Galapagos acquires ProSkelia from ProStrakan and raises €31 million

Creates drug discovery leader in bone & joint diseases
Webcast Press Conference Scheduled for 10.30 AM CET on 22 December, 2006
  •          Preclinical programs in bone disease to expand Galapagos’ pipeline
  •          Phase II menopausal product marks start of Galapagos clinical development
  •          Acquisition price comprises €12.5 million in newly issued Galapagos shares plus a future earn-out capped at €14.5 million
  •          Galapagos raises an additional €31 million through a private placement
  •          Proceeds will be used to fund Galapagos’ enhanced portfolio in bone & joint diseases through to clinical testing
    Mechelen, Belgium, 22 December, 2006; Galapagos NV (Euronext & London AIM: GLPG), an integrated drug discovery company, today announced to have entered into a definitive agreement with UK-based ProStrakan Group plc (LSE: PSK) under which Galapagos acquires ProSkelia SASU, a French subsidiary of ProStrakan.   
    ProSkelia is engaged in drug discovery and development in bone diseases.  ProSkelia was the 2002 spin-out of Aventis’ Bone Disease Unit and was acquired in 2004 by the Strakan Group to form ProStrakan.  
    The assets that Galapagos acquires include ProSkelia’s R&D operations focused on bone diseases as well as a product portfolio of three preclinical products in bone diseases (osteoporosis and bone metastasis), and one preclinical product in cachexia (muscle atrophy and weight loss).  The combined product development portfolio will contribute to Galapagos’ goal of having multiple clinical programs in bone and joint diseases in 2008. 
    The transaction includes an exclusive option and license to oestradiol glucoside (“E2G”), a product that has successfully completed a phase IIa clinical study for treatment of menopausal symptoms (‘hot flashes’).  This marks the start of Galapagos’ clinical programs. With the acquisition, ProSkelia’s ongoing R&D partnerships with Amgen, Genentech, and Novartis will be transferred to Galapagos.  Galapagos will receive all annual revenues from these partnerships and will be eligible to 25% of the downstream milestones and royalties from these partnerships. 
    The acquisition price
    The acquisition price of ProSkelia comprises €12.5 million in newly issued Galapagos shares.  This price is partially offset by estimated cash tax refunds of €9 million over the coming four years.  In addition, ProStrakan will be eligible for earn-out payments capped at €14.5 million, as part of future income that Galapagos will derive from the acquired pre-clinical programs.  For the license on E2G, ProStrakan will receive €5 million plus a fixed amount of licensing revenues receivable by Galapagos, as well as single digit royalties.  These payments to ProStrakan for the E2G program are conditional to successful completion of Phase IIb clinical trials and partnering of the product.  In addition, ProStrakan has right of first refusal on the cachexia program, should Galapagos decide to partner or out-license this.
    In conjunction with the acquisition, Galapagos has raised an additional €31 million in funding through a private placement of new shares with institutional investors in the US and Europe.  The proceeds of the offering will be used for the funding of the further development of the enhanced portfolio in bone & joint diseases through to clinical testing.
    “With our programs in rheumatoid arthritis, our GSK alliance in osteoarthritis, and now the excellent ProSkelia programs, Galapagos is becoming a leader in the discovery and development of small molecule drugs to treat bone and joint diseases,” commented Onno van de Stolpe, CEO of Galapagos.  “With the licensing of ProStrakan’s E2G program, we will be able to execute a phase IIb trial and build the necessary infrastructure to progress our other products into and through clinical testing.  Additionally, Galapagos expands its collaborations with leading pharma and biotech companies, while operating a fast growing business unit in drug discovery services.  The substantial capital inflow through the issue of new shares to institutional investors in the US and Europe is expected to provide Galapagos with the necessary funding to bring our bone and joint programs into the clinic in 2008 and 2009.  We are gratified by the strong support from leading international institutions for our plans.”
