Pharmaceutical Market Europe • July/August 2021 • 6-7
NEWS
ELLIOTT MANAGEMENT CHALLENGES WALMSLEY’S LEADERSHIP AS GSK LAYS OUT TEN-YEAR STRATEGY
GSK aims for £33bn in sales by 2031 as CEO Walmsley lays out ten-year strategy
GlaxoSmithKline is aiming for £33bn in sales by 2031 as part of a ten-year strategy revealed in an investor update.
GSK’s chief executive officer (CEO) Walmsley has come under increasing pressure to improve GSK’s performance ahead of a planned split of the company’s consumer health and pharma divisions that is ‘well under way’.
To quell investors’ concerns, Walmsley laid out the plans for a ‘new’ GSK – one with a renewed focus on its vaccines and speciality medicines businesses.
That includes four core therapeutic areas – infectious diseases, HIV, oncology and immunology/respiratory.
In a statement, GSK highlighted its current pipeline of 20 vaccines and 42 medicines, many of which it says have the potential to be best or first-in-class assets.
Following the split of its consumer health business, GSK will also have more cash to spare – the cash generated from operations for the ‘new’ GSK is expected to exceed £10bn.
The company will use these funds to strengthen its pipeline, invest in successful product launches, enhance the sustainability of its operations and underpin its ‘progressive’ dividend policy.
With this new strategy in mind, GSK is expecting to deliver sales growth of more than 5% and adjusted operating profit growth of more than 10% over the next five-year period.
By 2031, GSK is expecting product sales to reach £33bn ($46bn) – almost the same as the £34bn the company brought in last year, although the ten-year target will not have any contributions from the consumer healthcare business following the planned split this year.
GSK supports CEO Walmsley following Elliott’s demands for leadership overhaul
In response to a 17-page letter from activist hedge fund Elliott Management last week, GlaxoSmithKline (GSK) has thrown its support firmly behind chief executive officer Emma Walmsley (pictured).
In Elliott’s letter, the hedge fund highlighted ‘leadership failures’ regarding the company’s plans for the consumer health/biopharma separation as well as ‘years of underperformance’.
In particular, Elliott said that GSK should ensure the right leadership through the right process – in particular, Elliott said the right leadership should be chosen for each of the newly separated businesses.
This would involve increasing biopharma and scientific experience for the board of ‘new GSK’, prior to executing the separation and launch the process of selecting the executive leadership for both divisions.
In response, GSK’s board said that it ‘strongly believes’ that Walmsley is the ‘right leader’ for the new biopharma business.
It added that it supports Walmsely and her management team’s actions and expects the team to “deliver a step-change in performance and long-term shareholder value creation through the separation and in the years beyond”.
GSK has come under increasing pressure from Elliott since the company accumulated a multibillion-pound stake in the British drugmaker in April.
Other major GSK shareholders have also issued their support for Walmsely, including M&G Investments and Royal London Asset Management, which backed GSK’s strategy.
Elliott Management puts pressure on GSK after years of ‘disappointing performance’
Activist hedge fund company Elliott Management has published a public letter to GlaxoSmithKline, outlining a five-point plan following the pharma company’s investors day last week.
In the 17-page letter addressed to GSK’s non-executive chairman Jonathan Symonds and board of directors, Elliott said that although the British drugmaker has ‘substantial value creation opportunity’, the company has a ‘poor record of operational execution and value creation’.
By its own estimation, Elliot said that GSK could be worth 45% over its current market value in the lead-up to the full separation of its consumer health and biopharma businesses and in the years to come.
Elliott added that the years of underperformance have stemmed from long-standing issues, commenting that GSK’s biopharma business is seen as ‘overly bureaucratic’.
Although GSK’s chief executive officer Emma Walmsley was not named, Elliott highlighted ‘leadership failures’ regarding the company’s plans for the consumer health/biopharma separation.
Elliott said the company’s leadership did not communicate the details of the planned split for several years, which created an ‘avoidable’ overhang on share prices.
The hedge fund manager also noted GSK’s dividend overhang, adding that the company paid a higher dividend than it could afford for ‘at least four years’.
Despite GSK confirming the dividend cut in its investors day last week, the overhang ‘dissuaded many potential investors from building positions’.
