GSK Chief Executive Sir Andrew Witty has ruled out a takeover bid for AstraZeneca.

Sir Andrew told shareholders at the company’s annual general meeting yesterday not to expect any major takeovers in the future as GSK focuses on the potential of its pipeline.

In response to a question over a possible merger, Sir Andrew said a deal for AZ would be “very distracting” at a time when experimental drugs in its pipeline are entering an exciting period.

The future of AstraZeneca remains uncertain as the company battles against generic competition, setbacks in drug development and the loss of its CEO David Brennan after he retires on June 1.

Revenue was down by 8% in the first three months of this year at AZ with sales in the US, Western Europe, Established Rest of the World and Emerging Rest of the World all falling.

David Brennan announced his retirement to coincide with the publication of the Q1 results after admitting that the pharmaceutical sector is “experiencing pressures none of which I’ve witnessed in my 36 years in the industry”.

AZ shareholders had criticised his leadership in recent years after the company had failed to compensate for the loss of revenue with mergers and acquisitions.

As a result, industry analysts have speculated that AZ may become a takeover target for one of pharma’s biggest companies.

A merger of GSK and AZ, the two largest pharma companies in the UK, would provide big cost savings. It led one GSK shareholder to raise the issue with the Chief Executive claiming it would be more effective than the recent $2.6bn offer for Human Genome Sciences.

Sir Andrew said GSK believes it can “deliver an extraordinary return to shareholders through this acquisition. I think we waited until exactly the right moment to make this offer, but nonetheless this is a compelling offer for shareholders at HGS to consider,” he said.

The $13 per share offer was rejected by HGS – who have now instructed Goldman Sachs and Credit Suisse to help explore strategic alternatives to GSK’s bid. Sir Andrew declined to comment on whether he had made contact with HGS’ management since GSK’s offer was rejected.

Both GlaxoSmithKline (GSK) and Eli Lilly are investing in new pharmaceutical research facilities in the UK.

GSK has provided £12m to help fund a new sustainable chemistry research facility, focusing on pharmaceutical research, at Nottingham University.

Lilly has launched new neuroscience research facilities at its Erl Wood R&D campus in Surrey, at a cost of £5.4m.

Both initiatives reflect the industry’s renewed confidence in partnership with the academic sector, triggered in part by the new ‘patent box’ legislation.

Known as the GlaxoSmithKline Carbon-Neutral Centre for Sustainable Chemistry, the new building at Nottingham University is intended to stimulate collaborations with other institutions and industry partners.

The new building, scheduled for completion in 2014, will be carbon-neutral, made from natural materials and rely on renewable energy sources.

Sir Andrew Witty, CEO of GSK, said: “The carbon-neutral laboratory will help affirm the UK as a global hub for the future of the life sciences industry. This is an opportunity to invest further in science in the UK, rethink how we approach the drug discovery process and play a role in contributing to environmental stewardship.”

“This development will be transformational in several ways,” commented Professor David Greenaway, Vice-Chancellor of the university. “The building will break new ground in sustainable construction, while the centre of excellence will shape the future of drug discovery.”

The initiative was praised by David Willetts, Minister for Universities and Science. “This new laboratory is an excellent example of collaboration between universities and industry,” he said. “It shows how businesses can benefit from the knowledge and expertise of our world-leading research base and will help keep us at the very forefront of life sciences.”

Eli Lilly’s new research facilities at Erl Wood will house 130 staff, many already employed at the site.

The investment reflects Lilly’s aim of strengthening its neuroscience portfolio, especially for the treatment of Alzheimer’s disease.

Dr Jan Lundberg, President of Lilly Research Laboratories, commented: “The UK is a great place to do bioscience research. Not only does the UK benefit from have a strong research base, the government is also able to maintain a stable pricing and reimbursement system.

“As well as financial incentives for R&D, this demonstrates that the UK government has a commitment to maintain its position as a global leader in attracting pharmaceutical investment.”

Lilly’s involvement in neuroscience research goes back two decades. The company’s drug solanezumab, currently in phase III development, has potential to slow the progression of Alzheimer’s disease.

