Case Study: Gilead and Galapagos – R&D collaboration

Gilead Sciences, Inc. and Galapagos NV 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.

Deal Financials: 

• 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.

Deal desired Outcome:

• 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 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.
• The collaboration will allow for closer scientific partnership between the companies.
• Gilead will have access to Galapagos’ established research base, which includes more than 500 scientists, and to Galapagos’ unique platform, which utilizes disease-related, human primary cell-based assays to discover and verify novel drug targets. Gilead will also nominate two individuals to Galapagos’ Board of Directors following the closing of the transaction.
• As part of the collaboration, Gilead gains rights to GLPG1690, Galapagos’ Phase 3 candidate for idiopathic pulmonary fibrosis. Gilead also receives option rights for GLPG1972, a Phase 2b candidate for osteoarthritis, in the United States. Both GLPG1690 and GLPG1972 are first-in-class compounds and could offer important mid- and late-stage pipeline opportunities for Gilead.

Key note in this collaboration deal:

• Galapagos will fund and lead all discovery and development autonomously until the end of Phase 2.
• After the completion of a qualifying Phase 2 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.

Understanding about the Filgotinib Collaboration between Gilead and Galapagos

• Gilead and Galapagos have also agreed to amend certain terms around the development and commercialization of filgotinib, the experimental compound being advanced for rheumatoid arthritis and other inflammatory diseases.
• The companies have recently completed the comprehensive Phase 3 FINCH program in rheumatoid arthritis and plan 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, providing the opportunity to build a commercial presence on an accelerated timeline.
• 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 United Kingdom.