Investors react to the Sanofi-Regeneron collaboration

The pharmaceutical group Sanofi has put its stake of around 21.6% in its partner Regeneron to the test. Sanofi SA has announced that it is considering a partial or total sale of its approximately 23.4 million shares in the U.S. biotech company.

The French Sanofi informed the U.S. Securities and Exchange Commission (SEC) that it could start selling its stake after the holding period of an investment agreement with Regeneron expired in December 2020. However, Regeneron shares could also be used as collateral for a transaction.

Citigroup analysts consider the SEC filing to be information about an option, not a statement of intent, let alone notice of sale. Sanofi would also need five years under the holding agreement to exit Regeneron completely. According to Citigroup, the biotech company could also buy back some of its shares. Last month, the Regeneron Board approved a $1 billion share buyback program.

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Sanofi, known as Sanofi-aventis at the time, also said it will increase its stake in Regeneron from 4% to 19% by buying 12 million newly issued shares at $26 per share. The companies later announced an immuno-oncology collaboration agreement in 2015 to jointly develop a PD-1 inhibitor, which was then in Phase 1 testing.

The agreement was restructured in January 2019 ahead of its scheduled expiration in mid-2020. The amendment made in 2019 allowed Regeneron to retain rights to its IO discovery and development programs, and Sanofi to advance its early-stage IO program independently. Over the years, Sanofi increased its stake in Regeneron to 21.6%.

Sanofi and Regeneron entered a global collaboration agreement in November 2007 to develop fully human therapeutic antibodies using the latter’s VelociSuite technologies. Regeneron has developed the neurodermatitis drug Dupixent, which is also approved for the treatment of asthma and is marketing it in the U.S. jointly with Sanofi under a 2007 cooperation agreement. Sanofi is marketing the product internationally.

Dupixent has “the chance to be one of the most successful drugs in the history of the industry,” said new Sanofi CEO Paul Hudson on Monday, December 9. The company estimated the potential peak sales at more than $11,08 billion (€10 billion) per year. In 2018, the partners set Dupixent at $873 million (€788 million), 268% more than in the previous year.

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(Featured image by Mari Helin via Unsplash)

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