Millennium renews hunt after losing AnorMed to Genzyme
By Stephen Heuser, Globe Staff | October 18, 2006
After Genzyme Corp. declared victory yesterday in the first major bidding war in the biotechnology industry, spurned Cambridge rival Millennium Pharmaceuticals Inc. said it is still on the hunt to buy experimental cancer drugs that could boost its sales.
Millennium chief executive Deborah Dunsire had hoped to notch her first major deal by buying AnorMed Inc. , a Canadian firm developing an experimental cancer treatment. When Genzyme launched a hostile bid for AnorMed in August, she jumped in with a $515 million friendly offer for AnorMed. Genzyme returned fire with a $580 million offer last week. Dunsire conceded the fight early yesterday morning.
``We played a great game," she said. ``Let's be honest. This wasn't something that the other Cambridge firm involved was expecting, and I certainly don't think they were expecting to pay what they did."
The deal concludes a saga that began more than a year ago, when Genzyme and Millennium independently began talks with AnorMed to license the company's leading potential drug, Mozobil.
Such talks are common in the biotechnology industry, where established companies constantly fuel their growth by buying potential new drugs from smaller firms. But such deals usually end with a friendly agreement negotiated in private.
Genzyme broke with that tradition in August by launching its hostile offer to buy AnorMed for $380 million, or $8.55 a share. AnorMed's management urged shareholders to reject the deal as too low.
The terms of the deal yesterday valued AnorMed at $13.50 a share, nearly 60 percent higher than the original bid, and more than two and a half times the $5.03 share price of AnorMed before Genzyme made its hostile offer.
Kenneth Galbraith , chairman of AnorMed, told the Globe last week that he ``wasn't surprised at all" that AnorMed and its drug had generated so much interest from larger biotech firms.
He also suggested that Canadian business laws, which are more conducive to public bidding wars, gave the company a certain advantage in extracting higher prices from potential suitors.
``We know ice hockey, and we know hostile takeovers," he said, ``so for either one of these Boston biotech companies to come to Canada and try to outmaneuver us or out-strategize us in a hostile takeover, it's just not going to happen."
The key move came last week, when Genzyme, a bigger company than Millennium with deeper cash reserves, made its $580 million offer.
Millennium, with $630 million in the bank, faced the difficult decision of whether to make a potentially risky higher bid or bow out.
Dunsire spent several days at Millennium's offices meeting with the company's bankers, lawyers, and top researchers to figure out whether AnorMed's drug would be likely to generate enough future income to justify the price. Wall Street analysts expect the drug to sell $100 million to $300 million annually, but it is still in trials and isn't guaranteed to be approved by the Food and Drug Administration.
Yesterday, after Millennium let its bidding deadline expire, Dunsire said the price had gotten too high to justify the risks involved in bringing a new drug to market.
``We feel very confident in the assessment that we made," she said. ``We had the discipline to say, `If it's beyond what will benefit our shareholders, we won't do it, no matter who's looking.' "
She suggested that Genzyme executives ``clearly have made a different assumption" about the long-term value of AnorMed's drug.
Through a spokesman, Genzyme chief executive Henri Termeer declined requests for an interview.
The loss leaves Dunsire trying to answer questions about how she will fund the company's growth over the next several years.
With more than 1,000 employees, Millennium is one of Cambridge's largest biotechnology companies, but is still struggling to turn a profit after 13 years in business.
Dunsire said she had several potential products and companies in her sights, but ``you don't know when these opportunities will come to fruition."
She can, however, claim a modest takeaway prize.
Under the terms of its September agreement with AnorMed, Millennium can now collect a breakup fee of $19.5 million.
Genzyme expects to close the purchase of AnorMed on Nov. 6, pending approval from AnorMed shareholders and US antitrust regulators.
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