will pay $ 5.1 billion to increase its participation in
NV and obtain rights outside of Europe to the developing treatments of the Belgian biotechnology company, in a broad research collaboration aimed at increasing the growth of drug manufacturers.
Under the terms of the agreement, which will be announced on Sunday, Gilead will make a payment of $ 3.95 billion to the Galapagos. It will also invest $ 1.1 billion, or € 140.59 ($ 158.49) per share, to increase its stake in the drug manufacturer to 22% from 12.3%. That represents a 20% premium on the weighted average price of the Galápagos shares, quoted in Amsterdam and Nasdaq and has a market value of around $ 7.9 billion.
Assuming that Galápagos shareholders sign, Gilead could eventually increase its ownership interest by up to 29.9%, company officials said in interviews over the weekend. Gilead will get two seats on the Galápagos board of directors as part of the agreement.
Gilead, which has been looking for new products to recover its rapid sales growth, is ensuring access for one decade to one of the most promising and risky pipelines in the industry. Galápagos has six compounds in human trials, which include possible medications for conditions such as osteoarthritis of the knee and pulmonary fibrosis that would be sold in multi-million dollar markets.
Galapagos, meanwhile, receives a large infusion of cash to advance its drug research efforts. The agreement could also help the Galápagos remain independent, since Gilead will agree not to submit an offer for more than 29.9% of the company in the course of the agreement, and it is likely that Gilead's participation in the company will deactivate it.
The companies know each other well: for more than three years, they have partnered in the development of a drug for rheumatoid arthritis. They hope to get approval to sell that drug, filgotinib, by the end of the year. As part of the broader collaboration they are carrying out, Galápagos will obtain European European trade rights to the drug, which analysts say could be a big seller.
Gilead, based in Foster City, Calif., Is under pressure to keep its approximately $ 22 billion in annual revenue so it does not continue to decline. Its top line has fallen from a high of $ 33 billion in 2015, amid the slowdown in sales of its successful offers against hepatitis C, such as Sovaldi and Harvoni. In 2017, Gilead spent about $ 11 billion to buy Kite Pharma Inc., which specializes in a new type of cancer treatment, but the sales of its drug Yescarta have been disappointing.
However, instead of pursuing a total acquisition of Galapagos, Gilead has opted for an unusual research partnership, although not unknown.
Among the large pharmaceutical companies that have reached such broad research agreements are
SA, whose dealings with
has produced a series of approved medications and significant sales for each company.
The partnership with Galapagos would be one of the first notable transactions for Daniel O & # 39; Day, the new CEO of Gilead, who had first-hand experience with perhaps the most successful research collaboration in the industry, an alliance between
AG and Genentech biotechnology. Mr. O & # 39; Day arrived in Gilead in March from Roche, where he also played a role in his research partnership with the Japanese drug manufacturer.
Mr. O & # 39; Day said in an interview that the structure of the agreement guarantees the independence of Galapagos and allows Gilead to protect the value of its investment.
"Megamergers can often distract the organization from pursuing science and following innovation," he said. "I prefer a transaction like this."
Galápagos, from Mechelen, Belgium, has tried to discover the first drugs to treat intractable diseases through a novel program, which seeks new objectives by exploring what happens in diseased human cells when genes are accelerated or diminished. Then, the company develops the so-called small molecule drugs to achieve these new objectives. If the medicines work, the reward could be enormous, but there is a risk that they will not do so because the research is very advanced.
Gilead shares a focus on small molecule drugs and the company has been exploring some of the same areas of Galapagos, such as fatty liver disease, which is characterized by the accumulation of scar tissue.
Galapagos chief executive Onno van de Stolpe said the companies began to seriously consider expanding their partnership earlier this year.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and Cara Lombardo at email@example.com
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