by Geeta Anand
“A deal with Genzyme may end up being our best bet, Bill,” John said. Canfield knew about the talks with Genzyme; he’d even participated in some, though at the time neither man had thought they would sell to the larger company.
“I think it’s time to move Genzyme to the front burner,” John said. “The big question is whether we can get Henri to pay enough.”6
Canfield nodded, stroking his beard and thinking. The two men had very different personalities. Where John had a hard time saying “no,” Canfield had the opposite tendency—wresting a “yes” from him was harder than finding good Chinese food in Oklahoma City. Still, John had learned during their year-long relationship that if he presented an argument in purely rational terms, Canfield might fret, but if it made sense he would eventually go along with it.
“I don’t like the idea, but I think you may be right,” he said at length.
“I think it’s the right thing to do,” John nodded.
Then, one eyebrow cocked, he changed his tone and asked archly, “Bill, have you begun testing your technology in Gaucher disease yet?”
“No … but I could,” Canfield replied, quickly picking up John’s drift.
“Let’s see how quickly Elvira can do some experiments on a Gaucher enzyme,” John said.
Canfield called in the recently hired director of preclinical studies and told her she was in charge of a new project to make a better version of Genzyme’s Gaucher treatment. “Make this your top priority,” Canfield said quietly. “Keep a record of all experiments. We may need to present results very soon.”
When she had left, John, his tone still light, suggested they brainstorm for names for the Gaucher treatment they were now developing. Genzyme had named its first-generation Gaucher drug Ceredase, and its improved version Cerezyme.
“How about Ceravance?” John said, again slyly crooking his brow.
“I like it,” Canfield said with a smile.
“Then I’ll work on filing the trademarks today,” John said. “And what about a code name for these merger talks?” To keep discussions secret, senior executives often gave them code names, seeking to avoid having their own employees illegally trade on the information.
“Project Echo?” Canfield suggested.
“Naaah,” John said, grinning. “I’ve got a better one. We need sixty to ninety days to get this to the point where Genzyme knows it has to do a deal. We’re going to wrap this package up and put a great big bow on it. Let’s call it Project Bow.”
Canfield, who often found John’s brashness discomfiting, laughed, shaking his head at the audacity of it all—and the name stuck.
That day, John phoned Henri Termeer’s right-hand man, Jan van Heek, the executive vice president of worldwide therapeutics at Genzyme.7
“We have some good preclinical results and some other things we want to share with you,” John said, referring to Dr. Barry Byrne’s tests that appeared to show Canfield’s treatment strengthened the leg muscles of Pompe mice.
Van Heek—like Henri, a native of the Netherlands—sounded thrilled and said he would call back with a meeting date. He called Henri to tell him there was finally some movement on Project Rodeo. The talks with Novazyme had had a series of code names, all of them far less imaginative than Project Bow. At first, Genzyme called the discussions Project Cornhusker, but then someone pointed out that Cornhusker was the University of Nebraska’s mascot. Wrong state! Then the talks were known as Project Sooner, after the University of Oklahoma’s football team, but that was soon dismissed as too obvious. The latest name, one that hadn’t been challenged to date, was Project Rodeo—suggesting something western, but covering a broad enough area that it wasn’t obvious the company in question was in Oklahoma, where only a handful of biotechnology firms existed.
On April 4, John and Canfield arrived at Genzyme’s headquarters, a series of interconnected old brick buildings in Kendall Square in Cambridge, Massachusetts. Van Heek, a tall, lean man with a chiseled face topped by a helmet of thick brown hair, led them down a hallway so long and narrow—a legacy of the buildings’ original use as a fire hose manufacturing plant—that John felt claustrophobic. He was already nervous at finally being within the walls of one of the biggest, most successful biotechnology companies around, and the walls seemed to be creeping in on him. Inside a pencil-shaped conference room, a dozen senior drug development officials waited around a rectangular table.
Taking a deep breath, John began his pitch with a corporate update, intending to demonstrate that his company had both the momentum and resources to move forward alone, without Genzyme. Unlike some of their earlier, long-winded presentations, attempting to overwhelm their viewers with facts, this time John and Canfield aimed to be brief, with only eighteen PowerPoint slides between them. John said Novazyme now had over seventy employees. It had built a new manufacturing plant that was fully operational. And most important, it had completed a new round of financing.
Then, gaining confidence, John reached once more, as he was prone to do.
“Novazyme has $15 million in the bank,” he said boldly. (“I’m rounding the numbers a little,” he had chuckled to Canfield earlier in the day.) John also said they would begin clinical trials in September even though he knew that would be impossible.8
When his turn came, Canfield didn’t present Dr. Byrne’s data, which he knew Genzyme had seen in the press release from March. Instead, he showed off a fresh round of mouse experiments that his new preclinical director had just finished—with outstanding results. “As you’ll notice, the glycogen appears to be completely cleared in the cells of the mice who received the enzyme,” he said, with a note of triumph.
