The French drug maker has agreed to pay up to €518m for Oxford Biomedica's lead cancer vaccine.
Trovax is currently in Phase III trials in renal cancer, although it could also be used to treat other solid tumour types, according to both companies.
The move significantly boosts Sanofi's pipeline as its other cancer vaccines are only in preclinical development.
The worldwide cancer vaccine revenues are estimated to reach approximately $6bn (€4.5bn) by 2010, according to Arrowhead.
However, the closest thing to a cancer vaccine currently on the market is Merck & Co.'s Gardasil, which protects against a virus that can cause cancer.
The deal with Oxford BioMedica will enable Sanofi to leapfrog some competitors in the race to bring out a dedicated cancer vaccine.
"Trovax represents a best-in-class in terms of the cancer vaccine field," claimed Professor Alan Kingsman, CEO of Oxford Biomedica.
"The very strong correlation between clinical benefit and the quantitative immune response that is mounted in a patient...is, for us, the most significant information that suggests Trovax is efficacious."
Sanofi, one of the major players in the vaccine market, is already developing cancer vaccines in a joint project between its pharma and vaccine business divisions.
The company identifies specific antigens carried by tumours in order to then inject them and elicit an immune response that can hinder the development of the primary tumour or metastases.
Trovax targets the 5T4 tumour antigen and consists of a poxvirus gene transfer system, which delivers the gene for 5T4 and then stimulates the patient's body to produce an anti-5T4 immune response.
Sanofi's cancer vaccine work so far has focussed on melanoma and colorectal cancer, and the company said it sees the latter and renal cancer as the lead indications for Trovax.
Biomedica's pipeline also matches Sanofi's interests in other areas: the Oxford-based company are currently conducting Phase II trials for a melanoma vaccine, Hi-8 MEL.
A second Phase II programme for a pancreatic cancer vaccine, MetXia, is also underway.
Both projects remain without a partner.
Prof Kingsman explained that Hi-8 MEL came from Oxford Biomedica's acquisition of Oxxon Therapeutics earlier in March.
He explained that although Trovax could treat many potential cancers, the "one thing you can't do use it for is melanoma
so we plugged that gap very nicely with the Hi-8 MEL product."
"This revenue enables us to invest in the rest of the pipeline," he said.
He went on to explain that the company can now "invest significant resources in its neurotherapy pipeline and in particular Prosavin" - Biomedica's Parkinson's disease therapy.
The money from the Sanofi deal will enable Biomedica to only deal on its other products if and when it wants too.
"We can choose whether to do a deal on Prosavin based on business strategy rather than the decision being based on a need for cash," said Prof Kingsman.
Merck & Co.'s Gardasil is designed to protect against diseases caused by human papillomavirus (HPV), including types 16 and 18, which cause 70% of cervical cancer cases.
However, the company admits Gardasil might not fully protect everyone and does not prevent all types of cervical cancer.
Merck & Co. is also collaborating with Biomira on its lung cancer vaccine.
Stimuvax is a synthetic 25 amino acid sequence of the cancer-associated marker MUC-1 and is currently in Phase III trials.
GlaxoSmithKline also has a cervical cancer vaccine in development, Cervarix, which also targets HPV.
GSK submitted a Biologics License Application (BLA) to the US Food and Drug Administration (FDA) this week.
This week, the FDA also recommended that Provenge (Sipuleucel-T), Dendreon's vaccine against prostate cancer, should be approved.
The decision was greeted with surprise by some industry insider's after the drug had missed its endpoint in a Phase III clinical trial, which measured how long prostate cancers were kept from progressing.
A subsequent, small trial with 127 patients, did however, show that the drug extended average patient survival by 4.5 months to 25.9 months.
A larger trial is expected to finish in 2010.
Provenge is designed to stimulate the patient's immune system against the tumour.
The news sent Dendreon's shares skyrocketing 168 per cent.
Shares of Cell Genesys were also boosted by 24 per cent.
The California-based pharma compnay develops GVAX, a cancer immunotherapeutic currently in Phase III trials, again for prostate cancer.
The deal to develop Trovax is the first of two vaccine deals Sanofi announced this week.
The second one relates to the company licensing reverse genetics technology from MedImmune, in order to develop and construct influenza vaccines.
Vaccines developed using this technology would be made entirely from DNA.
This means manufacturers would only have to work with segments of the virus's genome rather than potentially highly infectious pandemic strains, such as H5N1.