GLAXOSMITHKLINE AND GALAPAGOS ENTER STRATEGIC ALLIANCE TO DEVELOP NOVEL ANTIBACTERIALS AND ANTIVIRALS

Issued - Monday 10 December 2007, London, UK & Mechelen, Belgium

Discovery and development of novel anti-infective medicines based on Galapagos' natural product drug discovery platform

Up to €3.5 million in total technology access fees, up to €215 million in total payments for one marketed product and up to double digit royalties on commercial sales of alliance products

GlaxoSmithKline (GSK) and Galapagos NV (Euronext & LSE: GLPG) announced today the creation of a multi-year strategic alliance to develop novel anti-infective drug candidates.

GlaxoSmithKline will participate in the alliance through its Infectious Diseases Centre of Excellence for Drug Discovery (ID CEDD). Under the terms of the agreement, Galapagos will grant GlaxoSmithKline options to license product candidates that are directed against up to six anti-infective discovery targets. Galapagos will be responsible for the discovery and development of natural product small molecule drug candidates through to clinical Proof of Concept, at which point GSK will have exclusive option to license each compound for further development and commercialisation on a worldwide basis. The alliance will utilise the natural product compound collection and chemistry capabilities of BioFocus DPI, Galapagos' services division. Galapagos will have the right to further develop and commercialise compounds for which GSK does not exercise its option.

Galapagos will receive total upfront fees of up to €3.5 million from GSK, depending on the total number of programmes within the collaboration. Galapagos could be eligible to receive up to €95 million in upfront fees, development and regulatory milestones payments for each product candidate. If a product is commercialised, Galapagos may receive up to €120 million for achievement of specific sales milestones. Galapagos is also eligible to receive up to double-digit royalties on worldwide sales of alliance products.

"This is our first alliance outside bone and joint diseases. It shows that Galapagos can generate significant business in new therapeutic areas," said Onno van de Stolpe, Galapagos' CEO. "The alliance will rely heavily on BioFocus DPI's natural product discovery capabilities. This alliance fits within our strategy of executing risk/reward sharing deals with big pharma and at the same time underscores our M&A approach and successful integration of DPI into the BioFocus service division."

"Our newly created ID CEDD has been focusing on discovering novel antibiotics and antivirals, and the natural product collections from BioFocus DPI have the potential to address our needs," said Zhi Hong, Senior Vice President and Head of GlaxoSmithKline's ID CEDD. "We recognise the significant unmet medical needs in hospital or community-acquired bacterial infections plus life-threatening viral diseases. It is therefore prudent to explore novel chemical space and targets that offer new prospects for treatments across a range of infectious diseases. Galapagos has been a productive collaborator for GSK in the existing osteoarthritis alliance, and we are confident this new alliance based on natural products will contribute to the advancement of our drug discovery and development programmes in infectious diseases."