Galapagos to Unlock Shareholder Value by Declaring its Intent to Separate into Two Publicly Traded Entities 

As part of the planned separation, Galapagos and Gilead Sciences, Inc. (“Gilead”) have agreed to amend their 10-year global Option, License and Collaboration Agreement (“OLCA”) entered into in 2019, whereby Galapagos will gain full global development and commercialization rights to its pipeline, subject to payment of single digit royalties to Gilead on net sales of certain products.

In the last two years, Galapagos has undergone significant changes to accelerate innovation and bring life-changing medicines to patients in need. Today’s news is a critical step in unlocking shareholder value by creating two entities, one focused on deploying significant capital to build a new company and Galapagos focusing on independently realizing the full potential of its cell therapy platform in oncology, addressing high unmet needs worldwide,” said Paul Stoffels, MD, CEO and Chair of the Board of Directors at Galapagos. “Gaining full global development and commercialization rights from Gilead to our robust discovery and development pipeline supports our commitment to executing our strategy for accelerated growth and value creation.”

SpinCo, together with Gilead as a collaboration partner, will have significant cash to pursue strategic business development opportunities to help bring innovative therapies to patients all over the world facing unmet medical needs,” Dr. Stoffels added.

SpinCo: Building a Pipeline of Innovative Medicines Through Transactions 

In the proposed separation, SpinCo will be capitalized with approximately €2.45 billion of Galapagos’ current cash. It will be focused on building a pipeline of innovative medicines with robust clinical proof-of-concept in oncology, immunology, and/or virology through strategic business development transactions. SpinCo will have a seasoned leadership team and Board of Directors with a proven track record of biotechnology company-building and strategic transaction experience to manage and oversee SpinCo independently.

Galapagos and Gilead have agreed that following the separation, the OLCA will only apply to SpinCo and not Galapagos. For future SpinCo business development transactions, Gilead commits to good faith negotiations with SpinCo to amend the OLCA to achieve positive value for all of SpinCo’s shareholders. 

SpinCo will apply to have its shares listed on Euronext. All Galapagos shareholders will receive shares of SpinCo on a pro rata basis based on their shares of Galapagos owned as of a record date to be established, following the approval by Galapagos shareholders of the partial demerger of SpinCo from Galapagos pursuant to Belgian law by an Extraordinary General Shareholders' Meeting of Galapagos (“EGM”). 

Accordingly, at the time of separation, Gilead will hold approximately 25% of the outstanding shares in both Galapagos and SpinCo and a lock-up will apply to the shares of Gilead in Galapagos until 31 March 2027 and in SpinCo until six months following the separation, in each case subject to certain customary exceptions and early termination provisions. Gilead will be entitled to nominate two Directors of SpinCo, and the SpinCo Board will be comprised of a majority of independent Directors. The two Gilead Directors currently serving on the Galapagos Board of Directors will step down upon the separation.

The proposed separation will allow Galapagos to focus on continued innovation and fully explore its cell therapy programs, while also providing the resources and agility for SpinCo to pursue partnerships with emerging biotechnology companies across therapeutic areas of interest,” said Andrew Dickinson, Chief Financial Officer, Gilead Sciences and Non-Executive Non-Independent Member, Galapagos’ Board of Directors. “Gilead fully supports the separation and believes it creates additional value for all of Galapagos’ shareholders and for SpinCo to explore opportunities in emerging therapies and in areas of high unmet need.”

Galapagos: Executing a Focused Cell Therapy Vision in Oncology 

Galapagos will focus on unlocking the broad-reaching potential of its decentralized cell therapy manufacturing platform in oncology and will continue to advance its cell therapy pipeline. Galapagos’ lead CAR-T candidate, GLPG5101, has demonstrated an encouraging efficacy and safety profile in patients with relapsed/refractory non-Hodgkin lymphoma (R/R NHL), supporting the feasibility of Galapagos’ innovative decentralized cell therapy manufacturing platform in delivering fresh, fit cells with a vein-to-vein time of seven days.

To advance its goal of becoming a global leader in cell therapy in oncology, Galapagos plans to discontinue its small molecule discovery programs and seek potential partners to take over its small molecules’ assets, including the TYK2 inhibitor, GLPG3667, currently in Phase 2 for systemic lupus erythematosus, dermatomyositis, and other potential auto-immune indications.

Galapagos intends to reorganize its business to focus on long-term value creation in cell therapy in oncology. This is anticipated to lead to a reduction of approximately 300 positions across the organization in Europe, representing 40% of the Company’s employees. This reorganization would result in meaningful reductions in staff in Belgium and the site in France is expected to close. Galapagos would continue to operate from its main hubs in Princeton and Pittsburgh in the United States, and from Leiden, Netherlands, and Mechelen, Belgium. 

Following the planned reorganization, Galapagos expects its normalized annual cash burn to be between €175 million and €225 million, excluding restructuring costs. Upon separation, Galapagos expects to have approximately €500 million in cash.

The planned reorganization is a difficult but necessary step, but one that will position Galapagos for sustainable growth and value creation and for future success in its renewed focus on cell therapies. We are grateful to our departing employees for their significant contributions and their dedication to making a difference in the lives of patients,” concluded Dr. Stoffels.

The proposed separation aims to help investors more easily assess the merits, and future prospects of the two distinct businesses, allowing them to invest in each company based on their own strategy and a clearer understanding of each business’ unique characteristics and value propositions,” said Thad Huston, CFO and COO of Galapagos.” 

Process and timing

The procedure for related party transactions under Belgian law was applied in connection with the proposed spin-off of SpinCo and the transactions associated therewith. More information can be found in the legal announcement attached to this press release.

The completion of the spin-off of SpinCo is subject to the satisfaction of customary conditions, including concluding consultations with works councils in the Netherlands, Belgium, and France, and receipt of approval from Galapagos shareholders. The separation is expected to occur by mid-2025. 

Goldman Sachs International acted as financial advisor to Galapagos in review of its strategic alternatives associated with this transaction. Lazard acted as independent financial advisor to Galapagos, in particular to Galapagos’ independent Directors. Baker McKenzie acted as the legal advisor of Galapagos. Allen Overy Shearman Sterling acted as the legal advisor of the independent Directors. TD Cowen and J.P. Morgan Securities LLC acted as financial advisors to Gilead.