In a presentation at the annual J.P. Morgan Healthcare Conference, Galapagos CEO Paul Stoffels illuminated the necessary evolution not only of his company but also of Gilead. As patient needs and therapeutic technologies have changed, both companies have reassessed their roles in the market. Galapagos is now leaving behind its initial concentration on small molecules to dive headfirst into the burgeoning field of cell therapy—an area that Gilead has already established a robust presence in.

Last week, Galapagos announced a significant decision: a business separation that aims to strategize its future more effectively. The new structure will see “Legacy Galapagos” focus on the development of cancer cell therapies, while a spinoff entity, referred to as “SpinCo,” will work on a diversified drug pipeline across oncology, immunology, and virology. Gilead will maintain an equity interest in both entities, allowing collaboration to continue, albeit under different strategic frameworks.

A noticeable trend has emerged over the past two years as Galapagos has shifted its focus towards cell therapies, particularly those produced at the point of care. Traditional autologous cell therapies, which often require extended manufacturing times of a month or more, pose significant logistical challenges. Galapagos aims to revolutionize this process. Utilizing cutting-edge technology, they plan to offer engineered cells with a turnaround time of just seven days, eliminating the need for freezing and ensuring that patients receive therapies that are fresh and tailored to their specific needs. This innovative approach promises not only cost-effectiveness but also enhances therapeutic efficacy and patient safety—particularly critical for those with limited life expectancies.

During a separate briefing, Gilead’s Chief Financial Officer Andy Dickinson discussed the realization that Galapagos’s management had become preoccupied with advancing cell therapy assets rather than exploring broader business development opportunities. The creation of the new entity, SpinCo, aims to capitalize on the available resources to support distinct strategies for both companies moving forward. With a financial infusion of approximately $2.5 billion designated for strategic investments, SpinCo is poised for growth in a competitive biotech landscape.

This separation underscores the diverging trajectories of Galapagos’s cell therapy ambitions compared to Gilead’s existing capabilities. Gilead’s FDA-approved Yescarta, an acclaimed autologous cell therapy, is produced at Kite, its subsidiary, with a commendable 14-day turnaround. Nevertheless, Gilead does not plan to enter the point-of-care manufacturing space, opting instead for the efficiency of existing production lines.

Galapagos’s journey has led it to a more complex yet promising approach. While its initial intention was for therapies to be produced at the very hospitals administering them, the challenges of establishing Good Manufacturing Practices (GMP) at individual sites have prompted a shift. Now, the company is expanding its manufacturing footprint regionally, already establishing five operational sites across Europe and planning an ambitious expansion in the U.S., including locations in Boston and San Francisco.