Sanofi pays up for Principia

The French group will need to answer questions about data and the rationale behind a full takeover to convince doubters.

The rumours are true: Sanofi has bought its partner Principia Biopharma for $3.7bn. But, while the French group undoubtedly needs new avenues for growth, there are questions over whether this is a wise deal.

A big one is why Sanofi paid top dollar when it already had rights to Principia’s key asset, the oral BTK inhibitor SAR442168, being developed in multiple sclerosis. As well as potentially saving milestone payments of $765m, Sanofi said part of its rationale was to eliminate future royalties. Based on EvaluatePharma’s consensus sales forecasts and an estimated royalty rate, these could come to around $900m.

Devil in the details

There are also questions about the data so far with SAR442168, which come from a phase II trial in relapsing MS (Multiple sclerosis “win” makes the Principia shorts squirm, February 6, 2020).

Sanofi has reported that the highest dose of SAR442168, 60mg, reduced Gd-enhancing T1 hyperintense lesions by 85% versus placebo.

The use of a surrogate endpoint rather than harder outcomes like relapse raised alarm bells. And the complex trial design, along with small patient numbers, makes it much harder to handicap future success. 

In June Sanofi enrolled the first patient in a pivotal study comparing SAR442168 against Aubagio in relapsing MS, part of a four-trial programme.

Phase III trials of SAR442168 in multiple sclerosis
Name	Setting	Comparator	Trial ID	Primary completion
Gemini 1	Relapsing MS	Aubagio	NCT04410978	Aug 2023
Gemini 2	Relapsing MS	Aubagio	NCT04410991	Aug 2023
Perseus	Primary progressive MS	Placebo	NCT04458051	Aug 2024
Hercules	Secondary progressive MS	Placebo	NCT04411641	Sep 2024
Source: EvaluatePharma & clinicaltrials.gov.

SAR442168’s unique selling point is its ability to penetrate the brain; Sanofi hopes to evaluate the project in other CNS diseases “and beyond”.

During a conference call today to discuss the deal John Reed, Sanofi’s global head of R&D, declined to say what these other indications might be, but did not disagree with an analyst who suggested that SAR442168 could have utility in Parkinson’s, amyotrophic lateral sclerosis and the big one – Alzheimer’s.

Buying Principia in full will also give the French group two more BTK inhibitors: rilzabrutinib, an oral project in late-stage development for the autoimmune diseases pemphigus and immune thrombocytopenia; and PRN473, a topical agent in phase I.

Rilzabrutinib’s chances are also hard to call, particularly as its phase II trials did not include control groups.

Royalties

But SAR442168 is the main attraction. If Sanofi’s main motivation was avoiding royalties, it looks to have paid handsomely for the privilege, at least based on the current sales consensus.

The 2017 licensing deal over the project details tiered royalties up to the mid-teens. Assuming that this would average out at around 10%, and using an 8% discount rate, total royalties from launch until a sales peak in 2036 would come in at $872m.

So, even adding the $765m in potential milestones saved, the price Sanofi has paid looks rich. 

Worth it? What SAR442168’s royalties could amount to
	2025e	2026e	2027e	2028e	2029e	2030e	2031e	2032e	2033e	2034e	2035e	2036e
Forecast sales	167	488	752	988	1,199	1,383	1,541	1,673	1,778	1,857	1,909	1,936
10% royalty	17	49	75	99	120	138	154	167	178	186	191	194
NPV of royalty stream @ 8% WACC	872
All figures in $m. Source: EvaluatePharma.

Of course, better than expected sales of SAR442168 would cast the deal in a better light. This must be what Sanofi is banking on, particularly if it can expand the project’s use outside MS. If the company is indeed looking at Alzheimer’s this could be its golden ticket, although this would be a long shot given others’ track record in this disorder.

Right now it appears that Principia got the better end of this deal. The group’s stock, which had already doubled since July when rumours of an acquisition emerged, was up another 9% this morning.

Principia’s hand was no doubt strengthened by Sanofi’s need to build a pipeline fast, and the fact the French group has ready cash to deploy after disposing of its stake in Regeneron. Jefferies analysts estimate that Sanofi could have another €20bn ($23bn) to spend on M&A, something that could lift the valuations of several other biotechs.

https://www.evaluate.com/vantage/articles/news/deals/sanofi-pays-principia

China Sinopharm chief ‘rules out very high price’ for coronavirus vaccine

A potential coronavirus vaccine being developed by a unit of China National Pharmaceutical Group (Sinopharm) could cost no more than 1,000 yuan ($144.27) for two shots, state media on Tuesday quoted chairman Liu Jingzhen as saying.

