Behind the scenes of the public stand-off between Sanofi-Aventis ($SNY) and Genzyme ($GENZ) over the pharma giant's $18.5 billion bid, executives at the Massachusetts-based biotech are reportedly mulling a new deal structure that would open the way for a bidder to acquire the company for a price plus a set of milestones.
The Wall Street Journal calls this a contingent value right (CVR) deal structure, which the industry typically calls a set of milestones. With Sanofi and Genzyme stuck on the potential value of Campath, says the Journal, Genzyme is open to a new deal that would pave the way for a buyer to acquire the company for a lower price than what it might consider ideal, but fork over additional cash based on future sales performance of the experimental drug.
Sanofi has gone to considerable pains to downplay just how much money it expects Campath to earn if it goes on to an approval for MS. Sanofi says peak sales should hit $700 million while Genzyme is bullishly forecasting a mega-blockbuster $3.5 billion. But even with a milestone-based buyout package, Genzyme still won't take a serious look at an offer unless one comes in considerably higher than Sanofi's $69 bid.
In an effort to reach some kind of deal with an outside party, the Journal reports that Genzyme has floated the CVR deal with Pfizer ($PFE), Merck ($MRK) and J&J ($JNJ), along with suggestions about selling some assets or a minority share in the company. At this point, just about any serious offer on the table from some company other than Sanofi would be considered a coup at Genzyme.
- here's the story from the Wall Street Journal