Sanofi is betting the genetic technology behind the fast development of two highly effective coronavirus shots last year will lead to vaccines for other viruses as well as drugs for diseases of the lung and liver, announcing Tuesday a deal to buy research partner Translate Bio for $3.2 billion.
The acquisition is the latest sign large pharmaceutical companies view messenger RNA, which BioNTech and Moderna used to create the COVID-19 vaccines now cleared for use in dozens of countries, as a crucial drugmaking platform.
Pfizer partnered with BioNTech early on in the pandemic and aims to develop mRNA vaccines for other infectious diseases, beginning with influenza. GlaxoSmithKline is working with German mRNA specialist CureVac, while the executive chairman of Novartis recently said his company was considering investment in the technology, too.
For Sanofi, buying Translate Bio follows a recent commitment to spend nearly $500 million a year on mRNA vaccine development through a new research unit that the French drugmaker plans to staff with 400 employees in the U.S. and France.
The Lexington, Massachusetts-based biotech is familiar to Sanofi, as the two companies having been partnered since 2018. Last year, they agreed to develop an experimental coronavirus vaccine that, after some delay, is now in a Phase 1/2 clinical trial. Initial results are expected by the end of September.
“A fully owned platform allows us to develop additional opportunities in the fast-evolving mRNA space,” Sanofi CEO Paul Hudson said in a Tuesday statement on the Translate deal. The deal will also help Sanofi, one of the world’s largest vaccine companies, keep pace with its competitors in a technology now considered likely to play a major role in future infectious disease research.
Under deal terms, Sanofi will pay $38 per Translate share, a premium of 30% over yesterday’s closing price and 56% over the volume-weighted average price of the past 60 days.
At $3.2 billion, the purchase price for Translate is far below the lofty market valuations commanded by Moderna, BioNTech and, to a lesser extent, CureVac. Moderna is now worth $140 billion, about $10 billion more than Sanofi despite the latter company’s international reach and dozens of approved medicines.
“It is difficult to determine what a fair takeout price for [Translate] is, in part because all of the mRNA platforms disconnected from fair value a long time ago, in our view,” wrote Geoffrey Porges, an analyst at SVB Leerink, in a note to clients.
Still, Porges described the price for Translate as “fair” given the early-stage nature of Translate’s research. The biotech pivoted to focus on messenger RNA development in 2017, when it acquired research around the technology from Shire and rebranded from RaNA Therapeutics to Translate Bio.
In addition to the coronavirus and influenza vaccines it’s developing with Sanofi, Translate is also working on using mRNA for drugs targeting cystic fibrosis and two other lung diseases. That work hit a setback in March, when treatment with Translate’s experimental cystic fibrosis drug failed to improve lung function in a small trial.
Sanofi’s vision for mRNA medicines goes beyond the rare diseases Translate has been targeting, however. The pharma paid $160 million in April to acquire a small biotech using mRNA to “reprogram” immune cells against cancer.
“Our goal is to unlock the potential of mRNA in other strategic areas such as immunology, oncology, and rare diseases in addition to vaccines,” Hudson said in Sanofi’s statement.
Sanofi expects the deal, which is contingent on support from shareholders owning at least a majority of Translate stock, to close in the third quarter. Ron Renaud, Translate’s CEO, and Baupost Group, Translate’s largest shareholder, have signed binding commitments in support of the deal.
Sanofi already owns approximately 6.5% of Translate as a result of past equity investments.