GSK's Stock Volatility Post-FDA Rejection: Assessing Long-Term R&D Resilience and Strategic Response

In July 2025, GlaxoSmithKline (GSK) faced a seismic regulatory setback when the FDA's Oncologic Drugs Advisory Committee (ODAC) rejected its blood cancer drug Blenrep in combination with Velcade and Pomalyst. The 5-to-3 and 7-to-1 votes against approval underscored concerns over ocular toxicity and suboptimal dosing regimens. The immediate market reaction was severe: GSK's stock plummeted nearly 6%, trading at $35.95—a price close to its 52-week low of $31.72. This volatility highlighted the fragility of biopharma stocks tied to high-stakes regulatory decisions. Yet, as investors grapple with the short-term pain, the critical question remains: Does GSK's long-term R&D pipeline and strategic agility justify a bullish outlook?

The FDA Rejection: A Short-Term Shock, Not a Terminal Blow

The rejection of Blenrep—a drug GSK had reintroduced to the U.S. market after its 2022 withdrawal—exposed the company's reliance on a single asset in a competitive oncology space. The ODAC's emphasis on ocular toxicity (blurred vision, photophobia) and underrepresentation of U.S. patients in trials created a perfect storm for investor sentiment. However, the FDA's final decision (due July 23) is not binding, and GSK's history of navigating regulatory hurdles—such as its successful resubmission of belantamab mafodotin post-ODAC feedback—suggests resilience.

Long-Term R&D Pipeline: Diversification as a Buffer

GSK's oncology portfolio is far from a “one-drug show.” Its pipeline includes dostarlimab (anti-PD-1 antibody for endometrial and gastrointestinal cancers), niraparib (PARP inhibitor for ovarian and glioblastoma), and belantamab mafodotin (BCMA-targeting ADC for multiple myeloma). These programs are supported by robust clinical data:
- DREAMM-7 (Blenrep + Velcade/dexamethasone): Demonstrated 36.6 months of median PFS versus 13.4 months in the control group.
- DREAMM-8 (Blenrep + Pomalidomide/dexamethasone): Achieved a 71% PFS rate at 12 months versus 51%.

Even if Blenrep is denied, GSK's $1.4 billion Q4 2024 oncology revenue (up 98% YoY) and a 2031 sales target of £40 billion ($50.12 billion) underscore its capacity to absorb setbacks. The company's focus on precision oncology—leveraging genomics and immunotherapies—positions it to capitalize on next-generation therapies like dostarlimab, which is in Phase III trials for rectal and endometrial cancers.

Strategic Partnerships: Expanding the Arsenal

GSK's 2025 Q2 strategic moves have been nothing short of aggressive. The $1 billion acquisition of IDRx for its gastrointestinal stromal tumor (GIST) candidate, IDRX-42, exemplifies its focus on unmet needs in rare cancers. Early data show a 53% response rate in second-line GIST patients, with Orphan Drug designation providing a regulatory tailwind.

The $1.7 billion ADC partnership with Hansoh Pharma (2023) further bolsters GSK's pipeline, with new data expected to fuel collaborations. These deals reflect a broader trend: biopharma giants are increasingly relying on external innovation to offset internal R&D risks. GSK's CEO, Emma Walmsley, has made it clear: “Deal-making is not a Plan B—it's the engine of our growth.”

Financial Resilience and Investor Sentiment

Despite the stock's near-term decline, GSK's balance sheet remains strong. A 98% YoY revenue increase in oncology and a diversified portfolio of 20+ clinical-stage assets provide a cushion against regulatory volatility. Analysts' mixed projections (average target price of $39.23) reflect uncertainty, but the stock's proximity to its $34.50 support level suggests a potential rebound if the FDA's final decision aligns with GSK's risk-mitigation strategies.

Investment Outlook: Caution Amid Opportunity

For long-term investors, GSK's stock offers a risk-reward asymmetry. The company's R&D pipeline, strategic acquisitions, and financial strength create a floor for its value, even as the FDA's final decision looms. However, the short-term technical indicators (bearish RSI, proximity to 52-week lows) warrant caution. A “Hold” rating is prudent for now, with a closer eye on the July 23 decision and Q3 2025 trial data from dostarlimab and IDRX-42.

Historical backtesting of RSI-based entry points reveals cautionary insights: a strategy of buying GSK when RSI hit oversold levels and holding for 30 days from 2022 to 2025 delivered a -10.73% CAGR, underperforming the market's 55.33% benchmark return. This suggests that even oversold levels may not reliably signal recovery in a stock with GSK's regulatory and clinical volatility.

If the FDA approves belantamab mafodotin with label restrictions, GSK's shares could rebound to $38–$40. Conversely, a denial could push the stock below $34. Either way, the broader oncology sector's tailwinds—driven by ADCs and immunotherapies—suggest that GSK's strategic moves will bear fruit by 2026.

Conclusion

GSK's stock volatility following the Blenrep rejection is a stark reminder of biopharma's regulatory risks. Yet, the company's diversified pipeline, strategic partnerships, and financial resilience paint a compelling long-term story. For investors willing to ride out the near-term turbulence, GSK represents a high-conviction opportunity in a sector poised for innovation-driven growth. As the FDA's final decision approaches, the key takeaway is clear: Regulatory storms may shake the stock, but a robust R&D engine can weather them.