Regeneron and Sanofi Immuno-Oncology deal

Regeneron Pharmaceuticals, Inc. and Sanofi have entered into a new global collaboration to discover, develop and commercialize new antibody cancer treatments in the emerging field of immuno-oncology. As part of the agreement, the two companies will jointly develop a programmed cell death protein 1 (PD-1) inhibitor currently in Phase 1 testing and plan to initiate clinical trials in 2016 with new therapeutic candidates based on ongoing, innovative preclinical programs.

About the Financials of the deal:

Sanofi will make an upfront payment to Regeneron of $640 million, and the companies will invest $1 billion for discovery through proof of concept (POC) development (usually a Phase 2a study) of monotherapy and novel combinations of immuno-oncology antibody candidates to be funded 25 percent by Regeneron ($250 million) and 75 percent by Sanofi ($750 million). The companies have also committed to equally fund an additional $650 million (or $325 million per company) for development of REGN2810, a PD-1 inhibitor. In addition, Sanofi will pay Regeneron a one-time milestone of $375 million in the event that sales of a PD-1 product and any other collaboration antibody sold for use in combination with a PD-1 product exceed, in the aggregate, $2 billion in any consecutive 12-month period. Finally, the two companies have agreed to re-allocate $75 million (over three years) for immuno-oncology antibodies from Sanofi’s $160 million annual contribution to their existing antibody collaboration, which otherwise continues as announced in November 2009. Beyond the committed funding, additional funding will be allocated as programs enter post-POC development.

The framework of the new immuno-oncology collaboration is as follows:

• Regeneron will be responsible for discovery, antibody generation and development through POC, at which time Sanofi will have the ability to opt-in to further development and commercialization. In the existing antibody collaboration, Sanofi has the opportunity to opt-in at the time of an Investigational New Drug application (IND).
• The companies will alternate serving as the lead development and commercialization organization after Sanofi opts-in to an antibody program.
• For programs where Regeneron is the lead, including REGN2810, Regeneron will serve as the U.S. commercial lead, including recording U.S. sales, and the companies will equally fund post-POC development. Sanofi will record sales and serve as the commercial lead for all countries outside the U.S. Sanofi will retain the right to co-promote in the U.S. and Regeneron will retain the right to co-promote outside the U.S.
• For programs where Sanofi is the lead, Sanofi will serve as the U.S. commercial lead and fund 100 percent of post-POC development, with Regeneron reimbursing up to 50 percent of such costs through the IO collaboration development balance, which represents the amount of development funding that Regeneron is obligated to repay out of its share of profits as described below. Sanofi will record sales and serve as the commercial lead for all countries outside the U.S. Regeneron will retain the right to co-promote in the U.S. and outside the U.S.
• Sanofi and Regeneron will share equally in worldwide profits from sale of collaboration immuno-oncology antibodies.
• As in the existing antibody agreement, Regeneron will repay the immuno-oncology collaboration development balance from its share of overall profits of the immuno-oncology antibodies, in an annual amount equal to 10 percent of the Regeneron share of profits.

Ref: Official Press Release of Regeneron, dated July, 27, 2015