Sanofi-Aventis confirms it is considering CVR-based deal regarding takeover of Genzyme

Following intense rumor and speculation over the weekend, late Sunday, French drug major Sanofi-Aventis (Euronext: SAN) confirmed that talks with respect to its hostile bid to acquire US biotech firm Genzyme (Nasdaq: GENZ) are continuing and said that its financial advisors have been engaged in discussions with respect to a potential Contingent Value Right (CVR), for Genzyme’s investigational multiple sclerosis candidate Lemtrada (alemtuzumab) with milestone payments based upon approval and certain sales thresholds.

“Those discussions are continuing and now include representatives from both companies. There remain significant differences on the terms and conditions of the potential CVR and the value of our offer, and there is no guarantee that the parties will come to an agreement,” according to a brief statement from Sanofi-Aventis, which has so far been steadfast in maintaining its offer price of $69 per share, or $18.5 million in total, made public in August last year.

The board of Genzyme has continued to argue this is inadequate, and that the French firm has not taken into account the promise of alemtuzumab, already sold  as Campath for the treatment of leukemia, as a multiple sclerosis drug. It has forecast that this indication could generate total sales of the product in the region of $3.5 billion, which Sanofi-Aventis has contested, saying it believes the MS potential is more like $700 million (The Pharma Letters passim). A CVR arrangement would allow Genzyme shareholders to get additional payments at a future point on approval of Lemtrada for MS and the drug achieving predefined sales targets.