Galapagos expands osteoarthritis alliance with GSK

Belgium-based genomics company Galapagos has expanded its existing osteoarthritis alliance agreement with GlaxoSmithKline (GSK) and has also issued 513,281 new shares for an investment of EUR 4.4m (USD 6m) by the UK's largest pharmaceutical company.

GSK adds a drug discovery programme alongside a selected GSK target to the alliance. For the existing programme, Galapagos will develop a disease-modifying drug toward completion of a phase II clinical trial, when GSK's global R&D organisation will be responsible for the late-stage development, production and marketing of the drug. GSK says its may add a second osteoarthritis drug discovery programme against a selected GSK target into the alliance.

Galapagos will receive an additional cash payment from GSK of EUR 3m (USD 4.1m) for initiating the first additional programme, as well as EUR 3m if GSK brings a second programme under the alliance, depending on future milestone achievements.

Galapagos would receive up to EUR 32.3m (USD 44m) in development milestones if it achieves clinical proof-of-concept. Upon successful completion, total cash value for Galapagos, including the EUR 4.4m equity investment, would be EUR 61.7m (USD 84.1m) for each product, as well as royalties on GSK worldwide sales. Galapagos could earn almost EUR 186m (USD 253.4m) in total milestones, if the expanded collaboration produces two marketed products.

Galapagos and GSK will continue their collaboration in the existing alliance as planned, with GSK maintaining its financial commitments under the original agreement. The original alliance was worth about EUR 137m (USD 186.6m) in upfront, equity and milestone payments for two marketed products and double-digit royalties. Galapagos has already pocketed EUR 7.6m (USD 10.4m) in access fees and milestone payments from GSK since the programme began back in June 2006.

Hugh Cowley, senior vice-president of GSK and leader of the Centre of Excellence for External Drug Discovery (CEEDD), said: "The alliance between the CEEDD and Galapagos is off to an excellent start, and the CEEDD is very pleased with the progress to date. We expect the alliance to contribute to GSK's development pipeline in osteoarthritis in the future, validating the collaboration model we sought to establish under the CEEDD strategic initiative at GSK."

Galapagos was founded in 1999 as a joint venture (jv) between Dutch vaccine company Crucell (formerly IntroGene) and Belgian pharmaceutical company Tibotec. The jv operated until 2002 when EUR 23.4m (USD 31.9m) was raised in a private placement. In May 2005, the company raised EUR 22.4m (USD 30.5m) through its IPO on the Euronext Brussels and Euronext Amsterdam stock exchanges.