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GlaxoSmithKline (GSK - Analyst Report) recently presented positive data on its oncology drug, Votrient (pazopanib) from a pivotal phase III study. The phase III study COMPARZ (COMParing the efficacy, sAfety and toleRability of paZopanib vs. sunitinib) evaluated the use of Votrient versus Pfizer’s (PFE - Analyst Report) Sutent (sunitinib) in patients with advanced renal cell carcinoma.

The open-label, head-to-head, randomized study enrolled 1,110 patients. Votrient was found to be non-inferior compared to Sutent in terms of progression free survival (PFS). Median PFS was 8.4 months and 9.5 months in the Votrient and Sutent arms, respectively. Votrient demonstrated an objective response rate (ORR) of 31%, while ORR was 25% in the Sutent arm.

Votrient is currently marketed worldwide for the treatment of patients with advanced renal cell carcinoma. On April 26, 2012, the FDA approved Votrient for the treatment of patients with advanced soft tissue sarcoma who have received prior chemotherapy. On August 7, 2012, Votrient received approval from the European Commission for use in advanced soft tissue sarcoma patients, who have received prior chemotherapy or have progressed within a year after neo adjuvant treatment.

In the second quarter of 2012, Glaxo reported that Votrient sales increased 77% to £39 million. In the US, Votrient sales went up 67%, benefiting from the label expansion.

Our Recommendation

We currently have a Neutral recommendation on Glaxo. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

Several products in Glaxo’s portfolio including Valtrex, Arixtra, Evoclin, Lamictal, Imitrex, Requip, Combivir and Epivir are facing declining sales due to intense generic competition. We expect the company's top line and gross margins to remain under pressure in the coming quarters. The EU pricing pressure will continue to affect sales.

Glaxo is looking towards deals and acquisitions to drive growth. The company is focusing on increasing the rights on its partnered products and promising pipeline candidates, so that it stands to benefit more from their success.

Glaxo’s acquisition of Cellzome and Human Genome Sciences and increasing investment in Theravance Inc. (THRX - Analyst Report) and Amicus Therapeutics (FOLD - Snapshot Report) indicate its efforts to expand the pipeline.

Apart from this, Glaxo continues to make progress with its cost-cutting initiative, which should help reduce the impact of increasing generic competition over the next few years and help earnings grow.

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