Sanofi and Regeneron expand alliance in $8bn deal and settle litigation

Sanofi (SAN) and Regeneron (REGN) have agreed to develop four new drugs together in a deal worth up to $8bn and to settle prior litigation, a move analysts said signals a reset of their strained partnership and an early victory for Sanofi's new chief executive, Belen Garijo.

Under the terms, Sanofi will pay $1bn upfront and up to $7bn in potential milestone payments. The companies will share development costs and future profits equally on the four drugs, with Regeneron leading research and Sanofi handling global sales if they win approval.

Sanofi shares closed up nearly 1 percent on Thursday, while those of Tarrytown, New York-based Regeneron fell 4 percent in midday trading.

"Mutual trust will be the guiding principle in this extended relationship," Garijo told investors on a call, adding that the partnership would include clear roles and accountability for both companies. Garijo, who took over at Sanofi in May and is leading a strategic review of the group, has promised investors faster decision-making. Analysts at Barclays (BARC) noted that her predecessor, Paul Hudson, had tried and failed to expand the alliance, which produced Sanofi's top-selling medicine, Dupixent.

Michael Leuchten, an analyst at Jefferies (JEF), said that while the assets were early-stage, the expansion "should be viewed positively" because it showed the new chief's focus on the most important yet addressable uncertainties facing investors. Evan Seigerman of BMO Capital Markets (BMO) said the deal marked an important step in repairing the relationship and removed a key overhang for both companies.

The four antibody drugs target the same type 2 inflammation pathways as Dupixent. They include REGN20423, which is in early-stage testing for atopic dermatitis, an intensely itchy skin condition also known as eczema. The other three are expected to enter clinical trials in 2027. Regeneron will become eligible for the first $1bn milestone payment when REGN20423 moves into late-stage testing. Garijo said the atopic dermatitis market could double in the next five years.

Not everyone was convinced by the price. Markus Manns, a portfolio manager at Union Investment, which holds Sanofi shares, questioned the cost given the uncertainties of such early-stage assets. "Sanofi certainly paid a full price," he said.

Analysts broadly welcomed the agreement but cautioned that it does not resolve Sanofi's central challenge: finding enough pipeline strength to offset the loss of Dupixent's patent protection later this decade. The drug accounted for 36 percent of Sanofi's 2025 sales of nearly €44bn ($49.4bn) and is approved to treat conditions including eczema, asthma, nasal polyps and chronic obstructive pulmonary disease.