Sanofi's Provention buyout hit with FTC delay. Will Pfizer's Seagen deal go off as planned?

The U.S. antitrust watchdog is taking more time to review the proposed combination of Sanofi and Provention Bio, two diabetes drug developers. Meanwhile, all eyes in biopharma are on the merger between Pfizer and Seagen.

Sanofi had to withdraw and refile its proposal to acquire Provention Bio to give the Federal Trade Commission (FTC) more time to complete its review, the French pharma said Monday. 

The move effectively reset the FTC’s 15-day preliminary review clock for a cash tender transaction, and the agency now has until the end of April 25 to make a decision. As a result, Sanofi is extending its offer to buy all of Provention’s shares by six days to the end of April 26.

Sanofi is trying to take over Provention at $25 per share in a deal valued at $2.9 billion. Following a deal announcement on March 13, Sanofi filed its premerger report with the FTC on March 24. Despite the FTC hiccup, Sanofi on Monday said it still expects to close the deal in the second quarter of this year.

Sanofi views the proposed takeover of Provention as a strategic fit. The centerpiece of the deal, Tzield, is the first and only FDA-approved treatment to delay the onset of Type 1 diabetes. The acquisition builds on a previous co-promotion pact, under which Sanofi lent its commercialization clout.

In an investor note back in March, analysts at SVB Securities said they saw a “low regulatory (FTC) risk due to the unique nature of the Tzield profile and limited direct overlap for potentially disease-modifying therapeutics in [Type 1 diabetes].”

Sanofi is one of the major insulin makers for Type 2 diabetes. But the two diabetes subtypes are different diseases. While Type 1 is a genetic disease in which the immune system mistakenly attacks the insulin-producing cells in the pancreas, Type 2 diabetes is mainly a lifestyle-related disease in which the body either doesn’t make enough insulin or the insulin doesn’t work.

As Sanofi works through the FTC delay, all eyes in biopharma are focused on how the agency will rule on another deal: Pfizer’s proposed $43 billion acquisition of cancer drug developer Seagen.

Pfizer unveiled the Seagen deal on the same day as the Sanofi-Provention transaction. It’s not immediately clear whether Pfizer has filed its own premerger report with the FTC.

Perhaps in a bid to resolve potential anti-competition concerns, Pfizer two weeks ago ended its yearslong collaboration with Merck KGaA on the PD-L1 inhibitor Bavencio.

Thanks to an FDA approval in 2020, Bavencio became a standard of care as a front-line maintenance treatment for bladder cancer patients who’ve responded to a round of chemotherapy. Then last week, the FDA approved a combination of Seagen’s antibody-drug conjugate Padcev and Merck & Co.’s PD-1 inhibitor Keytruda as a front-line treatment for bladder cancer patients who can’t take cisplatin-based chemo.

For Pfizer, holding both Bavencio and Padcev in bladder cancer would probably have raised some eyebrows at the FTC.

Still, the FTC has said it’s looking beyond simple product overlaps when reviewing large biopharma M&A deals. Combinations of big biopharma companies—like the one between Pfizer and Seagen—are the type of deals that the FTC has specifically said it will crack down on.

Over the past few years, the FTC hasn’t really blocked any major deals involving drugmakers—although the agency is now trying to unwind the already closed $8 billion merger between medtech companies Illumina and Grail.

Longer reviews are, however, more common in recent years. Sanofi itself had to refile its $3.2 billion buyout of Translate Bio with the FTC in 2021 to give the regulator more time. The FTC recently sent Amgen and Horizon Therapeutics a dreaded second request for more information on their $28 billion merger, a deal that Sanofi lost to Amgen.

But the recent resignation of Republican Commissioner Christine Wilson could add some uncertainty around the agency’s future enforcement actions. Wilson had previously voiced concerns about the agency’s aggressive antitrust approach to biopharma deals.