GSK’s new boss, Luke Miels , has struck one of the British drugmaker’s biggest deals, announcing the $10.6bn (£7.9bn) acquisition of a US cancer specialist with two late-stage medications.
The FTSE 100 company is increasing its oncology portfolio by agreeing to buy Nuvalent, a Boston-based biotech company that develops cancer drugs, including three for lung cancer. GSK will pay $124 a share in cash.
Nuvalent was founded in 2017 by Matthew Shair, a Harvard professor specialising in chemistry and chemical biology, and floated on the Nasdaq stock exchange in 2021.
He has a 2.16% stake in the business, according to LSEG data, indicating he is in line for just under $200m from the biotech company’s sale. Nuvalent’s biggest shareholder is Deerfield Management, a New York-based healthcare investment company.
The deal includes two late-stage next-generation treatments for non-small cell lung cancer which are being reviewed by the US regulator, the Food and Drug Administration, with decisions expected in September and November.
The drugs, zidesamtinib and neladalkib, are expected to launch later this year, assuming they are approved, and could be multi-blockbusters with annual revenues of several billion dollars each.
Both aim for longer effective treatment with better quality of life with improved tolerability, targeting mutations that drive lung cancer. Just under 4,000 people are being treated for these types of lung cancer in the US, most of them female non-smokers aged 40 to 50.
GSK said the Nuvalent takeover was its biggest ever acquisition and the largest transaction it had been involved in since an asset swap announced with Novartis in 2014 that was valued at about $21bn. GSK took over the Swiss company’s vaccines division for $5.25bn and sold its cancer portfolio to Novartis for $16bn under its then chief executive, Andrew Witty.
It is the latest in a string of deals announced by Miels since he took over from Emma Walmsley as chief executive at the start of the year.
In January, GSK acquired the California biotech company RAPT , which is developing a drug to protect against severe food allergies, including allergies to nuts, milk and eggs, for $2.2bn.
Miels, who was previously GSK’s chief commercial officer, is continuing the push into oncology that was begun by Walmsley from 2017, but has surprised investors with the size of the latest deal, after smaller bolt-on acquisitions in recent years.
He said GSK was following a “brick-by-brick approach” to increase its portfolio, adding: “The two lead products are potential best-in-class assets that could launch this year if approved by the FDA and offer significant new treatment options to patients with two forms of non-small cell lung cancer.”
Miels said the deal had been more than a year in the making, describing Nuvalent’s scientists as an “impressive group of people”. “I really became convinced that this was a deal that we needed to do,” he said.
He said with the current drugs on the market, the lung cancer patients had to be treated for seven or eight years and usually put on a lot of weight. “These are relatively young people. They’ve got kids, they [lead] active lives … Clearly there’s a gap for a much better-tolerated product .”
He said the purchase provided GSK with immediate new sales growth opportunities, improving profit contributions from 2027, and a platform in lung cancer for rapid expansion with a product called Ris-Rez that is in late-stage clinical development.
GSK hopes Ris-Rez could treat multiple forms of cancer, and it is expected to contribute to its target of more than £40bn in annual sales by 2031. Some analysts are sceptical that this target can be achieved. The forecast does not factor in the Nuvalent deal.
News of the deal sent Nuvalent shares soaring in pre-market trading on Tuesday, up 38% to $122, while GSK shares were down 1.4% by early afternoon.
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