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(Alliance News) - GlaxoSmithKline PLC on Friday said it has partnered with Alector Inc to develop brain disease treatments, as it defends its leadership in response to a scathing open letter from activist investor Elliott Management Corp.
The pharmaceutical company said California-based immuno-neurology researchers Alector will receive USD700 million in upfront payments and up to USD1.5 billion in milestone payments, profit sharing and royalties as the pair unite to develop and trial neurodegenerative disease treatments.
Neurodegenerative diseases - such as dementia, Alzheimer's disease, amyotrophic lateral sclerosis, and Parkinson's disease - affect brain function and are currently considered incurable.
GSK and Alector will co-develop progranulin-elevating monoclonal antibodies, designated AL001 and AL101, to treat a range of brain diseases.
The antibodies are designed to increase the level of the immune regulator known as progranulin, which has genetic links to multiple neurodegenerative disorders.
The company noted, Alector will initially lead both antibodies through phase 2 "proof-of-concept" trials, with the pair then sharing development responsibilities for late-stage studies. The companies will share all profits and losses from any commercialisation of the treatment.
GSK added, the AL001 antibody is also currently in a phase 2 study in symptomatic frontotemporal dementia patients, with a phase 2 development for amyotrophic lateral sclerosis planned for the second half of 2021.
Meanwhile, according to GSK, enrolment has already begun for a phase 3 trial of the AL001 antibody for candidates with, or at risk for, frontotemporal dementia due to a progranulin gene mutation.
No treatments are currently approved for frontotemporal dementia, which is a particularly severe and rapid acting form of the disease that most often effects under 65's. The disease affects between 50,000 and 60,000 people in the US and around 110,000 in the European Union.
Also on Friday, GSK defended Chief Executive Emma Walmsley as the right leader for the core pharmaceutical and vaccines business - even after the consumer division gets spun off - after coming under fire from activist investor Elliott Management.
The investor said it supported GSK's consumer healthcare spinoff, called New GSK, which includes toothpaste and over-the-counter medicines, from its pharmaceuticals and vaccines business.
However, without naming Walmsley, Elliott called for pharmaceutical and scientific experts to pick the "right leadership" for New GSK from internal and external candidates after years of underperformance.
"Despite the strengths of its people, its vaccines and its drugs, GSK has a poor record of execution and value creation. These shortcomings are clearly demonstrated in GSK's share price, which has underperformed every single peer over nearly every conceivable timeframe," Elliott said.
Walmsley's background is in consumer business, and she spent 17 years at L'Oreal SA before leading GSK's consumer business and then being promoted to group CEO in 2017.
On Friday, GSK said its largest shareholders support its strategy and have confidence in its leadership.
"The board strongly believes Emma Walmsley is the right leader of New GSK and fully supports the actions being taken by her and the management team, all of whom are subject to rigorous assessments of performance," GSK said in response to Elliot's letter.
GSK said it has been preparing for two new, appropriately qualified, independent boards ahead of the separation and that it has almost completed a six-month search for a chief executive officer for the consumer health business.
Shares in GlaxoSmithKline were trading marginally higher at 1,438.40 pence each in London on Friday afternoon.
By Scarlett Butler and Ivan Edwards; scarlettbutler@alliancenews.com; ivanedwards@alliancenews.com
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