Stephanie Sutton was an assistant editor at Pharmaceutical Technology Europe.

Stephanie Sutton

Sanofi-aventis (Paris) has asked Genzyme (Cambridge, MA) to stand aside and let the shareholders decide on whether an acquisition should take place. In the latest update in the ongoing sanofi-aventis/Genzyme 

, the CEOs of both companies have exchanged harsh letters.

Genzyme has several defenses in place, including a shareholder-rights plan or “poison pill,” which may prevent a hostile takeover. According to sanofi-aventis CEO, Christopher Viehbacher, however, this is unfair for shareholders. 

“We believe it would be inappropriate for the Board to take these defensive actions,” said Viehbacher in a 

. “If we are unable to have a direct dialogue with you, in all fairness you should allow your shareholders the opportunity to decide for themselves whether or not to accept our proposal.”

Additionally, Genzyme is wielding the threat of the Massachusetts anti-takeover status, which would prevent the acquisition from taking place without Board approval, regardless of shareholders’ opinion, and has indicated that the board can extend the election terms of two-thirds of its current directors to an additional one to three years. 

“Your shareholders should know with certainty that you will not interfere with their right to benefit from our offer,” said Viehbacher in the letter. “Therefore, we ask that you take action to make the Massachusetts anti-takeover status inapplicable to our offer and confirm that Genzyme’s 2011 annual meeting of shareholders, including the election of all directors, will be held on schedule.”

Viehbacher also requested a meeting with Genzyme to discuss the proposed acquisition, but in a firm 

 posted on the company’s website, Genzyme CEO Henri Termeer, explained that the current $69 per share offer is not an appropriate starting point for discussions. He highlighted the reports Genzyme has released about its near-term plans and future prospects, as well as the results of an independent third-party study of the significant revenue potential of its multiple sclerosis candidate alemtuzumab.

“Sanofi-aventis, for its own purposes, has chosen to dismiss or ignore this information and stick to its opportunistic and inadeuqate $69.00 per share offer, even as analysts have adjusted their target to reflect the new information,” said Termeer. He also added that Genzyme continues to have the support of its shareholders. 

He makes no mention of taking the actions Viehbacher requested, although he did explain that the Board is open to discussions with sanofi when an appropriate offer is made. 

The current tender offer for all the outstanding shares of Genzyme will expire on Dec. 10, 2010.

Articles

Sanofi-aventis (Paris) has asked Genzyme to stand aside and let the shareholders decide on whether an acquisition should take place.

Sanofi and Genzyme Still at Odds Over Acquisition

Genzyme has outlined why it believes sanofi-aventis’s tender offer of $69 per share “dramatically undervalues the company” and why a price of $89 per share would be more reflective of the company’s true value. 

At the end of last week, Genzyme released an outlook for strong near-term growth. “For 2011, the company expects to generate non-GAAP earnings of $4.30–4.60 per share, compared with guidance of $1.85–1.90 per share for 2010,” said a 

. “Revenue is expected to increase to $5 billion–5.1 billion in 2011 from an expected $4.1 billion for 2010.” In particular, the company is expecting strong growth in its rare diseases business, gross margin improvements and cost reductions stemming from a value improvement program.  

“Sanofi-aventis has stated that the $69 per share tender offer price represents a multiple of 20 times consensus earnings estimates,” Genzyme added. “Applying this multiple to the midpoint of Genzyme’s 2011 guidance would yield an offer price of $89 per share.”

, but initiated a hostile takeover attempt at the beginning of 

. Genzyme’s board of directors has rejected the offer and urged shareholders not to tender their shares.

“Our board is unanimous in its view that the sanofi-aventis offer does not approach the real value of the company, nor does it reflect our financial recovery, the achievement of manufacturing and product-supply milestones and the increasingly recognized commercial potential for alemtuzumab,” Henri A. Termeer, Genzyme’s board chairman and chief executive officer, explained in the statement. 

