Sanofi-Aventis (SNY) recently entered into a global license agreement with biopharma company CureDM Group Holdings for Pancreate, a diabetes candidate. As per the agreement, Sanofi has acquired exclusive worldwide rights for the development, manufacture and commercialization of Pancreate and related compounds.
Including an upfront payment, Sanofi will make other payments amounting to a total of $335 million based on the achievement of development, regulatory and commercial milestones. CureDM is also entitled to receive tiered royalties on global product sales.
Pancreate is an early stage pipeline candidate that has shown promise in restoring normal metabolic function and glucose function in blood. The candidate has been shown to stimulate the growth of insulin producing islets in the pancreas in pre-clinical studies.
This deal is in-line with Sanofi’s aim to strengthen its position in the diabetes market, which represents significant commercial potential. The prevalence of diabetes should continue increasing due to factors like sedentary lifestyles, excessive weight and obesity, unhealthy diets and aging populations.
Sanofi’s diabetes portfolio consists of products like Lantus, Apidra and Amaryl. Combined sales from these products exceeded €3.6 billion in 2009. Sanofi has several compounds in development for the treatment of diabetes. The most advanced candidates include Lixisenatide and PN2034.
If developed successfully, Pancreate could provide both type I and type II diabetes patients with a new treatment option. However, this product is yet to enter phase I studies and has a long way to go before being approved and commercialized. Phase I studies are scheduled to start later this year.
We currently have an Underperform recommendation on Sanofi. Our biggest concern for Sanofi is the high exposure to generic risk on many of its leading franchises. While new product launches should make significant revenue contributions in the early part of the decade, they will not be enough to compensate for increased generic erosion.
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