Nest Moves to Google Other Revenues, Other Bets Still Climbs
GlaxoSmithKline plc GSK is transferring the rare disease gene therapy portfolio to private biotech Orchard Therapeutics in exchange for a 19.9% stake in the company as well as a seat on its board. In addition, Glaxo will also be entitled to royalties and commercial milestone payments related to the rare disease medicines.
Glaxo’s rare disease gene therapies include marketed drug Strimvelis, a gene therapy for children with ADA-SCID which is an autosomal recessive metabolic disorder that causes immunodeficiency, along with some pipeline candidates including late-stage programs as well as some pre-clinical ones.
Glaxo announced the strategic review of the rare disease unit in last July. Back then, the company informed that it plans to terminate, partner or divest about 30 pre-clinical and clinical programs by 2020 while allocating 80% of capital to priority programs in two current areas -- Respiratory and HIV/infectious -- and two potential areas -- Oncology and Immuno-inflammation.
Interestingly, at a time, when companies whose product/pipeline portfolio includes rare disease drugs, are in great demand, Glaxo is divesting the portfolio of rare disease therapies. However, Glaxo will continue to invest in cell and gene therapies with a focus on oncology.
Shares of the British drugmaker have risen 16.5% this year so far against a decline of 1.7% for the industry.
Last month, Glaxo announced an agreement with Swiss giant Novartis NVS to buy the latter’s stake in their Consumer Healthcare joint venture (JV) for $13 billion (£9.2 billion). (Read More: Glaxo Buys Novartis’ Stake in Consumer Healthcare JV).
With the acquisition of Novartis’ 36.5% stake, Glaxo will now have 100% ownership of the Consumer Healthcare unit that includes products such as Sensodyne and Flonase.
Glaxo and Novartis created the JV in 2015 as part of a three-part transaction between the two companies by combining their consumer divisions. Glaxo owned 63.5% share of the JV.
Also, Glaxo is looking at strategic alternatives for Horlicks and other nutrition products to help fund the deal. These nutrition products are mostly sold by Glaxo’s Indian subsidiary, GlaxoSmithKline Consumer Healthcare. Glaxo owns 72.5% stake in the Indian subsidiary, which will also be included in the strategic review process. Food giants, Nestle, Kraft Heinz KHC and Unilever are being speculated as the frontrunners to bid for the Horlicks business.
Glaxo’s latest deal with Novartis comes less than a week after it announced that it is withdrawing from the race to buy Pfizer’s PFE Consumer Healthcare segment. (Read more: Glaxo Drops Bid for Pfizer Unit, Shingrix Gains EU/Japan Nod).
Pfizer is exploring strategic alternatives for the Consumer Healthcare segment, including a partial or a full separation through a spin-off, sale or other transaction.
Glaxo carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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