GlaxoSmithKline PLC GSK ViiV Healthcare and Shionogi enter new agreement

  GlaxoSmithKline PLC (GSK) - ViiV Healthcare and Shionogi enter new agreement

RNS Number : 7163P
GlaxoSmithKline PLC
28 October 2012

Issued: London, United Kingdom, 28 October 2012 - LSE Announcement

GlaxoSmithKline plc (GSK) today announced that Shionogi-ViiV Healthcare LLC, a
joint venture between ViiV Healthcare Ltd (a global specialist HIV company
established by GlaxoSmithKline and Pfizer, Inc.) and Shionogi & Co., Ltd, is
issuing the following statement today:

Shionogi and ViiV Healthcare announce new agreement to commercialise and
develop integrase inhibitor portfolio

- ViiV Healthcare acquires exclusive global rights to HIV integrase
inhibitor portfolio, including dolutegravir

- Shionogi receives ongoing royalty and dividend stream and receives 10%
equity in ViiV Healthcare

Osaka, Japan, 29 October 2012 and London, United Kingdom, 28 October
2012:ViiV Healthcare Ltd and Shionogi & Co., Ltd. today announced that they
have entered into an agreement substantially revising their integrase
inhibitor relationship. Under the new agreement, ViiV Healthcare will acquire
the exclusive global rights to the Shionogi-ViiV Healthcare LLC joint venture
assets. The assets include the investigational medicine dolutegravir and other
early stage integrase inhibitor compounds.

In the new relationship, Shionogi will receive a royalty on net sales of the
integrase inhibitor portfolio averaging in the high teens. For a defined
period post-launch, as the franchise is becoming established, the royalty
applies to sales above certain minimum thresholds; after that period, the
royalty applies to all sales. Shionogi will also become a 10% shareholder in
ViiV Healthcare and will be entitled to a proportional share of ordinary
dividends paid. Shionogi will be entitled to representation on the ViiV
Healthcare Board, and will, for a defined period, continue to have ongoing
involvement in the formulation of the development and commercialization plans
for the integrase inhibitor portfolio. The deal is effective on 31 October
2012 and replaces the existing joint venture agreement between ViiV Healthcare
and Shionogi.

The transaction is well aligned with both companies' mutual goal to advance
the integrase inhibitor portfolio most effectively and efficiently, while
maximising the full potential long-term value of the assets. ViiV Healthcare
will acquire exclusive development and commercialization rights to the
integrase inhibitor portfolio. This will enable streamlining of R&D and
commercial operations in order to maximise sales growth and shareholder
returns.For Shionogi, the revised relationship offers the value of a royalty
stream augmented by a shareholding in ViiV Healthcare itself, while releasing
financial, operational, and R&D resources to support its other pipeline
products in global development.

ViiV Healthcare was established in 2009 as a speciality HIV company between
GlaxoSmithKline and Pfizer, with an 85%, 15% equity split respectively. Post
transaction, equity positions in ViiV Healthcare are GSK: 76.5%, Pfizer: 13.5%
and Shionogi: 10%. Should dolutegravir be approved in the US and EU, GSK would
be entitled to 1.8% additional equity. This will be an adjustment between GSK
and Pfizer and will not dilute Shionogi. In addition GSK, Pfizer and Shionogi
will continue to each be entitled to certain preferred ordinary dividends on
the products they contributed to ViiV Healthcare (including the integrase

David Redfern, Chairman of the Board, ViiV Healthcare stated: "The
Shionogi-ViiV Healthcare joint venture has been extremely productive, with the
first integrase inhibitor, dolutegravir, scheduled to commence filings before
the end of the year. Both ViiV Healthcare and Shionogi believe that now is
the right time to simplify and evolve their existing arrangement. In doing
so, we will deepen the relationship as shareholders and at Board level. We
will also unlock synergies through simplifying processes and avoiding
duplication. We believe this new agreement will create long-term value for
ViiV Healthcare and its shareholders."

Dr. Dominique Limet, Chief Executive Officer, ViiV Healthcare stated: "Our
key priority when we established ViiV Healthcare was to build a successful and
sustainable business to deliver advances in treatment and care for people
living with HIV and today's agreement is a crucial milestone in delivering on
that commitment."

Isao Teshirogi, Ph.D.,President and Chief Executive Officer, Shionogi & Co.,
Ltd. Stated: "The new deal perfectly aligns with the strategic goals and
capabilities of both companies. Shionogi are able to secure a continued
revenue stream from the integrase inhibitor portfolio as well as a stake in
ViiV Healthcare itself, and will be able to contribute to the future direction
of these compounds which we know very well and continue to be excited about.
In parallel, we now have increased flexibility in our ability to dedicate
resources to the global development of our internal development pipeline."

Accounting post completion of the agreement

· Sales: ViiV Healthcare will record 100% of the net sales of the assets
previously owned by the Shionogi-ViiV Healthcare JV

· Operating Costs: ViiV Healthcare will now record all operating costs
(cost of sales, SG&A and R&D) related to the assets previously owned by the
Shionogi-ViiV Healthcare JV

· GSK will continue to consolidate 100% of ViiV Healthcare into its
consolidated financial statements

· The portion of ViiV Healthcare's after-tax profit attributable to the
non-controlling interests of Pfizer and Shionogi will be reflected in the GSK
income statement

· The new agreement is expected to be recorded as a business
combination. The estimated value of all the assets and obligations acquired,
together with the estimated value of future royalty payments, will be included
on GSK's balance sheet. 

