Gilead increases Galapagos stake in $5.1 billion deal

US drugmaker Gilead Sciences has agreed to invest $5.1 billion to raise its stake in Galapagos NV and partner with the Belgian-Dutch biotech firm to develop its treatments for a 10-year period, the companies said on Sunday.

Gilead and Galapagos announced they have entered into a 10-year global research and development collaboration.

“Through this agreement, Gilead will gain access to an innovative portfolio of compounds, including six molecules currently in clinical trials, more than 20 preclinical programs and a proven drug discovery platform,” said the firms in a statement.

Galapagos will receive a $3.95 billion upfront payment and a $1.1 billion equity investment from Gilead as the US firm almost doubles its stake in Galapagos to 22%.

“Gilead will receive an exclusive product license and option rights to develop and commercialize all current and future programs in all countries outside Europe,” added the statement.

“In addition, Gilead and Galapagos have agreed to amend certain terms in the agreement governing filgotinib, the candidate being advanced for rheumatoid arthritis and other inflammatory diseases to provide a broader commercialization role for Galapagos in Europe.”

Gilead will also nominate two individuals to Galapagos’ board of directors following the closing of the transaction.

“We are excited to enter into this unique agreement, which will generate both long-term strategic value and mutual, immediate benefits,” said Gilead CEO Daniel O’Day.

“We chose to partner with Galapagos because of its pioneering target and drug discovery platform, proven scientific capabilities and outstanding team.

“Gilead also gains exclusive access to all current and future compounds in Galapagos’ rich pipeline while Galapagos is able to expand its research activities and build commercial infrastructure.

“The collaboration reflects Gilead’s intent to grow our innovation network through diverse and creative partnerships.”

Gilead’s equity investment will consist of a subscription for new Galapagos shares at a price of €140.59 per share, a 20% premium to Galapagos’ 30-day, volume-weighted average price.

This will increase Gilead’s stake in Galapagos from 12.3% to 22%.

In addition, Galapagos intends to seek shareholder approval to issue two warrants allowing Gilead to further increase its ownership of Galapagos to up to 29.9%.

The agreement also includes a 10-year standstill restricting Gilead’s ability to seek to acquire Galapagos or increase its stake in Galapagos beyond 29.9%.

Barclays, Centerview Partners and Lazard are acting as financial advisors to Gilead. 

Moelis & Co. and Morgan Stanley are acting as financial advisors to Galapagos. Skadden, Arps, Slate, Meagher & Flom, Covington & Burling LLP and Eubelius are serving as legal counsel to Gilead and Baker McKenzie and Linklaters are serving as legal counsel to Galapagos.

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.