Why M&A Hungry Sanofi Could be Gearing Up to Buy Sarepta

Why M&A Hungry Sanofi Could be Gearing Up to Buy Sarepta May 1, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Last week’s announcement that Sarepta Therapeutics ’s chief executive officer and board director, Edward Kaye, was stepping down came wrapped in speculation that the company was ripe for acquisition. Now investors and analysts have put a bow on the package by speculating on a possible buyer—none other than Paris-based Sanofi .

There are a number of dots these rumors are connecting. First, Kaye, who was named interim chief executive officer in March 2015, is stepping down at the end of his term in September 2017. During his brief tenure, he oversaw the controversial approval of Exondys 51 for Duchenne muscular dystrophy (DMD), the first FDA-approved drug for the disease.

In related news, Jean-Paul Kress, one of the Sarepta board members who is a Sanofi executive, informed the board he would not stand for re-election. He plans to stay until his term is completed, citing time commitments and a possible conflict of interest with his future plans.

Adam Feuerstein, writing for TheStreet, noted that, “The timing of these two departures could be coincidental and mean nothing, or they might signal Sanofi’s interest in acquiring Sarepta.”

Feuerstein also says—twice!— that, “There is no outward evidence a Sanofi-Sarepta deal is in the works.”

Sanofi has clearly been in the market for a company, and has flamed out spectacularly in its last two bids—losing out on Medivation to Pfizer and losing out on Actelion to Johnson & Johnson .

It’s well worth noting that the speculation over recent acquisition targets for Sanofi is hardly news. On March 23, inside sources reported that Sanofi was wrapping up talks to buy Burlington, Mass.-based Flexion Therapeutics , although to date nothing has come of it.

Speculation that Sanofi might buy Sarepta is based on even less. Feuerstein writes that, ‘Sanofi has been sending mixed messages to investors about its appetite for acquisitions. Earlier this week, Sanofi’s top scientist told the Financial Times that controversies over U.S. drug-pricing policies and high company valuations have turned Sanofi more cautious on takeout deals.”

And it’s undoubtedly true that President Trump has repeatedly stated that he was going to do something about drug prices without any particular details being announced. He said on March 21 to the drug industry, “You folks have done terrific things over the years, but we have to get prices down for a lot of reasons. We have no choice. For Medicare, for Medicaid. That’s why we have to get the prices way down. We’re also going to be streamlining the process so you can actually get it approved, if it works, instead of waiting for many, many years. The U.S. drug companies have produced extraordinary results for our country, but the pricing has been astronomical for our country. We have to do better.”

In terms of Sarepta, Feuerstein also notes that Sanofi’s Genzyme division is close to moving into new headquarters in Kendall Square in Cambridge, Mass., and Sarepta is right around the corner. Then again, so are hundreds of other biotech companies, including Biogen , Warp Drive Bio, Teva Pharmaceuticals and Alnylam .

Fortune magazine writes, “But a buyout isn’t a particularly outrageous scenario. Sanofi has already faced a number of high-profile acquisition failures in recent months despite CEO Olivier Brandicourt’s mission to retool the company’s drug pipeline via licensing arrangements and other deals.”

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