The headquarters of Sanofi SA in Paris. MUST CREDIT: Nathan Laine/Bloomberg
Sanofi agreed to buy Dynavax Technologies Corp. for about $2.2 billion, as it seeks to expand a vaccines business currently anchored by its flu shot franchise.
The French drugmaker will pay $15.50 a share in cash for Dynavax, 39% above the Emeryville, Calif.-based firm's closing price Tuesday. The statement on Wednesday came minutes after Sanofi said the U.S. Food and Drug Administration had surprisingly rejected its experimental multiple sclerosis drug tolebrutinib.
Shares of Sanofi slipped as much as 1.5% in Paris before paring the loss. They were down about 12% this year through Tuesday's close. Dynavax shares surged 39% in New York, the most in four years, before closing Wednesday trading with a 38.2% rise.
Sanofi Chief Executive Officer Paul Hudson is investing heavily in research and development and bolt-on mergers and acquisitions deals as he seeks alternative revenue streams to replace top-selling medicine Dupixent, which is facing a patent cliff.
The Dynavax deal gives Sanofi a hepatitis B vaccine that's already marketed in the U.S., as well as an experimental shingles inoculation currently in early human testing. This will enhance its presence in adult immunization, according to the company, whose vaccine and immunization portfolio spans influenza, respiratory syncytial virus, meningitis, pertussis and more.
A shingles vaccines has proven to be a significant revenue booster for rival GSK Plc. Studies have also linked the shot to a reduction in dementia.
Still, Sanofi has inked the deal despite difficulties in the global vaccination market. The company's flu vaccine sales fell last quarter, with more price competition in Europe and lower vaccination rates in the U.S., where Health and Human Services Secretary Robert F. Kennedy Jr. is upending longstanding vaccine guidance -- though many changes have focused on childhood shots.
Chief Financial Officer Francois-Xavier Roger said at Sanofi's latest results that vaccination rates were declining globally. "It probably is linked to some fatigue post-covid around vaccinations. There might be a little bit of a negative feeling about vaccines overall as well," he said.
Dynavax's pipeline of experimental vaccines also includes a lyme disease shot and one for the plague. The company was created under a different name in the 1990s and went public in 2004.
Meanwhile the FDA's rejection of tolebrutinib is a significant blow for a drug Bloomberg Intelligence had pegged at having the potential for $1.7 billion in peak annual sales. Sanofi had already faced hurdles developing the medicine, with trials pointing to a risk of liver injury.
Sanofi is looking for alternative revenue streams to replace its top-selling medicine Dupixent, which is facing a patent cliff.
With Hudson investing so heavily in R&D, the tolebrutinib setback will likely raise questions about management credibility, Jefferies analyst Michael Leuchten said in a note.
The FDA's decision comes days after Sanofi said the review will likely be delayed, with further guidance from regulators expected in early 2026.
The company is "very disappointed by the FDA's action," Houman Ashrafian, head of research & development at Sanofi, said in a statement, calling the decision "a significant and meaningful change in direction from the feedback the agency previously provided to Sanofi."
Multiple sclerosis is a complex condition that affects the brain and spinal cord, which results in symptoms such as muscle cramps, numbness and fatigue. There are several types of MS, the most common involving periods of sudden worsening followed by periods of recovery.
One type, called secondary progressive MS, which involves which involves a steady increase in disability, is what Sanofi's FDA application targets.
There are currently few treatments for this type of MS. Sanofi said it is committed to working with the FDA to find a path forward for the drug.
"It now looks increasingly unlikely that tolebrutinib will reach the market in the U.S.," JPMorgan Chase & Co. analyst Richard Vosser said in a note. Even so, the market has "already discounted the majority of value for the product," given the previous setbacks, he wrote.
Information for this article was contributed by Lisa Pham, Subrat Patnaik and Phil Serafino of Bloomberg (WPNS).