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As Sanofi-Aventis (NYSE:SNY) narrows its selection of acquisition targets, ophthalmology buys are counted as an add-on that could reap synergies for the company, a source familiar with the situation told Pharmawire. Products that aid ailments in the eye, ear and even for balding/hair loss are considered high on the list of targets, the source said, with Allergan (NYSE:AGN) thought to be a strong contender.
Still, the source said there is a laundry list of opportunities close to Sanofi’s core business - including the biotech, vaccines, animal health and diagnostic markets - that it could move on first.
In March, this news service broke the news that Allergan turned down a late 2008 informal deal proposal in the range of USD 72/share from GlaxoSmithKline (NYSE:GSK), and as a result Allergan has seen intense deal-making speculation. An industry person familiar with the situation said Chris Viehbacher, who was GSK’s North American Pharmaceuticals president at the time, is likely continuing to champion an Allergan buy.
With Viehbacher now at the helm of Sanofi as CEO, “flipping around internal management and corporate development, and moving one of the GSK fleets over,” Allegan would sit at the top of his M&A wish list, the person added.
Yet it is unclear, with Viehbacher’s departure from GSK, whether GSK still carries an interest in acquiring Allergan. Some industry sources interviewed said Allergan would be a natural fit for GSK as the latter already has a relationship by means of its agreement in Japan and China, whereby GSK develops and markets Allergan’s Botox(botulinum toxin type A).
Allergan has two glaucoma products - Lumigan X, near approval, and a second generation prostaglandin moving through Phase II - while its Ozurdex is expected to be launched in 3Q09 for the treatment of macular edema following branch and central retinal vein occlusion. In Allergan’s 2Q09 earnings report, the company also raised its 2009 Latisse guidance to USD 60m up from USD 30m to USD 50m. Latisse saw an approval in Korea as its first ex-US market for eyelash growth and is planning to start trials in the EU later this year. The company is also working towards starting trials for Latisse in male baldness.
An Allergan spokesperson said it is the company’s policy not to comment on specific M&A rumors or speculation.
Philippe Goupit, Sanofi’s VP of business development and corporate licenses, told this news service that the company is seeking to increase its footprint in ophthalmology, through licensing opportunities or swiping up one-product companies. He stressed that Sanofi is not looking to “move” into ophthalmology per se, but conceded that the company has such a narrow presence or expertise in ophthalmology that this is the only footprint it is serious about considerably increasing.
Goupit commended the success of Genentech’s Lucentis (ranibizumab), which is indicated for macular edema due to branch retinal vein occlusion, similar to Ozurdex.
The person familiar with the situation noted Sanofi’s interest in ophthalmology with its stake in Regeneron Pharmaceuticals (NASDAQ:REGN). Bayer Healthcare, in turn, he said, has a notable partnership with Regeneron on the global development of VEGF Trap-Eye for the treatment of eye disease, including the neovascular form of wet age-related macular degeneration and diabetic eye diseases.
The source close to the situation compared Sanofi’s M&A strategy to that of Bristol Myers Squibb (NYSE:BMY), which heralds a “string of pearls strategy” by acquiring companies in the EUR 2bn to EUR 5bn range. Alternatively, Sanofi could go after a large deal north of EUR 15bn, he said.
Yet even though there has been excitement around an Allergan buy, it is still regarded expensive among the industry. In addition, Allergan management has been hesitant to sell, and have even commanded USD 100 per share in a takeout, one industry banker commented. Yet, despite its price, the banker did note that the company will at some point be taken out, as it has been looked at by several big pharmaceutical firms, including Sanofi.
Another candidate that has been chatted about among the banking community for its development in ophthalmology is privately-held Lux Biosciences. The company is in various “discussions” with parties, Dr Ulrich Grau, president and CEO said, as it nears its chances for a mid-2010 approval for LX211 (Luveniq), a calcineurin inhibitor and anti-inflammatory drug for the management of non-infectious posterior, intermediate and panuveitis.
Lux is working with an investment bank, believed to be Lazard, to sell itself, the person familiar said. The fact that David Guyer is currently chairman of the board of Lux already sets M&A implications, as he sold Eyetech Pharmaceuticals to OSI Pharmaceuticals (NASDAQ:OSIP) for USD 935m in 2005, the person added.
The CEO disclosed that Lux is working with a group, when asked if it had retained a bank. He declined to elaborate on the nature of the discussions or specific companies involved.
Although the person familiar added that it is unclear how large the uveitis market will be and what the data around the product will show, Grau said LX211 is a first in class product, and that the only drugs approved to treat uveitis are cortical steroids, injection or implants. Allergan’s Ozurdex is also in late stage uveitis trials.
Grau noted that Lux is poised to submit an NDA later this year, along with a marketing authorization in the EU around the same time. With the data, stage of development, the momentum towards submission later this year and potential a 2010 approval in the US with priority review, there is an element of attractiveness, he said.
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