Sanofi To Snap Up Kymab For Up To $1.45B; Street Sees 25% Upside

Sanofi has entered into an agreement to buy Kymab for up to $1.45 billion in a move to expand the French drugmaker’s pipeline of immunology treatments.

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Under the terms of the agreement, Sanofi (SNYNF) will pay an upfront payment of about $1.1 billion and up to $350 million, pending the achievement of certain milestones. The drugmaker plans to finance the deal with cash on hand and expects to complete the transaction in the first half of 2021, subject to regulatory approval.

Kymab is a biopharma company developing fully human monoclonal antibodies, with a focus on immune-mediated diseases and immuno-oncology therapeutics.

Following the deal, Sanofi will attain full global rights to Kymab’s KY1005, a fully human monoclonal antibody, which binds to OX40- Ligand and has the potential to treat a wide variety of immune-mediated diseases and inflammatory disorders.

“The Kymab acquisition adds KY1005 to our dynamic pipeline. The novel mechanism of action may provide treatment for patients with suboptimal responses to available therapies,” said Sanofi CEO Paul Hudson. “We understand from our ongoing work in debilitating immunological diseases how critical it is to find the right treatment for each patient. We look forward to rapidly developing this investigational medicine.”

In August 2020, Kymab released data, which showed that KY1005 met both primary endpoints in a Phase 2a trial studying moderate to severe atopic dermatitis patients whose disease is inadequately controlled with topical corticosteroids. KY1005 demonstrated a consistent treatment impact versus placebo across various key endpoints, including in the Eczema Area and Severity Index (EASI) and additional objective clinical measures.

In addition, Kymab’s pipeline includes the oncology asset KY1044, a monoclonal antibody cancer treatment, currently in early Phase 1/2 development. Furthermore, the acquisition gives Sanofi access to new antibody technologies and research tools.

Sanofi has been on a buying spree in recent months. In November, the company made an offer to snap up biotech company Kiadis for an aggregate adjusted equity value of €308 million to expand its range of cell-based immunotherapy products.

Shares of Sanofi have advanced 2.6% over the past month and were down 3.9% over the past year. Looking ahead, the average analyst price target of $121.42 reflects more than 25% upside potential in the shares in the coming 12 months.

The vast majority of Wall Street analysts have a bullish outlook on the stock. The Strong Buy consensus is based on 10 Buy ratings versus 3 Hold ratings. (See Sanofi stock analysis on TipRanks)