GSK’s “crown jewels” already look tarnished

Last year GSK named the late-stage projects that together, it believed, had peak sales potential of over £20bn ($23.7bn). Today, it pulled one of these, Blenrep, from the market.

Even if market withdrawal might have been foreseen after the failure of this antibody-drug conjugate's confirmatory trial, the speed with which GSK has lost one of its flagship oncology projects will alarm investors. And this is the latest in a long line of setbacks for GSK’s “crown jewels”. The group is likely to face more questions about whether it can continue in its current form – and how long Emma Walmsley, can hang on as chief executive.

Ms Walmsley came under fire from the activist investor Elliott in 2021, a hedge fund that is thought to still be an investor. At the start of 2022 some investors predicted that she would not last the year.

It is becoming clear that GSK’s push into oncology, signalled by the $5bn takeout of Tesaro in 2018, has been a disaster, but perhaps the blame should not fall entirely on Ms Walmsley’s shoulders. Her erstwhile right-hand man, Hal Barron, also played a big part in the group’s oncology strategy.

Ultimately, though, she presided over the decisions. And it is not just cancer where GSK has run into trouble. The rheumatoid arthritis project otilimab is on the scrapheap following lacklustre pivotal results, and there are doubts about whether the anaemia project Duvroq can become as big as hoped following a mixed adcom vote.

Zantac litigation still hangs over the company, with analysts recently questioning whether concerns here could put business development on hold. Until this litigation is resolved, GSK will be under a cloud.

In the meantime, the group will cling to its recent successes. Pivotal trials of gepotidacin, in uncomplicated urinary tract infection, were stopped early for efficacy, but there is always a question mark over how big new antibiotics can be, since they are usually kept in reserve.

GSK also presented phase 2 data on its Ionis-originated hep B hopeful bepirovirsen at the AASLD meeting earlier this month. The B-Clear study found 9-10% of patients achieving target viral suppression, although the authors conceded that a combination approach might be needed to improve responder rate. A phase 3 trial, to start next year, could give a better indication of whether the project might indeed represent a functional cure.

And GSK also scored with its most important pipeline project, the adult RSV vaccine GSK3844766A, which looks to have the edge over Pfizer’s contender in terms of efficacy – although the Pfizer asset looks more tolerable.

As with gepotidacin, market size is an issue. SVB estimates the adult RSV vaccine market to be worth $6bn, with GSK picking up just 25% of this. And the company discontinued its maternal RSV contender, which had been another big hope.

Success in RSV, although much needed, will do little to counteract the belief that GSK is primarily a vaccines company. Some investors have called for a spin-out of this business, something that the group has so far resisted. If GSK’s efforts elsewhere continue to disappoint, it might not be left with much choice. If it does separate its vaccines, though, the big question will be: what is left?