For all other programs resulting from the cooperation, Gilead will make a payment of $150 million per program and will not need any further milestones. Galapagos receives royalties staggered from 20 to 24% on net sales of all Galapagos products that were granted by Gilead as part of the agreement. Businesses will share the future costs of developing filgotinib equally and replace the 80-20 cost-sharing, as envisaged by the original agreement, and the Galapagos will play a broader role in the marketing of the treatment in Europe. In a way, Gilead`s deal with galapagos might even be better than a buyout. The company will immediately significantly expand its pipeline into one of the most lucrative therapeutic areas. While the $5.1 billion price tag is not a change in chump, it doesn`t use too many Gilead cash deposits. The Galapagos agreement leaves a lot of money for Gilead to do other business. Gilead and Galapagos will co-market filgotinib in France, Germany, Italy, Spain and the United Kingdom and retain the 50/50 share of profits in these countries, which was part of the original filgotinib licensing agreement, and, in accordance with the revised agreement, Galapagos will play an increased commercial role. Galapagos reserves exclusive rights in Belgium, the Netherlands and Luxembourg. Instead of the 80/20 cost-sharing under the original agreement, companies will share equally the future costs of global development of filgotinib. Other terms of the original licensing agreement remain in effect, including the remaining $1.27 billion in potential milestones and staggered royalties, which must be paid between 20 and 30 per cent in regions outside Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain and the United Kingdom. Galapagos receives a $3.95 billion down payment from Galaead and a $1.1 billion stake. Galapagos will use the revenue to expand and accelerate its research and development programs.
Gilead obtains an exclusive product license and option rights for the development and marketing of all current and future programmes in all countries outside Europe. In addition, Gilead and Galapagos agreed to amend certain conditions of the filgotinib agreement, with the candidate for rheumatoid arthritis and other inflammatory diseases having advanced to ensure a broader marketing role for Galapagos-Galapagos in Europe. Let`s start with the increased share of Gilead`s Galapagos. Gilead already held 12.3% of its partner`s shares. These rates will increase to 22%. In addition, Gilead received two warrants that allowed him to increase his possessions in the Galapagos by up to 29.9%. But there is a 10-year stalemate that prevents Gilead from acquiring galapagos or increasing its stake by more than 29.9%. As part of the agreement, Gilead will also appoint two members to Galapagos` board of directors after the transaction is completed. Galapagos CEO Onno van de Stolpe ($GLPG) confirmed that the status quo agreement that prevents Gilead ($GILD) from increasing its stake in his company is still active.
The revelation breaks rumors that Gilead will buy galapagos for now, but as Van de Stolpe refuses to say when the deal will end, it falls short of longer-term expectations for AM. Gilead pays a 10% premium on Friday`s closing price for the galapagos` increased share, but has a 10-year status quo agreement that prevents it from increasing its share by more than 29.9%.