Galapagos expands metabolic disease with Merck & Co; will now get more than 400 million euros

Belgian firm Galapagos has expanded its global strategic alliance in metabolic diseases with an affiliate of US drug major Merck & Co. to incorporate the development of new therapies for atherosclerosis, which will generate total alliance milestones of more than double to over 400 million euros ($590.4 million), plus royalties on worldwide sales.

Shares in Galapagos rose 4.2% to 8.49 euros by 1123 GMT as analysts said the deal lowered the risk profile of Galapagos. The DJ Stoxx European healthcare index .SXDP was up 1.2%. However, KBC Securities analyst Jan De Kerpel quoted by Reuters said that "Galapagos' chances of bringing a drug to market at this moment in time are low," said KBC Securities analyst Jan De Kerpel quoted by Reuters.

Galapagos will be responsible for the discovery and preclinical development of new, small-molecule candidate drugs based on the company's novel targets. The alliance will make use of Galapagos' proprietary target discovery platform for identification of novel targets in atherosclerosis, as well as in obesity and diabetes. After validation, targets will be selected by a joint steering committee and entered into screening and chemistry by Galapagos. Merck will have an exclusive option to license in each candidate for clinical development and commercialization on a worldwide basis. Upon exercise of such option, Merck will be responsible for the development and commercialization of the candidate drug. Galapagos may execute Phase I clinical studies and will have the right to further develop and commercialize certain compounds for which Merck does not exercise its exclusive option.

In January 2009, Galapagos announced an alliance with Merck in diabetes and obesity, with milestone payments with the potential to exceed 170 million euros. Under the terms of this expanded agreement, that now includes small-molecule candidate drugs for preclinical development in atherosclerosis, Galapagos is eligible to receive research, regulatory and sales milestone payments that may total in excess of 400 million euros. In addition Galapagos is eligible to receive royalties upon commercialization of any products covered under the agreement.

The expansion of this deal is separate from Galapagos' alliance with Merck in inflammatory diseases announced in April 2009.