In a significant pharmaceutical industry deal, Belgium-based Galapagos has agreed to divest its JAK1 inhibitor Jyseleca (filgotinib) to Italian pharmaceutical company Alfasigma SpA. The transaction, valued at up to €170 million plus royalties, marks a major shift in the trajectory of the once-promising rheumatoid arthritis and ulcerative colitis treatment.
Deal Structure and Financial Terms
The agreement includes a €50 million upfront payment and potential milestone payments of up to €120 million. Alfasigma will pay mid-single to mid-double digit royalties on European sales. As part of the arrangement, Galapagos will contribute up to €40 million over the next two years to support Jyseleca's development activities under Alfasigma's leadership.
Operational Impact and Transfer of Assets
The transaction encompasses the transfer of marketing authorizations in the European Union and United Kingdom to Alfasigma. Approximately 400 Galapagos employees involved in commercial, medical, and development activities for Jyseleca will transition to Alfasigma, ensuring continuity in the drug's development and commercialization efforts.
Historical Context and Challenges
Jyseleca's journey has been marked by significant challenges. Once anticipated to compete with established JAK inhibitors like Pfizer's Xeljanz, the drug faced a major setback in 2020 when the FDA rejected its rheumatoid arthritis application due to concerns about male fertility. This led to Gilead Sciences, Galapagos' former partner, abandoning US approval efforts and returning European rights to Galapagos for €160 million.
The drug's development program encountered additional obstacles, including unsuccessful trials in several indications such as lupus, Sjögren's syndrome, and Crohn's disease. These setbacks significantly impacted the $5 billion R&D alliance between Gilead and Galapagos established in 2019.
Current Performance and Market Position
Sales performance has been modest, with Jyseleca generating €54 million in the first half of 2023, accompanied by nearly €8 million in costs. Galapagos recently revised its full-year sales forecast downward to €100-€120 million from €140-€160 million, following decisions to halt European filings for Crohn's disease and Swiss applications for ulcerative colitis.
Strategic Implications
For Galapagos, the divestment aligns with its cost-reduction strategy, aiming to decrease annual expenses by €150 to €200 million. The company will also reduce its workforce by an additional 100 positions.
The acquisition represents another strategic move in Alfasigma's international expansion plans, following its recent $800 million acquisition of Intercept Pharma and its PBC therapy Ocaliva.
"We believe this will benefit both companies and ensure that Jyseleca will continue to be available to patients who can benefit from it," stated Francesco Balestrieri, Alfasigma's chief executive, emphasizing the deal's potential positive impact on patient care.
