Sanofi to Buy U.S. Developer of Multiple Sclerosis Treatment -- 2nd Update

By Peter Stiff and Joseph Walker 

Sanofi SA has agreed to buy Principia Biopharma Inc. in a deal that values the developer of a promising multiple sclerosis treatment at $3.68 billion, the health-care giant's latest move to focus more on specialty therapies over mass-market medicines.

The French company said the purchase would give it full control over the MS treatment that the two companies were already codeveloping, simplifying commercialization plans and eliminating the need to pay future royalties.

The deal is part of a research and development shake-up at Sanofi that is shifting its focus away from its traditional strengths in common ailments like diabetes and heart disease toward medicines for more rare diseases and cancer, where companies can command heftier prices.

"This acquisition advances our ongoing R&D transformation to accelerate development of the most promising medicines that will address significant patient needs," Sanofi Chief Executive Paul Hudson said.

More broadly, Sanofi said the deal would strengthen its R&D work in autoimmune and allergic diseases, and allow it to develop the technology behind the MS drug for use in other central nervous system diseases and therapeutic areas.

The deal will also hand Sanofi a therapy called rilzabrutinib, which is currently in Phase 3 trials for patients with pemphigus, a rare autoimmune disease that causes blistering of the skin.

Under the deal, Sanofi agreed to pay $100 a share for San Francisco-based Principia, a 10% premium on its closing price Friday. Principia's shares have risen more than 65% so far this year on speculation of a possible takeover, potentially by Sanofi.

Sanofi and Principia have been working together since 2017 under a deal that gave Sanofi exclusive rights to sell the medicine, code-named SAR442168, around the world in exchange for royalties.

The drug posted upbeat Phase 2 trial data in MS patients earlier this year, and Phase 3 trials started in June. Sanofi aims to apply for regulatory approval in the first half of 2024.

Geoffrey Porges, a SVB Leerink analyst, said in a note to investors on Monday that the deal was too good for Sanofi to pass up. Under the terms of the companies' 2017 agreement, Sanofi could have wound up paying $4 billion in total royalties and other payments for SAR442168 alone, Mr. Porges estimated.

The drug is among a class of medicines that block a protein, called Bruton's tyrosine kinase, involved in the immune system that can play a role in certain diseases.

The so-called BTK inhibitors have been successful at treating certain types of cancer and lucrative for drugmakers. AbbVie Inc.'s BTK drug Imbruvica had global sales of $4.7 billion last year.

Sanofi has competition in bringing to market the first BTK inhibitor for multiple sclerosis, a disease in which the immune system attacks the body's nerve endings, causing pain, fatigue and mobility problems. Germany's Merck KGaA is conducting a Phase 3 study of a BTK inhibitor for multiple sclerosis, and Biogen Inc. has a BTK drug in Phase 1 development.

Sanofi's Mr. Hudson said on a conference call with analysts Monday that taking full control of the drug means that "economically and executionally we can move faster."

Mr. Hudson took the helm of Sanofi in September and has since set out plans to focus the company's research pipeline on the more-lucrative areas of rare diseases and cancer, pivoting away from historically strong areas such as treatments for cardiovascular disease and diabetes.

Under those plans, Sanofi has said it would stop investing in diabetes research, while bolstering its oncology business with the $2.5 billion acquisition of biotech Synthorx Inc.

Analysts expect Sanofi could be in the market for further acquisitions in specialist disease areas, with the sale of its long-held stake in Regeneron Pharmaceuticals Inc. earlier this year giving the company a sizable war chest for deals.

Write to Peter Stiff at [e-mail] and Joseph Walker at [e-mail]

(END) Dow Jones Newswires

August 17, 2020 13:36 ET (17:36 GMT)

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