realized FX basically represents the slight strengthening. It's basically 1.12 to 1.11 of the dollar on the euro between signing and closing of the deal over summer and was already reported in our nine months data. Overall, obviously, a lot of impact from the Gilead collaboration. I'm happy to take any questions on this if that's useful, either during the webcast or later on as well. Let me move to the operating cash burn lookout for 2020.
We're guiding for a cash burn between EUR 420 million and EUR 450 million. This basically is an increase compared to the EUR 334 that I was mentioning in 2019, but it also includes an estimated milestone of $200 million, or I should say milestones because it's multiple, estimated $200 million of milestones upon approval in RA for filgotinib in the U.S., Europe, and Japan. Actually the underlying cash burn is increasing more than just EUR 100 million compared to the 2019 number that I just presented, and there is really three key components to highlight here.
Two are connected to research and development, and one is connected to the commercial launch. Research and development costs, we anticipate for the year 2020 to be increasing between 35% and 40% on a P&L basis, which is actually a similar percentage as we've done in 2019 vis-a-vis 2018 as well. Therein, there is two elements.
One is mechanical, that's the filgotinib cost share that's going up from 20% to 50%. As a result of that, obviously, we are increasing our R&D spends on filgotinib. The other one is two investments in or two additional investments, I should say, in discovery and early development. Finally, the third bucket that's driving the increase in cash burn is the preparation for the commercial launch in SG&A expenses, which is obviously ramping up now as we are getting ourselves ready for launch in EU5 and the Benelux. If I go to the next slide, I'll pass on the financials and I'll move to the more qualitative elements of 2020 and the thing to highlight, and Onno mentioned that already, is the significant number of data readouts that we're going to be having during 2020.
We're actually expecting no less than five patient data sets during the year to start off with ulcerative colitis, filgotinib in phase III, which will come in the second quarter. In the second half of this year, we anticipate the results of the PINTA study, the NOVESA study, the ROCCELLA study, and finally, also our first patient data set on Toledo. The activity level in 2020 is increasing significantly. We are anticipating to be executing over 80 clinical trials in 2020 on more than 10 different molecules. This includes phase I, phase II, phase III, plus supporting clinical trials to all of the molecules that we have in our rich pipeline. Finally, and certainly last but not least, expected approvals for filgotinib in RA in U.S., Europe, and Japan will make this also a transformational year again, 2020, for Galapagos.
Let me close with that and open the floor to questions.
Thank you very much, Bart. That does conclude the presentation part. We are going to open up the line now to callers. We don't manage the queue at Galapagos. I do ask that everyone limit themselves to one question to give everyone an opportunity to ask. With that, Elaine, our operator, can explain what the procedure is to pose a question over the phone. Go ahead, Operator.
Thank you, Elizabeth. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute button is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We will take our first question from Dane Leone, from Raymond James. Please go ahead.
Hi, thank you very much, and congrats on a stellar year. I just wanted to get some more color in terms of some of the readouts that were coming up. Could you just provide a bit more around what depth and detail we would expect from the ulcerative colitis program as it reads out? I guess I'll just leave one follow-up. Can you provide a little bit more out of what we would see around the Toledo program this year? You said you would give more color in the second half of the year, but, I guess, what are you hoping to entail, or what type of unveil would that actually look like? Thank you.
Hey, Dane. This is Walid. I will take your question on filgotinib. As usual, we and Gilead have been, or actually Gilead has been leading this. The way that we disclose top line on our phase III trials is to give the high-level picture for efficacy, but also the key safety elements, and I think that's what we should be expecting. The details of this will be shared at an upcoming scientific meeting. With that, I'll turn over to Piet.
Thank you, Walid. Hey, Dane. Thanks for the question. For the Toledo program, 2020 is an important year. We have an extremely ambitious program to run, and that will include the selection of next PCCs, and typically we plan for more than one. The start of phase I for GLPG 4399. Then we plan as well to generate patients' data. We have two assets there running, both GLPG3312 and GLPG3970. Around the moment when we present the first patient data, we as well plan to disclose the target to the public. That's what we have on the agenda for the Toledo this year. Thank you.
Thank you.
We will take our next question from Rushee Jolly from Bernstein. Please go ahead.
