Good News for Sanofi-Aventis: Heart Drug Multaq Receives FDA Approval

Sanofi-Aventis (SNY) finally received some good news when the U.S. FDA approved the company’s heart drug, Multaq, on July 2, 2009. Multaq provides patients suffering from atrial fibrillation (AF) or atrial flutter (AFL) with a new treatment option.

The approval process for Multaq was not exactly smooth sailing with the company receiving a non-approvable letter from the FDA for its initial new drug application (NDA) filing in 2006. Sanofi resubmitted its NDA in 2008 and received a favorable response from an FDA advisory panel in March 2009.

The product label will contain warnings regarding the use of the drug in patients with severe heart failure. However, Sanofi has a Risk Evaluation and Mitigation Strategy in place to ensure the product is used in the right patient base.

According to the company, AF affects about 2.5 million people in the U.S. and 4.5 million people in the EU. AF is also the leading cause of hospitalization for arrhythmia in the U.S.

Phase III results on Multaq showed that it significantly reduced the risk of cardiovascular hospitalizations or death from any cause by 24% compared to placebo. Multaq also significantly reduced the risk of arrhythmic death by 45% and the risk of cardiovascular death by 30% on top of standard therapy compared to placebo.

This data should help Multaq gain share. We expect the product to contribute significantly to revenues and believe it could eventually achieve blockbuster status. Multaq should reach the €500 million mark in 2012.

Although Multaq’s approval is a major boost for the company, we believe investor focus will remain on the recent negative headlines related to its diabetes drug, Lantus. The FDA is currently examining allegations which claim that Sanofi’s diabetes drug could increase the risk of cancer.

Another major concern with the stock is the generic risk being faced by most of its lead franchises. However, Sanofi is working on addressing these concerns and is looking to reallocate resources to the highest growth and most promising development programs.

We believe the company will also look to grow revenues through additional partnering deals and acquisitions. We maintain our Hold rating with a $35 price target.