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Sanofi settles Lemtrada dispute with Genzyme investors for $315m

The MS drug has been in decline amid increased market competition

Genzyme building

After years of legal wrangling, Sanofi has agreed to pay a $315m settlement to Genzyme shareholders who claim it deliberately put the brakes on a multiple sclerosis drug.

The dispute centres on Lemtrada (alemtuzumab) and specifically the regulatory and sales milestone payments that were due Genzyme shareholders as part of Sanofi’s $20bn takeover of Genzyme in 2011, when the drug was still in development.

The shareholders claimed in their complaint that Sanofi slowed down the development and roll-out of Lemtrada to reduce the amount it had to pay out.

Up to $3.8bn in contingent value rights (CVRs) – a mechanism used to set a value for an asset if two parties can’t agree on a figure – were on the table under the original terms of the deal. However, the go-slow meant the payout was reduced by $708m, the shareholders alleged in a lawsuit filed in 2015.

When Sanofi tabled its bid for Genzyme the two companies couldn’t agree a value for Lemtrada, so Sanofi agreed to add one Nasdaq-listed CVR – linked to Lemtrada – for every Genzyme share in the deal.

It also pledged to take 'diligent effort' to get Lemtrada through development and onto the market quickly. Lemtrada was eventually approved in November 2014, several months too late for the CVR deadline after being initially rejected by the FDA.

At the time, Sanofi was developing its own MS drug called Aubagio (teriflunomide), and the 2015 lawsuit alleged that the company decided to focus its attention on a drug that didn’t come with the additional baggage of a $3.8bn in pay outs and so allowed it to keep 100% of the profits.

It also claimed the company didn’t make the effort required for Lemtrada to reach its sales targets. The drug did go on to achieve blockbuster sales but is now in decline, making a little under $250m in the first nine months of 2019 amid increased competition in the MS market. Its use was restricted on safety concerns in Europe earlier this year.

The case has finally come to a close, with Sanofi agreeing to make the $315m settlement payment in return for the CVRs being de-listed from the Nasdaq, without admitting any wrongdoing.

Article by
Phil Taylor

4th November 2019

From: Sales

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