- Genzyme rights holders' trustee claims Sanofi broke contract
- Genzyme avoided $708 million in payments, according to lawsuit
A trustee representing Genzyme rights holders sued Sanofi claiming it stalled the development of a multiple sclerosis drug to avoid paying at least $708 million.
Sanofi broke its 2011 merger agreement with Genzyme Corp. by failing to use "diligent efforts" to win regulatory approval and reach sales targets for the drug Lemtrada, the trustee, American Stock Transfer & Trust Co., said in a complaint filed Monday in Manhattan federal court.
The agreement specified that holders of Genzyme stock receive rights to $3.8 billion in payments if the drug reached certain milestones, including approval from the the U.S. Food and Drug Administration by March 31, 2014, according to the trustee.
"Sanofi took those potential milestone payments into account in evaluating Lemtrada’s profitability, embarked on a slow path to FDA approval and departed from its own drug commercialization patterns and those of others in the industry," the trustee claimed in Monday’s complaint. "As a result, Sanofi missed the contractual milestones and skirted its payment obligations of at least $708 million."
Sanofi acquired Genzyme for about $20 billion in 2011. Lemtrada had sales of $174.4 million in sales in the first nine months of this year, Sanofi said in a regulatory filing.
Mary Kathryn Steel, a Sanofi spokeswoman, declined comment on the suit.
The case is American Stock Transfer & Trust Co. v. Sanofi, 15-cv-08725, U.S. District Court, Southern District of New York (Manhattan).