Sanofi Dogged By Lantus Risk; Analysts Downgrade Stock
June 29 2009 - 6:52AM
Dow Jones News
French drug maker Sanofi-Aventis's (SAN.FR) future growth could
be adversely affected by lingering questions about the safety of
its key diabetes product Lantus, analysts said Monday as many
issued downgrades of the company's stock.
A series of rating cuts and slashed target prices followed the
publication late Friday of studies by the European Association for
the Study of Diabetes journal Diabetologia. The association, known
as the EASD, called for further research into the possible link
between Lantus and an increased risk of cancer.
Although the data was inconclusive, analysts say the negative
publicity generated could weigh on sales of a product that Sanofi
is relying on to offset declining sales of products, such as
anti-clotting drugs Plavix and Lovenox, that could soon face
generic competition.
"Even though the results of the publication on a link between
Lantus and cancer are not clear-cut ... investors will likely
remain cautious until more data are published," said Exane BNP
Paribas in a research note, after downgrading the shares to neutral
from outperform.
Societe Generale lowered forecasts for Lantus sales to reflect
no growth in the second half of 2009, and mid-single digit growth
percentage-wise from 2010. Annual sales of the drug in 2012 could
be EUR3.4 billion, Societe Generale estimated, compared to the
company's guidance in February of EUR5 billion that year. Societe
Generale rates Sanofi shares buy.
After seeing its shares slide two days in a row amid worries
about Lantus, Sanofi late Friday issued a press release saying
results of the studies "clearly show that no definitive conclusions
can be drawn regarding a possible causal relationship between
Lantus use and the occurrence of malignancies."
Sanofi shares seemed to steady Monday and at 1035 GMT stood
slightly above their Friday close a higher Paris market, trading up
0.2% or EUR0.06 at EUR40.91. The company's shares fell around 8% on
Friday, after the Lantus safety issue was brought up by UBS equity
research teams on Thursday. In the note, UBS analyst Gbola Amusa
concluded that safety risks linked to Lantus are only theoretical
but that his discussions with doctors had revealed a "number of
long-established safety concerns, in particular that Lantus use may
promote cancer." UBS rates Sanofi sell.
UBS estimates that Lantus will account for almost 20% of the
company's annual sales by 2013.
Shares in rival drugs maker Novo Nordisk A/S (NOVO-B.KO) rose
almost 6% Monday after the Copenhagen-based company moved to
distance itself from the Lantus scare.
The Danish drugmaker said it has not seen any cancer risks for
three of its diabetes drugs.
Novo's shares had fallen as much as 4% on Friday.
Company Web site: www.sanofi-aventis.com
By Mimosa Spencer, Dow Jones Newswires; +33 1 40 17 17 73;
mimosa.spencer@dowjones.com
(Gustav Sandstrom in Stockholm contributed to this item)