France’s Sanofi-Aventis has staked its claim to become a major player in the therapeutic antibodies market by increasing its stake in the USA’s Regeneron Pharmaceuticals and backing the latter’s R&D efforts with serious cash.

The two firms are expanding their collaboration which began in 2003 in a move which will see Sanofi invest up to $872 million in shares and research funds. Firstly, it is raising its stake in Regeneron to 19% from 4% percent by spending $312 million to get hold of 12 million newly-issued shares priced $26.00 each. This represents a premium of 52% on Regeneron's closing share price on Wednesday evening.

Sanofi will also make an $85 million upfront payment and fund up to $475 million of research over the next five years. The Paris-headquartered firm will have an option to extend the agreement for up to an additional three years and have the exclusive option to co-develop each drug candidate in the collaboration portfolio.

Development costs will be shared between the two companies, with Sanofi providing funding upfront and Regeneron reimbursing half of the costs from its share of future profits. The US firm will have the right to co-promote all collaboration products worldwide and in the USA, profits will be shared equally while overseas earnings will be split on a sliding scale with Sanofi’s share ranging from 65% to 55%. In addition, Regeneron will be entitled to receive up to $250 million of sales milestone payments “when the collaboration achieves certain aggregate annual ex-US sales levels, starting at $1 billion”, Sanofi added.

The first therapeutic antibody to enter clinical development under the collaboration is an antibody to the interleukin-6 receptor (IL-6R) which has started clinical trials in rheumatoid arthritis. The second is expected to be an antibody to Delta-like ligand-4 (Dll4), which is currently scheduled to start its clinical development in 2008.

Sanofi is holding a briefing later today to discuss the extended collaboration.