The first project of its kind

The collaboration between Sanofi, OpenAI and Formation Bio aims to create software that will use artificial intelligence to accelerate and streamline drug development, the first project of its kind in the pharmaceutical industry. The French pharmaceutical company is thus gradually getting closer to its vision of becoming the first fully AI-enabled pharma company.  While Sanofi is to offer extensive data from its practice, OpenAI will provide its expertise in AI technology and Formation Bio will add the experience of connecting the pharmaceutical industry and AI with its platform.

Potential to reduce drug development time

In a Sanofi press release, the CEOs of all three companies expressed their excitement about the collaboration and agreed that artificial intelligence will significantly help in the development of new and innovative medicines for patients and their families. Indeed, as data from consultancy BCG shows, it normally takes 12 to 15 years of development and testing to bring a drug to market, but developing drugs through AI could reduce that time by 25 to 50 percent, not to mention saving costs.  Of course, this process cannot be done without the necessary studies to show whether drugs developed in this way are more likely to succeed in clinical trials.

A bet on AI

Sanofi began its journey into artificial intelligence with a collaboration with biotech company Owkin as early as late 2021, with the goal of treating four types of cancer using AI-driven predictive models. Their efforts continued in early 2022 with a research and licensing pact with Exscientia aimed at developing drugs against cancer and in the field of immunology. During the same year, Sanofi consolidated its prowess in AI-driven drug development through collaborations with Atomwise, BioMed X and Insilico Medicine, covering a variety of therapeutic areas. It has also strengthened its immuno-oncology initiatives with access to Amunix Pharmaceuticals' technologies. According to Labiotech.eu, its most recent AI-powered collaboration was with BioMap last fall, which leverages the company's platform to design drugs through understanding how proteins work.

A diverse portfolio

Sanofi's focus is not just on drug development and research.  Its business portfolio also includes commercialisation assistance, as evidenced by its recent collaboration with US firm Fulcrum Therapeutics to develop and promote Losmapimod, a drug for the treatment of facioscapulohumeral muscular dystrophy (FSHD), which is currently in Phase III trials.  According to GlobeNewswire.com, the companies plan to announce the results of the Phase III testing in the last quarter of 2024 and intend to apply for marketing in Europe, the US, Japan and other countries if positive data is received.

Cooperation with Novavax

In addition, Sanofi established a partnership with vaccine manufacturer Novavax in April this year. The agreement allowed Novavax to lift the going concern warning it first issued in February 2023 due to major doubts about its ability to stay afloat. Sanofi, in turn, gained a nearly 5 percent stake in the business and access to vaccine technology to develop new vaccines, including a combination vaccine for Covid and influenza. Sales of the coronavirus vaccine are expected to kick off as early as next year, which should provide Novavax with financial stability at a time of continued financial uncertainty.

High stock volatility

Despite a number of high-profile collaborations, Sanofi's value on the Nasdaq has faced several sharp declines in recent years, twice falling to five-year lows of around $38 per share - first in March 2020 and then in September 2022. The stock last peaked at around $56 in April 2023. Looking at the chart, it's evident that the company's value has been going through highly volatile periods. However, the performance over the last 5 years is 20 percent. As of May 22, 2024, the price stood at $49 per share and had a market capitalization of $122.9 billion, according to Companiesmarketcap.com.*

Sanofi's share price performance over the last 5 years (Source: Tradingeconomics.com)*

Olivia Lacenova, principal analyst at Wonderinterest Trading Ltd.

* Past performance is no guarantee of future results.