Sanofi and CureVac Ink Vaccine Deal

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Sanofi (SNY) and Germany-based CureVac entered into an agreement for the development and commercialization of an mRNA-based vaccine against an undisclosed pathogen.

CureVac and Sanofi had inked a deal in 2011 for several pre-defined pathogens. CureVac met all pre-agreed milestones and acceptance criteria mentioned in the agreement. Thus, Sanofi exercised its first option and extended the exclusive and non-exclusive options on all five pathogens.

Sanofi will make an undisclosed upfront payment to CureVac for exercising the option and an additional payment for extending the option term for the other pathogens. CureVac is also eligible to receive additional milestone payments up to €150.5 million based on the achievement of certain clinical, regulatory and commercial targets.

As per the terms of the deal, Sanofi will fund all research, development, manufacturing and commercialization activities and will have exclusive worldwide marketing rights to the RNActive vaccine. We note that RNActive vaccines are a new technology to produce safe, efficacious and cost-effective mRNA-based vaccines that are protected against elevated temperature and inadvertent freezing. CureVac will also receive royalties on net sales of RNActive vaccines.

We note that Sanofi possesses one of the world’s leading vaccine operations with total sales of €3.7 billion in 2013. The company’s portfolio includes pediatric vaccines, influenza vaccines, adult and adolescent booster vaccines, meningitis vaccines, and travel and endemic vaccines. Sanofi also has a strong position in both seasonal and pre-pandemic influenza vaccines. Sanofi continues to expand its vaccine business. We expect a significant ramp in vaccine sales over the next several years.

Sanofi carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Actelion Ltd. (ALIOF), Biogen Idec Inc. (BIIB) and ANI Pharmaceuticals, Inc. (ANIP). All these stocks hold a Zacks Rank #1 (Strong Buy).

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