Sanofi: Of Deals & Vaccines
As Sanofi looks forward to completing a swap with Boehringer Ingelheim in consumer healthcare and animal health in 2016, the company has pledged its resources to finding a vaccine against the Zika virus.
SANOFI
54, Rue La Boetie
75008 Paris, France
Telephone: +33 (0)1 53 77 40 00
Website: sanofi.com
Best-Selling Products
| Product | 2015 Sales | 2014 Sales |
|---|---|---|
| Lantus | $7,090 | $7,039 |
| Plavix/Iscover | $2,140 | $2,066 |
| Lovenox | $1,907 | $1,885 |
| Renagel, Renvela | $1,037 | $759 |
| Aubagio | $966 | $480 |
| Avapro/Aprovel, CoAprovel | $846 | $807 |
| Cerezyme | $840 | $793 |
| Myozyme, Lumizyme | $721 | $601 |
| Fabrazyme | $657 | $510 |
All sales are in millions of dollars and were translated using the Federal Reserve Board’s average rate of exchange in 2015: €1.1096.
Financial Performance
| 2015 | 2014 | |
|---|---|---|
| Revenue | $41,118 | $37,471 |
| Net income | $4,757 | $4,871 |
| Diluted EPS | $3.61 | $3.66 |
| R&D expense | $5,835 | $5,353 |
| 1H 16 | 1H 15 | |
|---|---|---|
| Revenue | $19,319 | $19,948 |
| Net income | $3,775 | $3,957 |
| Diluted EPS | $2.93 | $3.03 |
| R&D expense | $2,888 | $2,762 |
All sales are in millions of dollars and were translated using the Federal Reserve Board’s average rate of exchange in 2015: €1.1096.
2015 for Sanofi was a year of continued retrenching and setup for growth. Sanofi agreed to acquire Boehringer Ingelheim’s consumer healthcare business, and Boehringer Ingelheim is getting Sanofi’s animal health business, Merial. 2015 additionally saw the launch of three major products – Toujeo, a next-generation insulin, the anticholesterol medicine Praluent, and the dengue vaccine Dengvaxia – and the regulatory submissions of three other medicines. Also, several new research partnerships were signed in oncology and diabetes. In 2016, the company was engaging in the fight against the Zika virus as well as promoting its vaccine against dengue.
“In 2015, Sanofi made meaningful progress with key launches, multiple business development activities and our efforts to simplify the organization,” says CEO Olivier Brandicourt. “Entering into exclusive negotiations on a business swap with Boehringer Ingelheim would bring us leadership in CHC. This is a key first step in reshaping our portfolio. In 2016, we continue to allocate resources to our promising late-stage pipeline and the introduction of innovative medicines which will position us for accelerated future growth.”
The deal with Boehringer Ingelheim was signed in July. Executives expect the transaction will receive approval from various regulators at the end of 2016. “The proposed deal would allow us to become a leader in the growing and yet highly fragmented global consumer healthcare market,” Brandicourt says. “This is a key first step in reshaping our portfolio.
In 2014, Boehringer Ingelheim’s consumer healthcare (CHC) business was the eighth largest consumer healthcare business in the world, with annual sales of €1.4 billion ($1.55 billion). Having Boehringer Ingelheim CHC would improve the position of Sanofi in Germany and Japan where Sanofi’s CHC presence is limited, executives say. In the United States, Europe, Latin America, and Eurasia, Sanofi’s CHC business would also expand significantly.
Through the Boehringer Ingelheim deal, Sanofi would gain access to iconic brands in antispasmodics, gastrointestinal, vitamins, minerals and supplements, and analgesics as well as attain critical mass in cough and cold.
The leading brands of Boehringer Ingelheim’s CHC business are the antispasmodic Buscopan, the laxative Dulcolax, the multivitamins Pharmaton, the cough treatments Mucosolvan, and Bisolvon, and the cold treatment Mucoangin/Lysopaïne.
Financial & Product Performance
During 2015, Sanofi achieved revenue of €37.06 billion ($41.12 billion), 9 percent more than in 2014. Net income was €4.29 billion ($4.76 billion), 2.7 percent less than the 2014 total. Diluted earnings per share were €3.25 ($3.61), a decrease of 1.5 percent.
