glaxosmithkline-announces-$3.3-billion-buyout-to-square-off-with-pfizer,-merck

GlaxoSmithKline Announces $3.3 Billion Buyout To Square Off With Pfizer, Merck

GlaxoSmithKline (GSK) is squaring off with Pfizer (PFE) and Merck (MRK) after announcing Tuesday a $3.3 billion deal to buy pneumonia vaccine-maker Affinivax. But GSK stock dipped in early trades.

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The company is betting $2.1 billion up front and up to $1.2 billion in potential milestone payments to acquire privately held Affinivax. Affinivax is testing a new vaccine technology it calls multiple antigen presenting system, or MAPS. The company says the technology leads to a deeper immune response than conventional vaccines.

Affinivax’s most advanced programs are in pneumonia vaccines.

“The proposed acquisition further strengthens our vaccines (research and development) pipeline, provides access to a new, potentially disruptive technology and broadens GSK’s existing scientific footprint in the Boston area,” Glaxo’s Chief Scientific Officer Hal Barron said in a written statement.

In premarket trades on today’s stock market, however, GSK stock fell 0.5% near 43.80.

GSK Stock: Competing With Pfizer, Merck

The acquisition lines up GlaxoSmithKline to compete with Pfizer and Merck. Sales of Pfizer’s Prevnar shots generated nearly $1.57 billion in first-quarter sales, growing 22%. Merck’s Pneumovax 23 sales inched higher to $173 million. The company also has an experimental vaccine called V116.

Glaxo already sells one pneumonia vaccine, Synflorix. But the vaccine is only approved in Europe and its sales pale in comparison to Prevnar. In the first quarter, Synflorix sales fell by double digits to about $101.9 million.

Shares of GlaxoSmithKline are under pressure this year and, last week, fell below support at their 50-day moving average, according to MarketSmith.com. GSK stock is now forming a flat base with a buy point at 47.07.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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