Novartis Plans Acquisition of GSK's Oncology Products

Andrew Witty, CEO

GlaxoSmithKline (GSK) has agreed to sell its entire oncology portfolio to Novartis for an aggregate of $16 billion. As part of the agreement, Novartis will hand over control of its non-flu-related vaccines to GSK for up to $7.1 billion and the companies will form a joint consumer healthcare venture, which GSK will operate as a 63.5% majority shareholder.

Under the agreement, Novartis will assume control of several currently FDA approved cancer therapies, including dabrafenib (Tafinlar), trametinib (Mekinist), pazopanib (Votrient), lapatinib (Tykerb), and ofatumumab (Arzerra). Additionally, the company will receive eltrombopag (Promacta), which is currently approved as a treatment for chronic hepatitis C and idiopathic thrombocytopenia. In February, eltrombopag received a Breakthrough Therapy designation for the treatment of cytopenias in patients with severe aplastic anemia.

“Over the last six years we have made excellent progress to develop a series of innovative medicines,” Andrew Witty, chief executive officer at GSK, said in a release. “This transaction provides us with a unique opportunity to crystallize an attractive value for this portfolio and allow these medicines to benefit from Novartis’ global scale in this area.”

The transaction is conditional upon approval from the GSK shareholders and antitrust authorities. The general meeting for GSK shareholders will be held at the end of 2014. If approvals are granted, the companies expect the transaction to complete in the first half of 2015.

The oncology agreement between the companies is comprised of a $14.5 billion payment with $1.5 billion contingent on results from the phase III COMBI-d trial exploring the combination of dabrafenib and trametinib in comparison with dabrafenib and placebo for patients with metastatic melanoma.

Earlier this year, the FDA granted the combination of dabrafenib and trametinib an accelerated approval based on an improvement in overall response rates for patients with BRAF-mutated melanoma. This approval is contingent on results from the COMBI-d study.

In late January, GSK announced that the COMBI-d study met its primary endpoint by showing a statistically significant improvement in progression-free survival. Moreover, response rates and overall survival findings at the interim analysis were reported to be consistent with the earlier findings that supported the approval. Full results from this analysis will be presented at an upcoming meeting.

Dabrafenib and trametinib were each approved as single agents in May 2013 along with a companion diagnostic. The approval of the agents in combination marked the first for a targeted therapy combination in advanced melanoma.

In a separate agreement, Novartis announced plans to sell its Animal Health Division to Eli Lilly and Company for approximately $5.4 billion. The transaction with Lilly is expected to close in early 2015.

“We believe the divestment of our smaller Vaccines and Animal Health Divisions will enable us to realize immediate value from these businesses for our shareholders, and those divisions will benefit from being part of large, global businesses that are also leaders in their segments,” Joseph Jimenez, the chief executive officer of Novartis, said in a release. “Patients will benefit from even higher levels of innovation that this focus may afford. Looking ahead, this positions Novartis well for future healthcare industry dynamics.”

Novartis currently markets a number of oncology products, such as imatinib (Gleevec), everolimus (Afinitor), zoledronic acid (Zometa), and ruxolitinib (Jakafi). If the agreement is approved, the company will have opt-in rights for GSK's current and future oncology pipeline. GSK plans to continue research and development programs for new treatments in the areas of cancer immunotherapy, epigenetics, and tumor environment.