Gilead invests heavily in Galapagos

Gilead Sciences is dropping another $5.1 billion on Galapagos NV — increasing its stake in the Belgian biotech and getting rights outside of Europe to a slew of late-stage drug candidates. Galapagos’ lead drug, filgotinib, is in Phase 3 trials to treat inflammatory conditions like rheumatoid arthritis, Crohn’s disease, and ulcerative colitis.

But given Gilead’s need to flesh out its own pipeline, why isn’t it buying Galapagos outright? The deal price is a mere 38 percent below the biotech’s current market cap — which suggests that an acquisition would certainly have been feasible.

Gilead CEO Daniel O’Day, who worked at Genentech in the years before it was acquired by Roche, told STAT's Matt Herper "the value that independence can create" led him to structure the Galapagos deal in this manner, instead.

“Innovation, particularly in the early stages of our value chain, is about engaging people, motivating them correctly, getting the very best scientists and keeping a certain independence,” O’Day said.