Gilead Sciences Inc (NASDAQ:GILD) will invest $5.1 billion to raise its stake in Galapagos NV (NASDAQ:GLPG) and partner with the Belgian-Dutch biotech firm to develop and commercialize its treatments for a 10-year period, the companies said on Sunday.
The investment in Galapagos, which comes nearly four years after the firms partnered to develop a drug targeting inflammatory diseases, includes an upfront payment of $3.95 billion and a $1.1 billion equity investment from Gilead.
The U.S. drugmaker will pay 140.59 euros ($158.43) per new share in Galapagos to increase its stake to 22% from 12.3%. That represents a premium of nearly 10% to the close of Galapagos shares on Friday.
Galapagos said it would also seek shareholder approval to allow Gilead to further increase its ownership to up to 29.9%. After that, their agreement includes a 10-year standstill clause that would prevent Gilead from accumulating any additional stake.
In 2015, Gilead signed a deal worth more than $2 billion with Galapagos, which included a $725 million upfront payment for the development of filgotinib, as well as an equity stake in the European firm.
Filgotinib is an experimental compound being advanced for rheumatoid arthritis and inflammatory bowel disease and Gilead intends to submit its new drug application to the U.S. Food and Drug Administration this year.
Galapagos will now have greater involvement in filgotinib’s global strategy and participate more broadly in the commercialization of the product in Europe, according to their statement on Sunday.
Gilead shares climbed $1.59, or 2.4%, to $67.85, while shares in Galapagos jumped $24.55, or 16.8%, to $170.27
