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GlaxoSmithKline (GSK) on Wednesday announced a major advancement in its capability to assess the impact of genetic variation on human disease with the formation of a new collaboration with 23andMe, a leading consumer genetics and research company. GSK agreed to invest $300 million as part of the collaboration.

The move offers GSK an opportunity to use 23andMe's database and statistical analytics to gather insights, identify disease-relevant genes, discover novel drug targets driving disease progression, and develop therapies for serious unmet medical needs based on those discoveries.

With more than five million customers, privately held 23andMe is a large genetic and phenotypic resource and will allow GSK to identify patients with specific gene variations in specific diseases, helping accelerate recruitment for new clinical studies. The company, based in Mountain View, California, is named for the 23 pairs of chromosomes in a normal human cell.

Under the terms of the four-year deal, GSK and 23andMe have the option to extend for a fifth year. GSK becomes 23andMe’s exclusive collaborator for drug target discovery programs.

All activities within the collaboration will initially be co-funded 50/50, with either company having certain rights to reduce its funding share for any collaboration program. It is expected that the companies will jointly progress a number of targets per year, with either company able to independently progress additional targets identified within the collaboration.

The new collaboration adds to GSK’s existing investments in the EBI/Sanger Open Targets consortium, Altius Institute, and the UK Biobank.

GSK 2Q Earnings

The drug maker Wednesday also reported second-quarter revenue of £7.3 billion ($9.6 billion -- at constant exchange rate $9.9 billion), up 4 percent when discounting currency shifts, amid a promising performance of a new shingles treatment.

Sales of the shingles treatment Shingrix made £167 million ($220 million), and the company increased its forecast for 2018 sales of the drug to as much as £650 million ($855 million). GSK reported 2Q net income of £441 million ($580 million) after a loss of £180 million ($237 million) in the same period last year.

The results beat Wall Street expectations. The Brentford Middlesex, U.K.-based company reported it had net income of 25 cents per share. Earnings, adjusted for non-recurring costs and restructuring costs, were 77 cents per share. GSK shares have risen 16 percent since the beginning of the year. The stock has decreased slightly more than 2 percent in the last 12 months.

The company on Wednesday also announced a restructuring program aiming to improve competitiveness and cut costs by £400 million ($526 million) annually by 2021.

(Currency conversion on July 25, 2018: £1 = $1.31)
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(Sources: 23andMe; GSK; Zacks Equity Research; with reports from Associated Press)

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