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Galapagos Agrees to $3.95 Billion, 10-Year Licensing Deal Plus $1.1 Billion Investment from Gilead

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Galapagos announced that Gilead Sciences has agreed to pay $3.95 billion for a 10-year partnership and licensing deal and will invest an additional $1.1 billion in newly issued shares of the company.

Galapagos NV (GLPG:NASDAQ; GLPG:BSE) ADR shares opened up over 18% higher today after announcing that it has entered into a 10-year global research and development collaboration with Gilead Sciences Inc. (GILD:NASDAQ). The report advised that through the 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.

As structured, Galapagos will receive a $3.95 billion upfront payment and a $1.1 billion equity investment from Gilead. Galapagos plans to use the proceeds to expand and accelerate its R&D programs, and Gilead will receive an exclusive product license and option rights to develop and commercialize all current and future programs in all countries outside Europe. The two companies also 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 report claims that 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 that utilizes disease-related, human primary cell-based assays to discover and verify novel drug targets.

Based upon the formula outlined in the news release, Gilead's equity investment will consist of a subscription for new Galapagos shares at a price of EUR 140.59 per share representing a 20% premium to Galapagos' 30-day, volume-weighted average price. This will increase Gilead's ownership in Galapagos from approximately 12.3% to 22% of the issued and outstanding shares. The transaction is expected to close late in Q3/19 subject to shareholder and U.S. and E.U. regulatory approvals.

Galapagos describes itself as a clinical-stage biotechnology company specializing in discovering and developing small molecule medicines with novel modes of action. Its pipeline comprises discovery programs through Phase 3 programs in inflammation, fibrosis and other indications. The firm states its mission is to develop first-in-class medicines based on the discovery of novel proteins ("targets") that play a key role in causing diseases such as rheumatoid arthritis, inflammatory bowel disease and fibrosis.

Gilead, headquartered in Foster City, Calif., is a research-based biopharmaceutical company with operations in more than 35 countries. The company focuses on four primary therapeutic areas: HIV, liver disease, oncology and inflammation.

Galapagos shares opened up higher today at $172.33 (+$26.58, +18.24%) over Friday's close of $145.75/share. The company traded over one million shares in the first hour of trading and hit a 52-week intraday high price of $172.99 earlier in the day. Gilead shares are presently trading up at $68.04 (+$1.78, +2.69%) over the prior day's close.


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