Galapagos announces milestone payment of €7.5 million in osteoarthritis alliance with GlaxoSmithKline

Mechelen, Belgium; 18 December 2007 – Galapagos NV (Euronext & LSE: GLPG), an integrated drug discovery company, announces today that it has reached significant milestones in its multi-year drug discovery alliance with GlaxoSmithKline in osteoarthritis, triggering a payment of €7.5 million from GSK.
In June 2006, GSK’s Center of Excellence for External Drug Discovery (CEEDD) and Galapagos initiated a program to deliver disease-modifying drugs with clinical Proof of Concept to GSK’s global research and development organization.  The aim of this agreement is for Galapagos to expand its portfolio of novel targets in the field of osteoarthritis, to conduct compound screening, identify tractable hits, pursue a number of hit-to-lead programs, and develop the resulting leads into candidate selection compounds through to a successful Proof of Concept in clinical research Phase IIa.  GSK has exclusive options to further develop and commercialize these compounds on a worldwide basis.  Galapagos will have the right to further develop and commercialize compounds for which GSK does not exercise its option.  In July 2007, GSK made a €4.4 million equity investment in Galapagos and the alliance was expanded to include up to two selected GSK targets.  The expanded alliance is worth up to €186 million in milestones for two marketable products to Galapagos, plus up to double-digit royalties on global product sales.
Today’s announcement marks the fourth milestone payment made to Galapagos since the start of the osteoarthritis alliance.  The milestone of €7.5 million includes a €5.9 million payment for initiating two drug discovery programs from GSK that have been brought into the alliance as a consequence of the expansion of the alliance between Galapagos and GSK in July.  To date, Galapagos has received a total of €15.1 million in access fees and milestone payments from GSK under the alliance. 
“Achieving these significant milestones according to plan is evidence that we can deliver on our risk/reward sharing alliances with pharma,” said Onno van de Stolpe, Chief Executive Officer of Galapagos.  “Furthermore, we have demonstrated that this model is a viable strategy to progress a number of drug discovery programs while retaining the upside.”
Hugh Cowley, Senior Vice President of GSK and head of the Center of Excellence for External Drug Discovery at GSK noted “Galapagos goes from strength to strength in our collaboration, and we are very pleased with today’s excellent results.  We are confident that our alliance will continue to advance GSK’s pipeline in osteoarthritis.”
About osteoarthritis
Osteoarthritis (OA) is the most common form of arthritis, typically affecting people aged 45 and older. It is a degenerative disease characterized by joint destruction and loss of articular cartilage.  Cartilage is the slippery tissue that covers the ends of bones in a joint.  Healthy cartilage allows bones to glide over one another.  It also absorbs energy from the shock of physical movement.  In OA, the surface layer of cartilage breaks down and wears away.  This allows bones under the cartilage to rub together, causing pain, swelling, and loss of motion of the joint.  Over time, the joint may lose its normal shape.  Also, bone spurs – small growths called osteophytes – may grow on the edges of the joint.  Bits of bone or cartilage can break off and float inside the joint space.  This causes more pain and damage.  No currently available treatments prevent OA or even reverse or block the disease process.  Treatment of OA involves pain control, weight control, and exercise.  Many OA patients have pain that persists despite these measures.  Most of these patients use non-steroidal anti-inflammatory drugs (NSAIDs) that relieve the symptoms without changing the course of the underlying disease.  Healthcare providers are concerned about long-term NSAID use due to serious possible side effects.  It is expected that with the ageing of the population, more individuals will be prone to develop OA.  As mobility of seniors is of high importance to maintaining a high quality of life, preventing the severity of OA is seen as an immense clinical need over the next decade.  The market potential of a disease-modifying drug could exceed $8 billion annually[1], based on the current market and the absence of disease-modifying treatment.
Galapagos’ osteoarthritis program
Galapagos focuses its osteoarthritis research programs on chondrocytes, the main cell types in cartilage.  These programs will be the basis of the alliance with GSK.  Galapagos has identified a number of novel targets that have been validated in cellular disease models and has progressed these into drug discovery.  Modulation of these targets in human chondrocytes should lead to a net production of stable cartilage and should therefore be able to prevent and repair damage to this cartilage in patients.
About Galapagos
Galapagos (Euronext Brussels, GLPG; Euronext Amsterdam, GLPGA; London AiM: GLPG) is a drug discovery company with pre-clinical programs in bone and joint diseases.  Its division BioFocus DPI offers a full suite of target-to-drug discovery products and services to pharmaceutical and biotech companies, encompassing target discovery and validation, screening and drug discovery through to delivery of pre-clinical candidates.  BioFocus DPI also provides adenoviral reagents for rapid identification and validation of novel drug targets, compound libraries for drug screening as well as chemogenomics and ADMET database products to select targets and compounds.  Galapagos currently employs 460 people and operates facilities in seven countries, with global headquarters in Mechelen, Belgium. More information about Galapagos and BioFocus DPI can be found at and
About the GSK CEEDD
GlaxoSmithKline is enhancing the way it discovers and develops drugs by creating a small dedicated team who will feed the GSK pipeline solely through the efforts of its external collaborations.  In essence, the CEEDD will ‘virtualize’ a portion of the GSK pipeline; namely, from Target to Clinical PoC, by forming multiple risk-sharing/reward-sharing alliances.
Galapagos NV
Onno van de Stolpe, CEO
Tel: +31 6 2909 8028
This release may contain forward-looking statements, including, without limitation, statements containing the words “believes,” “anticipates,” “expects,” “intends,” “plans,” “seeks,” “estimates,” “may,” “will,” “could,” “stands to,” and “continues,” as well as similar expressions.  Such forward-looking statements may involve known and unknown risks, uncertainties and other factors which might cause the actual results, financial condition, performance or achievements of Galapagos, or industry results, to be materially different from any historic or future results, financial conditions, performance or achievements expressed or implied by such forward-looking statements.  Given these uncertainties, the reader is advised not to place any undue reliance on such forward-looking statements.  These forward-looking statements speak only as of the date of publication of this document.  Galapagos expressly disclaims any obligation to update any such forward-looking statements in this document to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, unless required by law or regulation.

[1] Galapagos estimates based on Datamonitor Market Research, “Global Overview Arthritis,” January 2004