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Galapagos Licensing Inflammation Drug in $2.1B Deal

X-ray f hands with rheumatoid arthritis

(National Institutes of Health)

17 December 2015. A biotechnology company is licensing its small molecule drug for treating inflammatory disorders to the biopharmaceutical company Gilead Sciences in a deal valued at nearly $2.1 billion. The agreement includes Gilead Sciences taking an ownership stake in Galapagos NV, based in Mechelin, Belgium.

The deal involves the small-molecule, or low molecular weight, drug filgotinib that Galapagos developed to treat rheumatoid arthritis and Crohn’s disease. Rheumatoid arthritis is an autoimmune disease, where the immune system is tricked into attacking healthy cells, that leads to inflammation of joints (wrists, fingers, feet, and ankles) and surrounding tissue, affecting some 1.3 million people in the U.S. making it the most prevalent autoimmune disease.

Crohn’s disease results in inflammation of the digestive tract lining, leading to abdominal pain, severe diarrhea, fatigue, weight loss, and malnutrition. While the exact cause of Crohn’s disease is unknown, heredity and immune system disorders are believed to play key roles.

Filgotinib is one of class of drugs known as Janus kinase 1 or JAK1 inhibitors that block the actions of enzymes interrupting the immune system. Limiting the pathway for signals from JAK1 enzymes is believed to help treat diseases caused by immune system malfunctions, such as rheumatoid arthritis and Crohn’s disease.

Galapagos is testing filgotinib in early and intermediate-stage clinical trials for both conditions, which are completed or open to new participants only by invitation. The company says it plans late-stage trials of filgotinib in 2016, pending discussions with regulatory authorities.

The agreement calls for Gilead, in Foster City, California and Galapagos to collaborate on late-stage clinical trials of filgotinib for inflammatory disorders, beginning with rheumatoid arthritis. Galapagos will fund 20 percent of further development work on filgotinib, while Gilead will be responsible for manufacturing and marketing worldwide. Galapagos will retain options for co-promoting filgotinib in eight Western European countries, as well as book sales of the drug in Belgium, Netherlands, or Luxembourg.

Gilead is paying Galapagos an initial amount of $300 million, as well as taking an equity ownership stake in Galapagos valued at $425 million. Galapagos will also be eligible for milestone payments that could run as high as $1.35 billion over the course of the agreement. In addition, Galapagos will be eligible for royalties of 20 percent or more, and a share of profits in regions where filgotinib is co-promoted.

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