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Update on Glaxo's Contracts

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GlaxoSmithKline (GSK - Free Report) has several contracts in its kitty to supply products including antibiotics, cephalosporins and penicillins to contract manufacturing partners.

The Biomedical Advanced Research and Development Authority (BARDA), a part of the U.S. Department of Health and Human Services (HHS), has entered into a four-year contract with Glaxo to purchase raxibacumab for combating a potential bioterrorist attack. As per the terms of the deal, Glaxo will supply 60,000 doses of raxibacumab to the government over four years for approximately $196 million.

In Dec 2012, raxibacumab was approved by the U.S. Food and Drug Administration (FDA) for inhalational anthrax caused by bacillus anthracis in patients (both adult and pediatric) in combination with appropriate antibacterial drugs and for the prevention of inhalational anthrax when other therapies are not available or appropriate.

Raxibacumab was initially developed by the BARDA and Human Genome Sciences, which was later acquired by Glaxo.

We note that raxibacumab is the first monoclonal antibody to be cleared by the FDA using the Animal Efficacy Rule. The rule facilitates the approval of candidates solely on the basis of efficacy data from animal trials, when it is not possible to conduct studies on humans.

Glaxo, a large cap pharma company, carries a Zacks Rank #3 (Hold). We are pleased with Glaxo’s pipeline development efforts. A number of pipeline-related news is expected in the coming quarters. Given the declining sales from generic competition, we believe Glaxo’s pipeline must deliver.

At present, large-cap pharma companies like Roche (RHHBY - Free Report) , Novo Nordisk (NVO - Free Report) and Bayer (BAYRY - Free Report) look well-positioned. While Roche is a Zacks Ranked #1 (Strong Buy) stock, Novo Nordisk and Bayer carry a Zacks Rank #2 (Buy).

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