Sanofi, UCB team up in $138M deal aimed at tackling biologic blockbusters

Sanofi is joining forces with UCB to study new small-molecule approaches to treating inflammatory conditions like arthritis, looking for an easier form of administration to some of the blockbuster injected biologics that dominate the field. The pharma giant ($SNY) is ready to spend more than $138 million for a package of milestones and an upfront payment to UCB in exchange for the partnering arrangement with its NewMedicines research arm.

In addition, Sanofi and UCB have agreed to split the research costs related to their joint work.

The announcement is light on details and heavy on Sanofi's vows of devotion to patients. But the deal fits neatly into Sanofi's current R&D focus, looking outside the company to access innovation. Regeneron ($REGN) currently is responsible for work on a slate of partnered therapies that represent a big part of Sanofi's hopes on new product development. The company's internal R&D effort has been a considerable disappointment in recent years. The Belgian drugmaker UCB, meanwhile, has been working its way around the patent cliff, looking to launch new products as old ones lose patent protection.

Ismail Kola, president of UCB NewMedicines

While the specific target is being kept under wraps, the stakes could be high. The top three rheumatoid arthritis drugs--market leader Humira, Enbrel and Remicade--brought in close to $14 billion for RA alone last year. And analysts are comfortable that they can keep churning out the big bucks with these biologics for some years to come--unless someone can come along to steal the show. An oral therapy that proves just as effective would have a shot at that.

"We partner Sanofi's significant expertise, strong capabilities and resources with UCB's cutting-edge research skills and breakthrough innovations. Together we can maximize the opportunity to treat diseases currently treated by biologic agents with small molecules...," says Ismail Kola, the president of UCB NewMedicines, in a statement. 

- here's the press release