Dr Lundberg also emphasised the importance of partnership between industry and academia. “Collaboration is absolutely essential to ensure innovative new medicines reach patients,” he said. “The science behind drug discovery is becoming more challenging.”

NICE’s decision not to recommend the use of Benlysta (belimumab) for the treatment of systemic lupus erythematosus (SLE) in final draft guidance has been called ‘devastating’ by GSK.

Benlysta failed to get NICE backing after its clinical benefits compared with standard options and cost effectiveness to the NHS were both questioned by the regulator – weeks after the SMC came to the same decision.

Simon Jose, General Manager, GSK UK, says the recommendations are “devastating decisions for patients with lupus whose disease is currently uncontrolled by existing therapies”.

SLE is an incurable autoimmune condition which currently affects around 15,000 people in England and Women – 90% of whom are women.

Benlysta is the first new treatment licensed in the UK for lupus in half a century after the European Commission granted marketing authorisation in July 2011.

But NICE questioned the health benefit for patients and the cost of the treatment in relation to its clinical effectiveness after analysing evidence and consulting with people with the condition and clinical specialists.

Sir Andrew Dillon, NICE Chief Executive, commented: “Whilst recognising the severity of the disease, the Committee concluded that based on this evidence, belimumab could not be considered a good use of NHS resources compared with current clinical practice.”

GSK insist that failure to recommend Benlysta sees patients being left behind those from Germany and Spain, where the treatment is already approved for use. “We remain committed to creating solutions that will help ensure that the small number of patients across the UK who we believe will benefit most, are able to access this important new medicine,” Simon Jose said.

NICE has failed to recommend GSK’s Tyverb (lapatinib) or Roche’s Herceptin (trastuzumab) with aromatase inhibitors as a first line treatment for a particular type of breast cancer in final draft guidance.

The decision is based on uncertainties over the overall survival benefits compared to existing treatments of both medicines and the high cost of the treatments.

Sir Andrew Dillon, Chief Executive of NICE, said that while the two have been shown to reduce the growth and spread of breast cancer the extent of overall survival extension “appears to be small or difficult to quantify”.

Final guidance on the appraisal is now expected in June.

The guidance only advises the use of the drugs alongside aromatase inhibitors as a first line treatment option to delay the growth of advanced breast cancer that has spread and reacts with oestrogen or progesterone and has high levels of HER2.

Alongside the clinical benefits, NICE also raised concerns around the cost effectiveness of both products. GSK estimates that the most plausible incremental cost effectiveness ratio (ICER) for Tyverb is likely to be around £74,400 per QALY gained. Roche estimates the most plausible ICER for Herceptin to be around £51,000 per QALY gained – both far in excess of the £20,000-£30,000 NICE typically deems to be a cost effective use of NHS resources.

GlaxoSmithKline (GSK) has reported modest global sales growth and significant pipeline development in the first quarter of 2012.

The UK’s largest pharmaceutical company achieved 2% sales growth worldwide despite a 6% drop in European sales.

The company also highlighted positive phase III data for five assets in treatment of major diseases, pointing the way to future growth.

CEO Andrew Witty said that GSK had “returned to reported sales growth, delivered additional R&D pipeline output and maintained our focus on returns to shareholders” in Q1.

GSK’s performance “reflects the resilience of our business and the investments we have made to increase the breadth and mix of the Group,” he commented.

The company’s pharmaceuticals and vaccines business grew by 2% overall – due largely to 9% growth in the US, where a co-promotion deal for overactive bladder treatment Vesicare combined with successful product launches in oncology.

However, Witty noted that pharmaceuticals and vaccines sales fell by 6% in Europe due to “the continued implementation of government austerity measures”.

The EMAP market saw 2% growth in this product area, with pharmaceuticals up 6% but vaccines down 9%, and strong sales in China and Latin America compensating for the impact of political turmoil in Africa and the Middle East.

