Shares of Nuvalent soared 39% in Tuesday’s trade on 9 June, hitting a fresh record high of $123 on the Nasdaq after GlaxoSmithKline (GSK) announced it had agreed to acquire the cancer drug developer for $10.6 billion.
The deal gives the British pharmaceutical giant a stronger foothold in precision oncology as it works to rebuild its cancer drug portfolio.
GSK is making a tender offer for Nuvalent at $124 per share in cash, representing a 40% premium to the Cambridge, Massachusetts-based company’s closing share price on Monday.
The acquisition marks a significant expansion of GSK’s oncology portfolio, which has been gradually growing since the drugmaker re-entered the cancer treatment space in 2019. It is also the first major acquisition under Chief Executive Officer Luke Miels, according to a Bloomberg report.
Nuvalent is developing precision-targeted cancer therapies, including treatments for non-small-cell lung cancer patients with specific mutations that are commonly found in non-smokers. Two of the drugs GSK is acquiring are already in late-stage trials, with the FDA expected to make approval decisions later this year.
GSK said both medicines have blockbuster potential if approved, which could provide fresh growth momentum as vaccine sales slow and the company increases its focus on oncology, immunology, and HIV.
The Nuvalent acquisition is expected to be completed by the third quarter, subject to regulatory approvals. GSK said the deal will be funded primarily through new and existing debt facilities, along with cash reserves, and is not expected to affect the company’s credit rating.
The acquisition is also not expected to impact GSK’s guidance for the current year and is projected to contribute to revenue growth from 2027 onward.
While the transaction strengthens GSK’s long-term oncology ambitions, investors appeared cautious about the scale and valuation of the deal, dragging GSK shares 3.9% lower in London trading. Despite the decline, the stock has remained up around 23% over the past 12 months.
Although the headline value of the transaction stands at $10.6 billion, GSK said its net investment would be approximately $9.4 billion after accounting for cash held on Nuvalent’s balance sheet.
The transaction remains incremental to GSK’s broader target of generating more than £40 billion ($53.4 billion) in annual sales by 2031.
Rebuilds oncology pipeline
GSK had swapped its oncology business for Novartis’ vaccines division in a 2014 deal, but the company has since been rebuilding its cancer drug pipeline. Previous acquisitions have included oncology-focused companies such as Tesaro, Sierra Oncology, and IDRx.
In January, GSK agreed to in a $2.2 billion deal. The company, which develops treatments for inflammatory and immunologic diseases, also secured a pulmonary hypertension drug through another transaction.
(With inputs from Bloomberg)
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