Sanofi Buys Principia for USD 3.7 Billion as Part of Specialty Pivot

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Sanofi has agreed a deal to buy out its partner, US biotech company Principia Biopharma for USD 3.7 billion in cash, giving the French giant full ownership of Principia’s pipeline of BTK inhibitors for autoimmune disorders.

 

The deal, whereby Sanofi is set to pay USD 100 a share to acquire Prinicipa Biopharma, will see Sanofi take full control of the development of the SAR442168 drug, which analysts at Jeffries are tipping to generate peak global sales of USD two billion if it succeeds in Phase III clinical trials.

 

Having taken the somewhat unusual step of acquiring a biotech partner outright before Phase III data has been produced, Sanofi CEO Paul Hudson told the FT that “This deal will put us at the front of pack in broad deployment of BTK inhibitors, and it will be accretive much faster if we control the drugs completely, as opposed to being in a partnership.” He added, “Given Sanofi’s scale and resources, we can do more with the assets and have a broader reach by exploring different indications for the drugs than Principia would have been able to do on its own.”

 

Sanofi has been working with Principia via a licensing deal since 2017 to develop an oral treatment to alleviate symptoms of multiple sclerosis (MS) and other diseases of the central nervous system (CNS). Having paid USD 40 million upfront, Sanofi would have owed future milestone payments of up to USD 765 million if the drug ever reached the market; payments they would be able to avoid if the acquisition is completed as planned by the end of the year.

 

We have enough firepower to do multiple additional bolt-ons if that’s what we want to do

Paul Hudson, CEO, Sanofi

 

Since joining as CEO in September 2019, British national Paul Hudson has increasingly shifted Sanofi’s focus towards specialty medicines for cancer and rare diseases, which he sees as ripe for innovation, abandoning the firm’s traditional focus on mass-market cardiovascular and diabetes drugs. The Principia deal was preceded by the USD 2.5 billion acquisition of immune-oncology focused biotech Synthorx Inc. in December 2019.

 

Analysts are predicting that Sanofi’s M&A splurge will not stop with the Principia acquisition. With a reported USD 50 billion M&A war chest bolstered by relatively low debts and USD 10 billion garnered through the sale of Regeneron stock, Hudson has stated that he is “open-minded” about doing further deals. “We have enough firepower to do multiple additional bolt-ons if that’s what we want to do,” he told the FT. “We don’t need to buy revenue but we need to amplify the value of our pipeline.”

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