AnorMED's Tumultuous Year

Biopharmaceutical firm AnorMED (AMEX: AOM) has had a rocky 2006. First, a huge battle broke out among shareholders for control of the board of directors, and in the aftermath, the company's CEO stepped down. Now AnorMED is embroiled in a hostile takeover attempt by much larger biotech rival Genzyme (Nasdaq: GENZ).

Things started to heat up for AnorMED last year, when a large institutional shareholder, upset with management's direction for the company, launched a campaign to unseat the current leadership. The shareholder feared that AnorMED would partner the company's lead drug, MOZOBIL, intended for stem cell transplants, too cheaply, and was also angered by dilutive financing done near the stock's 52-week lows.

Motley Fool Hidden Gems pick FlamelTechnologies (Nasdaq: FLML) faced a similar situation last year, when individual investors threw out the company's board of directors, spurring a management change. For AnorMED, the board overhaul seems to have paid off; Genzyme has offered $8.55 a share in cash for the company. Shares of AnorMED are at one-year highs, up nearly 50% based on the news.

The interesting part? Apparently, Genzyme privately offered $8.55 per share for the company several months ago, but management didn't like the offer. AnorMED never publicly disclosed the offer, and I wonder what role, if any, the Genzyme offer played in the ousting of the previous board of directors. Because AnorMED management rejected the earlier offer, Genzyme went public with its new attempt at a hostile takeover.

Was spurning Genzyme a smart move? We should know in a few months. MOZOBIL top-line trial results are expected in the first half of 2007, and if the trial is successful, the company plans to file a New Drug Application with the Food and Drug Administration sometime in the second half of 2007. Since AnorMED's other compounds in development are all early-stage drugs, years away from any sort of marketing approval, the Genzyme offer was most likely based upon a favorable opinion of MOZOBIL.

AnorMED's directors are the company's largest shareholders, owning 24.4% of outstanding shares. That means Genzyme probably can't wrest control of AnorMED away from the current board members without more tempting. The company also enacted an ironically dubbed "shareholder rights plan," which prevents any individual shareholder from owning more than 20% of the company for the next six months. If that doesn't prevent any immediate hostile takeover by Genzyme, it should at least allow AnorMED's current board to challenge such a maneuver in court.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article and welcomes your feedback. The Motley Fool has a disclosure policy .