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Recently, Sanofi (SNY - Analyst Report) received encouraging news with the European Commission (EC) approving its diabetes candidate, Lyxumia (lixisenatide). The EC cleared Lyxumia for glycemic control in patients, above 18 years of age, suffering from type II diabetes. The EC approved Lyxumia in combination with oral glucose-lowering medicinal products and/or basal insulin when these, together with lifestyle management, fail to provide adequate glycemic control.

The EC approved Lyxumia on the basis of the GetGoal phase III program. The GetGoal program, initiated in May 2008, consisted of 11 trials which enrolled more than 5,000 type II diabetes patients. Lyxumia demonstrated a promising efficacy and tolerability profile in the trials. Sanofi in-licensed Lyxumia from Zealand Pharma.

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

We note that Sanofi is looking to combat the generic threat confronting most of its key drugs by signing deals, making acquisitions and introducing new products. The approval of Lyxumia encouraging as the type II diabetes market offers significant commercial potential.  

We believe that the pipeline at Sanofi must deliver to combat the generic threat. We are pleased with Sanofi’s efforts to develop its pipeline. Over the last few months, several of Sanofi’s pipeline candidates gained approval including the US approval of Aubagio (teriflunomide) for relapsing forms of multiple sclerosis (RMS) and the US and EU approval of Zaltrap (aflibercept) as a combination therapy for treatment-experienced patients suffering from metastatic colorectal cancer. We note that Sanofi has a worldwide collaboration with Regeneron Pharmaceuticals Inc. (REGN - Analyst Report) for the development and commercialization of Zaltrap.

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

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