“This is something we’d be doing regardless,” said spokesman Bo Piela, adding that the layoffs were reported to stockholders back in May as part of a five-point cost-cutting plan. The company’s public announcement at that time confirmed there would be cost reductions — in light of its reduced 2010 forecast — but did not specifically mention job cuts.

Genzyme rejected Sanofi’s $18.5 billion takeover bid last month, saying the offer of $69 a share undervalued the company. Genzyme CEO Henri Termeer later wrote in a staff memo that the takeover proposal “reinforces how important it is to take control and maximize the value we bring to patients and shareholders.” But he also wrote that, for the first time in the company’s history, Genzyme is faced with the need to make “painful decisions.”

The company is set to face a further 1,900 job losses when it sells its genetic testing business to Laboratory Corp. of America Holdings (LabCorp) for $925m later this year It has said however that these employees will be offered new contracts when the sale is completed. Nonetheless, the The five-point plan will also the divestment of two other, ‘non core’ units, diagnostic products and pharmaceutical intermediates — proceeds from which may be used to finance the second half of the company’s $2 billion stock buyback in a move to reduce share price volatility.

The company will begin to implement the job cuts before the end of this year.

Roche plans to keep the Genentech site in San Francisco, and transition its New Jersey corporate headquarters to the West Coast. Additionally, research and early stage development will operate as standalone units. Roche expects to save about $850 million in the reduction of redundant services and positions, but there’s no word yet as to the actual number of jobs that could be eliminated.

Negotiations between the two firms were far from smooth. An initial $44B offer by Roche, made last July, was met with disdain by Genentech’s board of directors. Roche fired back by taking an even lower offer of $43.7B directly to Genentech’s shareholders—but that didn’t go over well either, and Roche was forced to go back to the well. Last week, the drug company made a firm offer of $46.8 billion, a price that appears to have satisfied Genentech’s board.

“We believe this is a fair offer for Genentech shareholders, and the committee is pleased to come to a successful conclusion of this process,” said Charles Sanders, chairman of the special committee of Genentech’s board of directors. “We look forward to working with Roche to complete the transaction as expeditiously as possible.”

Genentech and Roche’s partnership began nearly two decades ago, when Roche purchased controlling interest in the biotech firm. Over the years, Genentech has morphed from a smaller specialty firm to a sprawling bio-giant with annual revenue fluctuating around the $12 billion mark.

Roche has not commented on the deal beyond statements in a press release. The company has scheduled no press conferences or investor calls, and told Pharm Exec that none are in the works.

Another Mega Merger
The Roche/Genentech deal comes just three days after news broke that Merck would merge with Schering-Plough, and less than two months after Pfizer signed a deal to purchase Wyeth. Mergers and acquisitions are going strong, as Big Pharma faces looming patent expiration and a scarce supply of new drugs. However, not everyone thinks mergers are the best strategy. The New York Times comments section exploded with negative reactions after the Merck announcement. Most readers voiced fears that Big Pharma was getting “too big.”

While many analysts disagree that the general public should be concerned at this point, some did tell Pharm Exec that the push for large-scale mergers might not be the best course.

“Large-scale mega mergers at this stage in the game don’t really solve the fundamental problem,” said Peter Young, president of Young & Partners. “You don’t invent faster because you’re bigger, and the reality is that they are only buying themselves a little bit more time. The best analogy is that if you own four houses on a lot and one burns down, the others are fine. However, if you decide to glue them together in order to have more size and scale, [then] if one part of the house burns, there’s a risk that everything will burn down.”

• Total price of the sale will be $41.1 billion or $23.6 per Schering share.

• This deal is structured as a reverse merger with Schering being renamed Merck. This is being done to avoid triggering a loss of rights, according to Merck.

• To pay for the merger, Merck is taking out a $3 billion 364-day bridge loan  and adding $5.5 billion in revolving credit. The company will be fronting $9.8 billion in cash, and another $22.8 billion will stem from merck stock.

• Schering share holders will own 32 percent of the new combined company, while Merck shareholders will  own 68 percent of the company.

