GSK Teams with Alphabet in Crucial Bioelectronics Push

Creates a company called Galvani Bioelectronics by investing £540 million

Source: GSK
Source: GSK

British drug maker GlaxoSmithKline PLC (NYSE: GSK) has jumped ahead of its Big Pharma rivals into a novel field of medicine called bioelectronics to develop medicines that use electrical impulses rather than chemicals or proteins. GSK first announced that bioelectronics will be its focus area in a paper in Nature journal three years ago, and aims to treat diseases such as arthritis, diabetes, and asthma using these devices. Bioelectronics, which is still in its nascent stage, brings about therapeutic biochemical changes in the body through minute electrical impulses. Recent clinical trials of bioelectronic implants by Feinstein Institute for Medical Research and SetPoint Medical have shown promising result in reducing symptoms of rheumatoid arthritis.

Source: Verily
Source: Verily

For its crucial bioelectronics push, GlaxoSmithKline announced an agreement with Alphabet Inc.’s (NASDAQ: GOOGL) Verily Life Sciences (known as Google’s life sciences unit until last December) on August 1st, 2016, to create a new company called Galvani Bioelectronics for the development and commercialization of bioelectronic medicines. GlaxoSmithKline will hold a 55% stake in Galvani, while Verily will hold 45%. The agreement, pending approvals, is expected to close by the end of 2016.

Galvani Bioelectronics will be headquartered in the U.K., within GlaxoSmithKline’s global R&D center at Stevenage, and a second research hub will be located at Verily’s facilities in San Francisco. GlaxoSmithKline and Alphabet will each contribute intellectual property rights and an investment of up to £540 million ($715 million) over seven years, subject to completion of pre-decided discovery and development milestones. Galvani will start with a workforce of around 30 expert scientists, engineers and clinicians, and will collaborate with both parent companies and other R&D firms.

The investment in Galvani comes after GlaxoSmithKline’s recent spend of £275 million ($361 million) at three drug manufacturing sites in Britain, which the Company announced on July 27th, 2016.

Galvani to develop miniature implants

While GSK would bring to the table its world class drug discovery and development expertise and deep understanding of disease biology, Verily would pool in its technical expertise in the miniaturization of low power electronics, device development, data analytics, and software development for clinical applications. Galvani will initially work on establishing clinical proofs of principle for the treatment of inflammatory, metabolic and endocrine disorders, including type 2 diabetes. At a later stage, Galvani will develop miniature, implantable devices, which consist of an electronic collar that wraps around nerves, to modulate irregular or altered impulses that occur in many illnesses and chronic conditions such as diabetes, arthritis, and asthma.

Management roles

Moncef Slaoui, GlaxoSmithKline’s vaccines head, who is retiring from the Company in March 2017, will be the Chairman of the new company. Kris Famm, GlaxoSmithKline’s head of bioelectronics research, has been appointed President of the new company. A seven-member board, chaired by Moncef Slaoui, will also be appointed and will include Andrew Conrad, CEO of Verily. Galvani will be fully consolidated in GSK’s financial statements.

Galvani to ready product in seven years

Galvani aims to have its first bioelectronic medicines ready for regulatory approval in seven years. Bioelectronic medicines have already shown promising results in animal tests, but are yet to be tested in clinical studies. The tie-up between GSK and Alphabet reflects the marriage between healthcare and technology, and will focus on producing first generation implants with the size of a pill. Using the latest advances in nanotechnology, Galvani would eventually aim at miniaturization of the implants to the size of a rice grain. Patients will need keyhole surgery to insert the biomedicine into their body. Another major challenge would be to make the devices with ultra low power so that they function reliably.

Treating diseases with electrical impulses

Treating disease with electrical impulses is not a new concept anymore with the advent of heart pacemakers. More recently, deep brain stimulation has been applied to treat Parkinson’s disease and severe depression. In 2015, EnteroMedics Inc. (NASDAQ: ETRM) won FDA approval for the Maestro Rechargeable System, a weight-loss treatment for patients who are extremely obese.

Alphabet makes rapid strides in smart wearables

Source: Google
Source: Google

In the past, Verily has already developed innovative medical technologies like the smart contact lens in partnership with Swiss drugmaker Novartis International AG (NYSE: NVS) that measures glucose levels and helps monitor diabetes. Its smart contact lens has a LED system that could warn users of high or low blood sugar by flashing tiny lights. The device, which uses tiny chips and sensors to measure glucose levels in tears, is expected to take many years before commercialization. Other companies have failed in their attempts at accurate non-invasive glucose measurement mainly because of body movement, and fluctuations in hydration and temperature. In August 2015, French pharmaceutical giant Sanofi SA (NYSE: SNY) announced that it would collaborate with Google to come up with new ways to monitor and treat diabetes.

Stock Performance

G4GlaxoSmithKline’s stock finished the day at $45.03, dipping 1.01%, at the close on Wednesday, August 3rd, 2016, having reached an intraday high of $45.13 and a low of $44.70 during the session. The stock’s trading volume was at 2,738,435 for the day. The Company’s market cap was at $109.37 billion as of Wednesday’s close.

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