GlaxoSmithKline stumbled with COVID-19 shots. Now it's facing an exodus of US talent and an uncertain future as the world's vaccine leader.

  • The world’s largest vaccine business has been on the sidelines of the pandemic response.
  • GSK is facing an exodus of US vaccine scientists, with several dozen leaving in the past year.
  • Former GSK employees expressed frustration with the company’s bureaucracy and pandemic response.
  • Visit the Business section of Insider for more stories.

On a mild day in December 2016, GlaxoSmithKline executives snipped an orange ribbon, ushering in what they hoped would be a new chapter for the pharmaceutical giant.

GSK had just helped the world respond to the viral scares of H1N1 and Ebola, and its leaders envisioned growing their swanky vaccine-research center in suburban Rockville, Maryland, into a biopreparedness powerhouse, equipped with the research talent and manufacturing might to stop pandemics in their tracks.

Located near the power center of the US government and major federal research centers like the National Institutes of Health, the GSK team had pitched a proposal to build a biopreparedness organization to respond to pathogens, such as the coronavirus. The plan flopped in 2017 because the US repeatedly balked at funding it.

Still, the Rockville site went forward with more than 400 employees focused on projects including GSK’s blockbuster shingles shot, Shingrix, and an experimental messenger RNA (mRNA) platform.

Then, three years after the Rockville ribbon cutting, reports began to trickle in of mysterious cases of pneumonia in the Chinese city of Wuhan. Soon, scientists would identify the cause as a new coronavirus, called SARS-CoV-2. Within weeks, the virus had spread globally. By early March, much of the world had shut down in an attempt to halt the spread.

It was the kind of event the Rockville center was built for. And GSK, a multinational pharma company based in the UK, was sitting on some of the most promising technology for rapidly responding to viruses.

A Novartis team that joined GSK in a 2015 deal had been working for years on an mRNA platform, similar to those of Moderna and BioNTech. GSK also had its hands on chimpanzee-adenovirus technology, an approach ultimately used in a COVID-19 vaccine designed by University of Oxford scientists with AstraZeneca.

But as the novel coronavirus emerged, GSK, the world’s largest vaccine business by revenue, was caught flatfooted.

Medical workers attend to coronavirus patients in Wuhan, China, in February 2020.China Daily via REUTERS

GSK hasn’t developed a coronavirus shot

Insider spoke with Roger Connor, GSK’s president of global vaccines, and with former GSK employees and an analyst to understand how GSK fell behind in the vaccine race — and what effect it might have on the vaunted pharma giant’s future. (The ex-employees spoke on condition of anonymity so that they could speak candidly about their former employer.)

In the early months of the pandemic, researchers at Rockville requested that GSK start using its mRNA technology to work on a vaccine, two of the former Rockville employees said. That request was denied because its tech wasn’t ready for prime time, Connor said.

To this day, GSK’s vaunted vaccine unit has yet to develop a coronavirus shot, losing out to rivals with far less experience in the industry, despite having its hand on similar technologies.

The first two COVID-19 vaccines authorized in the US were developed by Moderna and the team of Pfizer and BioNTech, and both were mRNA-based shots. The Oxford-AstraZeneca shot is in use around the world as well.

Rockville has seen widespread departures. At least three dozen employees, many of them key scientists and leaders, have departed from the center since the pandemic began, in March 2020.

Roger Connor, GlaxoSmithKline’s president of global vaccines.GSK

“You can’t get away from the fact that our overall outcome has been disappointing,” Connor told Insider in an interview.

The Rockville site makes up a fraction of the $90 billion pharma giant’s world-spanning empire of 94,000 employees, which includes about 17,000 working on vaccines.

But the tensions and disappointment found in its labs speak to the larger struggle facing GSK in keeping pace with faster-moving biotechs such as Moderna, BioNTech, Novavax, and others.

Six ex-GSK employees described an organization undergoing a major restructuring focused on growing its existing vaccine business and not looking to disrupt that work by taking a gamble on a new pathogen. Three of them said a stifling bureaucracy and leadership’s lack of vision for vaccine research were key motivators for their departures.

Two other ex-employees said GSK’s reticence on diving into COVID-19 vaccine research was understandable given the newness of GSK’s mRNA platform and the company’s previous effort to craft an Ebola shot, which ultimately failed to lead to an approved vaccine.

GlaxoSmithKline CEO Emma Walmsley, left, with the first minister of Scotland, Nicola Sturgeon.Andy Buchanan/WPA Pool via Getty Images

Connor defended GSK’s response to the pandemic, expressing confidence in the partnerships GSK has forged with other vaccine developers like Medicago and Sanofi. Those efforts may still deliver for the world, though later than initially hoped, he said.

