Duel for drug maker flares between Mass. biotechs
Genzyme is looking at countering higher offer by Millennium
A rare bidding war between two Cambridge biotechnology powerhouses heated up yesterday after Genzyme Corp. said it might raise its offer for a Canadian drug company, hoping to snatch it away from another suitor, Millennium Pharmaceuticals Inc.
The companies are dueling over AnorMed Inc. , a small Vancouver, British Columbia, drug developer with a promising experimental drug for cancer patients.
Such takeover battles are virtually unknown in biotechnology, where deals are quietly negotiated and disclosed only after terms have been ironed out behind the scenes.
That diplomatic veneer was broken open late in August, when Genzyme launched a hostile $380 million bid for AnorMed. After being rejected by AnorMed's management, Genzyme appealed directly to the smaller company's shareholders, saying AnorMed lacked the expertise to bring its drug profitably to market. The move sent ripples through the world of biotechnology, a close-knit industry that rarely goes public with disputes between management teams.
``In life sciences, we've never seen a hostile offer," said Declan Quirke , a healthcare mergers-and-acquisitions banker for Cowen & Co.
AnorMed's executives told shareholders to spurn Genzyme, and the company immediately set out to find a better offer, opening up its books to potential bidders. The result was a far more substantial bid: a $515 million deal with Millennium, endorsed by AnorMed's executives and publicized last week.
Essentially, Millennium and Genzyme are competing over AnorMed's drug Mozobil , a potential treatment for cancer patients undergoing stem-cell transplant procedures. Recent clinical trials showed that Mozobil could increase the number of healthy stem cells in a patient's bloodstream, improving the odds of a successful procedure. It is now being studied in much larger groups of patients.
Buying AnorMed would be a more significant move for Millennium than for Genzyme. Located just across Massachusetts Avenue from Genzyme, Millennium has about $600 million in annual revenue and only one product on the market: Velcade, a treatment for multiple myeloma. AnorMed's drug is also designed to treat myeloma, which means Millennium could use its existing sales force and network of experts to help bring the drug to market.
At Genzyme, a far larger company with annual revenues of $3 billion, AnorMed's drug would join a roster of more than a dozen products the company already sells.
Until this week it was unclear whether Genzyme would step back into the bidding after Millennium topped its original hostile offer. Late Wednesday, however, Genzyme's executives signed an agreement with AnorMed that gave them access to AnorMed's books and research, which were previously closed to Genzyme as a hostile bidder.
According to the agreement, Genzyme will lift its bid above Millennium's offer of $12 if it is satisfied with its review of AnorMed's data.
``We have no obligation to make that offer -- it's dependent on what we find out when we do the due diligence," said spokesman Dan Quinn . ``But we're actively considering it."
According to the terms of AnorMed's current acquisition deal, Millennium has the right to match or beat any Genzyme bid, and to collect a $20 million breakup fee if AnorMed chooses another suitor.
Because Genzyme has not formalized its new offer, AnorMed's board is still officially recommending the Millennium deal to shareholders. Investors, however, clearly expect the bidding war to push the price up further: AnorMed's stock price rose to $13.45 on the news yesterday, up from Wednesday's close of $12.57, and well above the $12 a share Millennium is offering.
Stephen Heuser can be reached at sheuser@globe.com. 
