Regeneron pays Sanofi $900M for full rights to cancer drug Libtayo as it looks to become a force in oncology

While Sanofi is cutting costs, its longtime partner Regeneron is taking them on. And why not, after a year in which it rolled up more than $8 billion in profit?

But when the companies revealed that Regeneron has purchased exclusive worldwide rights to cancer drug Libtayo for $900 million, industry watchers got yet another glimpse of their future plans.

In addition to that upfront payment, Sanofi will receive an 11% royalty on worldwide sales of Libtayo as well as $100 million in regulatory milestone payments and up to $100 million of sales-related milestone payments over the next two years. Regeneron expects the deal to be complete in the third quarter of this year.

During a conference call, Regeneron CEO Len Schleifer, M.D., Ph.D., described several "compelling reasons" for the deal.

“With global rights, we will have the freedom to explore combination opportunities in our pipeline with existing collaborators and with future partners, while realizing a greater share of the potential upside from these investments," he said.

In partnering on the drug since 2015, the companies had split Libtayo’s worldwide profits equally and shared commercialization duties in the U.S. Sanofi, meanwhile, took care of marketing in the rest of the world.

This is another in a series of moves to distance the companies after 15 years as collaborators. In 2019, they restructured their deals on disappointing cholesterol drug Praluent and rheumatoid arthritis treatment Kevzara. Then in 2020, Sanofi sold its 20% stake in Regeneron.

The move also is consistent with Sanofi CEO Paul Hudson’s “play to win” strategy, designed to center the company’s efforts around first-in-class or best-in-class drugs. Along with the strategy came a cost-cutting program aimed at trimming spending in certain businesses and improving efficiency in operations.

“Our diverse oncology portfolio doubled between 2019 and 2022 and now includes 12 compounds in clinical trials, each with a unique mechanism of action,” Bill Sibold, Sanofi’s vice president of specialty care and president of North America, said in a release. “Our early steps with Libtayo in immuno-oncology provided a strong foundation for our revitalized oncology efforts. Now we are focused on leveraging our internal capabilities and advancing a new generation of oncology medicines.”  

Regeneron, which has money to spend after its COVID-19 antibody treatment generated $6.2 billion in 2021, sees the full rights to Libtayo as a chance to start to become a major player in oncology.

The company invented the PD-1 inhibitor with its VelocImmune technology and is exploring its use in 18 different treatment combinations. Libtayo has been approved as a monotherapy for advanced basal cell carcinoma, advanced cutaneous squamous cell carcinoma and advanced non-small cell lung cancer (NSCLC).

“We are very excited to have the opportunity to now be pursuing all of these combinations with Libtayo in a setting where we can invest as much as we want there and we can reap, appropriately, more of the benefit,” Regeneron Chief Medical Officer George Yancopoulos, M.D., Ph.D., said on the conference call.

Regeneron reported sales of $306 million for Libtayo last year, a 13% increase from 2020. Sanofi registered sales of $129 million for the drug, up 91% from the previous year.

Meanwhile, a September FDA decision date looms for Libtayo in combination with chemotherapy as a first-line treatment for NSCLC, making the timing of the acquisition a gamble for Regeneron.

“We have a high degree confidence,” Schleifer said of the impending FDA decision. “We were anxious to get moving on so many other things.”

The move also comes on the heels of Regeneron’s first-of-its-kind acquisition of skin cancer specialist Checkmate Pharmaceuticals for $250 million in April.