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Sanofi SA (ADR) (SNY), Regeneron Pharmaceuticals Inc (REGN): Getting Closer

When you have $5.5 billion in your wallet, it’s understandable if there’s a hankering to spend some of it.

French drugmaker Sanofi SA (ADR) (NYSE:SNY) counted that much money in its coffers as of the end of June, including cash, cash equivalents, and short-term investments. Last week, the company’s CEO hinted that it might spend some of its cash to buy a bigger stake of a fast-growing biotech. Rumors from another potential biotech buyout also mentioned Sanofi. Here’s the scoop on these two biotechs catching the big pharmaceutical’s eye.

Getting closer
Sanofi has enjoyed a close relationship with Regeneron Pharmaceuticals Inc (NASDAQ:REGN) for years. Aventis collaborated with Regeneron before it was acquired by Sanofi SA (ADR) (NYSE:SNY) in 2004. The merged company continued that tight relationship, gaining FDA approval for colorectal cancer drug Zaltrap in 2012. Sanofi and Regeneron Pharmaceuticals Inc (NASDAQ:REGN) are also working together on developing a cholesterol drug.

Source: Sanofi.

In February of this year, Sanofi SA (ADR) (NYSE:SNY) announced that it planned to bump up its stake in Regeneron from around 16% to 30%. At that time, speculation mounted that the big drugmaker could be eyeing a hostile takeover of its smaller partner. Sanofi attempted to brush aside those rumors and didn’t take any immediate action on buying more shares.

Last Friday, though, CEO Chris Viehbacher again raised the prospect of increasing its ownership of Regeneron Pharmaceuticals Inc (NASDAQ:REGN) to the maximum 30% allowed under the two companies’ collaboration agreement. Viehbacher noted that the relationship had been “extremely productive.” However, he indicated that the timing on how quickly Sanofi SA (ADR) (NYSE:SNY) might move was not set in stone.

A rare deal?
Viehbacher didn’t comment on another possible buy for Sanofi, but plenty of others did. On Friday, Viropharma Inc (NASDAQ:VPHM) shares soared on news that the biotech might be up for sale. The two companies most often mentioned as potential buyers were Shire PLC (ADR) (NASDAQ:SHPG) and — you guessed it — Sanofi SA (ADR) (NYSE:SNY).

Viropharma Inc (NASDAQ:VPHM) currently markets a couple of drugs in the U.S. , but 88% of its total sales stems from Cinryze, which is used to treat hereditary angioedema, or HAE. This is a very rare genetic disease that occurs in fewer than one in 10,000 people.

Since its pickup of Genzyme in 2010, Sanofi SA (ADR) (NYSE:SNY) has become increasingly involved in developing drugs that target rare diseases. Viropharma Inc (NASDAQ:VPHM) could fit well into the French company’s strategic direction.

However, Shire might be an even better fit for ViroPharma. Shire PLC (ADR) (NASDAQ:SHPG) has an HAE drug, Firazyr, so it already claims a sales force ready to sell to that market. Because of this synergy, Shire PLC (ADR) (NASDAQ:SHPG) could be more likely to offer more for ViroPharma. Sanofi has a significantly larger cash stockpile, though.

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