West Coast Editor

The victory - dubious in some quarters - by Genzyme over Millennium Pharmaceuticals Inc. at the finish of last year's bidding war for AnorMED Inc. is water under the bridge, but the cost of the win flooded Genzyme's bottom line, leaving the company with a net loss of $17 million for fiscal 2006 despite record revenues.

Analysts were still digesting the enzyme-replacement firm's numbers Wednesday, but Wall Street seemed pleased, as Genzyme also revised upward the guidance for 2007. Shares of the company (NASDAQ:GENZ) rose $2.10, to close at 67.30.

"Revenues were right on the guidance," noted Henri Termeer, chairman and CEO of Cambridge, Mass.-based Genzyme, during a conference call. The fourth quarter, he added, was even stronger than company officials expected.

Specifically, the firm drew $3.2 billion in revenue for the year, up from $2.7 billion in 2005, but lost $16.8 million, compared to $441.5 million in net income reported last year. For the fourth quarter, revenue hit an all-time high of $854.2 million, up from $728.7 million during the same period last year. Net loss totaled $286.2 million, or $1.02 per share, during the quarter, compared to $106.6 million, or 39 cents per share, in net income during 2005. Still, after various costs were taken out of the equation, Genzyme beat analysts' estimates by 2 cents.

Vancouver, British Columbia-based AnorMED agreed to let Genzyme take over the firm for $13.50 per outstanding share shortly after Millennium refused to go higher than its $12-per-share offer. Genzyme earlier had proposed $8.55 per share. In the end, AnorMED and Genzyme entered a mutually beneficial support agreement regarding the acquisition at the higher price - a 168 percent premium - and Millennium, of Cambridge, Mass., walked away with a $19.5 million termination fee. (See BioWorld Today, Oct. 18, 2006.)

In the deal, Genzyme got Mozobil, a small-molecule CXCR4 chemokine antagonist that releases stem cells from bone marrow into circulation to improve stem cell collection for use in blood-cancer transplant therapy. Enrollment was finished in October in the second pivotal Phase III trial with Mozobil, and AnorMED said top-line data from both Phase III trials are due in the first half of 2007.

"We hope to file this year or early next year for [Mozobil] to become commercializable in 2009," Termeer told investors, and said he would make more details available at the analyst meeting in May. Skeptics of Mozobil point to its niche indication - one that appears to be dwindling, though Termeer assured listeners during the conference call that Genzyme would be exploring "all kinds of additional potential indications" for the compound.

Renagel (sevelamer hydrochloride), the phosphate binder for kidney failure, along with Genzyme's franchise in lysosomal storage disorders (LSDs), drove growth in 2006. In 2006, Renagel sold $515 million, a number that Genzyme expects will rise to a range of between $580 million and $590 million this year.

Cerezyme (imiglucerase for injection), Genzyme's standard-of-care therapy for Type 1 Gaucher disease, sold $1 billion in 2006, and is expected to bring in as much as $1.075 billion this year. Because Gaucher patients risk bone complications, the research published in January's Journal of Bone and Mineral Research was important, showing long-term use of the compound significantly improved bone mineral density in those afflicted with the disorder.

Fabrazyme (agalsidase beta) for Fabry disease sold $359 million last year, and could go as high as $425 million in 2007. December data from a Phase IV trial, published in the Annals of Internal Medicine - the only major-outcomes study in that patient group - proved the replacement therapy reduced the risk of major clinical events that cause death and disability.

Synvisc (hylan G-F 20), a viscosupplement for osteoarthritis knee pain, hit $234 million last year, and is expected to range between $250 million and $265 million this year. The product did well "despite some uncertainty toward the end of the year associated with [Centers for Medicare & Medicaid Services] pricing," said Michael Wyzga, Genzyme's chief financial officer.

Genzyme's most recently launched product, Myozyme (alglucosidase alfa) for Pompe disease, "continues to ramp up nicely" after second-quarter sales began, he said. Sales last year reached $59 million and are expected to increase to at least $155 million and maybe as much as $180 million this year. This year, Genzyme plans to launch Myozyme in Japan, Brazil and a number of additional markets.

Genzyme had forecast total 2007 sales of $3.6 billion to $3.8 billion, and now aims for 2007 net income of $1.90 to $2 per share. Taking away the costs of the AnorMED buyout, the firm said 2007's earnings per share should reach between $3.20 and $3.30 per share, higher than the $3.10 to $3.20 range offered near the start of this year.

For the first time, Genzyme officials spoke about a pair of Phase III trials slated to begin this year in multiple sclerosis with Campath (alemtuzumab), the antibody approved for B-cell chronic lymphocytic leukemia.

"We are working with [overseas regulators] and the FDA on protocol development and definitions," said Termeer, adding that the compound targeting CD52 could "materially change the treatment of MS."

Myozyme is being tested in a 90-patient trial for late-onset Pompe disease. It's already used in that indication, but study data will "complete the picture" and "reinforce what the [treatment] community is very much understanding" already, Genzyme officials said.

David Meeker, president of LSD diseases for Genzyme, acknowledged that the firm had decided to extend the late-onset trial, based on advice from an independent panel that has inspected the blinded data. "With regard to the length of the trial, their instructions were to make sure this trial had the optimal chance to be able to demonstrate safety and efficacy."

Another point of interest during the call: Genzyme's therapy for Niemann-Pick disease, a seldom heard-about lipid storage disease, caused by mutations in the NPC1, NPC2, and SMPD1 genes and characterized by the buildup of lipids in the spleen, liver, lungs, bone marrow, and brain.

"This is a program we've worked on for a while," Meeker said, calling the effort "a bit more challenging than some of the other enzyme therapies we've developed. We will need to do at least one more pivotal trial and possibly two."

A second-generation Renagel trial also is under way. Wyzga said Genzyme "really gained momentum as we went through the year," and pointed to the firm's cash generation, which continued apace despite the AnorMED takeover.

The year ahead promises steady news flow, as the pipeline continues to ripen. "We expect data from about 10 trials in the course of [2007]," Wyzga said.