On Tuesday, JPMorgan (NYSE:JPM) reiterated its Underweight rating on GlaxoSmithKline (NYSE:GSK:LN) (NYSE: GSK), despite recent positive study results for the company's Blenrep treatment in Multiple Myeloma (MM) trials. The firm acknowledged the encouraging data from the DREAMM-7 and DREAMM-8 studies, which were discussed in a call with a key opinion leader (KOL) in the field, Dr. Daniel Sherbonou from the University of Colorado, Denver.
During the call, which took place on Monday, JPMorgan said Dr. Sherbonou expressed optimism about the efficacy data from the DREAMM trials. He highlighted the DREAMM-7 trial's impressive 23-month progression-free survival (PFS) benefit over Darzalex, with Blenrep showing a PFS of 36.6 months compared to Darzalex's 13 months. Dr. Sherbonou anticipates that the data will be sufficient for Blenrep's re-approval and foresees a role for the treatment in the MM treatment paradigm.
Despite the positive efficacy results, concerns remain regarding Blenrep's ocular toxicity profile, which Dr. Sherbonou finds challenging, especially for community administration, due to the need for an ophthalmology visit before each treatment. The exact positioning of Blenrep within the MM treatment paradigm is still uncertain, with a preference for CAR-T and potentially bispecific therapies over Blenrep because of the latter's challenging tolerability profile.
JPMorgan looks forward to the detailed DREAMM-8 presentation at the upcoming ASCO 2024 conference, scheduled for May 31-June 4, which could further support Blenrep's re-approval. The firm estimates that Blenrep could achieve peak sales of approximately $1.6 billion, mainly by serving around 30% of MM patients who are ineligible for CAR-T therapy, or as a subsequent treatment following bispecific therapy, or as an initial treatment for patients too frail for these therapies.
InvestingPro Insights
Amidst the discussions on GlaxoSmithKline's (GSK:LN) (NYSE: GSK) Blenrep treatment, investors are closely observing the company's financial health and market performance. GlaxoSmithKline boasts a robust market capitalization of $87.31 billion, reflecting its significant presence in the pharmaceutical industry. The company's P/E ratio stands at 13.81, while the adjusted P/E ratio for the last twelve months as of Q4 2023 is more favorable at 10.78, hinting at a potentially undervalued stock in comparison to earnings.
InvestingPro Tips suggest that GSK has a high shareholder yield and a valuation that implies a strong free cash flow yield. This could be particularly relevant for investors seeking companies with the potential for capital returns. Furthermore, the company has maintained dividend payments for 24 consecutive years, with a dividend yield of 3.71% as of 2024, showcasing its commitment to rewarding shareholders consistently.
With a return on assets of 8.91% for the last twelve months as of Q4 2023, GSK demonstrates efficient use of its assets in generating earnings. Additionally, the stock has experienced a strong return over the last three months, with a total price return of 18.98%, and it is trading near its 52-week high, at 97.9% of the peak price. These metrics could be a sign of investor confidence in the company's current strategy and market position.
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