Shares in Galapagos NV gained 11 percent Thursday morning on news that it sold its Biofocus and Argenta drug discovery services units to Charles River Laboratories International Inc. for €129 million (US$180 million) in cash, with another potential €5 million earnout to come.

The deal followed an initial approach last summer, which led to a letter of intent signed in December and what sounded like a marathon final deal negotiation. “It’s been a long night. We’ve been negotiating all night to get everything agreed and signed,” a weary sounding Onno van de Stolpe, CEO of Galapagos, said on an analyst call Thursday.

The company’s stamina seems to have paid off. Jan De Kerpel, analyst at KBC Securities in Brussels, wrote in a research note that “the transaction valued the division at about 12x adjusted EBITDA 2013, [whereas] an average multiple in the sector is around 10x EV/EBTIDA.” The selling price, he added, “is slightly higher” than the €100 million to €125 million range the company disclosed earlier this year.

Getting a deal done quickly was the company’s preference, once it could secure what it regarded as a fair price. “Auction processes for service divisions are dangerous, because customers do not like the uncertainty,” van de Stolpe said. The earnout figure is tied to external sales growth targets in 2014, excluding the annual €4 million revenue that Galapagos will itself deliver over the next three years. The company said the total value of the divestiture was €145 million, taking into account the cash the business has generated over the years.

The deal is a perfect fit, the firm’s senior vice president of corporate development, Andre Hoekema, said on the call, as the two organizations have an overlapping customer base but no overlaps in their service offerings. The transaction adds Galapagos’s in vitro expertise in areas such as target discovery and validation, medicinal chemistry, assay development and screening, and hit/lead identification and optimization, to Charles River’s in vivo expertise in ADME/PK, pharmacology and safety and toxicity testing.

Galapagos will retain a target discovery function in Leiden, the Netherlands. The company’s Fidelta CRO unit, located in Zagreb, Croatia, which it acquired from London-based Glaxosmithkline plc, is not included in the transaction either.

“Clearly the Fidelta business is very immature at the moment,” van de Stolpe said. “If it had been profitable, there would have been a chance that Charles River would have acquired it, together with Biofocus and Argenta. That’s not the case. Of course, our ambition is to make that unit profitable. If it is profitable, clearly there is a future for it, possibly within the Galapagos group, possibly outside the Galapagos group.”

A deal of this type, as well as the underlying strategic intent, had been flagged for some time. Mechelen, Belgium-based Galapagos has been seeking a buyer in order to free up cash to spend on its growing drug pipeline. But the details provide a clear picture of the future shape of the company and its financials. (See BioWorld Today, March 10, 2014.)

The company is cutting its 2014 revenue forecast from €180 million to €125 million – the latter figure will include service revenues from the current quarter – and it is guiding a year-end cash balance of €170 million. The company exited 2013 with €141.5 million on its balance sheet, but its R&D spending in the coming year will be exceptionally high at around €100 million. “Over 50 percent of that €100 million is going to ‘634 this year,” Hoekema said.

That compound, the selective JAK1 inhibitor GLPG0634, is undergoing phase IIb trials in rheumatoid arthritis, which will deliver top-line data by year-end, and a phase II study in Crohn’s disease, which will read out in the second quarter of 2015. It is the subject of a mammoth licensing deal with North Chicago-based Abbvie Inc., but Galapagos is covering the costs of phase II development. Another Abbvie-partnered program, in cystic fibrosis, also is slated to enter the clinic this year. (See BioWorld Today, March 1, 2012, and Sept. 25, 2013.)

Some 340 Galapagos staff, located in the UK and in the Netherlands, will transfer to Wilmington, Mass.-based Charles River. Post-transaction – the deal is expected to close on April 1 – the company will have some 418 personnel, located in Mechelen, Leiden, Zagreb and in Romainville, France.

Shares in Galapagos (BRUSSELS:GLPG) peaked at €17.59 during trading Thursday, but shed some of those gains to end the day at €16.92, up 6.8 percent.