GlaxoSmithKline released results from its SUMMIT study earlier this week, which failed to meet the goal when studying BREO in patients with COPD. Those results did show that BREO was associated with a lower risk of dying; however, the results were not statistically significant. That was an "unexpected disappointment," according to Goldman's Parekh.
But the fiscal impact from this would be "marginal," Parekh noted. In 2020, Goldman models £1 billion in revenue – a number that is "unlikely" to be challenged by these results. However, for Parekh, the bigger issue is how these results cast doubt on GSK's "overall R&D strategy and spend."
Goldman's solution – GSK should narrow its therapeutic focus and reassess its overall R&D spend. That could lead the company to "meaningfully improve" its R&D productivity. If these results serve as the catalyst to push GSK management to focus more, "it could act as a LT silver lining," Parekh said.
Goldman reiterated its estimates, ratings and price target.
Much of GlaxoSmithKline's year-to-date losses have come in the past month, when the stock shed 10.5 percent. At present levels, the stock yields 6.2 percent.
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