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Genzyme and sanofi-aventis are getting closer

The folks at Bloomberg and the Wall Street Journal have their “inside sources” (I was never good at espionage), so we’ll let them tell you what’s going on with the continuing saga of sanofi-aventis trying to acquire a (so far) reluctant Genzyme.

Bloomberg:

Genzyme Corp. agreed to give Sanofi-Aventis SA access to confidential information, bringing the companies a step closer to a deal five months after the French drugmaker offered to buy Genzyme for $18.5 billion.

The companies may reach a deal in the next two weeks, said three people with knowledge of the situation who spoke on the condition of anonymity because the talks are private. The confidentiality pact means that Sanofi and Genzyme are aligned on broad terms, with Sanofi likely to slightly raise its $69-a- share offer, the people said. The French drugmaker may also make additional payments based on the success of a Genzyme experimental multiple sclerosis drug, the people said. The companies have yet to agree on final terms.

Wall Street Journal blog:

It Might Actually Happen: Genzyme and Sanofi-Aventis have agreed in principle to a deal and plan to nail down the details in the next week, though there is still no guarantee of a final agreement, the WSJ reports, citing people familiar with the situation. Genzyme has previously rejected Sanofi’s $69-per-share offer as too low and instead wanted something more like $80 to sell, but recently “the two sides have made significant progress in bridging the value gap,” the paper says.

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February 1, 2011 Posted by | Corporate, M&A activity | , , , , , | 1 Comment

Amgen to acquire BioVex for as much as $1 billion

THOUSAND OAKS, Calif. and WOBURN, Mass.—Marking another move in Big Pharma to capitalize on the growing area of cancer vaccines, Amgen has entered into a definitive acquisition agreement under which it plans to acquire BioVex Group Inc., a privately held, venture-funded, biotechnology company headquartered in Woburn, Mass. BioVex is developing OncoVEX(GM-CSF), a novel oncolytic vaccine currentl in Phase III clinical development, that “may represent a new approach to treating melanoma and head and neck cancer.”

Amgen will pay as much as $1 billion to get the deal done, $425 million of that in cash at closing and as much as $575 million in additional payments upon the achievement of certain regulatory and sales milestones. The transaction has been approved by the boards of directors of each company but remains subject to customary closing conditions, including regulatory approvals. The company expect, however, that the deal will close in the first quarter of 2011. Following the completion of the transaction, BioVex will become a wholly owned subsidiary of Amgen.

“OncoVex has demonstrated encouraging anti-tumor activity in clinical studies for the treatment of melanoma and head and neck cancer, and BioVex is currently enrolling patients into pivotal Phase 3 trials in both indications,” says Dr. Roger M. Perlmutter, Amgen’s executive vice president for research and development. “Amgen is particularly excited about joining with BioVex and its talented staff to focus on advancing this late-stage investigational therapy, with the hope of bringing it to market within the next few years.”

“Amgen is ideally positioned to leverage the potential of OncoVEX in multiple solid tumor indications given their impressive oncology franchise and expertise in biologics manufacturing and development,” adds Philip Astley-Sparke, CEO of BioVex. “We have a shared vision and commitment to bring novel therapeutics to market and we are looking forward to being able to combine our efforts towards this common goal.”

We at ddn will provide you with additional details, in the print issue or on the website, in the coming days and weeks.

January 25, 2011 Posted by | Corporate, M&A activity | Leave a comment

Good news, bad news

As is so often the case, I greet stories of mergers with a sense of “yes, a company successful enough to be bought out by (or combine with) someone larger…congrats to them!” that is mixed with the “oh crap, more people are going to be jobless now, probably” feeling.

Case in point: Valeant Pharmaceuticals in California is laying off 500 people subsequent to the fall merger deal with the former Biovail, which had been Canada’s largest publicly traded pharma company…

Read more (and try not to weep; at least it isn’t the thousands upon thousands that so many Big Pharmas have announced are getting the axe in recent months, as ddn Chief Editor Amy Swinderman talked about here and here.)

January 14, 2011 Posted by | Corporate, M&A activity | , , , , , | Leave a comment

Delays, delays…

Perhaps one of many reasons Genzyme seems more willing to talk with sanofi-aventis about possibly being acquired in a peaceful fashion instead of in a hostile takeover (or having no deal at all)? …

Genzyme lowers guidance following Fabrazyme production delay

Jan. 13, 2011

Genzyme has lowered 2011 financial projections after delaying the date that it expects Fabrazyme production to return to normal. The manufacture of Fabrazyme (agalsidase beta) had been moved to a plant in Framingham, Mass.,  but production levels have not yet returned to earlier levels. Genzyme had expected supply to meet demand in the first half of 2011 but has now pushed back that timeline.

