GSK, a London-listed pharmaceuticals group, has bought a Canadian biopharmaceuticals firm for 1.6 billion pounds sterling.
GSK has access to an innovative cough treatment through the acquisition of Bellus Health. The company is listed on both the Toronto Stock Exchange and Nasdaq in New York.
Camlipixant is a potential drug that is “best in class” and has been in late stage development for treating adult patients. It is expected to get regulatory approval in 2026 and be available in the United States.
GSK, the second largest drug company in Britain, has shifted its focus to pharmaceuticals and vaccines, such as respiratory drugs. This is after separated Haleon from Pfizer’s consumer healthcare joint venture last summer, in what was London’s biggest listing in 10 years.
Rrefractory Chronic Cough is a persistent cough lasting more than 8 weeks, which does not respond well to treatment or is undiagnosed. The condition affects an estimated 10 million people worldwide, including 6 million Americans and European Union residents, who are not treated with approved therapies. This condition can cause depression, incontinence of the bladder, pain, fractures of ribs, social withdrawal, and sleep loss.
Luke Miels is the chief commercial officer of GSK. He said that patients with severe cases would cough up to 900 times per day. You can imagine the strain on these patients. Not to mention the social stigma of having a chronic continuous cough you can’t end.
Miels, 48, former senior executive of AstraZeneca (Britain’s largest drugs group), who was controversially poached by GSK to join, said: “The problem with chronic cough is that there are only a few options available for patients to treat it. Since the 1950s, there hasn’t been a single approved drug that treats chronic cough directly.
GSK targets “single-digit multibillion dollar” peak sales for the drug. The number of patients and unmet needs are high, so it will be a large product at peak.
Camlipixant competes with a drug made by Merck. The company is expected to submit a new application to American regulators this year for re-evaluation after officials requested more data last year. GSK will pay $14.75 in cash per share under the terms of the agreement. The acquisition is expected close in the third quarter. The price represents a premium of approximately 103 percent over Bellus’s Monday closing price.
In New York, shares of Bellus, which reported positive trial results in December 2021 almost doubled from $7.18 up to $14.44.
GSK was believed to have been involved in a bidding war with at least another bidder for Bellus. Analysts in the City welcomed the deal, even though shares of GSK, due to publish their first-quarter results on Monday, were down 27 3/4p or 1.8% at PS14.84.
Analysts from Barclays stated that it was “a relatively small bolt-on” for an asset which is de-risked and fits well into GSK’s portfolio. The acquisition “was synergistic with GSK expertise in respiratory and specialty medicines, with overlap with GSK’s current respiratory portfolio”. GSK anticipates that the drug will be priced at the ‘primary-care price’. This suggests the company believes there could be a decent volume uptake.”
Analysts added that “given the mixed record of [this class] of drug, we think we may need to see more data.”
Alex Ralph writes that since GSK separated its consumer healthcare division last summer, the company has invested a PS7billion dividend, which was unlocked through the separation, on acquisitions in order to reach its sales targets.
The London-based FTSE 100 firm, led by Dame Emma Walmsley as its CEO, has used the extra financial power to purchase late-stage drugs in order to accelerate its revival.
Walmsley, age 53, promised that a “new growth era” would begin after Haleon was separated. The company aims to achieve annual sales growth greater than 5% over the next five years, and an adjusted operating profit increase of at least 10%. GSK expects to increase its profits in 2027 with the acquisition of Bellus Health. It will also help GSK achieve its long-term goal of sales exceeding PS33 billion.
GSK has used the financial firepower it gained from demerging their consumer healthcare business in order to purchase late-stage drugs.
Investors want to know that GSK will be able to secure enough blockbusters in order to meet its goals, especially as the patent on dolutegravir – the most widely used HIV medication – expires by 2028.
GSK is on the lookout for M&A deals that it refers to as “type A and type B deals”. Luke Miels is GSK’s Chief Commercial Officer. He said that the acquisition of Bellus fell into the first category. These are multi-billion dollar acquisitions of new drugs, “tending towards areas where we have critical masses and insight”. This acquisition follows the $1.9 billion purchase of Sierra Oncology a California-based rare cancers specialist and Affinivax a Boston based vaccines firm, which was made a month after.
GSK has also been launching “type B deals”, which Miels described as “tuck-in deals that are smaller and more bargain-hunting deals where we can combine with our existing portfolio”. GSK has also been launching “type B deals”, which Miels described as “tuck-in, smaller deals, which are more of a bargain-hunting type of transaction where we can combine them with our existing portfolio”.