What Canfield didn’t say—and to be fair, no company would get into such detail in a presentation to a competitor—was that he couldn’t be certain the test to measure glycogen clearance was accurate. McKinney had been trying to buy a glycogen test, but couldn’t find any company willing to sell one, so Canfield’s team had used a makeshift one they had designed. It was promising, but Canfield hadn’t yet performed the extensive secondary tests required to validate its accuracy. Canfield also didn’t say that the enzyme used in this new round of experiments, as with Byrne’s, was the old version made with bovine PTase, which he didn’t intend to take into human clinical trial. Although Canfield had made human PTase, he had not succeeded—despite several months of effort—in using it to make a batch of the Pompe enzyme that produced good results in mice. He was still tinkering with the process, trying to determine how much of each ingredient to use, and under what conditions, to make the enzyme correctly.9
Canfield concluded by noting that the experiment showed that his Pompe enzyme cleared much more glycogen from the cells of mice than did Pharming’s and Chen’s conventionally made enzymes, both of which Genzyme now owned.
And then, as if it were an afterthought, Canfield said, “One more thing. We have a new initiative we want to tell you about.”
On the screen at the front of the room, he put up a slide entitled “Project Advance.” The slide read, “Genzyme Corp. generates about $600,000,000 a year with 80% margins” from its Gaucher medicine, Cerezyme, as if those in the room didn’t know.10
Then he clicked to the next slide, which was titled “Next Generation Cerezyme Opportunities.” He noted that Genzyme’s seven-year-monopoly under federal law for bringing to market a new treatment for a rare disease was due to expire the next month. Cerezyme was an effective treatment for Gaucher disease, in which patients became steadily more disabled with swollen organs and deteriorated bones, “but the medicine isn’t perfect. It doesn’t effectively reach patients’ lungs and bones.
“Ceravance is an improved third generation product,” he continued, using the name John had coined in his office only a week earlier. On the slide, a little R with a circle around it floated over the word Ceravance, indicating that the name was trademarked.
At this, van Heek, who had gotten up and was pacing at the back of the room as
Canfield presented the scientific results, stopped and shook his head, half in disbelief, half in dismay. Now John was sure the $2,500 spent on a patent attorney to apply for that trademark was well worth it.11
Only a few days later, van Heek was on the phone inviting John and Canfield back to Cambridge to discuss an acquisition. With a boyish grin, John knocked on Canfield’s door and gave the doctor an exuberant thumbs-up. “Project Bow is moving forward!”
As they rode in the backseat of a Boston Coach limousine to Genzyme’s offices, John asked Canfield to make a bet on the offer Genzyme would make.
“Not a cent over $50 million,” Canfield said.
True to form, John highballed it. “I’m saying $100 million,” he said grandly.
At Genzyme, John and Canfield were ushered into a smoky glass-walled conference room adjacent to Henri’s plush offices on the fifth floor of the main building. John sat himself at the head of the long wooden conference table, and Canfield settled into a seat on his right. They waited about fifteen minutes until Henri and van Heek appeared with a man they introduced as the company’s head lawyer and senior business development executive, Peter Wirth.
Henri was in his fifties, tall and elegant, with wavy brown hair that parted on the side. He greeted each of them with a big smile and a long handshake, and asked John how his children were doing.
“I hope we can work together to do something for your children and all other children with Pompe,” he said in a soothing voice, his Dutch accent pronounced.
“Peter is going to go over numbers with us,” he continued, “but the numbers aren’t important. What’s important is that we can move this drug development program faster together than apart.”
It was a line John had repeated often in his discussions with van Heek, telling him that he wouldn’t do a deal unless he was convinced it would get a treatment to patients more quickly. He never actually brought up Megan and Patrick, but everyone knew he had his children in mind.
John and Canfield sat tensely, staring at Wirth, who spent the next half hour outlining the prices of other comparable deals. He noted that Genzyme had paid $17 million for Pharming and $20 million for Chen’s program. He knew Novazyme’s own investors had valued the company at $35 million before the latest round of financing.12
“The fair price for Novazyme is $48 million,” Wirth said in conclusion.
John could see Canfield out of the corner of his eye leaning back in his chair, arms crossed and looking at the table, gloomily. “Well, if that’s your price, we’ve just wasted a lot of time,” John said. “My venture investors are never going to go for that, Henri, and you know that.”
Wirth jumped in to back up his numbers. John interrupted, saying he wasn’t quarreling with the calculations. “I’m sure the numbers are sound,” he said. “But the question is, ‘At what price can we get a deal done?’ And $48 million? My investors would never go for that.”
“What’s your price?” Henri asked.
Caught off guard, John didn’t reply at first, then stammered, “I’ll, uh, we’ll have to ask our board.” In truth, he didn’t really know. It wasn’t his company to sell. It belonged mostly to his venture capital investors and Canfield. John owned less than 5 percent of the firm.
“I’m sure there’s a way we can figure this out,” Henri said, smiling. “Why don’t you go discuss it with your investors. Find out at what price they would do it.”
John had regained his bravado. “I could never recommend anything under $100 million—and I don’t even know if that would be within range,” he said.
Henri’s eyes widened, and he said, “We may be a long way away.”
