Alfasigma: Galapagos plans to transfer Jyseleca to Alfasigma for 50M upfront and reduce workforce

Galapagos has a plan to hand over its Jyseleca business - its only commercial product - to Alfasigma, as well as lay off some of its own employees and transfer others to the Italian pharma. In the potential deal, Galapagos will get €50 million ($53.3 million) upfront, potential milestone payments totaling €120 million ($127.9 million) and mid-single to mid-double-digit royalties on European sales for Alfasigma. About 400 jobs in 14 different European countries will also be transferred to Alfasigma. Belgium-based Galapagos will pay Alfasigma up to €40 million ($42.6 million) by June 2025 for more development activities for the JAK inhibitor, and cut about 100 employees across the company. Galapagos said its annualized savings will be around €150 million to €200 million ($159.9 million to $213.2 million). "Looking ahead, the planned transaction is expected to free-up significant resources across the organization, enabling us to invest more in our R&D growth areas, business development and M&A," Galapagos chairman and CEO Paul Stoffels said in a statement. Galapagos first announced it was seeking "strategic options" for Jyseleca in August after the EU's recent recommendations to limit the use of JAK inhibitors. The drug class can have major side effects from malignancy to serious infections to even death in some patients. Jyseleca is approved in Europe and Japan in rheumatoid arthritis and ulcerative colitis. Gilead once paid $725 million in cash to partner on the drug in the US, but handed it back to Galapagos after the FDA rejected it for rheumatoid arthritis and asked for more clinical data in August 2020. Earlier this year, the drug also flunked a Phase III trial in Crohn's disease, and Galapagos scrapped filing plans. Alfasigma said in a separate statement said that it hopes to "significantly expand" its presence in northern European markets, where most of the sales of the drug are concentrated, as well as "strengthen" Jyseleca's presence in southern Europe. Alfasigma chairman Stefano Golinelli added that the potential deal "makes a concrete contribution to our company's growth strategy, consolidating and expanding our presence in several European markets." "Additionally, the acquisition of Jyseleca will further build our gastrointestinal portfolio while giving us access to the rheumatology market," Golinelli added. Alfasigma took on another struggling drug in September: Intercept Pharmaceuticals' liver disease drug Ocaliva. The deal included other pipeline projects in a $19 per-share cash deal. Ocaliva is approved for patients with primary biliary cholangitis, but has faced repeated rejections in NASH.