New GSK shines brighter with another forecast upgrade
By Natalie Grover
Nov 2 (Reuters) – GSK (GSK.L) beat third-quarter earnings forecasts on Wednesday and raised its 2022 estimate for the second time in four months, continuing its strong start as a standalone prescription medicine business since spinning off its consumer health unit.
After years of underperformance relative to its peers and missing out on the lucrative market for the first set of COVID-19 vaccines, GSK has delivered a string of strong results.
The latest is led by a record quarter for its blockbuster shingles vaccine Shingrix and higher-than-expected revenue from its COVID therapy, Xevudy.
Shingrix generated quarterly sales of 760 million pounds ($873 million), compared with the GSK-compiled analyst consensus forecast for 685 million pounds, with sales rebounding as COVID pressures have eased.
Xevudy handsomely beat expectations, raking in 411 million pounds in the quarter, well ahead of the GSK-compiled consensus of 60 million, helped by currency exchange movements making those sales more profitable than modelled by analysts.
However, the medicine has fallen out of favor in the arsenal of COVID-19 therapies on the basis that Omicron and the variant’s latest offshoots have likely rendered it obsolete.
On Wednesday, GSK said it anticipated that sales in its COVID-19 solutions business would be substantially lower going forward.
GSK’s robust results, coupled with positive pipeline developments, provide some encouragement on the underlying business performance, Citi analysts wrote in a note.
The British drugmaker now expects 2022 sales to rise between 8% and 10% and adjusted operating profit to increase by 15% to 17%, excluding any contributions from its COVID-19 solutions business. It is the second hike to the company’s initial full-year forecasts issued in February.
On Wednesday, GSK said it had secured priority regulatory review in the United States for its RSV vaccine, with a decision expected by early May.
GSK is among a handful of drugmakers racing to develop a vaccine for the respiratory virus, which causes thousands of hospitalisations and deaths each year.
If approved, the shots are expected to generate billions in sales for their makers, given the complex molecular structure of the virus and safety concerns have stymied protracted efforts to develop a vaccine.
GSK shares hit a 2-1/2 month high of 1,470.2 pence in early trade.
Having survived a revolt by activist investors Elliott and Bluebell last year, GSK’s prospects since splitting off its consumer arm earlier this year have been boosted by clinical trial success, though concerns around U.S. litigation over heartburn drug Zantac have spooked investors.
GSK said it had incurred a charge of 45 million pounds in the third quarter, primarily reflecting provisions for increased legal fees related Zantac. Thousands of cases have been filed in the United States against a raft of drugmakers over allegations the compound contains a probable carcinogen.
Shareholders fear a worst-case scenario where costs run into billions of dollars, as happened in cases involving Merck & Co’s painkiller Vioxx and Bayer’s (BAYGn.DE) glyphosate-based weedkiller.
GSK reported a third-quarter adjusted profit of 46.9 pence per share on sales of about 7.83 billion pounds, topping analysts’ forecasts for 40.1 pence and 7.32 billion pounds.
($1 = 0.8707 pounds)
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