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Sanofi, on the lookout for acquisitions, may have spotted a target

France’s largest pharmaceutical company is looking for assets to acquire, and may have found a potential target in a California biotech it already knows well.

On Wednesday, Bloomberg reported that Principia Biopharma is among the U.S. biotechs on Sanofi’s list of possible acquisitions, citing people familiar with the matter. A Sanofi representative wrote in an email to BioPharma Dive that the company doesn’t comment on market rumors or speculation.

Still, the report pushed Principia’s share price just past the $84 mark, an almost 15% increase that translated to a $350 million bump in the South San Francisco company’s market value. As of Thursday morning, Principia was worth $2.78 billion.

The Principia speculation comes as Sanofi tries to revamp its research and development work. Though perhaps best known for its heart and diabetes drugs, the pharma giant has been shifting resources to different areas of drug development like inflammation and cancer.

Sanofi also recently loosened ties with its longtime collaborator Regeneron — a pact that led to multiple approved drugs — suggesting that it wants to be a more self-contained research engine.

The company has turned to acquisitions as a way to speed up this shift. In December, it completed a $2.5 billion purchase of Synthorx — a young biotech with a drug that, according to Sanofi, looks like a promising agent to combine with other cancer treatments. Then last month, John Reed, Sanofi’s head of R&D, said that in addition to internal research, the company intends to pursue deals each year to supplement its pipeline of experimental cancer medicines.

Such comments have set the stage for speculation about what deals Sanofi will pursue. Principia could be seen as logical a target as any.

Like Synthorx, it’s a small biotech with a proprietary technology — in Principia’s case, it uses a type of small molecule chemistry to inhibit proteins in the body. The company’s most advanced drug, named rilzabrutinib, is in mid- to late-stage clinical testing for three different immune system-related diseases. Rilzabrutinib targets Bruton’s tyrosine kinase, an enzyme implicated in a variety of disorders and at the center of more than $35 billion worth of biopharma deals, according to estimates from SVB Leerink.

Sanofi is familiar with Principia, having inked a deal in late 2017 to develop another one of the biotech’s experimental BTK inhibitors as a treatment for multiple sclerosis. That drug, SAR442168, is in multiple late-stage studies expected to wrap up in 2023 and 2024. According to Bloomberg, Sanofi leadership has said the drug could take over half of the market for multiple sclerosis drugs.

BTK inhibitors are often used to treat cancer too. Last year, AbbVie recorded nearly $4.7 billion in net revenue from Imbruvica, a BTK drug approved to treat blood malignancies.

Analysts have named BioMarin as another possible target for Sanofi, given the firm’s expertise in rare diseases and emerging program in hemophilia, two areas of interest for the French pharma. No rumors have surfaced publicly to substantiate such a deal. But the fact that Principia has been named suggests Sanofi is out looking for biotechs to acquire.