UPDATE 4-Genzyme argues Campath value in Sanofi fight

* Genzyme tries to strengthen case for Campath MS forecast

* New push follows discussion with Sanofi on Campath value

* Sees drug taking 18-20 pct MS market share by year 5

* Genzyme shares slip 0.2 pct to $69.65
(Revises first sentence, adds CEO, analyst comments, other
details, updates share price)

By Toni Clarke and Bill Berkrot

NEW YORK, Dec 20 (BestGrowthStock) – Genzyme Corp (GENZ.O: ) held its
second investor meeting in two months to argue that its most
promising experimental drug will capture five times the sales
that Sanofi-Aventis (SASY.PA: ) has assumed in a hostile $18.5
billion takeover bid.

Genzyme seeks a significantly higher price than the $69 per
share that France’s Sanofi has offered the U.S. biotech’s
shareholders. The tender expires on Jan. 21.

At the heart of Genzyme’s argument is its estimate that the
Campath drug for multiple sclerosis could generate peak annual
sales of $3.5 billion, compared with a figure of $700 million
underpinning Sanofi’s offer.

But the company is finding it a tough sell to investors and
its share price, which had risen as high as $73.23 in October,
is now trading close to the Sanofi offer after losing 0.2
percent on Monday.

“This is a unique therapy. It is not a pill from a shelf,”
Genzyme Chief Executive Henri Termeer told investors at a
special meeting in New York on Monday.

He said the drug, known chemically as alemtuzumab, has the
potential to become the most efficacious, cost-effective and
the easiest for patient compliance of any MS treatment. “The
market is very large, a $14 billion market when we get there
(in 2013),” Termeer said.

Genzyme cited an independent market research analysis
completed in September, which found the drug could grab a 5
percent share of the MS market in its first year, 10 percent in
its second and third years, and rise to an 18 to 20 percent
share in year five and beyond.

Genzyme and Sanofi have been discussing a way to bridge
that gap through a deal structure that would include contingent
value rights (CVR), offering shareholders an additional payout
based on Campath meeting certain revenue targets.

“I don’t think anything said specifically today changed
anyone’s view because there is still a lot of uncertainty in
the market,” said RBC Capital Markets analyst Michael Yee,
calling the $3 billion forecast “quite lofty.”

Yee said Campath clearly has advantages over current
treatments, but that there could be a lot more competition from
new MS drugs in the next three to four years.

“A CVR at this point may be the best idea” to bring the two
sides together, he said.

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For Genzyme deal calculator: http://r.reuters.com/het92n

For graphic on drugs sector: http://r.reuters.com/xaw97p

For other stories on Genzyme bid battle: [ID:nLDE69R0ZX]

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A LITTLE EXTRA

Investors and analysts had said a deal could be reached at
$75 to $80 per share. But a deal involving CVR would be complex
and shareholders may not accept it unless Sanofi also increased
its $69 cash offer to the low $70-range, some say.

“They have to sweeten the underlying price,” said Sanford
Bernstein analyst Geoffrey Porges. “If they sweeten the current
price, a CVR could be a little extra to get a deal over the
line.”

Termeer told reporters after the meeting that shareholders
he has spoken to have been “very supportive” of the CVR idea.
He called it a useful way to bridge the gap when two sides
cannot come to an agreement on value.

Genzyme previously convened investors to argue for a higher
sale price two months ago, when it forecast 2011 earnings of
$4.30 to $4.60 a share and suggested that Sanofi’s offer based
on the new forecast should be more like $89 per share.

Sanofi dismissed the figure as “totally unrealistic” at the
time, and company officials declined to comment on Genzyme’s
latest Campath market projections.

Many of the claims for Campath superiority over other
current MS treatments, including the potential to reverse
disease disability, must be borne out by data from large
late-stage studies expected to become available next year.

Few analysts believe that Campath, which is already sold as
a leukemia treatment, will generate the kind of sales projected
by Genzyme. Independent market research group BioMedTracker has
forecast Campath sales of about $1.6 billion in 2019.

Genzyme said that physicians consulted on Campath’s
prospects strongly associate the drug “with best-in-class
efficacy” and believe it will be safer than Biogen Idec’s
(BIIB.O: ) Tysabri. Genzyme said the proposed brand name for
alemtuzumab in MS is Lemtrada.
(Reporting by Toni Clarke and Bill Berkrot, editing by Michele
Gershberg and Matthew Lewis)

UPDATE 4-Genzyme argues Campath value in Sanofi fight