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Galapagos Enters into Global Alliance with Janssen Pharmaceutica on Rheumatoid Arthritis Research

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Galapagos NV has announced that it has entered into a worldwide multi-target alliance with Janssen Pharmaceutica NV (‘Janssen’), a Johnson & Johnson company, to discover and develop novel small-molecule therapeutics for the treatment of rheumatoid arthritis (RA).

Under the alliance agreement, Janssen may select up to 12 programs from Galapagos’ internally identified RA targets into the alliance. Janssen receives future option rights to exclusively license these programs.

In addition, Janssen obtained an option to the future development and commercialization of product candidates from Galapagos’ other internal RA programs, including its most advanced program based on the kinase target GT418. A compound from this proprietary drug discovery program is expected to enter Phase I clinical trials in 2008.

With the signing of the agreement, Janssen will make an initial up-front cash payment of €15 million to Galapagos. In addition, Janssen will make a €2 million milestone payment for the selection of GT146, one of Galapagos’ advanced RA programs, into the alliance.

Under the alliance agreement, Galapagos will be responsible for the discovery of small molecule product candidates for those novel, validated RA targets that are chosen by Janssen. Galapagos will develop product candidates through to Phase IIa Proof of Concept (POC) clinical trials.

During the term of the collaboration, Galapagos is eligible to receive success-based progress milestones from Janssen. Upon Galapagos’ achievement of POC for a product candidate, Janssen has an exclusive option to license the product candidate from each alliance program and will then assume full responsibility for further clinical development and worldwide commercialization, at its expense.

For each alliance program licensed by Janssen, contingent on discovery, development and regulatory accomplishments, Galapagos could receive option exercise fees and milestone payments up to €73 million, plus royalties on net sales of each approved new RA drug.

In addition to performing research on the alliance RA targets, Galapagos will continue to perform the R&D activities for its internal RA programs, including its most advanced program GT418, at its own expense up to clinical POC, subject to an exclusive option by Janssen. Janssen’s license option for the Galapagos drug will become exercisable upon successful completion of Phase IIa clinical trial by Galapagos. Should Janssen elect to exercise the option, a non-refundable exercise fee of €60 million will be paid and thereafter Janssen would be responsible for the development and global commercialization, at its expense.

Galapagos could be eligible to receive up to €430 million in development and regulatory milestones payments should more than one product be approved for several indications in major markets. Furthermore, if a licensed product is commercialized, Galapagos could receive up to €346 million of one-time sales milestones upon the achievement of predetermined sales levels and receive double-digit royalties on worldwide sales.