Genzyme: Go ‘Way, Carl, We’re Not For Sale
Make a commentBy Ed Silverman // December 6th, 2007 // 6:38 am
That’s what Henry Termeer, the biotech’s ceo, has to say, despite recent interest shown by Carl Icahn. Simply put - there are no plans to put for a For Sale sign outside, he tells The Wall Street Journal.
After recently pushing two other biotechs into seeking buyers, Icahn last month reported he had taken a small stake in Genzyme, sparking predictions that the biotech would soon be in play. But Termeer says selling to a big pharma doesn’t make sense. “To integrate us to into a very large entity is not that attractive,” he tells the paper. “It is not that good a logical fit. It is much stronger as it is right now - as a stand-alone rather than as part of a company 10 times our size.”
Why? Genzyme already has a global sales force, and its focus on drugs for treating rare conditions would make a poor fit with big drugmakers looking for blockbusters. And he sees strong growth ahead as an independent company. For the record, Termeer says he hasn’t heard from Icahn and first learned of his interest in Genzyme last month when the investor reported in a Securities and Exchange Commission filing that he had acquired 1.5 million Genzyme shares, a stake is less than 1 percent of the outstanding shares.
Genzyme, with revenue of $3.2 billion last year, is best known for its treatments for rare disorders, such as Pompe disease, that are typically given “orphan drug” status by the FDA, which protects them against competition for extended periods and positions them to carry high price tags. The biotech has a market value of about $19 billion.
Earlier this year, Icahn threatened a proxy fight with MedImmune that helped pressure the company into a $15.6 billion sale to AstraZeneca. In October, Genzyme’s Cambridge neighbor Biogen Idec said it was evaluating a sale after Icahn started buying Biogen shares, began pressuring the company and then said he was prepared to buy it.
Watching as Icahn prodded MedImmune and Biogen, Termeer decided to be proactive. Beginning in September, he hit the road to meet big investors and promote Genzyme’s long-term prospects as an independent company. Those meetings continue, with Termeer slated to travel to California in the next week to meet with more investors. Since September, Genzyme shares are up 18 percent.
Termeer says Genzyme expects earnings to grow at an annual compound rate of at least 20 percent over the next five years. And he argues Genzyme is in a stronger position than other biotechs because it is more diversified and doesn’t share the rights to any of its best-selling products with other companies.
Some of those strengths, however, may make Genzyme attractive to big pharma, many of whose drugs are going off-patent in coming years and are looking to boost their lineups. Following disappointing results in clinical trials for two other products this year, Genzyme recently announced positive data for an experimental multiple sclerosis treatment. Also in development are cancer and transplant drugs, with positive early-stage research data.