BRUSSELS, Dec 10 (Reuters) - Belgian biotechnology company
Galapagos may sell its service division BioFocus DPI in 2010 if
the price is right and if the company needs the cash,
Galapagos's Chief Executive, Onno Van de Stolpe, told Reuters in
an interview on Wednesday.
"It's a possibility -- the hybrid model we're operating now,
with research and service businesses, will not be for eternity,"
said Van de Stolpe.
"When we can get a good price for it, it might be a good way
to raise capital for our research programs without diluting
shareholders."
He said the decision to sell BioFocus would depend partly on
whether the company needed the cash to fund its research and
development projects.
Van de Stolpe confirmed the company's previous prediction
that BioFocus, which garnered a division loss of 3.9 million
euros in 2007, will turn a modest profit in 2008.
"The service division will be profitable this year, although
not to large extent," said Van de Stolpe, noting he anticipated
the division to generate "substantial cash flow" in 2009.
Van de Stolpe predicted another net loss for his company in
2008, though he declined to give specific figures. In 2007,
Galapagos reported a net loss of 21.9 million euros.
He confirmed his previous guidance of a year-end cash
position of 25 million euros, 2008 revenues between 75 million
and 80 million euros and said once again that the company has
enough cash to fund its operations for the next two years.
"If the market would greatly improve and our stock would
rebound, we're not excluding that at some point we would do a
further capital increase," said Van de Stolpe.
"But we can clearly survive the next two years without a
capital increase."
Galapagos specialises in bone and joint disease such as
rheumatoid arthritis. While research and innovation funds have
all but evaporated during the current financial crisis, Van de
Stolpe said the company's partnerships with larger companies
allow it to keep its research going strong.
Galapagos's recently-announced alliances include deals with
Merck KGaA's Merck Serono and Morphosys AG.
"It's exciting to see the development of the company --
we're hitting all our milestones that we have set to the market,
so it's somewhat more frustrating to see the reactions of
investors," Van de Stolpe said.
"But I think a lot of companies are experiencing the same
thing at this point."
Galapagos's shares closed up 1.25 percent at 3.25 euros on
Wednesday. The company's shares have tumbled more than 50
percent from their close of 8.10 euros on Dec. 31, 2007.
"It's the pressure on the whole market -- investors are a
bit nervous, and when they're nervous, they sell off their small
companies, and all their companies that are in it for the long
term -- and biotech is always in for the long-term," said
Theodoor Gilissen analyst Tom Muller, adding Van de Stolpe's
optimistic guidance on Galapagos seems reasonable
(Reporting by Anne Jolis; Editing by Andrew Macdonald)
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