GSK, Pfiz­er to cre­ate con­sumer health pow­er­house un­der JV — then spin it out

Glax­o­SmithK­line CEO Em­ma Walm­s­ley took over the reins in 2017 with an un­en­vi­able task — to re­verse the steadi­ly erod­ing for­tunes of the phar­ma­ceu­ti­cal gi­ant. Her job, be­fore ris­ing to the helm of the British drug­mak­er, was head of GSK con­sumer health­care. It is this unit she has agreed to even­tu­al­ly part with, in a deal with Pfiz­er $PFE an­nounced on Wednes­day.

The con­sumer health di­vi­sions of GSK and Pfiz­er — which raked in a com­bined $12.7 bil­lion in sales last year — are to be merged in­to a joint ven­ture, with Pfiz­er re­tain­ing a 32% mi­nor­i­ty stake and GSK hold­ing the rest. Once the two busi­ness­es have in­te­grat­ed, GSK plans to split the com­pa­ny and list the JV as a sep­a­rate en­ti­ty on the UK eq­ui­ty mar­ket.

Since tak­ing over from An­drew Wit­ty, Walm­s­ley has made in­vest­ments to for­ti­fy the phar­ma busi­ness and ramp up R&D, in­clud­ing hir­ing in­dus­try vet­er­ans to helm key posts. Last year, she hint­ed her in­ter­est in the Pfiz­er con­sumer busi­ness, which was val­ued at $20 bil­lion at the time, spook­ing in­vestors who were wor­ried such a deal would hurt the com­pa­ny’s bot­tom line. This March, GSK ef­fec­tive­ly dropped out of the race for the unit, when she eva­sive­ly said GSK would on­ly make in­vest­ments that would meet their “cri­te­ria for re­turns and not com­pro­mise our pri­or­i­ties for cap­i­tal al­lo­ca­tion,” a move that in­vestors cheered.

This new deal, which adds to GSK’s div­i­dends, could be the best of both worlds. “With our fu­ture in­ten­tion to sep­a­rate, the trans­ac­tion al­so presents a clear path­way for­ward for GSK to cre­ate a new glob­al phar­ma­ceu­ti­cals/vac­cines com­pa­ny, with an R&D ap­proach fo­cused on sci­ence re­lat­ed to the im­mune sys­tem, use of ge­net­ics and ad­vanced tech­nolo­gies, and a new world-lead­ing con­sumer health care com­pa­ny,” Walm­s­ley said.

GSK’s Lon­don-list­ed shares jumped about 7% on the news, while Pfiz­er’s NYSE-list­ed shares edged up about 1% be­fore the bell.

Al­though GSK’s con­sumer di­vi­sion used to op­er­ate as a JV with Swiss phar­ma­ceu­ti­cal gi­ant No­var­tis $NVS, the British drug­mak­er bought out the lat­ter in a $13 bil­lion deal ear­li­er this year. If ap­proved by GSK share­hold­ers and reg­u­la­tors, the new deal is ex­pect­ed to close in the sec­ond half of 2019 cre­at­ing a JV that will be the largest glob­al con­sumer health busi­ness, the com­pa­nies said on Wednes­day.

“The JV will be a glob­al leader in the frag­ment­ed over-the-counter mar­ket, with 7.2% mar­ket share, well ahead of the 4.1% of its near­est com­peti­tors (such as J&J, Bay­er etc) and will hold the #1 or #2 po­si­tions in all key ge­o­gra­phies, in­clud­ing the US and Chi­na,” Jef­feries an­a­lyst Pe­ter Welford wrote in a note.

Un­til sep­a­ra­tion, the JV — which will bring brands such as GSK’s Sen­so­dyne and Pfiz­er’s Advil un­der the same roof — will be con­sol­i­dat­ed in GSK’s fi­nan­cial state­ments, and run by Walm­s­ley. The trans­ac­tion, if con­sum­mat­ed, is ex­pect­ed to be slight­ly ac­cre­tive to Pfiz­er in the first three years of clos­ing, and to gen­er­ate sav­ings of $650 mil­lion. Pfiz­er and GSK al­ready an ex­ist­ing JV for HIV.

