GSK buys Sierra Oncology for US$1.9b in cancer push
[LONDON] GlaxoSmithKline (GSK) agreed to buy biotech company Sierra Oncology for US$1.9 billion as the UK drugmaker moves to strengthen its stable of medicines to fight cancer and prepares to spin off its consumer-health unit.
The pharmaceutical giant will pay US$55 per share in cash for California-based Sierra, a maker of targeted therapies for rare forms of cancer, GSK said on Wednesday (Apr 13). That's 39 per cent more than Sierra's closing price on Tuesday of US$39.52.
The move is part of chief executive officer Emma Walmsley's effort to bolster the pharma business as the drugmaker prepares to split with Haleon, the maker of Panadol painkillers and Sensodyne toothpaste, in July. The company, facing pressure from activist investor Elliott Investment Management, has said the separation will strengthen the prospects of both companies.
As GSK focuses on lucrative drugs for cancer, HIV, and other diseases, as well as vaccines, the company is facing questions about its pipeline. While the deal is encouraging, the company needs further steps to build up its lineup of novel drugs in advanced stages of development, according to Bloomberg Intelligence.
With the Sierra purchase, GSK gains a treatment targeting myelofibrosis, a fatal cancer of the bone marrow impacting the normal production of blood cells. The medicine, called momelotinib, showed promising results in a late-stage study earlier this year, GSK said. GSK said it expects the transaction to start contributing to sales next year with significant growth potential in the future. It will likely add to adjusted earnings in 2024, the anticipated first full year of momelotinib's sales, and the company reiterated its full-year 2022 guidance and medium-term outlook.
GSK bought cancer-drug maker Tesaro for US$5.1 billion in 2018, followed by a US$4.2 billion collaboration with Germany's Merck. BLOOMBERG
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