GlaxoSmithKline lifts full-year earnings guidance on increased expectations for Shingrix

Headline results for the third quarter:

Prescription drug sales  

4.2 billion pounds ($5.4 billion)

+1%

Revenue

8.1 billion pounds ($10.3 billion; forecasts of 8 billion pounds)

+3%

Profit

1.4 billion pounds ($1.8 billion)

Versus 1.2 billion pounds ($1.5 billion)

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

CEO Emma Walmsley noted that GlaxoSmithKline saw "sales growth in all three businesses" in the quarter, noting that "the performance of our new launches is encouraging and this is where we continue to focus our resources." Walmsley added "Shingrix continues to have a remarkable start and we have now administered nearly 7 million doses worldwide since launch."

Walmsley continued "looking further ahead, we remain confident in our ability to deliver the group outlooks for sales and [earnings per share] growth we previously set for the period 2016-2020."

Other results:

  • Respiratory product sales: 1.7 billion pounds ($2.2 billion), up 3 percent
    • Seretide/Advair: 619 million pounds ($790 million), down 17 percent
    • Ellipta product sales: 500 million pounds ($638 million), up 34 percent
    • Nucala: 145 million pounds ($185 million), up 59 percent
  • Established pharmaceuticals sales: 1.2 billion pounds ($1.5 billion), down 12 percent
  • HIV product sales: 1.2 billion pounds ($1.5 billion), up 11 percent
    • Triumeq: 669 million pounds ($854 million), up 8 percent
    • Tivicay: 432 million pounds ($552 million), up 19 percent
    • Juluca: 37 million pounds ($47 million)
  • Vaccine sales: 1.9 billion pounds ($2.4 billion), up 14 percent
    • Shingrix: 286 million pounds ($365 million)
  • Consumer healthcare sales: 1.9 billion pounds ($2.4 billion), down 1 percent

What analysts said:

Analysts at Liberum noted that the newer respiratory products mostly missing forecasts, although HIV performed broadly in line with expectations, despite new competition.

Meanwhile, Charlie Huggins of Hargreaves Lansdown commented "we are encouraged by this performance, however we aren't going to get too excited by one quarter." Huggins said "confidence in [GlaxoSmithKline's] drug pipeline is still fairly thin on the ground," adding the company "is all too aware of the need to reinvigorate the fortunes of its pharmaceutical division."

Looking ahead:

GlaxoSmithKline indicated that annual earnings per share are expected to grow between 8 percent and 10 percent on a constant exchange rate basis, with the bottom end lifted from prior guidance of 7 percent. The company noted that the forecast remains the same whether or not a generic competitor to Advair is launched in the US in 2018. GlaxoSmithKline had previously projected earnings growth of 4 percent to 7 percent if a generic version of Advair is launched in the US from October 1.

The drugmaker added that the revised guidance mainly reflects an increase in expectations for Shingrix, which is expected to generate sales in the range of 700 million pounds ($893 million) to 750 million pounds ($957 million) this year. The company had previously anticipated sales of 600 million pounds ($766 million) to 650 million pounds ($830 million) for the vaccine.

Pipeline update:

GlaxoSmithKline disclosed that it will end development of danirixin, also known as GSK1325756, in chronic obstructive pulmonary disease after a planned interim analysis of a Phase IIb study showed that the drug did not achieve the primary efficacy endpoint. In addition, the company discontinued development of TRPV4, also called GSK2798745, in patients with chronic cough after a planned interim analysis of a mid-stage trial met the pre-defined criteria for futility. Meanwhile, the Phase I programme for TRPV4 will continue in acute respiratory distress syndrome.

Further, GlaxoSmithKline halted development of TLR7, also known as  GSK2245035, in asthma due to lack of efficacy after data from a Phase II study in mild asthmatic patients showed it did not meet its pre-determined success criteria. "We are focusing our pipeline better behind priority assets and intervening earlier, including on interim data to stop things that we don't believe have the bigger chances of success," Walmsley remarked.

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