The deal includes an upfront fee of $300m and a $425m, 15% stake in Galapagos, along with further payments of up to $1.35bn from milestones, shared profits and royalties if filgotinib - a JAK1 inhibitor - makes it through to the market.
Gilead has swooped in on the opportunity to partner filgotinib just a few weeks after Galapagos' former collaborator AbbVie handed back rights to the drug in order to focus on its in-house JAK inhibitor ABT-494.
Both filgotinib and ABT-494 are being developed to challenge Pfizer's Xeljanz (tofacitinib), which is the only JAK inhibitor currently approved for sale as a rheumatoid arthritis treatment and is growing strongly, with sales rising more than 70% to $351m in the first nine months of the year.
After AbbVie exited the alliance, Galapagos said filgotinib is the most selective JAK1 inhibitor and demonstrated "best-in-class efficacy and safety in RA" in a 24-week phase IIb study involving 877 patients.
Galapagos' chief executive Onno van de Stolpe said at the time that the company was disappointed by the abrupt nature of AbbVie's decision and pledged to find a new partner as a matter of urgency "so that we jointly can prepare and execute the meetings with the FDA and EMA".
The company has said it intends to start a phase III programme for the drug in 2016 in both RA and Crohn's disease, with FDA meetings scheduled to take place in March. Xeljanz was unable to show efficacy in an earlier clinical trial involving Crohn's disease patients. For Gilead, filgotinib will sit at the heart of the inflammation therapeutic category which it is developing alongside its established HIV and hepatitis C virus (HCV) franchises, both of which have grown into multi-billion dollar franchises.
Gilead has a matrix metalloproteinase (MMP) 9 inhibitor in phase II testing for Crohn's and ulcerative colitis, and in phase I for RA. Another drug - Syk inhibitor GS-9876 - is also in early-stage clinical testing for arthritis.
Under the terms of the agreement, Galapagos will fund 20% of the global development of filgotinib, and has retained co-promotion/profit-sharing rights to the drug in the UK, Germany, France, Italy, Spain, Belgium, the Netherlands and Luxembourg.
"The co-development and co-promotion aspects of this collaboration bring us into the next phase of the company's evolution," said van de Stolpe.