GlaxoSmithKline (GSK) is in the news primarily for its hostile bid to take over Human Genome Sciences (HGSI) and secondly because of its work on skin cancer drugs.
Let's look at the hostile takeover bid first. This refers to the ongoing story that GlaxoSmithKline is attempting to acquire Human Genome Sciences, a company that it has worked with in peace for many years up until now. The most recent development in this case is that Human Genome Science has decided to use a "poison pill" strategy to put the larger pharmaceutical company off. As one source puts it, the company has "adopted a "poison pill" shareholder rights plan to ward off unsolicited takeover bids for the biotech drug maker". This will essentially dilute the holdings if anyone, or any company such as GlaxoSmithKline, tries to acquire fifteen or more percent of the company. This is quite a good move, but GlaxoSmithKline seems unperturbed by Human Genome Science's reluctance to give in. In addition, Human Genome Science is recommending that its shareholders reject the offer form GlaxoSmithKline and they do not tender their shares in the company. Human Genome Science states that its reason for this recommendation is that the bid made by GlaxoSmithKline is inadequate and does not correspond with the true value of the company.
What has GlaxoSmithKline's reaction been? Well, the company has no intention of withdrawing or adjusting its bid for Human Genome Sciences. It plans to follow its current course of action as the acquisition will serve it and its stockholders well. At the same time, the company insists that it would prefer to conclude proceedings on a friendly basis. However, this seems contrary to the company's actual actions in the situation as the initial bid was unsolicited. At this point, I believe that a deal will be reached between the two companies at only a slightly higher price than the initial offering from GlaxoSmithKline. Human Genome Science has consistently traded above the offer price from GlaxoSmithKline ever since the bid was first made.
Recently, GlaxoSmithKline has developed a skin cancer treatment that comes with significantly fewer side effects than what patients generally experience if they undergo chemotherapy.
The two drugs, which are called trametinib and dabrafenib, were tested in patients with a mutation in a gene known as BRAF. This is the gene mutation that is responsible for melanomas in skin cancer, which is the most lethal kind. There are other drugs available that have a similar effect, but what makes the new offerings from GSK particularly attractive is the high chance that the side-effects caused by the drugs will be significantly less than those caused by the existing treatments for this form of cancer. Chemotherapy is not a pleasant treatment to endure in the least, and I think that the fact that the two drugs have fewer side effects than chemo will make them a more attractive option. Therefore, I believe that if the drugs are approved they will sell well and the stock will benefit greatly from those sales. The drugs are not 'perfect' in that side effects will still be experienced, however it is a better option than what is currently available. In addition, the two drugs may be able to keep skin cancer from worsening longer than chemotherapy is able to achieve.
A focus on cancer treatment is the way forward for pharmaceutical companies at present, so I believe that GlaxoSmithKline has the right idea about how to develop.
Pfizer (PFE) is one of GlaxoSmithKline's competitors that seems able to stay ahead of the pack. This probably due to the fact that it is closely involved in important innovations aimed at making a significant difference to the world at large. For example, Pfizer is one of the company's working hard to battle cancer. It will soon report on its drug aimed at fighting certain types of lymphoma and leukemia. The race to cure cancer in its various forms has accelerated and it seems that we are moving closer to achieving cures - and Pfizer is one of the leaders in this endeavor.
Novartis AG (NVS) has been in the news for entering into an agreement with Genmab (GEN). The agreement states that for an initial payment of $2 million, Genmab will help Novartis by using its DuoBody technology platform to identify bispecific antibodies to two disease target combinations identified by Novartis. This will allow Novartis to develop better antibody therapy for a variety of illnesses and condition including cancer, autoimmune, infectious and central nervous system disease. Novartis is funding the entire operation, so stockholders hope that all of its research goals will be met in a way that benefits them.
Interesting news from Eli Lilly (LLY): the company has invented a new radioactive drug that will allow surgeons to see plaques in the brain when they examine the patient with a PET scan. This is a way to identify Alzheimer's disease in patients, something that before could only be done after death. However, the results that you get from this are far from conclusive in determining or denying the presence of Alzheimer's disease. Also, the drug is not widely available, so the impact of this breakthrough on Eli Lilly's revenue will most likely be small at best.
Abbott Labs (ABT) has had to pay huge amounts of money to several different states due to the fact that I decided to market its anti-seizure drug for purposes for which it had not been approved. Abbott will have to pay $1.5 billion to the Department of Justice. This is a huge amount of money and it is no wonder that investors and stockholders in the company are feeling just a little bit nervous.
GlaxoSmithKline is poised for significant growth if it can finish its work on both the acquisition and the new treatment. The success of both should be a catalyst for new growth, and should leave stockholders quite pleased.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.