GSK plc GSK announced that it has agreed to acquire clinical-stage biotech Nuvalent NUVL. Per the terms, the British drugmaker will acquire all outstanding shares of NUVL for $124 per share, valuing the deal at around $10.6 billion (~£8 billion).
Following the acquisition, GSK will add three pipeline candidates that are in clinical development. These include two candidates — ROS1 inhibitor zidesamtinib and ALK inhibitor neladalkib — that are currently being reviewed by the FDA as potential treatments for non-small cell lung cancer (NSCLC). Regulatory decisions on these filings are expected before this year’s end. Nuvalent's third pipeline asset, NVL-330, is a HER2 inhibitor currently being evaluated in an early-stage study for NSCLC. GSK will also acquire the preclinical portfolio, which consists of multiple programs.
GSK will also assume Nuvalent's existing revenue-sharing arrangements, including low-single-digit royalties payable to Royalty Pharma RPRX and Deerfield
The transaction, expected to be completed in the third quarter, is subject to customary closing conditions and clearance from regulatory authorities. GSK expects to fund the deal using a combination of cash and debt.
GSK & NUVL Stock Performance
Post the announcement, shares of GSK were down 1% in pre-market trading today, while those of Nuvalent have jumped nearly 39%.
Year to date, GSK’s stock is up more than 3%, while Nuvalent is down 12%. In comparison, the industry has lost nearly 2% during this time frame.
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What Drives GSK’s Interest in Nuvalent?
The acquisition strengthens GSK's growing oncology business by adding a portfolio of targeted therapies for genetically defined forms of NSCLC. The company believes Nuvalent's assets will enhance its precision oncology capabilities and expand its presence in the large and rapidly evolving NSCLC space.
GSK also sees the deal as complementary to risvutatug rezetecan, its experimental B7-H3-targeted antibody-drug conjugate (ADC) candidate being developed in a late-stage study for extensive-stage small-cell lung cancer. Management said the acquisition provides the company with a platform for expansion into the lung cancer space while creating additional growth opportunities within its oncology portfolio.
The transaction is expected to contribute to GSK's revenue growth beginning in 2027 and support its long-term objective of generating more than £40 billion in annual sales by 2031. Management expects the acquisition to be accretive to core operating profit from 2027 and to core EPS from 2029, inclusive of anticipated synergies.
Importantly, GSK said the deal is expected to strengthen core operating profit through the anticipated loss-of-exclusivity period for dolutegravir products between 2028 and 2030. This suggests that the company views Nuvalent's pipeline as a potential growth driver that could help offset future pressure on its HIV franchise.
Although GSK expects the transaction to result in low single-digit dilution to core EPS from 2026 through 2028, it maintained its previously issued 2026 guidance. The company expects 7-9% growth in core operating profit and core EPS, indicating that the near-term impact is not expected to materially affect its earnings outlook.
The Nuvalent acquisition marks GSK's third deal in 2026. Earlier this year, the company expanded its respiratory, immunology and inflammation pipeline through the acquisitions of clinical-stage company RAPT Therapeutics and private biotech 35Pharma. These transactions underscore GSK's continued focus on strengthening its pipeline through targeted acquisitions of clinical-stage biotechnology companies.
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GSK’s Zacks Rank
GSK currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).