NEW YORK – Galapagos said Wednesday that it plans to separate into two companies. One company, a spinoff, will focus on developing innovative medicines through strategic transactions, and the other will continue to advance oncology cell therapies.
As part of the split, slated to occur in mid-2025, Galapagos will lay off 40 percent of its employees in Europe, or roughly 300 positions, and shutter its site in France.
The spinoff company, which will have a new name that hasn't been announced yet, will apply to list its shares on Euronext, and Galapagos shareholders will be able to receive shares of the spinoff on a pro rata basis.
This strategic change also has implications for the terms of Galapagos' 2019 licensing agreement with Gilead Sciences. The agreement was initially set to last a decade and gave Gilead rights to six molecules Galapagos was testing in clinical trials, more than 20 preclinical programs, and a drug discovery platform. Under the amended terms, Galapagos will regain the rights to its pipeline in exchange for paying single-digit royalties to Gilead on sales of certain products. The licensing agreement will now apply only to the products being developed by the spinoff company, and Gilead and the spinoff will negotiate and amend the terms.
At the time of the separation, Gilead will hold roughly a quarter of the shares of both Galapagos and the spinoff and will have the right to nominate two directors to the spinoff's board. The two Gilead directors that currently serve on Galapagos' board, meanwhile, will step down after the separation. After the split, Gilead will be subject to a lockup period for shares in Galapagos, which will last until the end of March 2027. It will also have a lockup period for shares in the spinoff for six months after the company split.
The new spinoff company is launching with roughly €2.45 billion ($2.52 billion) of Galapagos' current cash. The company will focus on building a pipeline of treatment candidates in oncology, immunology, and virology through strategic transactions.
Galapagos will focus exclusively on advancing cell therapies in oncology while discontinuing its small molecule discovery programs and selling its existing small molecule assets. The firm will focus on its lead CAR T-cell therapy candidate, GLPG5101, which has shown promise in treating patients with advanced non-Hodgkin lymphoma. The therapy involves a decentralized manufacturing process designed to deliver fresh cells to patients within a one-week turnaround time.
After the planned split, Galapagos expects its annual cash burn to fall between €175 million and €225 million, excluding the costs of restructuring. The firm expects to have about €500 million in cash after the split.
"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 [the spinoff] to pursue partnerships with emerging biotechnology companies across therapeutic areas of interest," Andrew Dickinson, Gilead's CFO and Galapagos board member, said in a statement. "Gilead fully supports the separation and believes it creates additional value for all of Galapagos' shareholders and for [the spinoff] to explore opportunities in emerging therapies and in areas of high unmet need."