Galapagos NV plans to separate into two entities: a newly to be formed company (to be named later), which would focus on building a pipeline of innovative medicines through transformational transactions, and Galapagos, which would continue to advance its cell therapies in oncology.

The reorganization of its business will result in cutting approximately 300 positions across the organization in Europe, representing 40% of the company’s employees. This reorganization would result in reductions in staff in Belgium and the site in France is expected to close. Galapagos would continue to operate from its main hubs in Princeton and Pittsburgh in the U.S., and from Leiden, Netherlands, and Mechelen, Belgium.

As part of the planned separation, Galapagos and Gilead Sciences, Inc. have agreed to amend their 10-year global Option, License and Collaboration Agreement entered into in 2019, whereby Galapagos will gain full global development and commercialization rights to its pipeline, subject to payment of single digit royalties to Gilead on sales of certain products.

In the proposed separation, the spinoff will be capitalized with approximately €2.45 billion of Galapagos’ current cash. It will be focused on building a pipeline with robust clinical proof-of-concept in oncology, immunology, and/or virology through strategic business development transactions.

Gilead will hold approximately 25% of the outstanding shares in both Galapagos and the spinoff.

Galapagos will focus on the potential of its decentralized cell therapy manufacturing platform in oncology and will continue to advance its cell therapy pipeline. Galapagos’ lead CAR-T candidate, GLPG5101, has demonstrated an encouraging efficacy and safety profile in patients with relapsed/refractory non-Hodgkin lymphoma, supporting the feasibility of Galapagos’ decentralized cell therapy manufacturing platform in delivering fresh, fit cells with a vein-to-vein time of seven days.

Galapagos plans to discontinue its small molecule discovery programs and seek potential partners to take over these assets, including the TYK2 inhibitor, GLPG3667, currently in Phase 2 for systemic lupus erythematosus, dermatomyositis, and other potential auto-immune indications.

Following the planned reorganization, Galapagos expects its normalized annual cash burn to be between €175 million and €225 million, excluding restructuring costs. Upon separation, Galapagos expects to have approximately €500 million in cash.

“The proposed separation aims to help investors more easily assess the merits, and future prospects of the two distinct businesses, allowing them to invest in each company based on their own strategy and a clearer understanding of each business’ unique characteristics and value propositions,” said Thad Huston, CFO and COO of Galapagos.”