Belgian biotech firm Galapagos has struck a new deal with Gilead Sciences where the latter will acquire a larger stake for $5.1 billion. The deal is the largest yet by new Gilead CEO Daniel O’Day.
A long-term perspective
Gilead Sciences and Galapagos are working together on the experimental JAK1 inhibitor filgotinib for rheumatoid arthritis. Gilead has agreed to pay $3.95 billion upfront to Galapagos. It will take a $1.1 billion equity investment in the company and increase its stake to 22%. Another $1.1 billion are dedicated to opt-in payments for two late-stage drugs.
The 10-year research & development alliance is crucial for Gilead as it could introduce six new compounds to the firm’s clinic programs and another 20 in preclinical programs. The biotech firm is already suffering because of staggering declines in its hepatitis C sales. Its HIV franchise is also under pressure and one of its biggest stakes, cancer and live diseases, are still being worked upon.
Gilead needs to rebuild its pipeline
The company acquired Kite for $12 billion to get hold of CAR-T therapy for cancer Yescarta (axicabtagene ciloleucel). However, the sales for the product are dismal and brought only $264 million in 2018. It’s lead non-alcoholic steatohepatitis (NASH) therapy selonsertib also experienced two failed trials.
O’Day, who took over as CEO this March, sees the reinvigoration of the company’s pipeline as his top priority. As revenues are already disappointing, it will be worthwhile to give the company a new direction. With the new deal with Galapagos, the company will add the oral, once-daily autotaxin inhibitor for idiopathic pulmonary fibrosis (IPF) in phase 3. Another interesting addition will be GLPG1972, an ADAMTS-5 blocker for osteoarthritis in phase 2B. The drug is targeted at the US market as Servier holds its rights for international markets.
The company’s new deal also brings option rights to all current and future clinical programs of Galapagos outside Europe. O’Day commented on the partnership, complimenting the Belgian biotech for its pioneering target and drug discovery platform, great team and proven scientific abilities.
For Galapagos, this high-stakes acquisition brings a truckload of financial prowess, especially as it tries to become one of the top 10 biotech firms as well as a commercial-stage company. It also seeks commercialization rights for filgotinib in Europe, so the drug could be launched in 2020. Gilead also brings more experience and commercial acumen to the Belgian firm and help it double down on R&D without losing its independence.