Sanofi (SNY) is a company to keep an eye on, with several developments on the horizon.
To begin with, Sanofi appears to be at least somewhat involved in the race to buy Amylin Pharmaceuticals (AMLN). Amylin is best known for its diabetes drugs, Bydureon and Byetta. Sanofi is not the only company that has expressed interest in buying the company. Bristol-Myers Squibb (BMY) made an unsolicited offer to purchase Amylin that was subsequently rejected by the company. Amylin recently opted to hire an external consulting agency to assist it in making the final decision regarding the sale of the company. Several companies, including Sanofi, are interested in buying the company in order to get a foot in the door of the diabetes industry.
At this point, it may only be a rumor that Sanofi wishes to acquire Amylin. Sanofi is currently working on its own experimental diabetes drug treatment, and so Amylin may one day be a competitor. As of right now, Sanofi has not yet commented officially on its intention of buying Amylin, but insiders assume that it will be in the running for acquisition. If Sanofi makes a move and does acquire Amylin, expect Sanofi to become the major player in diabetes treatment. Either way, the fact that Amylin denied Bristol-Myers' bid shows that pharmaceutical companies don't think Bristol-Meyers has the ability to market some drugs effectively. This is good news for Sanofi.
In other news, Sanofi has announced its intention to collaborate with the Michael J. Fox Foundation (MJFF) to test an early-stage treatment for Parkinson's disease. According to this agreement, MJFF will financially back the tests. Sanofi's drug, AVE8112, has shown great promise specifically in addressing the psychiatric symptoms inherent in the disease and Sanofi, along with MJFF, believe there are many indications this drug will be a success. Initial tests are focused on determining the safety of the drug for patients. If the initial tests return satisfactorily, Sanofi will determine what the next phase of the process should be and prescription decisions will be made.
Under the agreement, all results obtained from the testing procedures will be owned by MJFF, along with any resultant data. What happens after this initial round of testing remains to be seen. Sanofi and MJFF will begin enrolling patients for the study later this year. The actual trial will begin toward he end of the year and will be conducted at clinical sites in the U.S.
The main implication of this study is that it addresses some of the cognitive aspects of Parkinson's disease that have not received a lot of attention up until now. If the tests are successful, and prove that Sanofi's drug is one that can be effectively used in treating Parkinson's, this will make the company a leader in this area, with obvious positive consequences for the stock. No effective treatment for the debilitating disease is currently available. Even if MJFF works out an agreement to result in little profit for Sanofi, the name exposure and ensuing positive reputation will be positive for the company. Being the first successful pharmaceutical company in a well-publicized sector such as this could be a huge plus for any company.
Moreover, this is far from being Sanofi's only attempt to get involved in the treatment of Parkinson's disease. In a separate study, Sanofi's own Genzyme business has been investigating a gene candidate for the treatment of the disease.
It's worth considering what Sanofi's competitors are up to. Amgen (AMGN) and Pfizer (PFE), two of its main competitors, are in the process of dissolving their long-standing partnership. Amgen will leave with the right to distribute the anti-inflammatory drug, Enbrel, in the U.S., while Pfizer, busy developing its own competitor for the drug, will maintain rights to market Enbrel outside the U.S. Pfizer also recently announced its final decision regarding the sale of its baby formula subsidiary. The sale will go to Nestle (NSRGY.PK), in a move that should benefit both corporate giants. Nestle will have a foot in the door of the Chinese market where Pfizer's presence is already strong. Nestle will also benefit from the substantial profits made by the high quality and well known baby formula company on a yearly basis. Pfizer was looking to sell off any subsidiary considered a non-core company. Nestle will purchase the company for no less than $11.8 billion in cash.
Other competitors are not doing as well as Sanofi or Pfizer. Merck (MRK), for example, recently had to pay $321.6 million in fines. This is due to the company's years of illegally marketing a drug, Vioxx. The drug is a former painkiller and has some serious side-effects related to heart disease. The lawsuit against Merck & Co. has been ongoing since 2004 and the result probably comes as a relief to the company and stockholders as the nasty business has finally been put to rest.
GlaxoSmithKline (GSK) recently announced its intention to "divest the previously identified non-core OTC brands in its international markets to Aspen Pharmacare Holdings Limited for £164 million in cash." The transaction will yield about £135 million in cash, which will soon be returned to shareholders. This move is aimed at increasing value for shareholders, indicating that GlaxoSmithKline has the interests if its investors at heart. For Sanofi, however, the move means a competitor has a new load of cash to invest, always a warning sign as the highly competitive industry looks to cut its competitors down with generics and improved drugs.
The influx of cash is a warning sign, but Sanofi seems to be involved with big things currently. With the company on the rise, watch out for developments in its Parkinson's treatment and its possible move toward buying Amylin and you will get a better picture of Sanofi's growth potential in the coming months.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.