Genzyme ($GENZ) and Sanofi-Aventis ($SNY) are once again trading barbs in their ongoing contest over Sanofi's hostile bid. But the most intriguing remarks about that potential deal today came from the sidelines.
First, the companies themselves: Sanofi released a letter urging Genzyme to abandon any defensive tactics suggested by management, including adopting a new poison-pill provision. "[I]n all fairness, you should allow your shareholders the opportunity to decide for themselves," CEO Chris Viehbacher wrote. Genzyme fired back with its own letter reiterating its contempt for Sanofi's $18.5 billion offer, once again saying that its sales-and-earnings forecasts show the company is worth much more.
But here's the rub, offered by Novartis. The Swiss drugmaker questions those very sales forecasts, predicated as they are on rosy projections for future sales of Genzyme's experimental multiple sclerosis drug Campath. Novartis just won FDA approval for Gilenya, an MS treatment that would compete with Genzyme's Campath, and its development chief says that drug will capture enough of the market to keep Campath sales below Genzyme's $3 billion target.
"$3 billion was probably realistic in May, but is it realistic now?" asks Trevor Mundel (as quoted by Reuters), saying that Gilenya will be the first-line drug, leaving Campath to compete for second-line status. "To the extent that we solved the first-line issue first, then space for Campath will close down."
Meanwhile, a key biotech investor says Genzyme has virtually no chance of remaining an independent company. Some 40 percent to 50 percent of the company's shares are now held by arbitragers, who are betting on a takeover. "Genzyme is history," Frederick Frank, vice chairman of Peter J. Solomon, said at Reuters' health conference. "It's only a question of when and at what price."