Sanofi could have two new drugs on the market for the treatment of multiple sclerosis by the end of the year. The company announced June 12 that its Genzyme subsidiary has submitted regulatory filings for Lemtrada (alemtuzumab) for the treatment of relapsing forms of MS in the U.S. and Europe. In the U.S., the company is seeking a six-month priority review, which would position the drug for a potential approval and launch before the end of the year.

Lemtrada is one of two MS drugs Sanofi is planning to launch in the near-term with an eye on building a leadership position in the space Also see "Sanofi Sets Sights On Multiple Sclerosis Leadership" - Pink Sheet, 30 April, 2012.. FDA action on Aubagio (teriflunomide) should be approaching any day. Sanofi hasn’t confirmed the drug’s action date, but the company submitted the application in August 2011, positioning it for FDA action in June if granted a standard 10-month regulatory review ([A#111025d1]).

Sanofi expects to hit two spectrums of the disease with Aubagio and Lemtrada. Aubagio is an oral pill that appears to have a relatively benign side effect profile but has also demonstrated modest efficacy in clinical trials. Sanofi expects the drug will be a convenient option for patients with less severe disease. Lemtrada, meanwhile is an intravenously administered drug that has demonstrated notable efficacy in clinical trials – including superior benefits on relapse and disability against Merck KGAA’s Rebif (interferon beta-1a) – but also has a serious side effect profile, which could limit its use to more seriously affected patients Also see "Sanofi/Genzyme MS Drug Lemtrada Scores High Against Rebif" - Pink Sheet, 24 April, 2012..

The Lemtrada regulatory filing means there are now three drugs pending at FDA for MS. The third is Biogen Inc.’s BG-12 (dimethyl fumarate), another potential oral option that appears to have robust efficacy. Biogen submitted the regulatory application in February. If approved, Aubagio and BG-12 would join Novartis AG’s Gilenya (fingolimod) as the only oral disease-modifying drugs for relapsing remitting MS. But oral drugs may experience pressure from payers, who want to see more than just convenience and adherence benefits over older injectable drugs. Payers are increasingly applying more cost management tools across the category, fueled by rising drug prices Also see "MS Boon: Many Drugs On The Way, But Will Payors Swallow The Cost?" - In Vivo, 23 April, 2012..

The Money Riding On Lemtrada

Sanofi gained Lemtrada through the acquisition of Genzyme in 2011. The drug became the center of attention at the time of the acquisition because Sanofi and Genzyme couldn’t agree on a fair valuation for the company, and the biggest discrepancy was Lemtrada’s eventual sales potential. Phase III clinical trial results for the drug hadn’t yet read out and Sanofi hedged peak sales at around $700 million, while Genzyme guided to fortunes as high as $3.5 billion. Ultimately, the companies negotiated the sale of Genzyme for $20.1 billion plus a six-part contingent value right, mainly linked to the approval and sales performance of Lemtrada Also see "Complex CVR Will Enable Genzyme And Sanofi Shareholders To Share Potential Upside For Lemtrada" - Pink Sheet, 21 February, 2011..

If Lemtrada is approved in a timely manner, Genzyme is on track to meet the first of the CVR milestones involving Lemtrada. CVR shareholders stand to receive $1 per share upon regulatory approval.

The full potential value of the CVR, which is traded publicly on NASDAQ under the stock symbol GCVRZ, was $14 per share based on Lemtrada milestones and production goals for other Genzyme drugs. However, shareholders missed the first $1 per share milestone in 2011, which was linked to production levels of two different drugs, Cerezyme (imiglucerase) and Fabrazyme (algalsidase beta). The other $13 per share are tied to Lemtrada approval and sales. After the approval milestone, the rest are linked to sales of the drug, ranging from $2 per share if Lemtrada sales reach $400 million during a specified period (around 2014) to $4 per share upon achievement of worldwide sales totaling $2.3 billion during a four-calendar quarter from 2015 to 2020.

The CVR opened March 31, 2011 at $2.20. It opened June 11 at $1.36. Most are now held by risk arbitrageurs who trade special situations and play off the small fluctuations in trading price while awaiting the longer term payoff, which won’t be known for several years.

The U.S. regulatory filing for Lemtrada is an sBLA, because alemtuzumab is already approved and marketed in the U.S. for B-cell chronic lymphocytic leukemia under the brand name Campath. The monoclonal antibody targets CD52, a protein found on T and B cells. The drug is believed to work in MS by depleting the T and B cells thought to cause the damaging inflammatory process.

Genzyme acquired rights to alemtuzumab from Bayer HealthCare LLC in 2009. Bayer retains the right to co-promote globally and would receive contingent payments based on sales revenue. [See Deal].

Sanofi Takes Another Step Forward In MS, Files Lemtrada NDA

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