Assistant Managing Editor

Genzyme Corp. urged shareholders to take no action on Sanofi-Aventis SA's anticipated hostile takeover attempt – at the previously twice-rejected $69 per-share offering price – but whether the large biotech is able to command a higher bid remains debatable.

So far, Paris-based Sanofi remains the only bidder at the table. And the big pharma firm has remained adamant that it will not bid against itself, arguing that $69 per share – about $18.5 billion – is more than fair, given the firm's stock performance over the past few years and last year's troubles at the Allston Landing manufacturing facility that resulted in shortages of enzyme replacement therapies Cerezyme (imiglucerase) and Fabrazyme (agalsidase beta).

"We didn't just wake up one day and say, 'OK, the share price is unusually low this week and let's go launch a tender offer,'" Sanofi CEO Chris Viehbacher told investors on a conference call.

The offer marks a roughly 30 percent premium to Genzyme's closing price before reports of a potential buyout first leaked in mid-July.

He also pointed out that Genzyme's manufacturing woes, which already prompted a costly $175 million consent decree, still are in the process of being resolved. "They're not out of the woods yet," he said. (See BioWorld Today, March 25, 2010.)

Since rumors of Sanofi's interest in Cambridge, Mass.-based Genzyme first surfaced in July, analyst estimates for the potential takeout price have run the gamut, from as low as the mid $60s all the way up to $80 per share. Analysts at Jefferies International Ltd. wrote in a research note Monday that final deal terms "might be a little closer to being below the middle of the $70 - $80 per share range." (See BioWorld Today, July 26, 2010.)

But, unless or until another bidder emerges to drive up the price, Sanofi is banking on the support of Genzyme shareholders to push through a deal.

The big pharma already has secured the needed financing. According to recent filings, it gained access to $15 billion from J.P. Morgan, Societe Generale and BNP Paribas.

After Genzyme's swift rejections, and the inability of the two companies to reach even a starting point for negotiations, Sanofi met with shareholders representing more than 50 percent of the Genzyme's outstanding shares and concluded that they were in favor of an acquisition, Viehbacher said.

"We heard a lot of frustration at Genzyme's unwillingness to work with us," he said, adding that when presenting shareholders with the choice of receiving an immediate cash payout or waiting to see if Genzyme could resolve all its problems, "we didn't hear a single person say they wanted to hang around and see what happens." He added, however, that those shareholders didn't indicate whether they might hold out for a higher bid.

Sanofi's tender offer expires Dec. 10.

Genzyme has in its favor the fact that Sanofi is facing increasing pressure from the upcoming patent cliff. The pharma company has been aggressive over the last year in its acquisition and licensing strategy, most recently buying privately held kinase firm TargeGen Inc. for $560 million in June, but really needs a mature pipeline to help immediately offset the recent generic threat to its best-selling blood thinner Lovenox (enoxaparin). (See BioWorld Today, July 1, 2010.)

The firm suffered another blow last week when a U.S. District Court judge invalidated two of the patents covering chemotherapy drug Taxotere (docetaxel).

Genzyme also has on its board members hand-picked by billionaire and activist investor Carl Icahn, who has successfully driven up purchase prices of other biotechs such as ImClone Systems Inc. and MedImmune Inc., though Sanofi said it has not ruled out a proxy fight to help close a deal. (See BioWorld Today, April 24, 2007, and Aug. 1, 2008.)

In its official rejection of Sanofi's bear-hug letter a month ago, Genzyme's board called the offer "opportunistic," stating that it failed to take into account the biotech's efforts to fix problems at the Allston plant. Genzyme has said it resolved contamination issues in the bioreactors at Allston, and recently reaffirmed that it was on track to ramp up inventories of Cerezyme and Fabrazyme back to full capacity starting this fall. The company also is slated to open a new manufacturing facility in Framingham, Mass. next year. (See BioWorld Today, Aug. 30, 2010.)

Since Sanofi's original offer, Genzyme also has divested, as planned, its genetics business unit to Laboratory Corp. of America for $925 million. Though those terms were better than expected, Sanofi's Viehbacher said the divestiture had been anticipated and did not warrant a higher asking price. (See BioWorld Today, Sept. 14, 2010.)

Genzyme also is planning to sell its diagnostics and pharmaceutical intermediates units in a restructuring move to boost shareholder value.

Shares of Genzyme (NASDAQ:GENZ) closed Monday at $71.01, up 13 cents.