Since September 2003, Regeneron (REGN) has collaborated with Sanofi-Aventis for the development and commercialization of Zaltrap. The company also entered into another collaboration agreement with Sanofi to develop and commercialize fully human monoclonal antibodies.
The above graph shows the revenues earned by Regeneron from its Zaltrap and Antibody collaboration programs with Sanofi (SNY). In July 2015, Regeneron entered into one more collaboration agreement with Sanofi for developing and commercializing antibody-based immune-oncology therapies.
Zaltrap is known in scientific literature as VEGF trap and is targeted at people with metastatic colorectal cancer (or mCRC). The drug is currently available in the US, Europe, and several other countries. It is administered in combination with FOLFIRI therapy to the patients resistant to previous therapy or with advanced cancer.
Excluding the Japanese market, both Regeneron and Sanofi equally share the promotion rights as well as the profits and losses due to Zaltrap’s sales. Regeneron receives up to 35% of the Zaltrap’s sales in Japan and $350 million in milestone payments on approval of certain regulatory filings. The company also must reimburse Sanofi for up to 50% of its development expenses on Zaltrap.
Zaltrap was initially priced higher than its competitor drug, Roche’s (RHHBY) Avastin, but the increasing criticism from the physician and payer community forced Sanofi to substantially reduce the drug’s price. Also, unlike Avastin, both Zaltrap and Bristol-Myers Squibb’s (BMY), Eli Lilly’s, and Merck Serono’s Erbitux cannot be prescribed as a first-line treatment for mCRC, affecting their profitability.
Regeneron and Sanofi have entered into an antibody collaboration to co-develop and commercialize drugs in areas such as oncology and cardiovascular diseases. Praluent for high cholesterol and Sarilumab for rheumatoid arthritis are the two major drugs developed under this agreement.
Investors can get exposure to Regeneron’s collaboration revenues from Sanofi without exposure to individual company risks by investing in the iShares NASDAQ Biotechnology ETF (IBB). IBB holds 7.34% of its total holdings in Regeneron.