Icahn to launch battle for Genzyme?

Genzyme may be getting the Carl Icahn treatment. The billionaire activist investor purchased 1.5 million shares of the beleaguered biotech's stock in the third quarter, and a source close to the company tell Reuters that Icahn may be launching a proxy battle for control of Genzyme.

The rare disease company is still trying to recover from one of the worst years in its history. Viral contamination was discovered at a bioreactor in its Allston Landing facility outside Boston. The contamination led to a plant shutdown and extended cleanup. But just as the facility was coming back online, new production problems--caused by aging equipment--derailed those efforts. As Genzyme continues to work on its Allston plant, it's outsourcing some of its manufacturing work to Hospira.

Manufacturing troubles aren't Genzyme's only problem. For most of its existence, Genzyme has dominated the Gaucher disease market with its therapy Cerezyme. But Shire and Protalix BioTherapeutics are developing drugs that will compete with Genzyme in that space. What's more, the FDA is speeding the new treatments to market to offset shortages of Cerezyme caused by the Allston plant problems. "I think shareholders would be willing to listen if there was talk of a change of management," analyst Derek Taner tells Reuters. "There have been a lot of management missteps that candidly shouldn't have been made."

Icahn has been a perpetual thorn in the side of other biotechs, including Biogen Idec and Amylin Pharmaceuticals. But he may have a bigger battle on his hands at Genzyme (photo) than he's had at other companies. With 25 years as CEO, Henri Termeer is firmly entrenched at the helm of the company and is backed by a loyal board. And he's already taken steps to shore up the company for a proxy fight; yesterday the biotech announced it had granted Ralph Whitworth, founder of Relational Investors, the right to join Genzyme's board if he requests it. Relational Investors is one Genzyme's biggest stockholders. In return for the appointment, Relational said it would support the company's board picks later this year.

- read Genzyme's release discussing the agreement with Relational Investors
- see this report
- check out this article for more

ALSO: Genzyme has brought on Ron Branning, formerly the head of quality and compliance functions at Gilead Sciences, to help whip its manufacturing facilities into shape. As Senior Vice President of Global Product Quality at Genzyme, Branning will oversee quality of all Genzyme products manufactured at seventeen sites around the world. "Ron Branning is a recognized industry leader in ensuring product quality, and we look forward to adding his experience to our corporate leadership team. Bringing in new senior leaders such as Ron is a fundamental component of our plan to renew and strengthen our manufacturing organization," Henri Termeer said in a statement. Article

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