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GSK reports negative first quarter

R&D pipeline currently includes 59 vaccines and medicines

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GlaxoSmithKline's Upper Providence Twp. site to grow

 

LONDON | GSK (Glaxo Smith Kline), with facilities in Collegeville and Valley Forge, Pa., and its CEO, Emma Walmsley, have been under fire for the company’s lackluster performance compared to other large pharma companies.

Recently, it was reported that activist hedge fund Elliott Management had built up a multi-billion-pound stake in the company, which almost certainly spells more challenges for Walmsley and GSK down the road.

Further complicating things, the company is actively planning to separate its consumer unit in 2022. Said Walmsley in a statement: “Separation plans are also well underway, and we look forward to sharing our strategy and growth outlook for New GSK with investors in June.”

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Nevertheless, even though GSK reported mostly negative results for the first quarter, its earnings managed to exceed analysts’ expectations and its stock was trading roughly even mid-day Wednesday.

Walmsley commented: “Our first quarter results are in line with our expectations and reflect the anticipated impacts of COVID-19. We continue to expect a significant improvement in performance over the remainder of the year and reconfirm our guidance for 2021 and 2022 outlook.”

R&D Pipeline

GSK’s approach to R&D focuses on the science of the immune system, genetics and advanced technologies. The pipeline currently comprises 59 vaccines and medicines, predominantly in the areas of infectious diseases, oncology and immune-mediated diseases.

The company has identified over 20 potential product approvals which could take place by 2026, of which more than 10 could significantly change medical practice and potentially generate peak annual sales in excess of one billion dollars.

GSK is working on a number of COVID-19 Vaccine collaborations. The company has reached an agreement in principle with Novavax and the UK Government Vaccines Taskforce to support manufacturing of up to 60 million doses of Novavax’s COVID-19 vaccine candidate (NVX-CoV2373) for use in the UK.

Medicago and GSK started a Phase III trial of adjuvanted COVID-19 vaccine candidate in combination with GSK’s pandemic adjuvant, as part of the ongoing Phase II/III study.

Sanofi and GSK started a new Phase II study of adjuvanted recombinant protein-based COVID-19 vaccine candidate and GSK and SK Bioscience started a new collaboration and Phase I/II study of an adjuvanted protein-based COVID-19 vaccine candidate. In addition, GSK started a Phase I study with self-amplifying mRNA (SAM) with COVID-19 as model antigen.

First Quarter Results

Group sales were £7.418 billion in the first quarter, down 15% CER (Constant Exchange Rate).

Pharmaceutical sales in the quarter were £3.882 billion, a decline of 8%, reflecting the continued impact of the COVID-19 pandemic, including the inventory build in the first quarter of 2020 and lower demand for antibiotic products in the first quarter of 2021.

New and Specialty sales of £1.940 billion grew 3%, with growth from Respiratory, Immuno-inflammation and Oncology partially offset by decline in HIV. Sales of Established Pharmaceuticals declined 17% to £1.942 billion.

Vaccine sales declined 30% to £1.224 billion, primarily driven by the adverse impact of the COVID-19 pandemic on Shingrix, Hepatitis vaccines, DTPa-containing vaccines and Bexsero, partly offset by the performance of Cervarix in China.

Consumer Healthcare sales declined 16% CER to £2.312 billion in the first quarter, largely driven by the divestment program which has now completed. Sales excluding brands divested/under review declined 9% .

Total operating profit was £1.693 billion in first quarter 2021 compared with £2.014 billion in 2020. Adjusted operating profit was £1.881 billion, 23% lower on a sales decline of 15%. investment in R&D.

Total EPS (Earnings Per Share) was 21.5 pence, compared with 31.5 pence in 2020. Adjusted EPS was 22.9 pence in 2021’s first quarter compared with 37.7 pence in the first quarter of 2020, down 33% CER.

2021 Guidance

“The launch of Cabenuva for HIV and Phase III starts for our RSV vaccine and a new long-acting treatment for severe asthma are key milestones as we continue to strengthen our growth prospects,” said Walmsley. “In 2021, as planned we will continue to increase investment in our pipeline, build on our top-line momentum for key growth drivers and largely complete readiness for separation.”

Walmsley reconfirmed a guidance range for 2021 for a decline of adjusted EPS in the mid to high-single digit percent range. Assuming healthcare systems and consumer trends approach normality in the second half of the year, the company continues to expect Pharmaceutical revenue to grow flat to low-single digits and Consumer Healthcare revenue to grow low to mid-single digits excluding brands divested/under review with above market growth.

For the Vaccines business, GSK anticipated disruption during the first half of the year, given governments’ prioritization of COVID-19 vaccination programs and ongoing measures to contain the pandemic. The company remains confident in the underlying demand for its Vaccine products, and expects strong recovery and contribution to growth, notably from Shingrix, in the second half of the year, with Vaccines revenue for 2021 growing flat to low-single digits.

GSK (NYSE: GSK), headquartered in London, U.K., consists of three global businesses that research, develop and manufacture innovative pharmaceutical medicines, vaccines and consumer healthcare products.

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