Daniel O’Day has framed Gilead’s $5.1 billion (€4.6 billion) megadeal with Galapagos as a way to double its research capacity. The Gilead CEO told investors his company will benefit from having two drug discovery operations feeding into its clinical-phase pipeline.
Earlier in July, Gilead tightened its ties to Galapagos by paying $3.95 billion upfront and making a $1.1 billion equity investment in return for broad access to its partner’s pipeline. The deal gave Gilead the chance to add treatments for idiopathic pulmonary fibrosis and osteoarthritis to its much-scrutinized late-phase pipeline. And also provided it with a chance to pick up stakes in whatever other molecules emerge from Galapagos’ labs in the coming years.
“With the collaboration with Galapagos we essentially double our research capacity,” O’Day said on Gilead’s second-quarter conference call with investors. “It provides two sources of early-stage discovery input into our late-stage portfolio.”
In theory, Gilead could have accessed the capacity by acquiring Galapagos outright. Galapagos’ desire to remain independent was one barrier to that happening. According to O’Day, his own views on how R&D works best were another barrier.
“I'm a big believer that innovation requires independence,” O’Day said. “The structure of this deal allows us to preserve the great science and talent at Galapagos. They can invest and innovate to accelerate the progress based upon our investments. And in return we have an exclusive access right to their proven drug discovery platform.”
That platform has supported the progression of seven medicines into clinical development, including the Gilead-partnered filgotinib that could come to market in a clutch of indications. And it has given rise to more than 20 preclinical programs that are making their way toward human testing.
O’Day thinks that Galapagos can maintain and even increase its output in the coming years.
“Their model has been very productive at producing new candidates for the clinic every year. And of course with our increased investments we would expect that to even increase in the future,” O’Day said.
The history of drug development shows that putting more money into larger operations doesn’t necessarily lead to a faster flow of significant molecules. But in Galapagos, O’Day thinks Gilead has a partner that can complement its own infrastructure and ensure a stream of new prospects.