GSK's shares fell as much as 7% on Thursday, a day after a U.S. public health agency narrowed its age recommendation for use of respiratory syncytial virus (RSV) vaccines, in a blow to the drugmaker's ambitions for its new blockbuster medicine.
Britain's GSK launched its RSV vaccine, Arexvy, in the United States last summer after it and rival Pfizer (NYSE:PFE) won regulatory approval for use in adults age 60 and over.
The U.S. Centers for Disease Control and Prevention narrowed late on Wednesday its recommendation for use of the vaccines in older adults this year and held off on recommending their use for those under age 60.
The U.S. decision is a negative for GSK because the new recommendation cuts the U.S. market for RSV shots in the upcoming flu season, Jefferies analysts said in a note. But as more real world safety data accumulates, the recommendation may be expanded, the analysts said.
GSK shares dropped to their lowest since January on Thursday. The stock was among the bottom performers in the FTSE 100 index and Europe's STOXX 600. It was last down 5.6% at 1111 GMT.
Pfizer's shares fell about 2% on Wednesday and were trading marginally higher at $27.54 in U.S. pre-market trading on Thursday. Shares in Moderna (NASDAQ:MRNA), which won U.S. regulatory approval for its RSV vaccine last month, fell marginally to $121.96 in pre-market trading, after closing down 11% on Wednesday.
Arexvy is GSK's new blockbuster medicine as it grapples with a combination of patent expiries and declining revenue from its current bestsellers by the end of this decade. The vaccine generated 1.2 billion pounds ($1.5 billion) of sales last year when it was launched and surged to an early lead over Pfizer's rival vaccine.
Earlier in June, the U.S. Food and Drug Administration approved the expanded use of Arexvy in adults aged between 50 and 59, the first shot endorsed for that age group.
But late on Wednesday, the CDC said that it now recommended the shots for people who are 60 to 74 and have an increased risk of severe RSV due to medical conditions.
The CDC postponed endorsing its use in the 50 to 59 age group as its work group said the balance of risk and benefits for the vaccine in that age group was more uncertain.
RSV, which typically causes cold-like symptoms, is a leading cause of pneumonia in toddlers and older adults.
GSK forecasts that Arexvy will reach peak annual sales of more than 3 billion pounds ($3.79 billion).
A GSK spokesperson said the company does not comment on any changes to earnings expectations outside of quarterly reporting.
"We believe consensus Arexvy forecasts may now be lowered to reflect a smaller eligible US patient population, confirmed Moderna competition, and more risk around GSK's two-year revaccination interval," JPMorgan analysts said in a note.
The successful launch of the vaccine soothed worries of investors and analysts about the strength of GSK's pipeline of drugs in development. A renewed focus on vaccines and infectious diseases after the company spun off its consumer healthcare business, Haleon, in 2022 had also lifted sentiment.
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