Genzyme Planning December Investor Meeting To Review MS Drug

Genzyme Corp. (GENZ) is planning to hold a December investor meeting to thoroughly review its controversial long-term sales projections for multiple sclerosis drug alemtuzumab.

The potential of the drug is a key part of the Cambridge, Mass., company's claim that an $18.5 billion hostile takeover offer from Sanofi-Aventis SA (SNY SAN.FR) is too low. The drug is still being tested, but Genzyme recently projected sales hitting $3.5 billion in 2017 compared to Sanofi's expectations of about $700 million in yearly sales.

In late October, Genzyme held a meeting in New York with investors and analysts to lay out it long-term financial projections, including estimates of alemtuzumab's sales.

The December meeting would be similar, likely being held in New York, and will focus only on alemtuzumab's use in MS. A company spokesman said the date of the meeting is being finalized.

Sanofi's $69-a-share offer expires on Dec. 10, but few shares will likely be surrendered because Genzyme's stock has traded above the offer price since it was launched. Genzyme is currently reaching out to third parties who may be interested in the company.

Sanofi Chief Executive Chris Viehbacher has said that Genzyme's projection for alemtuzumab "stretches the bounds of reality in anybody's mind." Genzyme has rejected a Sanofi request to form a working group to allow the French firm to do a limited amount of due diligence on the drug.

Many Wall Street analysts believe Genzyme will eventually be sold at a higher price, and also see its long-term estimates for alemtuzumab as overly optimistic.

The Wall Street Journal recently reported Genzyme is exploring the possible use of a contingent value right--which could give the holder payments based on future sales milestones--as a way to bridge the valuation gap for the drug. Sanofi is also exploring such an option with its financial advisers.

It is expected that any deal would still need to include a cash component that exceeds the current $69-a-share offer.

Alemtuzumab is already approved to treat a rare type of blood cancer under the brand name Campath, bringing in less than $150 million a year for the company. For MS, the drug is given far less frequently and in lower doses.

It is being tested in two large Phase III trials, with data expected in mid-2011. It has proved highly effective in preventing relapses of the disease in midstage trials for as long as four years after the last dose.

Its ultimate usage will largely depend on that data and its relative safety in a competitive MS market where patients have many other options.

Shares of Genzyme recently traded down 67 cents, or nearly 1%, to $70.69.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com

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