Genzyme says Sanofi's bid is $4.2B short of reality

Genzyme officials have said consistently there was a giant gap between Sanofi-Aventis's $18.5 billion bid for the company and their own view of what the big biotech is actually worth. And on Friday the gap became a chasm after they publicly did a little back-of-the-envelope math that points to a $4.2 billion shortfall between Sanofi's bid and their own bullish sentiment.

Looking at the company's brightened financial outlook for 2011, Genzyme says that Sanofi's own offer last August to pay 20 times projected earnings would now lead to a proper valuation of $22.7 billion, or $89 a share. And Ralph Whitworth one of the company's biggest shareholders, said there was no daylight to be found between board members and CEO Henri Termeer (photo) on the subject of Genzyme's true worth.

"Is there the potential to drive wedges in the board room? I don't see that," Whitworth scoffed. Sanofi spokesman Jack Cox had little to say about Genzyme's counter valuation, aside from noting to Bloomberg, "It seems totally unrealistic."

New York Times biotech scribe Andrew Pollack says that much of Genzyme's value is wrapped around the late-stage trials of Campath, or alemtuzumab, for multiple sclerosis. Genzyme officials argued on Friday that while the drug has serious side effects, they are manageable. They have a point. The MS population has been willing to risk some of the worst side effects in pharma provided a drug offered to them significantly alleviates the symptoms of their disease.

Genzyme came up with the $22.7 billion figure after determining that it should earn $4.30 to $4.60 a share next year. That's twice the range for this year and 20 percent more than the consensus among analysts. So far the two companies have remained so far apart on price that negotiations have had to take place in the business press with some well timed leaks or carefully worded remarks. By that standard, the ball is now back in Sanofi's court.

- read the Bloomberg story
- here's the piece from the New York Times
- here's the report from the Financial Times