GSK CEO says RSV vaccine revenue to top 1 billion pounds in first year

FILE PHOTO: GlaxoSmithKline CEO, Emma Walmsley, arrives for a meeting in Downing Street in central London

By Michele Gershberg and Josephine Mason

NEW YORK/LONDON (Reuters) -GSK CEO Emma Walmsley gave an upbeat assessment of the British drugmaker's new respiratory syncytial virus (RSV) vaccine on Thursday and said the costs of Zantac litigation won't alter the company's capital plans.

GSK shares rose 1.3% on Thursday.

RSV is a leading cause of pneumonia in toddlers and the elderly and GSK's shot, branded Arexvy, "will be more than a billion pounds in its first year, (it) has lots of headroom for growth," Walmsley said in a Reuters Newsmaker interview.

GSK had previously forecast 2023 sales for Arexvy between 900 million pounds and 1 billion pounds ($1.26 billion) following a strong U.S. launch.

"We’re delighted with the start of our RSV vaccine," Walmsley said in the interview.

The U.S. Food and Drug Administration (FDA) approved Arexvy for adults aged 60 years or older in May and GSK launched the vaccine in the U.S. later in the year. It is also approved in Europe, Japan and other countries.

Walmsley said the company will submit data for U.S. approval for the vaccine to be used for 50-59 year olds by the end of the year.

GSK is betting on Arexvy to be its next blockbuster medicine as it grapples with a combination of patent expiries and declining revenue from its current bestsellers by the end of this decade.

The successful launch has soothed worries of investors and analysts about the strength of GSK's pipeline of drugs in development. A renewed focus on vaccines and infectious diseases after the company spun off its consumer healthcare business, Haleon last year has also lifted sentiment.

GSK made close to two-thirds of RSV doses given in the United States since early September, according to IQVIA data earlier this month.

On Tuesday, rival Pfizer said it was disappointed in the performance of its RSV shot Abrysvo compared with GSK. Chief Financial Officer David Denton said the U.S. drugmaker is working to pick up market share in 2024.

"It's good that there's more than one (vaccine) because that creates a market," Walmsley said. "I think it creates awareness. And that's a really good thing."

GSK was helped by being the lone shot offered by U.S. drugstore chain CVS through November, although the Pfizer shot is now being offered in some locations.

COSTLY LITIGATION

Walmsley also told Reuters on Thursday that costly U.S. litigation over the discontinued heartburn drug Zantac remains an overhang burdening the group's stock price performance.

She added that any future settlement expenses, estimated by analysts to be $5 billion, would not change capital allocation.

GSK shares currently trade at the equivalent of around 9 times expected earnings over the next 12 months, according to LSEG data, compared with AstraZeneca's 15 and 16 for the FTSE global pharmaceutical index.

Since Walmsley took the reins in March 2017, shareholders have received a 16.2% return on their investment, including dividends, or 2.3% on an annualised basis.

That's dwarfed by rival AstraZeneca's return of 159%, or 15.2% on an annualised basis.

Walmsley defended the company's work on its drug pipeline, noting an increase in R&D spending over the past five years which is bearing fruit.

In September, it received U.S. approval for Ojjaara for the treatment of intermediate or high-risk myelofibrosis in adults with anaemia and last month it agreed a deal to develop and commercialise Johnson & Johnson's hepatitis B therapy.

She noted recent late-stage trial data for GSK's cancer drug Jemperli when combined with chemotherapy for endometrial cancer and said camlipixant which is in late-stage development for the treatment of chronic cough, is a "multi-billion opportunity for a horrific disease that has no current solution."

($1 = 0.7923 pounds)

(Writing by Ludwig Burger, Michael Erman and Josephine Mason; Editing by Kirsten Donovan, Elaine Hardcastle and Daniel Wallis)