Hi. Rushee Jolly, Bernstein. On filgo, we're going to see the UC data in 2Q and Crohn's next year. Would you be able to talk through what you consider your internal bar for success to be in each indication, but also how you think of potential positioning with respect to the TNF and also ENTYVIO? Thanks.
I don't know if Michele, you want to take the positioning part and I'll take on the first part?
Yes, that's okay, Walid.
Yeah, I think for us, as you know, we do not have any data with filgotinib in UC. We have data in Crohn's, but also we have seen how other JAK1s have performed in UC, and also how they performed in other inflammatory indications like RA, PsA, and AS. If you look at the totality of the data that we have so far from phase II and also from phase III with filgotinib, you can expect what level of efficacy you would see that would be on top of the range when it comes to the JAKs that are being tested in that space and safety to be best in class, which is what we have seen so far.
We expect that those would be the type of data that we will see in UC, by sort of pegging this on performance and other indications, particularly also with Crohn's, where we have very good data with FITZROY. With that, I'll turn it over to Michele for positioning.
Yeah. Thank you for the question. In UC, there is still a high unmet need. We have one out of eight patients that are already treated with advanced treatment. There's clear need there. As Walid indicated, there are still questions to be addressed with the readouts. With the profile, we can see that some of these unmet needs can be addressed with a drug like the potential of filgotinib. On the durability of response, the safety profile, the quick onset of action, these are all needs that the patients have in UC. We're really comfortable that we'll have a very good opportunity there.
Thank you very much.
We will now move to Christopher Marai from Nomura Instinet. Please go ahead.
Hi. Thanks for the question. Just with respect to your IPF programs, could you elaborate on the type of update we might get from the futility analysis for GLPG1690 in IPF? Will this be efficacy-based only, or will we also get some sense of safety? Just remind us of the duration of exposure that patients will have had to GLPG1690 at the time of this futility analysis, like what duration they've been exposed to the drug. Secondarily, with respect to your PINTA program in IPF, how does this asset compare to other GPR84 programs out there? How would you look at potential combinations with GLPG1690 and/or running one program versus another based on success? Would you continue both programs? Thank you.
All right. Thanks, Chris. Let me tackle the first part of the question. With the futility, actually, what we will be sharing is just simply whether it's a go or a no-go. Just to remind you, this program is a program with 1,500 patients, where the primary endpoint is after 52 weeks of treatment. However, patients will continue on whatever drug they were randomized to, placebo or active, until the last patient finishes the 52 weeks. By the time we will have the cutoff for the futility, I think we have about a 1/3 of the patients who would have been exposed to 52 weeks, and probably, the majority, if not all the patients, would have been recruited in the trial.
It's hard for me to guess exactly the duration of exposure, but you can look at when we started, which was earlier this year, earlier last year, I should say, we're in 2020 now, and kind of guess a little bit of where we would be. We also, just from a safety perspective, because I think you asked a bit of question on that, on a regular basis, we've been looking at a safety us on a blinded way, but the external data monitoring committee in an unblinded manner. On a regular basis, we've been getting, of course, the thumbs up, keep going the way it is. We don't have any safety signal. I hope I answered all of your pieces around the ISABELA program, and I'll let Piet tackle the question on PINTA.
Okay. Thanks for the question and allowing me to shed some light on GLPG 1205. GLPG 1205 is our small molecule GPR84 antagonist, which we developed indeed in phase II for IPF. You asked to compare to other GPR84. I assume you want to compare GLPG-1205 with the ProMetic compound PBI-4050, I believe. We tried our best and it's virtually impossible to, on a scientific level, compare the two as they are quite different agents. GLPG 1205 is a nanomolar antagonist of GPR84. The Prometic is a micromolar compound acting on GPR84. That's quite clear. Whether it's an antagonist or an agonist, we could not figure out in our assays. Our assays are not fitted to have a clear sensitive measurement on agonist versus antagonist. It's also a dual compound. It has a dual mechanism of action.
It's very hard and frustrating also for us and also for you understand that to compare those two compounds at face value because it is not a single assay where both show a result. That is for the competitors. Combined with GLPG 1690 is a great question. As you know, we have a plan to really play big in IPF. We really believe patients deserve much better treatment than the ones that currently are there, and probably we'll need to build up cocktails with one compound after the other.
Indeed, it's in our mind if the data GLPG 1205 are as good as we hope that at a certain stage, we can go and combine it with GLPG 1690. There is no actual study in the planning currently because we probably first will wait the phase III data of GLPG 1690 before we start on a combination study.
