Galapagos has never been a company to sit still for long, but—even by its own standards—the decision to split in two while waving goodbye to 40% of its employees and a long-standing Gilead Sciences partnership is a bold move.
The split will leave one company with the Galapagos name and its portfolio of cell therapies. As part of the move, Gilead—which entered into a 10-year global research and development collaboration with Galapagos back in 2019—has agreed to hand back full development and commercialization rights to Galapagos’ pipeline.
The other, as yet unnamed, entity resulting from the split up of Galapagos will “focus on building a pipeline of innovative medicines through transformational transactions,” according to a Jan. 8 release. This spinout company will apply to list on the pan-European stock exchange Euronext—where Galapagos is currently listed along with the Nasdaq—with Galapagos’ existing shareholders receiving a slice of the shares.
“Today’s news is a critical step in unlocking shareholder value by creating two entities, one focused on deploying significant capital to build a new company and Galapagos focusing on independently realizing the full potential of its cell therapy platform in oncology, addressing high unmet needs worldwide,” Galapagos’ CEO Paul Stoffels, M.D., said in the release.
“Gaining full global development and commercialization rights from Gilead to our robust discovery and development pipeline supports our commitment to executing our strategy for accelerated growth and value creation,” Stoffels added.
The unnamed company will launch with 2.45 billion euros ($2.53 billion) of Galapagos’ cash, which will be used to “build a pipeline of innovative medicines with robust clinical proof-of-concept in oncology, immunology, and/or virology through strategic business development transactions,” according to the release.
This endowment means that both the new company and Gilead, which will remain a collaboration partner of the new entity only, will have “significant cash to pursue strategic business development opportunities,” Stoffels said.
After the separation, Gilead will hold around 25% of the outstanding shares in both Galapagos and the spinoff company. While Gilead will lose its two directors on Galapagos’ board, it will gain two seats at the new entity.
“The proposed separation will allow Galapagos to focus on continued innovation and fully explore its cell therapy programs, while also providing the resources and agility for [the spin-off company] to pursue partnerships with emerging biotechnology companies across therapeutic areas of interest,” Gilead’s chief financial officer Andrew Dickinson said in the release.
“Gilead fully supports the separation and believes it creates additional value for all of Galapagos’ shareholders and for [the spin-off company] to explore opportunities in emerging therapies and in areas of high unmet need,” Dickinson added.
Galapagos itself—which will be left with around 500 million euros ($516 million) in cash—will remain focused on both its decentralized cell therapy manufacturing platform for oncology and its pipeline of cell therapies led by the CAR-T candidate GLPG5101. The biotech reported a month ago that an ongoing phase 1/2 study of GLPG5101 in patients with relapsed/refractory non-Hodgkin lymphoma had demonstrated “high antitumor activity and an encouraging safety profile in all NHL subtypes studied.”
But further down the pipeline there will be more changes, with Galapagos halting work on its small-molecule discovery programs and seeking a partner for assets like its TYK2 inhibitor, GLPG3667, which is in phase 2 trials for autoimmune indications like systemic lupus erythematosus and dermatomyositis.
This reorganization is the justification for the layoffs, which will see around 300 employees lose their jobs, including “meaningful reductions” in staff in the company’s home territory of Belgium as well as the closure of its site in France. Galapagos will continue to operate from its main U.S. hubs in Princeton and Pittsburgh as well as Leiden in the Netherlands and Mechelen in Belgium.
“The planned reorganization is a difficult but necessary step, but one that will position Galapagos for sustainable growth and value creation and for future success in its renewed focus on cell therapies,” Stoffels explained.
The split-up of Galapagos is only the latest shake-up in the company in recent years. Other major events have included the pivot to CAR-Ts in 2022 and the resulting halt of its kidney disease and fibrosis programs, as well as at least two waves of layoffs.