Editor

Gone are the sector-sensitive days when a failure (or a success) practically anywhere in biotechnology could send every other company's stock plunging (or skyrocketing). But something like that still happens to a lesser degree.

Witness last week's lower-than-expected earnings reported by Genzyme Corp. and Amgen Inc. Genzyme took the harder hit on its news, losing $5.13 to close at $60.65, after the firm said three products sold less than company officials - and, no doubt, investors - had hoped.

Specifically missing the revenue bar were Genzyme's enzyme-replacement product Fabrazyme (agalsidase beta) for Fabry's disease, Synvisc (hylan G-F 20) for osteoarthritic knee pain and Hectorol (doxercalciferol) for secondary hyperparathyroidism in patients on dialysis, as well as chronic kidney disease.

Genzyme promised better news ahead for the products, and analyst Christopher Raymond with Robert Baird & Co. is a believer. With the company's lysosomal storage disorder (LSD) franchise, which means so much to the bottom line, "you can't go out and survey and get direct market feedback, because patients are so rare," Raymond pointed out. Genzyme's flagship LSD therapy, Cerezyme (imiglucerase for injection), for Type 1 Gaucher's disease hit $239 million in the first quarter, compared with $226 million in the same period a year ago, an increase of 6 percent.

But Hectorol and Renagel can be measured for progress. The latter, Raymond told BioWorld Financial Watch, did "just fine this quarter." No doubt. Renagel (sevelamer hydrochloride), Genzyme's phosphate-binding tablet for patients with end-stage renal disease on hemodialysis, sold $118.7 million, an increase of 19 percent from $99.4 million in the same quarter last year.

Down the road, key drivers for Renagel sales will be the implementation of the Medicare prescription drug benefit, and upcoming clinical data, Genzyme said, noting the publication due later this year of the Dialysis Clinical Outcomes Revisited trial, which compared morbidity and mortality outcomes of patients on Renagel with those on calcium-based phosphate binders.

Meanwhile, Genzyme blamed the somewhat disappointing first-quarter results on costly investments in late-stage clinical programs, as well as manufacturing scale-up and preparations to launch Myozyme (alglucosidase alfa), the enzyme-replacement therapy for Pompe disease, approved in Europe earlier this month and awaiting action by the FDA.

Even so, revenues totaled $730.8 million, a 16 percent rise over the same quarter last year.

"Over the last few quarters, Replagal's growth has definitely flattened out," Raymond said, although "it certainly looks like Fabrazyme has been on a much deeper trajectory over the past two years."

Replagal (agalsidase alfa) is the Fabry's therapy from Transkaryotic Therapies Inc., the drug that started competing early with Fabrazyme - competing, that is, for FDA approval, in a hotly contested race that Genzyme ultimately won.

Genzyme predicted the Fabrazyme picture will improve later because many patients started treatment near the end of the first quarter, so the earnings haven't landed on the books yet. Synvisc use is seasonal, but should grow "solidly" in the second and third quarters, the firm predicted, and "strong underlying demand" will drive Hectorol sales, affected during the first quarter by $3 million in what the company called a "non-recurring contractual allowance charge." Raymond said he had not consulted with officials at Genzyme, but "that sounds like 'rebate.' "

As for Amgen's earnings (also "not necessarily stellar," Raymond pointed out), adjusted earnings per share, excluding stock option expense, totaled 91 cents for the first quarter of 2006, an increase of 26 percent compared to 72 cents during the first quarter of 2005, with adjusted net income jumping 19 percent to $1.1 billion compared to $924 million in the first quarter of 2005.

During the first quarter, total product sales increased 14 percent to $3.1 billion from $2.7 billion in the first quarter of 2005, Amgen reported. Wall Street consensus had put the EPS at 89 cents, and Amgen beat that number by two cents - which was the good tidings. The bad: Product revenues totaled $3.13 billion, somewhat below many estimates, mainly because of lower-than-expected sales of Enbrel and Neulasta, and product sales in general, except for Sensipar, fell a little short.

Worldwide sales of Sensipar (cinacalcet HCl), the oral therapy for secondary hyperparathyroidism, increased 126 percent to $61 million in the first quarter of 2006 vs. $27 million during the first quarter of 2005.

Enbrel (etanercept), approved for rheumatoid arthritis, psoriasis and psoriatic arthritis, had to deal with Medicare problems and competition from Humira (adalimumab), from Abbott Laboratories, and Remicade (infliximab) from Centocor Inc.

The big surprise in Amgen's earnings involved denosumab, its compound for osteoporosis. Company officials, who had earlier talked about a possible filing on two-year data, said they will probably need three-year Phase III data to get the drug approved in the U.S. and the European Union. As a result, denosumab probably won't be launched until 2009, estimated CIBC World Markets analyst Bret Holley in a research report.

While Holley agreed with Raymond that Amgen's first-quarter results were "not exceptionally strong," he noted the firm raised its guidance and now expects an EPS of between $3.60 to $3.70, excluding the dilution caused by acquiring Abgenix Inc., in a deal completed earlier this month, for about $2.2 billion plus assumed debt.

Holley expects a stronger second half of the year.

"Despite denosumab's delay, we believe denosumab and panitumumab will drive out-year growth," he wrote, adding that Amgen is "undervalued at current levels." In late March, Amgen and Abgenix finished the rolling biologics application begun late last year for panitumumab, a monoclonal antibody for colorectal cancer.