When Fierce caught up with Paul Stoffels, M.D., back in June 2022, the Johnson & Johnson veteran was enthusiastic about his recent return to Galapagos—a company he had founded—and the Belgian biotech’s pivot to CAR-T cell therapies under his leadership.
It's three years down the line; Stoffels has hit the exit, and the cell therapy strategy has been scrapped. So what happened at Galapagos?
At the Jefferies Global Healthcare Conference in London, Fierce Biotech spoke to Stoffel’s replacement, Henry Gosebruch, to find out. A former CEO of neuroscience biotech Neumora, Gosebruch’s journey to Galapagos is illustrative of the company’s recent turbulent history.
Gosebruch was drafted in late April to helm a planned spinout company of Galapagos that was expected to launch with 2.45 billion euros ($2.53 billion) of Galapagos’ cash in order to, according to the January announcement, “build a pipeline of innovative medicines with robust clinical proof-of-concept in oncology, immunology, and/or virology through strategic business development transactions.”
Under this plan, Galapagos would have been left with its portfolio of cell therapies. Gilead—which entered into a 10-year global research and development collaboration with Galapagos back in 2019—also agreed to hand back full development and commercialization rights to Galapagos’ pipeline.
The separation into two companies had been expected in mid-2025, but, by May, it appeared that Galapagos was getting cold feet, citing “regulatory and market developments.”
Over tea on the sidelines of the Jefferies conference this week, Gosebruch gave Fierce an insight into what actually happened.
“The [Securities and Exchange Commission] essentially came back with some comments,” he explained. “It had nothing to do with the business itself; it was really more the spin[out] structure.”
It meant Gosebruch was officially the CEO of the planned spinout company “for a grand total of two weeks” before he was asked to take over running Galapagos itself from Stoffels, who had just announced his retirement.
Gosebruch’s primary task was to “start a process to evaluate—if we couldn't spin, could we sell the cell therapy business? If we couldn't, could we wind it down and focus on other areas?”
Galapagos isn’t the only company to have had second thoughts about cell therapies recently. Takeda and Novo Nordisk are two prominent Big Pharmas who have backed out of the space this year.
When Fierce suggested Galapagos’ own decision may have been influenced by a case of Parkinsonism in a phase 1/2 trial of its BCMA-directed CAR-T cell therapy last year, Gosebruch responded that leaving cell therapies behind was “less of a situation of … poor data, or it didn't work in this area, or anything like that.”
He explained: “While the clinical data continued to, I would say, be pretty supportive, you sort of step back and look at all the things that have to go right for cell therapy,” he explained.
Even with good data to hand, cell therapy companies have to consider their supply chain and “a very complex patient journey,” Gosebruch said.
One way cell therapy companies are trying to bypass these hurdles is by focusing on in vivo options. Gosebruch acknowledged that the “strategic players are investing heavily in that” and revealed that Galapagos did consider going down the in vivo route.
“But again, just relative to the investment it would take, ultimately the board really decided, ‘Look, let's separate cell therapy, let's see if we can sell it. If not, let's exit that, and let's focus on other areas,’” Gosebruch said.
“So it was kind of the totality of the competition, the evolution of where the industry is going,” he continued. “It wasn't anything intrinsic to our clinical data or our setup.”
Galapagos tried to ship its cell therapy pipeline around to “all the strategic players … that had some stake in cell therapy,” Gosebruch revealed. “None of them had an interest to really go look at our business in a serious way.”
With cell therapy ruled out, Gosebruch is left overseeing a company with “around 3 billion euros of capital” that is looking for something to spend it on.
Surely there’s a temptation to follow many other biotechs this year by winding down the Mechelen, Belgium-headquartered company and handing all that money back to shareholders?
“Under Belgian rules, you can't really do that because it takes a 75% vote,” Gosebruch explained. “Gilead owns 25% and doesn't have any interest in doing that. Gilead wants us to go out and rebuild the company.”
“We have that setup that makes us a bit different from some of these more U.S.-style biotechs that maybe are considering, you know, closing up and just giving the money back,” he added.
Gilead’s stake in the company dates back to the 2019 deal, when the pharma handed over $5 billion in a combination of cash and an equity investment. That agreement also gave Gilead the option to secure U.S. rights to any drug from Galapagos that’s at proof-of-concept stage for a fee of $150 million.
“For most assets these days that are in phase 2, phase 3—U.S. rights are worth a lot more than [$150 million], right?” said Gosebruch. “So what we have to do is work with them constructively [to] renegotiate that deal, which they're very open to.”
Whatever updated deal terms the two companies settle on, what’s certain is that Gilead won’t allow Galapagos to give up any time soon.
“They said publicly [that] they want us to be active; they want us to do deals,” Gosebruch said.
Those deals are expected to focus on clinical-stage assets in the immunology or oncology spaces, although “obviously not cell therapy,” he pointed out.
Gosebruch, with Gilead’s support, will “probably look for slightly smaller indications” or at least sub-segments of crowded spaces like lung or breast cancer, rheumatoid arthritis or inflammatory bowel disease.
One hallmark of the company’s shifting strategy over recent years has been a number of rounds of layoffs. The biotech’s remaining clinical team has been reduced to about 15 people working on a legacy TYK2 inhibitor program for lupus and dermatomyositis that’s finishing up a phase 2 study.
Going forward, Galapagos expects to employ a total of between 35 and 40 people “focused on, essentially, the corporate piece, and then business development and strategy,” Gosebruch said.
With so much churn at the biotech, was Gosebruch wary of taking over as CEO?
“It’s an interesting journey,” he responded, in something of an understatement.
The original role he accepted heading up the spinout would have involved building up that company “completely from scratch … with a big bank account of two and a half billion euros,” he said. “So that was an amazing [blank] piece of paper.”
“Now, of course, it is different,” the CEO acknowledged. “The whole restructuring of cell therapy, going through the process, you know, managing all of that—it’s more complex.”
“But then the prize is that there's even more capital to work with, right?” Gosebruch added. “So while this is complex, I'm enjoying it.”