GlaxoSmithKline spins out analgesics into stand-alone Convergence Pharma, retaining 18% stake; dire forecast for Big Pharma from GSK CEO

In a move that aims to reduce R&D overheads, UK pharma giant GlaxoSmithKline (LSE: GSK) has spun out staff and patents relating to investigational pain relief products into a new company, Convergence Pharmaceuticals, which was officially launched yesterday, in exchange for an 18% stake, in the new firm.

Convergence has successfully raised $35.4 million (£22.4 million) in Series A financing from a syndicate of leading European and US life science investors - Apposite Capital, New Leaf Venture Partners and SV Life Sciences. The company will be led by Clive Dix as chief executive, together with a strong management team including former GSK scientific experts in the field of pain. Proceeds of the financing will be used to accelerate the clinical development of the company’s pipeline programs.

GSK began research that led to the pain drugs in the late 1990s, and Dr Dix headed research for the company at the time. However, GSK announced its decision to exit neurological fields such as pain and depression in February.