Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Pharma firm Gilead to raise Galapagos stake in $5.1 billion deal

Published 07/14/2019, 06:43 PM
Updated 07/14/2019, 06:43 PM
© Reuters. A Gilead Sciences, Inc. logo is seen outside the company headquarters in Foster City, California

© Reuters. A Gilead Sciences, Inc. logo is seen outside the company headquarters in Foster City, California

(Reuters) - Gilead Sciences Inc (O:GILD) will invest $5.1 billion to raise its stake in Galapagos NV (AS:GLPG) and partner with the Belgian-Dutch biotech firm to develop and commercialize its treatments for a ten-year period, the companies said on Sunday.

The investment in Galapagos, which comes nearly four years after the firms partnered to develop a drug targeting inflammatory diseases, includes an upfront payment of $3.95 billion and a $1.1 billion equity investment from Gilead.

"Gilead 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," Gilead Chief Executive Officer Daniel O'Day said in a statement.

The U.S. drugmaker will pay 140.59 euros ($158.43) per new share in Galapagos to increase its stake to 22% from 12.3%. That represents a premium of nearly 10% to the close of Galapagos shares on Friday.

Galapagos said it would also seek shareholder approval to allow Gilead to further increase its ownership to up to 29.9%. After that, their agreement includes a 10-year standstill clause that would prevent Gilead from accumulating any additional stake.

In 2015, Gilead signed a deal worth more than $2 billion with Galapagos, which included a $725 million upfront payment for the development of filgotinib, as well as an equity stake in the European firm.

Filgotinib is an experimental compound being advanced for rheumatoid arthritis and inflammatory bowel disease and Gilead intends to submit its new drug application to the U.S. Food and Drug Administration this year.

Galapagos will now have greater involvement in filgotinib's global strategy and participate more broadly in the commercialization of the product in Europe, according to their statement on Sunday.

The companies will share future development costs for filgotinib equally, replacing the 80-20 cost split provided by the original agreement, they said.

Galapagos will use the proceeds to expand and speed up its research and development programs.

Gilead will nominate two people to Galapagos' board.

Barclays (LON:BARC), Centerview Partners and Lazard acted as financial advisers to Gilead while Moelis & Co and Morgan Stanley (NYSE:MS) advised Galapagos.

© Reuters. A Gilead Sciences, Inc. logo is seen outside the company headquarters in Foster City, California

The Wall Street Journal reported the deal earlier on Sunday.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.