By Jim Shrine
Special To BioWorld Today
Sales of Cerezyme and Ceredase surpassed $100 million in the third quarter as Genzyme Corp. reported earnings of $32.2 million. Excluding one-time gains and charges, the earnings were in line with analysts' estimates, coming in at $29.7 million, or 37 cents per share.
Revenues for the Cambridge, Mass., company were $167.1 million, a 12 percent increase over the third quarter of 1997. The earnings increased 22 percent over the year-ago period, excluding the one-time events.
"We are pleased to report record earnings this quarter despite accelerating our investment in several new therapeutic products in development," said Henri Termeer, chairman and CEO, in a prepared statement. "Our therapeutics business will continue to lead the growth of the company, with two new products scheduled for launch this year and five more products anticipated in the next three years."
Genzyme's earnings for the first nine months of the year were $88.4 million, or $1.09 per diluted share. David Stone, managing director at S.G. Cowen Securities Corp. in Boston, maintained a "strong buy" rating on the stock, with an estimate that yearly earnings will be $1.45. He projected earnings of $1.80 next year.
Stone said earnings beat his estimates by 2 cents, and were a penny less than the consensus estimate but well within the range of 35 to 40 cents. He said the slight difference of increases in expenses may have been related to research and development and investments in the new products.
The two products expected to be approved by year's end are RenaGel, a non-absorbed phosphate binder being developed in a joint venture with GelTex Pharmaceuticals Inc., of Waltham, Mass.; and Thyrogen recombinant stimulating hormone, which will be co-marketed with Knoll Pharmaceutical Co., of Mount Olive, N.J.
Stone projected the eventual markets will be $300 million for RenaGel and $50 million for Thyrogen.
The $105.5 million in Cerezyme and Ceredase sales were impressive, Stone said, as they beat his estimates by $3 million, beat the previous quarter by $6.9 million and were 23 percent better than a year ago. That increase was offset somewhat by lower-than-expected sales of surgical products, which he said could be partly explained by seasonal factors.
Genzyme said the full conversion of U.S. patients to Cerezyme (recombinant glucocerebrosidase) from Ceredase, the natural version of the enzyme, will be completed by the end of the year and worldwide in mid-1999. Eighty-six percent of patients already are using Cerezyme, a treatment for Gaucher's disease.
Sale Of Research Products Business Reaps Gain
In the quarter, Genzyme also put in place two joint ventures to develop treatments for lysosomal storage diseases. Results from a pivotal trial of alpha-L-iduronidase — being developed with BioMarin Pharmaceuticals Inc., of Novato, Calif., for Hurler's and related syndromes — will be presented Oct. 31. And Phase II/III trials of human alpha-glucosidase are expected to begin by the end of the year. That product, for treating Pompe's disease, is being developed with Pharming Group NV, of Leiden, the Netherlands.
Sales of surgical products were $27.2 million for the quarter, 11 percent more than the third quarter of 1997 but nearly $2 million less than the second quarter of 1998.
Genzyme recorded a gain this quarter of $18.3 million after taxes from the sale of the research products business to Techne Corp., of Minneapolis. Those gains were offset somewhat by write-downs of Ceredase and Sepra inventories, and Seprafilm II process development costs.
Total revenues from diagnostic products and services were $29.6 million, which reflected the $4 million that would have been expected from the research products business.
Genzyme General is one of three Genzyme Corp. divisions. Genzyme Tissue Repair and Genzyme Molecular Oncology are the others. Genzyme General owns about 41 percent of Genzyme Transgenics Corp., of Framingham, Mass., which also reported third-quarter numbers Thursday. It had a net loss of $4.6 million with revenues of $16.5 million.
Genzyme's stock (NASDAQ:GENZ) closed Thursday at $37.125, down $2.625. *