GlaxoSmithKline dumps entire stake in respiratory partner Innoviva for $392M

GlaxoSmithKline GSK House in Brentford, UK
GSK will sell its entire 32% stake in royalty management company Innoviva for roughly $392 million. (GSK) (GlaxoSmithKline)

As GSK forges ahead with its plan to split into two by next year, the pharma giant has unveiled plans to sell its entire stake in respiratory drug partner Innoviva for roughly $392 million.

Innoviva, a royalty management company that collaborates with GSK on respiratory treatments, including Breo Ellipta, Anoro Ellipta and Trelegy Ellipta, has counted GSK among its investors for years. But now GSK is selling its holdings, with plans to use proceeds to "make further investment behind the group's strategic priorities.” 

As part of their partnership, GSK pays royalties to Innoviva for those key respiratory products, which are used to treat conditions like asthma, bronchitis, emphysema and chronic obstructive pulmonary disease (COPD.)

The terms of the companies’ respiratory collaboration will “remain unchanged,” even though GSK will no longer hold any stock in the company, the pair said in statements on Thursday. GSK had been Innoviva's largest investor.

Under the sale agreement, GSK will sell its roughly 32 million shares, or 32% of the company, back to Innoviva at a 3% discount, or $12.25 per share. 

Innoviva is "confident in the collaboration products’ excellent commercial prospects, especially given strong recent performance in the face of a challenging environment," CEO Pavel Raifeld said in a statement. 

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GSK’s decision to dump its entire stake in Innoviva comes as the drugmaker looks to simplify its operations ahead of its 2022 split. Initiated by CEO Emma Walmsley, the restructuring will divide the drugmaker into two companies—one focused on biopharma and the other on consumer products. 

On a call with analysts in late April, Walmsley maintained the split was “well underway” and remains on track for its 2022 deadline. GSK plans to host a meeting in late June where it will lay out “a clear view of the strategy” for the revamped company, including growth opportunities and timing updates. 

The COVID-19 pandemic and the global vaccine rollout has hit GSK’s sales, especially for its blockbuster shingles vaccine Shingrix. The company reported sales of £7.42 billion ($10.28 billion) during the first quarter, an 18% decline compared with the same quarter last year.