Sanofi settles dispute with Genzyme investors over MS drug

Sanofi has settled a long-running dispute with shareholders in the biotech Genzyme, who claimed the big pharma deliberately held back development of a multiple sclerosis drug to avoid payments after a takeover in 2011.

In a statement Sanofi said it had agreed to pay Genzyme investors $315 million to settle the lawsuit.

As part of Sanofi’s $20 billion takeover of Genzyme, the French drugmaker promised shareholders in the US biotech payouts under a Contingent Value Right (CVR) that was due when MS drug Lemtrada (alemtuzumab) achieved certain regulatory and sales milestones.

But the Genzyme shareholders said Sanofi slowed development of Lemtrada, which was owned by the US biotech at the time of the takeover, to reduce the amount it had to pay out.

They argued in a lawsuit launched in 2015 that the payout of up to $3.8 billion laid out in the CVR meant that the payout was reduced by $708 million as a result of the delays.

CVRs are a financial tool used when two parties cannot agree the true value of the asset, and allow for payouts to be increased or decreased depending on the success of the drug.

In Lemtrada’s case payouts were cut because of an initial FDA rejection, and eventual approval in 2014, several months too late for a deadline outlined in the CVR.

Sanofi also decided to focus on developing its Aubagio, a once-daily pill, instead of the injected Lemtrada, a strategy that allowed it to reduce payouts.

This allowed Sanofi to gain a share of the lucrative market for oral MS treatments that emerged with the launch of Biogen’s hugely successful Tecfidera (dimethyl fumarate).

Under the agreement announced late last week Sanofi said it will delist the CVR from the Nasdaq, where it could be publicly traded.

Sanofi will pay $107 million in costs, and a payout of $208 million that will be distributed to current holders of the CVR.