Emma Walmsley, GlaxoSmithKline CEO (Fang Zhe/Xinhua/Alamy Live News)

GSK's con­sumer health spin­off Ha­le­on preps launch with $12B+ in debt

GSK’s con­sumer health spin­off Ha­le­on will make its big de­but in just over a week — but with some se­ri­ous debt in tow, ac­cord­ing to the com­pa­ny.

When it lists on the Lon­don Stock Ex­change on Ju­ly 18, Ha­le­on will have about £10.3 bil­lion (more than $12 bil­lion) in debt on the bal­ance sheet, GSK con­firmed on Wednes­day. That’s around four times the spin­off’s es­ti­mat­ed earn­ings for the year, ac­cord­ing to the UK’s This is Mon­ey, which first re­port­ed the news.

Bar­clays an­a­lysts have pre­vi­ous­ly called Ha­le­on the “largest list­ing in Eu­rope for over a decade.” Though the spin­off will be chal­lenged with “sig­nif­i­cant debt,” the an­a­lysts pre­dict sales will top £13 bil­lion (more than $15 bil­lion) by 2026.

Ear­li­er this year, GSK called the de­merg­er the “most sig­nif­i­cant cor­po­rate change for GSK in the last 20 years,” adding that Ha­le­on will lead in ma­jor cat­e­gories such as pain and res­pi­ra­to­ry health with pow­er brands like Advil and Ther­aflu.

“It will come to the mar­ket with sig­nif­i­cant debt, c.£10.3bn or 4x EBIT­DA, but we ex­pect or­gan­ic delever­age to fall be­low 3x by the end of next year,” Bar­clays an­a­lysts wrote in a re­cent re­port.

Ha­le­on al­so owns pop­u­lar brands such as Sen­so­dyne tooth­paste and Ro­bi­tussin cough syrup. The port­fo­lio in­cludes con­sumer health drugs from both No­var­tis and Pfiz­er as a re­sult of deals from 2017 and 2019, re­spec­tive­ly. Sales last year to­taled £9.54 bil­lion, or around $11.3 bil­lion. This year, Bar­clays an­a­lysts ex­pect sales to reach £10.67 bil­lion, or more than $12.7 bil­lion.

The com­pa­ny is ex­pect­ed to be val­ued be­tween £38 bil­lion and £45 bil­lion, This is Mon­ey re­port­ed.

Bar­clays an­a­lysts not­ed:

Ha­le­on’s val­u­a­tion will, in our view, like­ly be a func­tion of mar­ket ex­pec­ta­tions of its struc­tur­al Or­gan­ic Sales Growth. From our con­ver­sa­tions with in­vestors, there is a de­gree of scep­ti­cism around its 4-6% tar­get, and sig­nif­i­cant push­back on our 4.7% medi­um-term growth fore­cast. We look for 6% OSG this year (al­beit part­ly helped by Covid head­wind un­wind), but the key ques­tion for val­u­a­tion longer term is like­ly where growth sta­bilis­es next year.

Last month, Pfiz­er an­nounced that it plans on ex­it­ing its 32% stake in Ha­le­on “in a dis­ci­plined man­ner” af­ter the com­pa­ny lists — a com­plete turn­around from GSK’s pre­vi­ous an­nounce­ments that said Pfiz­er would re­tain its 32% stake and ap­point two board mem­bers. Ac­cord­ing to a quar­ter­ly fil­ing, Pfiz­er could get rough­ly $15.8 bil­lion from its stake.

Ear­li­er this year, GSK punt­ed mul­ti­ple un­so­licit­ed of­fers from Unilever to buy the con­sumer health spin­out for £50 bil­lion ($68 bil­lion).

The GSK board de­cid­ed that Unilever’s of­fers “fun­da­men­tal­ly un­der­val­ued the Con­sumer Health­care busi­ness and its fu­ture prospects.” And CEO Em­ma Walm­s­ley has long held that as op­posed to a sale, a spin­out al­lows GSK share­hold­ers to get the best of both worlds — shares in both the new GSK, which is hom­ing in on phar­ma and vac­cines and Ha­le­on.

The com­pa­ny’s name is a mashup of the words “hale,” mean­ing “in good health,” and “leon,” which is as­so­ci­at­ed with strength.

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Pfizer was first to the finish line for the next-gen pneumococcal vaccine in adults, but Merck beat its rival with a jab for children in June.

Now, two months after Merck’s 15-valent Vaxneuvance won the FDA stamp of approval for kids, Pfizer is out with some late-stage data on its 20-valent shot for infants.

