Genzyme To Share Information With Sanofi-Aventis

TRENTON, New Jersey (AP) - Biotech drug developer Genzyme Corp. said Monday it will share nonpublic information with Sanofi-Aventis SA, eight months after word first leaked that the French pharmaceutical company was pursuing Genzyme.

Both companies were keeping mum Monday about details of the current negotiations, which follow months during which Genzyme repeatedly spurned the Sanofi-Aventis offer of $18.5 billion, saying it was too low.

"The discussions have progressed to a point where our board has authorized them to do due diligence," said Bo Piela, spokesman for Cambridge, Massachusetts-based Genzyme.

Piela said Genzyme is not disclosing what information will be shared as part of the confidentiality agreement its board of directors authorized.

Jack Cox, a spokesman for Paris-based Sanofi-Aventis, said the confidentiality agreement allows Sanofi "to take the next step in our ongoing discussion. There's no guarantee these discussions will actually result in an agreement."

In trading Monday afternoon, shares of Genzyme rose $2.05, or 2.9 percent, to $73.15, while U.S.-traded shares of Sanofi added 88 cents to $34.23.

Typically, due diligence can take weeks or months. It involves reviewing detailed financial and other information from a potential acquisition target or merger partner.

Sanofi likely would also scrutinize data from studies of Genzyme's experimental drugs, particularly a promising multiple sclerosis treatment, as well as Genzyme's manufacturing capabilities.

Genzyme, which develops drugs for rare diseases, had to restructure its manufacturing after viral contamination shut down its suburban Boston factory for a few months in 2009. Genzyme got hit with both a $175 million government fine and a big drop in profit. In November 2009, the Food and Drug Administration found tiny particles of steel, rubber and fiber in some of its drugs.

Sanofi, the world's fourth-largest drugmaker, last week extended its offer of $69 per share to Feb. 15 from Jan. 21.

Genzyme has argued Sanofi's offer does not take into account the company's recovery and its pipeline of potential medicines.

The companies have disagreed about both Genzyme's overall value and the value of Genzyme's alemtuzumab, a biologic drug approved for treating leukemia under the brand name Campath. It's now in late-stage testing for treating multiple sclerosis, and if approved would have the brand name Lemtrada.

The two companies are discussing potential terms, including possibly tying payments to milestones such as the alemtuzumab's future sales, as a way to reach a resolution.

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AP Business Writer Tom Murphy contributed to this story from Indianapolis.