Back to top

Image: Bigstock

Glaxo (GSK)/Alector Ink Deal for Neurodegenerative Indications

Read MoreHide Full Article

GlaxoSmithKline (GSK - Free Report) announced that it is in-licensing co-development rights to Alector’s (ALEC - Free Report) two clinical stage monoclonal antibodies for a range of neurodegenerative diseases.

The companies will jointly develop and co-commercialize the two progranulin-elevating monoclonal antibodies, AL001 and AL101 for neurodegenerative diseases, including frontotemporal dementia, amyotrophic lateral sclerosis, Parkinson’s disease and Alzheimer’s disease.

A phase III study on AL001 in people at risk of or with frontotemporal dementia due to a progranulin gene mutation (FTD-GRN) is currently enrolling patients. Meanwhile, a phase II study is also ongoing in symptomatic FTD patients with a mutation in the C9orf72 gene while another phase II study in amyotrophic lateral sclerosis (ALS) is expected to be initiated in the second half of 2021. Currently, no medicines are approved to treat FTD, a rapidly progressing and severe form of dementia.

AL101 is in early-stage development and has been designed for treating more common neurodegenerative diseases like Parkinson’s disease and Alzheimer’s disease.

AL001 and AL101 have been designed to elevate levels of PGRN, a key regulator of immune activity in the brain, and thereby slow the progression of FTD and other neurological disorders.

Alector will take care of clinical development of AL001 and AL101 through phase II proof-of-concept after which the companies will share costs and development responsibilities for all late-stage clinical studies.

For the deal, Glaxo will make an upfront payment of $700 million to Alector while the latter will also be entitled to up to $1.5 billion in potential milestone payments, profit sharing and royalties.

If the candidates are eventually approved, Glaxo and Alector will share profits in the United States with joint responsibility for commercialization in the country. Glaxo will have exclusive commercialization rights in outside U.S. markets.

So far this year, Glaxo’s shares have risen 9.8% compared with the industry’s 10% increase.

Zacks Investment ResearchImage Source: Zacks Investment Research

This is Glaxo’s latest step to rebuild its drug pipeline. Last month, Glaxo signed a deal with iTeos Therapeutics (ITOS - Free Report) to co-develop its investigational cancer candidate known as EOS-448, an anti-TIGIT monoclonal antibody. Glaxo will also study EOS-448 with its other investigational cancer therapies.

The deal with Alector comes amid rising pressure on Glaxo from activist investor, Elliott Investment Management to improve its returns. In an open letter to shareholders on Jul 1, Elliott said that Glaxo’s operational execution and value creation has been poor and called for changes in board ahead of the company’s split into two standalone companies. Glaxo intends to separate its Consumer Healthcare segment into a standalone company in 2022. The new Glaxo will be a biopharma company focused on developing new treatments.

In a response to the letter, Glaxo said that the issues highlighted by Elliott have been well recognized by its board. Chief executive officer (CEO), Emma Walmsley said the separation of Consumer Healthcare segment will allow Glaxo to deliver “a step-change in growth and performance.” The letter also stated that the board believes that Emma Walmsley is the right leader of new Glaxo.

Glaxo currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A better-ranked large drugmaker is Bayer (BAYRY - Free Report) , carrying a Zacks Rank #2 (Buy).

Estimates for Bayer’s 2021 earnings have increased from $1.74 to $1.81 per share in the past 60 days while that for 2022 have risen from $1.89 to $2.00 over the same period. The stock has risen 3.6% in the year so far.

Time to Invest in Legal Marijuana

If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.

After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%

You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.

Today, Download Marijuana Moneymakers FREE >>