) recently announced that its subsidiary, Stiefel, has entered into
an agreement with Basilea Pharmaceutica Ltd. to acquire its
product, Toctino (alitretinoin). Toctino, approved for severe
chronic hand eczema in patients above 18 years who are unresponsive
to potent topical steroids, is currently approved in 29 countries
(marketed in 14 countries). The drug recorded worldwide sales of
£22 million in 2011. Toctino is currently in phase III development
in the US.
As per the terms of the agreement, Glaxo will get exclusive
worldwide rights (including patent rights, trademarks, product
registrations) to Toctino. Glaxo will undertake the future
development, production and marketing duties of Toctino. In
exchange, Glaxo will make an upfront payment of £146 million in
cash to Basilea. Additionally, Glaxo will pay up to £50 million
upon the US approval of Toctino and double-digit payments for three
years post-launch, on net US sales.
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, EU pricing pressure will continue to affect
Glaxo is looking towards deals and acquisitions to drive growth.
The company is focusing on increasing the rights on its partnered
products and promising pipeline candidates, so that it stands to
benefit more from their success. Glaxo's acquisition of Cellzome
and increasing investment in
) indicate its efforts in this direction.
Apart from this, Glaxo has launched a hostile bid to acquire the
outstanding shares of
Human Genome Sciences, Inc.
) 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.
We currently have a Neutral recommendation on Glaxo. The stock
carries a Zacks #3 Rank (Hold rating) in the short run.
GLAXOSMITHKLINE (GSK): Free Stock Analysis
HUMAN GENOME (HGSI): Free Stock Analysis Report
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