• Joint company expects to save approximately $3.5 billion by 2011.

• There will be a job freeze for both companies beginning this morning.

• Complete transaction by Q4 2009.

• Remicade distribution rights between Schering and Johnson & Johnson are not expected to be in question, but Merck is prepared in case of legal problems. Question as to whether there will be a change of control.

• Synergies have not been defined beyond potential savings.

• Very little overlap in compounds with the exception of two late-stage programs in Hepatitis C and one other.

• Merck will gain access to Schering’s massive animal health product portfolio.

• Joint company will reside at Merck’s Whitehouse Station, New Jersey location.

Merck announced, a little over an hour ago, that it had signed an agreement with Schering-Plough’s board of directors to merge the two companies under the Merck name.

The stock and cash transaction is worth over $41 billion with Schering shareholders receiving $10.50 per share in cash and 0.5767 of a share of the combined company—a 34 percent premium over Friday’s closing price. Merck Chairman Richard T. Clark will assume control of the joint company. Schering CEO Fred Hassan will continue to manage the company until the end of the merger period. He had this to say in a release this morning.

“We are joining forces with Merck, our long-term partner in our cholesterol joint venture, to create a dynamic new leader in the pharmaceutical industry,” Hassan stated.

No word yet on what this means for the future of the employees, but as with the Pfizer/Wyeth mergers, cuts of redundant positions are expected.

“A key priority is keeping the best talent from both companies,” Merck stated in a release. “Recognizing that the combination will result in a much larger organization, Merck expects that the substantial majority of Schering-Plough employees will remain with the combined company.  In addition, both Merck and Schering-Plough will institute hiring freezes immediately.”

Schering and Merck have been strategic partners for years, with a collaberation on the blockbuster cholesterol drug Vytorin. The two companies came under fire last year after a study revealed that the drug was no better than its generic equivalent at lowering arterial plaque—a treatment that it was never approved for. The drug has been a billion dollar seller and has proven to lower total cholesterol levels while raising good cholesterol.

The two companies, also, failed to get an approvable letter, last year, for a combination drug of Claritin and Singulair to treat seasonal allergic rhinitis.

We’ll have more on this story throughout the day.

The CVT board rejected Astellas’s second proposal last Friday stating that the Astellas proposal undervalued the company and is not in the best interest of the shareholders.

In a press release issued this morning Astellas stated, “While we continue to prefer to reach a negotiated agreement with CV Therapeutics’ Board, their refusal to engage with us regarding our proposal has left us with no alternative but to take our offer directly to CV Therapeutics’ stockholders. We believe our offer provides CV Therapeutics’ stockholders with immediate cash value that exceeds what the company could reasonably expect to deliver on it own, particularly given current uncertain market conditions and execution risks inherent in CV Therapeutics’ standalone strategy.”

The tender offer is a 41 percent premium to CVT’s closing share price of January 26, 2009, and a 69 percent premium to CVT’s 60-day average closing price ending on January 26th.

The bidding war began in November when Astellas made the first move to buy CVT. When the offer wasn’t accepted, Astellas made a second proposal to the board in late January, which was once again rejected by CVT on February 20th.

Meanwhile, Astellas US Holding, Inc., a subsidiary of Astellas Pharma Inc., today announced that it has filed a lawsuit in the Delaware Chancery Court against CV Therapeutics Inc. According to the press release its directors are seeking, “declaratory and injunctive relief to prevent CV Therapeutics from applying its recently amended stockholders rights plan in a way that would prevent CV Therapeutics’ stockholders from tendering their shares into the tender offer announced by Astellas today and preclude CV Therapeutics from claiming that a 2000 agreement between Astellas and CV Therapeutics has been violated by the Astellas tender offer.”

Roche wants Genentech and it’s sick of waiting for a deal.

Six months after a special committee for the biotech firm’s board of directors rejected Roche’s offer of $43.7 billion or $89 a share, Roche has switched gears and dropped the offer to $86.50 per share and is taking negotiations to the stockholders.

