September 28, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Investors and analysts love to speculate on who Gilead Sciences might buy, but for a while, at least, one company is off limits. Belgium company, Galapagos , recently indicated that a standstill agreement that prevents Gilead from increasing its stake in the company is still in effect.
In January, Gilead’s entirely-controlled subsidiary, Gilead Biopharmaceuticals Ireland Unlimited Company, subscribed to a capital increase, receiving 6,760,701 new shares in Galapagos. This accounts for 14.75 percent of the company’s current shares. The two companies have a development and license deal for filgotinib, a JAK1-selective inhibitor. Gilead payed $300 million up front for the deal and invested another $425 million in Galapagos shares. Another $1.35 billion more in milestone payments is possible, and tiered royalty payments that begin at 20 percent.
The drug is being tested for rheumatoid arthritis (RA), Crohn’s disease and ulcerative colitis.
Recently, Galapagos’ chief executive officer, Onno van de Stolpe, being interviewed on Dutch radio station BNR, said that the December agreement it signed with Gilead prevents a takeover—at least for now. Van de Stolpe declined to say when the standstill agreement would end, although it has been pointed out that a lockup period, where Gilead is not allowed to sell Galapagos’ shares, ends at the end of 2017.
Just yesterday Galapagos reported that it had successfully finished discussions with the U.S. and European regulatory agencies to begin the DIVERSITY Phase III trial in Crohn’s disease and the SELECTION Phase IIb/III trial in ulcerative colitis using filgotinib. First dosing is expected to begin before the end of this year.
“The outcome of the discussions with U.S. and national European regulatory authorities enables our collaboration partner Gilead to further evaluate filgotinib in IBD,” said Piet Wigerinck, Galapagos’ chief scientific officer, in a statement. “The improvements in clinical signs, quality of life, and endoscopy in Crohn’s patients reported in the FITZROY Phase II study support this next step.”
If Gilead is interested in an acquisition in the meantime, other companies have been suggested. One is New York-based Intercept Pharmaceuticals . The big reason was that in May, the U.S. Food and Drug Administration (FDA) approved Intercept’s Ocaliva (obeticholic acid) to treat primarily biliary cirrhosis.
Gilead has been the leader in the liver-disease market, largely based on its dominance with hepatitis C (HCV). But it’s losing out to Intercept, and Allergan recently acquired the San Francisco Bay Area’s Tobira and San Diego-based Arkarna Therapeutics in order to gain entry to the non-alcoholic steatohepatitis (NASH) and liver disease market.
Earlier in the year Gilead acquired Nimbus Apollos for its Acetyl-CoA Carboxylase (ACC) inhibitor program, which grew its NASH program. Gilead is also investigating its simtuzumab for NASH.
Other companies that investors speculate Gilead might acquire include Puma Biotechnology , Incyte Corporation (INCY), Kite Pharma and Portola Pharmaceutical .
Gilead is currently trading for $79.05. Overall, the stock is down about 23 percent so far this year. This has given analysts and investors a reason to argue that it needs an acquisition to bolster its stock value, while others believe it’s a good reason to buy shares, although TheStreet’s Jim Cramer, on CNBC’s “Stop Trading” segment earlier this month noted that just because a stock is cheap doesn’t mean it’s going to improve. He pointed out that Gilead currently doesn’t have a catalyst to push it higher.
There’s even been speculation of a mega-deal between Allergan and Gilead. However, most analysts think it unlikely, partly because with its recent entry into the NASH market, Allergan appears to be positioning itself as a competitor to Gilead.
