Gilead Sciences, Inc. (NASDAQ: GILD) and Galapagos NV (NASDAQ: GLPG) each saw its shares shoot up on Monday after the companies announced a new collaboration.
Under the terms of the deal, Galapagos will receive a $3.95 billion upfront payment and a $1.1 billion equity investment from Gilead. Galapagos will use the proceeds to expand and accelerate its research and development programs.
According to the agreement, Gilead and Galapagos have entered into a 10-year global research and development collaboration. Through this agreement, Gilead will gain access to an innovative portfolio of compounds, including six molecules currently in clinical trials, more than 20 preclinical programs and a proven drug discovery platform.
Gilead will receive an exclusive product license and option rights to develop and commercialize all current and future programs in all countries outside Europe. In addition, Gilead and Galapagos have agreed to amend certain terms in the agreement governing filgotinib, the candidate being advanced for rheumatoid arthritis and other inflammatory diseases to provide a broader commercialization role for Galapagos in Europe.
Daniel O’Day, chairman and CEO of Gilead, commented:
We are excited to enter into this unique agreement, which will generate both long-term strategic value and mutual, immediate benefits. We chose to partner with Galapagos because of its pioneering target and drug discovery platform, proven scientific capabilities and outstanding team. Gilead also gains exclusive access to all current and future compounds in Galapagos’ rich pipeline while Galapagos is able to expand its research activities and build commercial infrastructure. The collaboration reflects Gilead’s intent to grow our innovation network through diverse and creative partnerships.
Shares of Gilead were last seen up over 2% at $67.96, with a 52-week range of $60.32 to $79.61. The consensus analyst price target was $79.62.
Shares of Galapagos were recently trading up about 17% at $171.13, with a 52-week range of $85.00 to $172.99. The consensus analyst price target is $140.27.