Sanofi and Regeneron face Praluent royalty snag

Amgen has gained another edge over Sanofi and Regeneron in the cholesterol-lowering drug battle, after a jury decided that Praluent had infringed patents covering its rival PCSK9 inhibitor Repatha. The question now is what Sanofi and Regeneron will do – and how much it will cost them.

The companies have already said they will appeal against the verdict, which could take 12-18 months. But, if the decision is upheld, the companies might choose to take the hit and pay off the royalties in one go. Based on Praluent’s US sales forecasts the net present value of an expected royalty level of 5% would only total around $450m (see table below).

This would rely on Praluent sales living up to current expectations. The drug has recorded disappointing revenues so far, hindered in part by concerns over pricing (Slow Praluent launch another canary in pharma’s coalmine, February 09, 2016). 

But, if cardiovascular outcomes data come in positive and the PCSK9s take off, the once-and-done approach could be a wise move, saving the companies cash in the long run.

Permanent injunction decision due

At least Sanofi and Regeneron should not be liable for massive damages: the judge indicated that wilful patent infringement would not be considered, according to BTIG analysts. A US ban on Praluent is possible, but unlikely – a hearing for a permanent injunction is scheduled for March 23.

This leaves the prospect of a settlement under which Sanofi/Regeneron would pay Amgen royalties. Evercore ISI analyst Mark Schoenebaum puts the consensus at 5%, but some think it could be higher, with Oddo Securities forecasting 10% and the US broker Chardan Capital previously saying royalites could hit double digits (Amgen starts to gain upper hand in PCSK9 battle, February 3, 2016). 

Despite their 10% figure Oddo said the impact on Sanofi should be marginal, and even saw a glimmer of hope, adding: "The combined patents of Amgen and Sanofi/Regeneron could constitute an unbreakable barrier for a third entrant such as Pfizer."

Praluent peak US sales (2029e) $2,311m
NPV of 2.5% royalty $226m
NPV of 5.0% royalty $452m
NPV of 10.0% royalty $904m

Praluent sales are booked by Sanofi, and the drug's originator, Regeneron, gets a share of the profits. Trading in Regeneron was suspended yesterday, but resumed later and the group’s share price ended the day flat. Sanofi was down 1%.

Praluent was the first PCSK9-targeting agent to be approved, but Amgen has since stolen its thunder with Repatha, which has recently seen an uptick in forecasts while Praluent’s have dipped. EvaluatePharma sellside consensus forecasts global 2020 Praluent revenues of $2.5bn, while Repatha is expected to bring in $3.3bn.

All about the outcomes

However, the broad uptake of both drugs depends on upcoming readouts from cardiovascular outcomes studies. Amgen is expecting results from its Fourier trial in the second half of this year, while the Odyssey Outcomes study of Praluent has a primary completion date of December 2017.

Both have a primary endpoint of time to cardiovascular death, non-fatal myocardial infarction, hospitalisation for unstable angina, non-fatal stroke, or unstable angina requiring coronary revascularisation.

Future sales hinge on showing a benefit here over and above simply lowering “bad” cholesterol. Royalties might be the least of Sanofi and Regeneron’s worries.

Drug Study No. of patients Trial ID Primary completion
Repatha Fourier  27,564 NCT01764633 H2 2016
Praluent Odyssey Outcomes  18,600 NCT01663402 December 2017

To contact the writer of this story email Madeleine Armstrong in London at madeleinea@epvantage.com or follow @medtech_ma on Twitter

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