Sanofi Bumps Up Regeneron Stake

Regeneron Pharmaceuticals and Sanofi-Aventis have entered a new collaboration, which will include a greater SA stake in the biopharma. The companies will work to discover, develop, and commercialize fully-human therapeutic antibodies utilizing Regeneron’s proprietary VelociSuite of technologies.

SA will also make an $85 million upfront payment to Regeneron and will fund as much as $475 million of research during the next five years. SA will have an option to extend the research agreement for as many as three additional years.

As part of the agreement, SA will boost its ownership of Regeneron from approximately 4% to 19% by purchasing 12 million newly issued shares. SA has an option to expand its ownership to 30% in the next four years. Like most major pharma companies, SA aims to expand its presence in biologics.

SA will have the exclusive option to co-develop with Regeneron each drug candidate in the collaboration portfolio. Development costs will be shared between the two companies, with SA funding drug candidate development costs up front and Regeneron reimbursing half of the development costs from its share of future profits.

The first therapeutic antibody to enter clinical development under the collaboration is an antibody to the Interleukin-6 receptor (IL-6R), which has started clinical trials in rheumatoid arthritis. The second is expected to be an antibody to Delta-like ligand-4 (Dll4), which is currently slated to start its clinical development in 2008.

For any new product successfully developed as part of the collaboration, SA will take the lead in commercialization activities and will consolidate the sales. Regeneron will have the right to co-promote any and all collaboration products worldwide. In the U.S., profits will be shared equally. Outside the U.S., profits will be split on a pre-determined sliding scale with sanofi-aventis’ share ranging from 65% to 55%. Regeneron will also be entitled to receive as much as $250 million in sales milestone payments when the collaboration achieves certain aggregate annual ex-U.S. sales levels, starting at $1 billion.