Galapagos ($GLPG) CEO Onno van de Stolpe has confirmed that the standstill agreement stopping Gilead ($GILD) from increasing its stake in his company is still active. The revelation quashes talk that Gilead will buy Galapagos for now, but, with Van de Stolpe declining to say when the agreement ends, falls short of extinguishing longer term M&A expectations.
Talking to Dutch radio station BNR, Van de Stolpe threw a temporary dose of cold water on the M&A speculation by confirming that the contract Galapagos signed with Gilead in December currently prohibits a takeover, ABM Financial News reports. That news was enough to send shares in Galapagos down 6%, ending a 10-day period in which the Belgian-Dutch biotech rose 30% on Nasdaq despite a lack of major stock-moving news.
The big, as-yet-unanswered question is when Gilead will be free to pull the trigger on a takeover bid. Van de Stolpe refused to comment on the duration of the standstill agreement. A lockup period, in which Gilead is unable to sell shares, is due to expire at the end of 2017.
In the 10 days preceding Van de Stolpe’s comments, Gilead CEO John Milligan talked up the prospects of filgotinib in Crohn’s disease, and Galapagos posted a new look at old Phase II data and upped its share capital in relation to warrant exercises. While these events were a net positive for Galapagos, they aren’t the type of matters that typically cause 30% swings in the stock price of companies with $3 billion (€2.7 billion) market caps.
Van de Stolpe first discussed the standstill agreement, which stops Gilead from owning more than 15% of Galapagos, when the $2 billion deal for filgotinib was struck in December. But, with Gilead under pressure to buy itself a pipeline capable of offsetting forecast declines in sales in its hepatitis C franchise, observers have continued to link it to a takeover of Galapagos, chatter that has contributed to recent increases in the share price of the Belgian drug developer.