The new spinout which has yet to be named and is currently referred to as "SpinCo" will engage in dealmaking to build a pipeline of treatments spanning oncology, immunology and virology.
Galapagos will fund the new entity with € 2.45 billion ($2.53 billion) in cash and it is expected to list on the Euronext exchange, altough that is still to be determined.
Meanwhile, Galapagos will continue to function as a separate business focused on advancing cell therapies for cancer.
Paul Stoffels “our small molecule portfolio is a longer-term one, our cell therapy portfolio is a shorter-term one, and we need to expand in the US.”
To help it put its full weight behind cell therapy, the company decided to “discontinue” internal work on its small molecule programs with an eye to transferring those assets to potential partners, Stoffels said, adding that the company was “lacking focus.”
Galapagos will have around € 500 million in cash once the spinout process is complete, which is projected by mid-2025.
It will provide capital runway for Galapagos at least into 2028. In that time Galapagos will a have number of inflection points where they’d look to raise capital or maybe opportunities to partner.
Galapagos’ current portfolio includes several CAR-T therapy candidates for blood cancer, but Gilead already has its cell therapy business Kite Pharma.
As such, Galapagos’ cell therapy portfolio “would have become competitive” with Kite’s offering, Stoffels said.
Gilead will retain 25% of outstanding shares in both Galapagos and its spinout at the time of the separation. The Lock up for Gilead stake in Galapagos 2.0 goes back in place until March 2027 to ensure the company can get to another important inflection point before Gilead can step out. Gilead has limitations on how they could sell. If there is a public offer, they could tender their shares.
The new company will search for deals on a global scale and will largely focus on licensing early-stage clinical assets, Stoffels said. He added that its first deal could even be announced before the split, although it was more likely to come in the second half of the year.
The biotech has not yet shared details on who will lead the spinout, but Stoffels said it would look for someone with experience in M&A and business development.