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GSK and Theravance Face Some Ugly Data

Yesterday was not a good day for GlaxoSmithKline or for Theravance. GSK has been running a large trial of the respiratory drug Breo (developed with Theravance) in over 16,000 patients, looking for something that no drug in that category has been able to demonstrate: a survival benefit in chronic obstructive pulmonary disease. COPD patients need that, and GSK needed it, too, because their big franchise in this area (Advair) is nearing the end of its product cycle for them.

Breo is a combination of a steroid (fluticasone furoate) and a long-acting beta-2 agonist (vilanterol). That latter part is where Theravance came in; they have several programs working on such agents. The combination has been approved for asthma, and was approved in 2013 for COPD. (Advair, by the way, is just fluticasone by itself, as the propionate). Success in this trial would have been a real advance, but it’s a tough field, and the results showed that Breo missed its primary survival endpoint. Here’s an excellent roundup from Evaluate Pharma:

If a company designs a 16,000-patient trial, skewed massively in its favour, with a new version of a drug whose predecessor only narrowly missed, chances are it thinks a positive result is a dead cert and wants the market to think so too.

This is just one reason why yesterday’s failure of Summit, a massive survival study of the COPD drug Breo , is such a setback for GlaxoSmithKline . Add into the mix that Glaxo ’s bold claim to turn around its respiratory division now lies in tatters, and the future of the UK group’s embattled chief executive, Sir Andrew Witty, looks even less secure than before.

After all, it was Sir Andrew who has maintained Glaxo ’s focus on respiratory drugs, a division that, based partly on Summit, was to have returned to growth next year. Meanwhile, bets on Glaxo’s safe but unexciting vaccines and consumer health businesses – while ditching established oncology drugs and eschewing M&A – are, in the current market, puzzling.

Indeed. Just last month we were speculating around here about GSK’s whole strategy, and this is just going to make all that talk even louder. The company basically pulled out of oncology last year, a particularly strange move given all the advances in recent years, and put more focus on lower-margin businesses that seemed safer. They’ve been defending that move has just facing reality, getting there before the rest of the industry realizes that it has to follow them, etc., but those are long-term reasons. And the current management team may not, it would seem, have a long term to work with. Part of the strategy was that the drug areas that the company stayed in would be successful – and if they aren’t?

Lost in those concerns is what’s happening at Theravance. The company’s stock was trading a $40 a share a year and a half ago, and is now below $12. If this is bad news for GSK (and it surely is), it’s terrible news for Theravance.

26 comments on “GSK and Theravance Face Some Ugly Data”

  1. Upside says:

    While this is indeed bad news for GSK (and even more so for Theravance), it should be viewed in the context of GSK’s undoubtedly very strong pipeline and heavy investment in early stage drug discovery. Given the disappointing track record of mergers, Sir Andrew’s conspicuous avoidance of this approach is to be commended. His alternative strategy of niche acquisitions and extensive academic and pre-competetive collaborations promise to deliver tangible success. The whole drug discovery paradigm is undergoing a profound shift and GSK is in the vanguard of realizing this new paradigm.

  2. Chemjobber says:

    Agilist made the switch from Corante – yes!

  3. Kazoo Chemist says:

    Advair is not just fluticasone. It is a combination with salmeterol.

  4. tally ho says:

    @Upside – that is truly one of the most awesome demonstrations of spin-jitzu ever attempted on this blog – well done!

  5. DrSnowboard says:

    I’d really like to see a psych profile of Agilent / Upside. They really seem to have an amazing belief that the rest of us are stupid.

    1. DrSnowboard says:

      ..but maybe get a scientist to proofread your posts? Attention to DETAIL , please

  6. Anon says:

    Tip for Agilist / Upside: If you’re going to pretend to be a neutral outsider with positive views on GSK, then at least drop the brown-nosing reference to “Sir Andrew”, it kind of gives it away. 😉

  7. Erebus says:

    “Upside” is messing with you guys. Read these passages again:

    “The whole drug discovery paradigm is undergoing a profound shift and GSK is in the vanguard of realizing this new paradigm.”
    “[… this] should be viewed in the context of GSK’s undoubtedly very strong pipeline and heavy investment in early stage drug discovery. ”

    That can only be sarcasm. You gotta laugh, I guess.

  8. Me says:

    Advair has had its day and hangs on to exclusivity by the copyright on the device and the difficulties of bio-equivalence testing. Its premium price days are surely nearly over when Mylan or Novartis launches their competitors and or generic versions. So long franchise.

  9. anon4 says:

    I gotta admit, I have no idea if agilist is serious or if its just dry english sarcasm.

  10. Magrinho says:

    “The whole drug discovery paradigm is undergoing a profound shift.”

    Exactly when in the last 30 years was this any more or less true than now? In other words, it is just gasbag emission.

    But I am 70/30 that Upside is being sarcastic. Huzzah!

