Genzyme Rises on Promising Campath Data and (or) Takeover Speculation

10/15/07Follow @bbuderi

(Updated at 5:50 p.m. on Monday, Oct. 15) It was a down day for the market, but Genzyme (NASDAQ: GENZ) shares had a nice pop on news that the company’s leukemia drug Campath had proven more effective in a Phase 2 trial than a Merck drug as a treatment for multiple sclerosis—and speculation that with Carl Icahn bidding for neighbor Biogen Idec it might be next on the takeover list. The stock closed at $74.77, up just over $3 per share (or 4.27 percent).

The Campath results, presented at the 23rd Congress of the European Committee for Treatment and Research in Multiple Sclerosis in Prague, came from a three-year study of 334 patients. According to the company’s press release, patients taking Campath (alemtuzumab) “experienced at least a 73 percent reduction in the risk for relapse after three years of follow up when compared to patients treated with interferon beta-1a [Merck's Rebif].” The company also reported that Campath patients experienced at least a 70 percent reduction in the risk of progressing into “clinically significant disability” when compared to the Merck drug.

Genzyme senior director of corporate communications Bo Piela notes that Campath has already entered Phase 3 trials for MS. Piela calls the drug “the most significant product in our pipeline at the moment.”

The Associated Press has a good write-up, showing a mixed take on today’s news from analysts. Goldman Sachs’s Meg Malloy reaffirmed her “neutral” rating on Genzyme, citing in part clinical risks associated with Campath. Christopher Raymond of Robert W. Baird, meanwhile, reaffirmed an “outperform” rating with an $84 target price, though he did register his concern about a bleeding disorder that developed in six of the patients taking Campath during the trial.

The AP article also reported that analyst Mark Schoenebaum of Bear Stearns had mentioned in a note to Biogen investors that Genzyme could be the next biotechnology acquisition target. A Reuters account late this afternoon attributed the day’s run-up to the takeover speculation and made no mention of the Phase 2 trials. “It’s not surprising to me that investors are moving on to Genzyme because what seems to be the asset du jour for pharmaceuticals companies is biologic capability,” Phil Nadeau, an analyst at Cowen & Co., told Reuters.

Genzyme’s Piela said that takeover speculation has been out there for a short while, but the company has had no comment to date.

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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