Gilead and LEO Pharma: A Strategic Partnership to Accelerate Oral STAT6 Program Development

Gilead Sciences, Inc. (NASDAQ: GILD) and LEO Pharma have entered into a strategic partnership to accelerate the development and commercialization of LEO Pharma's small molecule oral STAT6 (signal transducer and activator of transcription 6) programs for the potential treatment of patients with inflammatory diseases. This collaboration brings together Gilead's expertise in inflammation research and LEO Pharma's dermatology focus, aiming to maximize the potential of the STAT6 program in dermatology and beyond.

STAT6 is a specific transcription factor required for IL-4 and IL-13 cytokine signaling, which are clinically validated targets for Th2 mediated inflammatory conditions such as atopic dermatitis, asthma, and COPD. Targeting STAT6 has shown potential preclinically to treat a broad population of patients and provide an oral alternative to those currently treated with injectable biologics.

Under this partnership, Gilead will acquire LEO Pharma's comprehensive preclinical oral STAT6 small molecule inhibitors and targeted protein degraders. Gilead will lead further development efforts for the oral programs, while LEO Pharma will lead development for potential topical formulations of STAT6 inhibitors. This strategic split maximizes the program's potential, leveraging Gilead's expertise in oral therapeutics and LEO's dermatology focus.

"As we continue to expand our inflammation portfolio, we're committed to developing next-generation therapies to support long-term remission in patients with inflammatory diseases through mechanisms that block major pathogenic pathways, eliminate pathogenic cells, tolerize the immune system, and restore cell function," said Flavius Martin, M.D., Executive Vice President, Research, Gilead Sciences. "By partnering with LEO Pharma, we hope to explore the potential of the STAT6 pathway to bring forward an oral option for patients suffering from chronic inflammatory conditions."

Christophe Bourdon, CEO of LEO Pharma, stated, "STAT6 holds potential for treating various inflammatory diseases, including outside dermatology. This strategic partnership with Gilead will enable us to accelerate the development of the STAT6 program and maximize its potential in dermatology and beyond. This partnership acknowledges LEO Pharma's scientific capabilities and strengthens our commitment to innovate for people with skin diseases."

The terms of the agreement include Gilead having global rights to develop, manufacture, and commercialize the small molecule oral STAT6 program. LEO Pharma will have the option to potentially co-commercialize oral programs for dermatology outside the United States. LEO Pharma will hold exclusive global rights to STAT6 topical formulations in dermatology.

LEO Pharma is eligible to receive up to $1.7 billion in total payments, including an upfront payment of $250 million. In addition, LEO Pharma may also receive tiered royalties ranging from high single-digit to mid-teens on sales of oral STAT6 products. Gilead may receive tiered royalties ranging from high single-digit to mid-teens on sales of topical STAT6 products. This tiered royalty structure balances value sharing between Gilead and LEO Pharma, providing fair compensation based on the sales performance of the STAT6 products.

Gilead does not exclude acquired IPR&D expenses from its non-GAAP financial measures. This transaction with LEO Pharma is expected to reduce Gilead's GAAP and non-GAAP 2025 EPS by approximately $0.15 - $0.17. Bank of America Securities acted as financial advisors to LEO Pharma in this transaction, and Latham Watkins LLP acted as legal advisors.



The strategic partnership between Gilead and LEO Pharma represents a calculated expansion into the inflammatory disease market through the promising STAT6 program. The deal structure, featuring a $250 million upfront payment and potential total value of $1.7 billion, reflects a significant but measured investment in preclinical assets. The oral delivery method of the STAT6 program could capture significant market share from injectable competitors in a multi-billion dollar market spanning atopic dermatitis, asthma, and COPD.

The scientific rationale behind targeting STAT6 is particularly compelling. STAT6 acts as a master regulator in the Th2 inflammatory pathway, and its inhibition could potentially provide broader therapeutic effects compared to single cytokine targeting. The inclusion of targeted protein degraders in the program adds an innovative approach that could enhance efficacy and selectivity.

The co-commercialization option for LEO outside the US in dermatology creates aligned incentives while maintaining Gilead's control over the core program. The $1.6 billion in annual sales from LEO Pharma demonstrates their commercial capabilities in dermatology, making them a valuable partner for potential market expansion.

In conclusion, the strategic partnership between Gilead and LEO Pharma positions both companies to capitalize on the high-growth inflammation market, particularly in areas where oral alternatives to biologics could drive significant market penetration. By leveraging their respective strengths and maximizing the potential of the STAT6 program, Gilead and LEO Pharma are well-positioned to bring forward innovative therapies for patients with inflammatory diseases.