Genzyme Planning December Investor Meeting To Review MS Drug
November 23 2010 - 3:15PM
Dow Jones News
Genzyme Corp. (GENZ) is planning to hold a December investor
meeting to thoroughly review its controversial long-term sales
projections for multiple sclerosis drug alemtuzumab.
The potential of the drug is a key part of the Cambridge, Mass.,
company's claim that an $18.5 billion hostile takeover offer from
Sanofi-Aventis SA (SNY SAN.FR) is too low. The drug is still being
tested, but Genzyme recently projected sales hitting $3.5 billion
in 2017 compared to Sanofi's expectations of about $700 million in
yearly sales.
In late October, Genzyme held a meeting in New York with
investors and analysts to lay out it long-term financial
projections, including estimates of alemtuzumab's sales.
The December meeting would be similar, likely being held in New
York, and will focus only on alemtuzumab's use in MS. A company
spokesman said the date of the meeting is being finalized.
Sanofi's $69-a-share offer expires on Dec. 10, but few shares
will likely be surrendered because Genzyme's stock has traded above
the offer price since it was launched. Genzyme is currently
reaching out to third parties who may be interested in the
company.
Sanofi Chief Executive Chris Viehbacher has said that Genzyme's
projection for alemtuzumab "stretches the bounds of reality in
anybody's mind." Genzyme has rejected a Sanofi request to form a
working group to allow the French firm to do a limited amount of
due diligence on the drug.
Many Wall Street analysts believe Genzyme will eventually be
sold at a higher price, and also see its long-term estimates for
alemtuzumab as overly optimistic.
The Wall Street Journal recently reported Genzyme is exploring
the possible use of a contingent value right--which could give the
holder payments based on future sales milestones--as a way to
bridge the valuation gap for the drug. Sanofi is also exploring
such an option with its financial advisers.
It is expected that any deal would still need to include a cash
component that exceeds the current $69-a-share offer.
Alemtuzumab is already approved to treat a rare type of blood
cancer under the brand name Campath, bringing in less than $150
million a year for the company. For MS, the drug is given far less
frequently and in lower doses.
It is being tested in two large Phase III trials, with data
expected in mid-2011. It has proved highly effective in preventing
relapses of the disease in midstage trials for as long as four
years after the last dose.
Its ultimate usage will largely depend on that data and its
relative safety in a competitive MS market where patients have many
other options.
Shares of Genzyme recently traded down 67 cents, or nearly 1%,
to $70.69.
-By Thomas Gryta, Dow Jones Newswires; 212-416-2169;
thomas.gryta@dowjones.com
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