GlaxoSmithKline plc’s ( GSK Quick Quote GSK - Free Report) shares have outperformed the industry in the past year. The stock has risen 24% compared with 14.8% increase for its industry.
Meanwhile, estimates for 2020 have risen 4% in the past 60 days.
Its successful product launches, increasing focus on the oncology area, and positive pipeline and regulatory updates have all contributed to this upside.
New Products’ Impressive Performance
In 2017, Glaxo received approvals for its three key new drugs, namely Shingrix vaccine for shingles, which enjoys preferential recommendation from ACIP; Trelegy Ellipta, which provides three medicines in a single inhaler to treat COPD and Juluca (dolutegravir and rilpivirine), the first two-drug regimen, once-daily, single pill for HIV. All three products did well in 2018 and 2019, particularly Shingrix.
Juluca has been developed by Glaxo HIV-focused company, ViiV Healthcare in partnership with Johnson & Johnson
In fact, these new products coupled with the restructuring in the Consumer Health unit strengthened Glaxo’s competitive position.
In June 2018, Glaxo bought Novartis’
NVS 36.5% stake in their Consumer Healthcare joint venture (JV) for $13 billion (£9.2 billion). In December 2018, Glaxo and Pfizer PFE announced an agreement, stating that both will merge their respective consumer healthcare units into a new joint venture (JV). Glaxo owns a controlling stake of 68% in the JV. The transaction closed on Aug 1, 2019. Pipeline & Regulatory Successes
Glaxo has made significant progress with its late-stage pipeline. The company has had major positive data read-outs on multiple new medicines in HIV, oncology, immuno-inflammation and respiratory in 2019 with many other scheduled for 2020.
HIV is an important top-line driver for Glaxo’s Pharma business. It had some positive developments in its HIV pipeline. In April this year, Glaxo gained FDA approval for Dovato, a single tablet regimen of Tivicay (dolutegravir) + lamivudine for treatment-naïve HIV patients. Meanwhile, the same was approved in the EU in July. The new HIV medicine is off to a strong start. Its new drug application for fostemsavir for heavily pre-treated HIV patients was filed in December 2019 with potential approval in 2020.
Also, a supplemental NDA, seeking label expansion of Glaxo’s triple combination inhaler, Trelegy Ellipta for a new indication — uncontrolled asthma — is under review with the FDA with potential approval in 2020.
Increasing Progress in Oncology
Glaxo has made significant progress in its oncology pipeline recently and now has 16 assets in development, double from eight in July 2018. This has been achieved through advancement of internal programs as well as targeted business development including the January 2019 acquisition of Tesaro and the February global alliance with Merck KGaA (to co-develop bintrafusp alpha/M7824, a promising new oncology medicine).
Meanwhile, Glaxo now has a number of molecules with diverse mechanisms of action, offering an opportunity for many innovative cancer combinations.
Zejula, the ovarian cancer drug Glaxo acquired from the Tesaro acquisition, was approved for the treatment of late-stage ovarian cancer in October 2019. Meanwhile, another regulatory application to get an approval for ovarian cancer in first-line maintenance setting (regardless of biomarker status) is expected to be filed soon.
Meanwhile, NDA for belantamab mafatotin for fourth-line multiple myeloma was filed in December 2019 with a potential approval in 2020. A NDA seeking approval for dostarlimab in second-line endometrial cancer is also expected to be filed soon.
Glaxo has its share of challenges in the form of stiff competition, genericization and pricing pressure on key drugs in the Pharma segment. Particularly, pricing pressure and competitive dynamics are hampering sales of Glaxo’s respiratory products. Importantly, a generic version of its top-selling drug Advair has been launched, which is massively eroding the drug’s sales and hurting the overall top line. Also, competitive pressure on HIV drugs is on the rise. Nonetheless, higher sales of new products, pipeline success and accretive deals are expected to keep the stock afloat in the New Year.
Glaxo currently carries a Zacks Rank #3 (Hold). You can see
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