Sanofi has yet to wrap up its $3.2 billion acquisition of mRNA specialist Translate Bio, but the French pharma is already reaching out to its wallet. This time, it’s making a play in general medicines.
In a surprising move, Sanofi is paying $1.9 billion in cash to scoop up U.S. biotech Kadmon, the companies said Wednesday. The deal gives Sanofi access to Rezurock less than two months after the drug snagged a first-in-class FDA nod to treat chronic graft-versus-host disease (cGVHD) after two prior therapies.
The addition of Rezurock will bolster Sanofi’s existing transplant portfolio, which includes hematopoietic stem cell mobilizer Mozobil and broad immunosuppressive agent Thymoglobulin. The drugs together chalked up global sales of €530 million ($626 million) last year.
Although Rezurock fits well into the Sanofi franchise, Jefferies analyst Peter Welford suggested in a Wednesday note that a bolt-on deal for general medicines is “somewhat unexpected.”
Sanofi is in the middle of a five-year revamp championed by CEO Paul Hudson since he took the reins in 2019. The “play to win” strategy involves sharpening Sanofi’s focus on vaccines and some specialty care areas, such as oncology, while downsizing investments around general medicines—including diabetes and cardiovascular disease—and consumer health.
“We are transforming and simplifying our general medicines business and have shifted our focus on differentiated core assets in key markets,” Olivier Charmeil, Sanofi’s head of general medicines, said in a Wednesday statement.
Rezurock is a small-molecule drug that inhibits ROCK2, a signaling pathway that modulates inflammatory response and fibrotic processes. After its approval in July, Kadmon priced it at $15,500 per 30-count bottle.
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A survey from Jefferies analyst Biren Amin ahead of the approval bodes well for the novel drug. In the highly fragmented cGVHD space, 25 U.S.-based hematology and transplantation specialists suggested that by next year Rezurock could capture 9% to 23% of market share in the second- and third-line treatment settings, plus 30% share in the fourth and fifth lines.
Further, an industry expert recently told Jefferies analysts that he intends to switch 30% to 50% of patients from off-label use of Incyte’s Jakafi to Rezurock. Jakafi’s cGVHD application is being delayed at the FDA amid a classwide scrutiny on JAK inhibitor safety. Over the long term, about 50% of 70% of his patients could get Rezurock, the expert said.
With the positive feedback, Jefferies currently projects Rezurock to reach peak sales of $1 billion, with $650 million coming from the the U.S. market. That's higher than the consensus estimate of €476 million (about $562 million) by 2026, according to ODDO BHF analysts in their Wednesday note.
But there were some weak points in Rezurock’s story. During Amin’s survey, the U.S. doctors noted a lack of awareness around Rezurock, as well as potential reimbursement challenges that could stall the drug’s rollout during the first two years of launch.
Under Sanofi’s wings, the drug could enjoy the benefit of the sales and marketing clout of a Big Pharma company.
“Our existing scale, expertise, and relationships in transplant create an ideal platform to achieve the full potential of Rezurock,” Sanofi’s Charmeil said in a statement.
In addition to cGVHD, researchers are testing Rezurock in phase 2 trials in systemic sclerosis. Kadmon’s pipeline also includes KD033, an anti-PDL1/IL-15 drug currently in early testing in solid tumors.
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To strengthen its pipeline and add new platforms to its drug discovery toolbox, Sanofi has been active in striking deals lately. So far this year, Sanofi has bought out Kymab in a $1.1 billion upfront deal and gained an antibody targeting the immune system regulator OX40L. In April, Sanofi put down $160 million upfront to acquire Fred Hutchinson Cancer Research Center spinout Tidal Therapeutics for its mRNA-based approach to reprogramming immune cells inside the body.
Just a month ago, the French pharma unveiled a $3.2 billion deal to take over its mRNA COVID-19 vaccine partner Translate Bio. But the deal appears to have hit an antitrust snag as the parties recently refiled paperwork with the U.S. Federal Trade Commission to allow the agency more time to review the transaction.
For Kadmon, Sanofi is paying $9.5 per share, which represents a 79% premium over the firm’s previous closing price. Jefferies’ Welford said the size of the markup is typical of biotech deals. “We do not envisage competition concerns given minimal overlap and low likelihood of a counterbid,” he wrote in the Wednesday note. Sanofi expects to close the deal in the fourth quarter.