West Coast Editor

Genzyme Corp. racked up Wall Street-pleasing earnings of $134.5 million, or 49 cents per share, for the second quarter, compared to $123.6 million, or 46 cents per share, for the same period last year.

"All the major products reached new highs, which is something we are striving for," Henri Termeer, chairman, president and CEO of Cambridge, Mass.-based Genzyme, told investors during a conference call, adding that products limping somewhat in the last quarter - Synvisc, Fabrazyme and Hectorol - "really recovered beautifully."

The news was particularly good for investors after first-quarter revenues that came in lower than expected, and Genzyme's stock (NASDAQ:GENZ) closed Wednesday at $62.74, up $4.76. (See BioWorld Today, April 20, 2006.)

Non-GAAP net income for the second quarter jumped 22 percent to $181.2 million, up from $149 million in the same quarter a year ago, and non-GAAP earnings rose 19 percent to 68 cents per diluted share - beating Thomson First Call's estimate of 66 cents per share, and up from 57 cents last year.

Analyst Ron Ellis, of Prudential Financial in New York, maintained his "neutral weight" rating on the company, raising his earnings-per-share estimate for 2006 from $2.35 to $2.38, but Christopher Raymond, of Robert Baird & Co. in Chicago, said his firm remains "aggressive buyers" of Genzyme.

Cerezyme (imiglucerase), the lead enzyme-replacement therapy for Gaucher's disease, sold 8 percent more in the quarter, chalking up $254 million. Renagel (sevelamer hydrochloride), the kidney failure treatment, sold $126.6 million, a 26 percent hike. Termeer said Renagel's growth was especially pleasing and was "driven by global volume - somewhat price but mostly global volume."

Aldurazyme (laronidase), the enzyme-replacement therapy for patients with MPS I, had revenues of $23.5 million in the second quarter, a 23 percent jump from sales of $19.2 million in the same quarter last year. The drug is marketed through a joint venture with BioMarin Pharmaceutical Inc., of Novato, Calif.

Sales of the Fabry disease drug Fabrazyme (agalsidase beta) rose 20 percent to $89 million. Synvisc (hylan G-F 20) for osteoarthritic knee pain increased 8 percent over last year's second quarter, rising to $63.6 million from $58.8 million, driven by the expanding market for viscosupplementation products.

Officials said Genzyme's larger U.S. commercial team also is helping drive the growth of Hectorol (doxercalciferol) for secondary hyperparathyroidism in patients on dialysis and those with earlier stages of chronic kidney disease, which rose to $22.4 million from $18.9 million in the same quarter last year. Termeer acknowledged the vitamin D2 product gained through the acquisition of Madison, Wis.-based Bone Care International had some "start-up difficulties."

Genzyme has submitted a marketing application for the product in Argentina, and filings in Mexico and Israel are expected to follow later this year, along with studies to enable registration in Europe and bolster its position in the U.S.

Oncology revenue for the second quarter totaled $13.7 million, an increase of 41 percent compared with $9.7 million in the same quarter last year. That income includes profits and royalties from the leukemia drugs Campath (alemtuzumab), marketed by Berlin-based Schering AG and its U.S. affiliate Berlex, and Clolar (clofarabine).

Two-year Phase II data with Campath in multiple sclerosis, as well as data from a trial testing the drug against B-cell chronic lymphocytic leukemia, are due in the second half of this year. By year's end, results from trials with sevelamer carbonate - the next-generation Renagel - are due.

Next year, analysts expect the launch of Hectorol outside the U.S., plus data from the Phase III trial of Genzyme's tolevamer in C. difficile-associated diarrhea, as well as an expanded label for Synvisc in the U.S.

As of June 30, the company had about $1.35 billion in cash, which "gives us some flexibility" with regard to future buys similar to Hectorol, Termeer said.

The firm is pursuing what officials described as a three-tiered strategy to advance its oncology portfolio: boosting research and development while considering product buyouts and acquisitions to "change the scale and scope" of operations.

Although Cerezyme might list variable sales from quarter to quarter because of new-patient starts, the latest "very robust" earnings "really continued pretty much what we've been seeing in the last two years," Termeer said. The company is "on track to deliver the [financial] guidance for the year," he said.

Revenue estimates for 2006 project between $3.1 billion and $3.3 billion, with GAAP earnings of $1.78 to $1.88 per diluted share, and non-GAAP earnings of $2.65 to $2.75 per diluted share.