- Sanofi's plan to sell nearly all of its more than $11 billion worth of Regeneron shares has sparked speculation that the French drugmaker is eyeing a new round of acquisitions. The pharma has expressed interest in moving into the fast-growing gene therapy sector, which has been driven forward by smaller biotechs like Spark Therapeutics, AveXis and the still-independent BioMarin Pharmaceutical.
- The cash will be used to "invest in early science, drive innovation and growth," a Sanofi spokesperson said in an email to BioPharma Dive. CEO Paul Hudson told the Financial Times that the company wants to expand its pipeline "through our own R&D and through acquisitions."
- The two companies will continue to collaborate on drug development, a partnership that has yielded five approved products, but the sale will mostly bring to an end Sanofi's role as a major investor in Regeneron.
Under Hudson, Sanofi has moved on from many of its older businesses like diabetes and cardiovascular disease in favor of an increased focus on cancer and immunology.
Sanofi has strongly signaled it sees a future in gene therapy, too. The company repurposed a vaccine plant in France to make gene therapy delivery tools, and aims to do more than "dabbling" in the space, according to R&D chief John Reed.
Because of its gene therapy interest and its ownership of blood-products company Bioverativ, which Sanofi secured two years ago, analysts on Tuesday suggested BioMarin Pharmaceutical — which has a hemophilia gene therapy nearing regulatory approval — could be a target.
BioMarin would "fit well" with Sanofi and "could add a very long lived platform for future development," RBC Capital Markets analyst Kennen MacKay wrote in a May 25 note to clients. The share sale would give Sanofi more than $20 billion in cash, MacKay wrote, enough to buy most small- to mid-cap biotechs.
BioMarin shares rose 8% on the news Tuesday, giving it a market capitalization of about $19 billion.
The Regeneron partnership, which began in 2003 and has been one of the most productive in biopharma, has yielded five approved products, including the eye injection Eylea and the eczema treatment Dupixent. In the process, Sanofi's stake has skyrocketed in value. The company first bought Regeneron shares in 2004, and then upped its stake in a 2007 share purchase at $26 apiece. By last Friday, it owned 23.2 million shares worth $569 each.
Sanofi in recent years has sought to restructure parts of the collaboration to enable it to focus on its own pipeline. Meanwhile, its pledge to hold onto Regeneron shares was set to expire in December 2020.
The share sale was set to begin Tuesday as part of a registered direct offering. Regeneron also plans to buy back $5 billion worth of shares from Sanofi, which will leave the French pharma with 400,000 shares.
Sanofi said Friday it would sell its shares at a price of $515 apiece. If an option to buy shares held by the banks underwriting the deal is exercised, Sanofi would received $11.7 billion in gross proceeds.
SVB Leerink analyst Geoffrey Porges, writing in a note to clients Tuesday, expects Regeneron's stock price to increase after a one- to two-day adjustment period, driven in part by the company's decision to buy back shares. "In our view, that these shares are, or were, owned by Sanofi, or another institution, makes little difference to the value per share," he wrote.
Piper Sandler analyst Christopher Raymond added that Regeneron's work to develop antibodies to fight coronavirus infections could generate news that will increase share prices later in the year, in addition to updates from its pipeline of cancer and autoimmune disease drugs.
Editor's note: This article has been updated to reflect the price per share, and total deal value, at which Sanofi said Friday it would sell its common stock of Regeneron.