    ProSkelia, located in Romainville near Paris, operates state of the art research facilities in discovery research.  It currently employs 65 people.  The operations will be integrated with Galapagos’ drug discovery division based in Mechelen.  The acquired capabilities in preclinical development and in vivo pharmacology will benefit Galapagos’ current drug discovery programs.  As a consequence, Galapagos expects immediate cost savings of about €2.5 million per year, mainly because of reduced outsourcing needs for Galapagos drug development, and in part through operational synergies.   
    This acquisition also fits very well within Galapagos’ strategy to partner with pharmaceutical and biotechnology companies in turnkey drug discovery alliances, as it further strengthens the company’s portfolio of drug candidates.  Galapagos entered such a turnkey alliance with GlaxoSmithKline in osteoarthritis in June 2006 and intends to complete two more such turnkey deals in the coming three years.
    Galapagos will issue 4,860,331 new shares as part of the capital increase and the ProSkelia acquisition, on the basis of €8.95 per share (the average Galapagos share price over the last thirty days prior to 22 December 2006 as quoted on Euronext Amsterdam).  The newly issued shares to ProStrakan will be subject to a 12-month lock-up agreement, other than in certain defined circumstances.  Galapagos shall apply for a listing of the newly issued Galapagos shares on Euronext Brussels and Euronext Amsterdam, subject to the approval by the Belgian Banking Finance and Insurance Commission (BFIC-CBFA) of a prospectus as required under applicable Belgian law, as well as on London AiM.  Trading of the new shares issued in conjunction with the private placement will be subject to BFIC-CBFA approval of the prospectus, which is expected April, 2007. 
    Kempen & Co advised Galapagos in the acquisition of ProSkelia, and Kempen & Co, Fortis and Whitaker Securities have been Joint Lead Managers of the private placement.
    Webcast Press Conference details
    Galapagos will host a press conference and audio webcast call discussing the transaction on 22 December, 2006 at 10.30 AM CET/ 9.30 AM GMT.  To participate in the call, dial +32 2290 1608 ten minutes in advance of the call.  A live webcast of the conference call can be accessed on the Galapagos website at  An archived version of the webcast will be available later today and archived on the website for 30 days.
    About Galapagos
    Galapagos is a publicly traded, genomics-based drug discovery company (Euronext Brussels, GLPG; Euronext Amsterdam, GLPGA; London AiM: GLPG) that has drug discovery programs based on proprietary, novel targets in bone and joint diseases – osteoarthritis, osteoporosis and rheumatoid arthritis.  Galapagos offers a full suite of target-to-drug discovery products and services to pharmaceutical and biotech companies through its division BioFocus DPI, encompassing target discovery and drug discovery services through to delivery of pre-clinical candidates.  In addition, BioFocus DPI provides adenoviral reagents for rapid identification and validation of novel drug targets, compound libraries for drug screening as well as chemogenomics and ADME database products to select targets and compounds.  Prior to this transaction, Galapagos employed more than 380 people and operated facilities in seven countries, with global headquarters in Mechelen, Belgium.  More information about Galapagos and BioFocus DPI can be found at
    About ProStrakan
    ProStrakan Group plc is a rapidly growing international specialty pharmaceutical company engaged in the development and commercialization of prescription medicines for the treatment of unmet therapeutic needs in major markets.  The company is headquartered in Galashiels, Scotland.  EU-wide sales and marketing of ProStrakan’s portfolio of products are handled by commercial subsidiaries based in the UK, France, Germany and Spain.  ProStrakan was listed on the London Stock Exchange in June 2005.  More information on ProStrakan can be found at
    Forward Looking Statements
    This release contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements.  You are urged to consider statements that include the words “may,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “anticipates,” “intends,” “continues,” “forecast,” “designed,” “goal,” or the negative of those words or other comparable words to be uncertain and forward-looking.  Any forward-looking statements made by ProStrakan or Galapagos speak only as of the date made.  ProStrakan and Galapagos undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
    Galapagos NV                                        
    Onno van de Stolpe                               
    +31 6 2909 8028