GlaxoSmithKline CEO's enthusiasm for R&D effort falls flat

GSK CEO Andrew Witty

GlaxoSmithKline ($GSK) CEO Andrew Witty had some upbeat Q2 revenue numbers to report, but a renewed effort to spur some enthusiasm for its drug pipeline fell flat with analysts.

Typically, a top 10 Big Pharma company stays focused on its late-stage pipeline when it talks about potential drug stars in the pipeline. Witty, though, pulled back to cite some 40 drugs in Phase II and Phase III. And after completing its big asset swap with Novartis--exchanging a portfolio of marketed and late-stage cancer drugs for a batch of vaccines--Witty also encouraged investors to get excited once again about oncology.

"We have very interesting oncology assets in the pipeline," Witty told analysts in a call, according to a report from Bloomberg. "Having missed the current wave, we're very pleased we'll be able to take part in the next wave."

And if you add up the potential here, he added, you'll see $9.4 billion in possible revenue.

GlaxoSmithKline's pipeline is centered on HIV, vaccines, cardiovascular, immuno-inflammation and respiratory diseases, with about 183 staffers--most around the Philadelphia area--now toiling in early-stage cancer drug research. The cancer work includes an ambitious partnership with Adaptimmune in the U.K. on TCRs, a next-gen immuno-oncology platform that is looking to spur a T cell attack on cancer cells.

But trying to win over analysts who have been repeatedly disappointed by GSK's pipeline work--with a slate of unimpressive approvals and high-profile flops--is a hard sell.

"The company cites 40 NMEs (new molecular entities) in the pipeline, most of which are in Ph II," noted an unimpressed Seamus Fernandez at Leerink. "Given the relatively modest R&D spend, we expect this number will have to increase as products advance into Ph III. At this point, there are few obvious products that spark our interest - but this is a pot'l source of upside in the story."

That's been the market assessment for some time now at GSK, which laid off more than 1,000 people from its extensive U.S. operations in North Carolina and Pennsylvania while transferring hundreds more to a CRO and Novartis ($NVS). GSK has also been reorganizing its vaccines R&D work as it concentrates efforts in Rockville, MD.

Without singular late-stage star performers in the clinic to point to, GSK will find it tough going in generating enthusiasm for the company's future. Witty also discounted any change of a megadeal to work his way out of the doldrums.

- here's the Q2 release
- here's the report from Bloomberg