Galapagos: A surprising and pleasant new deal

BUY, Fair Value EUR22.5 (+42%)

News published on September Wednesday 25, 2013
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Galapagos and AbbVie announced yesterday afternoon a licensing agreement in Cystic Fibrosis. Following the deal for 634 in Rheumatoid Arthritis, this is the second major agreement between the two companies emphasizing the interest of R&D of Galapagos for big pharma. AbbVie will pay Galapagos USD45m upfront, USD360m in milestones and double-digit royalties. Both companies will participate in the funding and the development of drugs in that area. As a reminder, Galapagos has been working on Cystic Fibrosis since 2005 and has made good progresses in pre-clinical development. We had no value for this project in our EUR22.5 fair value and will integrate this opportunity going forward. We reiterate our BUY rating on Galapagos and believe that this new agreement is real plus to the equity story demostrating once more Galapagos’s R&D attractivness as well as reinforcing the strategic partnernship with AbbVie.

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