[September 27, 2006]

Millennium offer beats Genzyme's

(Boston Globe, The (KRT) Via Thomson Dialog NewsEdge) Sep. 27--In a surprise attempt by a Cambridge biotechnology company to trump a takeover bid by one of its neighbors, Millennium Pharmaceuticals Inc. yesterday said it had reached a $515 million deal to buy a small Canadian drug firm that Genzyme Corp. has been trying to buy since late last month.

Their target is AnorMed Inc., a British Columbia company working on a treatment for blood cancer.

Though Millennium is nowhere near the size of its cross-town rival Genzyme -- it's worth $3 billion, to Genzyme's $17 billion -- the company's offer came in considerably higher than Genzyme's $380 million bid for AnorMed.

It also comes with the support of AnorMed's board of directors, which had urged shareholders to spurn Genzyme's offer as too low.

For both Cambridge companies, AnorMed represents an increasingly rare commodity: a company with a drug that has performed well in two rounds of human trials but has not yet been snapped up by a bigger pharmaceutical firm.

The experimental drug, Mozobil, is entering the final phase of trials in patients with blood cancers. It is designed to boost their bone marrow's ability to release healthy stem cells into the bloodstream, which are then used in a procedure called a stem-cell transplant.

Genzyme's hostile offer for AnorMed late last month made waves in the biotechnology world, in which acquisition deals are normally negotiated behind closed doors and neatly sewn up before being publicized. After twice being rejected in private talks with AnorMed's board, Genzyme pitched its deal directly to shareholders.

Immediately after Genzyme made its offer at $8.55 a share, AnorMed's stock jumped to nearly $10 a share and stayed there, suggesting investors expected a higher offer was forthcoming.

In a quest for new bids, AnorMed opened up a "data room," a secure online server where potential new bidders could look through its books and decide whether to make a play for the company.

"We had interest from multiple parties, but we were looking for what we thought was an attractive deal for shareholders," said Kenneth Galbraith , who is running AnorMed as interim chief executive.

Millennium chief executive Deborah Dunsire said she had been talking to AnorMed periodically for a year and a half, and began discussing a potential acquisition with the board immediately after Genzyme went public with its rejected offer.

"The relationship that we'd built enabled us to move very quickly," she said.

The result was a $12-a-share cash bid that garnered the support not only of AnorMed's board but also its top shareholder, Baker Bros. Advisors LLC , which agreed to sell its shares to Millennium.

The company is particularly attractive for Millennium, a 13-year-old money-losing company with only one product on the market, Velcade. The drug is approved to treat patients with multiple myeloma, one of the types of blood cancer on which AnorMed's Mozobil is being tested.

"We felt we would be a highly appropriate partner to help Mozobil be very successful," Dunsire said yesterday.

A Genzyme spokesman said he could not comment on whether the company would return with a higher offer.

Millennium will formally make its offer to shareholders within 10 days, and expects it to be open for about 35 days.

The offer of $12 a share drove AnorMed's stock up to $12.74 in trading yesterday, suggesting that investors expect a higher bid. Asked whether Millennium would respond to a higher bid, Dunsire declined comment, saying only that "We believe that we have put a very solid value on the table for the AnorMed shareholders."

The deal allows AnorMed to entertain higher offers, though any buyer would have to pay a $19.5 million breakup fee to Millennium.

"That's not going to scare potential unsolicited bidders," said Galbraith.

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