|Sanofi CEO Chris Viehbacher|
To call Sanofi's ($SNY) earnings release from last month "dismal" might be an understatement, but CEO Chris Viehbacher says the company has the resources to help turn earnings around. The CEO of the French drugmaker says the company could make some "opportunistic" moves, and repurchasing a 9% Sanofi stake from L'Oreal or increasing its stake in Regeneron Pharmaceuticals ($REGN) to as much as 30% may be among them.
According to Reuters, Viehbacher told a Bank of America Merrill Lynch healthcare conference Friday that repurchasing L'Oreal's stake in the company might make sense if L'Oreal puts the holding--worth $12 billion--up for sale. Comments from L'Oreal's CEO last month have driven speculation that L'Oreal may sell, in turn depressing shares of Sanofi, which saw net income dive 23.4% last quarter. Some analysts, however, think a repurchase with cheap debt could boost Sanofi's earnings, the news service reports.
But Viehbacher told the conference that whether Sanofi gets involved will depend on the best use of capital at that point in time, noting, "We certainly have cash flow to do some things."
Another of those things may be upping Sanofi's stake in Regeneron, the Tarrytown, NY-based biotech that's continued to cruise since the mega-successful launch of eye drug Eylea. As Reuters notes, Sanofi currently holds about 16% of Regeneron and said in February it retains the right to raise that share to a maximum of 30%.
A move like that could prove fruitful for Sanofi. Regeneron has a $27 billion market value, according to Reuters, and has toppled one analyst's estimate after another since it took the market by storm in November 2011. Recently, U.S. sales of Eylea jumped 70% to $330 million for the second quarter, causing Regeneron to up its 2013 revenue estimate to $1.3 billion to $1.35 billion. And in August, the company released new data suggesting the drug may soon vie for a new approval for diabetic macular edema, which affects over 6 million people worldwide. "The Regeneron relationship has become extremely productive for us," Viehbacher said. "Over time, it could well make sense to build our stake up to 30 percent. How fast we do that, whether or not we do that is a function of a number of different factors--but it is a bulky chunk of money to use."
There's a chance Viehbacher is looking in a different direction, as well. Friday, rare-disease drug developer ViroPharma ($VPHM) once again found itself in the spotlight as a potential acquisition target with rumors highlighting Sanofi, as well as Shire ($SHPG), among interested parties.
- see the news from Reuters
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