French drug maker Sanofi plans to sell its Dermik skincare business to Canada's Valeant Pharmaceuticals for $425-million in cash, the latest drug giant to move to shed non-core assets.
The group said separately that late-stage tests on its Lemtrada experimental multiple sclerosis (MS) drug were "positive", although analysts viewed the results as underwhelming. Sanofi inherited Lemtrada through the purchase of U.S. biotech firm Genzyme.
Sanofi had stated previously that it planned to divest its dermatology business in the United States and Canada, whose brands include acne treatment BenzaClin and the anti-face wrinkle injection Sculptra.
"Our strategy is based upon our growth platforms and innovation," Sanofi chief executive officer Christopher Viehbacher said in a statement. "This divestiture allows us to rationalize our portfolio and improve focus on our core businesses."
Valeant CEO Michael Pearson said the deal added another strong dermatology franchise to the Canadian company's business, giving it opportunities to leverage the combined portfolios in current markets and expand into new territories.
The sale reflects wider moves by major pharma groups to ditch non-core assets.
Pfizer said last week it might sell or spin off its animal health and nutrition units - businesses valued at more than $16-billion - to focus on its main pharmaceutical business, while GlaxoSmithKline is currently looking to sell a portfolio of over-the-counter products in an auction.
MS treatment Lemtrada is a key drug candidate at Sanofi's Genzyme unit, with the fortunes of the drug closely watched by holders of Genzyme Contingent Value Rights issued to shareholders as part of the takeover deal.
In the latest Phase III clinical trial, Lemtrada reduced the rate of relapses by 55 per cent compared to Merck KGaA's widely used drug Rebif.
Deutsche Bank analyst Mark Clark said the result was comparable to the 52 per cent relapse rate reduction that Novartis's Gilenya produced versus Biogen Idec's Avonex but "noticeably less impressive" than the 74 per cent reduction Lemtrada had achieved in a Phase II study.
Furthermore, the Phase III trial was unable to provide evidence of a significant impact on disability in MS sufferers. Sanofi said this reflected the fact very few patients accumulated disability at the rate expected from previous clinical trials.
The results of another Phase III study to compare Lemtrada with Rebif in MS patients who have relapsed while on therapy are expected to be available in the fourth quarter.
The company expects to file for U.S. and European Union approval of Lemtrada in early 2012 and has been granted fast track designation by the U.S. Food and Drug Administration.
Deutsche's Clark said he currently forecast risk-adjusted 2015 sales for Lemtrada of only €180-million ($261-million U.S.), or less than 1 per cent of Sanofi's revenue, reflecting scepticism about the product's prospects in an increasingly competitive MS market.