Positive MS data may thwart Icahn's plans for Genzyme

Follow-up data from a Phase II trial of Campath (alemtuzumab) for multiple sclerosis revealed that about 71 percent of patients remain free the disease for up to three years after receiving their last dose of the drug. The study compared Campath to the Merck KGaA's approved MS therapy Rebif in early, active, relapsing-remitting multiple sclerosis patients who had received no prior therapy. Genzyme presented the positive data at the American Academy of Neurology annual meeting.

The study results are terrific news for the beleaguered biotech. Genzyme has been locked in battle with Carl Icahn following problems at one of its manufacturing plants last year. Those problems have interfered with production of the company's top-selling drug and cut into Genzyme's bottom line. That's brought about calls for a change in Genzyme's management, including the resignation of CEO Henri Termeer.

Icahn, who holds a 1.8 percent stake in Genzyme, managed to get himself and three associates nominated to the biotech's board this year. But the foursome are also stakeholders in Biogen Idec, which has its own MS treatments--Avonex and Tysabri--that would compete with Campath if the blood cancer drug were approved for MS. Non-Icahn appointed board members also are concerned that there's a conflict of interest if Icahn's nominees are making decisions about an MS drug that could compete with one from their other companies.

"Directors owe shareholders a duty of loyalty and a duty of care," Peter Wirth, head of Genzyme's legal department, said in a telephone interview with BusinessWeek. "When you have people who are on the board of a competitor or have a billion-dollar stake of a competitor, they can't satisfy either."

Icahn's board member Alexander Denner fired back at Wirth, saying that Genzyme is raising possible conflict-of-interest problems to distract shareholders from problems elsewhere in the company. "To the extent that conflicts do come up at the board level, which we don't expect very often, we obviously will not participate," said Denner.

Two Phase III trials of Campath are currently under way, with data expected by 2011.

- here's Genzyme's release on the data
- read about the Icahn angle from Bloomberg

Editor's Note: This article incorrectly stated that the Phase III Campath results are due in 2010.