GSK secures potential ‘multi-blockbuster’ drug in $950mn deal

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GSK has reached a near-$1bn deal to acquire 35Pharma, a Canadian biotech that develops drugs for heart and lung diseases, as part of a drive to replenish its pipeline with relatively inexpensive assets.

The FTSE 100 drugmaker said it would pay $950mn in cash for the privately held group.

HS235, the company’s lead drug candidate, has completed an early stage clinical trial and is set to begin studying the drug’s effects on patients with pulmonary arterial hypertension. The progressive disease is characterised by high blood pressure in the arteries of the lungs, and pulmonary hypertension caused by heart failure.

The drug, which could be available to patients in the early 2030s, has the potential to be a “multi-blockbuster”, according to a person familiar with GSK’s thinking.

The person added that the drug, which is in the same class as Merck’s blockbuster pulmonary hypertension treatment Winrevair, underscores new chief executive Luke Miels’ strategy to acquire assets where the “science is relatively settled”.

Data from HS235’s trial suggests it could have an advantage over Winrevair by lowering the risk of bleeding and delivering better quality weight loss and improved insulin sensitivity. That may be a key consideration given the prevalence of obesity and insulin resistance in patients being treated for the disease, the person said.

The acquisition of 35Pharma is the second big transaction of Miels’ early tenure, following last month’s purchase of US-based Rapt Therapeutics for $2.2bn.

He took over in January with a remit to convince sceptical investors that the FTSE 100 group can reach its ambitious 2031 revenue target of £40bn. The company reported £32.7bn in annual revenues earlier this month.

GSK faces a looming patent expiry that will dent revenues in the coming years, with branded versions of its HIV medicine dolutegravir losing US and European exclusivity between 2028 and 2030.

The 35Pharma deal expands GSK’s respiratory, immunology and inflammation portfolio, a key area where the company has expertise and fits within its strategy of purchasing reasonably priced companies and assets it believes could deliver outsized returns.

GSK shares rose 0.2 per cent in morning trading and have jumped by a fifth this year.