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Sanofi’s (SNY - Analyst Report) vaccines division, Sanofi Pasteur, recently announced the launch of Sklice (ivermectin) Lotion, 0.5% in the US.

The Food and Drug Administration (FDA) had approved the product for the topical treatment of head lice in patients aged 6 months and above in February 2012. Sklice was added to Sanofi’s portfolio after the acquisition of Topaz Pharmaceuticals in October 2011.

Approval was granted on the basis of data from two identical multi-center, double-blind and placebo-controlled phase III trials evaluating the efficacy and safety of Sklice. The two phase III studies enrolled 781 patients in total.

Sklice demonstrated an impressive efficacy profile with a significantly higher number of patients in the Sklice arm being louse-free as compared to the placebo arm. Sklice was also found to be well tolerated and less than 1% of patients experienced side effects like conjunctivitis, ocular hyperemia, eye irritation, dandruff, dry skin and skin-burning sensation.

As per Centers for Disease Control and Prevention (CDC) data, head lice infests approximately 6 to 12 million children between 3 to 11 years annually. The total cost of the disease (both direct and indirect) is anticipated to be around $1 billion. Currently available head lice topical treatments include Taro Pharmaceuticals’ Ovide (malathion) and Pernix Therapeutics and ParaPRO’s Natroba (spinosad).

Our Recommendation

We expect Sanofi to contain operating costs in order to increase earnings in the face of weakening sales of some key drugs. We also expect the company to pursue bolt on acquisitions. We are pleased with the company’s efforts to develop its pipeline.

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

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