Glaxo’s Shingles Vaccine Helps Boost Earnings Over Estimates
(Bloomberg) -- GlaxoSmithKline Plc’s shingles vaccine helped counter new competition for its aging asthma treatment as the U.K. drugmaker posted first-quarter earnings that beat analysts’ estimates.
Shingrix, the shot that’s become a key growth driver for Glaxo, handily exceeded expectations, according to a statement Wednesday. The company said the vaccine, approved in late 2017, will likely generate significantly more than 1 billion pounds ($1.3 billion) in sales this year.
As longtime blockbuster Advair bows to generic competition, Chief Executive Officer Emma Walmsley is betting on innovative products like Shingrix as well as returns from the lucrative oncology field after buying Tesaro and partnering with Germany’s Merck KGaA on a cancer drug. Investors are closely watching the costs of launching new products and expanding in cancer.
Glaxo will look for more deals, probably on a smaller scale in the near term, focusing on immunology, genetics and new technologies, Walmsley said on a call with reporters. Cell and gene therapies are “highly relevant’’ for its pipeline, and the company sees an opportunity to improve on manufacturing, a key challenge for the emerging field, she said.
Plans to split into two companies after creating a consumer-health venture with Pfizer Inc. will provide additional strength “to invest in both returns to shareholders and further growth, organic and inorganic,’’ she said.
The company maintained its forecast for earnings per share, excluding some costs, to decline as much as 9 percent this year. That raises the question of why Glaxo didn’t raise, or at least narrow, its outlook, according to Sam Fazeli and Cinney Zhang, analysts at Bloomberg Intelligence. The company could be playing it safe in case pressure on respiratory drugs intensifies or the vaccines business cools, they wrote.
What Bloomberg Intelligence Says
“The question is why it hasn’t raised, or at least narrowed, its guidance range. We think it’s playing it safe in case vaccines normalize and respiratory pressure intensifies.”
-- Sam Fazeli, BI pharmaceuticals analyst
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Glaxo also said that results from some tests of an experimental cancer drug that targets a protein called BCMA will be pushed back to the second half of the year from the first. The delay isn’t due to safety issues, and the company said it’s looking for ways to make up the time. The data are from tests in multiple myeloma patients who’ve already received one round of unsuccessful treatment, and the rest of the development program is on track, according to Glaxo.
The results also highlight pressure on Glaxo’s key HIV medicines, according to a note from Bernstein analysts. Sales of Triumeq, the company’s biggest drug, missed the average estimate.
Earnings per share excluding some costs totaled 30 pence, Glaxo said. Analysts surveyed by Bloomberg had estimated 26 pence on average. Sales of 7.66 billion pounds beat the average prediction of 7.54 billion pounds. Shingrix sales surged to 357 million pounds.
Glaxo slipped 0.9 percent at 4:50 p.m. in London.
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