January 13, 2011 Posted by | Corporate, M&A activity | , , | Leave a comment

Theeey’re baaaaaaack

…well, to be honest, they never left.

They never left the news (they simply went into the background for a little while) and they never left the negotiating table (it just seemed like it).

I’m talking about Paris-based sanofi-aventis and Cambridge, Mass.-based Genzyme. The former has been trying to acquire the latter for months now. Genzyme says it’s worth too much to give in to a $69-per-share offer and sanofi points out that the biotech can’t hold out forever, particularly with no other suitors knocking at the door.

Truth is that they probably need each other. Genzyme probably needs to be part of something larger and sanofi-aventis certainly needs the pipeline and technology platforms that Genzyme can bring it in these challenging economic times.

So it’s probably with great relief to investors and to many market watchers that the companies announced at the beginning of this week that they are in negotiations about the acquisition. There is still a lot of ground to cover to get them on the same page…or in the same chapter, for that matter…but at least they’re talking.

Of course, they have been all the while. When the top execs haven’t been trading letters, the financial advisers for both companies have been talking. The difference now is that actual company representatives for both sides are now in on the talks.

More importantly, sanofi finally seems willing to budge on the price, and Genzyme seems willing to beat its chest a little less forcefully about how much it’s worth.

At least that’s how it looks…for now.

We’ll see how it all pans out, but like I said, a lot of people watching these companies are breathing easier as a possible deal seems to become more and more likely.

Frankly, I suspect the CEOs and boards of both companies are breathing easier too.

January 11, 2011 Posted by | Corporate, Dealmakers, M&A activity | 1 Comment

Season’s mergings

So, I just finished writing one of my articles for the January issue, which is on the Johnson & Johnson and Crucell acquisition bid for Crucell. As I noted in the blog (here), one of the sticking points in the M&A journey for these two companies has been the opinion of the second-largest shareholder, Van Herk Groep, that J&J just isn’t offering a satisfactory per-share price in its bid.

Well, in the few months that have passed since the two companies told everyone they were courting, there have been some manufacturing problems at a Crucell plant in South Korea that were bad enough to affect third-quarter earning and year-end projections.

However, J&J went ahead with a formal acquisition bid earlier this month, and didn’t lower its offer a single penny.

Now, one can only speculate whether Van Herk has still been holding to its opinion that J&J is being a Scrooge. After all, I haven’t heard anything so far that’s made me think their collective minds have changed. And I don’t know how much they think is fair…

…but one wonders whether Van Herk will view this bid as a holiday gift (no change despite manufacturing problems), or still keep looking for a bigger box under the tree for itself.

At least I wonder.

Seasons greetings, everyone, belatedly to those who’ve already celebrated their respective holidays and proactively to everyone else. And let’s hope for a Happy New Year in pharma, whether J&J and Crucell tie the knot in February or not.

December 20, 2010 Posted by | Corporate, M&A activity | , , , , | Leave a comment

Who? What? How much?

So, as I was writing a news article (here) on the web site about Axcan Holdings getting prepped to buy out Eurand N.V., I was struck with an overwhelming question.

Who are these companies?

I don’t mean to be flip, mind you. They’re both legit pharma entities, with Axcan having a strong gastrointestinal focus and Eurand having six FDA-approved products under its belt. But I’ve never heard of either one of them.

This isn’t odd, of course. There are so many small and mid-size pharmas and biotechs that even the most hardened life sciences market analyst couldn’t know them all. No matter how much we are in the business or reporting about it, there will always be company names that make us say, “Never heard of ’em.”

But the reason this sticks out for me is that the buyout deal is for $583 million. That’s over a half-billion dollars.

Isn’t that a lot of money? Shouldn’t I have heard of these companies in passing before, with that kind of money about to change hands?

Or is it just that things have begun to move so quickly now, and so much money is being thrown around the world economy that a billion dollars is “the new black?” That is, being a millionaire now, even at the high ends, is perhaps passé, and now you don’t matter as a rich person unless you break the billion mark?

I realize that as I get older, I will look back at the “good old days” (or bad old ones, for that matter) and say, “What happened?” I already do, and I recognize it.

But still, half a billion dollars seems to me like the kind of money that gets thrown around by pharmas I’ve heard of before. It just doesn’t seem like in the mere five-and-a-half years that I’ve been on staff at ddn that we could have gone from half a billion being big news to simply being a blip on the radar.

So, I wonder: Is the fault in me that I’ve never heard of these companies before and should have? Or just that the world is moving so fast now that it’s hard to keep up with the dollars and the deals?

