Genzyme Corp. announced last week that the production costsof its Gaucher's disease drug, Ceredase (glucocerebrosidase, orGCR), could increase up to $22 million per year at currentproduction levels.

The increase will result from the decision of GCR supplierPasteur Merieux Serums et Vaccins to suspend production ofhuman albumin. The company extracts both albumin and theenzyme GCR from placenta.

The French company will maintain production of GCR at currentlevels, but without the albumin market, Pasteur Merieux willnot get as much of a return to offset production costs. "It isuncertain at this time whether and to what extent (theincreased production costs) will be borne by Genzyme, PasteurMerieux or may be reflected in the price of Ceredase," Genzyme(NASDAQ:GENZ) said.

Susan Cogswell, Genzyme's director of investor relations, saidthat in the worst-case scenario, Genzyme would absorb all ofthe cost increase and might increase the price of Ceredase. Inthe "average scenario," she said, the two companies wouldshare the increase in production costs equally.

Pasteur Merieux decided to drop human albumin productionafter the French minister of health called for the collection ofadditional information from donors of blood or placenta.Specifically, the government requested that donors be askedabout previous treatment with human growth hormone andany family history of neurodegenerative diseases.

Pasteur said this questioning procedure could cause a netdecrease in the collection of placenta, as it would imposeadditional constraints at maternity hospitals. The companycollects placenta from hospitals all over the world.

The French minister of health called for this procedure as aprecaution at the recommendation of the viral safety group ofthe French Medical Agency. The group concluded, however,that there was no data to indicate placental or plasmaticalbumin is unsafe with regard "to the transmission of the agentof the disease Creutzfeldt-Jakob." At the same time, theminister of health requested that Pasteur Merieux continue tocollect placentas for the production of GCR.

Ceredase, the only treatment for Gaucher's disease, costs anaverage of $140,000 for a year's treatment. The cost dependsupon the prescribed dosage, severity of the disease and patientweight, and ranges from $30,000 to $300,000. Genzyme said ittakes many tons of placental tissue to support each patient onCeredase and added that the current volume of placentacollection is insufficient to meet future demands of the patientpopulation.

Teena Lerner, an analyst with Lehman Brothers, said that theincrease in Ceredase production costs is a one-time problem forGenzyme, as its recombinant formulation will replace theplacental product. Genzyme filed a new drug application forrecombinant GCR in May and anticipates FDA approval in thefirst half of 1994. Lerner said FDA might be sensitive to thesupply issue.

Cogswell said the company has a pilot plant in Framingham,Mass., that can ship $35 million worth of the recombinant drug.Genzyme of Cambridge, Mass., expects to have full-scaleproduction running in the first half of 1995.

Cogswell noted that the company has not priced therecombinant formulation but does not anticipate that it wouldnot be priced differently than the current product.

Genzyme's stock closed at $28.75 a share on Friday, off 25cents.

-- Brenda Sandburg News Editor

(c) 1997 American Health Consultants. All rights reserved.