news

Biotech giant helps itself without swallowing Galapagos whole A ten-year collaboration gives biotech giant Gilead frst rights to all of Galapagos’s pipeline.

he interesting part of Gilead’s expansive R&D collaboration with TGalapagos is what it claims it is not: an acquisition. Instead, Gilead—helmed by Roche veteran Daniel O’Day—not only has paid Galapagos $3.95 billion up front, but also has bought $1.1 billion of company equity to both ensure access to its drug pipeline for the next ten years and prevent competitors from buying the group. The partners’ fortunes are tied, but they remain separate entities—for now. Some observers are drawing parallels with Roche’s former archetypal partnership with Genentech or Sanofi’s 2015 partnership with Regeneron. At the heart of the deal is Galapagos’s new Janus associated kinase-1 (JAK1) selective inhibitor filgotinib. The companies began working together on the anti-inflammatory drug in 2015, after AbbVie declined an option on the compound; in March 2019, the partners released positive phase 3 results in rheumatoid arthritis. With the recent deal, Galapagos’s offices in Leiden, the Netherlands. Credit: Galapagos Gilead and Galapagos maintain the original agreement, and in addition Gilead gains full rights to GLPG1690, a phase 3 candidate for idiopathic pulmonary fibrosis (IPF), US platform uses a battery of human cell- development costs, rather than 20% as in the option rights to osteoarthritis candidate based assays to identify novel drug targets. previous arrangement, but the biotech also GLPG1972, in phase 2b, and option rights Human primary cells from an affected retains generous 20–30% tiered royalties on outside Europe on all of Galapagos’s other tissue of interest are transfected with a non-European Union sales and is eligible for current and future clinical programs. The library of 25,000 adenoviruses encoding $1.27 billion in potential milestones. equity investment increases Gilead’s stake in short interfering RNAs (siRNAs) against Industry is rife with examples of creative the Mechelen, Belgium-based group from mRNA sequences encoded by target genes. biotechs that are acquired by innovation- 12.3% to 22%; but a stand-still agreement—a Targets identified as pivotal in disease in hungry pharmaceutical companies, only contractual measure designed to prevent the screen are then further validated and to end up smothered and unproductive a hostile takeover—prevents Gilead tested against collections of small molecules within the larger organization. Europe has from increasing its stake beyond a 29.9% to identify chemical binders that mimic fared particularly badly at retaining and maximum or seeking to buy Galapagos for siRNA. Galapagos’s discovery pipeline has growing independent biotechs. One notable the ten-year duration of the deal. already generated 20 pre-clinical and 7 exception: Allschwil, Switzerland-based Critically, Galapagos maintains its research clinical small-molecule drug candidates. Actelion, which built a multi-million-dollar and discovery independence. The biotech “is The partners hope to further increase that commercial enterprise before selling to free to follow the science. We are not going productivity, as Galapagos plans to double Johnson & Johnson in 2017 for $30 billion. to influence them,” says O’Day, The Belgian its R&D headcount to 1,000 and seek Emerging biotech giant Ablynx, based in group will fund and lead discovery and complementary technologies. Ghent, Belgium, was subsumed within development until the end of phase 2, after As well as turbocharging its R&D Paris-based Sanofi in 2018 just as its lead which Gilead’s options kick in. If an option engine, this deal also keeps alive Galapagos’s asset neared approval. is exercised, the partners will co-develop ambition to become a fully integrated, Galapagos CEO and founder Onno the compound and share costs equally. commercial-stage biotech—a vision shared van de Stolpe has long been vocal in his The companies have agreed on specific by many biotechs but achieved by few. The desire to avoid selling out to big pharma. payment terms for the IPF and osteoarthritis companies have now amended their 2015 Before the 2015 deal, Gilead had openly candidates, and a simpler licensing deal licensing agreement around filgotinib to sought an acquisition, but van de Stolpe template for all future programs. give Galapagos expanded commercial rights claims he quickly shut down that idea. This Gilead’s cash allows Galapagos to in key European countries and exclusive time around, he was feeling “vulnerable” rapidly expand its discovery efforts beyond rights in the Benelux countries. In exchange, to an unsolicited takeover after filgotinib’s its existing focus. The biotech’s R&D Galapagos is on the hook for half of global positive phase 3 results in March 2019, and

