Deal Flow

Sanofi acquires Protein Sciences in $750 million deal

Deal opens door for Sanofi to expand into recombinant flu vaccine development – and to acquire an optimized vaccine for H7N9 flu now in clinical trials in Australia

Photo by Scott Kingsley

Manon Cox, the president and CEO of Protein Sciences, which Sanofi has agreed to acquire in a deal worth $750 million.

By Richard Asinof
Posted 7/17/17
The acquisition of Protein Sciences by Sanofi in a deal valued at $750 million provides the global biotech giant with the manufacturing capability to produce recombinant vaccines for influenza – and other infectious diseases. It positions EpiVax to work in collaboration with Sanofi on its optimized vaccine for H7N9 flu, now in clinical trials in Australia, a project that EpiVax and Protein Sciences have been working on together.
Now that Flublok will have the backing of Sanofi, will that change the equation on how the recombinant vaccine becomes part of the distribution channel at pharmacy chains, such as CVS, and big box stores? Will the R.I. Department of Health consider offering Flublok, which offers proven better protection to older adults, to the state’s elderly residents? Is there an opportunity for a new innovation campus in Rhode Island to focus on the development of recombinant vaccines employing the immuno-informatic tools developed by EpiVax? Will the state’s largest commercial insurer, Blue Cross & Blue Shield of Rhode Island, provide discount incentives toward the purchase of Flublok, based on its greater efficacy in protecting senior citizens from the flu – and, as a result, reducing medical costs?
With the approval by the FDA of the new gene therapy to treat leukemia, the opportunities to grow EpiVax Oncology, a spin-off of the privately held company, become much more intriguing.
EpiVax Oncology is working with researcher Sadhak Sengupta at Brown University to develop a potential vaccine for glioblastoma, a form of deadly brain cancer that is highly prevalent in Rhode Island’s population.
Sengupta will provide EpiVax with the genetic sequences of the glioblastoma tumors in a mouse model and, in turn, EpiVax would design a personalized cancer vaccine for the tumors in the mouse model, and then test it.
EpiVax recently received a $50,000 innovation voucher to support Sengupta’s research. If and when EpiVax, in collaboration with Sengupta, produce a proof on concept based upon the research, the firm will be looking at two potential vaccine platforms to license as part of the new company.

MERIDEN, Conn. – On July 11, the global biotech giant Sanofi announced that it had acquired the privately held Protein Sciences, the makers of Flublok, the only recombinant DNA flu vaccine approved by the FDA, for $650 million, with a potential additional $100 million in payment upon achieving certain milestones.

The move by Sanofi marks a paradigm shift by Big Pharma to invest in production of flu vaccines that do not rely on the traditional [and some would say technologically antiquated] egg-based manufacturing process.

“The acquisition of Protein Sciences will allow us to broaden our flu portfolio with the addition of a non-egg based vaccine,” said David Loew, Sanofi executive vice president and head of Sanofi Pasteur, Sanofi’s vaccines division, in the news release announcing the acquisition.

Sanofi is organized into five global business divisions: Diabetes and Cardiovascular, General Medicines and Emerging Markets, Sanofi Genzyme, Sanofi Pasteur and Consumer Healthcare, according to the company’s description. In turn, Sanofi Pasteur, the division under which Protein Sciences will operate, produces vaccines against seasonal influenza at four sites: Swiftwater [Pennsylvania, United States], Val de Reuil [France], Ocoyoacac [Mexico City, Mexico], and Shenzhen [China].

The deal, which requires FTC approval, could close as early as within the next six weeks, according to Manon Cox, president and CEO of Protein Sciences. “We’re going to get some help,” she said.

The move will also bring Sanofi’s marketing heft and expertise to improve Flublok’s access to the major distribution channels for flu shots – the consolidated big pharmacy chains.

Despite its FDA approval and Flublok’s clinically proven effectiveness against influenza, including a study recently published by the New England Journal of Medicine that found Protein Science’s recombinant flu vaccine “provided better protection” than standard flu vaccines among older adults, Protein Sciences had found it difficult to secure and maintain a distribution channel for its recombinant vaccine, given the increasing market consolidation of big pharmacy chains.

