Sanofi SNY announced that it has inked a multi-component strategic agreement with Evotec for the next five years. The deal, slated to complete by the end of this month, will allow Sanofi to receive a broad range of long-term drug discovery services from Evotec.
In December last year, the companies had entered into exclusive negotiations for this major collaboration.
The Deal in Details
The deal, confirmed a minimum guaranteed commitment from Sanofi of €250 million (including more than €40 million as upfront cash payment) to Evotec. The deal covers an array of opportunities including capacity and capability expansion, strategic outsourcing, offering of joint small-molecule libraries and pipeline-building initiatives.
As per the deal, Evotec will acquire Sanofi's scientific operations at the Toulouse site in France while retaining the associated employees.
The companies will join forces to develop a pipeline primarily focused on oncology including five advanced, pre-clinical projects and further discovery-stage assets. Also, the companies will combine their libraries to offer them to Evotec’s partners for screening.
Other Developments
In a separate press release, Sanofi announced the results from the phase IIIb ELIXA study on Lyxumia (lixisenatide). The study, comparing Lyxumia with placebo, evaluated cardiovascular safety in a high-risk population of adults suffering from type II diabetes. Results from the study revealed that Lyxumia was non- inferior, but not superior to placebo as far as cardiovascular safety is concerned.
Sanofi plans to include the results in its New Drug Application (NDA) filing for Lyxumia, to be submitted in the third-quarter of 2015.
The drug, in-licensed from Zealand Pharma, is approved in Europe for the treatment of adults suffering from type II diabetes mellitus to achieve glycemic control in combination with oral glucose-lowering medicinal products and/or basal insulin, when these, along with diet and exercise do not provide adequate glycemic control. The drug is yet to be approved in the U.S.
Sanofi recorded Lyxumia sales of €27 million in 2014.
Our Take
Although the results from the Lyxumia study were encouraging, we remain concerned about the future of the company’s Diabetes segment, one of the largest contributors to Sanofi’s top line. The segment’s sales are expected to remain flat in 2015. We expect sustained investor focus on Sanofi’s Diabetes segment.
Sanofi carries a Zacks Rank #4 (Sell). Stocks that warrant a look in the health care sector include Cytokinetics, Inc. CYTK, Acorda Therapeutics, Inc. ACOR and Affymetrix Inc. AFFX. All of these carry a Zacks Rank #1 (Strong Buy).
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