Britain's GlaxoSmithKline (GSK.L) sought to bolster its cancer business by agreeing a $1.9 billion deal to buy U.S. drug developer Sierra Oncology (SRRA.O), the latest move to fend off pressure from activist shareholder Elliott.
GSK has been facing mounting calls to shore up its drug pipeline since Elliott built up a significant stake in the company last year.
The deal also comes as it prepares to spin off its large consumer healthcare business, which includes brands such as Sensodyne toothpaste and Advil painkillers, in July, in the biggest shake-up for the company in two decades. Shareholders in Sierra, which focuses on targeted therapies for the treatment of rare forms of cancer, will receive $55 per share of common stock in cash, GSK said.
Momelotinib, which Sierra acquired from Gilead Sciences (GILD.O) in 2018 for $198 million including milestone payments, could generate U.S. peak sales of $950 million, and $780 million in peak sales outside the United States, H.C. Wainwright’s Joseph Pantginis wrote in an analyst note in late January. Over the past year, GSK has suffered several trial setbacks on the cancer compounds bintrafusp alfa and feladilimab, which were previously touted as potential billion-sellers.
It will lose patent exclusivity on HIV drug dolutegravir at the end of 2027, worth about 3 billion pounds ($3.9 billion) in annual sales.Last June, GSK agreed to pay up to $2 billion to iTeos Therapeutics Inc to develop and sell a potential cancer treatment together.
Sourced from Reuters - written by Yadarisa Shabong