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Gilead Sciences To Increase Galapagos Stake In $5.1 Bln Deal

Gilead Sciences Inc. (GILD) agreed to pay $5.1 billion to increase its stake in Belgian biotechnology company Galapagos NV (GLPG) and gain access to a portfolio of compounds, including six already in clinical trials.

As per the deal, Gilead will pay $3.95 billion upfront to Galapagos and invest $1.1 billion to increase its stake in Galapagos to 22% from 12.3%, the companies said in a statement.

Gilead's equity investment will consist of a subscription for new Galapagos shares at a price of 140.59 euros per share, representing a 20% premium to Galapagos' 30-day, volume-weighted average price.

The agreement also includes a 10-year standstill restricting Gilead's ability to seek to acquire Galapagos or increase its stake in Galapagos beyond 29.9% of the company's issued and outstanding shares.

The transaction is expected to close late in the third quarter of 2019.

Gilead and Galapagos have also agreed to amend certain terms around the development and commercialization of filgotinib, the experimental compound being advanced for rheumatoid arthritis and other inflammatory diseases.

Gilead and Galapagos will co-commercialize filgotinib in France, Germany, Italy, Spain and the United Kingdom and retain the 50/50 profit share in these countries that was part of the original filgotinib license agreement, and under the revised agreement, Galapagos will have an expanded commercial role. Galapagos retains exclusive rights in Belgium, the Netherlands and Luxembourg.

The companies noted that they will share future global development costs for filgotinib equally, in lieu of the 80/20 cost split provided by the original agreement. Other terms of the original license agreement remain in effect, including the remaining $1.27 billion in total potential milestones and tiered royalties ranging from 20-30% payable in territories outside of Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain and the United Kingdom.

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