On the same day Carl Icahn called for his removal, Genzyme Corp’s long-serving chief executive Henri Termeer has unveiled a number of plans to increase shareholder value, headed by a possible sale of three non-core businesses.
Speaking to analysts, Mr Termeer noted that the company, which has had a torrid time since June 2009 when its Allston Landing, Boston facility was temporarily shut down, affecting production of Cerezyme (imiglucerase) for Gaucher disease and Fabrazyme (agalsidase beta) for Fabry disease. Those problems still persist and investors have not been best pleased.
In response, Mr Termeer says the company will pursue “strategic alternatives” for its genetic testing, diagnostic products and its pharmaceutical intermediates units. The options could include divestiture, spin-outs, or management buy-outs, and Genzyme has retained the services of Credit Suisse and Goldman Sachs.
The CEO said that in particular, “genetics and diagnostics are strong businesses that are both leaders in their fields” but are no longer core. Sales for the divisions reached $371 million and $167 million respectively in 2009.
Genzyme added that it has identified some potential strategic partners for all of the three businesses, and has also received “unsolicited inquiries”. It expects any transactions to be completed this year.
The biotech is also looking at “reducing costs across the company” and has announced plans for a $2 billion stock repurchase. Under the plan, $1 billion of shares would be bought in the near term, financed with debt, with the remainder to be repurchased over the next year.
Genzyme also told analysts about three products that are expected to be launched by the end of 2013, that will “serve as significant growth drivers”. First up is alemtuzumab in multiple sclerosis, “which has the potential to fundamentally change the standard-of-care for this disease”, followed by the cholesterol drug mipomersen and eliglustat for Gaucher disease.
The announcements came hours after it was revealed that billionaire investor Mr Icahn, who has a 4.9% stake in Genzyme and is seeking places for himself and three associates on the board, wants Mr Termeer’s seat.
In a filing with the US Securities and Exchange Commission, Mr Icahn called on shareholders to boot out Mr Termeer and three other current directors. Last month, in a bid to block Mr Icahn, Genzyme appointed investor Ralph Whitworth, principal and cofounder of Relational Investors to the board in return for his support of the company’s slate of board nominees and proposals at its annual meeting of shareholders on June 16.
