GlaxoSmithKline
(
GSK
) recently announced that it has entered into an agreement to
acquire 80.02% shares of a U.K. and Germany-based, privately-owned
company, Cellzome, for a cash payment of £61 million (U.S. $99
million). Glaxo already owns 19.98% shares of Cellzome and after
the completion of this deal will own the full company. The
acquisition is expected to be completed on May 21, 2012.
After the acquisition, Glaxo will get full rights to Cellzome's
proteomics technologies. These technologies enable better analysis
of a drug's efficacy and safety profile, thus reducing the number
of discontinued candidates in development phases.
Glaxo plans to make Cellzome a part of its research and
development (R&D) organization. Glaxo along with Cellzome
shareholders plans to form a spin-off company that will deal with
assets and activities that Glaxo does not want to continue.
Neutral on Glaxo
We currently have a Neutral recommendation on Glaxo. The stock
carries a Zacks #3 Rank (Hold rating) in the short run. A major
part of Glaxo's revenues will be exposed to generic competition as
multiple drugs are scheduled to lose exclusivity in the next few
years.
We expect the company's top line as well as gross margins to
remain under pressure in the coming quarters. In addition to
generic competition, the U.S. health care reform and E.U. pricing
pressure will continue to affect sales.
Glaxo recently launched a hostile bid to acquire the outstanding
shares of
Human Genome Sciences, Inc.
(
HGSI
) for a cash payment of $13 per share.
Glaxo would get exclusive rights to Benlysta as well as other
candidates such as darapladib and albiglutide, if it succeeds in
acquiring Human Genome. The acquisition will raise the returns on
research and development (R&D) expenses for Glaxo and lead to
cost synergies of minimum $200 million by 2015. We believe this
potential takeover would be accretive for the company from
2013.
GLAXOSMITHKLINE (GSK): Free Stock Analysis
Report
HUMAN GENOME (HGSI): Free Stock Analysis Report
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