GSK (GSK.L) will buy Bellus Health Inc. (BLU.TO) for $2 billion in cash as it bets on respiratory medicines.
GSK investors worry about whether the medicine cupboard has enough to sustain pace over the next decade after the impending loss of patent protection for one of its major ingredients.
On Tuesday, the businesses announced a contract for Camlipixant, a late-stage RCC medication. Patients may cough 900 times a day. It affects 10 million people worldwide. No U.S. or European medicines are approved.
GSK’s $14.75 bid is more than twice Bellus’ Monday Nasdaq closing price of $7.26.
GSK’s respiratory portfolio, which includes Nucala and Trelegy, produced over 3 billion pounds ($3.73 billion) last year and grew with Bellus.
Gefapixant, Merck’s (MRK.N) RCC medication, competes with camlipixant.
The U.S. government rejected gefapixant in early 2022, requesting further data on its efficacy. However, the company is scheduled to resubmit its application later this year.
If both medications are approved in the U.S., some researchers suggest camlipixant may be the safer choice.
Jefferies analysts predicted $1.2 billion in peak U.S. sales for Camlipixant earlier this month.
Given that dolutegravir, a chemical used in four of GSK’s HIV medications, will lose patent protection in 2027, putting more than 5 billion pounds of sales at risk, investors are particularly interested in GSK’s plans.
The business hopes its RSV vaccine, which causes thousands of hospitalizations and deaths yearly, will partially offset that loss.
It bought Affinivax and Sierra Oncology to fill the gap.
However, the business has recently cut a few pipeline programs and experienced difficulties in its marketed cancer medicine portfolio.
Its blockbuster Shingrix vaccination is also likely to saturate.
Luke Meils, GSK’s chief commercial officer, told a media briefing that deals like Bellus would help close that gap in the second part of the decade.
“We expect to continue doing deals like this.”
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