GlaxoSmithKline (GSK) is set to benefit from a whopping $1.25bn payment as part of a settlement between drug maker Gilead and its HIV department.
As part of the settlement, announced yesterday, Gilead will pay over one billion dollars in upfront costs in addition to paying royalties of three per cent on all future sales of antiretroviral drug Biktarvy.
The upfront payment and royalty income will be distributed amongst shareholders in ViiV Healthcare according to the size of each company’s stake. GSK, which owns 78.3 per cent of the company, is set to receive $978m, with Pfizer receiving 11.7 per cent and Shionogi taking home 10 per cent.
The dispute originated in 2018 with GSK alleging that Gilead’s drug Biktarvy, which is used to treat HIV, infringed on ViiV Healthcare’s drug dolutegravir.
In 2020, Biktarvy sales totalled $6.09bn with analysts at Jeffries estimating that cumulative US sales of the drug will hit $50bn by 2027 when GSK’s patent expires. That means royalties worth roughly £1.5bn can be expected for ViiV overall.
The win for drugs giant GSK comes after months of facing pressure from activist investors, pushing for changes to company leadership. Bluebell Capital Partners has been attempting to oust chief executive Emma Walmsley, citing a decline in share price under her leadership.
Following a recent takeover proposal from Unilever, GSK shares now trading at £16.46 a piece, above the price level when Walmsley took over in April 2017.
Despite the upcoming windfall for GSK shares are flat today, up 0.13 per cent compared to yesterday. Gilead shares tumbled by 3.6 per cent before the open of US trading.