Witty emphasised that GSK’s future lies in its pipeline, echoing the recent words of Lilly CEO John Lechleiter. He pointed to positive results for five drug candidates:

• The first of three phase III studies for HIV drug dolutegravir, showing non-inferiority to raltegravir.

• Successful phase III studies for melanoma drugs BRAK and MEK, which are ready to be filed for approval (and to be trialled in combination).

• Ongoing successful phase III data for type 2 diabetes drug albiglutide.

• Completion of phase III studies of asthma and COPD treatment Relovair, which will be filed for both indications this summer.

These new products, Witty said, “together with the progress we have made with the broader late-stage pipeline since the beginning of 2011, underpins our growing confidence in our ability to grow sales on a sustainable basis.”

For a video interview with GSK’s CFO, Simon Dingemans, click here.

GlaxoSmithKline (GSK) has reported modest global sales growth and significant pipeline development in the first quarter of 2012. CFO Simon Dingemans answers questions about GSK’s current position and expectations for the future.

To read the whole story, click here.
 

Human Genome Sciences’ (HGS) decision to reject GSK’s $2.59 billion acquisition offer highlights the future potential biotech companies believe they possess, analysts have said.

HGS rebuked GSK’s $13 per share offer and have now instructed Wall Street advisors to try and find other potential bidders, sources claim.

Paul Chapman, Partner at Marks & Clerk LLP, said the “stark dismissal” of GSK’s offer shows how biotech companies “value their portfolios and pipelines, and how much potential they see for the future”.

GSK’s offer was an 81% premium on the closing price of HGS’ stock on 18 April, the Financial Times reported. Its stock was as high as $30 per share around a year ago. But prices fell after the disappointing launch of its lupus drug – in partnership with GSK – Benlysta.

A statement from HSG said that the billion dollar offer from GSK does not reflect the company’s value – despite its high premium. Ana Nicholls, a healthcare analyst at the Economist Intelligence Unit, agrees.

She commented: “HGS’ decision to turn down the offer, which it says doesn't reflect its true value, suggests that it thinks it can get a better offer, either from GSK or elsewhere. It may be right. HGS’ two late-stage pipeline drugs, for diabetes and cardiovascular disease, have plenty of potential in large markets.”

The rejection of GSK’s offer comes a matter of days after Roche indicated it was considering abandoning its £6.8bn hostile bid for Illumina. Paul Chapman expects to see more takeover bids by pharmaceutical companies of biotech and biopharma firms in the future. “Major players in the pharmaceutical industries are in a bind,” he said. “The patent cliff is approaching fast and existing pipelines in more traditional areas of R&D seem insufficient to replace lost revenue. They need to rejuvenate pipelines and absorbing smaller, promising biotech firms is an attractive way of doing so.

“It could be that the likes of HGS and Illumina are quite aware of the advantageous position they are in, and are playing their hand accordingly. Glaxo can afford to return with a revised offer, the question is will they?”

The US Supreme Court heard that drug representatives are not sales professionals in a new twist of the ongoing GlaxoSmithKline overtime pay dispute.

Two sales representatives are suing GSK for overtime pay they claim was illegally denied to them by the company’s definition of their role.

Attempting to overturn a lower court ruling against them, the plaintiffs argued that ‘detailing’ is a promotional role and not a sales role.

While rooted in the terms of the US Fair Labor Standards Act (FLSA), the case could have implications for similar disputes worldwide.

The FLSA stipulates a mandatory ‘time and a half’ payment rate for time worked over 40 hours per week, but excludes ‘outside sales representatives’.

Lawyers representing Michael Christopher and Frank Buchanan claimed that their role was not ‘sales’ since no transaction was involved.

GSK’s lawyers argued that the difference merely reflects the purchasing mechanisms prevalent within healthcare, whereby health professionals must purchase drugs through a pharmacy.

According to GSK, the company’s representatives are “evaluated and compensated as sales people” just as if they exchanged goods for money.

The US federal government supports the plaintiffs. Lawyer Malcolm L. Stewart said on behalf of the Labor Department that pharmaceutical reps do not sell: they “set in motion a chain of events” that make sales “more likely to occur”.

