Sanofi Looks to Bolster Immunology Pipeline By Acquiring Kymab for $1.5 Billion
French Pharma giant Sanofi has agreed to purchase UK-based Kymab for an initial price of $1.1 billion. Kymab produces a pipeline of immune system-based medications and the treatment of inflammatory disorders.
Kymab’s KY1005, an antibody therapy, is viewed as having the potential to treat a wide range of inflammatory disorders and immune-related diseases is a human monoclonal antibody targeting key immune system regulator OX40L. KY1005 passed a mid-stage Phase IIa clinical trial in August and looks promising as a product with widespread application.
According to Sanofi, the drug can re-balance the immune system without suppressing it and controls atopic dermatitis in the intermediate stage of clinical trials. KY1005 regulates the immune system by stopping the proliferation of effector T cells and driving the expansion of regulatory T cells. In doing so, KY1005 could dial down pro-inflammatory cells while dialing up anti-inflammatory cells. Kymab sees applications in multiple autoimmune and inflammatory diseases.
Along with KY1005, Kymab’s pipeline includes KY1044, a cancer treatment currently in Phase I/II clinical development. KY1044 is an anti-ICOS antibody that Kymab is testing as a single agent and in combination with an anti-PD-L1 checkpoint inhibitor in a Phase I/II clinical trial. The study will provide early evidence of whether KY1044 can tackle cancers by depleting intratumoral regulatory T cells and stimulation of effector T cells.
Besides an upfront price of $1.1 billion, Sanofi said the deal price could increase by $350 million if certain milestones are met. The deal is expected to be completed by June of this year.
Weil, Gotshal & Manges LLP is acting as Sanofi’s legal counsel in this deal while J.P. Morgan is acting as financial adviser and Goodwin PLC is acting as its legal counsel for the Kymab on the other side of the table.
Sanofi was late to capitalize on the rise of immunotherapy (drugs that activate the body’s immune system to attack tumor cells) in the early 2010s. It is now trying to catch up by focusing on the immuno-oncology pipeline and hopes to secure a piece of the $100 billion-a-year cancer drug market.
As part of this effort, Sanofi has acquired a series of $1 billion-plus takeovers to move away from reliance on external partners for innovation. A year ago, Sanofi made a deal to purchase Synthorx for $2.5 billion before doing the same for a $3.7 billion deal for Principia Biopharma. Like Kymab, the Synthorx and Principia deals advanced Sanofi’s efforts towards autoimmune and immuno-oncology drugs. In the past couple of months, Sanofi spent 308 million euros ($376 million) on Dutch biotechnology company Kiadis, which specializes in cell-based immunotherapy products to treat cancer.
Pushing Forward with the Purchase
Sanofi intends to finance the transaction with cash rather than perform a stock swap or other financing form. Its shares rose less than 1% to 79.19 euros in Paris trading, following the announcement.
Kymab will also provide Sanofi with antibody technologies and research capabilities. One of Kymab’s technologies has been the focus of a legal dispute with long-standing Sanofi collaborator Regeneron. Kymab has fought off attempts to invalidate patents on the use of genetically modified mice to make antibody therapeutics. Now that Sanofi has acquired Kymab’s IP, Regeneron will be more willing to work together.
Immune System-Based Medicines
The primary obstacle of immune system-based medicine has been the sheer complexity of human immunity and the number of problems that it can have. Eczema, the disorder that KY1005 is meant to treat, afflicts 35 million Americans and has no single cause. As a result, so many of the treatments for eczema merely treat the symptoms of the disorder.
While these treatments do increase the quality of life, they do not solve the problem. However, now that genetic sequencing has opened the door to personalized medicine and increased computing power making in-silico drug design practical, the level of customization required to treat immune system disorders is now available. Disorders like eczema, which are without a standardized cure, are relatively common and correlate with increased affluence in a country. As a result, this is a huge financial opportunity for Sanofi to become the chief in treating these increasingly common diseases, afflicting a generally wealthier population.
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