Zeroing in on fast-growing vaccines, GSK sheds 2 shots to Bavarian Nordic for up to $1.1B

Under its former CEO Andrew Witty, GlaxoSmithKline made a huge play in vaccines by picking up most of Novartis’ offerings in a multibillion-dollar asset swap. Now, it's slimming down a bit by offloading two of those shots to Bavarian Nordic for up to €955 million ($1.06 billion)

GSK agreed to sell its rabies and tick-borne encephalitis vaccines, both picked up in that Novartis asset swap. The deal includes a €301 million up-front payment, inventory of €159 million and up to €495 million in potential milestones, which cover successful technology transfers, transfer of approvals and more.

The drugmaker’s global vaccines president Roger Conner said in a statement the deal “will enable us to commit greater resources to our key growth assets and to our R&D pipeline, while also ensuring the continued supply of these important and successful vaccines.” 

The decision comes as GSK’s vaccines group posts strong growth, due in large part to recent launch Shingrix, which won its FDA nod in October 2017. The shingles vaccine has far exceeded expectations, growing sales to £734 million ($952 million) during the first half of 2019.

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So far, GSK has focused on the U.S. in its Shingrix rollout, but it has also launched in Canada and Germany; it also recently won a Chinese approval. Strong demand for the vaccine has outstripped supply, and GSK has pledged to invest in added capacity.

Meningitis shots have also been chipping in growth for the drugmaker, with sales rising 22% in the first half to £444 million ($576 million). Overall in the first half, GSK’s vaccines sales were up 25% versus the same period last year to £3.1 billion ($4.02 billion)

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For Bavarian Nordic, the deal comes on the heels of U.S. approval for its next-gen smallpox vaccine Jynneos. That vaccine is also the first to win an approval worldwide for monkeypox.  

GSK will keep making the rabies and tick vaccines at its Marburg site in Germany until the process is fully transferred to Bavarian Nordic. The transfer will start early next year and be completed in five years, GSK said. The company isn’t transferring any employees or manufacturing sites to BN. The companies hope to close by the end of the year.