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Boston Capital

Uncertain prescriptions

By Steven Syre
Globe Columnist / February 1, 2011

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Long before Sanofi-Aventis SA ever set its takeover sights on Genzyme Corp., executives at the French drug giant struck a deal to buy another American biotechnology company with a promising new product in development.

Sanofi bought BiPar Pharmaceuticals in April 2009 to get its hands on the California company’s cancer drug known as BSI-201. It paid BiPar’s venture capital owners money upfront, but promised more if BSI-201’s future turned out to be as bright as everyone hoped.

Now, Sanofi is close to a deal for Genzyme and some sort of contingent payment for the Cambridge company’s Lemtrada treatment for multiple sclerosis, which is under development and on track to seek federal drug approval next year. The Sanofi experience with BiPar and BSI-201 is an important part of the back story to the latest drama.

The acquisition of BiPar was comparatively small, about $500 million at most. It was one of the earliest deals struck by Chris Viehbacher, the expansion-minded Sanofi chief. He limited the BiPar risk by structuring part of the potential price as a kind of earn-out, achievable if BSI-201 reached important milestones. A contingent payment for Genzyme based on the future of Lemtrada would be more complicated but similar in nature.

So what happened to BSI-201 after the sale of BiPar? The company announced last Friday that the drug did not attain either of its main goals for treatment of breast cancer in a big late-stage clinical trial. It will take time to sort out what all the data mean and whether BSI-201 may be useful for treating other cancers.

But the latest clinical results were a big setback. The drug was the most advanced treatment in Sanofi’s pipeline of oncology products. Sanofi had been expected to seek federal approval for the drug in the first quarter of this year.

The contingent payment arrangement for BiPar looks smart now. But Sanofi’s expansion plans are driven by a need to feed more drugs into the company’s marketing pipeline. The bad news on BSI-201 only emphasizes the importance of Genzyme to Sanofi. Suddenly, merger talks that moved at the pace of a glacier seemed to be sprinting to the finish line yesterday.

The story of BSI-201 should make Genzyme shareholders think, too. The odds are stacked against any drug — even many of the most promising candidates — becoming a huge commercial hit. Lemtrada has lots of potential, but it’s no sure thing. The treatment is a reformulation of a Genzyme drug used to treat leukemia patients.

Genzyme chief Henri Termeer will probably squeeze an offer of more guaranteed cash out of Sanofi; perhaps he already has. But both sides need to settle the Lemtrada question, a sticking point for months. Sanofi and Genzyme appear to be headed toward a solution.

How many investments can earn a 1 million percent return for you?

Good luck finding the next one. But I know one mutual fund — a mutual fund! — that has produced that kind of gain.

The Pioneer Fund, managed in Boston since it opened for business in 1928, had generated a total return of 1,073,300.43 percent by the end of last year, according to Morningstar Inc. That’s not a misprint.

Some good news for anyone who stuck $1,000 in the fund at its inception: That account is worth a little over $10 million. The bad news: It’s unlikely many investors have lived long enough to see their money appreciate by 1 million percent.

The fund crossed the 1 million percent threshold on Dec. 16, though no one noticed at the time. Pioneer Investments executives say they were alerted by mutual fund researchers at Lipper Inc., who had taken notice when the fund’s seven-digit total return created a computer hiccup during routine number crunching. Programs that managed performance information weren’t built to account for returns of 1 million percent.

The Pioneer Fund ranks in the middle of the pack for performance over the more conventional time periods of one, three, and five years. But it’s the big winner in the lifetime total return category. Second place belongs to the American Funds’ Investment Company of America, according to Morningstar. It’s earned 684,327.34 percent since the fund was launched in 1934.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.