Genzyme to initiate tender offer to acquire AnorMED, Inc.

09-18-2006

Genzyme Corporation (GENZ) announced that it plans to initiate a tender offer to acquire AnorMED, Inc. (AOM; AOM) of Vancouver, British Columbia.

The tender offer will take the form of an all cash transaction valued at US$8.55 per outstanding share, or approximately $380 million. This offer represents a premium of approximately 70% over AnorMED's closing price of US$5.02 on the American Stock Exchange on August 29, 2006.

The addition of AnorMED will bring Genzyme a leading late-stage product candidate in development for hematopoietic stem cell transplantation (HSCT). AnorMED's most advanced product, Mozobil, could improve the viability of hematopoietic stem cell transplants, and enlarge the pool of patients for whom transplantation is an option. Enrollment is complete in a Phase 3 trial for Mozobil in multiple myeloma, and a second Phase 3 trial in non-Hodgkin lymphoma is expected to conclude in late-2006. Mozobil has been granted special protocol assessment and orphan drug status in the United States and European Union.

"We believe Mozobil represents an important therapeutic advance in the field of stem cell transplantation, and Genzyme is uniquely positioned to ensure that it reaches its full global potential," said Henri A. Termeer, chairman and chief executive officer of Genzyme Corporation.

"We firmly believe that Genzyme is the best party to bring Mozobil to patients worldwide. Our clinical/regulatory infrastructure will allow us to complete development and registration of Mozobil without delay and at a considerably reduced execution risk; the commercial infrastructure we have developed to support our transplant business unit will allow Mozobil to be made available with reduced incremental investment and delay, and our strong financial position eliminates any capital market and dilution risk."

Genzyme has been in discussions with AnorMED regarding Mozobil since October 2005, including an acquisition proposal in April 2006 at a proposed price of US$8.55 per AnorMED share. Genzyme believes that the company continues to face a number of challenges during this critical stage in the development of Mozobil particularly with respect to the following:

- the need to rebuild AnorMED's senior executive leadership and to recruit and retain experienced clinical and regulatory staff capable of completing the ongoing clinical trials, finalizing the associated clinical study reports and preparing what will be a complicated regulatory submission on an ambitious timeline;

- execution risks associated with clinical development generally, and particularly with the development of a product such as Mozobil where its long-term commercial potential will depend significantly on unit pricing supported by convincing pharmacoeconomic data that demonstrate the value of the product to patients and to the overall healthcare system;

- the expense involved and the execution risks associated with building a commercialization infrastructure in both North America and Europe in advance of product approval; and

- the challenges of obtaining sufficient financial resources on a timely basis to fund the company's operating, developmental and infrastructure needs in a potentially difficult capital market and at the cost of significant dilution for current shareholders.

These challenges may ultimately prevent the shareholders of AnorMED from realizing the significant value potential that has been created by the company's early development work. As more time passes, the potential value of the Mozobil opportunity, and therefore of AnorMED as a whole, may erode further, since there is a significant risk that the commercialization of Mozobil will be delayed. It is these considerations which compelled Genzyme to once again submit an offer in August 2006 to acquire AnorMED for US$8.55 per share and to seek the support of AnorMED for this acquisition.

"We are in a position to offer AnorMED shareholders full value now for their pioneering efforts to develop Mozobil and enable them to realize an excellent return on their investment," said Termeer. "The addition of Mozobil will broaden Genzyme's transplant business by increasing its presence in hematological transplantation, a large and growing market. Our established transplant and oncology businesses provide a solid platform to launch Mozobil's growth and drive its adoption in stem cell transplantation procedures throughout the world."

Mozobil has been shown in multiple Phase 2 studies to rapidly increase the number of stem cells in circulation in the blood, an important step in preparing a patient for a stem cell transplant. Increasing the number of stem cells collected may improve patient outcomes in two ways: by helping patients who were previously not eligible to meet the target ranges needed for a transplant; and by raising the level of stem cells collected in those already eligible, thereby improving the viability of the transplant. Approximately 45,000 stem cell transplants are performed each year in the United States and Europe for multiple myeloma, non-Hodgkin lymphoma, and other conditions.

Thymoglobulin (anti-thymocyte globulin, rabbit), Genzyme's largest transplant product, is indicated in the United States to treat acute rejection of a renal transplant, and in some countries outside the United States for use as induction therapy prior to solid organ or stem cell transplantation. Thymoglobulin is sold in more than 50 countries throughout the world, and is being examined in several clinical trials as part of a conditioning regimen for hematopoietic stem cell transplantation.

Genzyme's offer to acquire AnorMED will take the form of an all cash tender offer, which will be open for acceptance for 35 days. The transaction has been approved by the Genzyme board of directors.

In association with the acquisition, Genzyme anticipates it will incur certain one time charges, which will be detailed at the close of the transaction. The acquisition is expected to be accretive beginning in 2009, the first full year of Mozobil revenues following its anticipated launch in 2008.

This article was prepared by Biotech Business Week editors from staff and other reports. Copyright 2006, Biotech Business Week via NewsRx.com.