GSK’s Shingrix On Recovery Track In Q3 After Pandemic Slump
Newer Drugs Fuel HIV Sales Growth
Executive Summary
The shingles vaccine’s move to health care practices, as well as inventory moves, contributed to its 41% sales growth during the quarter after a difficult year due to COVID-19.
Earlier this year, sales of GlaxoSmithKline plc’s shingles vaccine Shingrix, its number two product, dropped by nearly half due to the pandemic. The company has also been under pressure from activist investors and planning for a new direction as it prepares to spin off its consumer health business. But it is starting to see solid signs of pandemic recovery, reporting significant growth for Shingrix in the third quarter that beat consensus expectations by more than 20%.
The company announced its third quarter earnings on 27 October, reporting overall sales of £9.1bn ($12.5bn), representing 10% growth over the comparable period the year before.
But that growth comes with some caveats.
COVID-19 related products were a significant contributor to overall sales, bringing in £209m ($287.2m) including £114 ($156.7m) from Vir Biotechnology, Inc.-partnered antibody therapeutic Xevudy (sotrovimab) and £94m ($129.2m) from sales of its pandemic adjuvant used in vaccines under agreements with other firms.
SVB Leerink analyst Geoffrey Porges pointed out in a same-day note that excluding pandemic products and one-time adjustments and events of more than £300m ($412.2m) in value, sales were about 1% below consensus expectations.
GSK is spinning off its consumer health division by mid-2022, which Jefferies analyst Peter Welford called “a significant opportunity to crystallise value” despite “the scarcity of near-term catalysts.”
Indeed, the company said that excluding contributions from COVID-19 products, it expects 2021 adjusted earnings per share to decline by 2%-4%.
Leerink’s Porges also noted that while Shingrix had strong sales growth, low demand for travel vaccines and a delayed flu season dampened underlying demand for other vaccines.
Shingrix On Track For Recovery
During the quarter, Shingrix saw sales of £502m ($689.6m), representing 41% growth and a major driver of the 13% growth for the company’s overall vaccine business, to £2.2bn ($3bn). Factors contributing to that growth included sales in the US, launches in the UK, Spain and Italy and higher demand in Germany. Particularly in the US, retail prescriptions of Shingrix suffered due to the spread of the Delta variant of COVID-19, but a rebuilding of wholesale inventory during the quarter – compared with reduction in inventory during the third quarter of 2020 – helped improve growth.
“The performance of Shingrix in the quarter primarily reflected a favorable impact from inventory movements and also a larger proportion of Shingrix being administered in HCP offices, a trend we’ve been tracking through the course of the pandemic as retailers prioritize vaccinations for COVID-19,” GSK chief commercial officer Luke Miels told the firm’s 27 October earnings call.
Shingrix sales beat consensus by 22%, and the numbers represent a significant shift in the vaccine’s fortunes compared with its sagging sales over the past year due to the pandemic.
“For Shingrix, specifically, we have seen an impact as a result of the surge in the Delta variant, but we are increasingly confident we’re on the recovery track,” CEO Emma Walmsley told the call.
In February, when it announced its 2020 earnings, the company had anticipated that the rollout of COVID-19 vaccines around the world would cause a disruption in Shingrix, which is its key vaccine product. (Also see "More COVID-19 Headwinds In 2021 For GlaxoSmithKline" - Scrip, 3 Feb, 2021.)
That prediction indeed came to pass, as the company reported a steep decline in Shingrix sales in the first quarter. Part of the cause for that was a recommendation by the US Centers for Disease Control and Prevention recommending that people not receive other vaccines within two weeks – before or after – getting a vaccine against SARS-CoV-2, thus creating a two-month no-go period for other vaccines. That quarter, Shingrix’s sales declined by 49% from the year before. (Also see "GSK Sees Light At End Of Shingrix Tunnel As COVID-19 Eases" - Scrip, 28 Apr, 2021.)
In the second quarter, the vaccine’s sales still had not fully bounced back, rising by only 1% at CER but declining 9% on actual exchange rate (AER) terms to $295m. Continued pressure from the COVID-19 pandemic and a slow rate of vaccination was seen as a limiting factor. (Also see "GSK Exceeds Expectations In Q2, But Still Awaiting Shingrix Bounce Back" - Scrip, 29 Jul, 2021.)
But now, the company is pushing a message of confidence that Shingrix will rebound in 2022. “The initiatives we’ve put in place and the underlying demand will drive strong growth in 2022 with the potential to deliver record annual sales,” Walmsley said.
