* Stops development of 14 drugs, incl. 4 in Phase III
* To decide on 4 drugs in next months
* Sees 3 potential blockbusters in leaner pipeline
* Q1 net profit at 2.18 bln euros, beats consensus
* Shares up 3.1 percent
PARIS, April 29 (Reuters) - France's Sanofi-Aventis took a knife to its pipeline, slashing 14 drugs from development including four in final trials, and posted a better-than-expected rise in quarterly net income, boosting shares.
Under chief executive Chris Viehbacher, Sanofi's research and development team has sped up assessment of its pipeline to see which drugs can successfully reach the market and help offset sales lost to cheaper generics when patents expire.
Sanofi-Aventis, the world's fourth-biggest drugmaker, posted first-quarter earnings that beat expectations on Wednesday and kept its 2009 forecast for earnings per share growth of at least 7 percent at constant currency exchange rates.
"We're certainly off to a very good start of the year," Viehbacher told journalists.
Sanofi shares rose as much as 4.4 percent in early morning trade and were up 3 percent at 42.85 euros at 0828 GMT while the DJ health index .SXDP was flat. The stock is trading at 6.9 times its expected 2009 EPS, cheaper than rival GlaxoSmithKline which trades at 8.9 times.
Viehbacher is aiming for small to mid-sized takeovers of up to 15 billion euros and R&D partnerships to improve Sanofi's pipeline. But he said he remained open for all deal sizes and said his team looked at more than 70 projects in the first quarter[this is a tiny fraction of the 6,000 programs MRK claims to have looked at during 2008 (#msg-36535199)].
"We are looking ... at all sizes of acquisitions," he said. "I don't think I'm changing my strategy," he added. "We don't start by saying what's the price tag but what businesses are most attractive, the most interesting."
Analysts welcomed Sanofi's strong earnings, ongoing measures to contain costs, refocused pipeline and the swift transition of the company since Viehbacher arrived in December.
"We think the market has failed to adjust for upside from corporate change as well as strong recent newsflow," Collins Stewart analyst James Knight said in a research note.
Adjusted net profit rose to 2.18 billion euros ($2.84 billion), up 8.7 percent at constant exchange rates and easily beating the 1.95 billion euro average from a Reuters poll of 12 analysts.
Sales grew 2.5 percent to 7.11 billion euros while they were flat at constant exchange rates. At constant rates, growth was driven by 27 percent higher sales of diabetes drug Lantus, an 8.3 percent rise in cancer drug Taxotere and 9 percent growth in vaccines.
In its "first critical phase" of R&D transformation, Sanofi ditched products from clinical trials and said it would decide in the next months on the fate of four others. Speeding up its search for R&D alliances could help boost the share of biotech-based drugs to as much as 50 percent in the next years.
POSSIBLE STAR PERFORMERS
Sanofi, which is the world's biggest maker of human vaccines, said it was doing whatever necessary to help fight a pandemic of swine flu, should it occur. It had donated stock of seasonal flu vaccine to Mexico, where as many as 159 people have died from the disease.
It now has 51 drugs in its portfolio, of which 21 are in Phase III or are awaiting regulatory approval, including heart drug Multaq. Morgan Stanley analysts expect Multaq peak sales of 3 billion euros against consensus of as high as 1 billion euros.
The leaner pipeline contained three possible candidates with sales potential of at least 1 billion euros Viehbacher said, naming a vaccine to prevent the spreading tropical disease dengue, and cancer candidates BSI-201 and aflibercept.
Sanofi stopped developing in final Phase III clinical trials anti-depressant saredutant, AVE5530 in hypercholesterolemia, and returned the rights of cancer drug TroVax to Oxford BioMedica. In its fast-growing vaccines business, it dropped combination shot Unifive™ to focus resources on Hexaxim.
In mid-stage Phase II, four studies were halted -- AVE0657 for sleep apnea, SSR180575 for diabetics, oncology candidate AVE1642 and a melanoma vaccine. It stopped six Phase I projects.
In the next few months, Sanofi plans to decide on four drugs -- heart drug idrabiotaparinux, neurotherapy drug xaliprodene, AVE1625 and West Nile virus vaccine -- on which clinical data are pending.
Sanofi has suffered several setbacks in its pipeline, culminating in the flop of anti-obesity pill Acomplia, once seen as a blockbuster. About a fifth of Sanofi's sales are exposed to drugs losing their patent protection by 2012[including Plavix worldwide and possibly Lovenox in the US]. Its portfolio does not contain enough drugs to be able to offset that loss.‹
Sanofi Reports 1H09 Annualized Lovenox Sales of $4.3B
[The sales figures below are in Euros, Sanofi’s reporting currency, but the growth rates are in local currencies unless otherwise specified. Tallying growth in local currencies is a way to track the change in volume and price irrespective of exchange rates. The figures below are annualized, i.e. they are 2x the reported 1H09 numbers.]
Worldwide Lovenox sales in 1H09 rose 7% year-over-year in local currencies and 14% in Euros to an annualized rate of €3.08B, which is $4.3B at the current exchange rate.
In the US (where MNTA and NVS have filed an application to sell generic Lovenox), annualized 1H09 Lovenox sales were €1.87B, which is $2.6B at the current exchange rate.
The breakdown of 1H09 sales by geography is as follows (growth rates are year-over-year in local currencies):
US: €1.87B (61% of total), +2% EU: €886M (29% of total), +13% RoW: €324M (11% of total), +17% === Total: €3.08B, +7%
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