Pol­i­tics, pric­ing con­tro­ver­sy, tax re­form and steep val­u­a­tions con­spire to con­fuse Sanofi’s M&A strat­e­gy

Feb 7, 2007: Pres­i­dent George W. Bush and NIH Di­rec­tor Dr. Elias Zer­houni en­joy an ex­change. NIH – Screen­shot

One of the big ques­tions fac­ing the in­dus­try right now is whether or not the M&A train will get rolling in a mean­ing­ful way in 2017. It’s clear that many of the ma­jor play­ers — the ones ex­pect­ed to add bil­lions in meaty deals to the bare bones of what we’ve been see­ing — have been caught at least some­what off bal­ance by a new pres­i­dent that con­stant­ly spouts off about out­ra­geous­ly high drug costs as well as plans to re­form cor­po­rate tax­es.

That in­de­ci­sion was cap­tured per­fect­ly over the week­end by the Fi­nan­cial Times, which in­ter­viewed Sanofi R&D chief Elias Zer­houni. Sanofi has tried, and failed, to bag Medi­va­tion as well as Acte­lion, beat out by big­ger check books (Pfiz­er/Medi­va­tion) and more con­sis­tent play­ers (J&J/Acte­lion). What­ev­er hap­pens to its re­port­ed in­ter­est in Flex­ion, that deal won’t tip the M&A scales very much.

Zer­houni un­der­stands to pric­ing un­cer­tain­ty per­fect­ly.

“There is a lot of un­cer­tain­ty right now in the val­ues of all com­pa­nies be­cause of pric­ing is­sues in the US . . . in par­tic­u­lar, but world­wide,” he told the FT. “And so when you see the val­ues that are be­ing paid you ques­tion your­self as to the sus­tain­abil­i­ty of those val­ues, giv­en the un­cer­tain­ty in the pric­ing en­vi­ron­ment.”

He al­so has the lux­u­ry of count­ing on Re­gen­eron to pro­vide the in­no­va­tion the com­pa­ny has failed to pro­vide for it­self. That is ev­i­dent with the big new ap­proval for Dupix­ent and the con­tin­u­a­tion of its lon­grun­ning le­gal bat­tle with Am­gen. And so there’s some lee­way in when and what Sanofi goes af­ter next, though a num­ber of an­a­lysts and big in­vestors aren’t about to let Sanofi CEO Olivi­er Brandi­court off the hook on M&A. Says Zer­houni:

It’s not fair to say that we’re not in­ter­est­ed, but we’re al­so very dis­ci­plined. There is an in­fla­tion of prices for these as­sets and they are quite un­usu­al.

So val­u­a­tions are high, US pol­i­tics are par­tic­u­lar­ly un­cer­tain and Sanofi ex­ecs nat­u­ral­ly don’t like to sweat in pub­lic. It should be an in­ter­est­ing year, but with the di­a­betes fran­chise on the wane, mark­ing time is not a lux­u­ry that Sanofi can af­ford — what­ev­er Zer­houni says in an in­ter­view.

The M&A train at the French com­pa­ny can’t stay in the sta­tion in­def­i­nite­ly.

The Avance Clinical leadership team: CEO Yvonne Lungershausen, Sandrien Louwaars - Director Business Development Operations, Gabriel Kremmidiotis - Chief Scientific Officer, Ben Edwards - Chief Strategy Officer

How Aus­tralia De­liv­ers Rapid Start-up and 43.5% Re­bate for Ear­ly Phase On­col­o­gy Tri­als

About Avance Clinical

Avance Clinical is an Australian owned Contract Research Organisation that has been providing high-quality clinical research services to the local and international drug development industry for 20 years. They specialise in working with biotech companies to execute Phase 1 and Phase 2 clinical trials to deliver high-quality outcomes fit for global regulatory standards.

As oncology sponsors look internationally to speed-up trials after unprecedented COVID-19 suspensions and delays, Australia, which has led the world in minimizing the pandemic’s impact, stands out as an attractive destination for early phase trials. This in combination with the streamlined regulatory system and the financial benefits including a very favourable exchange rate and the R & D cash rebate makes Australia the perfect location for accelerating biotech clinical programs.

Dan O'Day, Gilead CEO (Andrew Harnik, AP Images)

UP­DAT­ED: Gilead leas­es part­ner rights to TIG­IT, PD-1 in a $2B deal with Ar­cus. Now comes the hard part

Gilead CEO Dan O’Day has brokered his way to a PD-1 and lined up a front row seat in the TIGIT arena, inking a deal worth close to $2 billion to align the big biotech closely with Terry Rosen’s Arcus. And $375 million of that comes upfront, with cash for the buy-in plus equity, along with $400 million for R&D and $1.22 billion in reserve to cover opt-in payments and milestones..