Having said that, as soon as we have the data and GLPG 1205 is good, we'll do whatever is needed and best to bring to the market and patients as quickly as we can. Thank you.
Thank you.
We'll take our next question from James Quigley from JP Morgan.
Hello, thank you for taking my questions. It's one for Michele, really. On the commercial build-out of the teams, how are you progressing and how are you leveraging the Gilead sales force and the Gilead influence? Is there anything that you haven't got or that you need to progress and to move forward in order to be competitive versus AbbVie? I would also love to get your view on the class black box warning and how this could affect the uptake across the inflammatory conditions. Thank you.
Yes. Hi, thank you for the question. I'll address the first point on the commercial buildup on that. I'd say I'm really pleased with the progression that we're having on the buildup on our European commercial organization. We are really attracting and keep attracting strong talent with deep expertise in the field, in RA, in inflammation in the countries at the international level, with knowledge of the scientific community, the payers environment, the competitive arena. That's progressing very well, so that we'll be ready for the approval and then the reimbursement processes, the registration, the pre-launch activities. We are doing that, of course, as Galapagos because we want to build our commercial footprint as Onno illustrated at the beginning.
We are doing together with Gilead, which is also a big opportunity to put resources together, also the different type of companies we are as a biotech and a very established, strong organization as Gilead is in the country, so that there's a lot of synergies and common learnings we can have in this process. On your question about competition, well, I know that competition very well. I've been in this field of immunology for more than 10 years, and of course, it's something that we take seriously. At the same time, we see two things. There is one and still big unmet need, also in rheumatoid arthritis. Still very few patients, 20%, 30% of the patients achieve a real sustained remission. There is need there for newer therapies, better therapies, and I would say also newer JAKs, in that sense. The space is there.
At the same time, also, we want to play smart. We are building, I'd say a strong commercial and medical infrastructure where we want to leverage the strong data we have on filgotinib, the potential best-in-class we have there, and play it smart in the payer environment, play it with the patient who can benefit most and take that competitive edge. Does it answer your question?
It does. Thank you very much.
Welcome.
We will now move to our next question from Adam Walsh from Stifel. Please go ahead.
Oh, hey. Thanks for taking my questions. Let me add my congrats on all the success over the past year. On GLPG 1690, real quick, the phase II and systemic sclerosis, can you just remind us what we'll be looking for when those data mature? Whether or not you think there's any read-through between any of the efficacy data points in that trial and what we might hope to see in IPF. Thank you.
Adam, this is Walid. Thank you for the question. To kind of give a little bit of background, this is a small exploratory phase II study in 30 patients in systemic sclerosis. It will be six months in duration, double blind, placebo-controlled. We will have a 2:1 randomization on drug versus placebo. We expect 20 patients on drug and 10 patients on placebo. The primary endpoint will be the modified Rodnan skin score. We will also look at other endpoints that are commonly used in systemic sclerosis. We will also look at FVC. We don't expect there to be a lot of changes because we didn't specifically select patients who have SSc-ILD. We didn't select patients who have interstitial lung disease with systemic sclerosis. Since we were looking at those patients, we measured FVC.
From a read-through perspective, I think there will be Literally, my expectations are very low because, again, we're dealing with a read-through for IPF because this is a small study to give us an initial signal or foray into the systemic sclerosis space. If you've been following that space, it's really a very difficult disease. It's heterogeneous in terms of progression of the disease. Also the endpoint, which is the modified Rodnan score, is notoriously variable, and also it goes one way in the early part of the disease and another way in the later part of the disease. You have to be very careful when you select your patients. All of this is to tell you that this is our initial foray exploration into that space. Obviously, if we have positive data, we'll be very excited. It will determine the next step.
If the data are not positive from the perspective of a P value that's being hit because it's an exploratory, it will still guide us to see whether we want to continue looking in this patient population, in certain subpopulations in that group and things of that sort going forward. I hope I addressed your comment.
You did. Thank you.
Thanks, Adam.
We will take our next question from Emily Field from Barclays.
Hi. Thank you. Yeah, I was just wondering which of the readouts expected in 2020 could lead to an opt-in decision from Gilead. I'm assuming that-1205 could result in that decision. Also, would the POC in GLPG 3312 qualify? Also just on that same topic, do you expect to continue developing GLPG 3312 into commercialization? Or will the findings of that more be used to inform the development of the rest of the Toledo program? Thank you.
