GSK CEO Walm­s­ley is re­or­ga­niz­ing R&D, drop­ping drugs and adding a new fo­cus on can­cer re­search

Just days af­ter rush­ing Dana-Far­ber chief Lau­rie Glim­ch­er on­to the board at Glax­o­SmithK­line $GSK, new CEO Em­ma Walm­s­ley is mak­ing her move to re­or­ga­nize the pipeline. Her plan calls for a ma­jor R&D cull, drop­ping 30 de­vel­op­ment projects and adding can­cer and im­muno-in­flam­ma­to­ry dis­eases to its list of top R&D pri­or­i­ties — which will con­sume the li­on’s share of its bud­get.

Em­ma Walm­s­ley

In a state­ment out ear­ly Wednes­day, GSK out­lined plans to part­ner out or sim­ply drop 30 pre­clin­i­cal and clin­i­cal pro­grams, stream­lin­ing R&D and oth­er op­er­a­tions in the glob­al op­er­a­tion as the com­pa­ny looks for about $1.3 bil­lion in sav­ings by 2020. Rare dis­ease drugs in par­tic­u­lar ap­pear to be on the chop­ping block while a list of as­sets that are be­ing dropped from the pipeline in­cludes sirukum­ab, its dis­ap­point­ing rheuma­toid arthri­tis drug now un­der reg­u­la­to­ry re­view and part­nered with J&J $JNJ.

You can see the full list be­low.

The move puts GSK back in play as sev­er­al top bio­phar­ma com­pa­nies look to shake up their R&D or­ga­ni­za­tions and start to strike new deals. And the phar­ma gi­ant’s re­turn to the deal ta­ble will quick­ly earn close at­ten­tion from a long list of ri­vals. More big play­ers are al­so like­ly to fol­low suit, mark­ing a turn­ing point for bio­phar­ma as a slate of new CEOs look to put their dis­tinc­tive stamp on prod­uct de­vel­op­ment.

The plan at Glax­o­SmithK­line now is to re­serve about 80% of its an­nu­al multi­bil­lion-dol­lar bud­get for two main­stay dis­ease fields — res­pi­ra­to­ry and HIV/in­fec­tious dis­eases — while ex­am­in­ing the “po­ten­tial” ad­di­tion of can­cer and im­muno-in­flam­ma­tion. GSK spent $4.5 bil­lion on R&D, putting it among the top 15 in the in­dus­try.

The phar­ma gi­ant al­so plans to get its busi­ness de­vel­op­ment team back to the bar­gain­ing ta­ble af­ter a long ab­sence in search of new, pri­mar­i­ly ear­ly-stage deals.

Walm­s­ley in­her­it­ed one of the weak­est R&D groups in Big Phar­ma when she took the helm in April. De­spite sig­nif­i­cant progress in HIV and vac­cines, phar­ma R&D lan­guished af­ter a pe­ri­od marked by some high-pro­file flame­outs in Phase III de­vel­op­ment. Now the CEO wants to use the stream­lin­ing to set up a re­vival for the phar­ma re­search group.

From their quar­ter­ly state­ment:

In its Phar­ma­ceu­ti­cals pipeline, GSK has de­vel­oped a pri­or­i­ty list of as­sets to in­vest be­hind. This pri­or­i­ty list will evolve as da­ta reads out. The Group has al­so set a tar­get to de­ploy over time 80% of its Phar­ma­ceu­ti­cals R&D cap­i­tal to pri­or­i­ty as­sets in two cur­rent ther­a­py ar­eas: Res­pi­ra­to­ry and HIV/in­fec­tious dis­eases; and two po­ten­tial ar­eas: On­col­o­gy and Im­muno-in­flam­ma­tion. Sig­nif­i­cant da­ta is ex­pect­ed from these pri­or­i­ty as­sets over the next three years which will be used to in­form R&D in­vest­ment de­ci­sions and how best to gen­er­ate val­ue from these as­sets. GSK al­so ex­pects to pur­sue dis­ci­plined busi­ness de­vel­op­ment to aug­ment its ear­ly-stage pipeline in these pri­or­i­ty ar­eas.

Now in the spot­light at GSK: A range of Phase I and Phase II can­cer drugs, in­clud­ing its mid-stage pro­gram part­nered with Adap­ti­m­mune $ADAP.

J&J says that GSK’s de­ci­sion to bail out on sirukum­ab leaves them in charge of world­wide roll­out, and they have no plans to change course now. In a state­ment to End­points News, the com­pa­ny not­ed:

Our pri­or­i­ty is work­ing with Health Au­thor­i­ties in the U.S., Eu­rope, Japan and many oth­er coun­tries to bring this nov­el an­ti-IL-6 mon­o­clon­al an­ti­body to RA pa­tients.  We are con­tin­u­ing with launch prepa­ra­tions in EMEA and Asia Pa­cif­ic through our world-class Janssen Im­munol­o­gy or­ga­ni­za­tion, and we are al­so ex­plor­ing the best op­por­tu­ni­ties to bring this im­por­tant new med­i­cine to pa­tients in the ge­o­gra­phies that will re­turn to Janssen.

The move at GSK mir­rors the same ba­sic strat­e­gy that Michel Vounatsos and Dave Ricks an­nounced yes­ter­day for Bio­gen and Eli Lil­ly. Both have been lay­ing plans to “stream­line” op­er­a­tions and de­vote more time to new projects that can whip up some ex­cite­ment among the in­vestor crowd. Lil­ly al­so is drop­ping can­cer projects — while GSK looks to add to what’s left of its on­col­o­gy group fol­low­ing a big trade­off with No­var­tis.

These moves will cre­ate dozens of new busi­ness op­por­tu­ni­ties among biotech play­ers look­ing for new as­sets to pick over. Typ­i­cal­ly these projects go for on­ly small amounts of up­front cash. And it al­so adds new play­ers to the deal ta­ble, ready to spend cash and part­ner on more drugs.

GSK sig­naled this move re­cent­ly af­ter it re­cruit­ed Glim­ch­er to its board. The im­muno-on­col­o­gy ex­pert joined the board’s sci­ence team and can of­fer some key in­sights gleaned from years on the board at Bris­tol-My­ers Squibb.


From the GSK pre­sen­ta­tion:

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