Sanofi, UCB Ink Deal

Zacks Equity Research

Sanofi (SNY) entered into an agreement with Belgium-based biopharmaceutical company UCB (UCBJF) for the discovery and development of therapies for immune-mediated diseases including gastroenterology and arthritis.

Per the terms of the deal, Sanofi and UCB will share costs and profits equally. Sanofi will make an undisclosed upfront payment and development (preclinical and clinical) milestone payments of more than €100 million depending upon the achievement of certain targets.

Our Take

We are pleased with Sanofi’s efforts to boost its pipeline. Although Sanofi has some promising pipeline candidates (U300, alirocumab and sarilumab), we are disappointed with its string of pipeline setbacks in the recent past. The Complete Response Letter for multiple sclerosis drug, Lemtrada, was a huge disappointment.

We remind investors that Sanofi has been quite active on the deal-making front, particularly with biopharmaceutical companies. Last month, Sanofi licensed Ardelyx Inc.’s novel phosphate transport NaP2b inhibitor program, which includes a number of candidates in early stages of development for the treatment of hyperphosphatemia in patients suffering from end stage renal disease or chronic kidney disease.

Earlier this year, Sanofi expanded its existing agreement with Alnylam Pharmaceuticals, Inc. (ALNY) for the development of treatments for rare genetic diseases. Additionally, Sanofi announced its plan to acquire a 12% stake in Alnylam through a $700 million investment. Meanwhile, Sanofi has been showing a lot of interest in other companies as well.

Sanofi carries a Zacks Rank #4 (Sell). Some better-ranked stocks include Gilead Sciences Inc. (GILD). Gilead Sciences carries a Zacks Rank #1 (Strong Buy).

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