will pay $ 5.1 billion to increase its share in
NV and gaining rights outside Europe for the Belgian biotechnology company's under development treatments, in a broad research collaboration aimed at increasing the growth of drug users.
According to the deal, announced Sunday, Gilead will pay $ 3.95 billion to Galapagos. It will also invest $ 1.1 billion, or € 140.59 ($ 158.49) a share, to increase its stake in drugmaker to 22% from 12.3%. It represents a 20% premium to the 30-day weighted average share price of Galapagos, which trades in Amsterdam and on Nasdaq, and has a market value of around $ 7.9 billion.
Assuming that Galapago's shareholders log in, Gilead could gradually increase ownership ownership to as much as 29.9%, company officials said in weekend interviews. Gilead will get two seats on the Galapagos board as part of the deal.
Gilead, who has been looking for new products to regain its demanding sales growth, secures access for a decade to one of the industry's most promising but also risky pipelines. Galapagos has six compounds in human testing, including potential drugs for conditions such as knee arthrosis and lung fibrosis that will sell in multibillion-dollar markets.
Meanwhile, Galapagos gets a large infusion of cash to advance its research on drugs. The deal can also help Galapagos remain independent, since Gilead will agree not to bid more than 29.9% of the company during the deal and that other potential plaintiffs will likely be offended by Gilead's deep engagement with the company. 1
Gilead, based in Foster City, California, is under pressure to keep his about $ 22 billion in annual revenue from falling further. Its top line has fallen from a top $ 33 billion in 2015, including by slowing sales of its blocking hepatitis C offerings, including 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 sales of the drug Yescarta have been disappointing.
Instead of pursuing a complete takeover of Galapagos, Gilead has opted for an unusual but not unknown research collaboration.
Among the major pharmaceutical companies that have turned such broad research agreements is
SA, whose deal with
has produced a number of approved drugs and significant sales for each company.
The Galapagos partnership will be among the first notable transactions for Daniel O & # 39; Day, Gilead's new CEO, who had first-hand experience with perhaps the most successful research collaboration in the industry, a link between
AG and Biotechnology Genentech. Mr. O & # 39; Day came to Gilead in March from Roche, where he also played a role in his research partnership with Japanese drug maker
Mr. Day told in an interview that the structure of the agreement ensures Galapagos independence and gives Gilead the opportunity to protect the value of the investment.
"Megamergers can often distract the organization from pursuing science and following innovation," he said. "I prefer a transaction like this."
Galapagos, of Mechelen, Belgium, has attempted to discover the first drugs to treat incurable diseases through a new program that looks for new targets by exploring what happens in diseased human cells when genes are revved up or down. Then, the company develops so-called small molecule substances to meet these new goals. If the substances work, the payout can be large, but there is a risk that they will not, because the research is so innovative.
Gilead shares the focus on small molecular substances and the company has explored some of the same areas as Galapagos, such as fatty acid medicine, which are characterized by the accumulation of scar tissue.
Onno van de Stolpe, CEO of Galapagos, said the companies began seriously considering expanding their partnership earlier this year.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and Cara Lombardo at firstname.lastname@example.org
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