But after being the world’s largest vaccine business in 2019 and 2020, GSK is all but certain to be displaced by smaller biotechs that trounced the pharma giant at COVID-19-vaccine development.

“They weren’t able to envisage how a breakthrough technology could upend, not just COVID now, but pretty much all vaccines,” SVB Leerink industry analyst Geoffrey Porges said.

The race for a vaccine

GlaxoSmithKline CEO Emma Walmsley.Mandel Ngan/Getty Images

The race for a coronavirus vaccine began in early January 2020, when Chinese scientists posted the genetic sequence of the virus online. Dozens of vaccine developers were discussing what to do, including GSK.

Three Rockville scientists told Insider that they had asked if anyone at the company was working on a vaccine. Two of those researchers were particularly interested in trying out GSK’s self-amplifying messenger-RNA technology, nicknamed SAM.

At the start of the pandemic, mRNA was an unproven platform, with no federally approved mRNA vaccines or medicines. A few months before the SARS-CoV-2 virus emerged in China, GSK’s leaders had described technology like mRNA as being far from reality.

“We can imagine that in about 10 years’ time,” Connor said in September 2019, when he was asked at an investor event about the competitive threat of mRNA to its vaccines business.

But the technology was promising because it could be used to rapidly respond to new viruses.

It took Moderna, for instance, two days to initially develop an experimental vaccine against the new coronavirus using mRNA.

A nurse gets a shot of the Pfizer-BioNTech coronavirus vaccine.John McDonnell/The Washington Post via Getty Images

GSK decided its technology wasn’t ready for prime time

While Moderna and Pfizer-BioNTech successfully used mRNA to make their vaccines, GSK’s in-house technology was more complex. With SAM, the RNA molecules from the vaccine are designed to copy themselves once inside a human cell. That means a smaller dose generates a bigger immune response — an ideal feature for addressing a pandemic.

As the research request escalated through GSK’s international bureaucracy, the response dismayed many lab scientists at Rockville. Connor said top leaders of GSK, including himself, decided SAM wasn’t ready for prime time.

Scaling up manufacturing would be too complex, and the platform was still unproven, he said. The technology had yet to be tested in humans beyond a small pilot study of an experimental rabies vaccine, which influenced the decision.

“We think it is a really exciting platform, but it wasn’t ready to be switched on,” Connor said. “We didn’t have the in-human data that we needed for that platform to be able to switch it on to COVID. We did assess it, we looked at it very closely, we had our technical experts look through it, and the timeline was just not going to be competitive.”

For scientists who spent their lives studying viruses and vaccines, GSK’s reluctance to use the new technology was frustrating.

How mRNA vaccines are developed.Shayanne Gal/Insider

“That was incredibly, incredibly disappointing,” one Rockville scientist, who left within the past year, told Insider. “It flies directly in the face of everything we were trying to do in Rockville — setting up that place, being close to the government, rapid response.”

A second scientist, who also left GSK’s Rockville site in 2020, said the pandemic response was a factor in leaving.

“On a personal level, it felt like it wasn’t enough,” they said. “This was upending our lives, and I just wanted to know we were doing something about it.”

Instead, GSK decided that offering its adjuvant — ingredients added to a vaccine to boost the immune-system’s response — to others would have the most impact, Connor said.

A year later, there are no vaccines on the market that use GSK’s adjuvant technology, and a collaboration with fellow vaccine giant Sanofi has been delayed. The effort that’s furthest along comes from the Canadian biotech Medicago, and is now in the final stages of clinical research. Medicago is using GSK’s adjuvant in addition to its plant-based vaccine candidate and is aiming to produce results this summer that show whether the vaccine works.

A stream of departures from Rockville

Among the three dozen people who’ve left the Rockville facility are the site’s leader and at least three top research-and-development executives. Some joined rival companies that have led the pandemic response, according to LinkedIn profiles and interviews with a half dozen former employees.

“We call it a hemorrhage, and it’s still ongoing,” said one former scientist at the Maryland facility who recently left.

Connor said “hemorrhage” overstates the scope of the departures, but he acknowledged that retaining talent is a challenge, particularly as new biotechs have surged amid the pandemic.

One scientist said they left GSK because they were being asked to work on what felt like nonessential early-stage vaccine work against other diseases, even as the coronavirus wreaked havoc.

It also helped that the job market for virologists and vaccine experts has boomed, with rival biotechs adding significantly to their ranks in the past year.

