Gilead signs a major agreement with Galapagos

Gilead signs a major agreement with Galapagos


Galapagos leaps 18% in Amsterdam, after a 10-year global research and development collaboration with Gilead Sciences, which will see access to an innovative pharmaceutical portfolio. The latter will receive an initial payment of $3.95 billion and a capital investment of $1.1 billion from Gilead, resources that Galapagos will use to expand and accelerate its R & D programs.

The portfolio includes six molecules currently in clinical trials, more than 20 pre-clinical programs, and a proven drug discovery platform, for which Gilead will have marketing rights outside Europe.

As part of their deal, the second among the groups after the $2 billion tie-up in 2015, Galapagos will now be more involved in the global strategy of filgotinib, a drug which is currently under investigation for the treatment of rheumatoid arthritis (RA) and Crohn’s disease.

Sell side brokers JP Morgan described the agreement as “transformer” to Galapagos while KBC believes it is “Royal” to the Belgian group. It will ask shareholders permission to leave Gilead up 29.9% of its capital. Once this threshold is reached, the agreement provides for a suspension clause 10 years preventing any rise in additional round. This clause Jefferies notes, it guarantees “probably the independence of Galapagos until 2029” adding that this removes the chance of a buyout of the company by Gilead in the near future.

They will continue to market the drug in France, Germany, Italy, Spain and the United Kingdom, will share the profits fairly and Galapagos retained the exclusive rights in the Benelux. The role of Belgian biotech in marketing will still be extended. In contrast, future drug development costs will now be equally divided between Gilead and Galapagos (vs. 80/20 previously).

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Brayden Fortin is a American with numerous years of investment experience in the American Equity Market and in the Global Commodity Market. He has a B.Com degree from a well respected Canadian university and has experience working in the wealth management industry. He is interested in delving into numbers to analyze companies and markets. He won a couple of international strategy simulation competitions involving decision making through numerical analysis, and also scored in the top 50 on the Bloomberg Aptitude Test (out of nearly 200,000 test takers).