According to Genzyme, sanofi-aventis based its tender offer on a July 1 stock price and the timing will deprive Genzyme shareholders of the opportunity to fully benefit from the company’s manufacturing recovery  

 at the company had caused a shortage of Cerezyme and Fabrazyme and a subsequent drop in sales. However, Genzyme now expects Cerezyme patients worldwide to return to normal dosing levels during the fourth quarter. The company has also begun doubling allocations of Fabrazyme , starting in the US, and expects to be able to fully supply the global market during the first half of 2011. 

“The offer fails to adequately recognize Genzyme’s rapidly improving financial performance, including its outlook for double-digit growth in revenue, earnings and cash flow; its unique portfolio of 12 market-leading products with durable revenue streams; and its valuable pipeline that includes three significant late-stage drugs scheduled for launch by 2013,” said Genzyme.

The tender offer will expire on December 10. 

Genzyme has outlined why it believes sanofi-aventis?s tender offer of $69 per share "dramatically undervalues the company" and why a price of $89 per share would be more reflective of the company?s true value.

Genzyme Says It Is Worth More Than Sanofi Bid

The UK’s coalition government has unveiled its spending 

 and it’s good news for the life sciences sector, which has been allocated annual public funding of £4.46 billion ($7 billion) until 2014/2015. 

, the figure actually translates as a cut as inflation means that £1 today will be worth about 90 pence in 4 years’ time. However, the sector has still fared better than other areas of expenditure, which have suffered significant cuts in light of the financial crisis and the fact that the UK is in a huge amount of debt right now (the equivalent of a budget deficit in excess of $240 billion).

“A real-terms cut still poses significant challenges, but we acknowledge the commitment of Ministers to ensuring a stable scientific research base in the UK,” Nigel Gaymond, Chief Executive of the BioIndustry Association (BIA), said in a 

The funding has also been welcomed by the Association of the British Pharmaceutical Industry (ABPI). “Scientific research is critical to securing the future economic growth and the UK can harness the rich opportunities offered by medical science for the benefit of patients and society,” said Richard Barker, Director General of the ABPI, said in a 

UK life sciences also received further good news this week with the launch of two new initiatives designed to boost R&D and collaboration between academics, clinicians and industry. The Therapeutic Capability Clusters initiative will seek to accelerate the development of new medicine, while the Inflammation and Immunology Initiative aims to help target the right treatments to the right people, enabling effective clinical trials as well as identifying novel biomarkers, mechanisms and targets. Both initiatives were launched by universities and UK Science Minister David Willetts at a joint conference held by the ABPI and the BIA.

Another initiative launched in the past week is the UK Department of Health’s pledge to establish a 

 of £200 million per year ($317 million USD), which should help boost the country’s uptake of cancer drugs and, subsequently, pharma companies with oncology drugs. 

“This £200 million a year funding over 3 years for cancer drugs is a crucial step forward in addressing the disparity in patients' access to cancer drugs in England compared with other countries,” UK Health Secretary Andrew Lansley said in a statement. 

The ABPI also added: “The UK currently ranks amongst the lowest in Europe in the uptake of innovative medicines, despite having amongst the lowest prices. As the NHS faces the challenge of achieving £20 billion annual efficiency savings, innovative new medicines will be an important part of the solution to reduce the long term burden of disease, and so deliver cost-effective care.”

The UK's coalition government has unveiled its spending review and it's good news for the life sciences sector, which has been allocated annual public funding of £4.46 billion ($7 billion) until 2014/2015.

Life sciences protected in the UK

A European pilot initiative will test the impact of consultations with a number of stakeholders such as patient representatives and payers on early stage drug development.

 from the European Medicines Agency (EMA), which is also involved in the initiative, the purpose of the consultations is to “improve clarity and alignment among the stakeholders regarding what constitutes a medicine’s value and the evidence required to demonstrate that value most effectively”. Ultimately, the aim will be to provide better medicines that better meet the requirements of European healthcare systems. 

The pilot will involve a number of stakeholders from France, Germany, Italy, the Netherlands, Sweden and the UK, including clinicians, health technology assessors (HTAs), patient representatives, payers, regulators and drug developers. 

