GSK to acquire Sierra Oncology for $1.9B to bolster specialty meds; Sierra soars 38%

Apr. 13, 2022 4:47 AM ETGSK plc (GSK)By: Ravikash, SA News Editor

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GlaxoSmithKline (NYSE:GSK) is acquiring San Mateo, Calif.-based Sierra Oncology (NASDAQ:SRRA) in a $1.9B cash deal to bolster its cancer drug portfolio.

Under the agreement, outstanding shares of Sierra will be cancelled and converted into the right to receive $55 per share in cash. GSK said the per share price represents a premium of ~39% to Sierra's closing stock price on April 12.

Sierra's main drug candidate is momelotinib to treat myelofibrosis, a type of bone marrow cancer. A phase 3 trial of the drug had met its main goal in January, skyrocketing the shares.

The British drugmaker said momelotinib complements GSK’s Blenrep (belantamab mafodotin), building on its commercial and medical expertise in haematology. The proposed acquisition aligns with GSK’s strategy of building a portfolio of new specialty medicines and vaccines.

GSK expects momelotinib will contribute to its specialty medicines business, with sales expected to begin in 2023.

"With this proposed acquisition, we have the opportunity to potentially bring meaningful new benefits to patients and further strengthen our portfolio of specialty medicines,” said GSK Chief Commercial Officer Luke Miels.

The transaction is expected to close in Q3 2022 or before, subject to conditions, including approval by at least a majority of Sierra stockholders and U.S. antitrust approval, among other things.

Sierra's (SRRA) board has recommended its stockholders to vote in favor of the merger. Additionally, certain stockholders holding ~28% of Sierra’s outstanding shares have agreed to vote in the favor of the deal.

GSK (GSK) said it will account for the transaction as a business combination and expects it to be accretive to adjusted EPS in 2024, the expected first full year of momelotinib’s sales.

In addition, New GSK reaffirmed its full-year 2022 guidance, the medium-term outlook for 2021-2026 of more than 5% sales and 10% adjusted operating profit CAGR at CER, and long-term sales ambition.

GSK said the value of the gross assets of Sierra to be acquired (as of Dec. 31, 2021) is $109M. The net losses of the business were $95M for the 12 months ended Dec. 31, 2021.

SRRA +37.68% to $54.41 premarket April 13

GSK +0.37% to $46.70 premarket April 13

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