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

Donald and Melania Trump watch the smoke of fireworks from the South Lawn of the White House on July 4, 2020 (via Getty)

Which drug de­vel­op­ers of­fer Trump a quick, game-chang­ing ‘so­lu­tion’ as the pan­dem­ic roars back? Eli Lil­ly and Ab­Cellera look to break out of the pack

We are unleashing our nation’s scientific brilliance and will likely have a therapeutic and/or vaccine solution long before the end of the year.

— Donald Trump, July 4

Next week administration officials plan to promote a new study they say shows promising results on therapeutics, the officials said. They wouldn’t describe the study in any further detail because, they said, its disclosure would be “market-moving.”

— NBC News, July 3

Something’s cooking. And it’s not just July 4 leftovers involving stale buns and uneaten hot dogs.

Over the long weekend observers picked up signs that the focus in the Trump administration may swiftly shift from the bright spotlight on vaccines being promised this fall, around the time of the election, to include drugs that could possibly keep patients out of the hospital and take the political sting out of the soaring Covid-19 numbers causing embarrassment in states that swiftly reopened — as Trump cheered along.

So far, Gilead has been the chief beneficiary of the drive on drugs, swiftly offering enough early data to get remdesivir an emergency authorization and into the hands of the US government. But their drug, while helpful in cutting stays, is known for a limited, modest effect. And that won’t tamp down on the hurricane of criticism that’s been tearing at the White House, and buffeting the president’s most stalwart core defenders as the economy suffers.

We’ve had positive early-stage vaccine data, most recently from Pfizer and BioNTech, playing catchup on an mRNA race led by Moderna — where every little sign of potential trouble is magnified into a lethal threat, just as every advance excites a frenzy of support. But that race still has months to play out, with more Phase I data due ahead of the mid-stage numbers looming ahead. A vaccine may not be available in large enough quantities until well into 2021, which is still wildly ambitious.

So what about a drug solution?

Trump’s initial support for a panacea focused on hydroxychloroquine. But that fizzled in the face of data underscoring its ineffectiveness — killing trials that aren’t likely to be restarted because of a recent population-based study offering some support. And there are a number of existing drugs being repurposed to see how they help hospitalized patients.

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Cel­lec­tis slammed af­ter pa­tient dies and FDA slaps a hold on their tri­al for an off-the-shelf CAR-T for mul­ti­ple myelo­ma

Cellectis was slammed after the market close on Monday as the biotech reported that the FDA demanded it hit the brakes on their MELANI-01 trial for their off-the-shelf cell therapy UCARTCS1A after one of the patients in the study died of treatment-related cardiac arrest.

The multiple myeloma patient had previously been treated unsuccessfully with various therapies, noted the biotech, and had been given dose level two (DL2) of their allogeneic CAR-T.

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Pfiz­er re-ups on Mis­sion Ther­a­peu­tics col­lab­o­ra­tion, lead­ing a $15M round and grab­bing first dibs on DUBs

Seven years after Pfizer first invested in Mission Therapeutics, a biotech that researches selectively inhibiting deubiquitylating enzymes (DUBs), the pharma giant is re-upping its commitment to the company in another sign of confidence in the field of protein degradation.

Pfizer’s VC arm is heading up a $15 million round, announced Monday morning, and increasing its overall stake in Mission. Pfizer is also entering into a licensing agreement that would give it first dibs at negotiating exclusivity after accessing certain DUB inhibitors and screening them for their potential as drugs.

Shoshanna Shendelman, Applied Therapeutics CEO (Applied Therapeutics)

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As short attacks go, Biotech Research Partners’ assault on Applied Therapeutics’ “cherry picked” data and a variety of so-called red flags didn’t cause a whole lot of damage. Ahead of the July 4 holiday, its shares $APLT were dinged and showed signs of quick recovery.

But that didn’t stop an incendiary response, as the biotech swung into action bright and early Monday morning.

Applied Therapeutics accused the authors of the short report of manipulating graphs and figures, misrepresenting data and included factual misrepresentations — all of which added up, in their view, to fraud.

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Bill Haney, Dragonfly CEO (Dave Pedley/Getty Images for SXSW)

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Bristol Myers Squibb is making a habit out of collaborating with the crew at Dragonfly, adding their 3rd deal in a series that now will take them into newly charted R&D territory. And the fast-growing team at the Cambridge-based biotech is adding a facility in Copenhagen for its next growth spurt, where the government is making it easy to recruit scientists internationally as the U.S. throttles back.

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Covid-19 roundup: Teamed up with NIH, Re­gen­eron launch­es PhI­II pre­ven­tion tri­al for an­ti­body cock­tail

As Regeneron moves its antibody cocktail into Phase II/III trials testing REGN-COV2 as a treatment for both hospitalized and non-hospitalized patients with Covid-19, the biotech is also starting a Phase III in the prevention setting.

The National Institute of Allergy and Infectious Diseases — which orchestrated the large, randomized study for remdesivir that produced positive results — will jointly run the study.

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Douglas Love, Annexon CEO (Annexon)

IPO bound? Ac­tu­al­ly, An­nex­on was al­ready prepped and primed to toss its S-1 to Wall Street as in­vestors ral­lied

The Wall Street IPO shuffle generally calls for a little distance between the crossover ante and the Wall Street double, but with the window on the street wide open and biotech sizzling hot, who’s waiting?

The crew at Annexon didn’t leave anyone in suspense for long about their IPO plans. A day after the Bay Area biotech with clinical plans to target neurodegeneration quietly unveiled a $100 million raise, they were back with an S-1 outlining a pitch to double that — or more.

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Jean-Paul Clozel, Idorsia CEO (Patrick Straub/Keystone via AP Images)

Sec­ond PhI­II study for Idor­si­a's sleep drug re­turns pos­i­tive re­sults, but al­so rais­es new ques­tions

Following a successful Phase III study in April showcasing the safety and potential of its new sleep drug, Idorsia posted some mixed news in the second Phase III study, but that won’t stop a planned filing aimed at regulatory approval.

The drug, a dual orexin receptor antagonist (DORA) called daridorexant, was found to significantly improve sleep maintenance and subjective total sleep time in 25 mg doses, replicating results from the first Phase III study. However, improvements in sleep onset and daytime functioning narrowly missed statistical significance, despite numerical consistency with the April study.

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By the time the FDA finally granted an accelerated OK for Immunomedics’ Trodelvy, we already got a very strong hint that their confirmatory Phase III study in metastatic triple-negative breast cancer was a success.

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“We do not know the totality of their decision other than it’s pretty evident that the primary endpoint was met; otherwise they could not request to halt the study,” Behzad Aghazadeh, the executive chairman, told Endpoints News at the time.