GlaxoSmithKline has reaffirmed its intention to pursue Human Genome Sciences (HGS), despite having its first offer for the company rejected last week, saying a deal would be aligned with its long term strategy.
Unveiling a lacklustre set of financial results for the first quarter of 2012 Sir Andrew Witty, GSK's CEO, said of the intended purchase: “This transaction is entirely consistent with our strategy to deliver sustainable growth, enhance R&D returns, simplify our business model and improve returns to shareholders.”
HGS turned down GSK's initial offer of $2.59bn, saying the bid did not reflect the "the value inherent in the company", but that it was open to alternative offers.
The two companies have been in partnership for several years, including co-developing the lupus erythematosus treatment Benlysta (belimumab) which was approved in the US in March 2011 and Europe in July 2011.
GSK will be looking to the drug to help boost performance after first quarter revenues stalled at a lower than predicted 1 per cent growth, rising to £6.64bn for the three months of 2011 as government cost-cutting measures in Europe and the US, as well as instability in the Middle East and Africa, took their toll.
Net profits dropped significantly, falling by 12 per cent from £1.58bn during the first three months of 2011 to £1.39bn for 2012, suffering by comparison with 2011's figures, which were boosted by the sale of GSK's entire shareholding in Quest Diagnostics for £584m.
HGS also released its financial results for the period, showing dramatic revenue growth, up from $26.6m for the first quarter of 2011 to $47.1m for 2012. This included $31.2m in sales achieved by Benlysta.
But the company is still losing money, although at a slower rate than last year, and reported a net loss of $93.5m for Q1 of 2012 thanks to the cost of maintaining its R&D investment.
Both GSK and HGS also published their hopes for darapladib, another drug in development as part of their existing partnership.
The therapy is currently in phase III trials that are investigating its ability to reduce the risk of adverse cardiovascular events in patients with chronic coronary heart disease.
HGS will receive 10 per cent royalties on worldwide sales if darapladib is commercialised, and has a 20 per cent co-promotion option in North America and Europe, although GSK would take full ownership if an acquisition deal can be agreed.