Drug Development, M&A

Sanofi’s Elias Zerhouni says his R&D group is ready to stand alone — but big M&A and partnerships still loom large

Seven years ago, when then Sanofi CEO Chris Viehbacher named former NIH chief Elias Zerhouni as the French pharma giant’s R&D chief, his new boss offered a big shout out for his role as an early adviser in the transformation of Sanofi’s R&D group.

Zerhouni, he said, had been “central in implementing what is now one of the most promising R&D models in healthcare.”

Later, Viehbacher would tell me that he didn’t think any organization as big as Sanofi’s could be truly innovative. And Zerhouni would go on to rely largely on Sanofi’s close partner Regeneron — as well as the Genzyme buyout — to provide the new drugs that the pharma giant desperately needed. (And just look at what Sanofi partner Alnylam accomplished today.) Missteps on the cancer side led to a restructuring in the US while entrenched forces stubbornly resisted Viehbacher’s efforts to pull off a major reorganization in Europe. Then Viehbacher was fired.

Chris Viehbacher

Now Zerhouni insists that Sanofi’s in-house R&D group, long one of the worst laggards in Big Pharma, is ready to stand on its own two feet — planted on two continents. But behind that position you can still see a heavy reliance on biotech partners — Regeneron and Alnylam in particular — with a bad itch to establish a rep for R&D innovation that has so far proved elusive.

Leerink’s Seamus Fernandez captured Zerhouni’s thinking at a recent meeting. He notes:

If Dr. Zerhouni emphasized one thing from our discussion is was that “We’re so much more than just another way to own Regeneron.” Despite his enthusiasm for Dupixent and the company’s IO efforts with REGN (OP), it is increasingly clear that SNY’s efforts are shifting toward internally developed and owned assets.

There’s more:

Among the most interesting insights, in our view, was Dr. Zerhouni’s belief that SNY’s biologics and antibody development capabilities have advanced far enough that it no longer makes sense to continue the discovery collaboration with REGN; hence why SNY exited the agreement and moved toward the IO collaboration, where REGN’s focus is on developing checkpoints, including the PD1 antibody, and SNY is focused on combining other potential IO agents like its anti-CD38 or anti-TGF agents, both “potentially core mechanisms of resistance”.

In particular, Zerhouni highlighted new obesity research that could pay off.

Zerhouni highlighted the company’s internally developed GLP1/Glucagon and GLP1/GIP dual agonists in Phase IIb obesity studies. These studies should have data in 1H18 with the potential to meet or exceed the benefits on Victoza on blood glucose and substantially exceed its impact on weight. Dr. Zerhouni noted that weight loss in excess of 5% vs. control would warrant a move into Phase 3 in his view.

And just because Sanofi got beat out in the bidding war for Medivation and Actelion doesn’t mean it has given up on big time M&A. Zerhouni tells Fernandez that Sanofi is prepped to pay anywhere from $20 billion to $30 billion to get something it wants.

That brings up another point that Zerhouni once made to me. He told me at JP Morgan a few years ago that any Big Pharma company that buys a platform company will only kill it. If he stays true to form, Sanofi will reserve its big money for drug assets that are on or near the market — and that won’t come cheap.


Image: Elias Zerhouni, Sanofi’s president of global R&D, speaks in Paris last year Vincent Isore/IP3/Getty



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