Company: GLPG
Filing Date: 2025-03-27
Form Type: 20-F
Source: 0001558370-25-003806
Chunk: 417

Company: GALAPAGOS NV
Filing Date: 2025-03-27
Form: 20-F
Item: Item 19
Chunk 417
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F-2

responsibilities and services to be provided by both parties during a transition period following the completion of the sale. On that date, the Company recognized a gain on disposal of 52.5 mEUR, an upfront cash receipt of 50.0 mEUR, contingent consideration receivable estimated at 47.0 mEUR and a liability related to a contribution for research and development costs to Alfasigma of 40.0 mEUR.. 
The accounting for the disposal of the Jyseleca® business to Alfasigma was identified as a critical audit matter due to the judgement in identifying the different elements of the total consideration, determining the fair value of the contingent consideration receivable, and accounting for the transition agreement.
Auditing the fair value of the contingent consideration receivable was complex due to the significant judgment required in estimating the fair value. In particular, the fair value estimate required the use of a valuation methodology that was sensitive to certain significant assumptions, including net sales forecasts and the discount rate used in the model. Additionally, we exercised considerable judgment in auditing the research and development costs payable to Alfasigma, as required by the transition agreement, which was recognized as part of the overall gain from the divestiture of the Jyseleca® business. Variations in these judgments and estimates could notably affect the fair value of the contingent consideration receivable and the final gain realized from the disposal of the Jyseleca® business.
The primary procedures we performed to address this critical audit matter included: 

●   Testing the design and operating effectiveness of controls over management’s accounting treatment for the disposal of the Jyseleca® business, the derecognition of the disposal group, the calculation of the total consideration, including the development of the significant assumptions used in the valuation model of the contingent consideration receivable, related to: (i) estimates in the forecasts of future net sales and (ii) discount rate applied to the forecasts.
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●   Evaluating management’s judgements over the identification of all assets and liabilities belonging to the disposal group by reading relevant agreements and assessing the Company’s ongoing involvement during the transition period as agreed with Alfasigma.
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●   Verifying the components of the gain on disposal of the Jyseleca® business, including the identification of disposed of assets and liabilities, the determination of the contingent consideration received and recognition of liability for research and development costs payable by the Company to Alfasigma.
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