Third-quarter 2009 profit sinks at Genzyme, on production woes

Production problems at US biotechnology firm Genzyme's top-selling Gaucher disease treatment Cerezyme (imiglucerase for injection) facility - resulting in $23.7 million in costs - cut into the company's third-quarter 2009 profit while also prompting another cut in financial guidance. Shares of Genzyme were down 5% at $52.06 by close of October 21.

The company expects its 2009 non-GAAP earnings per share to be approximately $2.26, compared with previous guidance of $2.35-$2.90. This reflects the decision to write off Cerezyme work-in-process material, the cost of remediating the Allston plant, and management of customer-level inventories related to the Bayer transaction, the company said.

Missed Wall Street targets

Genzyme reported an 87% drop in third-quarter profit, missing Wall Street expectations, as it works to restore operations at its troubled Massachusetts production plant. Profit during the quarter plunged to just under $16 million, or 6 cents per share, compared with $119.6 million, or 42 cents per share, during the same period a year prior. Revenue fell 8.9% to $1.06 billion.
Excluding charges, the company said it earned 31 cents per share. Analysts polled by Thomson Reuters expected profit of 44 cents per share on revenue of $1.11 billion.

In June, Genzyme temporarily shut down its production facility in the Boston area to deal with viral contamination that had been slowing down the process for making supplies of Cerezyme and Fabrazyme (agalsidase beta).

The company noted that Myozyme (alglucosidase alfa) revenue grew to $86.0 million, compared with $76.7 million in the third quarter of 2008. European sales are continuing to re-accelerate this year following the first-quarter European Union approval of production at the 4000 L scale, which expanded supply. Second-quarter sales were $79.3 million.

Cerezyme revenue was $93.6 million, compared with $309.3 million in the same period last year, and Fabrazyme sales were $115.2 million compared with $125.6 million last year. Revenue for both products reflects the impact of the temporary interruption in production due to the Allston remediation. Third-quarter sales of Aldurazyme (laronidase) were $40.3 million, compared with $38.2 million in the third quarter of 2008.

Within the cardiometabolic and renal segment of its business, sales of Genzyme's sevelamer therapies, Renvela (sevelamer carbonate) and Renagel (sevelamer hydrochloride), were $181.7 million in the third quarter, compared with $171.0 million in the same period last year.

Genzyme has begun the launch of Renvela in Europe, following the product's approval there in June. The approval includes patients not on dialysis with serum phosphorus levels ≥ 1.78 mmol/L (5.5 mg/dL), and covers both the tablet and the powder formulations, the firm noted.

Sales of Thyrogen (thyrotropin alfa for injection) were $41.7 million compared with $38.2 million during the third quarter of 2008.