Sanofi dumps Principia Biopharma's San Francisco labs with plans to immediately cut 38 jobs

Sanofi’s Principia Biopharma is taking a one-two punch. Just days after one of the subsidiary's key BTK inhibitors crashed out of clinical testing, Sanofi has now disclosed it will wind down Principia’s San Francisco laboratories and lay off roughly three dozen employees in the process.

The 38 layoffs—first filed with the state in late August—will take effect on Oct. 8, according to a California WARN notice. According to Sanofi, the company has had to rethink the plan for Principia’s South San Francisco site after experiencing high turnover rates, a spokesperson said. 

Sanofi now plans to wind down the site’s drug discovery research activities and will shutter its laboratories by the end of this year, the company said, adding that the site will be vacated entirely by April 2022. 

RELATED: Sanofi's BTK inhibitor flunks phase 3 autoimmune trial, delivering blow to $3.7B biotech bet

“This was a difficult decision, and we plan to undertake this process responsibly and assist our employees with this transition,” Sanofi said in an emailed statement to Fierce Biotech. Several Principia employees have been offered the option to continue with Sanofi as remote workers or apply for positions outside the Bay area, the company said. 

The move comes roughly a year after Sanofi dished out $3.68 billion to acquire Principia, marking the sixth largest biopharma buyout in 2020. 

At the time, Sanofi wagered that taking full control of Principia would make commercialization of its leading meds more efficient and eliminate future royalty payments. Back in 2017, Sanofi committed just over $800 million to license Principia’s preclinical multiple sclerosis (MS) candidate, known as SAR442168. 

But instead of finishing out those payments, Sanofi moved to take on the whole company after SAR442168 posted promising phase 2 data linking the drug to relative reductions in new lesions. Sanofi has since funneled that candidate through four phase 3 trials, which are still ongoing. 

But the acquisition came with ardent pushback from Sahm Adrangi's Kerrisdale Capital, who argued Principia’s pipeline was “worthless” given that SAR442168 had “a mode of action that seems irrelevant to the etiology of MS.” 

RELATED: Sanofi goes all in on Principia, paying $3.7B to take full control of late-phase MS asset

Less than a week ago, another one of Principia’s promising pipeline meds, known as rilzabrutinib, failed its first major late-stage test for patients living with the rare autoimmune skin disease pemphigus. The therapy is designed to target BTK, a method that has borne fruit for B-cell cancers but is less than certain for autoimmune diseases such as pemphigus and MS. 

Sanofi hasn’t given up on rilzabrutinib just yet and plans to continue trials in the rare blood disorder immune thrombocytopenia and the autoimmune condition IgG4-related disease.

The French pharma has been on a busy M&A trail over the last year, snapping up Translate Bio in an about-face $3.2 billion deal in August.