Sanofi: A Long-Term Winner On These FDA Approvals

Sanofi (SNY) researches, develops, and manufactures pharmaceutical and healthcare products. Sanofi’s headquarters is in Paris, France. The company has a market cap of $115 billion, and its stock price is around $44.

On September 12th Sanofi got what some would call great news. It was announced that Sanofi’s multiple sclerosis drug Aubagio had been approved by the Food and Drug Administration (FDA). Aubagio is an oral drug medication that slows the progression of multiple sclerosis. Some might consider this to be great news because it will allow Sanofi to enter into the $12 billion market for the treatment of multiple sclerosis. But, since the announcement, Sanofi’s stock price has increased by less than 1%. That seems unusual because a drug-maker’s stock price would usually rally after an important drug received FDA approval.

I believe the reason that Sanofi’s stock did not rally is because Aubagio faces so much competition. For instance, Novartis (NVS) has Gilenya which is also an oral treatment that slows the progression of multiple sclerosis. But, while “Aubagio might be preferred over Gilenya given the safety issues Gilenya has had on the efficacy side”, it doesn’t appear to be that great of a drug. In a clinical trial, Aubagio failed to beat Merck (MRK) and Pfizer’s (PFE) co-marketed injectable multiple sclerosis treatment Rebif. Aubagio also faces the new drug dilemma that results when doctors take a wait and see approach towards prescribing new drugs, when they only have limited advantages over pre-existing drugs. To continue reading, click here.