(Bloomberg) -- Sanofi is selling a stake in Regeneron Pharmaceuticals Inc. valued at about $13 billion, giving the French drugmaker more firepower to potentially snap up promising assets in the cancer, gene therapy and rare-disease fields.

The Regeneron exit, part of Sanofi Chief Executive Officer Paul Hudson’s revamped strategy to focus on fast-growing areas, is sparking speculation he’ll hunt for more targets following a deal in December to buy biotech company Synthorx Inc. for $2.5 billion. The transaction will boost Sanofi’s war chest to $50 billion, according to Bloomberg Intelligence.

Regeneron has agreed to repurchase $5 billion of its stock from Paris-based Sanofi, the companies said on Monday. Regeneron said that Sanofi also plans to sell approximately 12.8 million shares, a holding worth more than $7 billion based on Friday’s closing price. That will mark the largest public equity offering in the heath-care industry on record.

Setting a new course, Sanofi said in December that it would end its hunt for new diabetes and heart disease medicines, helping save more than $2 billion, as it expands in lucrative areas such as oncology. Sanofi may also look for gene therapy assets targeting rare illnesses in pursuit of deals of less than $5 billion, according to analysts at Citigroup Inc.

“We believe the proceeds from this transaction will help further our ability to execute on our strategy to drive innovation and growth,” Hudson, who took the reins of Sanofi in September, said in a statement.

Stock’s Surge

Sanofi’s decision to sell comes after Regeneron’s stock surged 57% in the past six months. The French drugmaker holds about 23.2 million Regeneron shares, or 20.6% of the U.S. pharmaceutical company. When Sanofi first purchased shares of the Tarrytown, New York-based drugmaker in 2003, the stock traded below $20, compared with a closing price of $569.91 last Friday.

Sanofi slipped as much as 1.3% in Paris on Tuesday, while Regeneron was off 4.7% in U.S. premarket trading.

Besides cancer and gene therapy technologies, targets for deals may include immunology assets, according to analysts at Bank of America Corp. Switzerland’s Vifor Pharma AG could attract interest from Sanofi, Mirabaud analysts said.

Bank of America and Goldman Sachs Group Inc. are the underwriters of the stake sale. Regeneron said it will fund the share repurchase with $3.5 billion of cash and $1.5 billion of financing from Goldman Sachs Bank USA.

Partnership Continues

Sanofi and Regeneron said there will be no change to their ongoing partnerships. Through their collaboration since 2003, the companies have brought five medicines to market, and have additional drug candidates currently in clinical development. Sanofi will continue to own about 400,000 Regeneron shares.

In December, Sanofi and Regeneron announced their intent to restructure collaborations for two drugs, the cholesterol-buster Praluent and the arthritis medicine Kevzara.

Hudson also said at the time that Sanofi could raise funds by selling its stake in Regeneron after a lock-up period expires at the end of 2020. The two companies agreed to waive that lock-up and amend the agreement, Sanofi said in an email on Tuesday.

The deal could revive speculation that Sanofi may buy back L’Oreal SA’s 9.4% stake in the drug company. That, in turn, raises the possibility that L’Oreal would buy back a 23% stake that Nestle SA holds in the French cosmetics maker.

Covid-19 Collaboration

Both Sanofi and Regeneron have positioned themselves as front-runners in the race to develop therapies and vaccines to battle the coronavirus pandemic. Sanofi has received funding from the U.S. government to expedite research and development and scale up production capabilities for its high-profile vaccine candidates.

Read More: U.S. Likely to Get Sanofi Vaccine First If It Succeeds

Sanofi is also working with Regeneron to evaluate how Kevzara could help very sick Covid-19 patients in respiratory distress. Initial trial results have suggested that the drug may help only the most critically ill patients⁠ -- the severest of the severe⁠.

(Updates analyst comments throughout)

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