“What you didn’t factor in is that we’re making tremendous progress right now—and we don’t have to do this deal,” John said defiantly. “Look at the trajectory we’re on. At the point where you have to have us, we’ll be too expensive for you.”
Henri raised his eyebrows. There was an edge in his voice for the first time as he said, “We’ll always be able to afford you.”
Back at the stately Charles Hotel in Cambridge that night, John and Canfield wrestled with what to do. John had learned from the lashing he took from his venture capitalists in January that he needed to get their input and keep them well informed. He’d been making a special effort with Gus, and was surprised at the difference it was already making in their relationship. He had finally learned how the game was played—you needed to treat your investors as partners. A year ago he’d thought it was enough to take their money and merely check in once a quarter. How wrong he had been. They needed to feel valued and involved. And to John’s surprise, the investors actually had real value to add beyond their financial investment because of their experience and long-standing contacts in the biotechnology industry.
After he and Canfield finished dinner, John dialed Gus and found him still in his office working.
“We’re pretty far apart,” John said dejectedly.
“I’ll swing by and grab a drink,” said Gus, whose office was just a few miles down Memorial Drive.
In a matter of minutes, he sat down on the other side of the table from John and Canfield, stirring his gin and tonic with a lime. As a jazz band played, John went over the meeting with Genzyme, blow by blow, ending with the $48 million offer.13
Gus asked a lot of questions. John felt, for the first time, Gus was genuinely trying to help him figure out what made sense for Novazyme as a company, not just for himself as an investor. He was almost fatherly in the way he listened and probed.
“The questions you have to ask yourselves,” Gus said, “are ‘Would I rather deal with my son-of-a-bitch venture investors, or would I rather deal with Henri and Jan?’ And ‘How certain am I the science will work?’”
John looked down at the ice cubes he was stirring in his glass. He’d drained the cocktail without even noticing. “My gut tells me to call Henri and Jan and tell them we’re too far apart,” he admitted.
Gus said he was inclined to agree. The first offer was simply too low to begin negotiating.
Sleep was hard to come by that night. What if Genzyme didn’t come back to the table? John thought over and over. He had to be prepared for that possibility. He hadn’t admitted to Gus or anyone other than Canfield that he didn’t think they could make human trials by September. He and Canfield were the only ones who possessed all the information to truly weigh the options, and Canfield seemed to be deferring to him on this question.
At 6 a.m., exhausted and restless, he headed to the glass-enclosed hotel pool and swam fifty laps. With each powerful stroke through the water, he weighed the pros and cons of walking away from the Genzyme talks. Once he’d finished his laps, he hoisted himself out of the pool and sat on a bench, still deep in thought. Should he ask van Heek for time to present the Genzyme offer to the full board? Could he push van Heek for a better offer?
Suddenly, he noticed a swimmer had stopped in the middle of the pool and was staring at him, mouth agape. Two other men toweling off near the deep end were also looking at him sideways. John looked down and realized he was sitting there stark naked. He had been so preoccupied that his thoughts had skipped ahead to the locker room, and he had taken off his swimsuit!
John jumped up and tried to hoist up his swimsuit, but it was stuck around his ankles. Now two other older men had stopped swimming and pulled down their goggles in disbelief. Everyone seemed to be staring at him, like in some nightmarish high school dream where you showed up in class naked—except, in this case, it was true. Cursing, John began hopping as fast as he could toward the men’s room, his wet swim trunks flopping around his ankles and calves, but it didn’t feel like he could get there quickly enough. Everything seemed to have slowed down.
“I’ve officially lost it now,” he told Canfield later that morning, regaling him with the story as they rode together to Logan Airport. John never failed to find humor in stressful situations, and today was no exception. Canfield shook his head, smiling, and move
d on. “Have you called Jan yet?”
John’s ruminations overnight and in the pool had led him back to where he had ended the discussion the night before with Gus. If he began negotiations with Henri at $48 million, there was no way he would end up in the range that his venture investors would accept.
“You still feeling the same way as last night?” John asked Canfield.
“No doubt in my mind,” came the response.
John dialed van Heek and got him on his cell phone immediately. “Pricewise we’re so vastly apart, it would be counterproductive to spend the political capital and emotion to close the gap,” John said.
“Well, if you’re sure,” van Heek said, disappointed. “If you change your mind, we’d be very happy to continue discussions.”
At home that weekend, John threw himself into family life, trying not to dwell on whether he’d blown his chances of ever selling Novazyme. He found himself entrusted to take care of Patrick and John Jr. while Aileen escaped to the stores on Saturday afternoon, Megan at her side. Aileen had already imparted her passion for shopping to her young daughter.
Inside a nearby Kohl’s, with Megan in the child’s seat of the shopping cart, ventilator in the basket, Aileen headed gaily toward her favorite housewares section. Mother and daughter scanned the shelves with the same keen-eyed intensity. Aileen picked up several dark wooden picture frames and put them in the basket. She was looking at thank-you cards when Megan grabbed a pack. The shiny golden angel on the front had caught her attention, and she held them up for Aileen to see. “Wow, those are beautiful,” Aileen gushed. “The cards say, ‘Thank you for your baby gift,’” she read to her daughter. “How nice is that?”