Managing Editor

The consolidation of Genzyme Corp.'s operations into Sanofi SA helped the Paris-based big pharma firm offset generic threats to its revenue in the second quarter, but holders of Genzyme's contingent value rights (CVR) are unlikely to see the $1 CVR connected to manufacturing levels of enzyme replacement therapies (ERT) Cerezyme (imiglucerase) and Fabrazyme (agalsidase beta).

That news sent shares of the publicly traded CVRs (NASDAQ:GCVRZ) falling 80 cents, down 40 percent, to close Thursday at $1.20, but it was hardly surprising to Sanofi executives.

"We had expressed some skepticism that the recovery could be as quickly as had been forecasted" by Genzyme, Sanofi CEO Chris Viehbacher told investors on the firm's earnings call, adding that the pharma firm had all along considered Genzyme's projections for getting the ERTs produced at its Allston Landing plant back up to full capacity "too optimistic."

Full recovery of the production woes that have plagued the Cambridge, Mass.-based biotech – starting with the discovery of a virus in one of the Allston bioreactors in the summer of 2009 and eventually resulting in a $175 million consent decree – was one of the sticking points in Sanofi's acquisition negotiations for Genzyme. Rather than debate the timing of that recovery, the companies agreed to attach a CVR that would give Genzyme shareholders an extra dollar per share should Cerezyme and Fabrazyme regain specified production levels in 2011. (See BioWorld Today, June 17, 2009, March 25, 2010, and Feb. 17, 2011.)

But that's probably not going to happen, though Viehbacher said the company "continues to make progress." He added that levels of Gaucher disease drug Cerezyme were "in good shape," with Sanofi now focusing on building up an inventory, but production of Fabry disease drug Fabrazyme has been slower to regain full capacity. That clearly was reflected in second-quarter sales, with Cerezyme totaling €166 million (US$237.7 million), up 58 percent over the same period last year, while Fabrazyme sales only hit €30 million, a mere 3.5 percent over second-quarter 2010 sales.

The firm hopes to hit full recovery early next year, when Genzyme's new Framingham manufacturing facility comes on line. "We've got every confidence in the recovery of manufacturing," Viehbacher said. "It's just that the actual levels of production are not going to lead to what was originally forecast."

Manufacturing milestones represented only $1 of the $14 in CVRs stemming from the acquisition, which would tack on to the $20. 1 billion Sanofi already shelled out for Genzyme. The remaining CVRs are connected to sales of multiple sclerosis drug Lemtrada (alemtuzumab), but analysts already are doubting whether CVR holders will end up seeing all – or even a significant portion – of that money.

Despite Lemtrada hitting its endpoint in the first Phase III multiple sclerosis (MS) study earlier this month, data fell short of expectations, making it a long shot that Lemtrada could garner substantial market share amid an increasing number of competitors such as the recently approval oral MS drug Gilenya (fingolimod, Novartis AG). (See BioWorld Today, July 12, 2011.)

An FDA nod would win CVR holders $1 per share, which could come in 2012. And Lemtrada has a good chance at clearing the agency, especially if the second Phase III trial is positive. After that, however, it's anyone's guess. The rest of the CVRs are: $2 of net sales of Lemtrada after launch exceeds $400 million within specific periods per territory; $3 if global net sales exceed $1.8 billion; $4 if global net sales exceed $2.3 billion; and $3 if global net sales top $2.8 billion.

The good news for Sanofi is that the integration of Genzyme, which is nearly complete, is helping the firm. Had the big pharma not been able to add Genzyme's sales to the mix, its overall sales would have been down 4 percent for the quarter. Instead, sales were up 6.9 percent, Viehbacher said.

Bottom-line figures were helped by sales of Pompe disease ERT Myozyme/Lumizyme (alglucosidase alfa), which totaled €99 million for the quarter, up 42 percent over the same period last year. Genzyme's renal disease drugs Renvela (sevelamer carbonate) and Renagel (sevelamer hydrochloride) pulled in €137 million, and biosurgery drugs Synvisc/SynviscOne (hylan G-F 20) racked up sales of €89 million for the quarter.

