GlaxoSmithKline: New Diabetes Drug May Shoot Stock Higher

by Christopher French
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Submitted by Christopher French as part of our contributors program.

GlaxoSmithKline (GSK) will soon announce the results of trials surrounding a new experimental treatment for diabetes.

This is despite the fact that the company is in the middle of a hostile takeover bid to acquire Human Genome Sciences (HGSI). The reason why the situation is a little controversial is that Human Genome is GlaxoSmithKline’s partner on the drug. In addition, Human Genome did not ask to be taken over – the bid was all GlaxoSmithKline’s idea. I feel that the drug is actually the main reason why it suddenly felt the need to aggressively take Human Genome over so suddenly. The two companies, which have worked together in harmony for so long, seemed to have a fairly good business relationship up until now.

The drug is a very important one for the company. It is also one that could present a significant problem for Glaxo competitors. If it is given approval it will be a significant adversary for drugs produced by Amylin Pharmaceuticals (AMLN), Novo Nordisk A/S, Sanofi Aventis (SNY) and Eli Lilly (LLY).

This drug, called Albiglutide, will probably be a “niche” drug on the market. This means that there are not a lot of other drugs form other companies available at present that will be able to compete with it at a meaningful level. There are also a number of advantages that make the drug more attractive than its competitors. For example, the side-effect of nausea is less than its main competitor from Amylin, and in addition the needle is smaller and therefore easier to inject.

So far the trials for the drug have showed mixed results. Stockholders in GlaxoSmithKline need to keep their eye on developments in this area as it will have an enormous and obvious effect on stock prices.

A significant problem that faces these companies is the fact that bugs are able to build up resistance to antibiotics. GlaxoSmithKline has teamed up with AstraZeneca (AZN) to investigate a solution to this very important problem.

We are always hearing reports about how new superbugs are emerging all the time that are resistant to the antibiotics that we have on the market. This is something that simply cannot be allowed to continue. It is about time that someone decided to look into what to do about the problem, and fortunately for us GlaxoSmithKline and AstraZeneca have decided to take the reins of the issue. Every time you go to hospital you are at risk of catching a bug that very few drugs can control. In fact, the problem is so serious that tens of thousands of people die every year due to contracting drugs that are resistant to all known antibiotics. That is why it is important that methods are developed for counteracting the resistance that these bugs can build up. Although pharmaceutical companies are always in the process of developing new antibiotics, it is very difficult to keep up with evolving bugs.

The aims of the collaboration are as follows: to “improve the underlying scientific understanding of antibiotic resistance, design and implement efficient clinical trials and take novel drug candidates through clinical development”. If GlaxoSmithKline is successful in its efforts to achieve these ideals it will certainly make a mark for itself on the industry.

Competitor Eli Lilly recently had a stroke of luck in that a drug developed by Johnson & Johnson (JNJ) and Bayer was denied approval by a panel that advises the FDA. The drug, called Xarelto, would have been a serious competitor to Eli Lilly’s drug, Effient, used to prevent heart attacks and strokes. Although the FDA does not have to follow this advice, it does mean that for now Eli Lilly does not have to worry about that particular form of competition. This is a different position to what many other pharmaceutical companies facing generic competition are in.

ChromaDex (CDXC.OB), an up and coming supplier of ingredients used by the pharmaceutical industry, has seen its share of good news lately. Its BluScience dietary product line beat the company’s expected sales forecast by 50%. The product line was recently introduced in 8,000 drug stores across the U.S.

Looking back at GlaxoSmithKline, the denial of this drug could also be good news for other pharma companies such as Pfizer (PFE) and Bristol-Meyers Squibb (BMY) which are working together on a rival drug to Xarelto. The drug is called Eliquis and will be a strong rival. So, although Eli Lilly struck it lucky with this denial, it is not the only company. Eli Lilly and Pfizer will now compete on a whole new level. It is notable that GlaxoSmithKline is not even a minor figure in this battle.

Sanofi Aventis recently reported some exciting news regarding the treatment of liver cancer. The company believes that it has discovered a way to starve liver cancer cells to death. The drug will be tested in China next year. The Chinese population suffers at quite a large extent from liver cancer. If the drug is successful, then this is a rapidly growing emerging market that Sanofi Aventis will have its grip on. Investors will have to wait for quite a while yet, however, to see if the drug lives up to the promises or not, but the decision needs to be made now whether to buy Sanofi Aventis.

Something that is of growing concern is the high incidence of drug related liver injuries. This is such a big problem that many drugs are denied simply because they have a slight effect on the liver. That being said many drugs make it onto the market that are damaging to the liver. AstraZeneca in collaboration with many scientists, is working towards finding a way to predict the effect that drugs will have on the liver well ahead of time so that the drugs can be prevented from doing any serious harm.

All news with GlaxoSmithKline is surrounding its diabetes treatment and the progress it has taken. Investors are really hold their breaths for signs of success, as the competition continues to keep busy. If the treatment is successful, investors are in for a ride. If not, they may have to hold their breath until the next product comes up for testing.

Transparency / Disclaimer: I was compensated modestly by public relations to write this article. While I have vetted each company, researched it thoroughly and I’ve done my own due diligence, my due diligence is not a substitute for your own.

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