Sanofi-aventis raises stake in Regeneron, companies sign drug collaboration

Sanofi-aventis entered into an agreement with Regeneron to develop and market fully-human therapeutic antibodies using Regeneron's proprietary technologies, the companies announced Thursday. Additionally, sanofi-aventis will increase its investment in the US-based drugmaker from 4 percent to 19 percent through the purchase of 12 million new shares for a total of $312 million.

As part of the collaboration, sanofi-aventis will make an upfront payment of $85 million to Regeneron, and provide as much as $475 million in funding over the next five years. In return, sanofi-aventis will garner an exclusive option to co-develop each candidate in the collaboration portfolio. Regeneron will have the right to co-market all drugs under the collaboration on a global basis, if approved, and share half of the profits on products sold in the US. Outside the country, sanofi-aventis will be entitled between 55 percent and 65 percent of profits on marketed drugs.

Sanofi-aventis' deputy head of research, Jean-Claude Muller, said the agreement will help the company meet its target of advancing 20 potential new drugs into development annually. An antibody targeting the interleukin-6 receptor has already started trials in rheumatoid arthritis, the companies noted, while a second antibody targeting Delta-like ligand-4 is scheduled to start clinical development in 2008.

"The deal is on the expensive side, but manageable," commented analyst Ben Yeoh of Dresdner Kleinwort. "It gives sanofi-aventis access to humanised antibody technology, which strategically gives its research and development portfolio a much better balance over the next five to 10 years." Deutsche Bank analyst Michael Leuchten added that "this collaboration agreement seems a sensible step to bolster sanofi-aventis' technology platform, even though Regeneron has licensed its technology to others already on a non-exclusive basis."

Regarding the equity purchase, sanofi-aventis will pay $26 per share to increase its stake in Regeneron, a 52-percent premium over the US company's closing price on Wednesday. As part of the deal, sanofi-aventis is restricted for four years from increasing its stake in Regeneron to more than 30 percent.

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