Editor

"Change of control." It's one of those legal phrases in a contract that, when brought into play, can strike terror or joy into the heart of one side of a partnership or another who might have more casually agreed years earlier. The concept could take center stage for BioMarin Pharmaceutical Inc. in the firm's deal with Genzyme Corp. if Sanofi-Aventis SA goes ahead with a persistent bid to take over Cambridge, Mass.-based Genzyme Corp. – a bid that speculators predicted could turn hostile.

Genzyme, of Cambridge, Mass., is the target of Paris-based Sanofi, though how or whether the final deal might take shape remained uncertain last week. Sanofi offered $69 per share, according to the first published reports, and the French firm's board has authorized $70 per share, but Genzyme wanted more. (See BioWorld Today, July 30, 2010.)

"It's not an unusual situation," said Francois Nader, who found himself in the tug of war when, in the spring of 2004, Sanofi-Synthelabo SA, of Paris, entered an agreement to pay more than $63 billion to merge with Aventis SA, of Strasbourg, France, to create Sanofi-Aventis. Until July 2005, Nader served with Aventis as senior vice president of integrated healthcare markets and of North American medical and regulatory affairs. He is now president and CEO of NPS Pharmaceuticals Inc., of Bedminster, N.J.

Novato, Calif.-based BioMarin is partnered with Genzyme on Aldurazyme, an enzyme replacement therapy for the treatment of mucopolysaccharidosis-1, approved by the FDA in 2003. Any change in control at Genzyme, such as a buyout by Sanofi, can mean the end of the deal, and the terms say BioMarin can name its price for Genzyme to buy or sell its interest in the compound. BioMarin gets royalties of 39.5 percent to 50 percent on Aldurazyme, depending on sales volume. If BioMarin buys out Genzyme's share of the compound, the move would be "tremendously accretive" to earnings, as analyst Eun K. Yang with Jefferies & Co. pointed out in a research report published July 30. (See BioWorld Today, May 1, 2003.)

A few days later, BioMarin disclosed second-quarter earnings a bit below consensus estimates because of lower-than-expected sales and somewhat higher costs of doing business, while disclosing incremental progress with the pipeline that "may not overly excite investors," in the words of Leerink Swann analyst Joseph P. Schwartz. The firm reported an earnings-per-share loss of 1 cent, well below Leerink's estimate of a 5-cents gain and the consensus guess of 2 cents. But Leerink held onto its "outperform" rating on BioMarin's shares, while lowering the fair value from $27 to $25. Last week, BioMarin (NASDAQ:BMRN) was trading around $21.40.

That unexciting pipeline news included word of promising interim results from a Phase II study with PEG-PAL (PEGylated recombinant phenylalanine ammonia lyase) in phenylketonuria, and news that the program with BMN 195 for Duchenne's muscular dystrophy has been discontinued. The interim results showed two of seven patients who received 1 mg/kg per week for at least a month have had blood phenylalanine level reductions that let them loosen up their diets somewhat, and injection site reactions, though they turned up in 43 percent of patients, were considered mild to moderate, self-limited and not complicated by other problems. BioMarin is hoping PEG-PAL will help patients who do not respond to Kuvan (sapropterin dihydrochloride), which the company already markets for PKU. Analysts at Leerink Swann are skeptical. "Based on [oral] Kuvan's difficulty of gaining PKU patients who do not seem to value phenylalanine reductions alone, we remain cautious on the injectable opportunity," wrote Schwartz.

BioMarin could use the revenue boost that full Aldurazyme rights could provide, and investors were watching intently as the Sanofi-Genzyme situation plays out. If the takeover happens, it could drive excitement for other, similar buyouts of tightly focused biotechs by pipeline-strapped pharma, and NPS may be among those in the ballpark for consideration.

Nader "certainly cannot prognosticate" about such matters, and NPS wants to remain independent, he said. "We can go it alone, which is plan A, but certainly other plans come into play" if a partnering arrangement proves best for the company's shareholders, Nader told BioWorld Insight.

Still, some enticing features that resemble those of Genzyme are in place. NPS in 2007 decided to narrow its research interests to unmet medical diseases in rare disorders, specifically in the areas of gastrointestinal and endocrine disease – "an important turning point," said Nader, who joined NPS in June 2006.

NPS, as part of its second-quarter earnings last week, disclosed that enrollment is complete in the Phase III STEPS trial investigating Gattex (teduglutide) for short bowel syndrome, which means top-line data should be available in the first quarter of next year. More than 90 percent of STEPS patients have been funneled into the STEPS 2 open-label continuation study, boding well for tolerability of the analog of glucagon-like peptide 2.

Also, NPS said the REPLACE trial investigating NPSP588, a recombinant parathyroid hormone for hypoparathyroidism, is 70 percent enrollment and should finish sign-ups by the end of this year. George Farmer, analyst with Canaccord Genuity, called the timing with NPSP588 "ahead of Street expectations" and suggests a product launch in 2012. NPS' spending is "well controlled" in the opinion of Farmer, who estimated operating cash use of $77 million, working from management's guidance of $75 million to $90 million for 2010. Farmer pegged NPS' cash at $87 million by the end of the year, "providing a comfortable cushion into STEPS read-out" in the first quarter of next year. Both of NPS' compounds are partnered outside the U.S. with Nycomed A/S, of Roskilde, Denmark. (See BioWorld Today, April 19, 2010.)

A "safety net" for NPS, Nader said, is Sensipar (cinacalcet) for hyperparathyroidism licensed to Thousand Oaks, Calif.-based Amgen Inc., for "a revenue stream that is in many ways safe," though the stream has been monetized with notes that should be paid down by early 2013, so NPS would get about $100 million per year through 10 percent royalties, starting then. And by 2013, NPS could have both of its products on the market.

Whether or not NPS becomes a takeover target like Genzyme, Nader – like much of the industry – is watching the situation closely. "I don't have any specific internal knowledge, but it seems that it's not unusual in these circumstances to have this type of war, whether it's hostile or non-hostile," he said, pointing to the takeover by Tokyo-based Astellas Pharma Inc. of OSI Pharmaceuticals Inc., of Melville, N.Y. "I was on the other side when Sanofi acquired Aventis," he said. "Some of these items are very familiar."