Galapagos and GlaxoSmithKline (GSK) announced they have reached an agreement for Galapagos to acquire GSK’s state-of-the art research centre in Zagreb, Croatia. The arrangement, which is subject to closing conditions and is expected to be effective as of 9 September 2010, provides for ongoing employment of the staff at the centre and will provide additional capacity for Galapagos’ growing R&D requirements.

Terms of the deal include the acquisition of the research centre along with the transfer of approximately 130 staff. The agreement provides for the preservation of jobs and expertise. In addition, Galapagos will provide R&D services to GSK under a three year fee-for-service contract to the value of €14 million. Further terms were not disclosed.

The Zagreb centre comes with a strong heritage in the area of antibacterial research having served as GSK’s Macrolide Center of Excellence for drug discovery and before that as an R&D site for Pliva, the independent pharmaceutical company and founder of the blockbuster antibiotic azithromycin. The R&D operations in Zagreb is expected to fulfil Galapagos’ growing R&D capacity requirements. The integrated capabilities in the operations will allow Galapagos to resource research programmes from molecule through to the clinic in alignment with its milestone-driven alliance model. The site will form the basis of a newly created third Galapagos business unit, Internal Outsourcing, that will provide flexible, additional capacity for the Galapagos Group. GSK’s senior researcher from the Zagreb site, Dr Radan Spaventi, will join the Galapagos Executive Team as Senior Vice President.

“With our eight strategic alliances, we have a need to expand our discovery and development organisation. The team in Zagreb brings a proven track record and expertise in disease and discovery development that matches that of our current pharmaceutical alliances,” said Onno van de Stolpe, CEO, Galapagos. “The acquisition answers our expansion needs and, by bringing a majority of our outsourced programs back in house, we can achieve significant cost savings in R&D,” he added.
The arrangement to transfer operations of the large, pharma-standard, R&D operations along with the transfer of the GSK employees was reached following GSK’s announcement in February 2010 to cease R&D activity at Zagreb as part of a site rationalisation initiative.

Moncef Slaoui, chairman, GSK Research and Development, said, “This is a great outcome for GSK and Galapagos as it meets the capacity requirements of both companies and at the same time assures continuity of employment and a preservation of expertise at this excellent scientific facility.”

“Today’s acquisition fits very well into our financial strategy to control costs and protect downside risks while managing the tremendous growth of our alliances business,” stated Guillaume Jetten, chief financial officer, Galapagos. “Furthermore, the R&D contract with GSK and additional overflow work from within the Group will substantially cover our internal targets for site capacity utilisation. We remain confident of our full year guidance for revenues of at least €135 M with positive operating income and cash flow, and a positive net result in 2010.”