During the first half of 2016, net sales on an aggregate basis totaled €17.41 billion ($19.32 billion), 3.2 percent less than in first-half 2015. Net income was €3.4 billion ($3.78 billion), 4.6 percent less than in the same period last year. Business earnings per share were €2.64 ($2.93), 3.3 percent less than in the first half of 2015.
According to executives, the company’s Genzyme biotechnology subsidiary was a key growth driver for the pharmaceuticals business in 2015. Genzyme generated €3.66 billion ($4.07 billion), up 29.5 percent at constant exchange rates, driven by a solid performance from Aubagio and the ongoing launch of Lemtrada. Genzyme’s growth was driven by Rare Diseases products and above all by the strong momentum in multiple sclerosis. In 2015, the MS franchise grew 112.2 percent, exceeding €1 billion in annual sales for the first time, at €1.11 billion ($1.24 billion).
Genzyme’s performance partially compensated for the decrease of sales in the Diabetes division that executives anticipated. Diabetes sales were €7.58 billion ($8.41 billion), down 6.8 percent, reflecting lower U.S. sales of Lantus.
Sanofi’s top-selling product in 2015 was the insulin Lantus. The drug generated €6.39 billion ($7.09 billion), about the same as in 2014 as reported but down 10.8 percent at common exchange rates. Executives attribute this to a generally unfavorable price effect, primarily in the United States. Net sales in the United States decreased by 20.5 percent at a common exchange rate to €4.02 billion ($4.46 billion), due mainly to three factors: slower growth in the basal insulins market, further rises in the level of rebates compared with 2014, and the fact that a higher proportion of sales passed through governmental channels such as Medicaid. In Emerging Markets, sales increased by 17.3 percent at common exchange rates to €1.14 billion ($1.26 billion), driven by growth in China, the Middle East and Latin America. In Western Europe, where a biosimilar of Lantus was launched in second-half 2015, net sales growth was modest.
For the first half of 2016, Lantus global sales were €2.86 billion ($3.17 billion), 11.1 percent less than in first-half 2015.
Second highest in 2015 sales was the blood thinner Plavix. The product generated sales of €1.93 billion ($2.14 billion), 3.6 percent more than in 2014, as actually reported. Plavix sales actually decreased 4.1 percent in 2015 under a constant exchange rate, executives say, as sales were affected by generic competition in Western Europe and Japan. The product is marketed in the United States through an alliance with Bristol-Myers Squibb (see profile on page 36). First-half 2016 sales for the product were 22.2 percent lower than sales in the same period last year, at €780 million ($865 million), again reflecting generic competition in Western Europe and Japan.
No. 3 was the anticoagulant Lovenox, with sales of €1.72 billion ($1.9 billion) last year, a slight increase of 1.2 percent from 2014. Product sales in the United States decreased because of generic competition. This competition was reflected in 2016 half-year sales of €818 million ($908 million), 6.5 percent less than in the same period last year.
The hyperphosphatemia medicine Renagel/Renvela was Sanofi’s fourth best-selling product in 2015, at €935 million ($1.04 billion), 36.7 percent more than in 2014. Executives attribute the increase to a strong performance in the United States, reflecting reduced competition from Impax Laboratories, which for a few months had the right to sell a limited number of authorized generics of the drug. However, the drug’s sales in Western Europe declined because of generic competition and executives are expecting U.S. generics in 2016. First-half 2016 sales were €442 million ($490 million), 2.4 percent less than in first-half 2015.
The fifth best-selling drug for the company in 2015 was the multiple sclerosis drug Aubagio, which generated €871 million ($966 million) compared with €433 million ($480 million) in 2014. Aubagio sales in the first half of 2016 were €594 million ($659 million), compared with €369 million ($409 million) in the same period in the previous year.
The hypertension franchise Avapro/Aprovel and CoAprovel ranked No. 6 for Sanofi in 2015 sales at €762 million ($846 million), 4.8 percent more than in 2014. The product line generated first-half 2016 sales of €344 million ($382 million), down 14.6 percent compared with the first half of 2015, due to generic competition in Venezuela.
