Genzyme tops rival's offer for drug firm

The unusual bidding war between two of the marquee names in Cambridge biotechnology, Genzyme Corp. and Millennium Pharmaceuticals Inc. , took another twist yesterday when Genzyme offered $580 million to take over Canadian drug maker AnorMed Inc., potentially snatching it away from cross-town rival Millennium.

Genzyme gave AnorMed until the end of the day today to declare its new offer ``superior" to AnorMed's existing $515 million agreement to be bought by Millennium. ``We are confident that AnorMed's shareholders will find this all-cash offer of $13.50 per share to be a compelling one," Genzyme chief executive Henri Termeer said in a statement.

The companies are competing for AnorMed's drug Mozobil , a treatment designed to improve the success of bone-marrow transplants. It if proves effective in late-stage human trials, analysts predict Mozobil could reach the market as early as 2008, and eventually produce more than $200 million in annual sales.

Genzyme launched a hostile bid for AnorMed in late August, saying the Canadian firm's management wasn't qualified to bring its drug successfully through its final trials to market. AnorMed's directors urged shareholders to reject Genzyme's $380 million offer as too low. AnorMed opened its books to potential suitors and soon signed a friendly deal with Millennium.

Such a bidding war is a rarity in biotechnology. Although the industry is driven by mergers and acquisitions, with large companies competing to buy potential drugs from smaller developers, they are nearly always negotiated behind a veil of secrecy to preserve relations among executives and scientists.

Genzyme's offer came after it reached an agreement with AnorMed to examine the smaller company's books and research, which had been closed to Genzyme because of its status as a hostile bidder. After its executives combed through the documents over the long weekend, Genzyme returned with its bid of $13.50 per share, nearly 13 percent higher than Millennium's $12 per share.

If AnorMed does declare Genzyme's offer superior, it will trigger a three-day period during which Millennium can raise its offer or walk away from the deal and collect a $20 million breakup fee.

A Millennium spokeswoman said, ``We're certainly evaluating our next steps," but declined to offer specifics.

Shares of AnorMed jumped about 5 percent yesterday, from $13.30 to $13.98, suggesting that investors expect Millennium or another bidder to raise the price yet again.

Stephen Heuser can be reached at sheuser@globe.com.