GlaxoSmithKline’s majority-owned HIV business to buy drugs from US rival Bristol-Myers Squibb

Pharmaceutical group GlaxoSmithKline (GSK) said its majority-owned HIV business would buy drugs at different stages of development from US rival Bristol-Myers Squibb for an initial $350 million.

According to GSK, the acquisitions would provide ViiV Healthcare, its HIV unit with junior partners Pfizer and Shionogi, new opportunities for growth.

The UK company planned to revive its position in HIV treatment under its strategy to return to earnings growth in 2016.

The company was a dominant player in the area, but ViiV's 2014 sales of £1.5 billion pounds were less than a quarter of the HIV revenue generated by market leader Gilead Sciences.

ViiV would make an initial payment of $317 million towards the acquisition of late-stage HIV drug candidates from Bristol-Myers, including a phase III development treatment fostemsavir, plus $33 million for its preclinical assets.

Both deals would be subject to a further payment of over $500 million dependent on commercial milestones being met.

According to GSK, the assets being acquired complemented ViiV's existing portfolio and could be used in combination therapies.

"The addition of two potential first-in-class late-stage treatments and several promising early clinical development programmes strengthens ViiV Healthcare's pipeline and provides us with further new opportunities for growth," said GSK's chief strategy officer David Redfern, who is also chairman of ViiV.

Meanwhile, Bristol-Myers Squibb Company today announced that it had entered into two individual agreements with ViiV Healthcare, a global HIV company, to divest its pipeline of investigational HIV medicines consisting of a number of programs at different stages of discovery, preclinical and clinical development.

Under these agreements, ViiV will pay to Bristol-Myers Squibb upfront payments totaling $350 million with potential development and regulatory milestone payments of up to $518 million for the clinical assets and up to $587 million for the discovery and pre-clinical programs. Once products are approved and commercialised, ViiV Healthcare will pay tiered royalties.

Additionally, ViiV Healthcare will pay sales-based milestone payments of up to $750 million for each of the clinical assets and up to $700 million for each of the discovery and pre-clinical programmes.

Completion of the divestiture is expected during the first half of 2016, subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act.