The view from John Carroll
Tomorrow the analysts that cover Sanofi $SNY will gather in Paris to hear the pharma giant outline its R&D strategy. And more than a few skeptics from the investor community will be on hand.
After relying on partners like Regeneron $REGN and Alnylam $ALNY to deliver the goods on innovation and significant new progress in drug development, chief scientist Elias Zerhouni believes it’s time to become more self-reliant.
But that’s going to be a very hard sale.
Internally, the R&D organization has been one of the most notorious laggards in Big Pharma, rivaling GSK in underperformance. Its one big success, the dengue vaccine Dengvaxia, has now imploded as the Philippine government claims it was bamboozled into vaccinating hundreds of thousands of children with a vaccine that threatens previously unexposed subjects with severe cases of dengue — perhaps hemorrhagic fever.
Now the Philippines wants its money back. And a product that was held up as an example of Sanofi’s ability to develop blockbusters has become a liability of unknown proportions.
To top it off, Sanofi just days ago said it will terminate its late-stage program for a Clostridium difficile vaccine after investigators determined they were on a straight path to failure.
In the meantime, Sanofi tried and failed to deliver on some significant buyouts, outbid by Pfizer for Medivation (and likely glad of that) and raising doubts that it knows how to buy a company after watching Actelion go to J&J.
“Nothing is happening in terms of business development and there is very little news in the pipeline. What just happened with dengue is negative and shocking,” Candriam’s Rudi Van Den Eynde told Reuters in a bleak assessment of the company’s performance.
After taking a stab at cancer, the pharma giant ended up restructuring that effort after some key setbacks. That includes fedratinib, which was recently handed back to one of the scientists who helped discover it and is now taking it back into late-stage development. And now Sanofi’s in-house pipeline is limited to a few key efforts, including isatuximab (SAR650984), an unconjugated anti-CD38 antibody in Phase III development for relapsed and refractory multiple myeloma.
A couple of years ago I sat down with Zerhouni and he told me that a company like Sanofi has no business buying platform R&D efforts. They’d just kill it, he says, which is why he insisted to the board long ago that buying Regeneron was a terrible idea.
It hasn’t always been a smooth path, but Sanofi now has several partnerships delivering on innovation. Its reputation in-house couldn’t be worse, especially after former CEO Chris Viehbacher tried and failed to kick off a major reorganization in France after the Genzyme acquisition.
Zerhouni, though, has been telling analysts that the pharma giant’s in-house biologics and antibody work has progressed to the point that it doesn’t need Regeneron for that, shifting to a concentration on their partnership for the world’s sixth PD-1/L1 drug, due to be filed in a matter of weeks or months.
With their diabetes franchise under the gun, Sanofi continues to scout for major acquisitions of the $20 billion to $30 billion category. Investors have been clamoring for M&A for years, but the company’s executive team refuses to be rushed.
Image: Sanofi chief scientist Elias Zerhouni
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