  11. Am I Lloyd says:

    Upside: “The whole drug discovery paradigm is undergoing a profound shift and GSK is in the vanguard of realizing this new paradigm.”
    “[… this] should be viewed in the context of GSK’s undoubtedly very strong pipeline and heavy investment in early stage drug discovery. ”

    You forgot:

    “Raymond Shaw is the kindest, bravest, warmest, most wonderful human being I’ ve ever known in my life.”

  12. watcher says:

    GSK’s forward looking plan will continue to force more overall shrinkage, including R&D funding and size, a slow painful wither. The stock price is now artificially maintained by it’s unsustainable dividend which now is being paid from funds that came from the Novartis deal. Witty, members of the board, head of Research and Development had minimal background in the large challenge they undertook, and have learned little in the meantime, repeating their mistakes, selling valuable assets, conducting too many reviews that usually there their decisions often have been made in advance. While this study does little to hurt GSK’s current sales of these products, neither does it provide a growth trigger that is so desperately needed. OTC and me too vaccines just won’t cut it. It’s long past time for Witty to leave, for Patric Vallence to disappear, for Monsef to be sent drifing away, and for Baldoni to admire his stable of cars full time.

    Without drastic changes, the future of GSK will continue to be bleak, until the stock price declines sufficiently for the company to be swallowed, leaving little trace of it’s past in the ripples.

  13. pwade says:

    Unfortunately Andrew will use this result to justify the position regarding risk of Pharma R&D.

    How does a CEO spin 60% of the company revenue from patent protected drugs as liability and keep his job?

    The November R&D day will be a strange dance.

  14. Emjeff says:

    Anyone with half a brain knows that the respiratory area is well-served by cheap drugs which work well . Steroids e.g., betamethasone) are the cornerstone of asthma therapy and cost virtually nothing. It’s a sign of Witty’ unbelievable arrogance that he thinks GSK is going to “lead the way” with a sack full of higher-priced steroids and beta agonists that offer nothing new to patients. If GSK’s Board does not clean house soon, there will be nothing left of this company. Witty, Vallance, Moncef all need to be shown the door pronto.

  15. Emjeff says:

    I love this analysis from Market Watch..

    Glaxo has become a lower-margin company following its $20 billion asset swap with Novartis AG, in which it traded its highly profitable oncology franchise for the Swiss company’s vaccines business, which has slimmer margins. The pair also formed a joint venture, controlled by Glaxo, for their over-the-counter medicines, which also have lower margins than prescription pharmaceuticals.

    How’s that for a “new paradigm”, Upside?

  16. eyesoars says:

    > How does a CEO spin 60% of the company revenue from patent protected drugs as liability and keep his job?

    Apparently by press release and trolling med-chem websites.

    1. Us Chickens says:

      @drugA The article says Theravance is below $12, not GSK.

  17. DrugA says:

    Is GSK below $12? I seem to see a close at $39, the lowest it has been.

  18. nerd v geek says:

    Emjeff is absolutely correct, COPD, ARDS, IPF etc. need new drugs with differentiated MoA’s – not the same old stuff. I don’t work in the area anymore but have sat on review panels and there is a good future in respiratory medicine if one is willing to try genuinely new therapeutic approaches.

  19. steve_nose says:

    Upside, I’d like to believe that you’re being sarcastic, but more likely you’re one of the sad GSK shills that respond to every blog that mentions GSK, always the same hyper-positive mumbo-jumbo nonsense. If only GSK put as much effort into managing drug disovery as they do into spin, then they’d be a company with a future…

  20. Downside says:

    Sounds like the Witty/Moncef/Vallance plan is coming to fruition: to revitalize the pipeline by getting rid of productive units (Oncology CEDD + several productive satellite sites for other CEDDS) and keeping all the cr@p ones, or ones that are situated in countries where they want to maintain sales by not annoying the govt by laying people off.
    In grabbing tabloid headlines rather than R&D publication headlines by acquisitions such as Sirtris, and in spending more on dividends than they do on R&D because the organization they destroyed is no longer capable of producing viable returns on capital.

  21. NoDrugsNoJobs says:

    Its a shame really, they just missed again I believe. There was a reduction but didn’t reach significance. While its easy to criticize a failed study, success would have been meaningful to patients. We have to take our improvements in baby steps sometimes. Evolution and not revolution is much the story of modern drug development. Lots of little baby steps add up over time.

  22. Mole-art says:

    Dear Upside.
    I think two expressions you used give you over as the long acting Mole of GSK on this blog.
    “undoubtedly ” is suspiciously too British for this blog and
    “Sir Andrew” is suspiciously too respect-foul for the character achievements as GSK’s CEO, is it not?.

  23. Hap says:

    Isn’t the point of significance to actually know that the baby steps are real steps and not the inability to tell whether you’re standing still or going forward? Baby steps would be useful if you know they’re real.

    The other problem is that, for lots of reasons, baby steps are likely to cost as much as real steps (or rather, as much as people are willing to pay for real steps). Hence, people denigrate them because they’re not worth as much to them as they cost. That seems like a much harder problem to solve.

  24. not a chemist says:

    Advair got killed by a lot of formularies for asthma patients like me. Preferred drug is now Dulera. Just a regular inhaler, no fancy packaging.

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