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Sanofi (SNY - Analyst Report) recently announced its decision to withdraw the new drug application (NDA) for lixisenatide in the U.S. Sanofi is looking to get the drug approved for the treatment of adults with type II diabetes.

The NDA included early interim data from the ongoing ELIXA cardiovascular (CV) outcomes study. The company believes that potential public disclosure will hamper the integrity of the ELIXA CV study, which is expected to be complete in the next 15 months. Sanofi intends to resubmit the NDA for lixisenatide in 2015, post completion of the ELIXA CV study.

The U.S. Food and Drug Administration (FDA) had accepted the lixisenatide NDA in February this year. Sanofi in-licensed lixisenatide from Zealand Pharma.

We remind investors that the European Commission (EC) cleared lixisenatide (trade name: Lyxumia in EU) for glycemic control in adults suffering from type II diabetes in Feb 2013. The EC approved Lyxumia in combination with oral glucose-lowering medicinal products and/or basal insulin when these, in combination with lifestyle management, did not provide adequate glycemic control.

We are disappointed with the withdrawal of the NDA as approval of lixisenatide in the U.S. would not only have boosted the drug’s sales potential but also strengthened Sanofi’s diabetes portfolio further, which already includes blockbuster product, Lantus. Although Sanofi holds a strong position in the diabetes market, we note that the market is highly crowded with players like Novo Nordisk (NVO - Analyst Report), Eli Lilly and Company (LLY - Analyst Report) and AstraZeneca (AZN - Analyst Report).

Sanofi carries a Zacks Rank #5 (Strong Sell). We are concerned about generic erosion confronting most of Sanofi’s key drugs. Additionally, recent pipeline failures (oncology candidate - iniparib and anticoagulant - otamixaban) have put immense pressure on Sanofi’s pipeline.

Not all large-cap pharma companies are performing as badly as Sanofi. Novo Nordisk is well placed with a Zacks Rank #2 (Buy).

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