Sanofi-Aventis to Establish Venture Capital Fund, Looking for 'Right Brain Activity'

By Marie Daghlian

Chris Viehbacher, CEO of Sanofi-Aventis (SNY), said his company will establish a venture capital fund, joining an ever-growing queue of pharma venture capital funds seeking to gain better access biotech innovation. Viehbacher confirmed the French drugmaker’s plans in comments made at an event at Sanofi’s R&D campus in Cambridge, Massachusetts, the online publication Xconomy reported. The company also announced a significant expansion and extension of its collaboration with Regeneron Pharmaceuticals (REGN). The deal comes a month after Sanofi-Aventis struck a partnership deal with Merrimack Pharmaceuticals focused on the biotech's experimental antibody drug for cancer, and continues Sanofi's strategy of looking outside the company for what Viehbacher calls "right brain activity" that leads to creativity and innovation.

The expanded deal with Tarrytown, New York-based Regeneron, builds on the companies' existing global collaboration to discover, develop, and commercialize therapeutic antibodies, adding five years to the original arrangement and at least $800 million in potential revenues to the biotech. Under the terms of the new deal, Sanofi-Aventis will increase its annual funding commitment to the collaboration from $100 million to $160 million beginning in 2010, with the funding extending through 2017. The companies are looking to advance an average of four to five antibodies into clinical development each year. In addition to its VelocImmune technology, which was part of the first agreement, Regeneron will contribute its next generation technologies related to antibody generation to the new collaboration. Sanofi-Aventis also has an option to extend the discovery program for up to an additional three years for further antibody development and preclinical activities.

Leonard Schleifer, president and CEO of Regeneron, said:

The first two years of our collaboration with Sanofi-Aventis have been extremely productive, with five VelocImmune human antibodies in or entering clinical development. The expansion of our collaboration provides even greater resources over a longer time horizon and will boost our efforts to build a deep pipeline of new human antibody product candidates.

Schleifer anticipates that the collaboration may lead to more than 30 molecules into the clinic over the next eight years.

Marc Cluzel, executive vice president of R&D for Sanofi-Aventis, said:

This collaboration expansion demonstrates Sanofi-Aventis’ commitment to become a key player in the field of monoclonal antibodies and our confidence in our partner Regeneron. It will further fuel our product pipeline and will allow us to bring multiple antibody product candidates into the clinic, thereby significantly increasing the chance of providing patients access to innovative drugs in various therapeutic areas.

To date, Regeneron and Sanofi-Aventis have advanced four therapeutic antibodies into clinical development and have filed an application with regulators to begin clinical trials for a fifth additional antibody. Among the four antibodies in clinical development, three are antibodies to the Interleukin-6 receptor that are being developed for the treatment of rheumatoid arthritis. The others target nerve growth factor for the treatment of pain and Delta-like Ligand 4 for the treatment of advanced malignancies.

The new deal does not change the antibody collaboration entered into in November 2007, which was scheduled to end in 2012. In that potential $1 billion deal, Sanofi-Aventis made an upfront payment of $85 million and raised its ownership interest in Regeneron from 4 percent to about 19 percent through the purchase of 12 million newly issued shares at $26 each, or $312 million. As amended, the new collaboration will continue at higher levels of funding through 2017. As under the original terms, Sanofi-Aventis has the exclusive option to co-develop with Regeneron each antibody drug candidate discovered under the collaboration. Development costs for drug candidates co-developed by the parties will be shared, with Sanofi-Aventis funding development costs up front and Regeneron reimbursing half of the development costs for all collaboration drug candidates from Regeneron's share of future profits from commercialization of collaboration products to the extent future profits are sufficient for this purpose. In the United States, profits will be shared equally, while outside the United States, profits will be split on a pre-determined sliding scale with Sanofi-Aventis' share ranging from 65 percent to 55 percent.

For any products successfully developed as part of the collaboration, Sanofi-Aventis will take the lead in commercialization activities and will consolidate the sales. Regeneron will have the right to co-promote any and all collaboration products worldwide. In addition, Regeneron is entitled to receive up to a total of $250 million of sales milestone payments when collaboration products achieve certain aggregate annual ex-U.S. sales levels, starting at $1 billion. The agreement also includes a standstill clause that prevents Sanofi-Aventis from owning more than 30 percent of Regeneron.