GSK acquires biopharma group Affinivax for $3.3bn

GSK shares were up 0.3% to 1,733.7p in early morning trading on Tuesday, following the company’s acquisition of US clinical-stage biopharmaceutical company, Affinivax.

GSK is set to acquire 100% of outstanding Affinivax shares, and confirmed that it would pay $2.1 billion immediately, and up to $1.2 billion in potential paediatric developmental milestones in separate payments of $600,000 each.

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The pharmaceutical giant confirmed that the acquisition would provide it with access to “next-generation” 24-valent pneumococcal vaccine candidate in Phase two development, alongside highly innovative MAPS technology.

Pneumococcal disease includes conditions such as pneumonia, meningitis and bloodstream infections, alongside less deadly diseases including sinusitis and otitis media.

The new subsidiary is reportedly set to support the development of a strong portfolio of innovative vaccines and speciality medicines.

“The proposed acquisition further strengthens our vaccines R&D pipeline, provides access to a new, potentially disruptive technology, and broadens GSK’s existing scientific footprint in the Boston area,” said GSK chief scientific officer Dr Hal Barron.

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“We look forward to working with the many talented people at Affinivax to combine our industry-leading development, manufacturing, and commercialisation capabilities to make this exciting new technology available to those in need.”

GSK reiterated its FY 2022 guidance and medium-term outlook for 2021 to 2026 of over 5% sale and 10% adjusted operating profit on compound annual growth rate at constant exchange rate.

AFX3772 Drug

The current pipeline of projects at Affinivax has seen a recent slate of success, with its AFX3772 treatment well tolerated in adult phase one and two clinical trials, demonstrating strong immune responses against the current care standard.

Its treatment also gained US Food and Drug Administration Breakthrough Therapy designation to prevent S. pneumoniae invasive disease and pneumonia in adult patients aged 50 years and older in July 2021.

Affinivax reported that phase three trials were scheduled to start in the short term, with phase one and two clinical trials to assess the use of the treatment in paediatrics later in 2022.

GSK’s potential gamble

Analysts commented that GSK’s move to acquire Affinivax fell in line with the company’s strategy of expanding its portfolio with specialised treatments in a move to ramp up its revenues.

“GSK’s marching ahead toward it’s upcoming separation with momentum, snapping up specialty vaccine maker Affinivax in an effort to pad out its pipeline of late-stage drugs,” said Hargreaves Lansdown equity analyst Laura Hoy.

“The group’s planning to rely on growth from these niche medicines to support its ambitions for 5% compound annual sales growth, and this acquisition could be the first of many as the group looks to improve its portfolio.”

However, GSK is potentially making a gamble on the biopharmaceutical firm, with no guarantees that its purchase will pay off once the results are processed and the treatment verdict is in.

“While this marks a step in the right direction with regard to the group’s strategy, we’re mindful that owning the treatment and making money from it are two very different things,” said Hoy.

“Late-stage drugs often fail to clear the final hurdle, so the Affinivax purchase may not end up moving the needle at all.”

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