SANOFI
NEWS OF THE WEEK
ACQUISITIONS: For $20 billion, French
firm nets a biologics pipeline
E
NDING a nine-month standoff, French drugmak-
er Sanofi-Aventis has agreed to pay $20.1 billion for Genzyme, the U.S. biopharmaceutical pioneer. Sanofi will pay $74.00 per share in cash. The company has also agreed to contingent value right (CVR) payments of up to $14.00 per share based mostly on the success of Genzyme’s Lemtrada, a multiple sclerosis drug in Phase III clinical trials. The deal is the latest in a string of big drug acquisitions since 2008 and the largest biologics deal since Roche’s $46.8 billion purchase of the rest of Genentech in 2009. Genzyme will give Sanofi a sizable biopharmaceutical business plus a leg up in developing therapies for rare diseases. The U.S. firm became vulnerable to a takeover after it encountered manufacturing problems in 2009 at its Allston, Mass., plant. The problems resulted in shortages of its Gaucher disease drug Cerezyme and a $175 million fine by the U.S. government. Genzyme accepted the offer with CVR payments
USDA APPROVES ETHANOL CORN AGRICULTURE: Genetically modified
crop will boost biofuel production, but critics raise red flags
HE U.S. DEPARTMENT of Agriculture has cleared the way for farming corn that is genetically modified to produce α-amylase, an enzyme that rapidly breaks down starch into sugar. The decision—denounced by environmental groups—marks the first U.S. approval of a crop designed for ethanol production. Syngenta will sell corn seed with the amylase trait under the name Enogen. The company has shown that the trait can boost ethanol production efficiency at a 50 million-gal-per-year facility by about 10%, providing “producers with a proven means to generate more gallons of ethanol from their existing facilities,” says Davor Pisk, Syngenta’s chief operating officer. Syngenta first asked USDA for approval of the seed in 2005. On the basis of environmental and plant pest risk assessments conducted since then, USDA’s Animal & Plant Health Inspection Service has concluded that this line of corn “should no longer be subject to regula-
T
after rejecting Sanofi’s original bid of $69.00 per share, saying it was inadequate. “This transaction will create a meaningful new growth platform for Sanofi-Aventis while expanding our footprint in biotechnology,” says CEO Christopher A. Viehbacher. “The CVR structure, which served as an important value bridge between our two companies, rewards both Genzyme and Sanofi-Aventis shareholders, particularly if Lemtrada outperforms the market’s current expectations.” Andrew Badrot, head of the consulting firm CMS Pharma, sees Sanofi following the lead of Pfizer, AstraZeneca, and Eli Lilly & Co., all of which built biotech businesses through major acquisitions. He notes that the French firm is facing the loss of patent exclusivity on one of its only biologic drugs, the diabetes treatment Lantus, in 2014. Still, Badrot questions whether the deal will ultimately benefit Sanofi. He notes that Sanofi is buying Genzyme for nearly five times the biotech company’s annual sales, whereas the industry average for acquisitions in 2010 was 3.5 times sales. “If Lemtrada kicks in, that could be $2 billion to $3 billion in additional sales each year over the next five to 10 years,” he says. “If that product doesn’t go through, they will be in trouble.”—RICK MULLIN
Purchase of Genzyme will add to Sanofi’s R&D capabilities.
tion,” says Michael C. Gregoire, deputy administrator for APHIS’s biotechnology regulatory services. Grain millers and food manufacturers, however, worry that the amylase trait will escape from Enogen crops and comingle with corn intended for human consumption. The groups say it will affect the quality and shelf life of processed foods containing corn, such as breakfast cereals, snack foods, and battered products. Syngenta acknowledges that amylase can affect food processes, but claims that the enzyme is activated only under certain conditions of temperature, moisture, and acidity, which now affect only one product: table grits. Syngenta plans to work with only a few ethanol plants and corn growers this year, but is preparing for large-scale commercial planting Farmers can now plant of Enogen corn in 2012. The company says it will corn that is genetically manage production of the biotech corn by “using modified to boost ethanol a contracted, closed production system.” production. But environmental and consumer groups argue that Syngenta’s plan for a closed-loop system does not go far enough. “There is no way to protect food corn crops from contamination by ethanol corn,” stresses Margaret Mellon, food and environment program director at the Union of Concerned Scientists. “Even with the most stringent precautions, the wind will blow and standards will slip.”—BRITT ERICKSON
WWW.CEN-ONLINE.ORG
SHUTTERSTOCK
SANOFI, GENZYME COME TO TERMS
9
FEBRUARY 21, 2011
