Sanofi this week unveiled details of a plan to sell part of its 20.6% stake in Regeneron Pharmaceuticals Inc. for $11.1 billion in gross proceeds.
Analysts are now speculating how the Paris-based drugmaker will spend that money.
Informing that speculation are comments Sanofi CEO Paul Hudson has made since he announced in December 2019 that the company would pivot away from diabetes and cardiovascular research to focus on hematology, neurology, rare diseases and cancer.
Hudson also said the company would be open to making a purchase of between $2 billion and $5 billion that would add value to the company. At the time, the company had just purchased immuno-oncology company Synthorx Inc. for about $2.35 billion.
Paul Hudson, CEO of Sanofi
In Sanofi's first-quarter earnings call, Hudson said contractual agreements with his previous employer Novartis AG, prevented him from pursuing gene therapy with the company, but those agreements ended at the beginning of March. Hudson said Sanofi would be accelerating its gene therapy work.
Guggenheim Healthcare analysts said investors will probably speculate that Amsterdam-based gene therapy company uniQure NV may be one company Sanofi will consider buying. The group also said in a note that rare disease biotechnology company BioMarin Pharmaceutical Inc. and immunology company Principia Biopharma Inc. could be attractive to Sanofi.
UniQure is valued at about $2.86 billion, BioMarinat at about $19 billion and Principia at just over $2 billion. Analysts and investors speculated in 2019 that uniQure and BioMarin could be takeover targets after a flurry of deal activity around gene therapies.
Mirabaud analysts suggested that the Swiss immunology company Vifor Pharma AG may be of interest to the company, Bloomberg reported. Vifor's market value is about $10 billion. The news service also cited Citigroup Inc. analysts who said the company may want to acquire gene therapy assets.
Likewise, Jefferies analysts said they expect Sanofi to invest in oncology products and gene therapies, with enough firepower for "potentially several multibillion dollar transactions." However, the analysts stated that they do not expect Sanofi's acquisitions to necessarily be midsize or profitable ones.
"Rather, as outlined on the [first-quarter] call, we suspect focus is on adding to scientific platforms and discovery or early-stage pipeline assets, much like the recent $2.35 billion Synthorx acquisition for immuno-oncology drug THOR-707 in Phase I/II," the analysts stated in a May 29 note.
According to its website, Sanofi has 26 research projects in phase 1 of human testing, 23 in phase 2, and 39 in either phase 3 or in the registration stage.
History of Regeneron partnership
Despite its sale of Regeneron shares, Sanofi maintains that it will keep partnering with the Tarrytown, N.Y.-based biopharmaceutical company.
"Sanofi remains committed to continuing our collaboration with Regeneron, which remains an integral part of our overall strategy, and this decision was fully aligned with Regeneron," Hudson said in a May 25 press release.
Sanofi purchased shares of Regeneron in 2004. Since then, the companies have collaborated on five approved treatments. Recently, the U.S. Food and Drug Administration approved the companies' therapy Dupixent to treat children with a skin condition called atopic dermatitis.
The companies have several collaborations in their pipelines, including cancer drugs in all phases of clinical trials, such as Libtayo for treating skin cancer and Kevzara for arthritis, which they are exploring as a treatment for severe COVID-19 patients.
COVID-19 vaccine candidate
It is not clear whether any money from the sale would go toward the production of Sanofi's COVID-19 vaccine.
In February, the French drugmaker announced that under a partnership with the U.S. Biomedical Advanced Research and Development Authority, or BARDA, the company would develop a vaccine to protect against the novel coronavirus that causes COVID-19. In April, Sanofi announced a partnership with GlaxoSmithKline PLC to speed the development of the vaccine with hopes that it would be available in the second half of 2021.
Following its first-quarter 2020 earnings call, Hudson criticized European authorities for being unprepared to develop a COVID-19 vaccine and unwilling to collaborate with pharmaceutical companies as BARDA had done.