Galapagos NV [NASDAQ: GLPG] is one of the biggest gainers in pre-market trading. At the time of writing, it is was up by 15.94% to trade at $168.98. This follows news that Gilead Sciences Inc. was going to raise its stake in the firm by $5.1 billion. Gilead is doing this in order to deepen research on inflammatory diseases among other disorders. The company has agreed to an upfront payment of $3.95 billion, and then invest a further $1.11 billion to raise its stake to 22% from its current 12.3%.
The deal is a win-win for both companies. According to Galapagos CEO, Onno Van de Stolpe, Gilead will take control of the commercial aspect of Galapagos allowing Galapagos to focus more on research. Since research is Galapagos strong point, the company can now get better results from R&D and do so within a shorter time frame. He further added that the money that was being injected into the company, over-and above the equity stake, will be used to expand R&D human resources from 500 to 1000.
The two companies are already together on other drugs already. One of them is an experimental rheumatoid arthritis drug called filgotinib. The drug attained its late stage goals in late March and saw both companies gain bullish momentum. Galapagos is already up by over 50% since January 2019. With the increased stake, Galapagos will now be involved in the commercialization of Filgotinib in Europe. The two companies will cost-share the future development of this drug, and will help speed up the release of other drugs in the future.
It’s a big deal that could drive up bullish momentum in GLPG when markets open. From a look at the charts, GLPG is already in an uptrend, and was forming higher lows on Friday’s trading. If it opens the day with its pre-market gains, then it could be a bullish start to the week for this stock.