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

Paul Hudson, Getty Images

UP­DAT­ED: Sanofi CEO Hud­son lays out new R&D fo­cus — chop­ping di­a­betes, car­dio and slash­ing $2B-plus costs in sur­gi­cal dis­sec­tion

Earlier on Monday, new Sanofi CEO Paul Hudson baited the hook on his upcoming strategy presentation Tuesday with a tell-tale deal to buy Synthorx for $2.5 billion. That fits squarely with hints that he’s pointing the company to a bigger future in oncology, which also squares with a major industry tilt.

In a big reveal later in the day, though, Hudson offered a slate of stunners on his plans to surgically dissect and reassemble the portfoloio, saying that the company is dropping cardio and diabetes research — which covers two of its biggest franchise arenas. Sanofi missed the boat on developing new diabetes drugs, and now it’s pulling out entirely. As part of the pullback, it’s dropping efpeglenatide, their once-weekly GLP-1 injection for diabetes.

“To be out of cardiovascular and diabetes is not easy for a company like ours with an incredibly proud history,” Hudson said on a call with reporters, according to the Wall Street Journal. “As tough a choice as that is, we’re making that choice.”

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