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Bad news piles up for Sanofi – 08/17/2022 at 14:30

Sanofi’s new logo at the pharmaceutical group’s headquarters, on February 4, 2022 in Paris (AFP/Eric PIERMONT)

August is painful for Sanofi. The pharmaceutical giant, whose image has already suffered from its difficulties in developing a vaccine for Covid, is now worrying markets in the face of a backlog of bad news.

The group announced Wednesday that “Sanofi is ending its global clinical development program for amcenestrant,” lowering its share price by nearly 5% on the Paris Stock Exchange.

This molecule is designed to fight some types of advanced breast cancer. But Sanofi notes a lack of conclusive clinical trials.

For the group, this is new bad news after early August already saddled with unprecedented mistrust in the markets for several years, losing its title by more than 15% since July.

Admittedly, Sanofi’s image has already faded with the general public due to its delays and difficulties in developing an anti-Covid vaccine.

However, this topic did not really concern investors. However, if Sanofi’s recent problems are less visible to the general public, they are considered more problematic for its prospects.

Markets have reacted poorly to the amnesty law failure in a context where Sanofi has largely refocused in recent years on fighting cancer, particularly hurting the diabetes market.

Sure, unlike smaller pharmaceutical groups, a single failure doesn’t threaten Sanofi’s future, but it does risk making the group less attractive to investors.

According to analysts at Cowen Bank, unofficial sales should have represented 350 million euros in 2027, compared to nearly 38 billion euros in revenue generated by the group last year.

For some observers, the group’s connection is fundamentally in question: the poor results of the treatment have been known since March, but Sanofi did not immediately decide to abandon it.

“Investors will, rightly, doubt the leaders’ rhetoric,” Wimal Kapadia, an analyst at Bernstein, was quoted as saying by Bloomberg.

– Concerns about a dispute –

But, overall, the failure of this cancer drug has generated a major concern for analysts at Sanofi: Is the group too reliant on its flagship drug, Dupixent?

This drug, which is used in particular against asthma and some skin conditions, currently allows Sanofi to see life in pink with sales rising sharply. But Dupixent now accounts for a fifth of the group’s revenue, and investors are concerned about the difficulties it is having in developing promising new treatments.

Shortly before stopping the amcenestrant, Sanofi had already alarmed markets by suspending trials of the multiple sclerosis treatment, tolebrutinib.

It is not a matter of final concession this time. Serious problems have been found in some patients, and Sanofi must establish whether there is a direct link, before resuming trials.

However, this outage would constitute, to say the least, a major setback. And his announcement has not been well received because it comes amid renewed concerns on another front, this time judicial.

Investors are concerned about the financial consequences of a dispute over a treatment, Zantac, which has long been sold in the United States and Canada against heartburn but pulled out of the market in 2019.

Studies have proven, in fact, that this remedy breaks down in the body into a carcinogen, even if it hasn’t been shown to actually cause cancer.

However, the first trials will begin this month in the United States, and patients accuse Sanofi and other groups of contributing to cancer by selling Zantac.

Is this for Sanofi the beginning of a case similar to Depakin? The group had long been facing justice for the antiepileptic responsible for multiple disorders in exposed babies in their mothers’ womb.

Still, it’s too early to identify some analysts, who see it as difficult to establish a relationship with such a precise treatment as a painkiller, and to whom Sanofi has responded fairly quickly from the first alarming studies.

“It seems difficult to quantify the potential impact today,” say analysts at Oddo, who consider the market reaction “excessive.”

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