Galapagos acquires ProSkelia from ProStrakan and raises EUR31 million


Galapagos NV announced to have entered into a definitive agreement with UK-based ProStrakan Group plc under which Galapagos acquires ProSkelia SASU, a French subsidiary of ProStrakan. ProSkelia is engaged in drug discovery and development in bone diseases. ProSkelia was the 2002 spin-out of Aventis' Bone Disease Unit and was acquired in 2004 by the Strakan Group to form ProStrakan.

The assets that Galapagos acquires include ProSkelia's R&D operations focused on bone diseases as well as a product portfolio of three preclinical products in bone diseases (osteoporosis and bone metastasis), and one preclinical product in cachexia (muscle atrophy and weight loss). The combined product development portfolio will contribute to Galapagos' goal of having multiple clinical programs in bone and joint diseases in 2008.

The transaction includes an exclusive option and license to oestradiol glucoside ("E2G"), a product that has successfully completed a phase IIa clinical study for treatment of menopausal symptoms ('hot flashes'). This marks the start of Galapagos' clinical programs. With the acquisition, ProSkelia's ongoing R&D partnerships with Amgen, Genentech, and Novartis will be transferred to Galapagos. Galapagos will receive all annual revenues from these partnerships and will be eligible to 25% of the downstream milestones and royalties from these partnerships.

The acquisition price of ProSkelia comprises EUR12.5 million in newly issued Galapagos shares. This price is partially offset by estimated cash tax refunds of EUR9 million over the coming four years. In addition, ProStrakan will be eligible for earn-out payments capped at EUR14.5 million, as part of future income that Galapagos will derive from the acquired pre-clinical programs. For the license on E2G, ProStrakan will receive EUR5 million plus a fixed amount of licensing revenues receivable by Galapagos, as well as single digit royalties. These payments to ProStrakan for the E2G program are conditional to successful completion of Phase IIb clinical trials and partnering of the product. In addition, ProStrakan has right of first refusal on the cachexia program, should Galapagos decide to partner or out-license this.

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