New GlaxoSmithKline keeping old R&D model, says embattled CEO

Questions abound over the future of GlaxoSmithKline’s chief Emma Walmsley, but its research platform, which recently lost a key player and has been beset by flops and failures of late, may be in more urgent need of attention. That, however, isn’t in the cards.

After leading the oncology team at GSK, Axel Hoos, M.D., Ph.D., abruptly left the Big Pharma earlier this month to run a small biotech. The move came after GSK's misses in COVID vaccine work, a number of cancer program flops, vaccine execs bowing out, and a belated turning of the vaccine ship to mRNA, where possible.

Just this week, the company also dumped an RSV vaccine candidate in kids as it looked unlikely to succeed and notched up another failure for ICOS hopeful feladilimab, this time in lung cancer. This followed a few months after enrollment was halted in head and neck squamous cell carcinoma patients in a phase 2.

RELATED: 'New GSK' shows strength amid investor pressure, but Shingrix still needs to regain its footing

On a second-quarter earnings call Wednesday afternoon, Walmsley was adamant that despite Hoos’ recent departure, the R&D structure at GSK was not changing shape—and it's in good hands.

GSK CSO Hal Barron
Hal Barron, M.D. (GSK)

“There are no changes to the structure of R&D,” she said. “Hal [Barron] is our chief scientific officer and leads R&D across all of our pharma and vaccines business.  He has taken direct accountability but no changes in the structure at all for oncology as we continue to review the best talent opportunities in the world there and just to be clear, the immuno-neurology is not a large structure for the organization."

Walmsley said GSK's capital allocation strategy means the company can quickly adapt to changing technologies. 

“Nothing further to add than that, except I suppose that we do think GSK has a specific advantage when we are building on the strategy that is about the science of the immune system and see the growing synergies in prevention and treatment in having one capital allocation process across all of that which allows us to bring a lot more agility, especially when you see the exciting advances across vaccine, science and technology, too," she said. 

SVB Leerink, however, doesn't think GSK's existing R&D strategy can deliver development and innovation for the vaccines business fast enough, according to a Thursday note. The company invests "too much cash in high-risk, low-reward pharma assets," specifically, feladilimab and the failed oncology asset bintrafusp alfa

RELATED: GSK, under pressure to perform, pens $2.2B deal with Alector focused on neuro R&D, Alzheimer's

One change will be wrought from its $2.2 billion deal with biotech Alector, penned at the start of the month, which is focused on neuro R&D and Alzheimer’s.

A big bet on a risky area appeared to show some guile and a new, more high-risk approach to research deal-making. But as Walmsley battles against activist investors who want her out and the lukewarm reception to New GSK—which includes a spinoff of the consumer business—this doesn’t look like the time GSK wants to make major changes to its internal research workings.

Editor's note: This story was updated at 12 p.m. ET on July 29, 2021, to add analyst commentary.