New York-based Bioenvision today reported a big jump in revenues, and the leading minority shareholder opposed to the company’s proposed merger with Genzyme pointed to this surge as an indication Genzyme’s offer price far undervalues the company—and filed a letter with the SEC that showcases his strategy to block the deal.
Steven Rouhandeh, chairman of SCO Capital, a New York merchant bank, has long taken the lead in objecting to Genzyme’s $5.60 per share offer for Bioenvision. A special vote on the matter is scheduled for October 4, but shareholders already soundly rejected the terms earlier this summer by declining to tender shares under Genzyme’s offer—and Rouhandeh said today things aren’t going to change at the formal vote. Instead, he wants to move forward with plans to remove two Bioenvision board members and replace them with SCO representatives. He also wants to terminate Genzyme’s rights to Bioenvision’s leukemia drug clofarabine. All this is detailed in today’s SEC filing.
The crux of the issue has been the valuation of Bioenvision. In today’s quarterly and year-end report, Bioenvision relayed that revenues for the fourth quarter that ended June 30 had risen to roughly $6.75 million from $1.8 million a year earlier. Year-end revenue totals, meanwhile, were $19.1 million for fiscal 2007, compared to $5.3 million for 2006. The performance was significantly above analyst expectations. Bioenvision’s losses widened during the period, but Rouhandeh says the overall trend was good.
“It was very upbeat,” Rouhandeh says of the Bioenvision earnings report. “The company only looks better than it did four months ago [about when the tender offer was proposed],” he says. Sales are so strong, and the biotech sector in general is looking so good, Rouhandeh adds, the company might do far better to remain on its own than to try and come to better terms with Genzyme. “As a standalone company, it looks very strong,” he says.
“The reason we invest in some of these companies is to play for the home run, and I think we’re on the cusp of that. Selling it now is selling it prematurely.”
