Glaxo Eyes Benlysta Label Expansion

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GlaxoSmithKline (GSK) recently announced that it has initiated a phase III study to evaluate the use of Benlysta (belimumab) in patients suffering from anti-neutrophil cytoplasmic antibodies (:ANCA) positive vasculitis.

The multi-centre, randomized, double-blind phase III study will assess the efficacy and safety profile of Benlysta in combination with azathioprine as a maintenance therapy in ANCA positive vasculitis patients.

We note that ANCA positive vasculitis, which is characterized by inflammation of the blood vessels, can be further categorized into granulomatosis with polyangiitis (Wegener’s) and microscopic polyangiitis.

We note that Benlysta is already available for treating patients suffering from systemic lupus erythematosus. Benlysta was approved by the US Food and Drug Administration (:FDA) and European Commission (EC) for the indication in 2011. In the fourth quarter of 2012, Benlysta sales more than doubled to £29 million. The successful development and commercialization of Benlysta for the additional indication would boost its sales potential further.

We remind investors that in Aug 2012, Glaxo completed the acquisition of Human Genome Sciences for $14.25 per share in cash. With this acquisition, Glaxo gained full control over Benlysta and late-stage candidates, such as Eperzan (albiglutide).

We note that Glaxo has a robust pipeline. The company is seeking approval for several candidates including Relvar/Breo (chronic obstructive pulmonary disease/COPD and asthma, target date: May 12, 2013), Anoro (COPD, target date: Dec 18, 2013), dolutegravir (HIV, target date: Aug 17, 2013), Eperzan (type II diabetes), dabrafenib (oncology) and trametinib (oncology). We believe that Glaxo’s pipeline must deliver since many of its products are facing declining sales due to generic competition.

Glaxo, a large cap pharma stock, carries a Zacks Rank #3 (Hold). Large-cap pharma companies that currently look better-positioned include Novo Nordisk (NVO) carrying Zacks Rank #2 (Buy). Other pharma stocks that look attractive include Cytokinetics, Inc. (CYTK) and Osiris Therapeutics, Inc. (OSIR). Both are Zacks Rank #1 (Strong Buy) stocks.

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