'New GSK' shows strength amid investor pressure, but Shingrix still needs to regain its footing

Emma Walmsley
As COVID-19 vaccination programs hit their stride, Glaxo expects Shingrix sales to recover in the second half of the year. (GlaxoSmithKline)

As activist investor Elliott Management turns up the heat on GlaxoSmithKline, CEO Emma Walmsley’s new vision for the company is showing strength. But while Glaxo’s vaccines business does gangbusters overall, its crown jewel Shingrix has yet to hit its stride after the pandemic knocked it off its course.

GSK’s shingles vaccine reeled in £295 million ($409.27 million) for the second quarter, rising 1% at constant exchange rates and missing consensus estimates of £331 million ($459.2 million). Still, GSK expects a rebound in the back half of the year as pandemic vaccination programs near completion and routine vaccinations resume, executives said Wednesday on a call with analysts.

While Shingrix's recovery in certain markets outside the U.S. has been slower, GSK sees potential for "slight growth in sales" worldwide for the full year, chief commercial officer Luke Miels said on a call with analysts Wednesday. Last month, GSK said it was relaunching Shingrix in the wake of the COVID-19 disruption.

RELATED: GlaxoSmithKline touts 'widespread' investor support, backs CEO Walmsley in heated fight with Elliott

As part of its strategy to right the Shingrix ship, GSK is kicking off a direct-to-consumer campaign, Miels said Wednesday. The company will also tune its "messaging and relationships" with U.S. retailers ahead of the 2021 flu season, when adult vaccines are "top of mind," he said. 

Overall, GSK's vaccine sales jumped 49% at constant rates to £1.6 billion ($2.21 billion) for the second quarter. The showing beat consensus estimates by 32%, or 11% when subtracting the £258 million ($357.9 million) Glaxo made from pandemic adjuvant sales, Jefferies analysts wrote in a note to clients Wednesday. 

Elsewhere, GSK's pharma business pulled in £4.2 billion for the period, climbing 12% on the strength of Trelegy, Tivicay and Dovato, the Jefferies team said. Sales for the company's PARP inhibitor Zejula, which it snagged in its $5.1 billion Tesaro buyout, hit $98 million for the quarter, a 38% increase.

Still, it wasn't all good news on the Zejula front. Tucked into GSK's earnings report was an announcement that the company halted its phase 2 Moonstone study, which was looking at a combination of Zejula and GSK's PD-1 inhibitor Jemperli in women with platinum-resistant ovarian cancer without a known BRCA mutation. A pre-planned analysis suggested the data would come up short, GSK said. 

Meanwhile, the pressure is on for Walmsley and her team to deliver on their promises for the "new GSK." Earlier this year, hedge fund Elliott Management, which has a history of agitating for change at Big Pharmas, took a significant position in the company, raising concerns about a potential break-up or sell off of Glaxo. 

RELATED: As GlaxoSmithKline works to get Shingrix back on track, an FDA approval increases the key vaccine's reach

Some of those concerns focused on a series of oncology R&D fumbles. In January, Glaxo's cancer prospect bintrafusp alfa came up short in a key late-stage trial. Other cancer hopefuls like dostarlimab and feladilimab have also suffered setbacks. 

Elliott in early July pushed GSK to overhaul its board to include directors with biopharma and consumer health experience, signaling a de facto challenge to Walmsley's current team.