Gilead Sciences identified inflammation as an area for pipeline and revenue growth and the company is expanding its prospects through a nearly $1.7 billion deal to acquire Ouro Medicines, a startup whose lead asset offers the potential to treat a range of autoimmune disorders by “resetting” the immune system.
The therapeutic goal of immune reset is a bold one and the growing number of companies developing such therapies makes for a competitive space. But the deal announced Tuesday has a creative deal structure that shares the risk and the potential reward of the Ouro therapy with Galapagos, a longtime Gilead R&D partner that may have just found the new lead program it’s been looking for.
South San Francisco-based Ouro develops T cell engagers (TCE) for autoimmune diseases. Such drugs, bispecific antibodies designed to bind to a target on a T cell and a target on a disease-driving cell, first found use targeting the B cells that drive blood cancers. Excessive B cell activity is also associated with a range of autoimmune disorders. Through Ouro, Gilead gets a clinical-stage candidate in this emerging drug class.
One of the booming areas for immunology and inflammation drug research is the application of modalities that first found use in cancer treatment. This R&D includes cell therapies made by engineering a patient’s own immune cells to go after the disease-driving cells. But just as in cancer, the multi-step process of autologous cell therapy for autoimmune disease is expensive and requires a pretreatment regimen. TCEs avoid those limitations.
Cell therapies and TCEs are both intended to deplete the B cells that drive autoimmune disease. The hope is that the new cells that repopulate the immune system do not target healthy tissue, achieving what amounts to an immune system reset. These therapies could offer a durable effect, making them potential one-time treatments. Ongoing Phase 1b studies are evaluating the Ouro TCE in diseases such as autoimmune hemolytic anemia and immune thrombocytopenia. Gilead said it expects the drug to enter registrational studies in both indications in 2027.
Virology is Gilead’s strength, but the company has been active striking business deals to grow in oncology and inflammation. Livdelzi, marketed for treating the autoimmune liver disease primary biliary cholangitis, came from Gilead’s 2024 CymaBay Therapeutics acquisition. But inflammation is a longer-term strategy, which means the company is mainly looking at earlier-stage deals, Gilead CEO Daniel O’Day said in a January briefing with journalists during the J.P. Morgan Healthcare Conference in San Francisco. As an example, he pointed to the partnership Gilead began last year with LEO Pharma focused on developing oral small molecule inhibitors and degraders of STAT6, a protein that plays a key role in two inflammatory pathways. The LEO molecules covered by this agreement are preclinical.
“We want to pursue new scientific targets that can really evolve the field of inflammatory diseases in a variety of indications,” O’Day said. “And you’re going to see more of that playing out.”
Gilead has had setbacks in its immunology and inflammation efforts. A more than decade-long R&D partnership with Belgium-based Galapagos did not yield an FDA-approved product. Last year, Galapagos shifted its focus to cancer cell therapy, then abruptly abandoned those plans, deciding to sell its assets and deploy its capital toward business deals that would build a new drug pipeline. Galapagos reported having more than €3 billion (about $3.48 billion) in cash, though it has yet to announce any deals.
Throughout Galapagos’ strategic shifts, the partnership with Gilead, its largest shareholder, remained intact. Galapagos now figures prominently in Gilead’s plans for Ouro. Gilead and Galapagos said they are in advanced discussions about a potential R&D collaboration on the Ouro drug.
The financial terms for the Ouro acquisition call for Gilead to pay $1.675 billion in upfront cash; up to $500 million more is tied to the achievement of milestones. Under the new proposed Gilead/Galapagos agreement, the companies would share equally in the upfront cost for the Ouro assets and the associated milestone payments. Galapagos, whose headcount shrunk following corporate restructurings, would absorb Ouro’s assets and employees. The proposed agreement would make Galapagos responsible for developing the Ouro drug through the start of studies that could support regulatory submissions. Costs for late-stage clinical development would be split between the partners.
Ouro launched last year, founded by Monograph Capital in partnership with GSK. The startup’s TCE, which is designed to target the protein BCMA on B cells and CD3 on T cells, was licensed from China-based Keymed Biosciences. Under the proposed Gilead/Galapagos deal, Gilead would retain global commercialization rights to the Ouro drugs, except for Greater China were Keymed holds rights. Gilead would pay Galapagos royalties on sales of commercialized products.
The new agreement also amends the prior deal between the two companies to allow for up to $500 million of Galapagos’s current cash to be used freely, including up to $150 million for potential stock buybacks. Galapagos said most of its capital would remain available to pursue more transactions.
Some of the companies developing TCEs for autoimmune disease came from cancer. Cullinan Therapeutics changed its name from Cullinan Oncology to reflect its strategic shift. GSK and Merck have each struck deals with China-based biotechs to get TCE drug candidates with potential applications in immunology. Candid Therapeutics is going public in a reverse merger to finance clinical development of its TCE pipeline for autoimmune disease.
The Ouro deal is Gilead’s second big acquisition announcement in the past month, following the $7.8 billion agreement to buy Arcellx, its partner in the development of a next-generation cell therapy for multiple myeloma.
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