Galapagos Deal: GLPG Stock Rockets Higher on Gilead Stake

A Galapagos deal with Gilead has GLPG stock heading higher on Monday.

Galapagos Deal: GLPG Stock Rockets Higher on Gilead Stake

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As part of a larger deal with Galapagos (NASDAQ:GLPG), Gilead (NASDAQ:GILD) will be purchasing a stake in the company. This will have it acquiring new shares of GLPG stock for €140.59 each. This represents a 20% premium over the stock’s 30-day, volume-weighted average price.

The Galapagos deal will have Gilead increasing its stake in the company by a fair amount. This will have its ownership of GLPG stock increasing from 12.3% to 22%. Galapagos is also seeking approval from shareholders to allow for two warrants to Gilead. This will let it increase its stake in the company to 29.9%.

This Galapagos deal doesn’t just stop with an investment from Gilead. It will also have the two companies working together. This includes a $3.95 billion payment from Gilead that will allow the company to work more on its research and development programs.

The Galapagos deal will make it so that Gilead gains exclusive access to the results of research. That will include “exclusive product license and option rights to develop and commercialize all current and future programs in all countries outside Europe.”

There’s also the option for additional payments if things go well for Galapagos. For example, Gilead is willing to pay an additional $325 million to the company if GLPG1690 gets approval in the U.S. It will also have the ability to pay a $250 million fee to license the compound for use in the U.S.

GLPG stock was up 17% and GILD was up 2% as of Monday afternoon.

As of this writing, William White did not hold a position in any of the aforementioned securities.

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