Sanofi Shows Interest in Regeneron

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Regeneron Pharmaceuticals, Inc. (REGN) recently announced that it has received a notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) from Sanofi (SNY). As per the notification, Sanofi seeks to acquire Regeneron shares through open market and direct shareholder purchases. Sanofi is looking to increase its ownership in Regeneron above the HSR Act notification threshold of $500 million.

Investors have reacted positively to the news. Both Regeneron and Sanofi stocks were up 2.7% and 3.2%, respectively, on the news.

Sanofi and Regeneron have a long standing agreement as per which Sanofi will not acquire more than 30% of Regeneron's class A stock and common stock.

Sanofi and Regeneron collaborate on oncology therapy, Zaltrap (aflibercept). Last week, Sanofi and Regeneron received encouraging news with the European Commission (EC) approving Zaltrap. The EC cleared Zaltrap as a combination therapy (with 5-fluorouracil, leucovorin, irinotecan – FOLFIRI) for treating patients suffering from metastatic colorectal cancer who are either resistant or whose disease has progressed following treatment with an oxaliplatin-containing regimen.

We note that Zaltrap is already approved in the US for the above indication. The US Food and Drug Administration (:FDA) approved Zaltrap for the indication in August last year. Approval of Zaltrap in the EU has boosted the drug’s sales potential.

Sanofi and Regeneron both carry a Zacks Rank #2 (Buy). Valeant Pharma (VRX) and Novo Nordisk (NVO) are examples of pharma stocks which are more favorably placed. Both companies carry a Zacks Rank #1 (Strong Buy).

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