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Sanofi to sell stake in Regeneron worth $13 billion

Sanofi has positioned itself as a front-runner in the race to develop therapies and vaccines for the coronavirus.
Sanofi has positioned itself as a front-runner in the race to develop therapies and vaccines for the coronavirus.ERIC PIERMONT/AFP via Getty Images/File 2018

Sanofi is selling a stake in Regeneron Pharmaceuticals Inc. valued at about $13 billion, giving the French drug giant more firepower to invest in fast-growing fields such as cancer.

Regeneron has agreed to repurchase $5 billion of its stock from Paris-based Sanofi, the companies said Monday.

Regeneron said the French company also plans to sell approximately 12.8 million shares, a holding worth more than $7 billion, based on Friday’s closing price.

That will mark the largest public equity offering in the heath care industry on record.

The announcement is part of Sanofi chief executive Paul Hudson’s revamped strategy. The company said in December that it would end its hunt for new diabetes and heart disease drugs, helping save more than $2 billion, and focus on lucrative areas such as oncology.

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“We believe the proceeds from this transaction will help further our ability to execute on our strategy to drive innovation and growth,” Hudson said in a statement.

Sanofi holds about 23.2 million shares of Regeneron’s stock, or 20.6 percent of the US pharmaceutical company. Sanofi, which first purchased shares of the Tarrytown, N.Y.-based company in 2004, will continue to own about 400,000 shares.

Bank of America Corp. and Goldman Sachs Group are the underwriters of the stake sale. Regeneron said it will fund the share repurchase with $3.5 billion of cash and $1.5 billion of financing from Goldman Sachs Bank USA.

Sanofi and Regeneron said there will be no change in their ongoing partnerships. Through their longstanding collaboration since 2003, the companies have brought five medicines to market, and have additional drug candidates currently in clinical development.

In December, Sanofi and Regeneron announced their intent to restructure collaborations for two drugs, the cholesterol-buster Praluent and the arthritis medicine Kevzara.

Hudson also said at the time that Sanofi could raise funds by selling its stake in Regeneron after a lockup period expires at the end of 2020. “As the lockup expires, your flexibility increases,” he said. “We will look at the equity and decide where it can yield the best return for us as an organization.”

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Regeneron announced later that month that it planned to cut staff as it restructured its partnership with the French drug maker.

Both Sanofi and Regeneron have positioned themselves as front-runners in the race to develop therapies and vaccines to battle the coronavirus. Sanofi has received funding from the US government to expedite research and development and scale up production capabilities for its high-profile vaccine candidates.

Sanofi is also working with Regeneron to evaluate how Kevzara could help very sick COVID-19 patients in respiratory distress. Initial trial results have suggested the drug may help only the most critically ill patients. The companies are moving forward with a big trial focused on the most serious COVID-19 cases, with results expected in June.

Sanofi paid more than $20 billion in 2011 for Cambridge-based Genzyme, a pioneering developer of medicines for rare diseases. Sanofi employs more than 100,000 people worldwide. That includes about 4,800 in Massachusetts, according to a 2019 report by the Massachusetts Biotechnology Council trade group. That made it the second-biggest employer of any drug maker in the state, behind only Takeda Pharmaceutical, the Japanese drug giant.


Material from a previous Boston Globe story was included in this report.