Sanofi makes another bolt-on with Kadmon

The “left field but logical” buy sees Sanofi gaining a graft-versus-host disease therapy to add to its transplant offering.

Deals

Sanofi’s spending spree continues. This time it is handing over $1.9bn for Kadmon, the once controversial biotech that now has an approved graft-versus-host disease drug, Rezurock.

The acquisition is a little surprising, coming outside oncology and autoimmune diseases, where Sanofi has so far focused much of its M&A firepower. But Kadmon will fit in with the French firm’s transplant business, which comprises Thymoglobulin and Mozobil.

Jefferies analysts called the buy, which comes at a 79% premium to Kadmon’s closing share price yesterday, as “left field but logical”. They added that antitrust concerns are unlikely given minimal overlap between the respective companies' products.

Sales guaranteed

Kadmon looks like a surer bet than some of Sanofi’s other recent purchases. Rezurock was approved in the US in July for the third-line treatment of chronic graft-versus-host disease (GVHD), and Kadmon launched the drug in August. Sellside consensus, compiled by Evaluate Pharma, sees sales peaking at $661m in 2028, but Jefferies sees greater potential, saying peak revenues could reach $1bn.

Sanofi could see upside outside GVHD with Rezurock, a Rock2 inhibitor that is said to rebalance the immune system. The drug is in phase 2 for the autoimmune disorder systemic sclerosis, with a single-arm study set to yield data by the end of this year. A placebo-controlled trial is also ongoing, with results due by the end of 2022.

Rock2 is also involved in fibrosis, and Kadmon had been evaluating Rezurock in idiopathic pulmonary fibrosis. However, a phase 2 study completed this year and IPF is not listed among the group’s pipeline efforts.

Kadmon's only other clinical-stage project is KD033, an anti-PD-L1/IL-15 fusion protein, in phase 1. Cytokines have attracted massive interest from biopharma; if this project works out it would represent a big oncology bonus for Sanofi, but given the track record of IL-2/IL-15 assets this is a big if.

Including the Kadmon deal, Sanofi has now spent nearly $13bn on acquisitions in the past couple of years. Most recently, the group bought the mRNA vaccines player Translate Bio for $3.2bn (Sanofi Translates its mRNA interest into big bucks, August 3, 2021). 

There could be more to come: Jefferies noted that Sanofi is still interested in oral immunology projects with “interesting” mechanisms, as well as more oncology assets, and gene editing.

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