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

Why is On­col­o­gy Drug De­vel­op­ment Re­search Late to the Dig­i­tal Bio­mark­ers Game?

During the recent Annual ASCO Meeting, thousands of cancer researchers and clinicians from across the globe joined together virtually to present and discuss the latest findings and breakthroughs in cancer research and care. There were more than 5000+ scientific abstracts presented during this event, yet only a handful involved the use of motion-tracking wearables to collect digital measures relating to activity, sleep, mobility, functional status, and/or quality of life. Although these results were a bit disappointing, they should come as no surprise to those of us in the wearable technology field.

Ryan Watts, Denali CEO

De­nali slips as a snap­shot of ear­ly da­ta rais­es some trou­bling ques­tions on its pi­o­neer­ing blood-brain bar­ri­er neu­ro work

Denali Therapeutics had drummed up considerable hype for their blood-brain barrier technology since launching over six years ago, hype that’s only intensified in the last 14 months following the publications of a pair of papers last spring and proof of concept data earlier this year. On Sunday, the South San Francisco-based biotech gave the biopharma world the next look at in-human data for its lead candidate in Hunter syndrome.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 112,600+ biopharma pros reading Endpoints daily — and it's free.

J&J’s Rem­i­cade — the poster child for how to block biosim­i­lars — fi­nal­ly set­tles Pfiz­er suit

Biosimilars have proven time and again (although mostly in Europe) that competition works to bring down the cost of a once-pricey biologic, and can even expand its use.

J&J’s Remicade, however, has always proven to be an outlier.

Back in 2016, Pfizer won FDA approval for its infliximab biosimilar, known as Inflectra, but when the launch foundered, the company sued J&J, claiming that the company’s plan to block biosimilar competition worked incredibly well. Pfizer even went on to win FDA approval for a second infliximab biosimilar in 2017, known as Ixifi, but decided to never launch it.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 112,600+ biopharma pros reading Endpoints daily — and it's free.

No­var­tis reshuf­fles its wild cards; Tough sell for Bio­gen? Googling pro­teins; Ken Fra­zier's new gig; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

If you enjoy the People section in this report, you may also want to check out Peer Review, my colleagues Alex Hoffman and Kathy Wong’s comprehensive compilation of comings and goings in biopharma.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 112,600+ biopharma pros reading Endpoints daily — and it's free.

An­oth­er one bites the dust: Bris­tol My­ers Squibb pulls 'dan­gling' ac­cel­er­at­ed ap­proval for Op­di­vo in liv­er can­cer

Bristol Myers Squibb has agreed to pull a second-line liver cancer indication for its blockbuster Opdivo as a monotherapy, becoming the second PD-(L)1 indication to bite the dust after the FDA’s oncology adcomm reviewed six “dangling” accelerated approvals in April.

The outside experts voted against two of the six indications discussed at the meeting, including Opdivo as a monotherapy for hepatocellular carcinoma (HCC) patients who have previously been treated with sorafenib, and Merck’s Keytruda as a third-line treatment for stomach cancer. The adcomm voted 5 to 4 not to maintain Opdivo’s indication, after it failed to show clinical benefit in a confirmatory trial.

Pascal Soriot, AstraZeneca CEO (Raphael Lafargue/Abaca/Sipa via AP Images)

Covid-19 roundup: Fau­ci warns that US is head­ed in wrong di­rec­tion, rec­om­mends boost­er; As­traZeneca-Pfiz­er com­bo proves ef­fec­tive in South Ko­rea

A combination of unvaccinated Americans and the Delta variant has led a frustrated NIAID director Anthony Fauci to say the US is headed in the wrong direction, he said on CNN’s show “State of the Union.”

Booster shots may be required for those with suppressed immune systems and public health officials are considering a mask recommendation for those who are already vaccinated, the Associated Press reported. More than 163 million people are vaccinated, but that number is less than half of the US population. And 57% of those who are eligible for the vaccine have been inoculated.

Seth Lederman, Tonix Pharmaceuticals CEO

Small, strug­gling biotech winds up with a 3X los­er as an­oth­er PhI­II of its lead drug col­laps­es

Little Tonix Pharmaceuticals has run into another brick wall as its lead drug — a reformulated muscle relaxant originally approved 44 years ago — has failed another Phase III study, sending shares back into penny stock territory.

Three years after going down in their first Phase III trial of TNX-102 SL (cyclobenzaprine HCl sublingual tablets) for symptoms of PTSD, the biotech — which had been encouraged by a breakthrough designation at the FDA — reported late Friday the drug also failed its second late-stage challenge for pain associated with fibromyalgia. Outside data monitors recommended the Phase III trial be halted for futility after deciding interim data made it unlikely the drug would pass muster.

Hervé Hoppenot, Incyte CEO (Jeff Rumans for Endpoints News)

FDA un­sur­pris­ing­ly brings down the ham­mer on In­cyte's PD-1 — draw­ing a line for fu­ture ac­cel­er­at­ed ap­provals

It appears the PD-(L)1 honeymoon is finally over.

Incyte $INCY revealed late Friday the FDA has slammed its PD-1 retifanlimab — which was under priority review for locally advanced or metastatic squamous cell carcinoma of the anal canal — with a complete response letter, demanding “additional data” to show clinical benefit.

On one hand, the rejection should come as no surprise: Regulators spelled out the problems they saw with Incyte’s data package in no uncertain terms, raising concerns about the low response rates, lack of diversity and dearth of safety data in the single-arm trial. During the ensuing adcomm, the FDA’s cancer czar, Richard Pazdur, suggested the whole episode underscores the need to “reassess” how drugs get approved under the accelerated approval pathway without randomized studies.

In­side Bio­gen's scram­ble to sell Aduhelm: Pro­ject 'Javelin' and pres­sure to ID as many pa­tients as pos­si­ble

In anticipation of Aduhelm’s approval for Alzheimer’s in June, Biogen employees were directed to identify and guarantee treatment centers would administer the drug through a program called “Javelin,” a senior Biogen employee told Endpoints News.

The program identified about 800 centers for use, he said, and Biogen now pays for the use of bioassays to identify beta amyloid in potential patients having undergone a lumbar puncture procedure, the employee said — and one center preparing to administer the drug confirmed its participation in the bioassay program.

Endpoints Premium

Premium subscription required

Unlock this article along with other benefits by subscribing to one of our paid plans.