- Blenrep fails to impress US regulator
- Potential $1 billion sales hit
- Drug approved in UK and Japan
GSK (GSK) was the biggest faller in the FTSE on Friday (18 July) after reporting that its blood cancer treatment Benrep received a negative recommendation from the US regulatory advisory committee.
The shares sank 6.5% to £13.2, a fresh three-month low, taking the year-to-date loss to 3%, compared with a 9% gain in the blue-chip FTSE 100 index.
DEFICIENCIES OUTWEIGH BENEFITS
While a formal decision is still to be made by the US FDA (Food and Drug Administration) on 23 July, analysts at Berenberg believe it is unlikely Blenrep will be given the nod of approval.
‘While there was broad appreciation of the drug’s efficacy profile, the committee members concluded that high ocular toxicity rates and inadequate dosing regimens outweighed the benefits,’ said Berenberg.
It is particularly disappointing for GSK in the context of the drug’s prior approval in the UK and Japan and a positive recommendation from the European regulator. The treatment is currently under review in more than 10 countries.
GSK had removed the drug from the market in 2022 after disappointing data from a late-stage trial, but subsequent positive data from the DREAMM-7 and 8 trials gave the company a second chance.
WHAT THIS MEANS FOR SHAREHOLDERS
Although there was some market scepticism regarding estimated peak sales of around $3 billion, (the US representing half of those sales), Shore Capital’s Sean Conroy believes there is now up to $1 billion worth of revenues at risk.
‘More importantly however, we had signalled Blenrep-related upgrades could help meaningfully bridge the gap between our current financial year 2031 forecast sales expectations of circa £37 billion and GSK’s target for more than £40 billion, with consensus materially below this on circa £34 billion,’ explained Conroy.
‘GSK shares continue to remain at a disproportionate discount relative to peers as it has struggled to convince the market that it can grow through forthcoming HIV patent expiries,’ lamented Conroy.
