Galapagos (GLPG,GLPG.AS) has entered into a binding agreement with Gilead Sciences (GILD) in connection with Gilead's agreement to acquire all of the outstanding equity interests of Ouro Medicines, a privately held biotechnology company. Under the Framework Agreement, Galapagos' share of the total consideration for the acquisition amounts to 50% of the upfront consideration of $1.675 billion and 50% of any contingent milestone payments, which also includes the consideration under the asset acquisition term sheet. The Framework Agreement with Gilead comprises relief under the Option, License and Collaboration Agreement dated July 14, 2019 between Galapagos and Gilead, to enable Galapagos to deploy at least $500 million of its available cash independently from Gilead and outside the scope of the OLCA and the Ouro transaction, including up to $150 million for share buybacks.
The Framework Agreement has: a binding term sheet granting Galapagos licenses to certain intellectual property rights relating to Ouro's research programs, and a binding term sheet pursuant to which Galapagos would acquire substantially all Ouros operational assets in connection with the acquisition. Under the Licensing Term Sheet, Galapagos is required to fund its share of payments owed to KeyMed Biosciences Chengdu 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.
Galapagos is also eligible for up to $100 million milestones payments upon Gilead's initiation of the first registrational trials for gamgertamig in certain other indications. Upon commercialization, Gilead will pay Galapagos tiered royalties between 20-23% on net sales of gamgertamig. Galapagos will gain a preclinical portfolio of three additional autoimmune focused programs originally from Ouro.
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