Sunday, October 17, 2021

GSK’s late entry to the vaccine race will help protect it from aggressive investors | Nils Pratley

GlaxoSmithKline’s progress on Covid vaccines has been slow, frustrating and surprising. More was expected sooner, because the company remains far bigger in the wider vaccine field than, say, AstraZeneca. But there are now tangible signs the pace is improving.

Monday’s encouraging data from a phase 2 trial with French group Sanofi means a protein-based product could appear before the end of this year, perhaps to be used for booster injections. GSK is also working with CureVac of Germany on a variant-fighting “second generation” mRNA vaccine candidate. And it has a collaboration with Medicargo of Canada on a plant-based vaccine formula.

On the production side, GSK will be supporting the manufacture of up to 60m Novavax doses in the UK. More significantly, expect news soon about a government-backed deal to build mRNA manufacturing capacity in the UK, which ministers are thought to regard as a long-term priority because the Pfizer and Moderna vaccines, which use the technology, are imported. In other words, GSK is now firmly in the Covid-fighting race.

That has political implications – a point seemingly lost amid the whirl of speculation about what the arrival on GSK’s shareholder register of Elliott Management, the large and often aggressive US hedge fund, implies. To believe some of the chatter, you’d think GSK is doomed to be carved up and sold to the highest bidders once the consumer products division is demerged next year.

The idea sounds fanciful – or, at least, politically inflammatory. This is not 2014, when David Cameron’s government flapped ineffectually and left AstraZeneca’s management to save the company from Pfizer’s unwanted hostile bid. In a Covid world, large healthcare companies, even those that have underperformed for their shareholders for years, are viewed as national assets.

One suspects Downing Street would not hesitate to be over-interventionist at GSK if necessary. This is a government, remember, that insisted the Oxford vaccine was developed by a UK company (AstraZeneca) and not by an American one. Even a spin-off of the vaccines unit, separating it from the rest of the pharma division, might be resisted if it was seen to weaken control; GSK’s management, note, firmly believes the two operations belong together.

To be fair to Elliott, it has said nothing publicly about its intentions. It is conceivable (just) that it sees only an undervalued business, or wants post-demerger GSK to be led by a pure pharma scientist, which would equate to a demand that the current chief executive, Emma Walmsley, be replaced.

Ministers probably don’t care about the makeup of the boardroom. Their concern is ownership, and Covid will have changed the unofficial takeover rules around vaccine producers. An unwanted bidder for GSK could expect a very large political roadblock to be thrown in its path.

Musk gets mischievous with the bitcoin faithful

Bitcoin’s true believers are not known for their qualities of tolerance and respect for different points of view. Equally, Elon Musk can’t come across a hornets’ nest without wanting to stir it up.

It was inevitable, therefore, that there would be fun when Tesla’s chief executive, previously cheerleader-in-chief for the cryptocurrency, last week performed a U-turn and worried aloud about the environmental impact of bitcoin and the “insane” amounts of energy consumed by its miners.

A weekend of Twitter spats ensued, with Musk winding everybody up by hinting that Tesla would sell its remaining bitcoins and then clarifying that it hadn’t. Naturally, the price of the digital tokens has tanked – from a high of $64,000 in April to $44,000 on Monday.

The new lower level still implies healthy profits for anyone who climbed aboard pre-2021, but the bitcoin brigade’s mantra about their token being “a store of value” has rarely sounded so silly. The mischievous Musk can move the price 10% in either direction at will.

AT&T make the best of a bad deal

“For AT&T shareholders, this is an opportunity to unlock value and be one of the best capitalised broadband companies,” said John Stankey, chief executive of AT&T, as he unveiled a deal to spin off the group’s WarnerMedia assets and combine them with Discovery.

The new setup is not necessarily a bad move, but here’s a translation of Stankey’s strategic pitch: we rue the day we paid $85bn for TimeWarner in 2018; we’re swimming in debt; we’re still too small to compete with Netflix and Disney; we’ll try anything.

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