British pharmaceutical giant GlaxoSmithKline PLC announced on Tuesday that it has reached an agreement to acquire U.S. biotech firm Nuvalent, Inc. for $10.6 billion. The news sent Nuvalent, Inc. shares surging nearly 39% in pre-market trading, approaching the acquisition offer price of $124 per share.

Under the terms of the agreement, GSK will acquire all outstanding shares of Nuvalent, Inc. for $124 per share in cash, representing a premium of approximately 40% over the company's closing price on Monday. After deducting cash, GSK's net investment is approximately $9.4 billion. This marks the largest acquisition for GSK in over a decade and the first major deal for new CEO Luke Mills since he took the helm earlier this year.

Nuvalent, Inc. was founded in 2017 and focuses on the development of precision-targeted cancer therapies. Its core pipeline includes two next-generation inhibitors for non-small cell lung cancer—zidesamtinib and neladalkib—both currently under review by the U.S. FDA, with approval decisions expected in September and November of this year, respectively. Both drugs have received Breakthrough Therapy designation and Orphan Drug status.

GSK stated that this acquisition will significantly strengthen its position in oncology. Mills noted in a statement that these two potential blockbuster drugs are expected to contribute to revenue growth from 2027 onwards and support core operating profit during the period when the patent for its HIV drug, dolutegravir, expires between 2028 and 2030. The company reaffirmed its full-year 2026 guidance for core operating profit and core earnings per share growth of 7% to 9%.

Analysts point out that this high-priced acquisition reflects the urgency for GSK to address pressures from its upcoming "patent cliff." The company's flagship shingles vaccine, Shingrix, is already showing signs of decline in the U.S. market, while several HIV drugs are also facing patent expirations. Over the past year and a half, GSK has completed acquisitions of several biotech companies, including IDRx and RAPT Therapeutics, and has also entered into partnerships with Chinese firms such as Hengrui Medicine and Chia Tai Tianqing.

However, some analysts have expressed concern over the integration risks associated with the high-premium merger. GSK has previously completed several transactions at significant premiums for mid-to-late-stage pipelines; if clinical data falls short of expectations, the company could face pressure from goodwill impairments. The transaction is expected to close in the third quarter of this year, pending regulatory approvals.