Galapagos to Unlock Shareholder Value by Declaring its Intent to Separate into Two Publicly Traded Entities

Strategic Reorganization and Separation - Galapagos plans to separate into two entities: Galapagos, focusing on cell therapy leadership in oncology, and SpinCo, dedicated to building a pipeline of innovative medicines through transformational transactions [1][4] - SpinCo will be capitalized with approximately €2.45 billion in cash and will focus on oncology, immunology, and virology through strategic business development transactions [4] - Galapagos will gain full global development and commercialization rights to its pipeline, subject to single-digit royalties to Gilead on net sales of certain products [2][5] Corporate Structure and Shareholder Impact - Gilead will hold approximately 25% of the outstanding shares in both Galapagos and SpinCo post-separation, with lock-up periods until March 31, 2027, for Galapagos and six months for SpinCo [7] - All Galapagos shareholders will receive shares of SpinCo on a pro rata basis based on their holdings as of a record date [6] - Gilead will nominate two Directors to the SpinCo Board, which will be majority independent [7] Financial and Operational Focus - Galapagos expects its normalized annual cash burn to be between €175 million and €225 million post-reorganization, excluding restructuring costs [12] - The company plans to discontinue its small molecule discovery programs and seek partners for its small molecule assets, including the TYK2 inhibitor GLPG3667 [10] - Galapagos will reduce approximately 300 positions, representing 40% of its workforce, primarily in Europe, to focus on long-term value creation in cell therapy [11] Strategic Vision and Leadership - The separation aims to unlock shareholder value by allowing Galapagos to focus on cell therapy in oncology while SpinCo pursues innovative therapies through strategic transactions [3][8] - Galapagos' lead CAR-T candidate, GLPG5101, has shown encouraging efficacy and safety in relapsed/refractory non-Hodgkin lymphoma, supporting its decentralized cell therapy manufacturing platform [9] - The reorganization is expected to position Galapagos for sustainable growth and future success in cell therapies [13] Transaction Process and Timeline - The separation is subject to customary conditions, including consultations with works councils and shareholder approval, with completion expected by mid-2025 [15] - Goldman Sachs International and Lazard acted as financial advisors, while Baker McKenzie and Allen Overy Shearman Sterling provided legal counsel [16] Industry and Market Implications - The separation allows investors to assess the distinct value propositions of Galapagos and SpinCo, enabling targeted investment strategies based on each entity's focus [14] - SpinCo's focus on innovative medicines and strategic transactions aligns with emerging trends in biotechnology and high unmet medical needs [4][8]