Sanofi, Zealand hit by U.S. setback for diabetes drug

An employee walks into an office of French drugmaker Sanofi in Shanghai August 2, 2013.

Credit: Reuters/Aly Song

By Natalie Huet and Lionel Laurent

PARIS | Thu Sep 12, 2013 9:17am EDT

PARIS (Reuters) - French drugmaker Sanofi withdrew its U.S. application for diabetes treatment lixisenatide on Thursday, delaying the drug's launch in the world's biggest pharmaceutical market.

The decision sent shares in Sanofi down around 2 percent by 1300 GMT, while Zealand Pharma, its smaller Danish partner on the drug, dropped 16 percent.

Sanofi said it would resubmit its application to the U.S. Food and Drug Administration in 2015, after completion an ongoing cardiovascular patient study, and said the withdrawal was "not related to safety issues or deficiencies in the new drug application."

Sanofi argued that revealing interim data from the cardiovascular trial to the FDA before it was completed could potentially influence patients and doctors' response and affect the integrity of the study, and that it was therefore wiser to wait for its full results to submit a new drug application.

Lixisenatide is part of a new class of diabetes treatments called GLP-1 analogues that prompt the body to release insulin when a diabetic's blood sugar level climbs too high.

It has already been approved for sale in Europe under the brand name Lyxumia and is one of the new products Sanofi is betting on to restore growth after losing several blockbusters to generic competition.

Sanofi is the world's fourth-largest pharmaceutical company by prescription drug sales and the second-biggest player in the $43 billion diabetes market.

Lyxumia competes with other GLP-1 drugs as Victoza, from Novo Nordisk, and Byetta and Bydureon, from Bristol-Myers Squibb and AstraZeneca.

Sanofi said it expected to have the full results of its evaluation of lixisenatide in acute coronary syndrome, which is focused on patients with high cardiovascular risk, in about 15 months. Market analysts had expected the FDA to rule on lixisenatide by the end of the year.

"MINOR NEGATIVE"

"The net effect is that U.S. filing will be delayed to 2015, resulting in a 2-3 year delay to launch (likely to 2016), assuming nothing untoward emerges in the long-term cardiovascular outcome trial," Deutsche Bank analysts wrote in a note.

They had estimated the drug to bring 300 million euros ($399 million) of sales in the United States in 2016, and said they would now have to push back this forecast by a couple of years.

"We view this news as only a minor negative," they noted however, highlighting that Sanofi was sticking to its development plans for a combination of lixisenatide with its existing insulin drug Lantus that could reap higher sales.

The combination, a pen-shaped device known as LixiLan, remains on schedule to enter into final Phase III clinical testing in the first half of 2014, Sanofi said.

Sanofi has previously said that combining Lyxumia with Lantus insulin could help diabetics control blood sugar levels better than each therapy used alone.

After Sanofi's announcement on Thursday, analysts at Swiss-based broker Helvea revised their forecast for U.S. sales of lixisenatide in 2022 to 490 million euros from 830 million, and global sales to 1 billion euros from 1.5 billion.

They said they expected rival Novo Nordisk's Victoza drug to benefit from Sanofi's move.

Drugmakers are competing fiercely in the type 2 diabetes market as the number of people with the disease, which is linked to obesity, continues to grow rapidly - including in emerging markets where middle classes are switching to a Western diet.

An estimated 371 million people worldwide are living with diabetes, with China now topping the list, according to the International Diabetes Federation. It predicts as many as 552 million may have the disease by 2030.

(Editing by Jane Merriman and Ben Hirschler)

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Sanofi could acquire L'Oreal's stake, buy more of Regeneron

An employee walks into an office of French drugmaker Sanofi in Shanghai August 2, 2013.

Credit: Reuters/Aly Song

By Natalie Huet and Ben Hirschler

PARIS/LONDON | Fri Sep 13, 2013 7:20pm EDT

PARIS/LONDON (Reuters) - Repurchasing L'Oreal's 9 percent stake in Sanofi might make sense for the French drugmaker if the $12 billion holding is put up for sale, Sanofi's chief executive said on Friday.

Chris Viehbacher told an investor conference the group had the resources to do "opportunistic" share buybacks, as well as making bolt-on acquisitions and potentially increasing its stake in U.S. biotech firm Regeneron Pharmaceuticals.

Shares in Regeneron jumped more than 5 percent to an all-time high of $288.50 in New York after his comments, also buoyed by Lazard Capital Markets and RBC raising their price targets for the stock. Sanofi and L'Oreal shares were little changed.

Speculation over the fate of L'Oreal's stake in Sanofi has been fuelled by last month's comments from L'Oreal's CEO that the cosmetics company could buy back the 23-billion-euro ($30-billion) stake Nestle holds in it if L'Oreal in turn sold the 9-billion-euro stake it owns in Sanofi.

The comments have weighed on Sanofi shares, already dragged down by disappointing quarterly results, but some analysts say the drugmaker could use the opportunity to repurchase the shares with cheap debt, thereby boosting its earnings.

Asked about his potential interest in buying back L'Oreal's stake from next year, Viehbacher said it was difficult to comment because the issue was highly conditional.

"We certainly have cash flow to do some things," he told a Bank of America Merrill Lynch healthcare conference in London.

"Whether we would intervene in that or not is going to be a function of - if it does happen - what at that given point in time is the best use of capital. It may well be opportune to have a look at it."

Restrictions on Nestle selling its L'Oreal stake end in April.

More generally, Viehbacher said he did not exclude other share buybacks, but said these would depend on opportunities for acquisitions.

He said Sanofi could also look at raising its stake in Regeneron to as much as 30 percent. Sanofi holds about 16 percent of Regeneron and said in February it has the right to increase this to a maximum 30 percent under its decade-long partnership with Regeneron.

"The Regeneron relationship has become extremely productive for us," Viehbacher said. "Over time, it could well make sense to build our stake up to 30 percent. How fast we do that, whether or not we do that is a function of a number of different factors - but it is a bulky chunk of money to use."

Regeneron's market value is about $27 billion.

Regeneron is best known for its eye drug Eylea, co-marketed with Bayer. But it has also successfully developed the cancer treatment Zaltrap with Sanofi and is working with the French group on a new kind of cholesterol drug.

The drug, which is in late-stage trials, has cut levels of "bad" LDL cholesterol by 60 percent through a new mechanism - blocking a protein called PCSK9.

(Editing by Louise Ireland and Bob Burgdorfer)

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