GSK's decision to cast off now-valuable drugs raises questions
- Four drugs that GlaxoSmithKline (GSK) discarded are now valued at $5 billion.
- These includes drugs-in-development for treatment of Alzheimer's disease (AD), Fabry disease, muscular dystrophy and pain.
- While many suggest that GSK made a bad decision by discarding drugs that have signficantly increased in value, others suggest that this may be a sign of a huge biotech bubble on the brink of bursting.
At face value, it looks as if GSK may have spun off certain assets too quickly, especially considering the fact that although the overall pharmaceuticals sector is up 30%, GSK's stock is down by 14%. One example of a discarded drug that has increased in value is RVT-101, which was recently acquired by Avoxant, which recently went public and gained a market capitalization of $2 billion in short order. In addition, Amicus, which was co-developing a Fabry disease drug with GSK until GSK pulled out, has increased 7-fold to almost $1.4 billion in value since GSK made that fateful decision.
There are simillar situations with Prosensa and with Biogen. However, GSK has made the point that it wil receive further payments and royalties from Avoxant and Amicus if their drugs eventually reach market. While it's not clear what will happen, it is clear that different companies have different risk profiles and GSK is opting for a more conservative approach than investment-hungry investors.
- Financial Times Quartet of GSK cast-off drugs soar to a combined value of $5bn