Hotly rumored for weeks, the 2 players have formalized a 10-year alliance that starts with rights to the PD-1, zimberelimab. O’Day also has first dibs on TIGIT and 2 other leading programs, agreeing to an opt-in fee ranging from $200 million to $275 million on each. There’s $500 million in potential TIGIT milestones on US regulatory events — likely capped by an approval — if Gilead partners on it and the stars align on the data. And there’s another $150 million opt-in payments for the rest of the Arcus pipeline.

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As­traZeneca trum­pets the good da­ta they found for Tagris­so in an ad­ju­vant set­ting for NSCLC — but many of the ex­perts aren’t cheer­ing along

AstraZeneca is rolling out the big guns this evening to provide a salute to their ADAURA data on Tagrisso at ASCO.

Cancer R&D chief José Baselga calls the disease-free survival data for their drug in an adjuvant setting of early stage, epidermal growth factor receptor-mutated NSCLC patients following surgery “momentous.” Roy Herbst, the principal investigator out of Yale, calls it “transformative.”

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Pablo Legorreta, founder and CEO of Royalty Pharma AG, speaks at the annual Milken Institute Global Conference in Beverly Hills, California (Patrick T. Fallon/Bloomberg via Getty Images)

Cap­i­tal­iz­ing Pablo: The world’s biggest drug roy­al­ty buy­er is go­ing pub­lic. And the low-key CEO di­vulges a few se­crets along the way

Pablo Legorreta is one of the most influential players in biopharma you likely never heard of.

Over the last 24 years, Legorreta’s Royalty Pharma group has become, by its own reckoning, the biggest buyer of drug royalties in the world. The CEO and founder has bought up a stake in a lengthy list of the world’s biggest drug franchises, spending $18 billion in the process — $2.2 billion last year alone. And he’s become one of the best-paid execs in the industry, reaping $28 million from the cash flow last year while reserving 20% of the cash flow, less expenses, for himself.

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Paul Hudson, Sanofi CEO (Getty Images)

Sanofi CEO Paul Hud­son has $23B burn­ing a hole in his pock­et. And here are some hints on how he plans to spend that

Sanofi has reaped $11.1 billion after selling off a big chunk of its Regeneron stock at $515 a share. And now everyone on the M&A side of the business is focused on how CEO Paul Hudson plans to spend it.

After getting stung in France for some awkward politicking — suggesting the US was in the front of the line for Sanofi’s vaccines given American financial support for their work, versus little help from European powers — Hudson now has the much more popular task of managing a major cash cache to pull off something in the order of a big bolt-on. Or two.

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Look­ing to move past a tri­al fi­as­co, Ipsen poach­es their new CEO from Sanofi

Ipsen has turned to another Paris-based biopharma company for its next CEO.

Sanofi Pasteur chief David Loew is making the journey to Ipsen, 5 months after David Meek jumped ship to run a startup in late-stage development.

Loew arrives as Ipsen works to get back on track with their rare bone disease drug palovarotene, picked up in the $1.3 billion Clementia buyout, which was slammed with a partial hold after researchers observed cases of “early growth plate closure” in patients under the age of 14. But they are pushing ahead with the over-14 crowd after writing down slightly more than half of its initial development.

Iron­wood kicks de­layed-re­lease Linzess for­mu­la­tion to the curb af­ter tri­al fail­ure

The delayed-release formulation of Ironwood and Allergan’s bowel drug Linzess will not see the light of day.

The experimental drug, MD-7246, failed to help patients with abdominal pain associated with irritable bowel syndrome with diarrhea (IBS-D) in a mid-stage study, prompting the partners to abandon the therapy.

First approved in 2012, Linzess (known chemically as linaclotide) enhances the activity of the intestinal enzyme guanylate cyclase-C to increase the secretion of intestinal fluid and then transit through the intestinal tract, as well as reduce visceral pain, to relieve pain and constipation associated with IBS.

No­var­tis jumps in­to Covid-19 vac­cine hunt, as Big Phar­ma and big biotech com­mit to bil­lions of dos­es

After spending most of the pandemic on the sidelines, Novartis is offering its aid in the race to develop a Covid-19 vaccine.

AveXis, the Swiss pharma’s gene therapy subsidiary, has agreed to manufacture the vaccine being developed by Massachusetts Eye and Ear and Massachusetts General Hospital. The biotech will begin manufacturing this month, while the vaccine undergoes further preclinical testing. They’ve agreed to provide the vaccine for free for clinical trials beginning in the second half of 2020, but have not disclosed financials for after.

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Roger Perlmutter, Merck R&D chief (YouTube)

UP­DAT­ED: Backed by BAR­DA, Mer­ck jumps in­to Covid-19: buy­ing out a vac­cine, part­ner­ing on an­oth­er and adding an­tivi­ral to the mix

Merck execs are making a triple play in a sudden leap into the R&D campaign against Covid-19. And they have more BARDA cash backing them up on the move.

Tuesday morning the pharma giant simultaneously announced plans to buy an Austrian biotech that has been working on a preclinical vaccine candidate, added a collaboration on another vaccine with the nonprofit IAVI and inked a deal with Ridgeback Biotherapeutics on an early-stage antiviral.

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