Staff Writer

Sanofi-Aventis' expansion of its already-juicy deal with Regeneron Pharmaceuticals Inc. adds five years to the arrangement and at least $800 million, and may put some observers in mind of the historic partnership between Genentech Inc. and Roche Holdings AG.

But Tarrytown, N.Y.-based Regeneron's setup with Sanofi, of Paris, carries no strings like those attached to the setup signed by Genentech and Roche - terms that led to the latter owning the former.

"They can't gobble us up," said Leonard S. Schleifer, Regeneron's president and CEO, noting the standstill clause that prevents Sanofi owning more than 30 percent. "There's over $1 billion of discovery money that they're placing in our trust to manage and shepherd, and then they're going to fund development of this pipeline," he added. "It's really unprecedented."

Under the new terms, made public after the markets closed Tuesday, Sanofi will hike its funding from $100M to $160 million annually starting next year, and the research payout will extend through 2017.

The firms aim to advance an average of four to five antibodies into clinical development annually, helped by the VelocImmune technology as well as Regeneron's next-generation approaches. By the end of this year, the pair will have moved five antibodies into the clinic over the first two years of their research marriage. And Sanofi has an option to stretch the deal for yet another three years.

None of the changes affect the financial terms of antibody development in the potential $1 billion pact sealed about two years ago. In that agreement, Sanofi raised its ownership of Regeneron from 4 percent to about 19 percent by purchasing 12 million newly issued shares at $26 each, or $312 million, and made an up-front payment of $85 million. (See BioWorld Today, Nov. 30, 2007.)

Sanofi also pledged, under the original tie-up, up to $475 million over the next five years, with a payment of $75 million in the first year and $100 million per year in the following four years. That's the part that just got better.

As under the original terms, Sanofi has the exclusive option to co-develop with Regeneron each antibody drug candidate discovered, with costs for candidates co-developed by the parties to be shared. Sanofi funds development costs up front, and Regeneron reimburses half for all collaboration drug candidates from Regeneron's share of future profits to the extent those profits are sufficient.

In the U.S., profits will be shared equally. Outside, they will be split on a predetermined sliding scale, with Sanofi's share ranging from 65 percent to 55 percent.

Sanofi will take the lead in commercialization activities and will consolidate the sales, granting Regeneron the right to co-promote worldwide. Regeneron also gets as much as $250 million of sales milestone payments when collaboration products achieve certain aggregate annual ex-U.S. sales levels, starting at $1 billion.

With Sanofi, Regeneron could put more than 30 and maybe as many as 40 more molecules into the clinic over the next eight years "Many people have Phase III stuff, they get a success, and then what do they do? Every seven to 10 years, a company is [only whatever] its new pipeline is," Schleifer said.

Regeneron instead wanted to maximize its antibody technology while doing its other work. With Sanofi's cash and technical resources locked in, the firm seems positioned to construct a pharma-style pipeline to back the biotech's Phase III programs in gout, cancer and macular degeneration, without Genentech-style worries about a takeover that can't be stopped.

A separate alliance with Sanofi related to the VEGF Trap technology in cancer, which recently made news when the pair ended Phase III research into pancreatic tumors. The push with aflibercept, as VEGF Trap in that indication came to be known, had been ongoing since 2003. Efforts continue with the compound in ongoing Phase III trials of aflibercept in colorectal, non-small-cell lung and prostate cancer. (See BioWorld Today, Sept. 14, 2009.)

Regeneron also has a partnership with Bayer Healthcare AG. In May, the global development program for VEGF Trap-Eye was extended to include central retinal vein occlusion, and the firms said they would start a Phase III program testing the efficacy and safety of VEGF Trap-Eye in CRVO in the second half of this year. (See BioWorld Today, May 1, 2009.)

Regeneron with all of its partners would spend about $700 million in total on research and development next year, Schleifer said - but it was Sanofi and antibodies that stole Tuesday's show.

He quoted Sanofi CEO Chris Viehbacher to the effect that "large pharma has to find some new models on how to build and sustain their business [instead of] pouring money in and hoping for the blockbuster," and called the latest reshaping of the Regeneron relationship a good example.

Published  November 11, 2009