Early COVID-19 therapies were a tremendous boon for public health, and the companies that quickly brought them to market generated blockbuster profits. Pharmaceutical giant GlaxoSmithKline (GSK -0.61%) missed out on this early action and now looks to launch several pandemic products this year. Now GSK must find its niche in an increasingly crowded market -- an approach that could prove harder than it seems.
An increasingly crowded vaccine market
GSK has three separate COVID vaccines in late-stage development, in various partnerships with Sanofi (SNY -0.40%), South Korean pharmaceutical SK bioscience, and Canadian biopharmaceutical Medicago. Each vaccine combines the partnering company's proprietary protein platform with GSK's pandemic adjuvant technology, which lets smaller doses deliver bigger boosts to patients' immune systems. GSK's Phase 3 clinical trials are wrapping up, and GSK expects regulatory decisions in the US and EU starting later this year.
Unlike the mRNA vaccines of Pfizer (PFE 1.19%) and Moderna (MRNA -1.39%), GSK versions rely on more traditional technology that uses a portion of the protein from the virus to stimulate an immune response. This approach has been around for many years and may provide peace of mind to patients who are less comfortable with the newer mRNA technology, which sends instructions to the body's own in-cell factories to temporarily make proteins matching those on the targeted virus.
Initial clinical studies with the GSK-Sanofi vaccine showed the vaccine was highly effective at preventing severe disease and hospitalization. Meanwhile, GSK-SK biosciences's SKYCovione outperformed AstraZeneca's (AZN -1.95%) Vaxzevria mRNA vaccine in a head-to-head phase 3 clinical study, although it has not yet been compared against the Pfizer and Moderna versions.
Even with strong efficacy, there may be too many options in the market at this point. Early movers Pfizer and Moderna expect strong vaccine sales again in 2022, but analysts expect vaccine sales to tail off after 2022 amid lower demand and vaccine oversupply. AstraZeneca's newly launched Vaxzevria is struggling to gain traction. GSK also trails Novavax (NVAX -1.31%), which expects FDA review in June on a vaccine that also uses protein technology.
Next wave of pandemic therapy
GSK benefited from more timely entry into the treatment space with its monoclonal antibody Xevudy. By fulfilling previous contracts for Xevudy, GSK generated impressive first-quarter sales of $1.03 billion. However, the treatment is less effective against the now-dominant Omicron BA.2 strain, causing the FDA in April to restrict its use throughout the US. Management has provided guidance that 2022 treatment sales will be on par with the $830 million of 2021, signaling that most of its expected revenue has already been captured.
Since vaccine protection declines over time and is less effective against newly emerging strains, focus has now shifted toward developing boosters and more universal vaccines that will work against a wider variety of strains. GSK recently announced positive results from a preclinical study with CureVac on a "bivalent" vaccine which contained both the Beta and Delta strains in the same vaccine. Importantly, the vaccine stimulated a strong immune response against the later Omicron strain as well, suggesting broader protection against emerging strains. This positions GSK to compete for the recurring revenue streams from a booster.
Still, the market for booster vaccines appears increasingly competitive. Moderna is the front-runner in the bivalent space, having already started phase 2 and 3 clinical studies. Sanofi also has a bivalent vaccine in the preclinical stage, while Novavax has a combined flu-coronavirus vaccine in P1/2 clinical studies. Others are working on single-strain versions. Development is still at an early point, so the field may well get whittled down as the vaccines progress through clinical trials.
Is GSK's pipeline too heavily geared toward the pandemic space?
GSK management is guiding for respectable 5%-7% sales growth in 2022. On the face of it, this looks conservative given that its biopharma segment's Q1 sales grew 40%, and that GSK is divesting its slower-growing consumer healthcare segment. GSK also has eight regulatory submissions planned this year -- but five of these are for the aforementioned COVID treatments.
Xevudy accounted for 21% of total Q1 revenue and much of the company's overall sales growth. But diminishing revenue from Xevudy, and the company's relatively late entry into an already crowded vaccine field, puts even more pressure on the drugmaker to develop a successful booster vaccine. GSK must deliver strong performance to expand its share in the pandemic space.