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Rumor Alert: Sanofi (SNY) Close to Scooping Up This Massachusetts Biotech in $1 Billion+ Deal

3/23/2017 8:48:10 AM

Rumor Alert: Sanofi Close to Scooping Up This Massachusetts Biotech in $1 Billion+ Deal March 23, 2017
By Mark Terry, Breaking News Staff

Inside sources have reported that Paris-based stock is wrapping up talks to acquire Burlington, Mass.-based Flexion Therapeutics (FLXN).

Flexion is a specialty pharma company focused on musculoskeletal conditions such as osteoarthritis. The company’s lead product is Zilretta (FX006), which on February 23 enrolled the first patient in a clinical trial to evaluate the safety of repeat administration for OA of the knee.

“This trial is an important part of our ongoing clinical investigation of Zilretta in individuals who are confronting pain from OA of the knee,” said Michael Clayman, president and chief executive officer of Flexion, in a statement. “Previous clinical trials evaluating a single injection suggest Zilretta has an acceptable safety profile with side effects similar to placebo and active-control, and we look forward to reporting the results from the repeat administration study when the trials reads out in 2018.”

The company filed with the U.S. Food and Drug Administration in December, and if approved, and the acquisition is real, would be launched by Genzyme in the fall. Genzyme has marketed Synvisc for osteoarthritis since 2009.

Zilretta is a sustained-release corticosteroid. Synvisc is a hyaluronon-based injection that supplements the natural fluid in the knee. Analysts have projected, if Zilretta is approved, that it could hit $500 to $600 million in peak sales, and if it is approved for other joint indications, could hit the $1 billion blockbuster mark.

Sanofi has been beaten out on several high-profile acquisitions in the last year. In August, Pfizer (PFE) scooped Sanofi in a buy of San Francisco’s Medivation (MDVN) for about $14 billion. Then in January Johnson & Johnson (JNJ) beat out Sanofi for Swiss-based Actelion for $30 billion.
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John Carroll, writing for Endpoints News, says, “A deal for Flexion would amount to a relatively small but reliable bolt-on buyout for Sanofi, which needs to prove that it can close on a negotiation. It would also mark a big payout to investors who have backed this company through the development phase.”

According to FiercePharma, which broke the story, Flexion’s board already voted to accept the non-binding offer, with a price in the mid-30s. Flexion stock traded at $19.68 at the end of trade yesterday, but is currently trading at $26.25.

Sanofi stock also responded positively to the news. It is currently trading at $45.03, its highest price in a year. The last peak was April 25, 2016, when shares traded for $44.32, and the year low was on October 26, 2016, when shares traded for $37.06.

On March 22, The Cerbat Gem noted that Sanofi had a consensus recommendation of “Hold” from 17 analysts that covered the stock. Two gave it a “sell,” nine issued a “hold” and six gave it a “buy.” The average 12-month price target was $58.

The company’s market cap is $112.03 billion and has a price-to-earnings ratio of 22.93.

Flexion’s market cap as of this morning was $624 million, based largely on Zilretta.

Not surprisingly, neither Flexion or Sanofi would comment on the potential deal. Flexion’s spokesman, Scott Young, did tell Tracy Staton of FiercePharma, “We’re pursuing an independent strategy to commercialize our lead product Zilretta.”

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