Genzyme General reported higher-than-expected earnings for the first quarter, posting $51.6 million in net income, or 57 cents per share, 2 cents higher than the Street's consensus and 19 percent higher than the first quarter last year.
Driving the growth for the quarter was strong sales for Cerezyme, Renagel and Thyrogen. The Cambridge, Mass.-based company expects to file a biologics license application for its Fabry disease therapy by the end of the current quarter.
"This was another solid quarter for them," said Bill Tanner, vice president of SG Cowen Securities Corp. "I think the main highlight for them is that Cerezyme is a good drug. The fact that Thyrogen and Renagel revenues are up is a good thing, but it's really just a nice increase in a pretty small piece of the pie."
In addition to revenues of $178.6 million, which were up 16 percent over revenues for the first quarter 1999, the company recorded a record pretax gain of $20.3 million, or $16.4 million after taxes, related to its investment in Genzyme Transgenics Corp.
That gain was partially offset by a pretax charge of $19.5 million it is paying Synpac Inc., of Durham, N.C., for the rights to develop and commercialize Pompase, an enzyme replacement therapy for Pompe disease. It is a recombinant form of alpha-glucosidase produced in Chinese hamster ovary (CHO) cells. Pompe disease is a rare lysosomal storage disease characterized by the inability to convert glycogen into glucose, a primary source of energy for the body. Patients suffering from this disease have an accumulation of glycogen, causing the degradation of skeletal, heart and lung muscles. Infants suffering Pompe disease generally die before the age of 12 months.
As part of the Synpac deal, Leiden, the Netherlands-based Pharming Group N.V. is issuing a convertible note to Genzyme for $10 million. Genzyme General also is developing a treatment for Pompe disease in a joint venture with Pharming. The joint venture is producing recombinant alpha-glucosidase in the milk of transgenic rabbits. The company's move to the Synpac method may mean the joint venture is experiencing difficulty making large quantities of the enzyme in rabbits.
"The company may be viewing the two methods as having two shots on goal," Tanner said. "It may be a production issue and they may feel more comfortable with being able to produce large amounts of enzyme in CHO cells. I'd be betting on the Synpac product."
Genzyme General expects to launch a pivotal trial for Pompase in the second half of this year.
All of Genzyme General's approved products made revenue gains this quarter. Sales of Cerezyme, an enzyme replacement therapy for Type I Gaucher's disease, were $128.6 million, up 13 percent from the first quarter 1999. Sales of Renagel, a product to reduce serum phosphorus levels in patients with end-stage renal disease who are on dialysis, totaled $8 million, up 129 percent from sales of $3.5 million in the first quarter last year. Thyrogen, an adjunctive diagnostic tool for the follow-up of patients with well-differentiated thyroid cancer, produced sales of $3.4 million for the first quarter as compared to revenues of $1.3 million in the period last year.
The company also had revenues for its diagnostic products of $30.4 million, up 6 percent from revenues of $28.6 million in the first quarter 1999.
"I think where the company is really looking very good is in their various programs in development to treat rare, inherited lysosomal storage disorders," Tanner said. "It looks like they are making very good progress on these programs."
The most advanced product in the pipeline is Fabrazyme for the treatment of Fabry disease. The product has a fast-track designation, and the company intends to file a BLA for the drug in the first half of this year. If it achieves that goal it is possible it could be approved as early as the end of this year. Tanner estimated the drug will get approval either late this year or early in 2001.
Genzyme General also will begin a Phase III study of MPS-1 in the treatment of Hurler/Scheie disease.
Genzyme General's stock (NASDAQ:GENZ) closed Thursday at $42.312, up $1.562.