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GSK shares slide after US health agency narrows scope of RSV shots

FILE PHOTO: Illustration shows GSK (GlaxoSmithKline) logo

By Yadarisa Shabong and Maggie Fick

(Reuters) -GSK shares fell as much as 7% on Thursday, a day after a U.S. public health agency narrowed its age recommendation for use of respiratory syncytial virus (RSV) vaccines and did not recommend them at all for adults under 60, a blow to the drugmaker's ambitions for its new blockbuster medicine.

Britain's GSK launched RSV vaccine Arexvy in the United States last summer after it and a rival shot from Pfizer won regulatory approval for use in adults age 60 and over. This year, GSK had also received U.S. approval for the vaccine in adults aged 50 to 59 at increased risk from the illness.

But the U.S. Centers for Disease Control and Prevention on Wednesday only recommended that adults 75 and older, as well as those ages 60 to 74 who have an increased risk of severe RSV due to medical conditions, should receive the shots.

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That makes for a smaller U.S. market for GSK in the upcoming respiratory virus season rather than a larger one, Jefferies analysts said in a note. As more real world safety data accumulates, the recommendation may be expanded, the analysts said.

Pfizer is waiting for the FDA to weigh in on its vaccine's use in people ages 18 to 59.

GSK shares dropped to their lowest since January on Thursday. The stock was among the bottom performers in the FTSE 100 index and Europe's STOXX 600. It was down around 4.8% at 1432 GMT.

Pfizer shares fell about 2% on Wednesday and were down 0.8% at $27.22 on Thursday. Shares in Moderna, which won U.S. approval for its RSV vaccine last month, fell 2% to $119.87, after closing 11% lower on Wednesday as investors reacted to the durability of its shot.

Arexvy is GSK's new blockbuster medicine as it grapples with a combination of patent expiries and declining revenue from current bestsellers by the end of this decade. The vaccine generated 1.2 billion pounds ($1.5 billion) in sales last year and quickly became the market leader over Pfizer's rival vaccine.

The CDC postponed endorsing its use in ages 50 to 59 as its advisory committee's work group said the balance of risk and benefits for the vaccine in that age group was more uncertain.

The work group specifically flagged the risk of the rare neurological disorder Guillain-Barré syndrome. It also said if the prices of all three RSV vaccines were significantly lower, they might be cost-effective interventions for a broader adult population.

RSV, which typically causes cold-like symptoms, is a leading cause of pneumonia in toddlers and older adults.

GSK forecasts Arexvy will reach peak annual sales of more than 3 billion pounds ($3.79 billion).

"We believe consensus Arexvy forecasts may now be lowered to reflect a smaller eligible US patient population, confirmed Moderna competition, and more risk around GSK's two-year re-vaccination interval," JPMorgan analysts said in a note.

($1 = 0.7920 pounds)

(Reporting by Yadarisa Shabong in Bengaluru and Maggie Fick in London; additional reporting by Manas Mishra in Bengalaru and Michael Erman in New Jersey; Editing by Sonia Cheema, Emelia Sithole-Matarise and Bill Berkrot)