The French pharmaceutical giant Sanofi has increased its interest in the cancer drug market by agreeing to acquire the California-based biotechnology firm Synthorx in a cash deal worth around $2.5bn (£1.9bn, €1.7bn).
Sanofi also offered to buy out all the outstanding shares of Synthorx’s common stock at $68 per share, a 172 per cent premium on the US firm’s Friday closing price. Sanofi will likely lament the 40 per cent surge in Synthorx’s share price that occurred in the week preceding their announcement.
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The clinical-stage biotech company develops therapies to treat those with cancer and auto-immune disorders. Its main drug, THOR-707, is being tested as a treatment for a variety of solid tumors.
Commenting on the acquisition Paul Hudson, Sanofi’s CEO, stated: "This acquisition fits perfectly with our strategy to build a portfolio of high-quality assets and to lead with innovation.”
Founded in 1973, Sanofi has a market capitalisation of $115bn and employs more than 104,000 around the world. Hudson, the former pharma head at Swiss competitor Novartis, was appointed CEO in September and has since conducted a broad strategy review. Consequently, Sanofi’s long standing strategy boss is departing, its Seprafilm unit is to be sold to Baxter International for $350m and its consumer healthcare unit could potentially be sold off.
He will hope that the company’s first multi-billion dollar deal in almost two years will pay off and that Synthorx, which posted a $56.6m loss in 2018 will pay off in the long term.
Such major investment in innovative biotechnology firms mirrors wider gains in the biotechnology market. Biotech firms are notoriously volatile with a company’s share price and millions, if not billions, of dollars hinging on the latest outcome of experimental therapies and clinical trials. Nonetheless Biotech ETFs hit a 52-week high at the end of November, with iShares Nasdaq Biotechnology (IBB), the largest Biotech ETF, continuing its gains into December.
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