Sinopharm has said its experimental vaccine could be ready for public use by the end of this year. It has entered a late-stage human test in the United Arab Emirates to gather proof of efficacy for final regulatory approvals.

“It will not be priced very high. It is expected to cost a few hundred yuan for a shot, and for two shots it should be less than 1,000 yuan,” Liu told the Guangming Daily newspaper.

Governments and drugmakers around the world are in a frenetic race to develop a COVID-19 vaccine. More than 200 candidates are in development, including more than 20 in human clinical trials.

Moderna Inc said earlier this month that smaller volumes of its experimental vaccine have been priced at $32-$37 per dose.

Last month, the U.S. government struck a deal for an experimental vaccine being developed by Pfizer and partner BioNTech SE that secures enough to innoculate 50 million Americans for about $40 a person.

Sinopharm’s Liu did not mention whether China’s state-backed nationwide insurance program would cover some of the vaccine costs for consumers, or whether it could be included in the country’s free vaccination scheme.

China National Biotec Group (CNBG), a Sinopharm unit, has moved two vaccine strains using the same method into human trials. Its plants in Wuhan and Beijing combined could make over 200 million doses of the drug annually.

https://www.reuters.com/article/us-health-coronavirus-vaccine-sinopharm/china-sinopharm-chief-rules-out-high-price-for-coronavirus-vaccine-idUSKCN25E0F4

Study links COVID-19 to rise in childhood type 1 diabetes

Cases of type 1 diabetes among children in a small UK study almost doubled during the peak of Britain’s COVID-19 epidemic, suggesting a possible link between the two diseases that needs more investigation, scientists said on Tuesday.

While the study is based on only a handful of cases, it is the first to link COVID-19 and new-onset type 1 diabetes in children, and doctors should be on the look-out, the Imperial College London researchers said.

“Our analysis shows that during the peak of the pandemic the number of new cases of type 1 diabetes in children was unusually high in two of the hospitals (we studied) compared to previous years,” said Karen Logan, who co-led the study.

“When we investigated further, some of these children had active coronavirus or had previously been exposed to the virus.”

Logan said previous reports from China and Italy had noted that children were being diagnosed in hospitals with new-onset type 1 diabetes during the pandemic.

This study, published in the Diabetes Care journal, analysed data from 30 children in London hospitals diagnosed with new-onset type 1 diabetes during the first peak of the pandemic — around double the cases seen in this period in previous years.

Twenty-one of the children were tested for COVID-19 or had antibody tests to see whether they had been exposed to the virus — and five tested positive for novel coronavirus infection.

Type 1 diabetes causes insulin-producing cells in the pancreas to be destroyed, preventing the body from producing enough insulin to regulate blood sugar levels. The Imperial team said one possible explanation might be that the novel coronavirus’ spike protein might attack insulin-making cells in the pancreas.

“More research is needed to establish whether there is a definitive link, … but in the meantime we hope clinicians will be mindful of this,” Logan said.

https://www.reuters.com/article/us-health-coronavirus-diabetes-children/study-links-covid-19-to-rise-in-childhood-type-1-diabetes-idUSKCN25E0W0

U.S. states seek $26.4 billion from drug firms in opioid litigation

U.S. states are seeking a combined $26.4 billion from three major drug distributors and Johnson & Johnson to settle opioid litigation against the companies, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

About a dozen attorneys general are seeking a collective $21.14 billion from the distributors, which include McKesson Corp, Amerisourcebergen and Cardinal Health, and $5.28 billion from J&J, the WSJ reported.

AmerisourceBergen declined to comment on the report, while Cardinal Health, J&J and McKesson did not respond to Reuters’ requests for comment.

“We believe this latest settlement proposal would be viewed as a favorable outcome and would expect the stocks to react positively to the news as a global settlement would put the uncertainty behind,” JP Morgan analyst Lisa Gill said.

The lawsuits accuse drugmakers of overstating the benefits of opioids while downplaying the risks and allege distributors failed to flag and halt a rising tide of suspicious orders.

A closely watched opioid trial pitting New York state against McKesson, Johnson & Johnson and others was postponed in March due to the coronavirus outbreak.

https://www.reuters.com/article/us-usa-opioid-litigation/u-s-states-seek-26-4-billion-from-drug-firms-in-opioid-litigation-wsj-idUSKCN25E1A1