Looking at Genzyme’s Peers for ‘Other Buyout Candidate’ Probabilities (GENZ, SNY, GILD, CELG, BIIB, LIFE, HGSI, DNDN)

Genzyme Corporation (NASDAQ: GENZ) is flying high on reports that Sanofi-Aventis (NYSE: SNY) may have an interest in buying the company.  The WSJ reports that the large drug giant has approached what was the #5 biotech on NASDAQ by market cap, now #4, about an acquisition.  This is all informal as of now, but when one runs it creates a possibility that almost all peers of size could be attractive too.  Genzyme was not alone in being a dead-money stock.  Genzyme jumped 20% to over $65.00 but the shares are now up almost 18% at $63.80 after touching a new 52-week high of $66.96 today.

When looking around at other targets, the most important thing actually boils down to the size of a company after their earnings and pipeline powers are computed.

Size matters, and being too big can be limiting.  Amgen Inc. (NASDAQ: AMGN) is worth some $50+ billion and has been dead-money for quite some time.  Gilead Sciences Inc. (NASDAQ: GILD) may be too big at almost $30 billion, and its shares are down 1% at $33.42.  Celgene Corporation (NASDAQ: CELG) is worth $24 billion in market cap, and some may consider its multiples and valuations too high.  Shares are up 0.8% at $52.77.

Biogen Idec Inc. (NASDAQ: BIIB) had its problems of course, but it is THE target company if anyone wants to have the best MS franchise out there.  Its near-$14 billion market cap also makes it comparable in size to Genzyme before the deal was announced.  It has also been a “perceived” target before that went on the road to nowhere.  Its shares are now down 5.4% at $53.15 as it had been a prior Sanofi “candidate” depending upon whom you asked.

Life Technologies Corporation (NASDAQ: LIFE) is more on the tools side of the equation and also has valuation issues, but it is almost “the forgotten biotech” stock despite an $8.5 billion market cap…. Shares are down 2% at $46.82.  This

Human Genome Sciences Inc. (NASDAQ: HGSI) may be victim of being simply “the one that got away” as far as valuation.  It was under $1.00 at the peak of the mayhem in the last two years but the market cap is now $4.75 billion with shares up 1% at $25.38.  The year high was $34.49.

Dendreon Corp. (NASDAQ: DNDN) is a former buyout hope and rumor, but its new Medicare reimbursement issues around PROVENGE are a cloud.  It also may be the other “one that got away” as far as valuations are concerned.  Shares are up 2.3% at $34.11 on light volume.

Just because one company becomes a target or even an implied target does not mean that its peers suddenly become targets.  If Genzyme is able to get a deal orchestrated, Henri Termeer just fixed all of his wrongdoings and will end up with a remarkable pinnacle of a career that has been tarnished over the last year.

As with all Friday merger “news”… these are nothing more than rumor until or unless a deal gets signed.  Stay tuned….

JON C. OGG