With increased revenues of 23 percent in the fourth quarter, Genzyme Corp. exceeded analyst expectations, ending the year with two major acquisitions under its belt and an FDA approval for Clolar.
The company posted $591 million in fourth-quarter revenues, up from $481 million in the same quarter of 2003. Annual revenues grew 39 percent from $1.6 billion in 2003 to $2.2 billion in 2004.
"The revenue increase was driven by strong product sales across the company and the addition of new products and businesses," said Bo Piela, spokesman for Cambridge, Mass.-based Genzyme.
While Genzyme will give audited financial results and guidance for 2005 on Feb. 17, the company anticipates non-GAAP earnings of $1.75 to $1.80 per share, higher than prior guidance of $1.65 to $1.75. The company raised the guidance due to strong fourth-quarter performance and the $1 billion acquisition of San Antonio-based ILEX Oncology Inc., which was announced in February and completed at the end of the year. (See BioWorld Today, March 1, 2004.)
"I think the results signify two things," said Sena Lund, an analyst with New York-based Cathay Financial LLC. "One, they had a robust 2004 and fourth quarter. In addition to the stellar 2004 results, they also provide upbeat guidance for 2005 on the back of strong performance of its key products in all areas."
Genzyme projects between $2.5 billion and $2.7 billion in 2005 revenue, as well as non-GAAP earnings of $2.08 to $2.16 per share. Lund had projected 2005 earnings to be around $2.10 per share.
Genzyme expects to record a research and development charge in the fourth quarter in connection with the ILEX merger, and a charge for costs associated with the company's exit of certain low-margin businesses, including its generic cyclosporine business.
In addition to the ILEX merger, Genzyme's $215 million purchase of the New York-based cancer diagnostics company Impath Inc. has helped the company build its oncology portfolio. That acquisition first was announced last March and completed a few months later. (See BioWorld Today, March 2, 2004.)
"Last year, the completion of the Impath and ILEX acquisitions were strategic moves for Genzyme," Lund told BioWorld Today, "as was the rollup of their floating stocks in 2003, which consolidated Genzyme into one powerhouse."
The company consolidated the tracking stocks of Genzyme General, Genzyme Biosurgery and Genzyme Molecular Oncology under one symbol, "GENZ," in May 2003. (See BioWorld Today, May 12, 2003.)
The acquisitions of Impath and ILEX brought Genzyme a portfolio of cancer products, including several diagnostics and the leukemia treatments Campath and Clolar (clofarabine), the latter of which gained FDA approval in December. Piela said the product was launched on Tuesday. (See BioWorld Today, Dec. 30, 2004.)
"We've significantly increased our presence in the oncology field, and this has been a goal of ours for a long time," Piela said. "We've had a relatively small cancer research and development effort for some time and have always wanted to play a role in the oncology field because we think we can make a contribution and we think cancer products can help sustain our growth."
During a presentation Tuesday at the JPMorgan 23rd Annual Healthcare Conference in San Francisco, Genzyme Chairman and CEO Henri Termeer noted that Cerezyme has grown in sales every year since its 1991 approval. The enzyme-replacement therapy for patients with Type I Gaucher's disease had sales of $219 million in the fourth quarter and $839 million for the year.
Four years ago, the product represented 71 percent of the company's sales figures, compared with 38 percent in 2004, indicating Genzyme has diversified its portfolio, Termeer said.
"We have at least five products that are in the middle of a growth phase that has years to go," he said - Renagel, Synvisc, Campath, Thyrogen and Thymoglobulin.
Renagel sales grew 22 percent in the fourth quarter of 2004 to $99 million. For the year, the revenue was $364 million, up 29 percent from $282 million in 2003.
Sales of Synvisc, a product that treats pain due to osteoarthritis of the knee, were $15 million for the quarter, compared with $26 million a year ago. The drop was due to an inventory reduction by Madison, N.J.-based Wyeth in anticipation of Genzyme buying back the sales and marketing rights for Synvisc in the U.S. and five European countries. That transaction closed last week.
Genzyme's thyroid cancer diagnostic, Thyrogen, had sales of $18 million in the fourth quarter and $63 million for the year. Combined sales of the organ transplant drugs Thymoglobulin and Lymphoglobulin were $30 million in the fourth quarter and $109 million for the year.
In addition to those products, sales are still ramping up for Campath, Aldurazyme and Fabrazyme, as well as the newly approved Clolar.
Since the acquisition of ILEX closed late in 2004, Genzyme will post its first sales figures for Campath and Clolar in the next quarter results. As for Aldurazyme, fourth-quarter and full-year sales were $16 million and $43 million, respectively. Genzyme does not include those sales figures with its revenue because the therapy, which is used to treat patients with MPS-1, is commercialized through a joint venture with BioMarin Pharmaceutical Inc., of Novato, Calif.
Sales of the Fabry's disease product Fabrazyme rose to $64 million in the fourth quarter and $209 million for the year.
Moving forward, Genzyme expects to file a biologics license application in the middle of this year for Myozyme as an enzyme-replacement therapy for Pompe disease. A marketing authorization application for the product was accepted last month in Europe, and a decision there is expected in 2006.
Genzyme also is anxiously awaiting clinical data from the Dialysis Clinical Outcomes Revisited (D-COR) study for Renagel, which might determine the future growth prospects for the product. The study is examining the difference in morbidity and mortality outcomes for patients receiving Renagel and those receiving calcium-based phosphate binders. The results could support the use of Renagel in patients who are new to hemodialysis.
"The most important thing to watch for this year is the outcome of the D-COR study," Termeer said.
Genzyme's stock (NASDAQ:GENZ) rose $2.85 on Wednesday to close at $59.91.