“We are disappointed that the discussions over the last six months between Roche and the special committee of Genentech have not produced a negotiated agreement,” Roche Chairman Franz B. Humer stated in a release. “We feel it is now time to give the Genentech minority shareholders the opportunity to decide on our offer. Especially in the current market environment the offer provides an opportunity for all public shareholders to achieve liquidity and to receive a fair price for all their shares.”

Roche already owns 55 percent of Genentech and hopes to snag full control of its top cancer treatment Avastin. When the deal is approved, Roche plans to leave Genentech’s R&D division as a stand alone unit based in San Francisco. Meanwhile, Roche’s Nutley, New Jersey-based pharma commercial operations and Palto Alto-based virology division would be transplanted to SF. The Nutley branch will not be shuttered, instead it’s going to be turned into ground zero for Roche’s disease biology and metabolism units.

Roche plans to pay for the aquisition merger using a combination of cash, loans, and bonds.

Lilly broke the news Monday morning that ImClone had accepted its offer to acquire the biotech firm for $6.5 billion or $70 per share—Lilly’s largest acquisition ever.

With this purchase Lilly gains control of ImClone’s blockbuster, targeted cancer agent Erbitux, which is marketed for second- and third-line colon cancer and refractory head and neck cancer.

ImClone also has five monoclonal antibodies in clinical development—including one in Phase III and two currently moving out of Phase II trials. The acquisition will help Lilly meet the challenge of patent expiration that it will see in the next decade and bolster its 13 oncology drugs currently in development.

One sticking point will be how the deal affects ImClone’s co-marketing pact with Bristol-Myers Squibb in the United States. BMS currently pays a 39 percent distribution fee to ImClone for Erbitux and owns 17 percent of ImClone stock. In an investor call this morning, Lilly said it could not comment on the situation.

Last month, BMS offered $4.5 billion for ImClone. ImClone chairman Carl Icahn shot down the offer stating that it undervalued the company and that a second mystery suitor had made an offer for $70 per share. After more than a week of whispers and second-guessing, Lilly announced that the boards of both companies have approved a definitive merger agreement.

Lilly expects the income stream of Erbitux and the success of one additional drug to cover the cost of ImClone. The company will cover the cost with a combination of cash and debt.

Moody’s Investors Service announced this morning that it was considering the possibility of lowering Lilly’s Aa3 long-term debt rating (the company’s Prime-1 short-term rating would remain unchanged).

“The long-term success of the acquisition will be dependent on receiving expanded approvals for Erbitux as well as favorable execution of other products in ImClone’s pipeline, both of which remain uncertain at this time,” stated Michael Levesque, Moody’s senior vice president.

In a pointed letter to Alpharma’s board, King President and CEO Brian A. Markison stated that every effort to negotiate terms and costs with Alpharma has been ignored.

“While we would prefer to work cooperatively with you and your Board to complete a negotiated transaction, our Board of Directors has authorized management to commence a tender offer to purchase all of the outstanding shares of Class A Common Stock of Alpharma for $37 per share in cash, which we intend to do promptly.”

On August 22, Alpharma President and CEO Dean J. Mitchell rejected King’s initial offer stating, “the proposal is inadequate and does not reflect the Company’s inherent value.” Mitchell accused Markison of publicly commenting on negotiations without a confidentiality agreement and noted that the offer was not up to snuff because of potential earnings of Alpharma’s pain drug Embeda, currently under review by FDA.

He not only accused BMS of lowballing, but also admitted that the company has been in talks with the head of another mysterious pharma company, which has resulted in an offer of $70 per share in cash.

“The special committee has determined, subject to the execution of a confidentiality agreement, to allow this company to conduct due diligence for a two week period, subject to extension by mutual consent,” the release stated. “No determination has been made as to whether $70 per share would be adequate.”

BMS has yet to release statement in reaction to Icahn’s comments. BMS is a 17 percent stakeholder in ImClone and worked with ImClone to bring the head/neck cancer treatment Erbitux to the US market. ImClone is mum about the new suitor.

Photo by Jenn Jenn