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GSK, Flagship enter multibillion-dollar drug discovery deal

By Ashleigh Furlong
The logo of GSK Plc displayed at the company's headquarters in the Brentford suburb of London, UK, on Tuesday, April 30, 2024. When Elliott Investment Management, a hedge fund known for taking stakes in underperforming companies, came calling for the ouster of GSK Chief Executive Officer Emma Walmsley, she found her remedy in a vaccine breakthrough almost 60 years in the making. Photographer: Vivian Wan/Bloomberg (Vivian Wan/Bloomberg)

(Bloomberg) -- GSK Plc and Flagship Pioneering Inc. entered a partnership to develop as many as 10 new drugs in a deal that could pay more than US$7 billion to firms supported by the venture capital biotech.

Flagship, which created mRNA Covid-vaccine maker Moderna Inc., and GSK will jointly put $150 million upfront toward exploring new respiratory and immunology treatments, according to a statement Monday. GSK will commit as much as $720 million for each of the 10 drugs, including upfront payments, if they reach all of their development and commercial milestones.

Chief Executive Officer Emma Walmsley is working to hone GSK’s product portfolio, and the deal with Cambridge, Massachusetts-based Flagship is aimed at fields where the drug giant has been working to expand. Earlier this year, GSK agreed to buy US biotech Aiolos Bio Inc. for as much as $1.4 billion to gain its experimental asthma drug.

GSK shares rose as much as 1.3 per cent in London. They gained 7.7 per cent this year through Friday’s close.

GSK has been beset with investor concern about drugs reaching the end of their patents, including a mainstay antiviral, allowing cheaper copies to compete with them in the market. Last year, it acquired Canadian biotech Bellus Health Inc. in 2023 for about $2 billion to secure a promising cough medicine.

Under founder and Chief Executive Officer Noubar Afeyan, Flagship develops scientific ideas in-house, focusing on platform companies that can produce multiple products. The fund also supported Editas Medicine, the gene editing company that Crispr Nobel Prize-winner Jennifer Doudna co-founded in 2013.

Several of Flagship’s companies are already targeting immune conditions. Repertoire Immune Medicines is working on technologies that can use the immune system’s curative abilities to create medicines that could be used for autoimmune diseases. Another company, Seres Therapeutics is focused on the microbiome to develop drugs to treat diseases like ulcerative colitis. Flagship’s Sonata Therapeutics is also researching fibrosis and autoimmune disorders.

GSK’s share price growth has lagged behind that of rival British pharmaceutical company AstraZeneca Plc, weighed down by concern about litigation over whether its former heartburn drug Zantac causes cancer.

©2024 Bloomberg L.P.