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Can playing to win after COVID drag lift Sanofi’s share price?

The Sanofi [SNY] share price is continuing on a sharp downward trajectory, despite a wave of recent acquisitions of innovative biotech firms and more positive news on its COVID-19 vaccine.

Shares in the French pharma giant have dropped from $48.06 to $47.99 at close 8 December, after announcing on 1 December that it is buying Austrian biotech group Origimm, which specialises in developing vaccines for skin diseases, such as acne, with a jab already in clinical studies. The acquisition of Origimm further broadens our vaccines R&D pipeline with a first vaccine candidate against acne, a high medical need for millions of teenagers and adults,” said Thomas Triomphe, executive vice president and global head of Sanofi Pasteur.

 

 

 

It marked the latest stage in the groups Play to Win strategy to “pursue growth opportunities and build an industry-leading vaccines pipeline”. Sanofi is seeking to restructure around three global business units: specialty care, including immunology, neurology and oncology; vaccines; and general medicines for the treatment of diabetes and cardiovascular disease, which it’s better known for.

This approach has included the $180m mid-November investment in French startup Owkin, whose artificial intelligence algorithms seek to improve the research and development of new cures against cancer. Sanofi has taken a 10-15% stake in the group.

$180million

Valuation of Sanofi's mid-November investment in AI startup Owkin

 

It also paid $1.9bn to buy US biotech group Kadmon [KDMN], which makes the chronic graft-versus-host disease drug Rezurock. In addition, Sanofi is partnering with Chinese tech giant Baidu [BIDU] to integrate its product design pipeline with the firms mRNA design optimisation platform LinearDesign.

 

Sanofi looks forward

At a Vaccines Investor Event on 1 December, Sanofi confirmed its sales guidance of mid-to-high single-digit CAGR growth between 2018 and 2025 for its vaccines business.

It sees sustained growth in areas such as flu – the market is expected to be worth €15bn by 2030 – as well as meningitis, polio and boosters.

The pandemic has elevated the crucial role of vaccines in public health, as evidenced by the strong demand for our differentiated flu vaccines, which provide protection beyond flu by reducing the risk of severe consequences of influenza,” said Triomphe. As a world leader in vaccines, we are uniquely positioned to unlock the true potential of vaccines by moving fast towards next-generation mRNA and other technologies applicable to the prevention of disease.”

Sanofi already has vaccines in the pipeline tackling illnesses including flu, meningitis and chlamydia.

“As a world leader in vaccines, we are uniquely positioned to unlock the true potential of vaccines by moving fast towards next-generation mRNA and other technologies applicable to the prevention of disease” - Executive vice president and global head of Sanofi Pasteur Thomas Triomphe

 

 

Sanofi’s COVID comeback

Sanofi has also made more positive noises about its COVD-19 vaccine, which is being developed with GlaxoSmithKline [GSK]. It was forced to delay production of the vaccine in late 2020 after disappointing trial results among the vulnerable elderly population.

The news battered its share price, which is up 2% over the last 12 months in comparison with successful vaccine rivals Pfizer [PFE] which has seen its share price rise 26% and Moderna [MRNA], which is up 67%.

However, there are expectations that the Sanofi vaccine could be ready by the end of this year meaning it may play a role as a booster. According to reports, trials suggest that its shot produces a strong immune reaction”.

 

What do analysts think about Sanofi?

Analysts are positive with a consensus outperform rating, according to MarketScreener.

Credit Suisse is one of those analysts particularly impressed by the groups vaccine investor meeting. The firm recently reiterated its ‘buy’ rating on the stock.

Analysts at Zacks says Sanofi is on a “strong footing" citing a healthy R&D pipeline and its and partner Regenerons [REGN] immunology drug Dupixent. It is racking up annual sales of €5bn with the potential to ramp up to €10bn.

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