GSK acquires HGS in a $3 billion deal

British pharmaceutical giant GlaxoSmithKline (GSK) has acquired Human Genome Sciences (HGS). The acquisition of HGS gives GSK full rights to three main drugs: Benlysta (belimumab), albiglutide, and darapladib. The catalyst for the deal seems to be Benlysta, according to senior healthcare analyst for industry dynamics, Michael Leibfried, and lead healthcare analyst for cardiovascular, metabolic and immunological disorders, Jim Coutcher.

As the first approved therapy for systemic lupus erythematosus in more than 50 years, there were high hopes for Benlysta sales. Unfortunately, as the FDA noted during the approval process, only 30 per cent of lupus patients saw a benefit in clinical trials, and adverse events due to the depressed immune response were higher in Benlysta-treated patients. Consequently, sales for Benlysta have disappointed in its first year on the market. Benlysta saw a 77 per cent increase in sales during second quarter of 2012; however, after only reaching revenues of $31.2million in the same quarter, sales remain substantially below what was originally forecast.

The report also points out that albiglutide is scheduled for FDA filing in early 2013 in the treatment of type II diabetes. GLP-1 analog albiglutide has a longer half-life than either exenatide or liraglutide, the other GLP-1 analogs on the market, which means that the drug requires only weekly or bi-weekly dosing. Despite this advantage, head-to-head trial results to date have been split; albiglutide was not as efficacious as liraglutide, but beat sitagliptin (Januvia). Results from several other head-to-head studies are pending. Current consensus is that albiglutide will struggle in the competitive diabetes market, with peak sales near the $500 million mark.

Lastly, darapladib, a phospholipase A2 inhibitor, is in phase III for coronary heart disease. Initial trial results are not expected until the end of 2013.

The GlobalData analysts’ report points out HGS marks Big Pharma’s second major acquisition of an established biotech player in the last few weeks, as Bristol-Meyers Squibb (BMS) acquired Amylin Pharmaceuticals in a $7 billion joint deal with AstraZeneca in late June. With Big Pharma approaching and experiencing multi-billion dollar patent cliffs, they have begun looking to plug holes in their development pipelines, and established biotechs have become the prime targets.

Companies with marketed products grant immediate revenue to displace losses from generic erosion, while companies with late-stage development pipelines give promise of low-risk, high-reward investments. The price tags for these acquisitions are considerably higher than those of earlier stage biotech companies; however, pharma saves on development and clinical trials costs, and gains a higher probability of successful approval, in effect increasing the expected value of the drug and company acquisition.

The GlobalData analysts predict that this trend should continue throughout 2012 and into 2013.The next established biotech that could be placed on the auction block is BioMarin Pharmaceutical, which specialises in rare disease therapeutics.

EP News Bureau

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