“They were agile, and that’s a concept GSK is unfamiliar with,” a scientist said, comparing Moderna’s and GSK’s approaches. “They just weren’t prepared to move quick enough, because they aren’t used to it at GSK. They lost out on the opportunity.”

To be sure, GSK still has a formidable presence in vaccine research and the resources to remain a leader. While Connor said GSK’s attempt in developing coronavirus vaccines has been disappointing, he said the company would compete in the market for second-generation vaccines by working with the German biotech CureVac.

While the work with CureVac is perhaps GSK’s most promising lead on a coronavirus vaccine, the decision to work with the German company also shows a disconnect between the US team and GSK’s Belgium-based vaccine leadership who struck the deal, two former Rockville scientists said. US scientists view CureVac’s technology as a competitor to their own effort, the people said.

Connor said GSK’s vaccine team leadership, which includes leaders at the Rockville site, was involved in the CureVac deal. He also said the deal builds on GSK’s mRNA ambitions and doesn’t directly compete with the SAM platform.

Former GSK CEO Andrew Witty.Reuters

Smaller rivals are beating GSK

GSK now finds itself in a precarious position.

CEO Emma Walmsley, who took the helm from Andrew Witty in 2017, embarked on a sweeping restructuring, narrowing GSK’s research focus to immunology by combining the pharmaceutical and vaccine units.

Hal Barron, who became R&D chief in 2018 under Walmsley, has prioritized a reentry into the competitive space of oncology. The company had exited the cancer-drug business in 2015, trading its assets to Novartis for the Swiss drugmaker’s vaccines unit.

Those shifts have kept GSK’s top leaders busy, with the company using the steady, profitable vaccine business to fund other ambitious projects, said SVB Leerink industry analyst Geoffrey Porges. Over the past five years, vaccines have brought in more than $40 billion in revenue for GSK, with the 2017 launch of the shingles vaccine Shingrix boosting an already steady business.

“The strategy has been to milk the vaccine business to subsidize the oncology expansion,” Porges told Insider.

But this new era of vaccine research, fueled by a pandemic-driven focus on infectious diseases and the sudden ascendance of mRNA technology, could shake up the immunizations market, which has been dominated by four players: GSK, Pfizer, Merck, and Sanofi.

Underscoring the importance of vaccines to GSK, the business will generate nearly one-third of its revenue after the company spins off its consumer-health unit next year.

GSK, Merck, and Sanofi have so far settled into support roles in the fight against COVID-19, effectively becoming contractors to manufacture doses of rivals’ successful shots.

Pfizer has forecast about $15 billion in revenue in 2021 from its COVID-19 vaccine, with Moderna estimating at least $18 billion. Both totals would eclipse GSK’s vaccine business, which brought in $9.6 billion in revenue last year. 

 

Johnson & Johnson has begun to roll out its single-dose coronavirus shot as well. Merck discontinued its early-stage coronavirus-vaccine research in January, while more than 200 other candidates are still in development around the world, according to the World Health Organization.

So far, investors seem unconvinced of GSK’s prospects. Since Walmsley took over in April 2017, GSK’s London-listed stock has declined about 20%, while a pharmaceutical stock index has ticked up 17%.

Including dividends, GSK has delivered a total return of -1.8% over that period.

“For the past four years, the jury’s been out on the success of the restructuring and the new management,” Porges said. “They are close to returning an adverse verdict on that.”

Vials of undiluted Pfizer-BioNTech coronavirus vaccine.Brendan Smialowski/AFP via Getty Images

‘GSK has more to lose than anyone else’

A year into the pandemic, GSK has just started developing its own experimental vaccine based on its mRNA platform. That jab started a small trial in people in March. That research will seek to validate GSK’s own technology but won’t have a near-term effect on the pandemic. A GSK spokesperson told Insider that initial data would hopefully be available in the fall.

Connor said GSK still intends to become a leader in mRNA. The company is designing the commercial manufacturing needed to produce a massive number of mRNA shots, he added.

Porges, the industry analyst, is less convinced. The challenge for industry giants, including GSK, Merck, and Sanofi, will be how to adapt to this disruption, he said.

mRNA-based vaccines are already being tested in people to fight pathogens like respiratory syncytial virus, Zika, and cytomegalovirus. Developers like Moderna and BioNTech are planning to start more studies soon for experimental shots against influenza, HIV, Nipah, the Epstein-Barr virus, and others.

If mRNA winds up proving valuable in tackling diseases beyond COVID-19, Porges said, “GSK has more to lose than anyone else.”

Want to tell us about your experience in the biopharma industry? Contact this reporter via email at [email protected], encrypted messaging app Signal (978-577-5798)), or direct message on Twitter @AndrewE_Dunn.

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