The market challenge
Because flu shots are considered preventive, most health insurers cover the costs, including Medicare Part B. In turn, big box stores and pharmacy chains often use the promotion of flu shots as a lure to encourage more traffic into the store, where customers can be enticed to buy other products, according to some market research reports.

At CVS Pharmacy and MinuteClinic, for instance, patients can get a flu shot any day of the week, including evenings and weekends, with no appointment needed, according to public relations officials at the firm.

One-third of all U.S. adults who have ever received a flu shot determine where to get vaccinated based on convenience, according to an annual flu survey by CVS.

The pricing strictures
In 2016, as reported in ConvergenceRI, “The lowest cost for a patient who does not have health insurance is $39.99 for what’s known as the Quadrivalent flu vaccine, which protects against four strains of the influenza virus that are circulating most seasons, including A H1N1, A H3N2 and two B viruses, according to a CVS public relations spokeswoman. A higher dose of the flu vaccine costs $64.99.

“The problem is that in the 2013-2014 and again in the 2015-16 flu seasons, the flu shots offered had low effectiveness in combating the flu strains that were circulating the globe, in part because of the antiquated way flu vaccines are manufactured, using a 70-year-old, egg-based technology, and in part because of the way that flu viruses rapidly morph, change and evolve, creating strains that exhibit low immunogenic properties, limiting a vaccine’s effectiveness.

“For the 2016-2017 flu season, similar questions have been raised about the effectiveness and limitations of the current flu vaccine to combat the H3N2 influenza virus by Nancy Cox, Ph.D., the former director of the Influenza Division at the Centers for Disease Control and Prevention, in her keynote address at the Options IX for the Control of Influenza conference, held in Chicago, from Aug. 24-26.”

Last year, despite the claims by CVS public relations officials that customers could purchase Flublok at its stores, ConvergenceRI tried to do so at a number of stores and was told by pharmacists that their CVS store did not stock Flublok.

Many big pharmacy chains, according to Cox, are stuck in their commitment to using cheaper vaccines – even if they are proven to be less effective than Flublok.

A second market conundrum is the way that many states, such as Rhode Island, purchase flu vaccines as part of a collaborative bulk purchasing effort, which often seeks to purchase the lowest cost flu vaccine, regardless of its potential efficacy.

Deep pockets
To succeed, you have to have someone behind you with deep pockets and a lot of money, to create pull in the market, Manon Cox, the president and CEO of Protein Sciences told ConvergenceRI.

“It is a very expensive business to be in,” Cox said. “We need to produce and sell a million doses to be able to sustain our operation.” After two seasons of big losses, she continued, “We recognized that we couldn’t go it alone. If we could have done it, we would have done it. We started to look for a marketing and sales partner and it became an acquisition.”

It is pretty tough to be sustainable, Cox continued. “I really worry about the vaccine market [to combat infectious diseases] in general,” she said, saying that many companies are choosing to focus on cancer vaccines.

“The good news is that our product, Flublok, will be made more available, and more people will be able to get it,” Cox said. The expectation is that Sanofi will expand the amount of jobs in Protein Sciences, she continued, which she said was a bit understaffed. “For our company, it is fantastic – it puts us back into a growth stage, from the tough times [over] the last three years.”

Positive reactions
Cox reported that she had received very positive reactions to the acquisition of Protein Sciences by Sanofi. “People are really happy that there is some deal-making in infectious disease vaccines,” she said, with the increased possibilities for exit strategies.

In addition, Cox said that she had received very positive responses about the acquisition from the federal Biomedical Advanced Research and Development Authority, or BARDA, which has invested financial resources in the recombinant work at Protein Sciences.

“The Sanofi stock has reacted positively, way more than the market is up,” Cox said. “Many people are thinking that this is a good move for Sanofi.” In the end, in terms of Protein Sciences, she continued, “You need money to develop products.”

A boost for EpiVax
Dr. Annie S. De Groot, the CEO and CSO at EpiVax, saw the acquisition of Protein Sciences as a very positive development.