1104 Nature Biotechnology | VOL 37 | OCTOBER 2019 | 1099–1109 | www.nature.com/naturebiotechnology news uncertain over what to expect from Gilead. it also caps that share price by snuffing out The US biotech was undergoing a change of any upside from merger speculation. The New antibodies best leadership—O’Day started on March 1 of this European biotech has also relinquished ZMapp in Ebola trial year—and its plans were unclear. At the time, valuable US rights to any drugs that do Two antibody therapies for Ebola have however, “there was no concrete acquisition succeed and will bear increased development performed well in a late-stage clinical offer from Gilead, or from anyone else.” costs. Some observers also question how trial being conducted during the Ebola Gilead could have approached Galapagos’s independent the biotech will really be because outbreak in the Democratic Republic major shareholders directly with an the new deal gives Gilead two members of the Congo. The study, called PALM acquisition offer, bypassing the CEO. on the board who could “potentially veto (an abbreviation for a Swahili phrase (Those shareholders include a Rotterdam, anything they don’t like,” cautions one former meaning “together save lives”) was testing Netherlands-based family office, Van Herk biotech CEO, who suggests the deal is “an Regeneron’s REGN-EB3, a collection Investments, which was also one of the largest acquisition in all but name.” of three fully human monoclonal holders of Ablynx stock and, despite being The deal may not be a slam dunk for antibodies; Ridgeback Biotherapeutics a self-declared long-term investor, happily Gilead, either. Galapagos’s R&D engine has single monoclonal antibody mAb114; the accepted the 100% premium offered by been productive so far, but has yet to generate nucleotide-analog antiviral remdesivir, Sanofi.) But they did not. “When a company a marketed drug. Filgotinib will probably developed by Gilead Sciences; and is successful, it is difficult [for the potential be approved, perhaps as a safer alternative Mapp Biopharmaceutical’s ZMapp, a acquirer] to go hostile,” says Geoffrey Porges, to existing JAK inhibitors like Eli Lilly ’s cocktail of monoclonal antibodies against director of therapeutics research and a senior Olumiant (baricitinib) and Pfizer’s Xeljanz Ebola glycoproteins. ZMapp, the only research analyst at SVBLeerink. Buying a (tofacitinib), which come with serious candidate drug previously studied in company against management’s wishes, by side-effects. (The higher dose of Xeljanz Ebola patients, was being used as the seeking shareholders’ approval directly, spoils received a boxed warning in ulcerative colitis control arm in PALM because it showed the creative culture that often underpins in late July 2019). But following late into a favorable survival trend in an earlier much of the deal’s value, sending founders a very crowded, big-pharma-dominated trial. Following an August review, an and loyal scientists fleeing. That scenario rheumatoid arthritis market will not be easy, independent data and safety monitoring would not serve Gilead, under pressure to either in the United States or Europe, where board (DSMB) stopped the trial of the deploy its $30 billion cash pile (courtesy of cheaper biosimilars of AbbVie’s best-selling four therapies, recommending that its legacy hepatitis C virus drug franchise Humira (adalimumab) are starting to push participants now be randomized to and an expanding HIV therapy portfolio) to down prices. “The investment community receive only REGN-EB3 or mAb114. The enhance the pipeline. “It takes time to build does not share Gilead’s confidence in preliminary PALM data showed a 29% a productive drug discovery platform,” says filgotinib,” says Porges. And it is unlikely that mortality rate for participants treated O’Day, acknowledging the need for both the both the IPF and osteoarthritis development with REGN-EB3 and 34% with mAb114, technology and Galapagos scientists’ know- candidates hit the jackpot. versus 53% with remdesivir and 49% how in applying it. “This [deal] is a major O’Day is looking beyond these two with ZMapp. step forward for Gilead’s portfolio. It doubles candidates, though. He’s eyeing the almost two “It was clear to the DSMB that those our research base and significantly increases dozen preclinical assets, including some that agents are more effective than the other our IP, expertise and capabilities in fibrosis,” appear to both stimulate anti-inflammatory two,” NIAID director Anthony Fauci said he said on a 14 July conference call. cytokines and inhibit pro-inflammatory in an audio briefing. “Today, we have This deal was designed so that Gilead cytokines. “One or two compounds per year taken new steps. From now on, we will could tap into its smaller partner’s could come into the clinic—or more, given no longer say that EBOV is not curable,” innovation without squashing it and increased funding. I am at peace if [the] added PALM principal investigator shows how all pharma and biotech should osteoarthritis and IPF [candidates] don’t Jean-Jacques Muyembe-Tamfum. work together, according to van de Stolpe. hit. You have to be long-term minded when A week before the PALM trial The tie-up shares some similarities with approaching discovery research,” says O’Day. announcement, the Sabin Vaccine both Roche-Genentech and Sanofi’s 2015 Van de Stolpe insists that oncology remains Institute licensed rights to three vaccine immuno-oncology partnership with off the table because the company’s discovery candidates, including a phase 2 vaccine Regeneron, both of which “involved platform, using primary human cells against Ebola, from GlaxoSmithKline. cash for research, equity, board seats and rather than cell lines, provides insufficient defined terms for future development and competitive edge in this indication. Published online: 2 October 2019 commercialization,” says Porges. (This year, For now, Gilead has a tight, but friendly, https://doi.org/10.1038/s41587-019-0284-y Sanofi and Regeneron narrowed down their hold on Galapagos in a deal structure that collaboration around two clinical-stage has many positives for both sides. Yet “you assets.) Whether the Gilead–Galapagos never know how things go. If the market variation proves inspirational to pharma economics make sense for Gilead to buy or biotech in the future will depend on [Galapagos], even a stand-still agreement “Although none of our companies are working how many of Galapagos’s drug candidates is still negotiable,” says Dharminder on germline therapy, when I talk to people not actually succeed. If just one does, Gilead may Chahal, investment manager at Van Herk involved in the biotechnology business, one of have overpaid. If several do, the US company Investments. ❐ the frst questions I get is: ‘Aren’t you worried about has gotten a great deal and Galapagos’s designer babies?’ I am spending more time on this kind of question than at any point in my career.” shareholders may feel they were sold short. Melanie Senior ‘‘Jim Burns, CEO of Casebia and cochair of the Alliance Granted, the deal removes the risk of an London, UK for Regenerative Medicine task force on gene editing. unwanted acquisition, meets Galapagos’s The group put out a statement in August that fundraising needs for the next ten years, Published online: 21 August 2019 germline gene editing is currently inappropriate. and puts a floor under its share price. But https://doi.org/10.1038/d41587-019-00024-5 (Financial Times, 26 August 2019) Nature Biotechnology | VOL 37 | OCTOBER 2019 | 1099–1109 | www.nature.com/naturebiotechnology ’’1105