Sanofi-aventis confirms company is in merger talks with Genzyme

Sanofi-aventis confirmed that discussions with Genzyme about a takeover “are continuing” and that advisors “have been engaged in discussions with respect to a potential contingent value right (CVR) for Lemtrada (alemtuzumab) with milestone payments based upon approval and certain sales thresholds.” The French company added that “there remain significant differences on the terms and conditions of the potential CVR and the value of our offer, and there is no guarantee that the parties will come to an agreement.”

The biotechnology company has predicted that alemtuzumab, which is currently approved for the treatment of leukaemia and sold as Campath, could garner sales of $3.5 billion in MS by 2017, but sanofi-aventis has estimated around $700 million annually in additional sales in the MS indication.

People familiar with the matter had previously indicated that the French drugmaker may raise its bid for Genzyme in order to initiate the due diligence process once the companies reach an agreement on the value of the CVR. Sources indicated that the CVR may be worth between $5 and $6 per share. Earlier, The Wall Street Journal reported that the drugmakers were in discussions towards an agreement that would include a CVR that would potentially value Genzyme at about $80 a share.

RBC Capital Markets analyst Michael Yee commented that “$80 including a CVR is pretty attractive,” adding that if such a deal was to be reached, “this certainly puts the transaction in a much higher likelihood of getting completed.”