By Adria Calatayud
GSK agreed to buy U.S. cancer-drug developer Nuvalent for $10.6 billion, striking its biggest deal in years as the U.K. pharmaceutical company continues to branch out into oncology.
The acquisition is set to give GSK two drug candidates for lung cancer currently under review by the U.S. Food and Drug Administration for approval this year, as well as a third, earlier-stage medicine, the company said Tuesday. GSK also expects the deal to boost its sales and core operating profit from next year, ahead of the loss of patent protection for HIV drug dolutegravir.
GSK has sought to rebuild its oncology business in recent years after exiting it as part of an asset swap with Switzerland's Novartis completed in 2015. At the time, GSK sold its oncology unit to Novartis in exchange for its vaccines business, and the two merged their consumer-healthcare operations. GSK later bought Novartis's stake in the consumer business for $13 billion.
Acquisitions like Tesaro, Sierra Oncology and IDRx, as well as licensing deals, helped GSK return to the market for cancer treatments--one of the most lucrative in the pharmaceutical industry--over the past decade.
"Our strategy has been a brick-by-brick building approach," GSK Chief Executive Luke Miels said on a call with reporters.
The deal for Cambridge, Mass.-based Nuvalent marks a departure from GSK's recent acquisitions, which have been smaller and typically centered on one-product companies. Miels said the deal was unusual for GSK because it added three products in one transaction, but was consistent with the company's strategy of targeting companies with validated science that try to address shortcomings of existing therapies.
GSK will need some time to digest the Nuvalent purchase, but it will retain dealmaking capacity and is looking at new opportunities, Miels said.
Nuvalent has two drugs for lung cancer in late-stage development, zidesamtinib and neladalkib. GSK said both are expected to hit the market this year, subject to FDA approval, and have potential to become blockbuster assets given the efficacy and tolerability limitations of current treatments.
GSK had been looking to enter into lung cancer treatment through an experimental drug licensed from China's Hansoh Pharmaceuticals, ris-rez, and said the Nuvalent deal would accelerate its efforts. The acquisition also expands GSK's pipeline by adding another medicine in early-stage studies alongside several other projects that have yet to be tested in clinical trials, it added.
Under the deal, GSK said it would launch a tender offer of $124 a share in cash for Nasdaq-listed Nuvalent, or a 40% premium to the target's Monday closing price of $88.49. GSK said its aggregate investment is estimated to be $9.4 billion given that Nuvalent brings cash with it.
Nuvalent shares jumped 38% in U.S. premarket trading, while GSK traded 3% lower in European morning trading.
GSK said the acquisition is expected to contribute to revenue growth and strengthen its core operating profit from 2027, helping offset the dolutegravir patent expiration over 2028-30, and it is incremental to its goal of exceeding 40 billion pounds ($53.36 billion) in sales by 2031.
"This is incremental, we don't need this deal to achieve the target," Miels said.
Write to Adria Calatayud at adria.calatayud@wsj.com
(END) Dow Jones Newswires
06-09-26 0441ET
