Sanofi to Buy Cancer Biotech Company Synthorx for $2.5 Billion
December 09 2019 - 6:16AM
Dow Jones News
By Denise Roland
Sanofi SA has agreed to buy cancer biotech company Synthorx Inc.
for $2.5 billion, the first big move by new Chief Executive Paul
Hudson to reinvigorate the sprawling French health care giant.
The company has a long history in cancer-drug development but
has fallen behind in the latest rush to develop immunotherapies, or
drugs that help the immune system fight tumors. Its acquisition of
Synthorx is a bet that it can make up that ground.
Synthorx, based in La Jolla, Calif., is developing a drug that
aims to boost the immune system's response to cancer. The drug is
in the early phase of human testing in a range of cancers, both on
its own and in combination with existing cancer immunotherapies.
Sanofi on Monday said it would pay $68 a share in cash for
Synthorx, a 172% premium to the smaller company's closing share
price Friday.
"This acquisition fits perfectly with our strategy to build a
portfolio of high-quality assets and to lead with innovation," said
Mr. Hudson, who is set to provide an eagerly awaited strategy
update to investors Tuesday.
Mr. Hudson, a former Novartis AG executive who became Sanofi CEO
in September, has said he wants to create a sense of urgency and
prioritization at the company. The deal shows that cancer treatment
will be one of those priorities.
Sanofi is one of the most diversified companies in the industry,
spanning branded prescription drugs, vaccines and over-the-counter
treatments. Within branded drugs, it produces medicines ranging
from insulin for diabetes to specialty medicines for rare
diseases.
Analysts expect Mr. Hudson to slim the company down. That could
mean jettisoning its over-the-counter medicine business, the
analysts say, a move that would follow other industry giants like
Pfizer Inc., GlaxoSmithKline PLC and Novartis.
They also expect him to narrow its drug-development pipeline.
That is likely to mean more investment in rare or specialty
diseases like cancer, and less in broad disease areas, like
Sanofi's large but dwindling diabetes franchise.
Sanofi makes Lantus, the most heavily prescribed insulin brand
in the U.S. But amid patient uproar about the price of insulin, and
tough actions from insurers and pharmacy-benefit managers to drive
down the price, revenue from the lifesaving drug has fallen in
recent years.
Its top rivals in diabetes, Novo Nordisk A/S and Eli Lilly &
Co., have responded to those pressures by investing heavily in new
classes of diabetes medicine. But Sanofi's attempts to do so have
flopped.
Cancer treatment, meanwhile, holds far greater appeal. The area
has enjoyed a run of recent scientific breakthroughs, a permissive
regulatory system that allows for smaller and faster clinical
trials, and the ability to charge higher prices.
Those factors have attracted many companies into the field. The
number of cancer drugs in late-stage clinical trials surged more
than 60% to 710 between 2007 and 2017, according to IQVIA, a
health-care data provider.
Write to Denise Roland at Denise.Roland@wsj.com
(END) Dow Jones Newswires
December 09, 2019 06:01 ET (11:01 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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