Haleon will Launch with $12B+ Debt as New GSK Gains Momentum

GSK Consumer Health Business to Launch with Significant Debt Load, Sierra Oncology Buy Complete

When GlaxoSmithKline’s consumer health spinoff Haleon launches later this month, the new business will carry more than $12 billion in debt when it lists on the London Stock Exchange.

First reported by This is Money UK, Haleon will hit the ground running with multiple well-known brand name products, including Advil, Tums, Sensodyne toothpaste, Excedrin and Nicorette gum. In 2020, that combined portfolio generated annual sales of more than £10 billion (about $13.9 billion). In 2021, sales for the Consumer Healthcare Business dipped slightly, generating £9.6 billion (about $13.08 billion). The consumer health business unit is valued at approximately $54 billion, according to GSK.

Analysts Say Business Strength will Offset Debt

Earlier this month, GSK shareholders supported the spinoff, which Chief Executive Officer Emma Walmsley said is a vindication of the company’s rejection of the Unilever bid for the consumer health business earlier this year. Walmsley said the bid “didn’t recognize the full value” of the consumer health business, the Financial Times of London reported

GSK’s consumer health care business had been a joint venture with Pfizer, with the U.K.-based company maintaining a majority interest of 68%. Last month, Pfizer announced its intention to sell its stake in the new company in order to maintain its focus on innovative medicines and vaccines. When Pfizer announced its intention, the company did not attach a value to its stake at the time, only noting that it would seek the most advantageous sale of its share of Haleon to maximize value.

Although Haleon will launch with a significant debt load, analysts have predicted the consumer health business will be strong enough to support that debt, with sales topping more than $15 billion by 2026. Haleon is expected to have a value £38 billion and £45 billion ($45 to $53 billion), This is Money UK added. 

New GSK Gains Momentum with Momelotinib

Even as GSK moves closer to spinning out its consumer healthcare business, New GSK, the pharma business, continues to strengthen its own position. This week, the company completed its acquisition of California-based Sierra Oncology. In April, GSK plunked down $1.9 billion to acquire Sierra as a complementary oncology business.  

The deal centered on momelotinib, a late-stage potential new medicine with a unique dual mechanism of action that may address the critical unmet medical needs of myelofibrosis patients with anemia. Myelofibrosis is a rare blood cancer characterized by an enlarged spleen and anemia. Momelotinib is seen as a complementary drug to GSK’s Blenrep (belantamab mafodotin), which was approved two years ago as a monotherapy treatment for adult patients with relapsed or refractory multiple myeloma who have received at least four prior therapies, including an anti-CD38 monoclonal antibody, a proteasome inhibitor and an immunomodulatory agent. If approved, momelotinib will contribute to GSK’s growing specialty medicines business, with a U.S. launch anticipated in 2023.

Prior to the closing of the acquisition, Sierra Oncology submitted a New Drug Application to the U.S. Food and Drug Administration in June.

“This acquisition expands our innovative oncology portfolio, demonstrating our commitment to improving patient outcomes and creating value for shareholders. We now have a late-stage differentiated molecule in momelotinib, which could potentially address a significant unmet need in myelofibrosis patients with anaemia. Our focus is now on execution,” Luke Miels, chief commercial officer of GSK said in a statement. 

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