Known as Prevnar 20 for adults, Pfizer’s 20vPnC will head to the FDA by the end of this year for an approval request in infants, the Big Pharma said Friday morning. Discussions with the FDA will occur first and more late-stage pediatric trials are expected to read out soon, informing the regulatory pathway in other countries and regions.

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Senate Finance Committee Chair Ron Wyden (D-OR) (Francis Chung/E&E News/POLITICO via AP Images)

Sen­ate Fi­nance Chair con­tin­ues his in­ves­ti­ga­tion in­to phar­ma tax­es with re­quests for Am­gen

Amgen is the latest pharma company to appear on the radar of Senate Finance Committee Chair Ron Wyden (D-OR), who is investigating the way pharma companies are using subsidiaries in low- or zero-tax countries to lower their tax bills.

Like its peers Merck, AbbVie and Bristol Myers Squibb, Wyden notes how Amgen uses its Puerto Rico operations to consistently pay tax rates that are substantially lower than the U.S. corporate tax rate of 21%, with an effective tax rate of 10.7% in 2020 and 12.1% in 2021.

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AstraZeneca and Daiichi Sankyo’s antibody-drug conjugate Enhertu scored its second approval in less than a week, this time for a subset of lung cancer patients.

Enhertu received accelerated approval on Thursday to treat adults with unresectable or metastatic non-small cell lung cancer (NSCLC) whose tumors have activating HER2 (ERBB2) mutations, and who have already received a prior systemic therapy.

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J&J to re­move talc prod­ucts from shelves world­wide, re­plac­ing with corn­starch-based port­fo­lio

After controversially spinning out its talc liabilities and filing for bankruptcy in an attempt to settle 38,000 lawsuits, Johnson & Johnson is now changing up the formula for its baby powder products.

J&J is beginning the transition to an all cornstarch-based baby powder portfolio, the pharma giant announced on Thursday — just months after a federal judge ruled in favor of its “Texas two-step” bankruptcy to settle allegations that its talc products contained asbestos and caused cancer. An appeals court has since agreed to revisit that case.

Pharma brands are trying to figure out new ways to better reach patients and doctors, but also measure results. (Credit: Shutterstock)

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Healthcare marketing services companies like Lasso and CMI Media Group are trying to change that with new measurement methods and partnerships that aim to get closer to patients’ and physicians’ actions.

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Corey McCann, Pear Therapeutics CEO

Pear Ther­a­peu­tics touts Q2 growth while scal­ing back full-year goals and chop­ping 9% of staff

Pear Therapeutics set some ambitious goals back in March, predicting a five-fold boost in revenue and a surge in new prescriptions for its digital therapeutics. Now the company is scaling back those estimates and chopping 9% of its workforce — an all-too-common occurrence in biotech lately.

CEO Corey McCann unveiled Pear’s Q2 numbers on Thursday, touting a 20% quarter-over-quarter revenue growth totaling $3.3 million. That’s more than double what the company made in Q2 2021, and McCann thinks the team could see a nearly four-fold jump in revenue this year, falling in the range of $14 million to $16 million.

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Seagen interim CEO Roger Dansey and Daiichi Sankyo CEO Sunao Manabe

Paving the way for Mer­ck­'s buy­out, Seagen los­es ar­bi­tra­tion dis­pute with Dai­ichi over ADC tech

As Seagen awaits a final buyout offer from Merck that could be in the territory of $40 billion, Seagen revealed Friday afternoon that it lost an arbitration dispute with Daiichi Sankyo relating to the companies’ 2008 collaboration around the use of antibody-drug conjugate (ADC) technology.

But that loss likely won’t matter much when it comes to Merck’s deal.

After breaking off its pact with Daiichi in mid-2015, the two companies battled over “linker” tech — a chemical bridge between an ADC’s antibody component and the cytotoxic payload — that Seagen claims Daiichi would improve upon and implement in its current generation of ADCs.

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CSL is gathering its four business units under a unified brand identity strategy (Credit: CSL company site)

CSL brings Se­qirus, Vi­for un­der par­ent um­brel­la brand in iden­ti­ty re­vamp

CSL is gathering its brands under the family name umbrella, renaming its vaccine and newly acquired nephrology specialty businesses with the parent initials.

CSL Seqirus and CSL Vifor join CSL Plasma and CSL Behring as the four now uniformly branded business units of the global biopharma. The Seqirus vaccine division was formed in 2015 with the combination of bioCSL and its purchase of Novartis’ flu vaccine business. CSL picked up Vifor Pharma late last year in an $11.7 billion deal for the nephrology, iron deficiency and cardio-renal drug developer.

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