In a significant strategic shift, Belgian pharmaceutical company Galapagos announced plans to split into two separate publicly traded entities and restructure its collaboration with Gilead Sciences, marking a major transformation following several years of clinical setbacks.
The company will divide into two distinct organizations: the original Galapagos, which will focus on advancing its cell therapy pipeline and lead CAR-T candidate GLPG5101, and a new entity temporarily named SpinCo. The latter will launch with approximately €2.45 billion ($2.5 billion) in cash reserves, targeting pipeline development in oncology, immunology, or virology through strategic transactions.
Restructured Partnership with Gilead
The reorganization includes a significant amendment to the 2019 licensing and development agreement with Gilead Sciences. Under the new terms, Gilead will maintain approximately 25% ownership in each company while returning development and commercialization rights to legacy Galapagos programs. Gilead will retain royalty rights and the ability to nominate directors to SpinCo's board, though its representatives will step down from the original Galapagos board.
Strategic Refocus and Workforce Impact
The restructuring follows a challenging period for Galapagos, marked by multiple clinical disappointments and strategic shifts. The company will discontinue its small molecule programs and seek partnerships for various assets, including a Phase 2 autoimmune disorder treatment. This strategic realignment will result in approximately 300 job cuts, affecting 40% of the company's workforce, including the closure of its French facility and significant reductions at Belgian operations.
Market Context and Recent Challenges
Galapagos has faced numerous setbacks in recent years, reflected in its stock performance. The company's American depositary receipts have declined dramatically from a peak of $274 in February 2020 to approximately $29 in recent trading. These challenges included disappointing results for filgotinib in 2020, an unexpected FDA rejection, and the termination of various development programs.
Leadership and Historical Context
The transformation follows significant leadership changes, including the 2021 retirement of longtime CEO and co-founder, succeeded by Paul Stoffels, former chief scientific officer at Johnson & Johnson. Under Stoffels' leadership, Galapagos initiated a research reorganization in 2022, pivoting toward cell therapy while reducing its workforce by 200 positions.
Future Outlook
The success of this strategic split will largely depend on SpinCo's ability to execute effective business development initiatives, according to Leerink Partners analyst Faisal Khurshid. While the separation represents a "reasonable strategy to unlock value," the fundamental challenges that previously impacted Galapagos may continue to influence both entities' future performance.