December 2, 2010 Posted by | Corporate, Dealmakers, M&A activity | , , , , , , | Leave a comment

For M&As right now, Glaxo seems a no-go

I know I reported on this in early September (right here), but apparently the news bears repeating—and elaboration—since the company in question is again being pretty blunt about its view of M&As right now:

GlaxoSmithKline doesn’t want to acquire Genzyme.

Either that, or GSK is engaging a stealthy distraction of such grace and magnitude that it would make a team of elite ninjas commit ritual suicide in jealous disgrace.

Glaxo, of course, has been noted as one of several companies contacted by Genzyme to determine its value as it fends off an $18.5 billion hostile takeover bid by sanofi-aventis. But speaking late last week to reporters in Cambridge, Mass., where Genzyme is based, Patrick Vallance, senior vice president of medicines discovery and development for GSK, along with other Glaxo executives, gave an overview of their drug discovery and development strategies, and they were pretty clear that large M&A deals aren’t really a focus right now.

Vallance described such big deals as often being destructive to R&D efforts, and instead Glaxo has been toying with some new business models in discovery and development to reduce its risk and maximize its successes, something I’ll touch upon in the coming days and weeks as I share information from GSK R&D Day last week in Cambridge, which I had the pleasure to attend along with other members of the mainstream, business and pharma media.

GSK is increasingly looking outward for new ideas and new compounds to fill its pipelines, but it doesn’t seem eager to want to just buy companies based on potential, and certainly not for huge sums, as Moncef Slaoui, the British pharma’s head of research and development, noted when he said in September that “An offer by GlaxoSmithKline for Genzyme does not make sense. It is too expensive.”

So, for those still holding out that GSK is simply waiting to pounce in from the shadows to duel with sanofi over Geznyme, you’d probably be better making a bet that Glaxo might make a partnership deal with the company one day. Because Vallance and Slaoui have both been pretty clear that GSK is willing to look for the best ideas outside the company, but it isn’t that fired up about spending a mint to bring them in-house unless they look like they’re already on the way to big payoffs.

November 21, 2010 Posted by | Corporate, M&A activity | , , , , | Leave a comment

Genzyme and sanofi continue on…and on…and

There is a good reason why professional arm wrestling isn’t a major television draw. For all the complaints of how boring baseball or golf is to watch, things do change and tides turn in dramatic fashion amid the slow portions. But watching two people with interlocked hands staring each other down while muscles bulge…until finally one opponent just loses the will or strength to continue?

No, not interesting to most people.

In many respects, the sanofi-aventis attempt to acquire Genzyme (whether by willing merger or takeover) is beginning to feel like arm wrestling. It’s only interesting if you’re one of the competitors. Or you have a bet placed.

So, in recent days, sanofi has once again invited Genzyme to come to the table and talk (see this story coming out of Boston, for example, or this one from the Wall Street Journal). Genzyme, in turn, has said “There’s not enough money on the table yet to convince us show up!” (I paraphrase wildly, of course). We’ve been held at a $69 per share offer so long, and the back-and-forth repetition from both sides as to why they won’t budge that…Zzzzzzz

Wha….! Huh?!!!!

Seriously, though, as repetitious as this is seeming, there are little gems of information and insight to be gleaned.

For one thing, despite inviting Genzyme to come back to the table after threatening to take them over, sanofi is still showing its assertive streak by warning the Cambridge, Mass.-based company not to turn to its state’s takeover protections and swallow the proverbial “poison pill” to fend off a hostile acquisition (see this Bloomberg story).

At one website where the latest overtures and refusals had been aired as news, a comment was posted that said, essentially: “Maybe it’s time for sanofi to walk away long enough for Genzyme’s shares to drop back into the 40s and then let Genzyme’s top brass explain the real value of their shares to the stockholders.”

I don’t know that I agree Genzyme isn’t worth more than $69 per share. Maybe it is, maybe it isn’t. But it is certain that the stock rose on the news of a sanofi merger (or takeover). The continued presence of sanofi as an eager suitor (or conqueror) doesn’t seem likely to drive down stock prices. One can only wonder whether with no rival suitors sanofi might be better off stepping away for a time. But then again, with the pressures Big Pharma is facing right now with patents expiring and pipelines being sluggish, perhaps sanofi can’t afford to do that.

