GlaxoSmithKline (GSK) recently announced that its inhalational anthrax candidate, raxibacumab, has received US Food and Drug Administration (FDA) approval. Raxibacumab was approved for inhalational anthrax caused by bacillus anthracis in patients (both adult and pediatric) in combination with appropriate antibacterial drugs and for prevention of inhalational anthrax when other therapies are not available or appropriate.
We note that raxibacumab is the first monoclonal antibody to be cleared by the FDA as per its Animal Efficacy Rule. The rule facilitates the approval of candidates solely on the basis of efficacy data from animal trials, when it is not possible to conduct human trials.
The candidate was initially developed by the Biomedical Advanced Research and Development Authority (BARDA), US Department of Health and Human Services (HHS) and Human Genome Sciences, which was later acquired by Glaxo.
Our Recommendation
We currently have a Neutral recommendation on Glaxo. The stock carries a Zacks #3 Rank (Hold) in the short run.
Several products in Glaxo’s portfolio including Valtrex, Arixtra, Evoclin, Lamictal, Imitrex, Requip, Combivir and Epivir are facing declining sales due to intense generic competition. We expect the company's top line and gross margins to remain under pressure in the coming quarters. EU pricing pressure will continue to affect sales as well.
Glaxo is aiming to maximize the potential return from its pipeline. The company is looking toward deals and acquisitions to drive growth. Further, the company is focusing on increasing the rights on its partnered products and promising pipeline candidates, so that it stands to benefit more from their success.
Glaxo’s acquisition of Cellzome and Human Genome Sciences, increasing investment in Theravance Inc. (THRX) and Amicus Therapeutics (FOLD) and amended agreement between ViiV Healthcare and Shionogi indicate its efforts to expand the pipeline.
Apart from this, Glaxo continues to progress on its cost-cutting initiative, which should help reduce the impact of increasing generic competition over the next few years and boost earnings.
Large-cap pharma stocks currently holding a Zacks #2 Rank include companies like Novo-Nordisk (NVO) and Johnson & Johnson (JNJ).
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