Sanofi believes it’s still not too late to become a top player in cancer drug market

A little more than two years ago, Sanofi R&D chief Elias Zerhouni signaled the pharma giant’s sore disappointment in its cancer pipeline by axing group leader Tal Zaks and 100 investigators who failed to deliver the kind of exciting new oncology programs the pharma giant had promised to investors.

At the time, Sanofi said it was reorganizing to cut back expenses and absorbing the rest of the cancer R&D group into the global research structure. Then it turned to Regeneron to go to work on a blockbuster PD-1 partnership, which now is moving directly into pivotal studies. And Sanofi, which has struggled to find a major acquisition deal it can complete, has been eagerly signaling its intention to become a player in immuno-oncology, certain that the big surprises of the past year — like Bristol-Myers’ big setback on first-line lung cancer — indicate that there’s still plenty of trophies to hunt in the game of blockbusters played by the leaders in biopharma.

“It’s not a sprint to one target and that’s it, you’re the winner,” Zerhouni told Bloomberg in a new update. “The immuno-oncology field will be going through upheaval and changes in position for the next 20 years.”

Sanofi — like GlaxoSmithKline, which has also been signaling a big move back into oncology — finds itself way behind leaders like Merck and Roche and Bristol-Myers Squibb. AstraZeneca has been making a concerted effort to be a big player in cancer, and has drugs like Tagrisso, Lynparza and its PD-L1 drug Imfinzi to boast about — when they aren’t trying to explain away major setbacks like the failed first-round on the MYSTIC combo in first-line lung cancer.

While Zerhouni won’t come out and say so, its partners at Regeneron have been asserting for months now that PD-1 is a much better target than PD-L1 for immuno-oncology. Both dismantle a mechanism that cancer cells use to divert attention from immune cells, but there’s been a growing discussion that PD-1 could prove better than the others.

PD-L1 players like Roche would beg to differ, so expect plenty of more discussion on that point in the years ahead. Ironically, this debate is also coming at a time that there’s been growing discussion around the idea that I/O could become commoditized, with a growing second wave of checkpoints coming from BeiGene/Celgene, Novartis, Incyte and more that could wreck pricing.

If Sanofi is right, the pharma giant could steal a march in a huge and growing new oncology market. But practically all the analysts have been waiting for Sanofi to follow up on its failed Medivation bid and go after a cancer company that would provide a pipeline at a time the company is focusing more on internal programs.

“I see little opportunity for late entrants,” Nick Turner, an analyst at Mirabaud Securities in London, told Bloomberg. “I find it difficult, without an acquisition, to see how anybody else is going to build a competitive position in the PD-1 space.”

That won’t come cheap, especially if Emma Walmsley at GSK brings out the checkbook to mount their own come-from-behind strategy. GSK swapped their late-stage and commercial cancer programs to Novartis, and now want to be a player in the hottest field in biopharma R&D. Like GSK, Sanofi also has to overcome a history of miserable internal R&D results, which has been augmented only through pacts with companies like Regeneron or its acquisition of Genzyme.

Elias Zerhouni, Sanofi president, global R&D, speaking at Sanofi’s general shareholders meeting last year in Paris. Vincent Isore, IP3, Getty

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