The pharma industry is facing overtime claims from an estimated 90,000 sales representatives in the US, with lawsuits currently filed against Novo Nordisk, Johnson & Johnson, Bristol-Myers Squibb, Merck & Co and Novartis.

If the ‘not sales’ interpretation becomes standard across the US, the industry could lose billions of dollars in back overtime payments.

So far, a New York court has supported the ‘not sales’ view, while a San Francisco court has supported the ‘sales’ view.

One Supreme Court justice Stephen G. Breyer, argued that a balanced strategy might be appropriate: industry sales representatives could be entitled to overtime payments in the future, but not retrospectively.

The nine Supreme Court justices did not reach immediate agreement. Their verdict on the GSK case is expected in June.

GlaxoSmithKline (GSK) and Merck have agreed a deal to make their rotavirus vaccines available in the developing world for five years at a third of their standard price.

International vaccines group GAVI will make 132 million doses of GSK’s Rotarix and Merck’s Rotateq available to poorer countries at $5 per course.

The vaccines will help to combat the main cause of diarrhoea, a major killer of young children worldwide.

GAVI (the Global Alliance for Vaccines and Immunization) plans to distribute the vaccines in more than 40 economically deprived countries by 2016.

The new deal with GSK and Merck will enable GAVI to drop the price of its two-dose rotavirus vaccine courses from $15 to $5.

The WHO recommended in 2009 that all countries should target rotavirus – which kills half a million children every year – with national immunisation programmes.

A spokesman for GSK, which will supply 95% of the doses contracted by GAVI, said: “Rotavirus vaccine has demonstrated real-world, life-saving impact on reducing deaths. We have a chance here to collaborate in programs designed to protect millions of children.”

Based in Geneva, GAVI is a public-private partnership whose backers include the WHO, the World Bank, UNICEF, the Bill & Melinda Gates Foundation and a number of governments.

“Our market-shaping goal is to maintain supply security and strive to achieve the lowest price for currently available products,” commented Dr Seth Berkley, CEO of GAVI. “We have already taken an encouraging step forward towards this goal. GAVI Alliance members will continuously pursue these efforts to broaden competition and ensure the provision of quality vaccines at sustainable prices.”

GAVI’s procurement strategy offsets the cost to suppliers of heavy discounts by prepaying a portion of the fee and extending the deal period.

GlaxoSmithKline (GSK) has reported successful phase III trials of its new diabetes drug albiglutide, which it intends to file for regulatory approval.

The injectable drug, taken weekly, outperformed a rapid-acting insulin when used in combination with a daily insulin to manage type 2 diabetes.

Analysts predict the drug will earn GSK $250m per year by 2016 – not a potential ‘blockbuster’, but a robust product in the diabetes market.

Albiglutide – awaiting a new brand name after GSK dropped the name Syncria – is the latest product in the class of glucagon-like peptide-1 (GLP-1) diabetes drugs that includes Victoza from Novo Nordisk and Byetta from Amylin and Lilly.

GLP-1 drugs stimulate insulin release when glucose levels are high, a flexible property that makes them a potential alternative to insulin in patients with severe type 2 diabetes.

They have the further advantage of stimulating weight loss, which is of clinical value to most people with type 2 diabetes.

The first phase III trial of albiglutide, reported in November 2011, found it to be less effective than daily Victoza in reducing blood glucose levels – a disappointing result for GSK.

However, armed with top-line results from seven of eight phase III studies, GSK said that the cumulative data support an application for the drug’s approval as a treatment for type 2 diabetes.

One trial tested albiglutide against Lilly’s rapid-acting insulin Humalog when used in combination with Sanofi’s daily insulin Lantus.

The patients taking albiglutide experienced a 0.82 reduction in HbA1c, compared to 0.66 in the Humalog group. In addition, The albiglutide patients also lost an average of 0.73 kg in weight, whereas the Humalog patients gained 0.81 kg.

GSK expects to have all the data it needs to apply for regulatory approval by the end of 2012.