7. GlaxoSmithKline: A big swap simplifies things

Moncef Slaoui

2013: $6.58 billion (£3.922B)
2012: $6.66 billion (£3.97B)
Change: Down 1%
As a % of revenue: 14.5%
Head of R&D: Moncef Slaoui

Recently, when GlaxoSmithKline cheered the FDA's approval of its GLP-1 diabetes drug albiglutide, the Big Pharma player ($GSK) was able to extend its streak of new drug approvals for last year.

It was because of that streak that Morningstar's Damien Conover handed GSK the title for the best R&D group in Big Pharma, about four years after the company restructured its pipeline to create dedicated research teams more narrowly focused on key programs. But it's never easy in the R&D world, and GSK knows better than most just how difficult it is to win--and retain--recognition for pushing real innovation in the clinic.

That string of new approvals is significant. GSK grabbed the title for most new drug OKs for 2013, and its performance was head and shoulders above its Big Pharma colleagues. But almost every advance comes with an asterisk. Albiglutide is headed into a crowded field, like most of GSK's new drugs. GSK has been swinging at the fences with some big blockbuster contenders like darapladib and MAGE-A3 and drisapersen for DMD, but that whole slate of therapies has run into one failure after the next. And drisapersen was ditched, with the pharma giant handing back rights to the drug. Its biggest breakthrough came for Anoro Ellipta, which is expected to make a strong bid for blockbuster status as Advair fades.

That sets the stage for one of the biggest R&D shakeups so far this year as GSK follows through on a major swap with Novartis ($NVS), handing over its cancer drug portfolio, all its postapproval development work, a closely watched AKT inhibitor, and options on its experimental oncology therapies in exchange for a big vaccines division--a field in which GSK enjoys a major global role.

Technically, GSK will remain active in cancer R&D with a shot at marketing anything Novartis doesn't want. In the real world, though, GlaxoSmithKline can't have much--if any--future planned in oncology. In this industry, you always say you can go it alone to enhance the value of a franchise to a prospective buyer. Right now, it looks like a loose end.

While GSK continues working on darapladib and MAGE-A3--with its heart drug team recently making a weak claim that the first darapladib Phase III trial demonstrated a clear signal of activity--more of its midstage therapies need to be shifted into final Phase III testing.

There's been some good news on GSK's R&D front recently. Investigators for GlaxoSmithKline say they nailed the primary endpoint in a Phase III study of its injectable IL-5 drug mepolizumab, beating out a placebo with statistically significant results for severe eosinophilic asthma and setting the stage for the first regulatory filings for the drug.

Among its next round of late-stage programs expected in 2014 and 2015 you'll find two new respiratory programs for COPD and asthma.

Like any big deal, the one between Novartis and GlaxoSmithKline will get a thorough vetting by regulators. That will leave some of their R&D teams in limbo for awhile, with plenty of time to ponder the prospects of being invited to make a move to some distant R&D site.

For more:
Special Report: Biopharma's Top R&D Spenders of 2012 - GlaxoSmithKline
GSK's R&D staff hit with trade rumors spurred by Novartis' cancer pact
GlaxoSmithKline punts its cancer R&D work in Big Pharma swap and shop
GlaxoSmithKline maps a route to regulators with positive PhIII asthma data

7. GlaxoSmithKline: A big swap simplifies things

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