Foster City, Calif.-based drugmaker Gilead Sciences has agreed to a $5.1 billion deal with Galapagos, under which Gilead will pay to increase its stake in the Belgian biotechnology company, according to The Wall Street Journal.
Eight notes:
1. Gilead — which announced the news July 14 — said the 10-year global research and development collaboration involves a $3.95 billion upfront payment as well as a $1.1 billion equity investment from the drugmaker.
2. Proceeds from the transaction will go toward expanding and speeding up Galapagos research and development programs.
3. Under the agreement, Gilead will boost its stake in the Belgian company from about 12.3 percent to 22 percent, according to the Journal.
4. Galapagos also intends to issue two warrants allowing Gilead to further increase its stake up to 29.9 percent, pending approval from Galapagos shareholders.
5. Gilead will have two representatives on Galapagos' board of directors.
6. The transaction has benefits for both companies. Gilead receives access to new products to regain its sales growth, while Galapagos receives a large investment to expand its research, according to the Journal.
7. The newspaper states that the agreement — which restricts Gilead's ability to acquire Galapagos or increase its stake in the Belgian company beyond 29.9 percent — could also help Galapagos keep its independence.
8. The deal is expected to close late in the third quarter of 2019.
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