“The agreed consultation process will engage all participants on issues of a medicine’s therapeutic value, and a narrower group of HTA and payers on questions of economic value deriving from therapeutic benefits,” explained the EMA. 

 also added that the pilots are designed to provide a proof-of-concept opportunity on which subsequent pilots and broader initiatives for early consultation may be based. The recommendations of the consultations, however, will be non-binding and will not replace existing channels for regulatory and reimbursement approval. 

AstraZeneca, GlaxoSmithKline and Johnson & Johnson will be providing medicines from their pipelines for the pilots, as well as support and funding. Three pilots are planned for the latter half of 2010 and early 2011, and, according to the EMA, the participating companies will seek early advice regarding a medicine in development for either breast cancer or type 2 diabetes. 

European Healthcare Innovation Leadership network

, which aims to improve patient health outcomes and enhance the climate for innovation whilst also acknowledging pressures to control healthcare costs.

Europe Launches Early Drug Development Pilot

. “Revenue is expected to increase to $5 billion–5.1 billion in 2011 from an expected $4.1 billion for 2010.” In particular, the company is expecting strong growth in its rare-diseases business, gross margin improvements, and cost reductions stemming from a value-improvement program.  

“Sanofi aventis has stated that the $69-per-share tender offer price represents a multiple of 20 times consensus earnings estimates,” Genzyme added. “Applying this multiple to the midpoint of Genzyme’s 2011 guidance would yield an offer price of $89 per share.”

 Genzyme’s board of directors has rejected the offer and urged shareholders not to tender their shares.

“Our board is unanimous in its view that the sanofi aventis offer does not approach the real value of the company, nor does it reflect our financial recovery, the achievement of manufacturing and product-supply milestones, and the increasingly recognized commercial potential for alemtuzumab,” Henri A. Termeer, Genzyme’s board chairman and chief executive officer, explained in the statement. 

According to Genzyme, sanofi aventis based its tender offer on a July 1, 2010, stock price and the timing will deprive Genzyme shareholders of the opportunity to fully benefit from the company’s manufacturing recovery; 

 at the company had caused a shortage of Cerezyme and Fabrazyme and a subsequent drop in sales. However, Genzyme now expects Cerezyme patients worldwide to return to normal dosing levels during the fourth quarter. The company has also begun doubling allocations of Fabrazyme, starting in the US, and expects to be able to fully supply the global market during the first half of 2011. 

The tender offer will expire on Dec. 10, 2010.

Genzyme has outlined why it believes sanofi-aventis's tender offer of $69 per share "dramatically undervalues the company" and why a price of $89 per share would be more reflective of the company's true value.

Genzyme Says it is Worth More than sanofi Bid

A European pilot initiative will test the impact of consultations with a number of stakeholders such as patient representatives and payers on early-stage drug development.

 from the European Medicines Agency (EMA), which is also involved in the initiative, the purpose of the consultations is to “improve clarity and alignment among the stakeholders regarding what constitutes a medicine’s value and the evidence required to demonstrate that value most effectively.” Ultimately, the aim will be to provide better medicines that better meet the requirements of European healthcare systems. 

The pilot will involve a number of stakeholders from France, Germany, Italy, The Netherlands, Sweden, and the UK, including clinicians, health technology assessors (HTAs), patient representatives, payers, regulators, and drug developers. 

“The agreed consultation process will engage all participants on issues of a medicine’s therapeutic value, and a narrower group of HTA and payers on questions of economic value deriving from therapeutic benefits,” explained  EMA. 

also added that the pilots are designed to provide a proof-of-concept opportunity on which subsequent pilots and broader initiatives for early consultation may be based. The recommendations of the consultations, however, will be nonbinding and will not replace existing channels for regulatory and reimbursement approval. 

AstraZeneca (London), GlaxoSmithKline (London), and Johnson & Johnson (New Brunswick, NJ) will provide drugs from their pipelines for the pilots, as well as support and funding. Three pilots are planned for the latter half of 2010 and early 2011, and, according to  EMA, the participating companies will seek early advice regarding a drug in development for either breast cancer or Type 2 diabetes. 

, which aims to improve patient-health outcomes and enhance the climate for innovation while also acknowledging pressures to control healthcare costs.
