In order to expand its oncology pipeline, Sanofi-Aventis (SNY) recently entered into an agreement with privately-held biopharma company, Ascenta Therapeutics. Sanofi will have access to several early-stage oncology agents under the global collaboration and licensing agreement.
These oncology agents are being studied for the ability to restore tumor cell apoptosis or programmed cell death. The agreement covers two agents which have been in-licensed by Ascenta from the University of Michigan. These oncology candidates, MI-773 and MI-519-64, are scheduled to enter into preclinical development shortly.
As per the agreement, Sanofi-Aventis will have an exclusive worldwide license for the development, manufacture, and commercialization of all compounds covered under this program.
Ascenta is eligible to receive up to $398 million in the form of upfront, development, regulatory and commercial milestone payments. Ascenta is also eligible to receive tiered royalties on sales of products developed and commercialized under the agreement.
Sanofi currently has a wide range of novel agents in its oncology pipeline including BSI-201, cabazitaxel, alvocidib, and aflibercept among others. While some of these candidates are being developed by Sanofi itself, others are being developed in collaboration with companies like BiPar Sciences, Regeneron Pharmaceuticals (REGN), Exelixis (EXEL), Merrimack and Micromet (MITI) among others.
We currently have a Neutral recommendation on Sanofi. Our biggest concern for the stock is the high exposure to generic risk on many of its leading franchises, especially Lovenox. However, we are encouraged to see the company’s progress with its pipeline.
While new product launches should make significant revenue contributions in the early part of the decade, we expect the company to continue look to contain operating costs in order to grow earnings in the face of weakening sales of some of its biggest products. This should help keep earnings at positive, albeit modest, growth over the next few years.
We also expect the company to grow revenue through additional partnering deals and acquisitions.
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