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By Ludwig Burger and Dina Kartit
March 13 (Reuters) — France’s Sanofi SA on Monday agreed to acquire Provention Bio Inc for $2.9 billion to bolster its work on a U.S.-approved type 1 diabetes therapy and strengthen its drug pipeline following development setbacks.
The deal builds on an existing co-promotion agreement between the two companies, and would give the French drugmaker full ownership of the drug, Tzield, Sanofi said, adding it expects to complete the acquisition in the second quarter of 2023.
While growth in asthma and eczema drug Dupixent is boosting Sanofi’s sales, investors have criticised its drug development pipeline as weak.
Provention Bio’s shares nearly quadrupled in premarket trade from their last close at $6.70 after Sanofi agreed to buy the company at $25 per share in cash.
«The speed of the acquisition, combined with the large premium, suggests a competitive process, whereby Sanofi may have needed to respond to an unsolicited bid from another pharma (company),» SMBC Nikko Securities America analyst David Hoang said in an email.
Shares of Sanofi were down 1.5% in afternoon trade in Paris.
Sanofi, the maker of long acting insulin products Toujeo and Lantus for type 2 diabetes, in 2019 quit further type 2 diabetes drug development.
Chief Executive Officer Paul Hudson said last month the company saw great promise in type 1 diabetes drug development and link shortener reaffirmed his commitment to steer clear of further work on type 2 diabetes and obesity.
U.S.-based biotech firm Provention Bio won approval in the United States last year for Tzield, making it the first drug indicated to delay the onset of the third and final stage of type 1 diabetes in adults and children aged 8 years and older at stage 2.
(Reporting by Ludwig Burger and Dina Kartit, and Mariam E.Sunny in Bengaluru; Editing by Kim Coghill, Kirsten Donovan and Shinjini Ganguli)