Sanofi, Evotec In Exclusive Talks For Toulouse Site Transfer

German drug development company Evotec announced that it is engaged in exclusive negotiations with French drug maker Sanofi for the transfer of its Toulouse facility and research operations.

Under the terms of the proposed transaction, 209 of Sanofi's 250 employees will transfer to Evotec. These will be assigned to work on drug discovery and development. The remaining workforce will handle support functions, such as scientific archives and human resources under the French firm. Sanofi will also invest almost $310 million over the next five years to develop joint research programs, particularly focused on oncology projects.

Dr. Werner Lanthaler, CEO of Evotec, said, “We are very proud that Sanofi has chosen Evotec for this significant alliance... We will warmly welcome the Sanofi employees to the Evotec Group and look forward to working with them.”

“We believe Evotec will be an ideal partner... Our collaboration will secure the future for our employees in Toulouse and importantly accelerate our pipeline productivity,” said Dr. Elias Zerhouni, president of Global R&D for Sanofi.

The partners will work together on selected pre-clinical development projects aimed at oncology targets and other therapeutic initiatives. Evotec will license a number of projects, including five advanced pre-clinical projects on its way to the Investigational New Drug (IND) phase.

Evotec will also conduct collaborative research once the Toulouse site has been integrated with its global drug discovery platform. Finally, the companies stated that they will combine their libraries for compound screening. Sanofi holds more than 1 million compounds in its Toulouse site while Evotec possesses 400,000 of its own molecules. Sanofi will be eligible to receive contribution if a product developed from the library is elected as a candidate. The combined library will be made available to Evotec's partners.

Sanofi has made efforts in recent years to cut down on expenses. These efforts included curbing its appetite for R&D and restructuring its research teams around the world. However, the company's restructuring plans in its home country have been met with criticism and resistance from the French government, and trade unions who were worried about loss of jobs. In 2012 Sanofi's Toulouse site counted over 600 people but fell to almost a third of the original workforce after Sanofi prioritized other R&D sites in France, as well as increased its research presence in the U.S.

The company's former CEO Chris Viehbacher was axed in October due to his decision to shut down the Toulouse site. The company finally made the decision to keep the site until 2018 to pacify its critics.

Evotec and Sanofi said they expect to complete the transaction in the first half of 2015.