Galapagos Enters Acquisition Agreement with Gilead for Ouro at $1.675B

Galapagos (GLPG) announced that it has entered into a binding agreement with Gilead (GILD) in connection with Gilead's definitive agreement to acquire all of the outstanding equity interests of US-based Ouro Medicines, a privately held biotechnology company focused on developing T cell engager therapies for autoimmune diseases. Gamgertamig is a clinical-stage BCMAxCD3 T cell engager designed to enable rapid and deep plasma and B-cell depletion following a short duration, subcutaneously administered treatment course. Gamgertamig has been granted both Fast Track and Orphan Drug Designation by the FDA for the treatment of AIHA and ITP and is expected to enter registrational studies as early as 2027. On March 23, Gilead announced that it had entered into a definitive agreement to acquire all of the outstanding equity interests of Ouro for a total upfront cash consideration of $1.675B, subject to customary adjustments, and up to $500M in contingent milestone payments. In connection with the acquisition, the company has entered into the framework agreement with Gilead, which comprises the following components: relief under the option, license and collaboration agreement dated July 14, 2019 between the company and Gilead, or OLCA, to enable the company to deploy at least $500M of its available cash independently from Gilead and outside the scope of the OLCA and the Ouro transaction, including up to $150M for share buybacks; a binding term sheet granting the company licenses to certain intellectual property rights relating to Ouro's research programs, including Ouro's program of gamgertamig for development purposes, and to the BCMAxCD19xCD3 T cell engager program and other preclinical programs for development and commercialization purposes and a binding term sheet pursuant to which the company would acquire substantially all Ouro's operational assets in connection with the acquisition, including facilities and personnel, such that the company would obtain an operating business. The framework agreement will only come into effect as from the completion of the acquisition. The parties have agreed to enter into a collaboration agreement consistent with the terms of the binding term sheet. Under the licensing term sheet, the company is required to fund its share of payments owed to KeyMed Biosciences under the head license agreement between KeyMed and Ouro, comprising 25% of the milestone payments and 50% of the royalty payments that become due to KeyMed with respect to gamgertamig products. The company will also bear all costs of development prior to registrational studies for gamgertamig pursuant to agreed-upon research plans and budgets, including Ouro's current clinical trials, while costs of registration-enabling clinical development would be shared equally between the parties, with execution leadership divided by indication. Galapagos is also eligible for up to $100M milestones payments upon Gilead's initiation of the first registrational trials for gamgertamig in certain other indications. Gilead will be responsible for commercialization, including all related costs, globally outside of Keymed's territories. Upon commercialization, Gilead will pay the company tiered royalties between 20%-23% on net sales of gamgertamig. In addition, Galapagos will gain a preclinical portfolio of three additional autoimmune focused programs originally from Ouro, on which Gilead had the option to opt into a 50/50 profit split post clinical proof-of-concept for $75M per program. The OLCA waiver allows the company to spend $500M of cash to acquire or develop research programs independently from Gilead and not subject to Gilead's rights under the OLCA. In addition, the company can elect to use up to $150M of that $500M for potential share repurchases, dividend payments and other distributions of company's capital stock, subject to certain limitations.