Sanofi to acquire Synthorx for $2.5 billion; Plans to boost its immuno-oncology pipeline

The French healthcare giant has agreed to buy all the outstanding shares of the California-based biotechnology company for $68 per share in cash

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French pharmaceutical giant Sanofi said on Monday that it has agreed to acquire biotechnology company Synthorx in an all-cash deal of around $2.5 billion. The acquisition is in a move to bolster Sanofi's immuno-oncology pipeline of drugs and auto-immune disorders.

Per the deal, Sanofi will acquire all the outstanding shares of Synthorx for $68 per share in cash for a total enterprise value of $2.5 billion. The $68 per share value represents a 172% premium to Synthorx's closing price on December 6, 2019. Sanofi is re-strategizing and realigning its drug portfolio with special focus on cancer-treatment related medicines and this acquisition is a step forward in that.

Sanofi builds oncology franchise

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The French drugmaker has been increasingly focusing on transforming scientific innovation into healthcare solutions around the globe. Oncology has been a prime area of focus for the drugmaker and acquisition is in a bid to strengthen its immuno-oncology pipeline of drugs.

Synthorx is a California headquartered clinical-stage biotechnology company focused on prolonging and improving the lives of people with cancer and autoimmune disorders. Hence the acquisition makes sense of Sanofi. "This acquisition ... is aligned with our goal to build our oncology franchise with potentially practice-changing medicines and novel combinations," Sanofi Chief Executive Paul Hudson said in a statement.

THOR-707 is variant of interleukin-2

Synthorx's most prominent immuno-oncology product candidate, THOR-707 is a variant of interleukin-2. However, the candidate is still in clinical development in multiple solid tumor types as a single agent and in combination with immune checkpoint inhibitors. THOR-707 has the potential to become the best-in-class IL-2 therapeutic for the treatment of solid tumors. Sanofi's acquisition of Synthorx thus might become a big step forward in building its own oncology franchise.

Moreover, Hudson, who took over as the chief executive officer of Sanofi in September has been conducting strategy review since then and will give pointers on the businesses he wants to increase focus on at the company's investor day on December 10. Understandably, Sanofi is likely to under significant changes in its businesses in the coming days.

Sanofi re-strategizing business plans

An increasing number of healthcare companies are shifting focus towards developing advanced oncology drugs. Sanofi aims to become one of the leading players in this regard and has been aggressively realigning its portfolio and businesses. "I am bringing a little sense of urgency and prioritization. I have set a tone already that we can move a little bit faster," Hudson had told reporters a month after his appointment in October.

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Sanofi reportedly is also planning to enter into a joint venture or an outright sale among options for its consumer healthcare unit. As a part of its re-strategizing plans, reports said the company is pondering to replace one of its top strategy bosses. In an early sign of the new strategy, Sanofi last week agreed to sell its Seprafilm unit to medical supply company Baxter International for $350 million in cash.