GlaxoSmithKline announced Wednesday alongside its second-quarter results that it plans to cut more than 30 clinical and preclinical drug development programmes, whilst considering options for its rare diseases unit, as it looks to improve the efficiency of its pharmaceuticals business. The company indicated that improving its pharmaceuticals business and strengthening its development pipeline will become key priorities to help mitigate the impact of pricing pressures on its current portfolio.
According to GlaxoSmithKline, clinical development of 13 drugs will be halted, partnered or divested, including sirukumab for rheumatoid arthritis, with all rights to the therapy returning to Johnson & Johnson. The move also affects the late-stage drug retosiban for spontaneous pre-term labour, as well as therapies in Phase II development, such as tarextumab for small cell lung cancer, which is part of an alliance with OncoMed Pharmaceuticals.
GlaxoSmithKline added that it aims to allocate 80 percent of its pharmaceuticals R&D capital to priority assets in two current therapy areas of respiratory and HIV/infectious diseases, and the two potential areas of oncology and immuno-inflammation. The drugmaker noted that it has developed a "priority list" of assets to invest behind, with significant data expected from these medicines over the next three years. CEO Emma Walmsley said the R&D budget was not expected to reduce despite the reprioritisation, adding there was not "a magic percentage for spending." The executive also indicated that GlaxoSmithKline would consider acquiring companies with promising early-stage science "to help bolster the pipeline."
In the three-month period, sales of prescription drugs climbed 12 percent year-over-year to 4.4 billion pounds ($5.7 billion), reflecting growth of new products such as Triumeq, Tivicay and Relvar/Breo Ellipta. Meanwhile, revenue from vaccines jumped 16 percent to 1.1 billion pounds ($1.4 billion), which GlaxoSmithKline noted was partly due to "a strong performance from meningitis vaccines."
The company added that overall quarterly sales increased 12 percent to 7.3 billion pounds ($9.5 billion), coming in slightly ahead of analyst estimates. Meanwhile, GlaxoSmithKline posted a loss of 86 million pounds ($112 million), narrowed from a loss of 492 million pounds ($642 million) in the year-ago period. Walmsley remarked "Q2 was another quarter of progress," adding "our priority for the second half of the year is to maintain this momentum and prepare for the successful execution of several important near-term launches in respiratory, vaccines and HIV."
"Today we are updating our full year earnings guidance to reflect the investments we have made to accelerate the review of our new two drug regimen in HIV," Walmsley added. Last month, GlaxoSmithKline and ViiV Healthcare announced that a marketing application for a regimen combining Tivicay (dolutegravir) and Johnson & Johnson's Edurant (rilpivirine) for the maintenance treatment of HIV-1 infection was submitted in the US, with the companies submitting a priority review voucher, which GlaxoSmithKline recently acquired for $130 million, to the FDA along with the filing. GlaxoSmithKline noted that this will impact its previous expectations for growth of up to 7 percent by around two percentage points, with adjusted earnings per share this year, with no Advair generic expected in the US in 2017, now forecast to grow between 3 percent and 5 percent on a constant currency basis.
Meanwhile, Walmsley highlighted the success of the company's consumer healthcare joint venture with Novartis, adding she would be "delighted" to buy out the latter's share if it chose to sell. The CEO also made it clear that the US was now GlaxoSmithKline's priority market, as there was "much room for growth."
Commenting on the results, Trinity Delta analyst Mick Cooper said "a most impressive start by Emma Walmsley, as she demonstrates her understanding of the key issues and being unafraid of taking unpopular decisions." For further analysis, read ViewPoints: GlaxoSmithKline – meet the new boss (same as the old boss or not?).
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