Sanofi-Aventis wins over Genzyme board with $1.5 billion increase to August 2010 bid
Sanofi-Aventis has won its long-running battle for Genzyme, and is to acquire the US-based biotech for $74 (?46) per share - about $20 billion in total - plus extra payments of up to $14 per share. The extra payments will depend on the success of the leukaemia drug Campath (alemtuzumab) in the multiple sclerosis (MS) area, where it will be marketed as Lemtrada, and production levels of the Genzyme products Fabrazyme (agalsidase beta) and Cerezyme (imiglucerase), which lost market share after being beset by manufacturing problems in 2009.
Genzyme’s shares peaked at $83 in 2008, but had dropped below $50 by the time Sanofi-Aventis made its first offer as a result of the manufacturing issues. The French-headquartered company first bid $69 per share in August 2010, but Genzyme said it undervalued the business. Sanofi-Aventis hopes the deal will close early in the second quarter of this year, as no divestments will be required by the competition authorities in either Europe or the US.
In a conference call with analysts, Sanofi-Aventis chief executive Chris Viehbacher said that Genzyme was a good fit because it gives the company an increased presence in the US and increases its biotech operations. ’Biotech was not embraced by Sanofi-Aventis in the past, and that was a weakness,’ he said. ’We have been building up organically and now about 20-30 percent of our R&D platform is in biologics but not on the market.’
’I think Sanofi-Aventis didn’t have a choice - they started doing acquisitions knowing they had products such as Plavix going off patent,’ says Jansen Jacob, an adviser at consultancy PharmaVentures. Concerns over the potential value of Lemtrada appear to be the big driver behind the $14 per share extra payments. Sanofi-Aventis was burnt by the Phase III failure in January of breast cancer treatment iniparib, the lead product of its 2009 acquisition, BiPar Sciences.
’I am assuming they will try to price Lemtrada with other MS products,’ Jacob says. ’For leukaemia, a treatment costs $30,000, but the dose is lower in MS, and at a comparable price the treatment cost would be $7,000 - but a typical MS drug costs $48,000 per treatment.’
’The other issue is integration and whether Genzyme will be more or less left independent or not, as that might affect how innovative it is in the future,’ he adds.