It’s also worth putting the current situation into perspective relative to sanofi’s third-quarter earning report in late October. Commenting on those earnings, which were up 13 percent, analyst Simon King of Datamonitor wrote:

“Sanofi-Aventis’s increasing diversified business model is reaping rewards as growth across consumer, generic and vaccine divisions has helped to compensate for generic competition within the branded pharmaceutical segment. However, generic erosion continues to impact performance, driven in part by the somewhat unexpected approval of a generic Lovenox product. With Plavix sales also in decline due to loss of European patent exclusivity, Sanofi-Aventis’s anti-thrombotic empire is in collapse.

“These results occur against a backdrop of continued negotiation regarding Sanofi’s proposed acquisition of Genzyme. Sanofi has used its results announcement to launch its latest salvo towards Genzyme shareholders by suggesting that nothing has been said that will change its current offer. Genzyme though is now being very bullish in terms of sales forecasts – which will be heavily dependent on reversing the loss of sales to Shire in specialist markets and the success of Campath in multiple sclerosis.”

King notes that Genzyme’s stance could backfire, particularly if sanofi does decide to walk away and no other bidders emerge. However, he remains convinced that the Genzyme acquisition “fits the sanofi model.”

For now, it’s still an arm wrestling match. We’ll keep our eyes on it, and let you know who wins in the end…or if we get a draw.

(By the way, sanofi’s public announcement about the latest back and forth is here and Genzyme’s official take is here.)

November 9, 2010 Posted by | Corporate, M&A activity | , , , , , , | 1 Comment

Pink slips pile up in Big Pharma

We here at ddn are in the business of covering the business side of Big Pharma. But behind every headline touting million- or billion-dollar price tags for mergers, acquisitions and partnership deals, there are the untold stories of collateral damage.

Those stories are coming to the forefront lately as headlines are taking note of the number of pink slips piling up in the pharmaceutical and biotech industries.

According to the U.S. Bureau of Labor Statistics, unemployment in the United States was 9.6 percent in September. The unemployment rate has hovered around that figure for most of this year, but it’s about to gain a few percentage points, thanks to recently announced layoffs in Big Pharma.

According to PharmaManufacturing.com, the unemployment rate in pharmaceuticals and life sciences is estimated at 16 percent. Market research firm Reportlinker attributes pharma job losses to several factors. Besides the obvious ones—the economic downturn, the rising number of uninsured Americans and the impending 2011 patent cliff—the firm notes that action taken by the U.S. government as part of healthcare reform legislation will also impact Big Pharma.

“U.S. healthcare reform is set to improve coverage but this will be at the expense of containing healthcare costs,” Reportlinker says. “Although the pharma industry will benefit from the rise in insured individuals, measures such as the increased Medicaid drug rebate and Medicare donut hole discount will have an immediate negative impact on revenues out to 2014.”

Ed Silver, editor of Pharmalot, points out that these numbers may not tell the whole story, since not all job cuts are disclosed: “Some companies cut staff in dribs and drabs, and therefore are not required to file notices with their state governments. The implication is that job losses are greater than the survey implies.”

It can be argued that many of the layoffs are part of the life cycle of merger and acquisition activity. Consider the following:

  • Last year, Abbott Labs purchased Solvay’s drug business for $6.2 billion. Abbott is now cutting about 3,000 jobs in commercial, R&D, manufacturing and staff operations. The company will also close Solvay’s U.S. headquarters in Marietta, Ga.
  • Bristol-Myers Squibb Co., which recently acquired ZymoGenetics Inc. for about $885 million, plans to eliminate 3 percent of its headcount—or about 840 jobs—in the next few months.
  • After signing an agreement reportedly worth $1 million with the J. David Gladstone Institutes aimed at identifying treatments for multiple sclerosis, Alzheimer’s and other neurological diseases, Danish drugmaker H. Lundbeck A/S said it will cut 50 people from its R&D operations in the United States and Europe.
  • Just one month after agreeing to buy Penwest Pharmaceuticals for $144 million, Endo Pharmaceuticals is said to be in the process of laying off an unspecified number of sales managers and sales reps.
  • And most recently, sanofi-aventis—which in recent months has dominated our headlines with its many multimillion- and billion-dollar deals and plans to bring more companies into its fold—announced it will eliminate about 1,700 job in the United States, or about 25 percent of the company’s U.S. pharmaceutical operations division.

In announcing its recent agreement to acquire King Pharmaceuticals Inc., Pfizer Inc. focused on the “cost synergies” it expects to see from the $3.6 billion deal. According to Pfizer, it will take only three years for the dust to settle on the consolidation involved in the bolt-on acquisition. By then, it will have cleared a substantial patent expiration hurdle.

We’ll bring you the details of that acquisition in our November issue, but until then, what is your opinion of the mounting job losses we are seeing in Big Pharma?

October 15, 2010 Posted by | M&A activity | , , , , , | 1 Comment