PARIS (Reuters) - Shares in Sanofi (PA:SASY) fell on Tuesday despite the French drugmaker's impending $13 billion (£10.56 billion) payday from selling most of its 20.6% stake in U.S. partner Regeneron (O:REGN).
By 1111 GMT, shares in Sanofi were down 1%, in line with the broader European health index (SXDP).
The stake sale, part of a major overhaul under new CEO Paul Hudson, will see Regeneron repurchase $5 billion of its stock with the rest set for a public offering. Sanofi will keep some 400,000 Regeneron shares -- a stake of less than 1%.
Its existing collaborations with the company will continue.
The partnership goes back to 2003 and helped Sanofi to return to profits with the development of several key medicines including eczema treatment Dupixent, which has become a star product for both companies.
Based on Regeneron's closing share price of $569.91 on Friday, the transaction translates into proceeds of around 12 billion euros ($13.15 billion).
"We believe it is a good strategic decision to free up financial resources and to exit from a minority stake with no real strategic value," said Bryan Garnier analyst Jean-Jacques Le Fur in a note.
In recent months, Sanofi has simplified its structure and ended research efforts in diabetes and cardiovascular drugs to focus on more lucrative treatments in rare diseases and cancer.
"The head of research and development John Reed has often said that he would like the group to be more involved in the gene therapy space for example," said Le Fur.
The companies' rheumatoid arthritis drug Kevzara is being tested for treating Covid 19.
Although it will discontinue accounting for its ownership in Regeneron and restate its 2019 earnings, Sanofi said it was still expecting earnings per share to grow by around 5% at constant exchange rates this year.
The guidance from this new base however implies 2020 earnings per share of 5.83 euros, JPMorgan (NYSE:JPM) wrote in a note, 6% below its estimates.
($1 = 0.9122 euros)