UNITED KINGDOM – GlaxoSmithKline (GSK) sought to strengthen its cancer business on Wednesday by agreeing to a US$1.9 billion deal to acquire US drug developer Sierra Oncology, the latest move to fend off activist shareholder Elliott.
Since Elliott acquired a significant stake in GSK last year, the company has faced mounting pressure to strengthen its drug pipeline.
The transaction also comes as the company prepares to spin off its large consumer healthcare business, which includes brands such as Sensodyne toothpaste and Advil pain relievers, in July, in the company’s biggest shake-up in two decades.
Sierra shareholders will receive US$55 per share of common stock in cash, according to GSK. Sierra focuses on targeted therapies for the treatment of rare forms of cancer.
Sierra intends to apply for US marketing approval for momelotinib, an experimental drug being developed to treat anemic patients with a type of bone marrow cancer known as myelofibrosis, in the second quarter.
There’s about a 70% overlap in customer base between momelotinib, Blenrep and other hematology products, said Luke Miels, chief commercial officer at GSK.
Momelotinib, which Sierra acquired from Gilead Sciences in 2018 for US$198 million including milestone payments, could generate US$950 million in peak sales in the US and US$780 million in peak sales outside the US, according to HC Wainwright’s Joseph Pantginis in a late January analyst note.
GSK has had several trial setbacks in the last year with cancer compounds bintrafusp alfa and feladilimab, which were previously touted as potential billion-dollar sellers.
It will lose patent exclusivity on the HIV drug dolutegravir, which is worth approximately £3 billion (US$3.9 billion) in annual sales, at the end of 2027.
Miels signaled GSK continues to have an appetite for deals like Sierra. “They could be anywhere ranging from cancer, anti-infectives, vaccines, renal, autoimmune,” he said.