GlaxoSmithKline (GB:GSK) has inked a deal to acquire the Boston-based clinical-stage biopharmaceutical company Affinivax for $3.3 billion.
With innovative vaccines and specialty medicines under development, the deal will boost GSK’s portfolio. It will provide access to a next-generation, 24-valent pneumococcal vaccine candidate in the phase II development stage as well as the highly innovative MAPS technology.
Benefits of the Acqusition
Privately-held Affinivax is a pioneer in the development of a novel class of vaccines, including Multiple Antigen Presenting System (MAPS) and next-generation pneumococcal vaccines for pneumococcal diseases like pneumonia, meningitis, bloodstream infections, and sinusitis.
Developed at Boston Children’s Hospital, Affinivax’s lead candidate (AFX3772) targets 24 different types of serotypes in a single shot (compared to up to 20 serotypes in currently approved vaccines).
Notably, in early human trials, the vaccine showed a stronger immune response against prevalent pneumococcal serotypes compared to two of the leading conventional vaccines already used against pneumococcal diseases.
Meanwhile, one more pneumococcal candidate vaccine is also in the pre-clinical development stage that is expected to cover 30 different types of pneumococcal bacteria.
In July 2021, AFX3772 received Breakthrough Therapy designation for the prevention of S. pneumoniae invasive disease and pneumonia in adults 50 years and older by the US Food and Drug Administration (FDA).
The addition of Affinivax will enhance GSK’s vaccine research and development (R&D) pipeline, give access to a new, potentially disruptive MAPS technology, and also strengthen GSK’s existing scientific footprint in the Boston area.
Details of the Deal
Per the terms of the deal, GSK will pay $2.1 billion upfront and up to $1.2 billion in potential development milestones for 100% of the outstanding shares of Affinivax. The two future milestone payments of $0.6 billion will be made each upon the achievement of certain paediatric clinical development milestones.
The acquisition is expected to close in the third quarter of 2022, subject to certain regulatory approvals.
Reiterated FY2022 Outlook
Concurrent with the deal announcement, GSK also reiterated its financial guidance for FY2022.
Furthermore, in the medium-term for 2021-2026, the company continues to forecast growth of over 5% in sales and a 10% compound annual growth rate (CAGR) in adjusted operating profit.
Dr Hal Barron, Chief Scientific Officer and President R&D at GSK, commented, “In the adult phase I/II clinical trials, AFX3772 was well tolerated in participants and demonstrated good immune responses compared to the current standard of care.”
Shedding light on the road ahead, he further added, “Phase III is expected to start in the short term. Phase I/II clinical trials to assess the use of the vaccine in paediatrics are planned to begin later this year.”
Wall Street’s Take
Following the news, J.P. Morgan analyst James Gordon reiterated a Hold rating on the stock with a price target of GBp1,900 (9.66% upside potential) and a Hold rating.
Overall, the stock has a Strong Buy consensus rating based on three Buys, seven Holds and one Sell. The average GlaxoSmithKline stock forecast of GBp 1809.91 implies 4.7% upside potential from current levels.
Currently, GSK has had one pneumococcal vaccine called Synflorix approved for use in Europe and the U.S. since 2009.
After the spin-off of GSK’s consumer business in July, the company needed to boost its pipeline of pharmaceutical products.
The acquisition could be a step in the right direction, significantly boosting the company’s revenues, with a big gateway to a new vaccine technology targeting common bacterial diseases.
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