Innovation Fuels HIV Sales Growth
The rest of GSK’s pharmaceuticals and vaccines segments saw sales growth as well, thanks in part to new drugs. Sales in HIV grew by 8%, to £1.25bn ($1.7bn) taking year-to-date growth to 4%. A major contributor to that growth was newer HIV drugs, which represent 29% of the HIV portfolio. These include Dovato (dolutegravir and lamivudine), Cabenuva (cabotegravir and rilpirivine), Juluca (dolutegravir and rilpirivine) and Rukobia (fostemsavir). Dovato and Juluca recorded the highest sales of the four, respectively £208m ($285.7m) and £130m ($178.6m). Rukobia’s sales were £13m ($17.9m), while Cabenuva’s were £12m ($16.5m). But that growth offset declines for two older HIV drugs, 8% for Triumeq (abacavir, dolutegravir and lamivudine) and 2% for Tivicay (dolutegravir).
The company said more than 2,000 people living with HIV now take Cabenuva, a long-acting injectable drug, and it reported high levels of intent to prescribe. GSK launched the drug in February, but part of the challenge has been convincing patients and physicians that it is worthwhile to switch from self-administered daily pills to monthly injections at the doctor’s office. (Also see "GSK Promotes Ease Of Switching HIV Patients To Monthly Injection, Even During A Pandemic" - Scrip, 20 Jul, 2021.)
“As with any new class of medicine, Cabenuva will take time to build, and the COVID environment continues to constrain activity, particularly where a patient needs to visit a physician’s office,” executive board member Deborah Jayne Waterhouse told the earnings call. “We have robust lead indicators with over 80% market access and strong brand recognition.”
One factor that may help spur interest is cabotegravir for pre-exposure prophylaxis, which is under priority review at the FDA with action expected in January 2022. Waterhouse noted that the company expects Cabenuva and cabotegravir for PrEP to generate around £1bn ($1.4bn) in sales by 2026.
“New doublet and long-acting HIV drugs are offsetting pressures to older drugs Tivicay and Triumeq, supporting total HIV growth of 8%,” Morningstar analyst Damien Conover said in a 27 October note.
Continued Pipeline Growth
Beyond HIV, other areas have seen strong growth as well from new additions to the portfolio.
The company pointed to a new approval for its PD-1 inhibitor Jemperli (dostarlimab-gxly), for mismatch repair-deficient solid tumors, in August, as well as 14% sales growth for Zejula (niraparib), used in epithelial ovarian, fallopian tube and primary peritoneal cancers. More than 4,000 patients globally were taking Blenrep (belantamab mafodotin-blmf), the BCMA-targeting antibody-drug conjugate for multiple myeloma, and the company is planning to increase use in the community setting.
Overall, Miels said the company has “made strong progress in the quarter on commercial execution and competitiveness, which you’ve seen come through in the revenue and market share numbers.”
In terms of new drugs in development, Morningstar’s Conover highlighted GSK’s respiratory syncytial virus (RSV) and kidney disease programs.
“We are most bullish on Glaxo’s RSV vaccines (with a potential first-mover advantage) and kidney disease drug daprodustat (especially with competitor setbacks),” he said.
GSK appeared to possibly get the upper hand for daprodustat in July when it unveiled strong topline results just a day after an FDA advisory committee voted against recommending approval for a competitor, AstraZeneca plc and FibroGen, Inc.’s roxadustat. (Also see "GSK Looks To Capitalize On AstraZeneca’s Anemia Drug Knock-Back" - Scrip, 16 Jul, 2021.) The European Commission nevertheless approved roxadustat in August, under the brand name Evrenzo, even as FibroGen contemplated restructuring following an 11 August complete response letter. (Also see "European Approval For Roxadustat Is Silver Lining For FibroGen" - Scrip, 23 Aug, 2021.)
There have been some setbacks for GSK’s pipeline as well. The company discontinued a trial of its investigational COVID-19 antibody otilimab in elderly COVID-19 patients, and “given the continued evolution of the pandemic” will concentrate on Xevudy. It is still investigating otilimab for rheumatoid arthritis, with data expected in the second half of 2022.
While Benlysta (belimumab) saw double-digit growth, the company said the Phase III BLISS-BELIEVE study combining Benlysta with Roche Holding AG’s Rituxan (rituximab) in systemic lupus erythematosus failed to show a benefit for the doublet combination versus Benlysta alone.
“We would have assumed a positive result would have provided more optionality for Benlysta given growing competition,” Credit Suisse analyst Dominic Lunn said in a same-day note.