- All-cash acquisition of BELLUS Health at 103% premium
- Deal expected to be earnings accretive from 2027
- Potential blockbuster sales opportunity
Pharma company GSK (GSK) has agreed to buy Canadian cough drug company BELLUS Health (BLU:NASDAQ) for $14.75 per share in cash, representing a 103% premium to the last closing price.
The company said the roughly £1.6 billion transaction is expected to close in the third quarter of 2023 or earlier and will be accretive to earnings per share from 2027, anticipated to be the first year of sales from cough drug camlipixant which is currently in late-stage trials.
Chief commercial officer at GSK Luke Miels said: ‘Patients suffering from severe forms of refractory chronic cough can experience over 900 coughs daily, resulting in quality-of-life issues.
‘Camlipixant, a novel, highly selective P2X3 antagonist, has the potential to be a best-in-class treatment with significant sales potential. This proposed acquisition complements our portfolio of specialty medicines and builds on our expertise in respiratory therapies.’
GSK shares drifted 0.5% lower on Tuesday and are up around 4% year to date.
WHAT IS REFRACTORY CHRONIC COUGH (RCC)?
RCC is defined as a persistent cough which persists for more than eight weeks and does not respond to treatment or is otherwise unexplained.
GSK said the condition seriously impacts quality of life with patients suffering from depression, urinary incontinence, pain, rib fractures, social withdrawal, and loss of sleep. Two-thirds of patients are women aged between 50 and 60 years.
There are currently no approved medicines for RCC in the US or the EU and it is estimated that 28 million people suffer from a chronic cough.
In December 2021 BELLUS announced positive data from a phase IIb trial and is now conducting phase three trials with data anticipated in the second half of 2024 and 2025.
If successful, the drug is anticipated to be commercially launched in 2026 following regulatory approvals. GSK said the drug has the potential to deliver ‘significant’ sales through 2031 and beyond.
EXPERT VIEW
Shore Capital pharmaceuticals analyst Sean Conroy said:’ We believe this deal highlights that GSK is effectively utilising its post-demerger balance sheet to bridge the long-term earnings growth gap that needs to be addressed.
‘Importantly, GSK sees camlipixant as a significant, blockbuster opportunity, so this deal should be viewed as another important step to GSK hitting its long-term target of more than £33bn in turnover by financial year 2031.
‘We recently increased our long-term forecast to c.£31.4bn and will now look to review this again following first-quarter 2023 results which are expected next week.’
