Glaxo Aims for Next Wave of Cancer Drugs After Missing First

GlaxoSmithKline Plc shed more light on its pipeline of experimental medicines, giving a glimpse of drugs in earlier stages of development, although analysts remain skeptical about their promise.

Glaxo has 40 drugs in the middle or final stages of clinical trials, Chief Executive Officer Andrew Witty said on Wednesday, and about half may be submitted to regulators or approved by 2020. Investors have been eager to hear more about the U.K. company’s prospects as competitors roll out cancer drugs that trigger the immune system to fight the disease.

“We have very interesting oncology assets in the pipeline,” Witty said on a conference call with analysts. “Having missed the current wave, we’re very pleased we’ll be able to take part in the next wave.”

This next generation of drugs could deliver more than 6 billion pounds ($9.4 billion) in revenue a year, the CEO said, though Glaxo will consider selling medicines it’s developing if they fall outside core therapy areas. Among the most promising are treatments for lung disease, anemia and AIDS, he said.

Analysts are somewhat dubious.

“At this point, there are few obvious products that spark our interest,” Seamus Fernandez, an analyst at Leerink Partners, said in a note to investors.

First-in-Class

According to Witty, about four-fifths of the drugs in trials are first-in-class or have that potential. Glaxo will unveil more of its pipeline at an R&D day for investors scheduled for Nov. 3 in New York.

Witty spoke after the U.K.’s biggest drugmaker reported second-quarter earnings that beat analysts’ estimates as it sold more AIDS medicines and reduced costs. Glaxo is shifting from dependence on Advair, an asthma drug that faces pricing pressure in the U.S. and Europe, and has “strong and growing momentum” from new drugs, the CEO said.

Glaxo shares rose 3.5 percent, the most in more than five months, valuing the company at 66.9 billion pounds. Even so, the shares have declined this year, the fourth-worst performance on the Bloomberg Europe Pharmaceutical Index of 19 companies.

Witty said he’s not looking for Glaxo to be part of a large-scale merger or acquisition, because it would be difficult and disruptive. “The threshold of that next step is very big” because of the complexity of running an even more massive company, even if cost savings are evident on paper, he said.

Much of the current wave of M&A among pharma companies is in response to the threat of lower prices for drugs, so drugmakers are seeking scale to reduce costs and gain bargaining power, Witty said.

Glaxo’s new structure, with a bulked up and separated consumer health division formed in a venture with Novartis AG, gives it options to respond to changing dynamics, he said.

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