GSK's Blenrep Woes: Regulatory Rejection Risks and What It Means for Investors

The recent drama surrounding GlaxoSmithKline's (GSK) blood cancer drug Blenrep has investors on edge. After a rollercoaster ride of regulatory approvals, rejections, and clinical trial twists, the U.S. Food and Drug Administration's (FDA) potential rejection of Blenrep's biologics license application (BLA) in July 2025 has thrown a spotlight on GSK's long-term financial targets and stock valuation. Let's break down the stakes and what this means for your portfolio.

The Regulatory Rollercoaster: A Drug's Rocky Road

Blenrep, a B-cell maturation antigen (BCMA)-directed antibody-drug conjugate, initially dazzled the market in 2020 with accelerated FDA approval for relapsed or refractory multiple myeloma patients. But the euphoria didn't last. By November 2022, GSK voluntarily withdrew the drug in the U.S. and EU after the pivotal DREAMM-3 trial failed to meet its primary endpoint of progression-free survival (PFS). Fast-forward to 2025, and GSK is back with a new BLA, this time leveraging data from DREAMM-7 and DREAMM-8 trials, which showed improved PFS in combination therapies with Velcade and Pomalyst.

However, the FDA's Oncologic Drugs Advisory Committee (ODAC) delivered a blow in July 2025, voting against the drug's approval due to severe ocular toxicity risks—keratopathy, blurred vision, and dry eye—outweighing its modest survival benefits. While the FDA hasn't finalized its decision (expected by July 23), the ODAC's 5-to-3 and 7-to-1 votes against the Velcade and Pomalyst combinations, respectively, have investors bracing for a rejection.

Financial Fallout: A £3 Billion Dream in Jeopardy

GSK had projected peak annual sales for Blenrep of over £3 billion ($4 billion), banking on U.S. approval to unlock its full commercial potential. The drug was already approved in the UK, Japan, and Switzerland by April/May 2025, but the U.S. market—where oncology therapies command premium pricing—was critical. With the ODAC's negative vote, GSK's shares plummeted nearly 6%, wiping £3 billion off its market cap in a single day. Analysts now question whether the company can recoup its $1.4 billion investment in Blenrep, especially given the drug's prior 2022 withdrawal and the FDA's heightened scrutiny of risk-benefit profiles.

The rejection would also dent GSK's broader oncology ambitions. The company's 2025 Q1 oncology revenue surged 98% year-over-year to $1.4 billion, but Blenrep was a cornerstone of its “precision oncology” strategy. A U.S. denial could delay its 2031 sales target of £40 billion, forcing GSK to pivot to other assets like its recent $1 billion IDRx acquisition and a $1.7 billion ADC partnership with Hansoh Pharma.

Stock Valuation: A “Hold” in a Volatile Sector

GSK's stock has been a mixed bag in 2025. Year-to-date, it rose 7.8%, outperforming the biotech sector's 0.6% decline. But the Blenrep saga has introduced volatility. With the FDA likely to follow the ODAC's lead, investors are now weighing the company's resilience against its overreliance on a single drug.

Analysts have assigned GSK a “Hold” rating, with a median price target of $39.23 (8.01% upside from current levels). However, GuruFocus projects a more optimistic $46.52 GF Value, suggesting the market may eventually reward GSK's diversified pipeline. The key question: Can GSK offset Blenrep's setbacks with its other oncology bets?

Investment Advice: Navigating the Uncertainty

For investors, the Blenrep saga underscores the risks of high-stakes drug approvals. Here's how to approach the situation:

1. Short-Term Caution: With the FDA's July 23 decision looming, the stock could remain volatile. Consider trimming exposure if you're risk-averse or use any rebound as an opportunity to average down.
2. Long-Term Focus: GSK's broader oncology pipeline—anchored by its ADC partnerships and IDRx acquisition—offers a safety net. If the FDA rejects Blenrep, the company's 2031 sales target may still be achievable via other assets.
3. Diversify Within the Sector: Pair GSK with less speculative pharma plays, such as Merck or Roche, to balance regulatory risk.
4. Watch for Label Restrictions: Even if the FDA rejects the current BLA, GSK could pursue lower-dose approvals or narrower indications. Keep an eye on post-market data from DREAMM-7 and DREAMM-8.

Conclusion: A Bumpy Ride, but Not a Dead End

GSK's Blenrep troubles are a cautionary tale about the high-stakes world of drug development. While the FDA's potential rejection threatens near-term revenue and stock gains, the company's financial firepower and diversified pipeline provide a cushion. For investors, this is a reminder to balance optimism with pragmatism. If you believe in GSK's long-term vision and its ability to pivot, the current selloff could be a buying opportunity. But if the company falters, the Blenrep chapter may serve as a costly lesson in regulatory risk.

In the end, the FDA's decision will be a pivotal moment. As of July 19, 2025, the market is bracing for a verdict that could reshape GSK's future—and your portfolio. Stay tuned.