FRX Forest Road Acquisition Corp

Sanofi (SNY) entered into an agreement with a biopharmaceutical company, Ardelyx Inc. to license the latter’s novel phosphate transport NaP2b inhibitor program. The program 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.

As per the terms, Sanofi will undertake the sole responsibility of developing the candidates further while Ardelyx will retain an option to co-promote the drugs, covered under the agreement, in the U.S.

Sanofi will make an undisclosed upfront payment to Ardelyx. Additionally, Sanofi will be obligated to make development and regulatory milestone payments of up to $198 million depending upon the achievement of certain targets. Ardelyx will also receive royalties on net product sales.

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 the string of pipeline setbacks at the company in the recent past. The Complete Response Letter (CRL) for its multiple sclerosis drug, Lemtrada, was a huge disappointment for Sanofi.

We remind investors that Sanofi has been quite active on the deal-making front, particularly with biopharmaceutical companies. 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 Regeneron Pharmaceuticals, Inc. (REGN). Sanofi intends to increase its stake in the latter.

Sanofi carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks include Forest Laboratories (FRX). Forest Labs carries a Zacks Rank #1 (Strong Buy).

 
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