The Gaucher disease drug Cerezyme was Sanofi’s No. 7 drug in sales in 2015, achieving €757 million ($840 million), 5.9 percent more than in 2014. First-half 2016 sales were €381 million ($423 million), 5.9 percent more than in the same period of 2015.
Myozyme and Lumizyme, for Pompe disease, represented the eighth best-selling product line for Sanofi in 2015, at €650 million ($721 million), 19.9 percent more than in 2014. In the first half of 2016, sales were €348 million ($386 million), 11.2 percent more than in the first half of the previous year.
The Fabry disease drug Fabrazyme was the company’s No. 9 product in 2015 sales, achieving €592 million ($657 million), an increase of 28.7 percent compared with 2014 sales. Sales in the first half of 2016 were €316 million ($351 million), 12.2 percent more than in first-half 2015.
R&D And Partnerships
The company had several pipeline successes in 2015 and during the first half of 2016, and also entered several research partnerships.
The company ended 2015 with the approval of Dengvaxia, the first vaccine against dengue. The vaccine is approved in Mexico, followed by Brazil, the Philippines, and El Salvador for the prevention of disease caused by all four dengue virus serotypes in preadolescents, adolescents and adults, 9 to 45 years of age living in endemic areas. Executives say the approval, which is the culmination of more than 20 years of research, represents a historic milestone for the company, the global public health community and, most importantly, for half the world’s population who lives at risk of dengue.
Despite the novelty and need for the vaccine, Brandicourt, in an interview for the company’s September 2016 shareholders newsletter, says there has been a delay in Dengvaxia’s uptake. Although in Latin America there were four new product registrations granted and Brazil announced the launch of its first public vaccination program in the State of Paraná, the overall uptake of Dengvaxia was delayed by recent political changes.
In Asia, Dengvaxia has been approved in Indonesia.
At the end of July, FDA approved Adlyxin (lixisenatide), a once-daily mealtime GLP-1 receptor agonist injection, indicated as an adjunct to diet and exercise for the treatment of adults with type 2 diabetes. Adlyxin is approved under the proprietary name Lyxumia in more than 60 countries and marketed in more than 40.
In February, the FDA accepted to review the new drug application for LixiLan, a combination of insulin glargine and lixisenatide for the treatment of adults with type 2 diabetes. On May 25, 2016, the FDA Advisory Committee recommended the approval of LixiLan for the treatment of adults with type 2 diabetes. On August 19, Sanofi announced the submission of updated information on the pen delivery device as part of the new drug application for the fixed-ratio combination.
In January 2016, the U.S. Food and Drug Administration accepted for review the biologics license application for sarilumab in rheumatoid arthritis. Sarilumab is a fully human monoclonal antibody directed against the IL-6 receptor (IL-6R). Sarilumab achieved primary efficacy endpoints across all completed pivotal Phase 3 studies, including for TARGET and ASCERTAIN. Data from these two studies were presented as oral presentations at ACR on Nov. 8, 2015. Sanofi is developing the product in conjunction with Regeneron Pharmaceuticals Inc .
In January 2016, Sanofi and Warp Drive Bio announced that they have extended and reshaped their existing collaboration to discover novel oncology therapeutics and antibiotics. The companies will initially focus on three defined oncology programs targeting different mutants and states of the RAS oncogenic protein. The antibiotic collaboration will focus on the discovery and development of novel Gram-negative therapeutics.
The collaboration is an outgrowth of Sanofi’s Sunrise initiative, a strategic partnership model that seeks to invest in early stage opportunities that align with Sanofi’s expert development and commercialization abilities.
“Our partnership with Warp Drive is a perfect example of open innovation which allows Sanofi to collaborate with innovative companies and combine unique areas of expertise to advance drug development in a meaningful way,” says Elias Zerhouni, M.D., president, Sanofi, Global R&D. “This is an exciting collaboration for Sanofi as it could yield potentially lifesaving oncology and antibiotic therapies for patients by utilizing cutting-edge technology platforms.”
Under the terms of the agreement, Warp Drive will lead the research collaboration for a period of five years and Sanofi will receive worldwide exclusive licenses to develop and commercialize the candidates discovered during the research term.
Warp Drive is eligible to receive from Sanofi cumulative payments in excess of $750 million across four successful collaboration programs, including an equity investment by Sanofi, research, clinical and regulatory milestones, and research and development services.
