This Deal Could Put You Up Much More Than 149%

It was the very first stock that I recommended on the very first day we published Private Briefing nearly eight years ago...

I've re-recommended the shares to my readers several times, and when something happened that I felt everyone should know about, we made sure to get the news out in Money Morning, too.

When I first wrote about it in 2011, shares were trading at $8.60. As of Wednesday morning, the stock was sitting near all-time highs at $171 - monumental gains of nearly 1,900%.

But I'm writing today because it's been a big winner for you, too - more than 149%.

And I don't think it's done, not by a long shot...

Let me tell you about the company - and all about this latest development...

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There Goes My Baby (Biotech)

The stock I'm talking about is biotech Galapagos NV (NASDAQ: GLPG). The Belgium-based specialist in "orphan drugs" is one of four (soon to be five) "10-Baggers" I've delivered to my readers.

Galapagos just clinched a very big deal with Gilead Sciences Inc. (NASDAQ: GILD), another big winner we've told you about.

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Last Sunday, Gilead made a $3.95 billion up-front payment to Galapagos and a $1.1 billion equity investment.

It's a deal that makes good sense for both players.

For Gilead, an innovator and leader in HIV and hepatitis C drugs, the goal is to boost its drug-sales prospects in the near term and its drug-discovery portfolio in the long run.

For Galapagos - a proven drug development mill - the objective was to get the cash needed to rev up its work in rheumatoid arthritis, osteoarthritis, and idiopathic pulmonary fibrosis, a disease that scavenges the lungs and is fatal to sufferers.

The deal could be good for you, too, because of how it was structured.

In an interview with analysts on Sunday, new Gilead CEO Daniel O'Day said he opted to set up a 10-year partnership - instead of buying the smaller company outright - to maintain a "motivated, independent Galapagos."

Galapagos was happy to oblige.

"We were looking for an anchor to guarantee that the independence would be guaranteed long term," said Galapagos CEO Onno van Stolpe. "[They] respect and value our independence. It's the best of both worlds."

Gilead also will make a $1.1 billion equity investment in Galapagos, increasing its stake from 12.3% to 22%.

Galapagos will seek shareholder approval to issue two warrants that could further increase Gilead's stake to up to 29.9%, but the pact disclosed Sunday includes a 10-year standstill that restricts Gilead from buying Galapagos or increasing its stake beyond that 29.9% ceiling.

As you folks know from our detailed coverage, these two companies have been collaborators for years.

This Is a Biotechnology Dream Team

Back in 2016, for a $300 million up-front investment and a $425 million equity investment, Gilead bought into Galapagos' push to create filgotinib, a rheumatoid arthritis drug. That deal called for Gilead to spring for 80% of the development costs - an arrangement that shifts to an even 50/50 split under the new pact.

The new split is in line with other drugs Gilead could snag for its portfolio. That includes the idiopathic pulmonary fibrosis drug GLPG-1960 - a late-stage drug to which Gilead gains the rights - and options for GLPG-1972, an osteoarthritis drug in a mid-stage clinical trial.

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Galapagos' pipeline looks positively mouthwatering, too.

The "baby biotech" is running more than 20 preclinical programs and has six drugs in clinical trials. The pact apparently gives Gilead an exclusivity on all current and future Galapagos programs outside of Europe.

Filgotinib is the best near-term commercial opportunity for the duo: They released data from phase 3 clinical trials in March and are expected to seek U.S. Food and Drug Administration approval sometime this year.

I like this deal.

A lot.

You see, for us, this is a much better opportunity than if Gilead had bought the company outright.

It gives Galapagos the fuel to keep growing, and also defrays some of the risk.

I'll keep watching it for you.

With a gain of nearly more than 1,900%, Galapagos is one of four "10-Baggers" I've told my subscribers about, with a chance at peak gains of more than 1,899% on Nvidia Corp. (NASDAQ: NVDA), 1,100% on Advanced Micro Devices Inc. (NASDAQ: AMD), and 1,095% on Micron Technology Inc. (NASDAQ: MU).

And we're very close on one more: It's seen peak gains of about 970% since I first researched it, and it's closing on "10-Bagger" status. Click here to learn how to get my Private Briefing research for yourself.

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About the Author

Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press.

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