Gilead Sciences plans to spend more than $5 billion to develop a portfolio of compounds from a European firm.
The Foster City, California-based biotech company said Sunday that it had signed a deal with Mechelen, Belgium-based Galapagos. Under the deal, Gilead will get access to six drugs currently in clinical development, more than 20 more in preclinical development and the Belgian company’s drug-discovery platform. Gilead will pay $3.95 billion upfront and an equity investment of $1.1 billion, for a total of $5.05 billion.
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Shares of Gilead were up more than 2 percent in Monday morning trading on the Nasdaq. Shares of Galapagos were up more than 18 percent on the Euronext Amsterdam exchange and nearly 17 percent on the Nasdaq.
The companies have an existing collaboration around Galapagos’ lead drug candidate, filgotinib, announced in December 2015, which was also amended under the new deal. The amendments give Galapagos greater involvement in the drug’s global strategy and broader participation in its commercialization in Europe. The drug recently completed a Phase III study in rheumatoid arthritis, and the companies plan to file for approval in the U.S. and Europe before the end of the year.
Other Galapagos drug candidates Gilead will have access to include GLPG1690, in Phase III development for idiopathic pulmonary fibrosis and GLPG1972, in Phase IIb development for osteoarthritis.
“Galapagos has been highly effective at target identification and drug discovery, progressing novel molecules from research into the clinic,” said Galapagos CEO Onno van de Stolpe. “We will benefit greatly from Gilead’s expertise and infrastructure and believe this collaboration will provide an accelerated path to advance our pipeline.”
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In a note to investors Sunday, Cowen analyst Phil Nadeau compared the potential value created under the Gilead-Galapagos deal to that generated under deals between Regeneron and French drugmaker Sanofi, or between Swiss drugmaker Roche and U.S. biotech Genentech, which Roche has since acquired.
Nadeau wrote that in addition to the more than $5 billion in capital that Galapagos will gain, the partnership should also help fortify Gilead’s relatively weak pipeline and meager revenue growth prospects. The investment bank has projected that Gilead’s current portfolio should produce 2 percent annual growth for the 2018-2023 period. Nadeau noted that while Galapagos programs such as the two pipeline candidates that Gilead will help developed have not been derisked, they are supported by solid early data. Gilead suffered a major setback earlier this year with the consecutive failures of two Phase III trials of the drug selonsertib in nonalcoholic steatohepatitis.
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