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Management of Canadian biotech darling AnorMED, Inc (ANOR) agreed to a cash buyout offer from Millenium Pharmaceuticals (MLNM) for $12 U.S. a share, totaling $515 million. That represents a premium of 21% over Monday's closing price, and a whopping 40% premium to a hostile $8.55 bid by Genzyme (GENZ) that AnorMED and its investors declined.

The battle, which Millenium seems to have won, was for AnorMED's MOZOBIL, a small molecule chemokine antagonist that has been shown to mobilize stem cells from bone marrow. MOZOBIL is currently in phase 3 clinical trials.

But the attraction for AnorMED was fueled by the company's earlier success with FOSRENOL, a treatment for high phosphate levels in the blood of patients undergoing dialysis for chronic kidney failure.

World wide rights to FOSRENOL was sold in 2004 to Shire Pharmaceuticals Group. AnorMED has since gained $19 million U.S. in milestone payments from Shire as the drug has since been approved in the U.S., Germany, and the United Kingdom.

Millenium is banking on the little company's past experience with taking a drug from early research and through clinical trials, and eventual approval. MOBOZIL fits perfectly with Millenium's oncology and hematology sales unit.

But Millenium currently has just over $600 million in cash, and could possibly register a stock offering to fund the acquisition. Millenium has yet to become the biotech giant that many predicted during the roaring 90s.

Genzyme is a $17 billion biotech behemoth that posted a profit of more than $400 million last year. So why did Genzyme offer such a small bid for AnorMED? Some believe Millenium offered too much, especially since MOBOZIL has yet to be approved. Millenium is taking on a gamble that could potentially cost the company more in market cap than the cash it is offering.

There might be a sound financial reason for Genzyme's offer that Millenium is not aware of.

Time will tell.

Source: Millenium Beats Genzyme, Gets AnorMED's Stem Cell Drug