Belgian biotech company Galapagos on the hunt for deals

The former chief scientific officer of Johnson & Johnson is on the hunt for acquisitions after he took the reins at the struggling Belgian biotech Galapagos this year.

Paul Stoffels is on a “mission” to reinstate Galapagos as a top European biotech player. He has returned to lead the company he co-founded in 1999, attracted to its strong balance sheet of €4.4bn in cash and current financial investments, and he is seeking to spread access to innovative cancer treatments in Europe.

Stoffels said he was on the “look out” for companies with good drugs that had not yet reached human trials or were in the early stages that Galapagos could accelerate to market. After the worst biotech sell-off since the early 2000s, he said valuations were starting to appear attractive.

“It’s a very difficult time for biotech at the moment and for colleagues who need money. That leaves a lot of opportunities for us,” he said. “We won’t buy a phase 3 and compete with Pfizer, Amgen and AbbVie, that’s not what we can do.” 

Since Stoffels took over as chief executive in April, he has done two small deals as part of his plan to expand CAR-T technology inside hospitals to potentially extend the life of late stage cancer patients. Galapagos will install its manufacturing capabilities in 10 European hospitals this year, and up to 20 next year, when it will also launch in the US. 

The therapy, which turned 10-years-old this year, is still not widespread because of its complex manufacturing process, involving collecting and reprogramming the patient’s own immune system cells to target the blood cancers.

Galapagos bought Cellpoint, which has worked with Swiss manufacturer Lonza to create small incubators that allow the cells to be manufactured in hospitals, rather than shipped to another site, and AboundBio, which will help it source new candidates for next generation CAR-Ts, for a combined €239mn.

“It’s fun for people, very motivational, because you immediately, from day one, start saving lives,” he said. “In the clinical trial, patients walk back out of the hospital and that is something that is very nice to work on for such a field.” 

But in a biotech downturn, he must convince investors that the company, with a market capitalisation of €2.5bn, should be valued at more than the cash on its balance sheet. He said he would like to see the market capitalisation above the cash balance next year.

The company signed a $5.1bn deal with Gilead Sciences in 2019, giving the US biotech rights to sell drugs in development outside of Europe. Gilead can opt in at the start of any phase 3 programme to develop the drug together.

But Galapagos reported disappointing results for some of these drugs, including one targeting osteoarthritis and another for lung scarring. Stoffels has cut development of these programmes, as well as one for kidney disease, as he focuses the company on oncology and immunology.

Stoffels spent 13 years in research and development at J&J, including helping steer the development of its Covid-19 vaccine. He believes Europe needs more investment in biotech to ensure it keeps its homegrown biotechs from moving to the US to “fight” for funds.

“Europeans have exceptional good pharmaceutical talent, scientific talent, capability and history of making drugs,” he said. “A few new good examples of successful biotechs in Europe could change that.”