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Talks on drug may see deal for firms
By Ben Hirschler |
January 11, 2011, Tuesday
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Print Edition
Print Edition
FRENCH drug maker Sanofi Aventis SA said on Sunday it was in discussions with United States bid target Genzyme Corp over ways to value a key Genzyme drug, in a sign the two sides are moving closer to a deal.
Discussions over Campath, which Genzyme hopes to market as a treatment for multiple sclerosis (MS) under the brand name Lemtrada, are continuing between representatives from both companies, although Sanofi warned there was no guarantee of agreement.
Sanofi has offered to acquire Genzyme, a maker of drugs for rare diseases, for US$18.5 billion, or US$69 a share - a figure Genzyme says is too low.
The two sides are discussing a way to bridge the valuation gap and sweeten Sanofi's offer by focusing on prospects for Campath, Genzyme's most promising drug, via a deal structure known as a contingent value right (CVR).
A CVR would offer Genzyme shareholders an additional payout based on the medicine being approved in multiple sclerosis and meeting certain revenue targets.
"Those discussions are continuing and now include representatives from both companies. There remain significant differences on the terms and conditions of the potential CVR and the value of our offer, and there is no guarantee that the parties will come to an agreement," Sanofi cautioned in a brief statement.
At the heart of Genzyme's bid defense is its estimate that the new MS drug could generate peak annual sales of US$3.5 billion, compared with a figure of around US$700 million underpinning Sanofi's offer.
Discussions over Campath, which Genzyme hopes to market as a treatment for multiple sclerosis (MS) under the brand name Lemtrada, are continuing between representatives from both companies, although Sanofi warned there was no guarantee of agreement.
Sanofi has offered to acquire Genzyme, a maker of drugs for rare diseases, for US$18.5 billion, or US$69 a share - a figure Genzyme says is too low.
The two sides are discussing a way to bridge the valuation gap and sweeten Sanofi's offer by focusing on prospects for Campath, Genzyme's most promising drug, via a deal structure known as a contingent value right (CVR).
A CVR would offer Genzyme shareholders an additional payout based on the medicine being approved in multiple sclerosis and meeting certain revenue targets.
"Those discussions are continuing and now include representatives from both companies. There remain significant differences on the terms and conditions of the potential CVR and the value of our offer, and there is no guarantee that the parties will come to an agreement," Sanofi cautioned in a brief statement.
At the heart of Genzyme's bid defense is its estimate that the new MS drug could generate peak annual sales of US$3.5 billion, compared with a figure of around US$700 million underpinning Sanofi's offer.
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