GlaxoSmithKline offloads two travel vaccines to Bavarian Nordic

GlaxoSmithKline announced the divestment of travel vaccines ‘Rabipur’, known as Rabavert in the US and used for the prevention of rabies, and ‘Encepur’ for the prevention of tick-borne encephalitis, to Bavarian Nordic on Monday.

The FTSE 100 pharmaceuticals giant said the decision to divest the brands, acquired from Novartis in 2015 as part of the acquisition of its vaccines business, supported its strategic intent to increase its focus on and reinvest in growth assets, innovation and a simplified supply chain in its vaccines business.

It said it would receive an upfront payment of about €301m (£259m), and would also receive milestone payments of €495m and additional proceeds from the sale of inventory over the course of the supply arrangements for a total consideration of up to €955m.

The value of inventory at the anticipated closing date was estimated to be €159m.

GlaxoSmithKline added that €25m of the total consideration was conditional on the future sales performance of the two vaccines.

Milestones would be payable upon successful technology transfer, marketing authorisation transfers and the fulfilment of GSK's supply commitments, until Bavarian Nordic obtains regulatory approval to manufacture the vaccines.

To ensure supply continuity, both vaccines would continue to be manufactured primarily at GSK's Marburg site in Germany, until full production was transferred to Bavarian Nordic.

The staged technology transfer was expected to begin in the first quarter of 2020, with completion expected within five years.

No employees or manufacturing facilities were being transferred as part of the transaction, the GSK board confirmed.

The transaction was expected to close by the end of 2019, and remained conditional on antitrust approval, as well as approval of Bavarian Nordic's rights issue by its shareholders.

“This agreement with Bavarian Nordic will enable us to commit greater resources to our key growth assets and to our research and development pipeline, while also ensuring the continued supply of these important and successful vaccines,” said GlaxoSmithKline’s president of global vaccines, Roger Connor.