GlaxoSmithKline plc (ADR) (NYSE:GSK) Bankrolls A Tiny Startup In Search Of An HIV Cure

GlaxoSmithKline plc (ADR) (NYSE:GSK) will team up with the University of North Carolina to form a spinoff that will initially put all its focus on the search for a cure for HIV.

The company has been experiencing some rough times and will allocate some of its resources to the joint venture that it hopes will bear fruits. The spinoff will set up on Chapel Hill. The drug manufacturer says the venture is promising. However, one of the current limiting factors is the lack of adequate financial resources to optimize their plans.

Despite the limited funds, in an effort to maintain its commitment, GlaxoSmithKline will set aside $4 million every year for five years, which will be allocated to the project. The new venture will go by the name Qura Therapeutics.

According to an announcement from the pharmaceutical company, it will also allocate some of its scientists to the project as part of the partial resources allocated. If the research yields successful results, the company plans on commercializing its resultant drugs. However, it will not do it in collaboration with its sales partner, Viiv. The latter has been instrumental for GlaxoSmithKline as a distributor for the company’s HIV treatment drugs.

The new spinoff fits the criteria of companies coming up as a result of partnerships between parent companies, and renowned universities and institutions focused on research and development. One of the partnerships that are of a similar nature include the collaboration of Novartis AG (ADR) (NYSE:NVS) with the University of Pennsylvania.

Glaxo’s plan is to use the limited resources to come up with a drug that could make world history. This plan is unlike Novartis’ strategy where it used most of its resources to focus on new generation treatments for cancer.

Glaxo’s new venture has been viewed as part of the company’s ways of showing that it still has hope for its future especially with regards to the HIV issue. However, analysts view the decision to let Viiv go as unnecessary because Viiv has been vital for the company in terms of distribution and bringing in profits.

Published by Duncan Oleinic

Duncan Oleinic is from New Yourk. After graduating with a degree in physics, he began his career as an analyst in a broking firm. Through this experience he was able to advance to the role of correspondent for a U.S based financial news provider, where he worked from 2001 to 2007. He subsequently joined a merchant banking firm as a financial analyst focused on valuing unlisted companies in the sub-continent. Over the course of his two years here, he performed valuations of several media companies which were later acquired by peers.

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