Paris-based drugmaker Sanofi (SNY) - Get Report is selling its stake in Regeneron Pharmaceuticals (REGN) - Get Report, which has ballooned in value in recent months as investors have bet that Regeneron’s efforts to produce a “Covid-19 cocktail” treatment will prove successful.
Sanofi said it will sell its stake in Tarrytown, N.Y.-based Regeneron, worth about $13 billion, to focus its efforts on cancer-fighting treatments. For its part, Regeneron has agreed to repurchase $5 billion of its stock from Sanofi, the companies said.
Regeneron said that Sanofi also plans to sell approximately 12.8 million shares, a holding worth more than $7 billion based on Friday’s closing price. That will mark the largest public-equity offering in the healthcare industry on record, according to Bloomberg.
“We believe the proceeds from this transaction will help further our ability to execute on our strategy to drive innovation and growth,” Sanofi CEO Paul Hudson said in a statement.
Sanofi’s decision to sell comes after Regeneron’s stock surged 57% in the past six months. The French drugmaker holds about 23.2 million Regeneron shares, or 20.6% of the U.S. pharmaceutical company, according to Bloomberg.
When Sanofi first purchased shares of Regeneron 2003, the stock traded below $20, compared with a closing price of $569.91 last Friday.
Regeneron said it will fund the share repurchase with $3.5 billion of cash and $1.5 billion of financing from Goldman Sachs Bank USA.
Meantime, Regeneron is prepping to begin Phase 3 human studies of its REGN-COV2 antibody "cocktail" treatment for the Covid-19 virus as soon as next month.
Shares of Regeneron were down 4.72% at $543 in premarket trading on Tuesday. Sanofi stock was up 0.3% at $47.44.
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