French drug giant, Sanofi SNY announced a definitive agreement to buy small biotech Synthorx, Inc. THOR for $2.5 billion to boost its immuno-oncology (“IO”) portfolio. Per the terms of the merger agreement, Sanofi has offered to acquire all the outstanding shares of Synthorx for $68 per share in cash, a premium of almost 172% to the latter’s Friday closing price of $25.03
The deal, approved by the board of directors of both the companies, will add Synthorx’s lead pipeline candidate, THOR-707 to Sanofi’s oncology portfolio. Synthorx’s proprietary IO technology platform, Expanded Genetic Alphabet, should also prove to be synergistic with Sanofi’s existing therapeutic platforms, including its Nanobody technology.
THOR-707 is being evaluated across multiple solid tumor types alone and in combination with immune checkpoint inhibitors. Once acquired, it can be evaluated in combination with Sanofi’s present oncology medicines as well as immuno-modulatory agents in pipeline. Meanwhile, the acquisition will also boost Sanofi’s pipeline with Synthorx’s pre-clinical candidates for oncology and autoimmune disorders. The transaction is expected to close in the first quarter of 2020.
Sanofi’s shares have underperformed the industry this year so far. It has risen 6% in the said time frame compared with the industry's increase of 7.2%.
Sanofi has significantly stepped up its acquisition and alliance activity over the past few years. Among the more recent deals, the 2018 acquisitions of Ablynx and Bioverativ have strengthened Sanofi’s position in the rare blood disorders market.
In fact, there has been a flurry of M&A deal announcements this year in the biotech/drug industry with two mega-merger announcements, Bristol-Myers Squibb BMY - Celgene and AbbVie ABBV – Allergan.
Sanofi currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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