Sanofi Acquires Principia Biopharma in $3.6 Billion Deal

Acquisition_Compressed

Shares of Principia Biopharma were up more than 9% in premarket trading after Sanofi announced it was acquiring the company and its BTK inhibitors in a deal valued at about $3.68 billion as the French company continues to transform its R&D division to more heavily emphasize oncology and other lucrative programs.

At the center of the deal for Sanofi is Principia’s experimental Bruton tyrosine kinase (BTK) inhibitors the French company believes will allow it to build a portfolio of the next generation of transformative treatments for autoimmune diseases. BTK is present in the signaling pathways of key innate and adaptive cell types of the immune system. Being able to block or disrupt these signaling processes can help in stopping inflammation and tissue destruction related to autoimmune diseases and target some of the underlying pathophysiology. Principia’s portfolio includes the experimental multiple sclerosis treatment ‘168, which Sanofi previously licensed from Principia in 2017; the late-stage pemphigus treatment Rilzabrutinib; and PRN473, a topical BTK inhibitor.

Sanofi Chief Executive Officer Paul Hudson said that the addition of multiple BTK inhibitors to the company’s platform demonstrates Sanofi’s commitment to strategic product acquisitions in the company’s priority therapeutic areas. The acquisition of Principia will allow Sanofi to expand and accelerate the development of BTK inhibitors across multiple indications, Hudson said.

“Full ownership of our brain-penetrant BTK inhibitor ‘168 removes complexities for this priority development program and simplifies future commercialization,” Hudson said in a statement. “The Phase IIb data in relapsing multiple sclerosis showed the strong potential of ‘168 to address disability and disease progression, and triggered the start of Phase III studies across the full spectrum of MS.”

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In that Phase IIB study, ‘168 reduced Gd-enhancing T1 hyperintense lesions by 85% compared to placebo.

Rilzabrutinib, an oral BTK inhibitor, is currently being evaluated in a Phase III program for patients with moderate to severe pemphigus, a rare, debilitating autoimmune disease that causes blistering of the skin and mucous membranes. Additionally, a Phase III program for immune thrombocytopenia, a disease that causes a high risk for bleeding events, is expected to be initiated by the end of 2020. Principia has also been running an ongoing Phase II program for IgG4-related diseases, which is driven by chronic inflammation, immune cell infiltration, and fibrosis within organs that can lead to severe morbidity.

The topical BTK inhibitor PRN473 is currently in Phase I trials and is being developed for immune-mediated diseases that could benefit from localized application to the skin.

Under terms of the deal, Sanofi will acquire all of the outstanding shares of Principia for $100 per share in cash, which represents an aggregate equity value of approximately $3.68 billion. Sanofi expects to complete the acquisition in the fourth quarter of 2020. Principia closed at $90.74 on Friday, but in premarket trading is up to $99.12.

“The addition of multiple BTK inhibitors to our pipeline demonstrates our commitment to strategic product acquisitions in our priority therapeutic areas. Both ‘168 and Rilzabrutinib, have ‘pipeline in a product’ potential, and we look forward to unlocking their full treatment benefits across an array of diseases,” John Reed, Global Head of Research & Development at Sanofi added.

At the end of 2019, Hudson proposed a redesign of the company that includes the decision to exit diabetes and cardiovascular research and development in favor of more lucrative areas, particularly cancer research. The company has taken multiple steps to move in that direction, including an announcement that Sanofi will sell off its nearly $13 billion position in longtime development partner Regeneron as it moves forward with the company redesign. In July, Sanofi made moves to spin off its active pharmaceutical ingredients division into a standalone company. In addition to the API spinout, Sanofi is also considering selling off its consumer health business.

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