Gilead Sciences Inc. announced to invest $5.1 billion to increase its stake in Galapagos NV and partner with Belgian-Dutch Biotech firm to develop and commercialize its treatments for ten years. Galapagos discovers and develops small molecule medicines with novel modes of action, three of which show auspicious patient results and are currently in late-stage development in multiple diseases. Whereas, Gilead Sciences, Inc. is a research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in the areas of unfulfilled medical need.
Insights of the deal
The partnership will allow for closer scientific collaboration between the companies. Gilead will have access to Galapagos’ established research base, which includes more than 500 scientists, and to Galapagos’ unique platform, which develops the disease-related, human primary cell-based assays to discover and verify different drug targets.
The terms of the deal also consist of a $3.95 billion payment to Galapagos. It will also invest $1.1 billion a share, to increase its stake in the drugmaker from 12.3% to 22%. This represents a 20% premium to the 30-day weighted average share price of Galapagos, which trades in Amsterdam and on Nasdaq and has a market value of around $7.9 billion.
Assuming Galapagos shareholders would eventually sign off; Gilead could ultimately boost its ownership stake to as much as 29.9%. Gilead will get two seats on Galapagos’s board of directors as part of the deal, according to reports.
Research and development program to expand and accelerate with the deal
Galapagos will use the proceeds to expand and accelerate its research and development programs. Gilead will receive an elite product license and option rights to develop and commercialize the business across all the countries outside Europe. Moreover, the two companies have also settled to amend certain terms in the agreement governing filgotinib; a drug that is currently under research for the treatment of rheumatoid arthritis and Crohn’s disease.
Following the closing of the transaction, Gilead is also likely to nominate two individuals to Galapagos’ Board of Directors.
Daniel O’Day, Chairperson and Chief Executive Officer of Gilead said, “We are excited to enter into this unique agreement, which will generate both long-term strategic value and mutual, immediate benefits. We chose to partner with Galapagos because of its pioneering target and drug discovery platform, proven scientific capabilities and outstanding team.”