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 On Tuesday, Sanofi agreed to buy U.S. partner Translate Bio as it
bets on next-generation vaccines and particularly as the French
drugmaker, one of the world's top flu vaccine makers, seeks to see
off competition in one of its major markets.
The two companies have been partnering since 2018 and are developing
a COVID-19 mRNA shot together that has entered clinical trials, as
well as an influenza jab.
The messenger RNA (ribonucleic acid) approach, an area of Translate
Bio expertise, instructs human cells to make specific proteins that
produce an immune response to a given disease.
The technology has proven to be successful in COVID-19 vaccines
developed by Pfizer/BioNTech and Moderna.
"Although the platform of Translate Bio is not yet proven, it is a
smart move by Sanofi," Wimal Kapadia, an analyst with Bernstein
said. "Bringing the asset in-house will allow them to move quicker."
The transaction, backed by the U.S. company's largest shareholder,
is expected to close in the third quarter. It follows Sanofi's
acquisition of another, smaller, mRNA player, Tidal Therapeutics, in
April.
But analysts cautioned it won't be enough to ease pressure on chief
executive Paul Hudson to revive the company's drug pipeline with a
blockbuster product and boost the share price.
Sanofi's shares barely moved on the news on Tuesday and fell to near
three-month lows on Wednesday.
"The key for this stock to work is convincing the market that you
know how to develop drugs. And bringing in another company or
another technology does not really reflect that, and there is a lot
of frustration with the stock," Kapadia said.
The stock has risen just 1% since the start of the pandemic in March
last year while rivals in the COVID-19 vaccine race, Pfizer, Johnson
& Johnson and AstraZeneca have seen double-digit percentage growth
of 43%, 29% and 22% respectively. (Graphic: Sanofi shares have
lagged rivals during pandemic,
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 REVAMP
In 2018, the company hired a former Roche
executive, John Reed, to revamp its research and
development operations.
Sanofi said last month it expects several
pipeline milestones in the second half,
including pivotal trial readouts for
Amcenestrant, a breast cancer treatment, and
Sarclisa for multiple myeloma.
That was followed by Hudson's appointment almost two years ago to
reduce the group's focus to fewer but faster-growing segments such
as cancer and reduce dependence on Dupixent, its star eczema and
asthma treatment that has been leading its growth.
"The CEO is clearly going in the right direction and the Translate
Bio deal highlights that," a Sanofi investor speaking on the
condition of anonymity told Reuters.
"But Hudson's tenure was rapidly overshadowed by the coronavirus
pandemic and snags with the (COVID-19) vaccine," the investor said,
referring to delays developing another COVID-19 shot with Britain's
GlaxoSmithKline.
"Now, we will want to see Sanofi be bolder when it comes to deals if
we look at the group's profile in the longer term."
That means looking beyond 2025, analysts said.
Martial Descoutures, an analyst with Oddo BFH, said Sanofi's growth
profile was well established until then, with Dupixent expected to
make ever greater contributions to profits and exceeding 10 billion
euros ($11.89 billion) in peak sales.
"(But) we do need more visibility in the longer term. Right now, the
pipeline is the main issue."
($1 = 0.8410 euros)
(Reporting by Matthias Blamont; Editing by Josephine Mason and
Elaine Hardcastle)
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