AbbVie, Johnson & Johnson Floated as Possible Suitors For Freshly Flush Galapagos

Published: May 15, 2015

 AbbVie, Johnson & Johnson Floated as Possible Suitors For Freshly Flush Galapagos
May 14, 2015
By Riley McDermid and Alex Keown, Breaking News Staff

Mechelen, Belgium-based Galapagos is fattening up its initial public offering plans again, saying this week that it now expects an offering at $288 million, almost double the amount it initially filed for with the U.S. Securities and Exchange Commission last month.

Galapagos' ordinary shares are currently listed on Euronext Amsterdam and Euronext Brussels under the symbol GLPG, the same ticker it hopes to bring to the NASDAQ. Morgan Stanley, Credit Suisse and Cowen and Company are bookrunners on the deal, while Nomura and Bryan, Garnier & Co. are acting as co-managers. Morgan Stanley is acting as stabilization agent on behalf of the underwriters.

The Belgian drugmaker said the maximum amount has now been capped at $288 million.

Much of that money is expected to come from existing stakeholders, and potential acquirers AbbVie and Johnson & Johnson . JNJ was part of an amended F-1/A filing last week that said the company would receive $25 million of the IPO.

That interest was not unexpected. In early March, reports broke that Galapagos’ arthritis drug filgotinib is being eyed as the crown jewel of the company, making it a likely target for both AbbVie and Johnson & Johnson.

Filgotinib, also known as GLPG0634, is being developed to treat a number of inflammatory diseases including rheumatoid arthritis. Both AbbVie and Johnson & Johnson currently have stakes in Galapagos, but if the new arthritis drug pans out, the companies may fight to acquire Galapagos, especially since both companies will be losing patent protection on their own arthritis medications, Humira and Remicade.

Humira makes up more than half of AbbVie’s revenue. In February, Galapagos, a $650 million Belgian drugmaker, completed the first half of a two-part 24-week clinical trial testing Filgotinib. The DARWIN 1 trial tested 599 patients with moderate to severe rheumatoid arthritis who did not respond well to methotrexate. Select patients received Galapagos’ medication is administered in pill form, unlike Humira and Remicade, which are administered in a shot.

Galapagos expects to announce the results of the first 12 weeks of the clinical trial sometime in April, and then continue trials for another 12 weeks. Results from DARIN II are expected to be reported sometime in May.

“We see 98 percent of eligible patients who complete DARWIN I and II enrolling in DARWIN III, with 400 patients now in the long term extension study. The fact that investigators and patients see benefit in continuing treatment with filgotinib gives confidence,” Piet Wigericnk, chief science officer for Galapagos, said in a press release in March.

If trials play out as the companies hope, Filgotinib could be worth $2.2 billion in sales, which would make it an attractive candidate for an acquisition. In addition to AbbVie and Johnson & Johnson, Amgen , the maker of the arthritis treatment Enbrel, may also be interested in pursuing an acquisition.

The prospects of the medication have been on the radar of other companies for years. Nine companies competed for rights to help Galapagos develop and sell Filgotinib more than three years ago, according to reports.

Patients spend an estimated $27 billion annually on treatments for rheumatoid arthritis. Humira, manufactured by AbbVie, generated $12.5 billion in sales last year and Remicade, manufactured by Johnson & Johnson, generated $6.9 billion in revenue. /is expecting to begin to lose patent protection on Humira in 2016.

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