Sanofi's move to acquire Regeneron shares triggers market buzz

Regeneron Pharmaceuticals ($REGN) notified investors today that its longtime partner Sanofi ($SNY) is moving to snap up a big chunk of its stock. But after triggering an instant frenzy of speculation among analysts and journalists that the pharma giant may be plotting a takeover attempt, Sanofi at least partially cooled off the buzz with a statement saying the pharma giant is happy with its existing relationship with the biotech company and needed this technical filing to gain the freedom to snap up shares under the Hart-Scott-Rodino antitrust act.

Captured by the intense spotlight of market attention, Regeneron shares spiked 5% this morning.

According to Regeneron, Sanofi intends to acquire common shares of Regeneron through open market purchases and direct purchases from shareholders which are in excess of the $500 million threshold set out under the Hart-Scott-Rodino antitrust act. Sanofi added that the pharma giant may buy even more shares in the future. And while it characterized its current relations with Regeneron as "happy," Sanofi also didn't rule out a possible takeover. 

"Sanofi needed to file as we could not buy any share without filing for HSR," noted Sanofi spokesman Jean-Marc Podvin in a statement to FierceBiotech. "We are very happy with the relationship with Regeneron, but needed this technical filing to get freedom to operate. Sanofi has the right to increase its shareholding in Regeneron. It may increase its holding over time subject to market conditions and within the terms of our partnership agreement. Sanofi has not announced any intention to take a controlling stake in Regeneron. Sanofi is bound by its 2007 Investor Agreement, which caps Sanofi's potential investment at 30% of Regeneron's common stock."

This is from Regeneron's statement:

"Pursuant to the Investor Agreement between Regeneron and Sanofi dated as of December 20, 2007, as amended, Sanofi is bound by certain 'standstill' provisions including an agreement not to acquire more than 30% of the outstanding shares of Regeneron's class A stock and common stock," Regeneron stated in its release. "Unless otherwise terminated pursuant to the Investor Agreement, these standstill provisions are in effect until the later of the fifth anniversaries of the expiration or earlier termination of the License and Collaboration Agreement, dated as of November 28, 2007, as amended, between Regeneron and Sanofi, and Regeneron's Collaboration Agreement dated as of September 5, 2003, as amended, with Aventis Pharmaceuticals Inc. (Sanofi's predecessor) for the development and commercialization of Zaltrap."

Add it all up and at least initially it looked suspiciously like an imminent hostile takeover move. And in this environment, with everyone waiting for the next big M&A step in biopharma, some analysts started to speculate that the game was on. That buzz quickly died down in the wake of Sanofi's remarks to the business press.

One reason for the intense market interest is the fact that Sanofi and Regeneron--which has garnered accolades for the successful launch of Eylea, partnered with Bayer--is that the two companies are also partnered on REGN727, a PCSK9 drug now the subject of a huge Phase III study for lowering levels of bad cholesterol, one of the Holy Grails in R&D.

- here's the press release

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