The 2017 ad­just­ed op­er­at­ing mar­gins for the two com­pa­nies were broad­ly sim­i­lar: “at 17.6% for GSK and 17.3% for Pfiz­er, sug­gest­ing be­yond the cost sav­ings of the merg­er, man­age­ment al­so en­vis­ages sig­nif­i­cant ben­e­fits from scale,” Welford added.

In a con­fer­ence call with re­porters fol­low­ing the an­nounce­ment, Walm­s­ley sug­gest­ed the UK list­ing for the con­sumer busi­ness was a mat­ter of tra­di­tion, de­spite the un­cer­tain­ty of Brex­it: “whether that be our sci­ence base, the qual­i­ty of ed­u­ca­tion…op­por­tu­ni­ties of in­no­va­tion…man­u­fac­tur­ing and tech­ni­cal knowhow or in­deed the cre­ative in­dus­tries which are very im­por­tant for con­sumer brand-build­ing.”

“Ob­vi­ous­ly right now is a pe­ri­od that’s pret­ty dif­fi­cult and rather un­cer­tain, and we would all like to get to cer­tain­ty as soon as pos­si­ble…the key thing is that any sep­a­ra­tion in new head­quar­ters is go­ing to be af­ter a few years when I am con­fi­dent we will be in a more set­tled en­vi­ron­ment than we are to­day,” she said.

Im­age: Em­ma Walm­s­ley. GSK

UP­DAT­ED: Roche bags 'break­through' an­ti-fi­bro­sis drug in $1.4B biotech buy­out deal

Roche is snapping up a “breakthrough” anti-fibrotic drug in a $1.4 billion buyout.

The pharma giant announced Friday that it is acquiring Promedior, primarily to get its hands on PRM-151, a recombinant form of human pentraxin-2 (PTX-2) protein that has nailed down mid-stage clinical data on idiopathic pulmonary fibrosis and demonstrating its potential for a range of fibrotic conditions.

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Amarin emerges from an ex­pert pan­el re­view with a clear en­dorse­ment for Vas­cepa and high odds of suc­cess when the FDA weighs in for­mal­ly

Several FDA experts who gathered Thursday to consider the landmark approval of Vascepa to reduce cardio events in an at-risk population voiced their unease about various aspects of the efficacy and safety data, or ultimately the population it should be used to treat. But the overwhelming belief that the data pointed to the drug’s benefit and clearly outweighed risks carried the day for Amarin.

The panel voted unanimously (16 to 0) to support the company’s positive data presentation — backing an OK for expanding the label to include reducing cardio risk. The vote points Amarin $AMRN down a short path to a formal decision by the FDA, with the odds heavily in its favor. Chances are the rest of the questions about the future of this drug will be hashed out in the label’s small print.

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No­var­tis spin­out’s first an­ti-ag­ing PhI­II is a flop, so now they’ll turn to Parkin­son’s chal­lenge as shares wilt

Novartis spinout resTORbio is grappling with the collapse of its lead clinical program this morning — an anti-aging R&D failure that will badly damage their rep in the field.

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No­var­tis scores its lat­est FDA OK — this time for a new sick­le cell dis­ease drug picked up in a $665M deal

Novartis’ decision to buy Oklahoma-based biotech Selexys 3 years ago for up to $665 million has paid off with an FDA approval today.

Blessed with the FDA’s breakthrough drug designation for a speedy review, the pharma giant has pinned down an approval for crizanlizumab, a new therapy designed to reduce the frequency of painful incidents of vaso-occlusive crises among sickle cell disease patients 16 or older.

