Sanofi’s Acquisition of Kymab

By Lorenzo Mirone, Riccardo Colombo, Federico de Rosa ( Bocconi University) and Roshni Padhi, Winston Shum, Moh Jin Yin ( Stanford University)

 

Overview of the deal


Acquirer: Sanofi

Target: Kymab

Implied Equity Value:

Total Transaction Size: 1.45 bn$

Closed date: First half of 2021

Target advisor: JP Morgan


Sanofi, the French pharma company born from the merger between Sanofi-Synthelabo and Aventis, has agreed to acquire Kymab, a UK-based clinical-stage biopharmaceutical company, which is concentrating on the development of fully human monoclonal antibodies with a focus on immune-mediated diseases and immuno-oncology therapeutics, for approximately $1.1 billion and up to $350 million if some milestones are reached after the closing. This acquisition will give the French company the possibility to have full global rights to KY1005, a human monoclonal antibody with new mechanism of action, in order to take care of a long series of diseases and disorders. Since Paul Hudson became CEO of the company in 2019, it’s the fourth deal completed. In fact his strategy is to push Sanofi into the market for treatments for immune disorders, as it is considered one of the faster growing sectors in the medical industry.


“The Kymab acquisition adds KY1005 to our dynamic pipeline, a potential first-in-class treatment for a range of immune and inflammatory diseases. The novel mechanism of action may provide treatment for patients with suboptimal responses to available therapies,” said Paul Hudson, Sanofi Chief Executive Officer.

Company Details: (Acquirer - Sanofi)


Sanofi is a global life sciences company with three core business units: speciality care, vaccines, and general medicines. They focus on both prevention and treatment of diseases ranging from multiple sclerosis to diabetes and now COVID.


Founded in 2004, headquartered in Paris, France

CEO: Paul Hudson

Number of employees: 100,000+

Market Cap: $115.89B (as of 03/06/2021)

EV: $127.70B

LTM Revenue: $44.03B

LTM EBITDA: $12.82B

LTM EV/Revenue: 2.90x

LTM EV/EBITDA: 9.96x


Company Details: (Target - Kymab)


With $200M in equity financing (pre-acquisition), Kymab is a biotechnology company that develops antibody-based drugs. They focus on four key areas: immuno-oncology, inflammation, hematology, and infectious disease.


Founded in 2010, headquartered in Cambridge, UK

CEO: Simon Sturge

Number of employees: ~200


Projections and Assumptions

Short-term consequences


Sanofi’s acquisition of Kymab will lead to it having complete global rights to KY1005, a form of human monoclonal antibody which has a novel mechanism of action. According to Sanofi’s media release, KY1005 binds to OX40-Ligand and has been shown to work on a severe form of eczema called atopic dermatitis, with the potential to treat a much wider range of inflammatory diseases and mediated diseases. Beyond that, Kymab’s IntelliSelect Transgenic platform, one of the most comprehensive antibody platforms around, will ensure Sanofi has the highest chance of uncovering drug candidates quickly and effectively.


As a whole, the transaction, coming after Sanofi agreed to purchase US biotech company Principia Biopharma for US$3.4 billion, cements Sanofi’s rising presence in the immunological diseases sector. This is in line, too, with the company’s pivot towards therapies targeting the immune system, as it aims to develop a pipeline of medicines that will deliver it a piece of the $100 billion-a-year cancer drug market. The deal will additionally better position Sanofi to offer new therapies to patients who presently have suboptimal responses to available treatments.


Long-term Upsides


The obvious benefits include the adding of Kymab’s monoclonal antibody, KY1005, to the pipeline of Sanofi, but there are also several benefits to this acquisition for both companies in the long-term. For Sanofi, KY1005 isn’t the only antibody that has potential growth in the immunology and typ