Sanofi, TB Alliance Join Forces

Zacks

Sanofi (SNY) recently announced that it has entered into a research collaboration agreement with the Global Alliance for Tuberculosis (:TB) Drug Development (TB Alliance).

Sanofi and TB Alliance will work together to speed up the development of several of Sanofi’s novel TB compounds. Sanofi is developing a vaccine for TB, which is currently in phase I.

We note that several big pharma players including Novartis (NVS), Janssen Pharmaceuticals of Johnson & Johnson (JNJ), GlaxoSmithKline (GSK), Bayer Healthcare AG (BAYRY) and AstraZeneca (AZN) have inked pacts with TB Alliance.

Currently, TB Alliance has more than 20 development programs underway, of which 3 candidates are in late stage development.

We remind investors that earlier this month the US Food and Drug Administration (:FDA) granted priority review status to the new drug application (:NDA) of Janssen’s TB candidate, bedaquiline (TMC207).

Janssen is looking to get bedaquiline approved as part of a combination therapy for pulmonary, multi-drug resistant tuberculosis (MDR-TB) in adults. FDA approval would make bedaquiline the first TB candidate to gain approval in more than 40 years. Moreover, bedaquiline would be the first and only treatment to be approved for MDR-TB.

According to the World Health Organization, TB affected approximately 8.8 million people in 2010, of which 1.4 million died.

Our Recommendation

We are pleased with the company’s efforts to develop its pipeline. We expect Sanofi to continue to contain operating costs in order to increase earnings in the face of weakening sales of some of its biggest products. We also expect the company to pursue bolt-on acquisitions.

We currently have a Neutral recommendation on Sanofi. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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