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As­traZeneca gains EU nod for di­a­betes triple; Am­gen and Duke launch re­al-world PC­SK9 ob­ser­va­tion­al study

→ Weeks after winning EU approval to start marketing dapagliflozin as Forxiga, AstraZeneca has racked up another OK for a triplet combo involving the SGLT2 diabetes drug. Named Qtrilmet, the pill combines Forxiga with the DPP-4 inhibitor Onglyza (saxagliptin) and the bedrock drug metformin in a modified-release format. That 3-in-1 approach proved superior in reducing average blood glucose levels to a number of other dual combinations across 5 Phase III trials, including Forxiga plus metformin, Onglyza with metformin, or glimepiride with metformin.

Five drugs, in­clud­ing two No­var­tis ther­a­pies, win EMA en­dorse­ment

As is custom, an EMA panel on Friday issued its weekly recommendations on marketing applications submitted by drug developers. This week, the agency backed the use of five new therapies — including two Novartis drugs — but issued no negative reviews.

Novartis’ S1P drug for relapsing forms of multiple sclerosis (MS) drug, Mayzent (known chemically as siponimod), which was approved by the FDA in March — has been given the nod by the EMA. The Swiss drugmaker already sells its other MS drug, Gilenya, in both regions.

Atom­wise's X-37 spin­out gets $14.5 mil­lion to launch AI dis­cov­ery ef­forts

The folks behind Atomwise’s spinout X-37 like to think in cosmological metaphors, and you can think of their AI drug development model as probes sent into space from a central station. That station just got $14.5 million in Series A funding from DCVC Bio, Alpha Intelligence Capital and Hemi Ventures to back those missions.

X-37 uses Atomwise’s AI platform to identify drug targets and – unlike the parent company, which largely sticks to computers  – bring those into a wet lab and preclinical testing.  In addition to AI professionals, it’s led in by part by drug developers from Velocity Pharmaceutical Development.

Ab­bott Lab­o­ra­to­ries CEO Miles White pass­es ba­ton down to suc­ces­sor; Lon­za CEO Marc Funk hits the ex­it

→ Abbott Laboratories has named a successor to CEO Miles White after he announced that he was stepping down in March after 21 years of service. Robert Ford, the company’s COO and president, will take the helm. Ford is known for his work in the $25 billion merger between St. Jude Medical into Abbott in January 2017. White will remain with the company as executive chairman of the board. 

→ After snapping up Novartis’ Swiss facility, Novartis Center of Excellence, in July, Lonza has announced that their CEO, Marc Funk, is hitting the exit for “personal reasons.” Funk has been the CEO of the company for less than a year — brought onto the company back in March. In the meantime, chairman Albert Baehny will serve as interim CEO. 

UCB adds on more pos­i­tive PhI­II da­ta for IL-17A/17F in­hibitor bimek­izum­ab, clear­ing a path to the FDA

A month after posting positive top-line data from their first Phase III trial of the IL-17A/17F inhibitor bimekizumab, Belgium’s UCB says they’ve added more upbeat results from their second late-stage test in moderate-to-severe plaque psoriasis.

That leaves the company on track for regulatory submissions in the middle of next year, says CMO Iris Loew-Friedrich.
Their drug beat out a placebo on the co-primaries — a 90% improvement in PASI 90 (the Psoriasis Area and Severity Index) and Investigator Global Assessment (IGA) response of clear or almost clear (IGA 0/1) at week 16, compared to placebo. Investigators also boasted of hitting some key secondaries.
UCB is angling to enter an increasingly crowded market space.
In their first of 3 Phase III studies for bimekizumab, researchers touted top-line wins on statistically significant results on clearing plaque psoriasis, including a victory over J&J’s IL-23 contender Stelara on key endpoints. The drug targets both IL-17A and IL-17F, a modification on the IL-17A strategy laid out for Taltz (Eli Lilly) and Cosentyx (Novartis). And the new group also includes J&J’s Tremfya and AbbVie’s Skyrizi.

Social image: UCB