GlaxoSmithKline (GSK) received good news last week with the receipt of approval from the US Food and Drug Administration (FDA) for its cervical cancer vaccine, Cervarix. The vaccine received approval for the prevention of cervical pre-cancers and cervical cancer associated with oncogenic human papillomavirus (HPV) types 16 and 18 for use in girls and young women (aged 10-25).

Last month, an advisory committee of the FDA had voted 12-1 in favor of the efficacy of the vaccine and 11-1 in support of its safety. Cervarix also received approval in Japan for girls aged 10 and above, becoming the first cervical vaccine to gain approval in Japan.

The American Cancer Society estimates that about 11,000 women will be diagnosed with cervical cancer and 4,000 women will die from the disease in 2009 in the US. Globally, more than 500,000 women are expected to be diagnosed with cervical cancer and 280,000 women to die from it every year.

Glaxo has presented very encouraging data against genotypes that account for 70% of cervical cancer cases and management believes that Cervarix may offer protection against several other genotypes that could increase this figure to 80% of cervical cancer cases. Cervarix was found to be highly effective and was well tolerated in the prevention of cervical pre-cancers and cervical cancer related to HPV types 16 and 18, in girls and young women. Types 16 and 18 are the two most common virus types known to cause cervical cancer.

The vaccine is approved in 100 countries around the world, including the 27 member states of the European Union, Australia, Brazil, South Korea, Mexico and Taiwan.
The recent US approval will open up a large market for the product, which recorded £125 million in global sales in 2008. Once launched, Glaxo will compete directly with Merck’s (MRK) Gardasil. Although Merck beat Glaxo to the market, we believe Cervarix comparatively offers a broader base, has more potent protection and could achieve peak sales of approximately £1.5 billion.

We believe that the US launch of Cervarix will significantly boost Glaxo’s vaccine segment revenue, which came in at £2.5 billion in 2008. Cervarix should be available in the US later this year.
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