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Positive Phase III Data on Sanofi's U300

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Sanofi (SNY - Free Report) recently announced encouraging data from two phase III studies (EDITION I and EDITION II) evaluating its new insulin candidate, U300. Detailed data from both the studies are expected by the end of 2013.

The multi-center and open label EDITION I (n = 807) study compared the safety and efficacy of U300 and Lantus, another diabetes drug at Sanofi, in patients with type II diabetes using basal and mealtime insulin. U300 demonstrated similar blood sugar control with fewer night-time low blood sugar events as compared to Lantus.

Top-line data from the EDITION II study (n = 811) assessed the safety and efficacy of U300 versus Lantus in patients with type II diabetes using basal and oral antidiabetic treatments. Data from the study revealed that U300 was similar in efficacy to Lantus in terms of blood sugar reduction. However, fewer patients experienced night-time low blood sugar events with U300 as compared to Lantus.

Lantus, which generated sales of €1.3 billion in the first quarter of 2013, is one of the top-selling drugs at Sanofi. U300 on approval is expected to further strengthen Sanofi’s product portfolio. Although Sanofi holds a strong position in the diabetes market, we note that the market is highly crowded with players like Novo Nordisk (NVO - Free Report) , Eli Lilly and Company (LLY - Free Report) and AstraZeneca (AZN - Free Report) .

Sanofi carries a Zacks Rank #3 (Hold). We remain concerned about generic erosion confronting most of Sanofi’s key drugs including Plavix, Avapro, Lovenox, Taxotere, Eloxatin and Xatral. The genericization of Avapro and Plavix is expected to negatively impact Sanofi’s business net income by around €800 million in the first half of 2013.

Sanofi is looking to combat headwinds by containing operating costs. Additionally, new product launches should make significant revenue contributions in the upcoming quarters.

Companies that currently look attractive include Novo Nordisk, carrying a Zacks Rank #2 (Buy).

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