November 9, 2015 / 10:51 PM / 4 years ago

Sanofi delayed drug to avoid $708 mln in payments, lawsuit claims

Nov 9 (Reuters) - A new lawsuit accuses Sanofi SA of stalling development of its multiple sclerosis drug Lemtrada to avoid paying out at least $708 million to rights holders under its 2011 agreement to acquire Genzyme Corp.

The lawsuit, filed on Monday in Manhattan federal court by American Stock Transfer & Trust Co LLC, a trustee for the rights holders, seeks at least $236.1 million in damages.

Genzyme was in the process of developing Lemtrada when Sanofi bought it. Under the merger agreement, Sanofi issued Genzyme shareholders tradable certificates entitling them to payments if Lemtrada won approval from the U.S. Food and Drug Administration by March 31, 2014, and further payments if it met certain sales benchmarks after that.

Sanofi promised it would make “diligent efforts” to meet those goals, according to the complaint. Instead, the trustee alleges, it deliberately took a “slow path” to bring Lemtrada to market.

The lawsuit claims Sanofi deliberately ignored the FDA’s concerns about the designs of its clinical trials, leading the agency to deny the company’s first application for approval.

The trustee further claims that even after Lemtrada was finally approved in November 2014, Sanofi skimped on marketing it, while actively promoting a different multiple sclerosis drug, Aubagio. As a result, the lawsuit says, Lemtrada has failed to meet any of the sales benchmarks.

The drug is expected to lose patent protection in September 2017, according to the lawsuit, further limiting its prospects.

Sanofi said in a statement that it was aware of the lawsuit but did not comment on pending litigation.

The case is American Stock Transfer & Trust Company LLC v. Sanofi, U.S. District Court, Southern District of New York, No. 1:15-cv-08725. (Reporting by Brendan Pierson in New York; Editing by Matthew Lewis)

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