Sanofi to Sell $13B Regeneron Stake as Regeneron Repurchases $5B in Shares

Compiled by Keke

As Regeneron’s stock price recently hit a peak, Sanofi is preparing to sell its stake in Regeneron, valued at approximately $13 billion, to marshal more “firepower” for investments in rapidly growing areas such as oncology.

On May 25, Regeneron announced the commencement of a public secondary offering of its common stock, through which Sanofi will exit its investment in Regeneron shares.

Sanofi made a substantial purchase of Regeneron shares in early 2013, when Regeneron’s stock price was approximately $165 per share. It is reported that Sanofi currently holds about 23.2 million shares of Regeneron (representing 20.6% of the company’s outstanding shares) and plans to publicly offer 12.8 million of these shares.Based on Monday’s closing price of $569.91, the value of Sanofi’s shares offered will exceed $7 billion. This will be the largest public stock offering in the healthcare industry on record.。

Regeneron also announced that, following the completion of the secondary offeringRepurchase approximately $5 billion worth of common stock directly from SanofiThe purchase price paid by Regeneron will be the net issuance price per share after deducting any discounts and commissions. The repurchase funds include $3.5 billion in cash and a fully committed $1.5 billion bridge financing provided by Goldman Sachs Bank USA.

Ultimately, Sanofi will retain 400,000 shares of Regeneron stock. Following this offering and Regeneron’s $5 billion share repurchase, Sanofi will sell all shares except those retained. Regeneron stated, “It will not receive any proceeds from the sale of shares in this offering. Sanofi wishes to grant the underwriters a 30-day option to purchase an additional 10% of the shares issued in the base offering.” The offering will be conducted simultaneously in the United States and globally.

This plan is also part of Sanofi’s strategic adjustment. In December 2019, the company announced that it would halt the development of new drugs for diabetes and heart disease, shifting its focus to more profitable areas such as oncology. Analysts at HSBC stated that pursuing transactions would be the fastest way for Sanofi to build a stable portfolio of anticancer drugs. Meanwhile, recovering capital by divesting equity investments will prepare Sanofi for further investment in rapidly growing fields like cancer treatment. The deal has also sparked market speculation that Sanofi may further buy back its 9.4% stake in L’Oréal.

Since 2003, the two companies have established a long-term collaboration, bringing five drugs to market, with additional candidates currently in clinical development, including for Covid-19. The parties are currently collaborating on the development of the anti-inflammatory drug Kevzara (sarilumab) for critically ill Covid-19 patients suffering from respiratory distress. Preliminary trial results indicate that Kevzara benefits only the most critically ill patients, with further results expected to be announced in June. Sanofi stated, “The registered stock offering and share repurchase will not have any impact on the ongoing collaboration between the two companies.”

In December 2019, the two companies announced a restructuring of their collaboration on the cholesterol-blocking agent Praluent and the arthritis drug Kevzara. Praluent, representing a breakthrough in their joint development of PCSK9 inhibitor lipid-lowering therapies, was expected to send shockwaves through the market but ultimately delivered disappointing post-launch performance. Revenue from the IL-6 inhibitor Kevzara has also been underwhelming. Currently, the PD-1 inhibitor Libtayo, used as a cancer therapy, stands as the most successful product of their partnership.

In this scenario, Sanofi has secured at least one groundbreaking drug from its years-long partnership, along with an investment yielding billions of dollars in returns. Thus, by any measure, Sanofi emerges as the winner.

Reference Sources:

1、After decoupling from Regeneron, Sanofi says it’s time to sell the $13B stake picked up in the marriage

2、Regeneron Announces Secondary Offering of its Common Stock Held by Sanofi and $5 Billion Stock Repurchase