French pharmaceutical firm Sanofi is exploring a potential acquisition of cancer drugmaker Mirati Therapeutics Inc., according to people familiar with the matter.
Mirati is in the process of rolling out its first product to patients, a lung-cancer drug called Krazati. Shares of the San Diego-based company surged 45% on Thursday following Bloomberg’s report on the deliberations, giving it a market value of $4.2 billion.
A deal for Mirati would further bolster Sanofi’s drug pipeline, helping the company to reduce its reliance on the blockbuster asthma medicine Dupixent. The company has narrowed a trading discount to its big European pharma peers in recent years, thanks to Dupixent’s explosive growth and the introduction of new drugs for hemophilia and respiratory syncytial virus in young children.
Sanofi’s backing would also help Mirati commercialize Krazati — a second-line treatment for a type of lung cancer in which the the KRAS gene has mutated — and to fund treatment and further studies. Mirati received accelerated approval from the Food and Drug Administration for the drug in December, though European regulators have so far withheld support for the medicine.
Deliberations are ongoing and there’s no certainty they will result in an agreement, said the people, asking not to be identified because the information is private. Mirati could also attract interest from other suitors, the people said.
Representatives for Mirati and Sanofi declined to comment on market rumors.
Sanofi has occasionally been criticized for becoming too dependent on Dupixent for growth. It’s added other experimental medicines to its pipeline with a string of small and mid-sized acquisitions and partnerships, including two deals this week for treatments for bowel disease and an invasive form of a digestive pathogen.
Sanofi probably has about €44 billion ($46.4 billion) available for deals through 2024 before it would breach a debt threshold, Luisa Hector, an analyst at Berenberg, said in a note last month.
It’s not, however, under lots of pressure to spend that money fast. Sanofi faces little in the way of patent expirations through the end of this decade. That’s allowed it to show a willingness for big deals, but also to remain patient. Last year, for instance, it considered an acquisition of Horizon Therapeutics Plc, but backed out after Amgen Inc. offered $28 billion for the company.
Sanofi shares were little changed at mid-morning on Friday in Paris. Mirati’s 45% US gain on Thursday was its biggest since 2017. Through Wednesday, the stock had fallen 37% in the prior 12 months.
Shares of Tango Therapeutics Inc., which is developing similar cancer drug candidates, closed up almost 14% on Thursday. The Cambridge, Massachusetts-based company has a market value of about $1.2 billion.
Since August, Mirati’s chief executive and chief financial officers have stepped down. Bloomberg News reported last year that it was drawing takeover interest from large pharmaceutical companies.
--With assistance from Tim Loh.
(Updates with details on Sanofi deliberations from fifth paragraph)
Author: Michelle F. Davis, Dinesh Nair and Albertina Torsoli
