Gilead Invests Up to $2 Billion in Galapagos’ Anti-inflammatory Drug
December 17, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Foster City, Calif.-based Gilead Sciences, Inc. and Mechelen, Belgium-based Galapagos NV announced today that they had inked a deal to develop and commercialize filgotinib for inflammatory diseases.
Gilead will pay Galapagos an upfront payment of $725 million, which is made up of a $300 million license fee and a $425 million equity investment in Galapagos. Gilead will also pay Galapagos up to $1.35 billion in milestone payments, as well as tiered royalties starting at 20 percent.
Filgotinib is a JAK1-selective inhibitor. In a Phase II clinical trial, it has proven to be effective and safe for rheumatoid arthritis (RA) and Crohn’s disease. The two companies plan to begin Phase III clinical trials in RA and Crohn’s in 2016.
“The partnership represents an opportunity to add complementary clinical programs to our growing inflammation research and development efforts,” said Norbert Bischofberg, Gilead’s executive vice president, Research and Development, and chief scientific officer, in a statement. “We look forward to working with Galapagos to advance this program forward as quickly as possible.”
Only last week analysts were speculating on the possibility that Thousand Oaks, Calif.-based Amgen might be interested in Galapagos based on the trial data from filgotinib.
In September 2014, AbbVie Inc. returned the rights to filgotinib to Galapagos with plans to develop its own JAK1 inhibitor, ABT-494. The Chicago-based AbbVie apparently believed that its own drug would be more effective than filgotinib and with a better safety profile.
JAK inhibitors are a new class of drugs being developed for a number of inflammatory diseases, including RA, lupus and irritable bowel syndrome (IBS). Galapagos not only had caught the attention of AbbVie, but Johnson & Johnson . JNJ’s arthritis drug Remicade loses its U.S. patent protection in September 2018, and is facing fierce pricing competition in Europe.
So JNJ partnered with Galapagos and Astellas for JAK inhibitors. But in 2014, JNJ spilt with Astellas, then ended its partnership with Galapagos in March 2014.
In what seems prescient now, Matthew Harrison, an analyst with Morgan Stanley, wrote earlier this year, “Galapagos management can negotiate another deal with a key rheumatoid arthritis player and advance filgotinib quickly.”
Not Amgen, as it turns out, but Gilead.
Which doesn’t make it necessarily less of a risk. Pfizer Inc. launched a JAK inhibitor, Xeljanz, in 2012. Eli Lilly & Co. and Incyte Corporation have had positive Phase III data for its JAK inhibitor, baricitinib, compared to placebo and Humira. Galapagos’s filgotinib will need to improve on them in order to make a go of it, which is apparently something Gilead thinks can happen.
In The Motley Fool, George Budwell wrote last week, “…it’s important to understand that there are several other experimental treatments in ongoing trials for Crohn’s disease, including ABT-494. Thus, filgotinib will need to be able to differentiate itself from currently available therapies—and any forthcoming competitors—in this increasingly crowded space to be a major value driver for Galapagos going forward.”
Galapagos popped a little bit on the news. On Sept. 23, 2015, shares traded for $62.51, then plummeted to $39.01 on Sept. 29. Shares recovered gradually to $57.53 on Dec. 11. Shares are currently trading for $61.43.