· Total cash consideration of up to €134 million
o €129 million cash payment
o earnout of €5 million upon achievement of revenue target after 12 months
· Proceeds to be used to progress Galapagos' pipeline
o four Phase 2 patient data readouts expected over next 15 months
o delivery of multiple Phase 1 studies and candidates in 2014
· Galapagos retains target discovery capabilities for its R&D and alliance operations
· Management guidance for 2014 Group revenues (including Argenta and BioFocus revenues Q1) of €125 million and year end cash of €170 million
Galapagos to hold a live audio webcast presentation today at 10.00 CET,
call number +32-2290-1608, www.glpg.com
Mechelen, Belgium; 13 March 2014 - Galapagos NV (Euronext: GLPG) announces the signing of a definitive agreement to sell the BioFocus and Argenta service division operations to Charles River Laboratories International, Inc. (NYSE: CRL) for a total consideration of up to €134 million. The transaction is subject to customary closing conditions and is expected to close early in the second quarter of 2014.
"We are pleased to sell the Argenta and BioFocus divisions to Charles River, one of the premier life science service providers in the world. These newly acquired capabilities are fully complementary to the services provided by Charles River, and Charles River therefore provides a logical and excellent home for Argenta and BioFocus," CEO Onno van de Stolpe commented. "With this transaction, Galapagos transforms from a hybrid drug discovery service and pipeline company into a research and development biotech focusing on developing innovative drugs for unmet medical needs. We have created significant value in building our service activities, and BioFocus and Argenta have greatly contributed to our current pipeline. The time has now come to move into the next phase of the Company with our focus on the pipeline, and to let Argenta and BioFocus continue their success under the wings of Charles River. We would like to thank the employees of Argenta and BioFocus for their contribution to Galapagos' success over the years. We wish them the very best within Charles River."
Details of the transaction
Charles River acquires all service operations of BioFocus and Argenta in the UK and The Netherlands. The acquisition includes all client contracts, order pipeline, premises, equipment, and further obligations of BioFocus and Argenta. All employees of BioFocus and Argenta will move into the Charles River organization upon completion of the transaction, which is expected to occur early in the second quarter of 2014, subject to customary closing conditions. David Smith will join Charles River as Corporate Vice President, In Vitro Discovery Services and lead the transition.
Charles River agrees to pay Galapagos immediate cash consideration of €129 million. Upon achievement of a revenue target 12 months after transaction closing, Galapagos will be eligible to receive an earnout payment of €5 million. The purchase price implies a multiple of approximately 2 times 2013 sales and approximately 12 times 2013 adjusted EBITDA.
Galapagos agrees to retain 5.4% of the €129 million cash consideration in an escrow account for 15 months.
Charles River is a global leader in drug research services, with over 7700 employees and 2013 revenues of $1.17 billion. The acquisition affords Charles River further vertical integration into a high growth outsourcing area, fully complementary to its existing offering and in line with its announced growth strategy.
Galapagos retains target discovery and assay development capabilities in Leiden for its R&D and alliance operations. Post-transaction, Galapagos will have three R&D sites in Mechelen, Belgium (headquarters), Romainville, France, and Leiden, the Netherlands. Galapagos also retains Fidelta, a fee-for-service operation based in Zagreb, Croatia. In total, Galapagos employs over 400 staff.
Management guides for €125 million in Group revenues in 2014 (lowered from €180M as a result of divesture of the Argenta and BioFocus operations), and a year-end cash position of €170 million.
Galapagos will conduct a conference call open to the public today at 10:00 Central European Time (CET)/5:00 AM EDT, which will also be webcast. To participate in the conference call, please call +32-2290-1608 ten minutes prior to commencement. Go to www.glpg.com to access the live audio webcast. The archived webcast will also be available for replay shortly after the close of the call.
Galapagos (Euronext: GLPG; OTC: GLPYY) is specialized in novel modes-of-action, with a large pipeline comprising five Phase 2 studies (two led by GSK), one Phase 1 study, six pre-clinical, and 20 discovery small-molecule and antibody programs in cystic fibrosis, inflammation, antibiotics, metabolic disease, and other indications. In the field of inflammation, AbbVie and Galapagos signed a worldwide license agreement whereby AbbVie will be responsible for further development and commercialization of GLPG0634 after Phase 2B. GLPG0634 is an orally-available, selective inhibitor of JAK1 for the treatment of rheumatoid arthritis and potentially other inflammatory diseases, currently in Phase 2B studies in RA and in Phase 2 in Crohn's disease. Galapagos has another selective JAK1 inhibitor in Phase 2 in ulcerative colitis and psoriasis, GSK2586184 (formerly GLPG0778, in-licensed by GlaxoSmithKline in 2012). GLPG0974 is the first inhibitor of FFA2 to be evaluated clinically for the treatment of IBD; this program is currently in a Proof-of-Concept Phase 2 study. GLPG1205 is a first-in-class molecule that targets inflammatory disorders and has completed Phase 1. AbbVie and Galapagos signed an agreement in CF whereby they work collaboratively to develop and commercialize oral drugs that address two mutations in the CFTR gene, the G551D and F508del mutation. Potentiator GLPG1837 is at the pre-clinical candidate stage. Galapagos has 400 employees, operating from its Mechelen, Belgium headquarters and facilities in The Netherlands, France, and Croatia. Further information at: www.glpg.com
Elizabeth Goodwin, Head of Corporate Communications & Investor Relations
Tel: +31 6 2291 6240
This release may contain forward-looking statements, including, without limitation, statements containing the words "believes," "anticipates," "expects," "intends," "plans," "seeks," "estimates," "may," "will," "could," "stands to," and "continues," as well as similar expressions. Such forward-looking statements may involve known and unknown risks, uncertainties and other factors which might cause the actual results, financial condition, performance or achievements of Galapagos, or industry results, to be materially different from any historic or future results, financial conditions, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, the reader is advised not to place any undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date of publication of this document. Galapagos expressly disclaims any obligation to update any such forward-looking statements in this document to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, unless required by law or regulation.