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Sanofi's Diabetes Drug Combination Wins FDA Panel Backing

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Positive news flowed in for Sanofi SNY when the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee (EMDAC) voted in favor (12 to 2) of an approval of the company’s new drug application for the fixed-ratio combination of its diabetes drugs – Lantus (basal insulin glargine, 100 units/mL) and Lyxumia (GLP-1 receptor agonist, lixisenatide) – for the treatment of type II diabetes in adults.

The recommendation came as a surprise given the concerns raised in the briefing documents released by the FDA ahead of the panel meeting (read more: Sanofi Diabetes Drugs Briefing Documents Raise Concerns). Nevertheless, the EMDAC’s opinion will now be reviewed by the FDA, with a final response expected in Aug 2016. With the panel in favor of approving the fixed-ratio combination, we believe chances of gaining an FDA approval are high.

The company submitted a regulatory application for the combination in the EU in Mar 2016. Meanwhile, a final decision from the FDA regarding Lyxumia’s approval status is expected in Jul 2016. We note that Lyxumia is already approved in the EU.

Sanofi’s Diabetes segment has been under pressure of late, with Lantus facing pricing pressure in the U.S., and biosimilar competition in the EU and Japan. The company expects global Diabetes sales to decline 4–8% annually over the 2015–2018 time frame.

Novo Nordisk A/S NVO is also looking to get an FDA approval for its combination treatment, IDegLira, for the treatment of adults with type II diabetes. The company has received a favorable opinion from the EMDAC. IDegLira is a once-daily, fixed combination of Tresiba (insulin degludec) and Victoza (liraglutide).

Update on the Medivation Takeover

Sanofi remains focused on acquiring Medivation, Inc. MDVN even after the latter rejected an unsolicited offer of $52.50 per share (approximately $9.3 billion) in cash late last month, citing that it significantly undervalued the company.

In a recent development, Sanofi announced that it has filed preliminary consent solicitation materials with the U.S. Securities and Exchange Commission (SEC), seeking approval to remove and replace each member of Medivation’s board of directors with candidates who will be open to this transaction.

Following the SEC approval, Sanofi will make the definitive consent solicitation statement available to Medivation shareholders, so that they may begin delivering written consents to Sanofi’s proposal.

However, Medivation has urged its shareholders to thwart Sanofi's efforts to replace the company's entire board of directors and expects to file consent revocation materials with the SEC promptly.

While speculations are rife about other companies being interested in acquiring Medivation, Sanofi was the only one to make an official proposal.

We expect investors focus to remain on further updates on this transaction.

Sanofi is a Zacks Rank #2 (Buy) stock. Bristol-Myers Squibb Company (BMY - Free Report) is another favorably ranked stock in the health care sector, sporting a Zacks Rank #1 (Strong Buy).

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