· As a result of this transaction a non-cash accounting gain is expected
to be recognized in GSK's Q4 2012 non-core results.

· Future royalty payments to Shionogi will be recorded as a reduction of
the royalty obligation on GSK's balance sheet.

V A Whyte

Company Secretary

28 October 2012

About Shionogi & Co., Ltd
Headquartered in Osaka, Japan, Shionogi & Co., Ltd. is a
majorresearch-drivenpharmaceutical company dedicated to placing the highest
value on patients. Shionogi's Research and Development currently targets three
therapeutic areas: Infectious Diseases, Pain, and Metabolic Syndrome. The
Company is the originator of innovative medicines which have been successfully
delivered to millions of patients worldwide. In addition, Shionogi is engaged
in new research areas such as allergy and cancer. Contributing to the health
of patients around the world through development in these therapeutic areas is
Shionogi's primary goal. For more details,
For more information on Shionogi Inc., headquartered in Florham Park, NJ,

About ViiV Healthcare

ViiV Healthcare is a global specialist HIV company established in November
2009 by GlaxoSmithKline (LSE: GSK) and Pfizer (NYSE: PFE) dedicated to
delivering advances in treatment and care for people living with HIV. The
company's aim is to take a deeper and broader interest in HIV/AIDS than any
company has done before and take a new approach to deliver effective and new
HIV medicines as well as support communities affected by HIV. For more
information on the company, its management, portfolio, pipeline and
commitment, please

ViiV UK/US Media enquiries:     Camilla Bull             +44 (0) 20 8380 6226
                                Marc Meachem             +1 919 483 8756
GSK Global Media enquiries:     David Mawdsley           +44 (0) 20 8047 5502
                                Sarah Spencer            +44 (0) 20 8047 5502
Analyst/Investor enquiries:     Sally Ferguson           +44 (0) 20 8047 5543
                                Lucy Budd                +44 (0) 20 8047 2248
                                Tom Curry                + 1 215 751 5419
                                Gary Davies              + 44 (0) 20 8047 5503
                                James Dodwell            + 44 (0) 20 8047 2406
                                Jeff McLaughlin          + 1 215 751 7002
                                Ziba Shamsi              + 44 (0) 20 8047 3289

                                                         +81 6 6209 7885
Shionogi & Co., Ltd. enquiries: Corporate Communications
                                                         +81 3 3406 8164


Shionogi forward-looking statement: This announcement contains
forward-looking statements. These statements are based on expectations in
light of the information currently available, assumptions that are subject to
risks and uncertainties which could cause actual results to differ materially
from these statements. Risks and uncertainties include general domestic and
international economic conditions such as general industry and market
conditions, and changes of interest rate and currency exchange rate. These
risks and uncertainties particularly apply with respect to product-related
forward-looking statements. Product risks and uncertainties include, but are
not limited to, completion and discontinuation of clinical trials; obtaining
regulatory approvals; claims and concerns about product safety and efficacy;
technological advances; adverse outcome of important litigation; domestic and
foreign healthcare reforms and changes of laws and regulations. The company
disclaims any intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or otherwise.
Thisannouncement contains information on pharmaceuticals (including compounds
under development), but this information is not intended to make any
representations or advertisements regarding the efficacy or effectiveness of
these preparations nor provide medical advice of any kinds.

GlaxoSmithKline Cautionary statement regarding forward-looking statements

Under the safe harbor provisions of the U.S. Private Securities Litigation
Reform Act of 1995, GSK cautions investors that any forward-looking statements
or projections made by GSK, including those made in this announcement, are
subject to risks and uncertainties that may cause actual results to differ
materially from those projected. Factors that may affect GSK' s operations are
described under 'Risk factors' in the 'Financial review & risk' section in the
company's Annual Report 2011 included as exhibit 15.2 to the company's Annual
Report on Form 20-F for 2011.

Pfizer disclosure notice: Pfizer assumes no obligation to update any
forward-looking statements contained in this release as a result of new
information or future events or developments. This release contains
forward-looking information about Pfizer, GlaxoSmithKline and ViiV Healthcare
and about the prospects of the companies, including revenues from in-line
products and the potential benefits of product candidates that will be
contributed to that company, as well as the potential financial impact of the
transaction. Such information involves substantial risks and uncertainties
including, among other things, decisions by regulatory authorities regarding
whether and when to approve any drug applications that have been or may be
filed for such product candidates as well as their decisions regarding
labeling and other matters that could affect the availability or commercial
potential of such product candidates; and competitive developments.

A further list and description of risks and uncertainties can be found in
Pfizer's Annual Report of Form 10-K for the fiscal year ended December 31,
2011 and in its reports on Form 10-Q and Form 8-K.

                     This information is provided by RNS
           The company news service from the London Stock Exchange


AGRKMMZGFRNGZZZ -0- Oct/29/2012 07:00 GMT
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