Sanofi is selling off its nearly $13 billion in investments in longtime development partner Regeneron as the France-based company shifts its strategy to focus on indications such as oncology, neurology, rare diseases and hematology.
Sanofi is selling off its nearly $13 billion in investments in longtime development partner Regeneron as the France-based company shifts its strategy to focus on indications such as oncology, neurology, rare diseases and hematology.
On Monday, Sanofi announced it was dumping billions of dollars’ worth of Regeneron stock as it looked to exit its investment in the company. Sanofi currently owns approximately 23.2 million Regeneron shares, amounting to about a 20% stake in the company, and intends to sell approximately 12.8 million shares in a public offering. Sanofi said it may also sell an additional 1.28 million shares as part of the offering in the next 30 days if there is sufficient demand. The other shares will be sold through additional avenues. Sanofi said it intends to retain about 400,000 shares of Regeneron, which is worth about $227 million as of Friday’s closing price of $569.91. Regeneron will acquire about $5 billion worth of the available stock. Regeneron will fund the purchase with a combination of $3.5 billion of cash on hand and $1.5 billion of fully-committed bridge financing from Goldman Sachs.
Although Sanofi is selling off its stake in Regeneron, the longtime partners said the move will have no impact on their ongoing collaborations, such as with Dupixent and their assessment of Kevzara as a potential treatment of COVID-19. In April, Sanofi and Regeneron launched a second trial with Kevzara, an interleukin-6 inhibitor, Kevzara in adults hospitalized with serious complications from COVID-19.
For Sanofi, the sale of the Regeneron stock will likely be a key tactic to boost the company’s new pipeline strategy, which was unveiled in December. The sale of Sanofi’s shares in Regeneron will provide the company with billions of dollars to assist in shaping the company under the new strategy. During an investors meeting, Sanofi Chief Executive Officer Paul Hudson outlined his plans to revamp Sanofi with a focus on six primary areas. But, part of that new strategy meant the company was shifting out of the development of treatments for diabetes and heart disease.
On Monday, Hudson told the Financial Times that this was the right time for Sanofi to sell off its investment in Regeneron – an investment it’s held since 2003 when shares of Regeneron were selling at less than $20. Hudson said Sanofi should not be a passive investor in another company and should use those funds to advance its own agenda. However, he reiterated that the sale of the shares would in no way hinder the partnership between the two companies. Hudson said Regeneron and Sanofi will be developmental partners for years to come. In December, the two companies restructured their collaboration on Kevzara and Praluent.
The first key to Sanofi’s pipeline revamping was the $2.5 billion acquisition of San Diego-based Synthorx in December. That move brought Synthorx’s lead immuno-oncology candidate THOR-707, an interleukin-2 form being developed as a potential treatment for solid tumors into Sanofi’s pipeline.
In the interview with the Financial Times, Hudson said the company will likely use the assets from the stock sale to finance other deals to bolster its pipeline. The funds will not be used to pay down company debt, Hudson said. While it is unclear how many ways Sanofi could invest the funds from the stock sale, some analysts have suggested the company could acquire potential gene therapy treatments, as well as some immunology assets. Company acquisitions could also be on the table. Mirabaud analysts told Bloomberg that Switzerland’s Vifor Pharma AG could attract interest from Sanofi.
