- Sanofi will pay $2.5 billion to acquire Synthorx, a La Jolla, California-based biotech pursuing the ambitious idea of expanding the genetic code by creating a new DNA base pair, the companies announced Monday.
- The deal is an aggressive and early bet on cancer research by Paul Hudson, who started as Sanofi's CEO in September. Little clinical data supports Synthorx's platform, and the French pharma is paying $68 per share, representing a steep 172% premium.
- Biren Amin, a biotech analyst at Jefferies who covers Synthorx, called the deal "unexpected" in a Monday note to investors. Amin added he does not anticipate additional bidders or issues with the Federal Trade Commission. Sanofi expects the deal to close in the first quarter of 2020.
The deal predates Sanofi's capital markets day, where Hudson will roll out his vision and strategy Tuesday for the Paris-based company.
Part of that presentation figures to explain the rationale behind this deal, which is Sanofi's first major M&A move under Hudson.
Synthorx went public last December and disclosed first-in-human data just a few months ago for its lead asset, a variant of recombinant IL-2 called THOR-707 being tested in solid tumors.
While there is little clinical evidence of its efficacy yet, Sanofi executives expressed optimism for both THOR-707 and Synthorx's broader technology.
Sanofi R&D head John Reed said in a statement that THOR-707 is "a molecule that has the potential to become a foundation of the next generation of immuno-oncology combination therapies."
Additionally, Reed said the pipeline of other lymphokines holds the potential to treat not just cancers but also auto-immune and inflammatory diseases. SVB Leerink analyst Daina Graybosch wrote Monday the breadth of the Synthorx platform in several therapeutic areas likely appealed to Sanofi.
Graybosch also predicted other immuno-oncology companies could see a boost on the market from this sale, citing a "relative dearth in M&A activity" recently for the area.
For Synthorx, being acquired caps its brief corporate history. The biotech was founded in 2014 to commercialize science from The Scripps Research Institute that aims to add a new DNA base pair of X and Y to the genetic code. Synthorx dubbed this the Expanded Genetic Alphabet platform.
This X-Y pair can create biologics, such as THOR-707, using a strain of E. coli bacterium. With the lead asset of recombinant IL-2, Synthorx has focused on a clinically validated target that won approval in the 1990s with Proleukin (aldesluekin).
But Proleukin has been hamstrung by its toxicity, which can include life-threatening side effects. Synthorx has said it believes THOR-707 can be safer and more effective. The company has an ongoing Phase 1/2 dose escalation and expansion trial, which started in the second quarter of 2019.
Overall, the deal will bolster Sanofi's presence in oncology, which makes up 28 of the 85 ongoing clinical projects in the company's pipeline.