Hi, this is Bart speaking. Let me give you a perspective on the opt-in of these five, then I'll ask Piet to comment on the progress on GLPG 3312 and whether we take that forward onto commercialization. In the five readouts, we have filgotinib, which obviously is already part of the Gilead license. We have also GLPG 1690, the NOVESA trial, and it's licensed by molecule, that's also already part of the alliance. The others, the one that is definitely a triggering clinical trial, as we call it, is GLPG1972, the OA program. That will lead to a decision by Gilead whether they opt in or not. On PINTA, it's not strictly speaking a triggering clinical trial, but it might still lead to an opt-in. We'll see what that data set will bring. Finally, the Toledo program will definitely not be an opt-in moment.
That will be later on. As usual, the contract defines the opt-in to be after a phase II-B program. We're not there yet with the Toledo program. Piet, maybe you can comment on the GLPG 3312 and the path forward there.
Yeah, thank you, Bart. At GLPG 3312, I always make the comparison to filgotinib. At the moment we started, filgotinib was the best drug we ever saw in our models of RA. GLPG 3312 is the best drug we've ever seen in our models for IBD. In that sense, I'm here the hopeful guy that hopes that this drug can make it to the market because it's simply the best. Whether we will get there depends on many clinical studies we still need to do, but good drugs typically make sure that they get to the market. We're hopeful that we can do that. Thank you.
Thank you.
We will take our next question from Eliana Merle from Cantor Fitzgerald.
Hey, guys. Thanks so much for taking the question. Just on ulcerative colitis, curious about how you're thinking about the space compared to the S1P1 class. If both have positive phase II readouts this year, what do you think are the key advantages or key points of differentiation for JAKs versus S1P given potential for both being oral in the space? Thanks.
You broke up initially. I think I got the gist of your question comparing the JAKs to S1Ps. I think the S1P data that I have seen so far, there are a couple of things that actually stood out for us. One is the speed of onset. I think also by virtue of their mechanism of action, you would expect that it would be a bit slower. I would imagine that there would be a potential differentiation for the JAKs. We've seen the JAKs work quite rapidly. Actually, at the very first time what they look at changes in symptoms, you can see an improvement in these patients. I would imagine that would be a positive differentiating factor. The second part, and we'll have to see, is what is the liability to cardiovascular liability with the S1Ps. I know historically they've been plagued with questions about slowing heart rate.
The distribution of these receptors in the heart are well-documented. It remains to be seen in larger trials whether we do still see some slowing of the heart rate and potential exclusion of certain portion of the population. What would be the safety longer- term will have to be seen. It's a bit too early to really comment on that part.
Thanks.
We will now move to Lenny Van Steenhuyse from KBC Securities.
Hi, and thanks for taking my question. Some weeks ago, we saw the first equity investment in a third party with Fibrocor. I was wondering if we can expect these smaller participations as now a fundamental part of the future strategy looking for external innovation, and if we can expect similar deals going forward in 2020. Thank you.
I'll take this question. This is Onno. Clearly, we have said when we did the deal with Gilead that acquisitions are going to be a strategy going forward. Clearly, we will take our time, look how it fits within our organization and in our pipeline. There will be no major acquisitions. They will be bolt-on acquisitions to what we currently have. We have a great pipeline. We have a great R&D organization. It's not that we have a lack of programs, but in the areas where we are active, we're always looking at additional molecules that could complement our own efforts to build a stronger franchise.
We're always looking to the outside world and see if there are new mode of actions there that could complement our own efforts, and the Fibrocor deal was clearly in that direction. You can expect more
acquisitions going forward.
Okay, thank you.
We will take our next question from Brian Abrahams, from RBC Capital Markets.
Hey, guys. Thanks so much for taking my questions. Two quick ones on Toledo. I was wondering if you could talk about any additional insights on the activity and therapeutic window that you've gained from the ongoing preclinical, and healthy volunteer work that you're doing. On filgotinib, just curious your level of confidence in the potential for priority review, based on the voucher, and when you'd expect to hear back from the FDA on potential filing centers. Thanks.
Piet here. On the Toledo, we typically bring forward drugs we believe are safe, and that's as far as we typically comment on terms of safety margins with any of our novel drugs, and that's where I would like to keep it with the Toledo as well.
