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Recently Sanofi (SNY - Analyst Report) and partner Regeneron Pharmaceuticals Inc. (REGN - Analyst Report) received encouraging news with the European Commission (EC) approving their oncology therapy, Zaltrap (aflibercept). The EC cleared Zaltrap as a combination therapy (with 5-fluorouracil, leucovorin, irinotecan – FOLFIRI) for treating patients suffering from metastatic colorectal cancer who are either resistant or whose disease has progressed following treatment with an oxaliplatin-containing regimen.

The approval did not come as a surprise as, in Nov 2012, the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) had recommended the approval of Zaltrap for the indication.

The EC approved Zaltrap on the basis of data from the phase III VELOUR study (n=1,226). The multinational, randomized, double-blind phase III study evaluated FOLFIRI in combination with either Zaltrap or placebo. Significant improvement in median survival was observed in the Zaltrap arm. Moreover, Zaltrap in combination with FOLFIRI demonstrated a statistically significant improvement in progression-free survival (PFS) and overall response rate (ORR) compared to placebo with FOLFIRI.

We note that Zaltrap is already approved in the US for the above indication. The US Food and Drug Administration (FDA) approved Zaltrap for the indication in Aug last year. Approval of Zaltrap in the EU will boost the drug’s sales potential.

We believe the pipeline at Sanofi must deliver since many of its key products are facing declining sales due to generic competition. Sanofi is trying to combat the generic threat by introducing new products, cutting costs and pursuing bolt-on acquisitions.

Sanofi carries a Zacks Rank #2 (Buy) in the short run. Valeant Pharma (VRX - Snapshot Report) and Novo Nordisk (NVO - Analyst Report) are examples of pharma stocks which are more favorably placed. Both companies carry a Zacks Rank #1 (Strong Buy).

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