During its earnings call, Sanofi also updated investors on the status of a couple of its partnered programs. Mipomersen, an apo-B synthesis inhibitor, was submitted for marketing approval in Europe in homozygous and severe heterozygous familial hypercholesterolemia, and plans are under way to file regulatory submissions in the U.S. later this year. Sanofi inherited rights to mipomersen in its Genzyme buyout and will owe a milestone to Carlsbad, Calif.-based Isis Pharmaceuticals Inc.

Among its other partnerships is a diabetes deal with Danish biotech Zealand Pharma A/S. The firms are on track to file for European approval of GLP-1 agonist Lyxumia (lixisenatide) in the fourth quarter, with FDA approval expected about a year later. But Sanofi said plans for a combo product featuring Lyxumia and Sanofi's Lantus insulin have been pushed back, with Phase III trials expected to start in 2013, about a year after most analysts had anticipated.

Specific reasons for the delay weren't offered, but analyst Peter Welford, of Jefferies, speculated that it might be device related and said the setback could put Sanofi's program as much as a year behind a competing product – Victoza (liraglutide)/degludec – from Novo Nordisk A/S.

In other earnings news:

• Dyax Corp., of Cambridge, Mass., reported second-quarter sales of hereditary angioedema drug Kalbitor (ecallantide) totaling $5.2 million and said the number of patients treated with the drug had risen to 246, 50 percent over the first quarter. The company's overall revenues reached $21.9 million. It posted a net loss of $76,000, or 0 cents per share, soundly beating analyst estimates, which projected a loss of 10 cents per share. As of June 30, the firm had about $55.6 million in cash. Shares of Dyax (NASDAQ:DYAX) gained 1 cent Thursday, to close at $1.73.

• Regeneron Pharmaceuticals Inc., of Tarrytown, N.Y., posted a wider-than-expected loss for the second quarter of $62.5 million, or 69 cents per share. Analysts had predicted a loss of 41 cents per share. The firm's total revenue was $107.8 million, down slightly from last year due to a decrease in licensing revenue. Sales of Arcalyst (rilonacept) for cryopyrin-associated period syndromes were a modest $5 million. But going forward, most of the attention at Regeneron is on Eylea (VEGF Trap-Eye), which received a positive opinion from an FDA advisory panel last month in age-related macular degeneration and has a PDUFA date of Aug. 20. The firm's cash as of June 30 totaled $569.1 million. Shares of Regeneron (NASDAQ:REGN) lost 2 cents, to close Thursday at $52.63. (See BioWorld Today, June 20, 2011.)

• United Therapeutics Corp., of Silver Spring, Md., enjoyed a solid second quarter, posting revenues of $183.8 million, driven by increasing sales of Tyvaso, its inhaled version of treprostinil, for pulmonary arterial hypertension, which totaled $61.8 million. Remodulin, its injectable treprostinil, pulled in $104.9 million for the quarter, while Adcirca (tadalafil) garnered $16.8 million in sales. United Therapeutics' net income totaled $73.9 million, or $1.27 per share, well above the 53-cents-per-share analysts had expected. As of June 30, the firm's cash totaled $887.4 million. Shares of United Therapeutics (NASDAQ:UTHR) rose $2.12, to close Thursday at $56.77.

• ViroPharma Inc., of Exton, Pa., reported net product sales of $128.8 million for the three months ending June 30. Sales of hereditary angioedema drug Cinryze (C1 esterase inhibitor) reached $62.5 million, while Vancocin (vancomycin) sales dropped slightly to $65.2 million. ViroPharma posted net income of $36.2 million, or 30 cents per share, missing analyst estimates of 38 cents per share. Its cash position totaled $518 million as of June 30. Shares of the company (NASDAQ:VPHM) closed Thursday at $18.41, down 91 cents.