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Acquiring Biomarin Would Speed Sanofi Transition to New Therapies

Sanofi SA (NASDAQ:SNY) has made it clear it wants to get into the rapidly growing gene therapy market, and an acquisition may be the fastest route. Rumor has it that the French pharmaceutical giant has its eyes on San Rafael, California-based Biomarin Pharmaceutical Inc. (NASDAQ:BMRN).

Speculation heated up after Sanofi announced it was selling about $11 billion worth of shares it owns in Regeneron Pharmaceuticals Inc. (NASDAQ:REGN). That would be a nice down payment, but Sanofi will have to dig deeper into its pockets because Biomarin has a market value of nearly $22 billion. Year to date, its shares are up more than 40%.


Sanofi CEO Paul Hudson told the Financial Times that the company wants to expand its pipeline "through our own R&D and through acquisitions." Sanofi will continue to work with Regeneron on drug development, efforts that have led to five approved drugs. However, the sale signals an end to Sanofi's investment in Regeneron.

An acquisition of Biomarin would be another step in Sanofi's plan to get out of heart and diabetes research and into cancer, immune diseases and uncommon blood disorders, according to an article in BioPharma Dive.

So far, Sanofi's efforts to break into the field of blood diseases have been less than inspiring. Last year, the company spent $12 billion to acquire Bioverativ. Of the two hemophilia drugs Sanofi got in the deal, one is trailing well behind rival medications. The same can be said for a Sanofi-Regenoron cancer drug, which hit the market late and has fared poorly against treatments from Merck & Co. Inc. (NYSE:MRK) and Bristol-Myers Squibb Co. (NYSE:BMY).

Sanofi's top seller is the immune system-regulating drug Dupixent. Its sales exceeded $2 billion last year and the company thinks it could generate more than five times that number at its peak.

Dupixent provides a nice base to build upon, and Sanofi is trying to do just that. The company has six high priority drug candidates in various stages of testing. One is an enzyme inhibitor called venglustat that's currently in mid- to late-stage testing for three different rare diseases. Sanofi said it could submit the drug for approval in each of the diseases in 2023. Two others are for hemophilia, and if studies pan out, they could be submitted for U.S. Food and Drug Administration approval in the second half of 2021 and the first half of 2022, respectively.

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Sanofi is also in the Covid-19 vaccine race. It hopes to begin clinical testing of its shot in September, with the possibility of having it ready for emergency use by next January. Sanofi, in partnership with GlaxoSmithKline (NYSE:GSK), is applying the same technology used in its approved influenza vaccine Flublok.

Sanofi also has another horse in the coronavirus vaccine race though its partnership with Translate Bio Inc. (NASDAQ:TBIO), which, like Moderna Inc. (MRNA), specializes in messenger RNA vaccines.

At just more than $51, Sanofi trades near its 52-week high, recovering nicely from mid-March when it had dipped to about $38. The company has a market cap of $129 billion and its shares yield about 3.25%.

CNN Money reports that the 20 analysts offering 12-month price forecasts for Sanofi have a median target of $59.59, with a high estimate of $64.12 and a low of $47.68. The stock is rated a buy.

Disclosure: The author holds a position in Bristol-Myers Squibb.

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This article first appeared on GuruFocus.