Glaxo and Pfizer create new HIV drug company

LONDON - Drug makers GlaxoSmithKline PLC and Pfizer Inc. said Thursday they plan to create a new company to invest in the research and development of HIV treatments.

The deal allows the two companies to blend Glaxo's portfolio of HIV treatments currently on the market with Pfizer's more robust pipeline of drugs in development.

"The combination of a broad current revenue base and a new diverse pool of pipeline assets provides a significant platform to invest in developing and delivering new HIV medicines," Glaxo Chief Executive Andrew Witty said during a Thursday conference call with analysts.

London-based Glaxo will initially hold an 85 percent equity interest in the new company, with New York-based Pfizer holding the remaining 15 percent.

The new company will have a product portfolio of 11 marketed products including market-leading therapies such as Combivir, Kivexa and Selzentry/Celsentri. Based on 2008 results, the combined portfolio generates sales of around 1.6 billion pounds ($2.4 billion).

The companies said revenues at that level will provide the new company with financial stability and support investment in its pipeline.

"We're going to just simply give it enough cash to support its working capital," Witty said. "It's not going to have any debt."

Witty said the new company can then ask its board, which will be divided according to the ownership stake of the two companies, for more funding.

"It's going to have two parents out there with, I think, a very rapid decision-making mechanism to allow it to be funded for what it needs to do," he said.

The two companies said that the new business "will be more sustainable and broader in scope than either company's individually," adding that it will hold a 19 percent share of the growing market.

"By combining Pfizer's and GlaxoSmithKline's complementary strengths and capabilities, we are creating a new global leader in HIV and reaffirming our ongoing commitment to the treatment of the disease," said Pfizer Chief Executive Jeff Kindler in a joint statement issued to the London Stock Exchange.

The new venture will focus on HIV treatments and not include Glaxo's vaccine program, Witty said.

"Who knows down the road whether or not there'd be a commercial collaboration opportunity if and when those vaccines make it to market, but they're not currently scheduled to go into this business," he said.

The company will have a pipeline of six innovative and targeted medicines, including four compounds in mid-stage drug development. Altogether, the new company will have 17 molecules at its disposal to develop in fixed-dose combinations as possible new HIV treatments.

The new company will contract research and development services directly from Glaxo and Pfizer to develop new medicines.

Shares of Pfizer fell 23 cents to $13.63, while Glaxo slipped 30 cents to $30.53 in Thursday morning trading.

A service of the Associated Press(AP)