US biotech Millennium Pharmaceuticals has weighed in with a $515 million bid for Canadian drugmaker AnorMed which leaves a hostile bid for the business from Genzyme – valued at $380 million – looking rather tame.

AnorMed rejected Genzyme’s offer, saying that it undervalued the company, but gave Millennium’s proposal a warm reception and recommended it to its shareholders.

Both companies are trying to get their hands on AnorMed’s lead drug Mozobil (AMD3100), used to drive stem cells out of bone marrow into circulating blood, where they can be collected for use in a life-saving stem cell transplant in cancer patients, which is in Phase III testing.

Some 45,000 stem cell transplants are performed each year in the USA and Europe for multiple myeloma, non-Hodgkin's lymphoma and other conditions.

Millennium believes that Mozobil will sit nicely alongside Velcade (bortezomib), which is sold for the haematological cancer multiple myeloma. Mozobil’s lead indications are in multiple myeloma and NHL patients. AnorMed has said it hopes to file for US regulatory approval for Mozobil by the fourth quarter of 2007, although Millennium has plans to accelerate the process.

Meanwhile, when announcing its $8.55 a share takeover bid in August, Genzyme said that it has a heritage in selling drugs for transplantation with its Thymoglobulin product, and Mozobil would complement that franchise.

Also fancied among AnorMed’s stable of drug candidates is AMD070, an HIV entry inhibitor in Phase I/II testing, while the winning company will also be able to tap into a royalty stream from kidney failure drug Fosrenol (lanthanum carbonate), sold by Shire.

But analysts said the $12-a-share price Millennium is prepared to pay for AnorMed may be too high, and stretch its resources too thinly, particularly its cash reserves. Peak sales of Mozobil are unlikely to rise above $250 million a year at best.

AnorMED has retained the option of withdrawing, modifying or changing its support of Millennium’s offer in case it receives a better bid, but in this case would have to pay a termination fee of $19.5 million.

Millennium said it expects the acquisition to be "modestly" accretive in 2008 and "significantly" accretive in 2009.