Galapagos to spin off innovative medicines business (updated)

Lakefront Biotherapeutics NV

08/01/2025 11:42

(Updates shares, adds analyst comments in paragraphs 5-7, 9,
plans for remaining part of Galapagos in paragraph 8)
    By Alban Kacher
       Jan 8 (Reuters) - Amsterdam-listed pharmaceutical firm
Galapagos  GLPG.AS  said on Wednesday it plans to split into two
listed entities by mid-2025 by spinning off its activities
focused on innovative medicines.
    Galapagos, headquartered in the city of Mechelen in Belgium,
will provide around 2.45 billion euros ($2.53 billion) of cash
for the new company, to be named at a later date, it said in a
press release.
    "The proposed separation aims to help investors more easily
assess the merits, and future prospects of the two distinct
businesses," Galapagos' finance chief Thad Huston said.
    The group's American partner and shareholder Gilead  GILD.O 
will hold about 25% in both Galapagos and the newly created
firm, which will both be listed on Euronext, Galapagos said.
    Shares in Galapagos were up 1.2% by 1024 GMT, after rising
as much as 12.2% earlier in the session. Barclays analyst Emily
Field said the initial spike was likely due to short interest.
    While the planned split seems to make strategic sense,
uncertainty remains on whether investors will give credit to the
newly listed business, Field said.
    "(The spin off) is just cash, so will people value it as
anything more than the cash?" she questioned.
    The new business will aim to build a pipeline of innovative
medicines, while the remaining part of Galapagos will focus on
developing its cell therapy platform in oncology, it said.
    "While we think this is a positive step for the company, it
does leave Galapagos 2.0 with an early stage cell therapy
program," KBC analyst Jacob Mekhael said.
    The reorganization is expected to lead to the reduction of
around 300 positions in Europe, or around 40% of the group's
workforce, Galapagos said.
    After the reorganization, it expects its normalized annual
cash outflow to be between 175 million and 225 million euros,
excluding restructuring costs.
    The Galapagos stock has faced a strong devaluation since
late 2020, after the group decided not to pursue the U.S. Food
and Drug Administration's approval of its experimental
rheumatoid arthritis treatment.
($1 = 0.9678 euros)

 (Reporting by Alban Kacher in Gdansk; editing by Milla Nissi)
 ((alban.kacher@thomsonreuters.com))