“This reshaped alliance enables joint and independent product development by Warp Drive, an important step in our evolution as we advance a therapeutic pipeline using our proprietary platforms,” says Laurence Reid, Ph.D., Chief Executive Officer, Warp Drive Bio. “Since our inception, Sanofi has been highly supportive of our progress and we are very pleased to reshape our strategic collaboration to focus on novel therapeutics in areas of great unmet need.”
Also in January, Sanofi and Innate Pharma announced that they entered into a research collaboration and licensing agreement to apply Innate Pharma’s new proprietary technology to the development of innovative bispecific antibody formats engaging natural killer cells to kill tumor cells.
“Over the past year, Sanofi has launched strategic corporate collaborations in the field of immuno-oncology that exemplify our commitment to open innovation in R&D and have the potential to transform the treatment of cancer,” says Gary Nabel, chief scientific officer, Sanofi. “Working with Innate Pharma, we seek to create new bispecific antibodies that will focus the immune system to kill cancer cells by engaging natural killer cells.”
Sanofi and Innate Pharma will work together on the generation and evaluation of up to two bispecific NK cell engagers, using technology from Innate Pharma and Sanofi’s proprietary bispecific antibody format as well as tumor targets. Under the terms of the license agreement, Sanofi will be responsible for the development, manufacturing and commercialization of products resulting from the research collaboration. Innate Pharma is eligible to up to €400 million ($444 million) in development and commercial milestone payments as well as royalties on net sales.
“There is a lot of excitement around bispecifics in immuno-oncology,” says Nicolai Wagtmann, chief scientific officer of Innate Pharma. “By building on our knowledge of the activating receptor NKp46, we have generated a technology to specifically induce tumor killing by NK cells. This new technology platform is complementary to our innovative portfolio of first-in-class antibodies targeting immune checkpoints. We intend to use it for our internal portfolio expansion, as well as through non-exclusive agreements with other companies, such as in this agreement with Sanofi.”
NKp46 is an activating receptor expressed on all natural killer cells. It is the most specific marker of human NK cells and plays a major role in their tumor cell recognition. NKp46-bispecific NK cell engagers bind with one arm to an antigen at the surface of tumor cells, and with another arm to the NKp46 receptor on NK cells. This leads to activation and specific tumor-killing by NK cells, an immune cell population representing a significant proportion of all cytotoxic lymphocytes in the body.
Sanofi’s vaccine division, Sanofi Pasteur, announced in February that it has launched a vaccine project targeting the prevention of Zika virus infection and disease, building on its successful history in developing vaccines against similar viruses such as yellow fever, Japanese encephalitis and, most recently, dengue.
On July 6, Sanofi announced a cooperative research and development agreement with the Walter Reed Army Institute of Research (WRAIR) on the co-development of a Zika vaccine candidate.
WRAIR will transfer its Zika purified inactivated virus vaccine technology to Sanofi Pasteur, opening the door for a broader collaboration with the U.S. government.
In addition to the work on the WRAIR technology, Sanofi Pasteur is performing pre-clinical studies, utilizing a technology previously and successfully developed for both its dengue fever and Japanese encephalitis vaccines. However, since that pathway will take longer to get a Zika vaccine candidate into clinical development, Sanofi Pasteur has also been exploring partnerships with external experts to rapidly advance a vaccine candidate.
Additionally during January, Sanofi Pasteur came to terms on an agreement with the Human Vaccines Project Inc. to partially fund the non-profit, public-private partnership convening leading academic researchers and industrial partners to solve the primary problems impeding vaccine/immunotherapy development by “decoding” the human immune system.
The company continues to work on rebuilding its oncology pipeline, Brandicourt says. To that end, Sanofi pursued Medivation, but lost out to Pfizer (see profile on page 64).
“Oncology is another area where we plan to rebuild a competitive position,” Brandicourt says in the September 2016 shareholders newsletter. “Our pursuit of the U.S. based biopharmaceutical company Medivation eventually did not succeed. However, we will continue in our efforts to strengthen our position in Oncology, which is one of the largest and fastest growing therapeutic areas in the biopharmaceutical sector.”
