GSK raises bet on HIV/AIDS drug with new Shionogi deal

City A.M. Reporter
GLOXOSMITHKLINE yesterday raised its bet on a promising drug for HIV/AIDS by redrawing a deal with Japan’s Shionogi which gives it a much bigger economic interest in the new product.

Dolutegravir, a once-daily drug that has performed strongly in clinical trials, is seen by analysts as a potential multi-billion-dollar-a-year seller and a strong competitor to treatments from market leader Gilead Sciences. The drug belongs to a novel class known as integrase inhibitors that block the virus causing AIDS from entering cells.

Under the new agreement Shionogi will take a 10 per cent stake in Viiv Healthcare – an HIV drug joint venture set up in 2009 between Britain’s biggest drugmaker and Pfizer – in exchange for its rights to dolutegravir.

Previously income from the medicine would have been shared 50:50 between ViiV and Shionogi, which analysts calculate would have given GSK only around a 40 per cent interest in the drug, after taking account of Pfizer's minority stake in ViiV.

Now GSK’s economic interest will be between 60 and 66 per cent, its chief strategy officer David Redfern said. Redfern said the new arrangement was expected to dilute GSK’s earnings by around 1p a share in 2013 and 2014 but should boost earnings thereafter.