Sanofi plans to acquire California drug maker Principia Biopharma in a deal with a price tag of about $3.7 billion, the companies said Monday.

The all-cash on hand deal will have French group Sanofi take full control of the Principia Biopharma, which is focused on rare diseases.

Principia Biopharma focuses on treatments for diseases like multiple sclerosis and a wide range of autoimmune disorders, it said in a statement.

Sanofi has been looking for would-be purchases of U.S. biotech firms, including Principia. The boards of directors for both companies have approved of this merge.

The purchase is expected to be done by the fourth quarter of 2020, reported Business Insider.

The deal puts a price tag of $100 per share of Principia. It also puts a 10% premium over the company's closing price Friday, said Stat News.

With the remaining shares that the U.S. company has, it will have a total cost of about $3.68 billion.

"This acquisition advances our ongoing R&D transformation to accelerate development of the most promising medicines that will address significant patient needs," said Paul Hudson, Sanofi's chief executive in a statement.

In a Reuters report, the president - CEO of Principia Biopharma Martin Babler, is also hopeful about the merger. He said it "will provide global resources to get these novel therapies to patients faster."

The deal is the second-largest purchase in drug making this year. It follows Gilead Sciences Inc. that bought cancer therapy maker Forty Seven Inc. at $4.9 billion. 

Forty Seven Inc. is a cancer therapy maker.

Once Sanofi has fully acquired Principia, they will have a pipeline of drugs known as BTK inhibitors. These drugs are used to treat autoimmune disorders.

Hudson is trying to restore Sanofi by focusing on fast-growing areas in medicine when new drugs command high prices.

Rare Disease Drugs

One of the BTK inhibitor drugs that Sanofi will get full control of from this deal is SAR442168. This drug is for multiple sclerosis and central nervous system diseases.

The license to this drug is now under Sanofi.

It has been found to help patients with multiple sclerosis in Phase Two trials that were done last February. With the results, Hudson said the treat could cover half of the $20 billion worth of the treatment market for the incurable disease.

Its first patient for Phase Three has been enrolled.

Principia is also making another therapy. One of them treats some immune- system conditions.

The company is also testing the medicine's use in patients with a group of rare diseases called pemphigus. This causes some blistering of the skin and mucous membranes.

Bloomberg sources said that in May, Sanofi could spend as high as $50 billion to buy other competitors in the drug industry. It had recently announced the disposal of its stake in another biotech company, Regeneron.

Analysts from the Bank of America Corp. wrote at the time that Sanofi is looking into other treatments besides cancer and gene therapy. They also wrote that the company would target immunology assets.

The buy-out of Principia is the latest takeover that Sanofi has done to its rivals.

In 2018, it took over U.S. company Bioverativ for $11.6 billion. It also purchased biotech company Synthorx in 2019 for about $2.5 billion.

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