French pharmaceutical company, Sanofi-Aventis (SNY) recently presented encouraging results on its multiple sclerosis (MS) candidate, teriflunomide. Results from a phase III randomized, double-blind, placebo-controlled study (TEMSO) showed that teriflunomide helped reduce annualized relapse rates by 31% compared to placebo.

 

The study evaluated two doses of teriflunomide – 7 mg and 14 mg. Sanofi said that treatment with teriflunomide helped reduce the risk of disability progression by 30% and 24% for the 14 mg and 7 mg doses, respectively. The candidate was found to be well-tolerated.

 

Sanofi also presented long-term safety data on relapsing multiple sclerosis patients. Eight years follow-up data from a phase II study showed that the candidate was well-tolerated.

 

The successful development of teriflunomide could provide multiple sclerosis patients with a new first-line treatment option. Teriflunomide is currently in two additional phase III studies – TOWER and TENERE. Another phase III study, TOPIC, is being conducted in patients with early multiple sclerosis or clinically isolated syndrome.

 

Once approved, teriflunomide will compete with existing multiple sclerosis drugs like Biogen Idec’s (BIIB) Avonex and Tysabri, Merck KGaA’s (MKGAF) Rebif and Teva’s (TEVA) Copaxone for a share of the market. However, we believe primary competition will be with Novartis’ (NVS) Gilenya, an oral multiple sclerosis therapy, which received US Food and Drug Administration (FDA) approval recently.

 

Neutral on Sanofi-Aventis

 

We currently have a Neutral recommendation on Sanofi, which is supported by a Zacks #3 Rank (short-term “Hold” rating). Our biggest concern for Sanofi is the high exposure to generic risk on many of its leading franchises. The entry of generic Lovenox is a huge setback for the company.

 

While new product launches should make significant revenue contributions in the early part of the decade, we expect Sanofi to continue to look to contain operating costs in order to grow earnings in the face of weakening sales of some of its biggest products. We also expect Sanofi to grow revenue through additional partnering deals and acquisitions. The company has been actively pursuing in-licensing deals and acquisitions to boost its pipeline and is now looking to acquire biotech company Genzyme (GENZ).

 
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