Sanofi to Boost Stake in Regeneron

Andrew Klips  |

Shares of Regeneron Pharmaceuticals Inc. (REGN) were halted for the first 35 minutes of trading Monday morning after Sanofi SA (SNY) reported its plans to increase its stake in the Tarrytown, New York-based drugmaker.  Sanofi is already the largest shareholder of Regeneron, owning about 17 percent of the company.

Regeneron said that it received a notification from Sanofi under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 that the French biotechnology company intends to acquire common stock of Regeneron through open market purchases and direct purchases from shareholders.

As a result, Sanofi intends that the value of its ownership of voting securities of Regeneron stock will be in excess of the $500 million, which triggered the HSR Act notification.  Per a December 2007 agreement between the two companies, Sanofi cannot purchase more than 30 percent of Regeneron.

Of course, the news of the additional share purchases has rumors starting to be murmured that Sanofi will eventually be looking to acquire Regeneron.  Sanofi has not reported any intentions of seeking a controlling interest in REGN.

Regeneron and Sanofi have been working together for years, including making strides in the arthritis and cholesterol arenas cumulatively.  Amongst other things, the two are developing PCSK9, a new drug candidate for lowering cholesterol that is one-day hoping to compete with giants like Crestor and Lipitor.

The tandem were in the news as recently as last week when Regeneron won European Union marketing approval for ZALTRAP, a drug for the treatment of metastatic colorectal cancer in adults.  In a 1,226-patient pivotal phase III study, ZALTRAP, when used as part of a chemotherapy treatment on patients that had previously been treated with other chemotherapy, lengthened the median survival rate of those patients by about 18 percent to 13.5 months.

Stateside, the FDA approved ZALTRAP last August.  Sanofi markets the drug in the U.S. and will also be commercializing it in Europe.

In a separate matter, shares of Sanofi got a boost Monday morning when rival insulin producer Novo Nordisk (NVO) reported that the FDA declined to approve its two new long-lasting insulin drug candidates without additional research on cardiovascular risks being conducted.

Now trading again after the brief morning halt,  shares of REGN are ahead by 4 percent (after initially jumping about 10 percent) at $172.50, while shares of SNY are holding gains of more than 3 percent at $48 heading towards the lunch break.  Shares of NVO, however, have lost nearly 14 percent with the bad FDA news, trading now around $166.

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