The hedge fund also said GSK should ensure the right leadership through the right process – in particular, Elliott said the right leadership should be chosen for each of the newly separated businesses.
CHMP recommends eight new medicines for EU approval
The European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) has recommended granting marketing authorisations for a total of eight new drugs in its June decisions.
The positive opinions include Bristol Myers Squibb’s CAR T therapy Abecma (idecabtagene vicleucel) as a potential new treatment for highly refractory multiple myeloma.
Next up is BioMarin’s Voxzogo (vosoritide), which has been recommended for the treatment of achondroplasia in patients aged two years and above whose epiphyses (growth plates) have not closed.
The CHMP also adopted a positive opinion for MorphoSys and Incyte’s Monjuvi (tafasitamab) for the treatment of relapsed or refractory diffuse B-cell lymphoma (DLBCL) for patients who are not eligible for stem cell transplantation.
The CHMP has also recommended approval of UCB’s Bimzelx (bimekizumab) for the treatment of moderate-to-severe plaque psoriasis, while Genetech’s Byoovis (ranibizumab) also received a positive opinion from the CHMP.
Finally, the CHMP has adopted positive opinions for Astellas and FibroGen’s Evrenzo (Roxadustat) for the treatment of anaemia symptoms in chronic kidney disease patients.
Two generic medicines also received positive opinions from the CHMP: Abiraterone Mylan (abiraterone acetate), a generic of Janssen’s Zytiga, for the treatment of metastatic prostate cancer and Fingolimod Mylan (fingolimod), a generic of Novartis’ Gilenya, for relapsing-remitting multiple sclerosis with high disease activity.
Sanofi to invest €400m annually in mRNA vaccines facility
With the rise of mRNA technology coinciding with the COVID-19 pandemic, Sanofi is planning to invest €400m annually to accelerate its internal development of the ‘next generation’ of mRNA vaccines.
Sanofi announced that it will invest in a ‘centre of excellence’, which will deliver end-to-end research and development (R&D) of the next generation of mRNA-based vaccines.
As part of these plans, the French pharma company will bring together approximately 400 dedicated employees to integrate end-to-end dedicated R&D, digital and chemistry, manufacturing and controls (CMC) teams.
The dedicated mRNA teams will be based in Cambridge, Massachusetts – a biotech hub in the US – and Marcy l’Etoile, Lyon in France.
Sanofi added that the dedicated centre will also enable the acceleration of the mRNA vaccines portfolio developed as part of its partnership with US biotech company Translate Bio.
Translate Bio and Sanofi signed an initial collaboration agreement in 2018, which was later expanded in 2020 to include the development of an mRNA-based COVID-19 vaccine.
The COVID-19 vaccine candidate from this expanded collaboration entered phase 1/2 testing earlier this year, after promising results in animal studies were reported last year.
The study is evaluating the safety, tolerability and immunogenicity of the candidate – named MRT5500 – and is expected to enrol 415 healthy adults aged 18 years and older.
GlaxoSmithKline agrees $2.2bn dementia mAb deal with Alector
GlaxoSmithKline has announced a new $2.2bn deal with US biotech company Alector to co-develop monoclonal antibodies for a number of neurodegenerative diseases.
The focus of the deal is two clinical-stage monoclonal antibodies – AL001 and AL101 – that are designed to bolster progranulin (PGRN) levels.
PGRN regulates immune activity within the brain and has genetic links to multiple neurodegenerative disorders.
As part of the deal, GSK and Alector will develop AL001 and AL101 for a range of these disorders, including frontotemporal dementia, amyotrophic lateral sclerosis, Parkinson’s disease and Alzheimer’s disease.
Under the terms of the deal, GSK will pay Alector $700m upfront, with further clinical development, regulatory and commercial milestone payments totalling $1.5bn.
Currently, enrolment is ongoing for a phase 3 trial of AL001 in people at risk for or with frontotemporal dementia due to a progranulin gene mutation (FTD-GRN).
AL001 is also being studied in a phase 2 trial in symptomatic frontotemporal dementia with a mutation in the C9orf72 gene, and is also scheduled to enter phase 2 development for amyotrophic lateral sclerosis (ALS) in the second half of 2021.
Meanwhile, AL101 is currently in phase 1a clinical development for the treatment of patients living with common neurodegenerative diseases such as Parkinson’s disease and Alzheimer’s disease.
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