Positive Data on Sanofi's Lantus

Sanofi ( SNY - Analyst Report ) recently presented encouraging data on Lantus (insulin glargine injection) at the American Diabetes Association. The online journal, The Lancet, also published the results.

The company presented data from the EASIE (Evaluation of Insulin Glargine Versus Sitagliptin in Insulin-Naïve Patients) study in insulin-naïve type II diabetes patients whose disease was not sufficiently controlled by metformin. The 6-month, open-label, randomized study evaluated Lantus versus Merck’s ( MRK - Analyst Report ) Januvia (sitagliptin), in combination with metformin. The drugs were compared on the basis of reduction in HbA1c, an indicator of glucose level in the blood.

Results showed that the reduction in HbA1c for Lantus and Januvia was 1.7% and 1.1%, respectively. Additionally, glycemic control was higher in patients receiving Lantus as compared to Januvia.

Lantus, which generated sales of €1.1 billion in the first quarter of 2012, is one of the most commonly prescribed insulins worldwide. We believe data from this study will encourage physicians to prescribe Lantus at an early stage of type II diabetes in combination with metformin therapy.

Lantus is also available as a pre-filled insulin injection pen, Lantus SoloSTAR. In the US, Lantus SoloSTAR accounts for 51.1% of Lantus sales. A few days ago, the company inaugurated a plant in Beijing for assembling and packaging the product. Sanofi is planning a $90 million investment in China to increase its share of the Chinese diabetes market.

Our Recommendation

We expect Sanofi to continue to contain operating costs in order to increase earnings in the face of weakening sales of some of its biggest products. We also expect the company to pursue bolt on acquisitions.

We currently have a Neutral recommendation on Sanofi. The stock carries a Zacks #3 Rank (Hold rating) in the short run.