Sanofi, Regeneron splitting up on Praluent, Kevzara

After more than a decade of working together, Sanofi and Regeneron's drug partnership finally turned a profit recently on the back of strong sales of blockbuster Dupixent. Instead of staying the course, the couple is now reworking their arrangement––and so far it's leaving Regeneron worse for wear. 

The companies will restructure their 12-year-old partnership into a royalty-based agreement for PCSK9 med Praluent and rheumatoid arthritis med Kevzara, with Regeneron taking over U.S. rights to the former and Sanofi snagging global rights to the latter. 

The restructuring, however, won't affect the companies' 50-50 split on Dupixent, which hit $633 million in global sales, they said. The reworked deal is expected to close in the first quarter of 2020. 

"Economically, it makes sense," Sanofi CEO Paul Hudson said Tuesday at an investor meeting, arguing the new structure gives the drugmaker "agility" and frees it of joint product committees and joint decision-making on those drugs.

RELATED: Sanofi CEO Hudson backs away from struggling diabetes, cardiovascular areas in strategy unveiling

But the restructuring could only be the first step of Sanofi and Regeneron's uncoupling after the French drugmaker said it would consider bailing on its 21.8% stock in its partner. 

Sanofi may look to raise capital by selling its more than 23.5 million shares in Regeneron once the collaboration expires in 2020, the company said. The company announced the move as part of Hudson's strategic unveiling Tuesday, focusing on driving growth through Dupixent and strengthening the drugmaker's R&D pipeline. 

On the heels of the announcement, Regeneron's stock price dropped 5% in premarket trading Tuesday to $357.15, but it has since rebounded slightly. 

As part of Hudson's plan, Sanofi said it believes Dupixent can generate more than €10 billion at peak, and that vaccines can deliver strong growth figures through 2025. And aside from those products, it's focusing on six "potentially transformative" pipeline therapies in hemophilia, RSV, cancer and more.

Along with the moves, Sanofi said it’s exiting R&D in its diabetes and cardiovascular groups, where the company has a rich history. The drugmaker won’t pursue a launch of efpeglenatide, a GLP-1 injection for Type 2 diabetes. 

Further, the company will be "right-sizing" its teams for Praluent and Kevzara, both of which haven’t met early commercial expectations. In the third quarter, Praluent and Kevzara hit $69.7 million and $54.8 million in sales, respectively.

By deprioritizing certain businesses, implementing "smart spending" initiatives and bolstering manufacturing efficiency, Sanofi aims to save €2 billion by 2022.

RELATED: Regeneron's Sanofi deal finally turns a profit, thanks to Dupixent

Despite Sanofi's search for profits away from Regeneron, its plan to walk away from its partner stings after the pair turned a profit for the first time in the second quarter on the back of Dupixent. 

Sanofi and Regeneron first joined forces in 2007, agreeing to split U.S. profits and losses 50-50 and ex-U.S. proceeds on a sliding scale. Along the way, Regeneron has opted to co-promote Dupixent, now approved to treat severe eczema, asthma and nasal polyps; Praluent; and Kevzara in the U.S. 

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