Vir Biotechnology and GlaxoSmithKline Expand Their COVID Partnership to Flu

Last year, Vir Biotechnology (VIR -5.10%) and GlaxoSmithKline (GSK 0.12%) partnered up to develop Vir's coronavirus antibody treatment. The London-based pharma must have liked what it saw in Vir, because GlaxoSmithKline recently signed on to develop more drugs developed by Vir. In this video from Motley Fool Live, recorded on Feb. 22, Fool.com contributors Brian Orelli and Keith Speights discuss the deal, which covers treatments and preventions for the flu and other viral infections, and what it means for Vir's future.

Brian Orelli: First up, Vir Biotechnology, ticker there's VIR, it expanded its pact with GlaxoSmithKline. The companies were already working together on developing Vir's coronavirus antibodies but this new deal is for influenza and some other stuff that we don't really know what that other stuff is quite yet. Vir gets upfront $225 million, that's pretty big upfront payment and then GlaxoSmithKline is also making $120 million equity investment. Glaxo gets an option to develop the lead flu antibody, which is called VIR-2482 and next-generation flu antibodies. Then the pact includes antibodies for up to three non-influenza pathogens that they haven't identified yet and they're going to work on developing those in the next three years.

The companies are also expanding their genomic look for pan-coronavirus therapeutics and they're going to expand that to other respiratory diseases. I think what they're doing here is they're looking at all the different coronaviruses and then seeing where they're most identical and then developing antibodies to the parts that are most identical. Therefore hopefully, it will cover more novel coronaviruses that might pop up. What do you think about the deal?

Keith Speights: I think it's a good deal, Brian. It's definitely good news for Vir. Honestly, I always like to see when a big, well-established drugmaker gives a seal of approval to pipeline candidates for smaller biotech and that's what we're seeing here with GlaxoSmithKline. Like you said, they already had an existing relationship with Vir. To me that's even better news because Glaxo had the opportunity to get an up-close look at what Vir was doing and liked it so much, they decided to expand the partnership. That's a very good sign.

The Vir stock jumped double-digit percentages last week on this news and I think rightly so. I also think this is a good fit for GlaxoSmithKline. If you look at their line up, they have a shingles vaccine, they have HIV therapies on the market. In their pipeline they have several antiviral therapies that are being developed. Vir's technology seems to be a pretty good fit with what GlaxoSmithKline has going on and then just on a broader note, Brian, I think this deal underscores the impact that COVID-19 is having in developing treatments in vaccines for other viral diseases. We're seeing other companies do similar things. They're making progress against COVID-19 and then taking the progress they made there to leverage it to go target other viral diseases and I think this is a good thing overall, but certainly a good thing for Vir.

Orelli: What really stuck out to me was that Glaxo is giving them $225 million up front versus normally you might see them. There will be a lot of milestone payments down the line for being effective. GlaxoSmithKline obviously thinks that they are putting their money up front, which makes me think they'll think they're going to be able to accomplish something with this new deal.

Speights: It's about as close to a Good Housekeeping seal of approval as you can get for a small biotech to have a big drug micro like that make this kind of deal.