GSK agreements highlight small-deal focus
This article was originally published in Scrip
GlaxoSmithKline's deals with Entelos and Idenix Pharmaceuticals earlier this month reflect its need to combat a revenue downturn.
The company's sales declined in 2008 and it has expanded its restructuring plan, which will likely mean more job cuts.
Entelos will conduct in silico research into GSK compounds using its Hematopoesis PhysioLab platform. The system is a computer model that can simulate the biology of anaemic patients and large virtual patient populations to predict responses to drugs.
The platform can assess the safety and efficacy of biologics, a relatively new area for GSK, find the best doses for specific patient types, and optimise clinical trial designs to position better products in the anti-anaemia market, Entelos said. The company's share price nearly doubled following the announcement to peak at £4.81.
Idenix Pharmaceuticals, a US-based biopharmaceutical company, sold GSK the exclusive worldwide rights to IDX899, a non-nucleoside reverse transcriptase inhibitor for the treatment of HIV and AIDS.
Idenix received $34 million up front and may receive up to $416 million in development, regulatory and sales milestones. Additionally, Idenix will receive double-digit, tiered worldwide royalties if IDX899, which is currently in Phase II clinical development, is developed and commercialised. GSK will be responsible for all development and related costs for IDX899.
IDX899 has shown high-potency with low milligram doses, a high barrier to drug resistance, a favourable risk/benefit profile and the convenience of once-daily administration, Idenix said.
The Idenix deal could strengthen GSK's HIV portfolio after its own HIV antiviral business fell by 3% last year with sales of £417 million.
The deal follows an extension to GSK's antibacterial and antiviral development agreement with Galapagos last month. Galapagos will receive an additional €2 million for the expansion (Scrip Online, January 19th, 2009).
GSK's combined antiviral sales fell by 4% to £924 million in the fourth quarter of last year, with Relenza (zanamivir) posting the largest fall to £13 million (–85%) as governments cut back on pandemic flu stockpiling (ScripOnline, February 6th, 2009).
The agreements highlight GSK CEO Andrew Witty's focus on small deals and M&A rather than large-scale consolidation. Mr Witty recently ruled out plans for a big transaction in a fourth-quarter and full-year results presentation.