GSK to buy Nuvalent for US$10.6 billion to expand in cancer drugs

[LONDON] GSK agreed to buy Nuvalent in a deal valued at US$10.6 billion (S$13.6 billion).

This adds a biotech firm that is developing treatments for lung cancer, as the British pharmaceutical company seeks to rebuild its oncology franchise.

GSK will pay US$124 a share in cash for Nuvalent, based on a statement on Tuesday (Jun 9), a 40 per cent premium over the Cambridge, Massachusetts-based company’s closing share price on Monday.

It marks a significant expansion of GSK’s cancer portfolio, which has been slowly growing since the British drugmaker returned to the disease space in 2019, as well as the first major acquisition for chief executive officer Luke Miels.

Since taking over at the start of this year, he has been working to revitalise GSK, which does not have a history of risk-taking, and has long struggled to allay investors’ fears about the drugs it has in development.

The company’s shares fell as much as 3 per cent in early trading in London. The stock is up by around 23 per cent over the past 12 months.

Nuvalent designs precisely-targeted therapies for oncology patients including lung cancer. Its shares have declined by 12 per cent this year, giving it a market value of almost US$7 billion.

Two of the medicines GSK is acquiring are in late-stage trials, with the US Food and Drug Administration expected to decide on regulatory approval later this year. Both could be blockbuster medicines if approved, GSK said.

The Nuvalent deal will not impact GSK’s guidance for the year, and it is expected to contribute to revenue growth from 2027, said the statement.

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The two leading drugs from Nuvalent treat non-small-cell lung cancer patients that have specific mutations. These mutations usually affect people who do not smoke.

The fortunes of GSK and rival British drugmaker AstraZeneca diverged in 2014, as Astra CEO Pascal Soriot worked to make the company a cancer drug powerhouse.

GSK meanwhile divested its oncology portfolio in an asset swap with Novartis in 2014.

Miels, a protege of Soriot, left Astra bitterly, with the company suing him in 2017, alleging he was in violation of his employment agreement. The two companies settled, with Miels joining GSK later that year.

Well-liked by investors, the pick of Australian Miels to succeed Emma Walmsley as CEO was seen as a move that could rejuvenate GSK. The drugmaker, known for its vaccines, has focused on immunology and Human Immunodeficiency Virus as vaccine sales have slowed.

In January, GSK agreed on a US$2.2 billion deal to buy US biotech Rapt Therapeutics, which develops treatments for inflammatory and immunologic diseases. The firm secured a pulmonary hypertension drug in another transaction.

The Nuvalent purchase is expected to be completed by the third quarter, pending regulatory approvals. The transaction will be funded mainly through new and existing debt facilities plus cash, and will not affect GSK’s credit rating, the company said. BLOOMBERG