Merrill
Genzyme at Risk of Overbidding For Anormed
We believe GENZ is at risk of overbidding for Anormed. In our opinion, GENZ
may raise its bid for ANOR to at least $13/sh in cash to top MLNM’s bid of $12/sh.
But, based on our worldwide Mozobil peak sales estimate in stem cell transplant
mobilization of $200 MM, we believe it would be very aggressive to bid $13 per
share. In fact, we believe $8.50 - $10.50 per share is more appropriate.
Anormed Synergistic with Transplant Business:
Anormed’s main drug called Mozobil for mobilization of stem cells for transplant is
synergistic with Genzyme’s transplant business, which includes thymoglobulin
and generates sales of about $150 MM per year. We estimate Genzyme would
have to add about 40 – 50 new sales reps to sell Mozobil.
But, WW Sales of Mozobil Unlikely to Surpass $200 MM:
We estimate that WW Mozobil sales are unlikely to surpass $200 MM even if it
penetrates 40% of the autologous & 20% of the allogeneic stem cell market.
Aggressive To Bid $13/Sh:
We can only justify a bid of $13 if we assume WW Mozobil peak sales of $200
MM, a 74% op. margin, a cost of capital of just 4% (int. rate on cash), & a 60%
chance of success for Mozobil, which we believe are aggressive assumptions.
Price of $8.50 - $10.50 is More Appropriate:
We estimate that a more appropriate acquisition price may be $8.50/share to
$10.50/share, which obviously wouldn’t top Millennium’s bid.
Phase II Data Interesting, But Flaws in Study Design:
Phase II data showed that 67% - 70% of patients receiving Mozobil + G-CSF
achieved target cell collection levels vs. 20% for G-CSF alone. But, patients
acted as their own controls, receiving G-CSF first & then the combo after a wash out
period, so the effect could have been partially due to a 2nd dose of G-CSF. |
