GSK aims for turnaround with return to oncology

GlaxoSmithKline (GSK) yesterday unveiled its R&D strategy to investors, and aimed to impress after a sustained period of declining sales and profits.

In particular, GSK’s mainstay respiratory franchise has looked very shaky of late, with next-generation treatments Breo/Revlar and Anoro getting off to a slow start in 2015, with blockbuster Advair/Seretide already in decline.

Its respiratory franchise currently accounts for 20 per cent of revenues, but has seen sales fall by a quarter over the last two years.

Also likely to be on investors’ minds were recent reports that Pfizer had approached GSK for merger talks, but had been rebuffed.

Pfizer confirmed reports last week that it has now moved on to merger talks with Ireland-domiciled Allergan – likely to be viewed as a missed opportunity among those GSK investors growing impatient with the firm’s strategy and performance.

Presenting the pipeline review to investors in New York, chief executive Sir Andrew Witty said its pipeline had ‘substantial’ innovation across therapy areas, and would reduce its reliance on respiratory drugs and help it grow strongly again.

Its focus is now on six core areas: HIV & infectious diseases, oncology, immuno-inflammation, vaccines, respiratory and rare diseases, with 40 candidates in development across this portfolio.

GSK says it could file up to 20 drugs and vaccines by 2020, creating additional revenue to the £6 billion ($9.25 billion) of new product sales it has already promised in the next five years.

This target was made up of recently-launched drugs and two pipeline candidates, severe asthma treatment Nucala (meploizumab) and shingles vaccine Shingrix, which are expected to gain approval shortly.

Also highlighted were sirukumab for rheumatoid arthritis, daprodustat for anaemia, cabotegravir for HIV, a candidate combination vaccine to prevent bacterial meningitis and a new inhaled triple therapy in COPD.

Witty declined to comment on the Pfizer rumours, but indicated that the “breadth and richness” of its drugs pipeline would help it thrive on its own.

Investors have been underwhelmed by GSK’s business strategy in the last few years, with Witty indicating that its future lay in low cost, high volume sectors such as vaccines and OTC medicines, rather than with high cost prescription drugs, where payers are increasingly protesting on price.

This was reflected in the $20 billion asset swap with Novartis completed earlier this year. This saw GSK increase its presence in vaccines and consumer health, while offloading its existing cancer drugs to the Swiss firm.

Sir Andrew yesterday stressed that GSK was still committed to innovation, but had rebalanced the firm’s portfolio to help offset the risky nature of innovation-led pharmaceuticals.

He pointed to last week’s better-than-expected Q3 results as evidence that newer products, particularly HIV drugs, were beginning to offset decline in older ones.

This highlights some of the confused or confusing decisions at GSK, as the firm had mooted the idea of spinning off its HIV joint venture ViiV earlier this, only to change its mind subsequently.

This muddle has also been seen in oncology: Witty maintained yesterday that GSK had never planned to exit oncology, only to dispose of “older technologies”. He said it permits the company to focus on newer oncology platforms such as immunotherapy and epigenetics – but divesting drugs goes against the portfolio strategy espoused in other therapy areas.

And now that Novartis has taken on GSK’s older cancer drugs, the Swiss firm may well show how superior development and marketing can yield growth from previously underperforming products. One such example could be Ofatumumab, the anti-CD20 cancer drug which Novartis now plans to develop in multiple sclerosis.

GSK finds itself a long way behind any of its big pharma competitors in oncology, with Merck and Bristol-Myers Squibb leading a new wave of immunotherapy drugs, and others such as AstraZeneca, Roche and Novartis who have more advanced pipelines and have been busy forging partnerships for combinations and next-generation therapies.

Yesterday GSK announced plans to combine its pipeline OX40 agonist with Merck’s Keytruda via a research collaboration in solid tumours – but such deals have become commonplace in the last year, and GSK still lags behind rivals.

Among its most novel drug candidates are a number of drugs in epigenetics, the control system which helps regulate the DNA of cells and controls cell function. GSK says it has an industry-leading presence in the field, and has two compounds in phase I for a variety of solid tumours and blood cancers.

GSK has also sat out the M&A frenzy of the last two years, declining to buy any small or medium-sized biotech or specialist pharma firms, in contrast to many of its competitors. Such moves are frequently used by big pharma to inject a fresh dose of innovation into their organisations – something that GSK is hoping to do on its own.

See the full GSK release

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