“It’s good news for flu, because Protein Sciences already has a flu vaccine on the market – Flublok,” De Groot explained. “So the platform that Sanofi Pasteur is acquiring is in the clinic.”

Manon Cox has an article that just came out in the New England Journal of Medicine of the efficacy of her vaccine, De Groot continued.

“Sanofi is ‘diversifying’ because Flublok is an egg-free vaccine, meaning that the key protein of influenza virus, HA, is produced in cell culture as a recombinant protein,” De Groot said. “This will give Sanofi Pasteur enormous flexibility when it comes to producing vaccines quickly for pandemics.”

The move by Sanofi will enable the global biotech giant to combine the recombinant vaccine with its egg-derived vaccines, according to De Groot.

“What recombinant flu vaccines don’t have are all the other proteins that usually ‘ride long with’ the key antigen (HA),” she explained. “Egg-derived vaccines contain other influenza proteins that may boost the immune response. So Sanofi Pasteur may continue to produce a ‘split vaccine’ – which is egg-derived, for seasonal influenza [for which it already has large production facilities].”

Producing vaccines more quickly
Another advantage Sanofi will have acquired through its purchase of Protein Sciences is the capability to produce other recombinant protein-based vaccines more quickly, according to De Groot.

“Think Zika and Ebola,” De Groot said. “So Sanofi Pasteur can respond quickly to a ‘call’ for new vaccines. This is good for everyone, including and especially Sanofi-Pasteur.”

Another plus, De Groot continued, is that Sanofi Pasteur may also be able to produce specially designed vaccines for flu and for other pathogens, such as the COBRA vaccine [a pan-influenza vaccine] that they have been working on for a while [and which Sanofi Pasteur has been presenting in public conferences]. “And yes, they would be able to produce vaccines specially designed by EpiVax,” she said.

“We remain interested in working with Sanofi Pasteur, and view this as a positive development for ‘immune-engineered’ vaccines such as the ones that we have been developing.”

Future collaboration
De Groot said that there were opportunities for future collaboration with Sanofi Pasteur on vaccine development. Currently, EpiVax had been working with Protein Sciences in a clinical test for a tweaked H7N9 vaccine, a paper on which was recently published by Nature’s Scientific Reports.

“Yes, there are opportunities for EpiVax to work with Sanofi Pasteur using the recombinant protein approach that Manon Cox has developed,” De Groot told ConvergenceRI.

As time goes on, the value of that opportunity could increase, according to De Groot. “Think of it this way: the Protein Sciences-produced and EpiVax-designed optimized H7N9 vaccine is cheaper to acquire when the clinical trial outcome is unknown [which is the situation that we have now] than when we have an optimized vaccine that gives a clear positive signal in a clinical trial [which could happen in the near future,” De Groot explained. “We may soon be sitting in the catbird seat, so to speak.”

Moving forward
The move by Sanofi to acquire Protein Sciences can be seen as a potential “reinvigoration” of Big Pharma’s investments in recombinant vaccines to fight infectious diseases, according to some industry observers.

“I think that you are seeing the field continue to heat up,” De Groot said. “Immuno-oncology efforts are also focusing a big new spotlight on vaccines, and ‘faster, better’ technologies like ours and Manon’s.”

De Groot said she was very excited to see this new attention to the field, “I think that our EpiVax technology has now matured to the point where it may be very, very valuable and bigger vaccine companies [such as] Merck, Sanofi Pasteur, GSK, Astellas and Pfizer should be looking at us very carefully. We welcome inquiries, by the way,” De Groot added.

Changing the conversation
At a time when there has been a resurgence in measles, both in Europe and the U.S., which has been blamed on anti-vaxxers, along with severe outbreaks of mumps in Brazil, cholera in Yemen, and Zika throughout the Americas, puts a new kind of urgency in the development of vaccines to combat infectious diseases.

Yet, producing vaccines to combat the spread of infectious diseases is something that is not necessarily valued by the public, according to Cox. “This is very dangerous; we need to do something about that.”

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