Gilead Sciences and Galapagos, a Mechelen, Belgium-based pharmaceutical company focused on small-molecules drugs in inflammation, fibrosis, and osteoarthritis, have entered into a 10-year global research and development collaboration in a deal worth up to $5 billion.

Under the agreement, Gilead will gain access to a portfolio of compounds, including six molecules currently in clinical trials, more than 20 preclinical programs, and a drug-discovery platform. Galapagos will receive $3.95 billion in upfront payments and a $1.1 billion equity investment from Gilead. Galapagos will use the proceeds to expand and accelerate its research and development programs. 

Gilead will receive an exclusive product license and option rights to develop and commercialize all current and future programs in all countries outside Europe. In addition, Gilead and Galapagos have agreed to amend certain terms in their agreement governing filgotinib, the candidate being advanced for rheumatoid arthritis and other inflammatory diseases, to provide a broader commercialization role for Galapagos in Europe.

The companies say the collaboration will allow for closer scientific partnership between the companies. Gilead will have access to Galapagos’ research base, which includes more than 500 scientists, and to Galapagos’ platform, which uses disease-related, human primary cell-based assays to discover and verify drug targets. Gilead will also nominate two individuals to Galapagos’ Board of Directors following the closing of the transaction. The transaction is expected to close late in the third quarter of 2019 and is subject to certain closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and receipt of merger control approval from the Austrian Federal Competition Authority.

Further details of the agreement

As part of the collaboration, Gilead gains rights to GLPG1690, Galapagos’ Phase III candidate for idiopathic pulmonary fibrosis. Gilead also receives option rights for GLPG1972, a Phase IIb candidate for osteoarthritis, in the United States. In addition, Gilead receives option rights on all of Galapagos’ other current and future clinical programs outside of Europe.

Galapagos will fund and lead all discovery and development autonomously until the end of Phase II. After the completion of a qualifying Phase II study, Gilead will have the option to acquire an expanded license to the compound. If the option is exercised, Gilead and Galapagos will co-develop the compound and share costs equally. Gilead will maintain option rights to Galapagos’ programs through the 10-year term of the collaboration and for up to an additional three years thereafter for those programs that have entered clinical development prior to the end of the collaboration term.

If GLPG1690 is approved in the United States, Gilead will pay Galapagos an additional $325-million milestone fee. For GLPG1972, Gilead has the option to pay a $250-million fee to license the compound in the United States after the completion of the ongoing Phase IIb study in osteoarthritis. If certain secondary efficacy endpoints are met, Gilead would pay up to an additional $200 million. Following opt in, Galapagos would be eligible to receive up to $550 million in regulatory and commercial milestones.

For all other programs resulting from the collaboration, Gilead will make a $150 million opt-in payment per program and will owe no subsequent milestones. Galapagos will receive tiered royalties ranging from 20-24% on net sales of all Galapagos products licensed by Gilead as part of the agreement.

With respect to the companies’ agreement for filgotinib, the companies recently planned to seek regulatory approval for the medicine in the United States and Europe before the end of the year. Under the amended agreement, Galapagos will have greater involvement in filgotinib’s global strategy and participate more broadly in the commercialization of the product in Europe.

Gilead and Galapagos will co-commercialize filgotinib in France, Germany, Italy, Spain and the United Kingdom and retain the 50/50 profit share in these countries that was part of the original filgotinib license agreement, and under the revised agreement, Galapagos will have an expanded commercial role. Galapagos retains exclusive rights in Belgium, the Netherlands and Luxembourg. The companies will share future global development costs for filgotinib equally, in lieu of the 80/20 cost split provided by the original agreement. Other terms of the original license agreement remain in effect, including the remaining $1.27 billion in total potential milestones and tiered royalties ranging from 20-30% payable in territories outside of Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain and the UK.

Source: Gilead, Galapagos NV