Monday, August 30, 2010

Sanofi Tries to Give Genzyme a Hug

Sanofi-Aventis (Ticker: SNY) just wants a small hug, but Genzyme (Ticker: GENZ) turns its back on Sanofi. It’s a cat and mouse game, but I believe Sanofi will eventually get its hand on Genzyme. Like I mentioned before, I see a minimal price for Genzyme in the high 70’s and would not be surprised to see a bid in the 80’s. A recent Merrill Lynch report from 8/30/10 showed that a $75 bid for Genzyme would create a 13.5% EPS accretion in 2013 for Sanofi. If the bid goes > $80 for Genzyme, that’s when it “would lack financial benefit to Sanofi shareholders…” This comes down to the time value of money. If Sanofi walks away, Genzyme will drop into the 50’s. The big question mark is the phase 3 results of Campath for MS, which is scheduled to be released in 2011. Positive clinical result for Campath can easily boost Genzyme shares into $90 +. Do you want to wait and risk it? Do you want to play it safe by taking the $$$ and hopefully generate a higher return with the cash? Those are some questions to consider… But obviously, we all need to see what Sanofi will really offer before answering any of those questions.


At August 31, 2010, Anonymous Anonymous said...

I enjoy reading your blog. I also happen to have MS and wanted to give you my opinion on Campath. I actually took part in a clinical trial of alemtuzumab (the generic name for Campath) run by another company. It turns out I got the placebo in the trial, but the results of the study were mediocre at best. There wasn't much improvement between alemtuzumab with other interferon treatments and those treatments alone.

I would also watch out for cladribine, from Serano. I am currently in a clinical trial for that and the results so far look very promising. Additionally, caldribine is taken orally and is not an injectible, like current treatments and alemtuzumab. Even if the alemtuzumab study shows decent results, good results from an orally-taken medicine will pretty much wipe out the market for injectibles.

Just an FYI. I know you are looking at GENZ as a takeover play, but if that doesn't work out, I would not hold on to it hoping for a big boost from the MS drug.

At August 31, 2010, Blogger Money Turtle said...

Thanks for your feedback on Campath. There are lots of players in the MS space and many are discounting Campath due to its potential side effects. It's a very potent molecule and there will be a niche for Campath. How big or small will depend on the result of the phase 3 trial. I've seen peak sales for Campath from 600 million to 3 billion. Hope your trial goes well...


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