Thank you.
The question on Toledo, I think we can confirm that indeed the FDA has accepted the filing for filgotinib and classified it as a priority review with the goal date in the second half of this year.
Great. Thanks so much.
Thanks.
We will now move to Patrick Trucchio from Berenberg Capital Markets.
Thanks. Good morning and good afternoon. My question is regarding the more than 80 clinical trials in 2020. Can you frame for us what proportion of these trials are evaluating novel mechanisms, and what proportion are improving on existing mechanisms? Secondly, with the early-stage pipeline broadening substantially in 2020, how many phase II and III clinical trials could Galapagos have up and running in two or three years from now? Thanks.
I guess we're discussing who needs to answer this question. It spans a bunch of things. We can say that those are actually When we say 80 clinical trials, it encompasses everything. The trials that we have ongoing that you're familiar with, phase III and phase II, plus a lot of the supporting phase I studies, the drug-drug interactions and so on, so forth. We mentioned this number to give a scope of the amount of work and how the pipeline is actually progressing. I'm not sure what you mean by improving on molecules that we have. Galapagos has been consistently going after sort of novel mechanism action with all these programs that we have, and we will be seeing over the next two to three years, I would say upwards of maybe 20 different phase II trials and novel indications.
I think we've talked also about Toledo by itself, evaluating about 10+ indications that we're going to be going after. I think it's a very healthy combination of phase II, evaluating new diseases, new pharmacology, plus also all the supporting phase I studies to enable us to move these programs from phase I to phase II to phase III as well, as we're moving forward.
We will now move to Phil Nadeau from Cowen and Company. Please go ahead.
Maureen, thanks for taking my question. Just a follow-up to Brian's question on the Toledo program. Do you still expect to disclose the mechanism when GLPG3312 starts the UC proof of concept trial at some point this year? Could you give us maybe a little bit more clarity on exactly when that disclosure will happen? Maybe could you remind us how GLPG3312 versus GLPG3970 and GLPG4399 differ? What should we expect to see different between a pan-Toledo versus a Toledo 2/3 and a Toledo 3? Thanks.
Thank you, Phil, for the question. I honor promise that we will disclose the target this year. That's a promise from us to all of the investors. The mystery will be there for a number of months, but we will help you out of your dreams there and bring you back to the reality in course of this year. That's a promise. I can spend, I think, too much time to really explain the difference between all of the different profiles. I think GLPG3970, as I said before, is a compound that behaves well across tissues. It has intrinsically the same pharmacological profile than GLPG3312, but behaves much more different after oral dosing in every tissue, and that means skin, joints, GI tract.
GLPG3312 is a compound which has the same mechanism of action, really only scores much better in the GI versus other tissues. That's why we target this to the IBD space. GLPG4399 is a complete different, because it is part of Toledo, but only has the anti-inflammatory activity, does not push the pro-inflammatory cytokines. It's really a different compound as it's only pushing down the bad cytokines, that currently we have only a couple of diseases in mind for that compound. That whole explanation could take me an hour as well, which we don't have over here now. Thank you.
That's helpful. Thank you.
We will take our next question from Peter Welford from Jefferies.
Hi, thanks. A couple for Bart on the financial side, if you don't mind. Firstly, just on the revenues, is it possible at all to give us some sort of split, I guess, of the EUR 238 or so, or whatever bit of that is without the other income, as far as where the source of those revenues came from during 2019? Just with regards to the European collaboration for the profit share. Where should we think about as that launches your share of profit? Is that going to be booked as an offset to your sales and marketing expense, or how should we think of that? Can you perhaps give us some sort of idea, I think sales and marketing expenses ticked up quite a lot in the fourth quarter. I appreciate the color on the R&D, P&L expense.
Is it possible to give us any insight as well into how we should think about that line, given clearly, I imagine there's quite a lot of ambition to expand, by the sound of it, the headcount there. How should we think about that line, going into 2020? Thank you.
Hey, Peter. Thanks for the questions. Let me try and give you a couple of answers. Hopefully, I'm capturing them properly. In terms of revenues split out for 2019. The revenues itself, I explained, I think in the earlier slides, are highly driven by the EUR 670 million of the license on 1690. There is the filgotinib revenue recognition in addition. There is some other income that we have, which is about EUR 50 million in 2019, which is mainly connected to grants and tax credits from the French and Belgian governments. We have a bit of income as well in revenues from our fee-for-service subsidiary, Fidelta. In terms of guidance for 2020, and specifically the sales and marketing line. What I've been trying to do in the guidance is to give you the three key drivers.
