Sanofi: Why is the pharmaceutical giant Sanofi slowing down the CAC 40?

(BFM Bourse) – The French pharmaceutical giant has lost nearly 15% since Tuesday. Sanofi faces headwinds after trials of its multiple sclerosis drug tolebrutinib were halted and a UBS memo no longer recommended buying the stock. The Swiss bank no longer detects catalysts for the action until the end of the year.

Dark week for Sanofi. The pharmaceutical laboratory sells more than 15% in three sessions after stopping its recruitment for clinical trials of an experimental treatment for certain forms of multiple sclerosis. A note from UBS did not fail to drive the point home, the Swiss bank is no longer buying the title, pointing to a lack of catalysts supporting the future progress of the title. The note revives, among other things, the specter of a dispute over Zantac, a drug used against heartburn, over the counter in the United States and Canada and withdrawn in 2019.

The Sanofi title lost another 5.50% to 82.64 euros around 4:15 p.m., even dropping more than 12% at the height of the day. Since Tuesday, Sanofi has sold nearly 15% on the Paris Stock Exchange, or around 20 million euros in capitalization, which went up in smoke in three sessions.

The starting point of this difficult week for Sanofi is the cessation of clinical trials concerning an experimental treatment (tolebrutinib) for certain severe forms of multiple sclerosis and myasthenia gravis. The Independent Data Monitoring Committee has requested the suspension of three clinical studies in three indications.

A “break” on the title and a dispute over Zantac

But it is above all a note from UBS which has not failed to fuel the current seller on the file. “Sanofi has been under pressure since the day before, in reaction to comments from the bank UBS which no longer recommends buying the stock,” said Alexandre Baradez, analyst at IG France, to AFP.

The Swiss bank changed its buy recommendation to neutral on the file, while reducing its target price to bring it back to 103 euros. A degradation which is justified by the recent disappointment on the clinical trials concerning the tolebrutinib. This is not the only failure pointed out by UBS, Sanofi has encountered difficulties with theamcenestrant in the treatment of advanced or metastatic breast cancer, whose phase II trials have ended in failure.

UBS analysts thus expect the laboratory’s action to “pause”, for lack of catalysts by the end of the year after the two failures on tolebrutinib and amcenestrant and the expiration of Aubagio’s patent in 2023.

UBS is also concerned about the litigation over heartburn medicine Zantac, previously available over the counter in the United States and Canada and withdrawn in 2019. It is suspected of containing N-nitrosodimethylamine (“NDMA”), an ingredient potentially carcinogenic to humans. More than 2,000 complaints have been filed in the United States with the opening of a first trial at the end of August. It will be followed by collective proceedings in September. The French laboratory is not the only one concerned by these lawsuits, Haleon and GSK are also in the sights of the plaintiffs. They could lead to significant compensation, “which would amount to billions of dollars”, according to Deutsche Bank.

Sabrina Sadgui – ©2022 BFM Bourse