Progress in Sanofi-Aventis bid to acquire Genzyme as it is allowed to conduct due diligence

More than five months into ongoing attempts to acquire US biotech firm Genzyme (Nasdaq: GENZ), French drug major Sanofi-Aventis (Euronext: SAN) has progressed to the point where Genzyme’s board has authorized the company to enter into a confidentiality agreement in order to allow Sanofi to conduct due diligence.

The move to at last open its books to examination excited investors, pushing Genzyme’s shares 3.2% to $73.35 by late afternoon trading, as speculation grew that an outline deal had been agreed between the companies.

Recently, Genzyme, which has consistently rejected Sanofi’s $69 a share, or $18.6 billion, offer as inadequate, reached agreement with the French group that could be tied to the performance of a Genzyme developmental drug, Lemtrada (alemtuzumab) in the treatment of multiple sclerosis (The Pharma Letter January 10). The compound is already sold as Campath, but without significant sales. A contingent value right accord could bridge the gap between Sanofi’s $69/share offer for Genzyme, the world’s largest maker of rare disease drugs, and the latter’s own valuation of around $89 a share. Genzyme has projected peak sales of $3.5 billion for alemtuzumab, while Sanofi believes that analysts’ estimates of about $700 million were a valuation “probably closer to the reality of the product” (The Pharma Letters passim).