Two of those are in R&D and represent the 35%- 40% of increase on the R&D line. The third is in SG&A, and all three are, let's say, of similar size. Don't want to get into more precision now because sometimes our numbers are influenced by some accounting entries here and there that are non-cash. Similar size, the three buckets, two of which are in R&D and the last one in SG&A. That's clearly connected to indeed the build-out in the commercial infrastructure. The way we're going to be accounting for that going forward is that we have both our own expenses, which will show up in operating expenses. We will have the share of, let's say, the profit share, which will be initially the loss share from the Gilead Sciences side.
To the extent it will become a profit share, it will end up obviously in the top line. To the extent it will be still a loss, which is what's going to be in 2020, is going to show up in our cost of sales lines as well.
Thank you.
We will take our next question from Matthew Harrison, from Morgan Stanley.
Hi, everyone. This is Connor on for Matthew. Thanks for taking the question. You touched on this briefly before, but on PINTA, could you just provide some more detail on what kind of data you need to see out of 1205 to move it into further study? Would you expect to wait for phase III data from 1690 to start a phase III? Would you potentially consider a combination study between the two as a first step? Thank you.
Thank you for the question on PINTA. PINTA is a phase II study with 60 patients, they are well-balanced in terms of background treatment, where one-third is on nintedanib, more or less one-third on pirfenidone, one-third on local standard of care in countries where none of these drugs is readily used. We have a well-balanced study. We'll have readouts in terms of FVC, and as well, we have included FRI, that will give us the sufficient readouts to decide whether the disease on its own is a promising drug. Whether we see that disease on its own for IPF is a promising drug, we will move it forward. Certain stage, we will, for sure, try the combination with GLPG1690. That is not the first thing that we need to do next.
It's really on our agenda as soon as we have the phase III readout of GLPG1690, that we can start and study the combination of those two. Assuming, of course, that both have been successful up to that stage. Thank you.
We will now take our next question from Benoit Louage, from Degroof Petercam.
Hello. Good afternoon and good morning. Thank you for taking my question. Mine relates to the ROCCELLA trial. I was wondering whether the primary endpoint on cartilage thickness would be the main decision-maker in order to go and decide to go into a phase III, or whether you would also aim to achieve a certain level of pain relief. Also, maybe what the current regulatory perspective is on novel disease-modifying drugs for osteoarthritis. Thank you.
Yes, thank you very much for that question, Ben. Yes, indeed, the primary endpoint and the way the study is powered is to detect whether we do have a change on cartilage thickness in the medial part of the knee as measured by MRI. Of course, moving forward and getting regulatory approval will require both demonstrating effects on structure, as well as on function or pain. Those endpoints actually will be looked at as part of the trial. The trial itself was powered on the structural changes. In terms of what will it take to take us to phase III, I think, obviously, we need to see a clear effect on the structure, but also we need to see some trend on either pain, as you indicated, or on function as well.
That's why it's really very difficult to, a priori, set the guidelines very clearly for this, because the results could come out in very different flavors, and it could very well be that certain subset of patients would have to be looked into in order to progress this forward. This is a very huge unmet medical need, and the Agency, just as the scientific community and also the pharmaceutical industry, are working together to figure out a path forward. Often it's like the chicken or the egg. You almost need data of a compound that actually is able to move the needle so that you can have fruitful discussion concretely with the health authorities about what will constitute the next step forward. That's really what we intend to do. We're working with the best academic collaborators.
Our partner, Servier, is also very well-versed in this space, and we will be putting our heads together and talking to regulatory authorities based on our data to figure out a clear way forward for the phase III program. I hope that answers your question.
Yes, very helpful. Thank you very much.
Thank you.
Okay. With that, I'm afraid we're going to have to call this a day. I realize there might be some folks who had some questions that weren't able to get in. Please reach out to the IR team, and we'll make sure you get your answers. Our next scheduled call will be for the Q1 2020 results at 8:00 A.M. Eastern on the 8th of May. We thank everybody for their participation today and wish everyone an excellent weekend. Thank you. Goodbye.