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Regeneron buys control of cancer drug Libtayo from Sanofi

Dive Brief:

  • Regeneron will pay partner Sanofi $900 million to gain global rights to the companies’ cancer immunotherapy Libtayo, announcing Thursday a deal executives said would position the biotech to become a “global oncology leader.”

 

  • Under the deal’s terms, Regeneron will owe Sanofi up to $200 million in additional fees based on regulatory approvals and sales goals, as well as 11% royalties on sales. Regeneron said it will also accelerate repayment of $3.5 billion in development costs for Libtayo and three other Sanofi-partnered drugs, reducing its repayment period by three to five years.

 

  • Executives said the deal will have a neutral impact on Regeneron revenues in the short term, but will add to sales and profits over a longer time period. “The timing will depend on how well we execute commercially,” CEO Leonard Schleifer said in a conference call Thursday. Shares fell 5% in early trading.

 

Dive Insight:

Libtayo was the sixth cancer immunotherapy of its type to be launched in the U.S., reaching market after Merck & Co.’s Keytruda, Bristol Myers Squibb’s Opdivo and Roche’s Tecentriq. Sanofi and Regeneron agreed to collaborate on its development and marketing in 2015, a year after Keytruda and Opdivo launched.

Despite some progress, Regeneron still trails the field’s leaders, which are busy combining their drugs with new types of immunotherapies. For example, Bristol Myers has combined Opdivo with a drug that targets a protein called LAG-3, winning U.S. approval of the pairing as Opdualag this year. Regeneron might not have data on Libtayo’s LAG-3 combination for another two years, by comparison.

Sales of Libtayo totaled $444 million in 2021, a small fraction of the $17 billion earned by Keytruda. Until now, Regeneron and Sanofi have split Libtayo profits equally, sharing commercialization responsibilities in the U.S., with Sanofi responsible for the rest of the world. Regeneron expects the purchase of global rights to be completed by Sept. 30.

A key milestone for Regeneron will be the Food and Drug Administration’s decision on whether to approve Libtayo with chemotherapy in newly diagnosed patients with non-small cell lung cancer, which is due by Sept. 19. Regeneron will then need to compete with Merck, which has had four years to build Keytruda into the dominant treatment in this setting.

Schleifer acknowledged Keytruda as a “formidable competitor,” but added, “we believe our data in the chemo combo is strong.”

Executives also noted Libtayo’s approval in non-melanoma skin cancer, where it is regarded as the standard of care, as an area of growth.

But they also emphasized the potential for combinations with future Regeneron immunotherapies. In addition to its LAG-3 drug, Regeneron has developed a number of “bispecific” antibodies, which are designed to bind simultaneously to immune cells and tumor cells.

The first of these combinations will generate results later this year, in prostate cancer, followed by another three Libtayo-immunotherapy combination datasets expected in 2023.

In a June 2 note to clients, RBC Capital Markets analyst Brian Abrahams wrote the deal could help Regeneron’s “developmental flexibility” as it researches these combinations, while the cost to the company is low compared to its cash holdings, which totaled $14 billion on March 31.

However, he said the value of the transaction might not be clear for years. “We believe it will take more time to determine how competitive Libtayo can be in a crowded space, especially given class biosimilars [are] expected longer-term, and whether their early-stage combo assets’ interesting mechanisms ultimately translate into differentiation,” he wrote.