Sanofi's Lemtrada Gets U.S. Approval, Carries Boxed Warning – Analyst Blog

Sanofi 's ( SNY ) Lemtrada has finally gained FDA approval for the treatment of patients suffering from relapsing forms of multiple sclerosis (MS). The drug's U.S. indication is however restricted to patients who have responded inadequately to two or more MS drugs.

Lemtrada's label in the U.S. comes with a boxed warning stating that there is a risk of serious, sometimes fatal autoimmune conditions as well as serious and life-threatening infusion reactions. The drug may also cause an increased risk of malignancies including thyroid cancer, melanoma and lymphoproliferative disorders. Moreover, the drug will be available under a Risk Evaluation and Mitigation Strategy.

Lemtrada's road to approval has not been smooth. Towards the end of last year, the FDA had issued a complete response letter for Lemtrada.

Lemtrada is already approved in over 40 countries around the globe including the EU, Canada and Australia. The drug is also under review in several other countries.

Sanofi has an agreement with Bayer ( BAYRY ) to co-promote Lemtrada in the U.S. However, Sanofi holds worldwide rights to the development and commercialization of Lemtrada for MS.

Our Take

The FDA approval of Lemtrada is a positive development for Sanofi, which needs to bring new products to market to boost its growth prospects. Sanofi already has another MS treatment, Aubagio, on the U.S. market.

However, we remain concerned about the boxed warning and other limitations that may restrict the drug's sales in the U.S. Moreover, Lemtrada, an intravenously administered drug, will be entering the highly crowded MS market which currently has several oral treatments available like Biogen Idec Inc.'s ( BIIB ) Tecfidera and Novartis' ( NVS ) Gilenya.

Sanofi carries a Zacks Rank #5 (Strong Sell). A better-ranked stock in the health care sector includes Biogen carrying a Zacks Rank #1 (Strong Buy).

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Sanofi's Lemtrada Gets U.S. Approval, Carries Boxed Warning - Analyst Blog