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EXCLUSIVE: Sanofi In Talks To Buy PTC Therapeutics

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EXCLUSIVE: Sanofi In Talks To Buy PTC Therapeutics
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Paris-based Sanofi SA (ADR) (NYSE: SNY) has restarted negotiations to acquire New Jersey's PTC Therapeutics, Inc. (NASDAQ: PTCT), a source familiar with the matter told Benzinga on Thursday.

Société Générale is said to be working on the deal.

Both sides began talks earlier this week after PTC said it received a Refuse to File notice from the FDA regarding its Translarna treatment. The disclosure, which pushed shares down more than 50 percent, was the result of an error and has no material bearing on PTC or Translarna's fundamental outlook, according to the source.

Calls and emails to PTC Therapeutics were not returned. A Sanofi spokesperson told Benzinga the company does not comment on market rumors.

More Attractive

Down 84 percent, PTC shares have fallen even further over the past 12 months as investors have rotated out of biopharma and biotherapeutic-related equities. This selloff is said to have made the small-cap's valuation more attractive to a buyer like Sanofi; PTC's current market capitalization rests just under $400 million versus $2.4 billion a year ago.

Sanofi has already evaluated PTC in the past, DealReporter suggested in December 2014. Reuters reported on February 23, 2015, that PTC was exploring a sale, causing shares to rise over 20 percent that day.

Sanofi management is reportedly now more likely to consider a buyout of a singularly-focused company like PTC as merger activity among industry peers heats up, the source said.

Last year was a record year for pharmaceutical M&A activity in terms of total deal size, as Sanofi peers like Pfizer Inc. (NYSE: PFE), Allergan plc Ordinary Shares (NYSE: AGN), Shire PLC (ADR) (NASDAQ: SHPG) and Merck & Co., Inc. (NYSE: MRK) were all involved in major transactions.

Does A Deal Make Sense?

According to a December analysis from Exane BNP Paribas analyst Luisa Hector, Sanofi could use proceeds from the disposal of its Merial animal healthcare unit to "bolster" a large acquisition. The company announced near the end of 2015 that it exchanged Merial with Boehringer Ingelheim for its consumer healthcare business, resulting in a gross cash payment of 4.7 billion euro to Sanofi.

"Turning points for the [Sanofi] share price could come in the form of a Merial disposal, a significant acquisition or stunning dupilumab P3 data in dermatitis. All of these could occur during 1H16," she wrote.

Two other analysts Benzinga spoke with on Thursday were less certain, explaining that any talks between Sanofi and PTC still have questions due to the broader sector selloff, the timing of a deal and recent regulatory risks surrounding PTC.

Jake Mann, Nick Donato, Brent Slava and Jason Shubnell contributed to this report.

Latest Ratings for SNY

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Sep 2016PiperJaffrayInitiates Coverage onNeutral
May 2016BarclaysUpgradesEqual-WeightOverweight
May 2016HSBCDowngradesBuyHold

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