Galapagos Announces Major Leadership Changes and Strategic Restructuring

In a significant shake-up for the Belgian biotech company Galapagos, CEO Paul Stoffels is set to depart after three years at the helm. This move comes as part of a broader restructuring that will see the company split into two separate entities. The announcement, made in an after-market release on Monday, marks a pivotal moment in Galapagos' ongoing efforts to redefine its focus and strategy in the competitive pharmaceutical landscape.

Stoffels' Departure and Legacy

Paul Stoffels, who joined Galapagos in 2022 after leaving his position as Johnson & Johnson's chief scientific officer, will step down from his role as CEO. During his tenure, Stoffels embarked on an ambitious five-year plan to transform the company, which had been plagued by a series of clinical failures since its founding in 1999. His strategy involved aggressive mergers and acquisitions to replace failed clinical programs and pivot the company's focus.

"I am proud to have transformed Galapagos into an R&D-driven biotech company with a clear focus on oncology," Stoffels stated. Despite his departure as CEO, Stoffels will remain with the company for at least another 12 months while a replacement is sought. The board also intends to nominate him for a four-year term as chairman at the 2026 annual general meeting.

Strategic Restructuring and Spin-Off

As part of the restructuring, Galapagos will separate into two distinct entities:

1. The core Galapagos company, which will retain its name and focus on cell therapy assets.
2. A new spin-out company, temporarily named XYZ SpinCo, which will manage €2.45 billion ($2.8 billion) in cash from Galapagos' legacy partnership with Gilead Sciences.

Henry Gosebruch, formerly CEO of neuroscience biotech Neumora, has been appointed as CEO of the spin-out company. Gosebruch brings extensive experience in dealmaking, having executed over 100 business development transactions during his time as chief strategy officer at AbbVie. His role will be crucial in building out a new pipeline of medicines, with a focus on assets that have proof-of-concept data and the potential to surpass current standard-of-care options.

Challenges and Future Outlook

While Galapagos has made strides in cell therapy through the acquisitions of CellPoint and Abound Bio in 2022, the company still faces significant challenges. Its lead clinical program is only in Phase II, and in February, the company shifted more resources behind its lead CD19 CAR T candidate GLPG5101 while deprioritizing other programs.

The restructuring comes amid increased scrutiny from activist investor Kevin Tang, who has recently acquired over 5% of Galapagos' shares. Tang, known for his bold moves in the biotech sector, has emerged as a potential influencer in the company's future direction.

For Gilead Sciences, a long-term partner of Galapagos, the creation of the spin-out company represents an attempt to salvage value from their partnership, which CEO Daniel O'Day admitted in January had not turned out as intended. The spin-off, with its substantial cash reserves and new leadership, will be tasked with building an exciting pipeline through strategic acquisitions and partnerships.

As Galapagos navigates this period of transition, the pharmaceutical industry will be watching closely to see how these changes shape the company's future and impact its position in the competitive biotech landscape.