Contributing Writer

One of the more public bidding wars in recent biotech history seemed near its end today as AnorMED Inc. agreed to be acquired by Genzyme Corp. for $13.50 per outstanding share, or approximately $580 million in cash. The announcement came just a few hours after rival bidder Millennium Pharmaceuticals Inc. declined to increase its $12 per share offer.

"Drama is what interests people; we just have to ignore the drama and focus on the value for our shareholders," AnorMED Chairman and Interim CEO Kenneth Galbraith told BioWorld Today.

Genzyme and AnorMED entered a mutually beneficial support agreement regarding the acquisition, which has been approved by the boards at both companies. If all conditions are met, the deal could close soon after the tender offer expires Nov. 6.

Until then, however, AnorMED has the right to withdraw from the deal if it receives a better offer. It's happened here before: The board approved an acquisition by Millennium just three weeks ago, only to have original bidder Genzyme - which previously offered $8.55 per share - offer more than Millennium.

Galbraith conceded such a scenario "could happen" again, but declined to speculate further, although he added that the current trading in the stock indicates "the market doesn't expect another offer." AnorMED traded more than 2 million shares (NASDAQ:ANOR) to close at $13.38 on Tuesday, down 42 cents.

"It's a good deal for Genzyme shareholders, and our shareholders are going to do very well," Galbraith said, citing AnorMED's late-August stock price of about $5.

Genzyme spokesman Dan Quinn declined to comment on the reasoning behind the original $8.55 per-share offer, saying only that the company is "comfortable that $13.50 per share" is fair.

Yet reaching an agreement on that price has been far from easy. The rivalry between Cambridge, Mass.-based companies Genzyme and Millennium dates back more than a year and centers on AnorMED's Phase III cancer drug Mozobil, also known as AMD3100.

Mozobil is a small-molecule CXCR4 chemokine antagonist that releases stem cells from bone marrow into circulation, thus improving stem cell collection for use in transplants to treat blood cancers. Data are expected next year from two registration-enabling trials in multiple myeloma and non-Hodgkin's lymphoma. If successful, Mozobil could be on the U.S. market by 2008 and elsewhere just a year later, generating estimated sales of more than $100 million annually.

Back in 2005, AnorMED was in negotiations with Genzyme, Millennium and other companies for European rights to Mozobil, Galbraith said. Yet majority shareholder Baker Brothers Investments, of New York, disagreed with plans to partner the drug so early in development.

In January, Felix Baker, a director of AnorMED and portfolio manager with Baker Brothers, made public his intention to convene a special shareholder meeting in an attempt to replace the board with a new slate. In a letter to then chairman David Scott, Baker cited the board's "decision-making process" in connection with fundraising activities, as well as other corporate concerns. Although the AnorMED board disagreed with the proposal, 74 percent of shareholders supported it, and the new board took over in April, followed by changes in senior management.

Also in April, Genzyme made its first offer to buy the company for $8.55 per share, although the proposal fell through. Galbraith said AnorMED was committed to staying independent until the Phase III Mozobil data were available, and "our board was not looking to sell," because it felt the company's value would be much greater in a year.

"But Genzyme had other plans," Galbraith said.

In August, Genzyme reiterated its offer, now made public, but AnorMED's board rejected the unsolicited $380 million takeover bid. In response, Genzyme announced plans to take the proposal directly to the company's shareholders. (See BioWorld Today, Aug. 31, 2006.)

At that point, AnorMED had to open up for bids "to increase the $8.55 per share offered by Genzyme," Galbraith said. The AnorMED board advised shareholders not to accept the Genzyme offer, and in late September, Millennium offered $12 per share, or $515 million. (See BioWorld Today, Sept. 27, 2006.)

The boards of both companies approved the acquisition, but before that deal closed, Genzyme upped its bid to $13.50 per share. Although Millennium had the option to match, it chose not to.

Millennium vice president of corporate communications, Lisa Adler, said the company "felt $12 per share was fair for our shareholders and AnorMED's shareholders, but $13.50 was beyond what we were willing to go to."

Don't feel bad for Millennium - AnorMED will pay Millennium a $19.5 million termination fee, which the company plans to use to grow Velcade sales, advance its pipeline and "look for the right opportunity," Adler said.

Having won the bidding war, Genzyme now plans to commercialize Mozobil through its existing global transplant business to hematologists and bone marrow transplant centers in more than 50 countries throughout the world.