Gilead and Galapagos in $5 Billion Dollar Licensing Deal for 10 Year Clinical Trials Collaboration

Jul 17, 2019 | Gilead, Idiopathic Pulmonary Fibrosis, License Deal, Osteoarthritis

idiopathic pulmonary fibrosis

Gilead structured a licensing deal to secure rights over Galapagos’ investigational therapy for idiopathic pulmonary fibrosis (IPF), as part of a 10-year research collaboration between the two companies. Known as GLPG1960, Gilead will now have access to the therapeutic platform which includes six molecules currently in clinical trials and more than 20 investigational therapies.

What are the Deal Terms?

Galapagos will receive a $3.95 billion upfront payment and a $1.1 billion equity investment from Gilead. Galapagos will use the proceeds to expand and accelerate its research and development programs.

What is GLPG1690?

GLPG1960 inhibits GPR84, a pro-inflammatory protein that promotes chronic inflammation in IPF. It was granted orphan drug designation by the U.S. FDA in June 2017 and by the European Medicines Agency in September 2016 as a treatment for IPF.

The candidate therapy is currently being evaluated in a worldwide Phase 3 program called ISABELLA.

What does its Phase 3 Program Look Like?

The Phase 3 program includes two identically designed trials called ISABELA, available here and here. These trials expect to enroll a total of 1,500 patients, ages 40 years or older, who have received an IPF diagnosis within five years of trial initiation. The trials will take place at more than 200 clinical sites worldwide, including at locations in the U.S. and Europe.

What does Gilead Get out of the Deal?

In addition to the equity investment in Galapagos, the company secures some treats. First Gilead already owned a 12.3% stake in Galapagos. That interest will now jump to 22%. Additionally, Gilead will receive two warrants that enable it to increase its ownership of Galapagos to up to 29.9%.

There is a 10-year standstill that prevents Gilead from trying to acquire Galapagos or boost its stake in the company above 29.9%. As part of the deal, Gilead also will name two members to the Galapagos’ board of directors post-transaction.

However, the real prize is an exclusive license and option rights to develop and commercialize all of Galapagos’ current and future programs in all countries outside of Europe. Gilead already licensed rights to Galapagos’ lead candidate, filgotinib. Now Galapagos will have greater involvement in the commercialization of the drug in Europe and will split development cost equally rather than footing only 20% of the costs.

Gilead picks up rights to Galapagos’ other late-stage candidate, GLPG1960. This drug is currently in Phase 3 clinical study targeting IPF as mentioned before. Also, Gilead now has an option to license GLPG1972 for commercialization in the U.S. The drug is in Phase 2 testing for osteoarthritis.

Finally, Galapagos has more than 20 other programs in earlier stages of research and development. Gilead will be able to exercise its option to license any of these programs outside of Europe after they complete Phase 2 studies for $150 million per program. The two ventures could then split development costs equally after the opt-in, with Galapagos receiving tiered royalties between 20% and 24% on net sales of any drugs licensed by Gilead as part of the agreement.

Who is Galapagos?

Galapagos (Euronext: GLPG; OTC: GLPYY) is a mid-size biotechnology company specialized in the discovery and development of small molecule and antibody therapies with novel modes-of-action. The Company is progressing one of the largest pipelines in biotech, with six clinical and over 50 small molecule discovery/pre-clinical programs. Through risk/reward-sharing alliances with GlaxoSmithKline, Lilly, Janssen Pharmaceutical, Merck & Co., Roche and Servier, Galapagos is eligible to receive up to €3.3 billion in downstream milestones, plus royalties. The Galapagos Group has over 800 employees and operates facilities in seven countries, with global headquarters in Mechelen, Belgium.

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