“It all comes down to our performance, to execution,” he said. “Biogen is in play. We are clearly not in play. But if we don’t improve our performance we will be in play.”
He said he would not be willing to negotiate an agreement with Icahn in the way he has with Whitworth’s Relational.
“To get other investors on the board with different interests could create a confusing situation.”
Genzyme faces more than manufacturing woes. For more than 20 years, the company has had the market for enzyme replacement therapies more or less to itself.
Cerezyme, a treatment for Gaucher disease and the company’s biggest-selling drug, generated revenue of $1.2 billion in 2008, roughly a quarter of the company’s total revenue of $4.6 billion.
Now, for the first time, competition is on the horizon, primarily from British drugmaker Shire Plc SHP.L and Israel-based Protalix BioTherapeutics Inc (PLX.A). Each is developing rival drugs to Cerezyme, and the U.S. Food and Drug Administration is doing what it can to speed them to market to offset shortages of Cerezyme.
The FDA is scheduled to rule on whether to approve Shire’s drug, velaglucerase alfa, by the end of February.
Genzyme’s crisis has galvanized the company into action, and it is moving to rectify its problems. Most recently it announced it would outsource part of the manufacturing process.
The company has also made management changes and added Robert Bertolini, who was previously chief financial officer at drugmaker Schering-Plough Corp, to its board.
Bertolini was instrumental in turning Schering-Plough around after a manufacturing crisis led U.S. regulators in 2002 to place the company under a consent decree — a legal agreement that effectively puts a company’s manufacturing operations under government control. Schering-Plough was fined a record $500 million.
While most analysts think it unlikely Genzyme will be placed under a consent decree, the company has little room to maneuver, and investor enthusiasm for Termeer, which has historically ebbed and flowed, is in a trough.
“This harks back to 2002,” said Nadeau.
Between January and July of that year, Genzyme’s shares fell more than 70 percent amid earnings downgrades and suspicions that the company had kept inventory levels of its kidney disease drug Renagel high in order to artificially boost sales — a practice known as channel-stuffing.
“We’ve been down this road before,” AIM’s Taner said. “And it speaks to the board being more passive than maybe a lot of other companies would be.”
But Termeer bounced back then and some say he will again.
“Nobody tells Henri what to do,” said Steve Brozak, an analyst at WBB Securities. “He is an alpha male who understands his space.” (Editing by Martin Howell and Steve Orlofsky)