Gilead Increases Stake in Galapagos with 10-Year Deal Worth More than $5 Billion

Gilead logo on scientist's coat

Four months after reporting success in two rheumatoid arthritis trials with its developmental partner Galapagos NV, Gilead Sciences is strengthening that partnership with a 10-year global research and development collaboration worth more than $5 billion. Gilead is also increasing its stake in Galapagos.

Under terms of the deal, Belgium-based Galapagos will receive $3.95 billion in upfront cash, as well as a $1.1 billion equity investment from Gilead. California-based Gilead will gain access to an innovative portfolio of compounds, including six molecules currently in clinical trials, more than 20 preclinical programs and a proven drug discovery platform. The investment made by Gilead will strengthen the relationship between the two companies. In their announcement this morning, Gilead and Galapagos said that amended certain terms in the agreement governing filgotinib, the late-stage RA drug being jointly developed by the two companies. The amended terms will provide a broader commercialization role for Galapagos in Europe.

With the deepening of ties between the two companies, Gilead will have access to Galapagos’ established research base, which includes more than 500 scientists, and to Galapagos’ cell-based assays to discover and verify novel drug targets. Also, Gilead will receive an exclusive product license and option rights to develop and commercialize all current and future programs in all countries outside Europe. Galapagos assets at the center of the deal include GLPG1690, a Phase III candidate for idiopathic pulmonary fibrosis and GLPG1972, a Phase IIb candidate for osteoarthritis. Both GLPG1690 and GLPG1972 are first-in-class compounds and could offer important mid- and late-stage pipeline opportunities for Gilead, the company said. If these assets are approved in the United States, Galapagos stands to gain nearly $500 million in milestone payments. Gilead also receives option rights on all of Galapagos’ other current and future clinical programs outside of Europe.

Galapagos will use the proceeds from the Gilead investment to expand and accelerate its research and development programs.

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Daniel O’Day, chairman and chief executive officer of Gilead, said the deal with Galapagos will generate both long-term strategic value and mutual, immediate benefits for both companies. O’Day pointed to Galapagos’ “pioneering target and drug discovery platform” as a reason behind their initial collaborations. He added that through the expanded deal, Gilead “gains exclusive access to all current and future compounds in Galapagos’ rich pipeline while Galapagos is able to expand its research activities and build commercial infrastructure.”

Galapagos CEO Onno van de Stolpe called the deal with Gilead a landmark in company history.

“Galapagos has been highly effective at target identification and drug discovery, progressing novel molecules from research into the clinic. We will benefit greatly from Gilead’s expertise and infrastructure and believe this collaboration will provide an accelerated path to advance our pipeline. This agreement is about maximizing innovation based on developing new mode of action medicines. With the capital provided by Gilead, we aim to progress innovation to patients,” van de Stolpe said in a statement.

Gilead’s equity investment is at a share price of €140.59 per share, which is a 20% premium for the average price of Galapagos shares over the previous 30 days. This will increase Gilead’s stake in Galapagos from approximately 12.3% to 22%. In addition, Galapagos intends to seek shareholder approval to issue two warrants allowing Gilead to further increase its ownership of Galapagos to up to 29.9%. As part of the deal, Gilead will also nominate two people to Galapagos’ board of directors following the closing of the transaction.

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