Delivers Solid Financial Performance While Building for the Future
CAMBRIDGE, Mass., July 23 /PRNewswire-FirstCall/ -- Genzyme Corporation
(Nasdaq: GENZ) today reported strong sales and profit growth in the second
quarter, along with significant progress in its commercial and clinical
programs.
Revenue increased 25 percent to approximately $1.171 billion from
$933.4 million in last year's second quarter. The increase was driven by
growth across all areas of the business.
GAAP net income was $69.6 million, or $0.25 per diluted share, compared
with $83.8 million, or $0.31 per diluted share, in the second quarter a
year ago. GAAP net income reflects the fee for the license to mipomersen, a
highly promising cholesterol-lowering drug in late-stage development.
Non-GAAP net income increased to $268.5 million from $238.7 million in
last year's second quarter. Non-GAAP earnings increased to $0.98 per
diluted share from $0.88.
Genzyme continues to reinvest cash from operations to build a
foundation for long-term growth. In the second quarter, the company
generated approximately $329 million in cash from net income prior to
one-time events and proceeds from the issuance of common stock. The company
made a $175 million payment to Isis Pharmaceuticals to secure the rights to
mipomersen, significantly strengthening its late-stage pipeline. Genzyme
also invested approximately $130 million in capital projects, predominantly
focused on expanding manufacturing capacity to meet current and anticipated
product demand. To reduce the dilutive effect of equity compensation, the
company used a portion of its cash to repurchase 1 million shares under its
three-year stock buyback program.
"It was a strong and highly productive quarter," said Henri A. Termeer,
Genzyme's chairman and chief executive officer. "We delivered solid
financial results, set in place a number of catalysts that will drive
near-term growth, and continued to build the company to grow beyond 2011."
Over the next 12 months, Genzyme anticipates six potential approvals
for new products or broader indications for existing products. These
catalysts will provide significant near term momentum:
-- Genzyme expects FDA approval by the end of this year for
alglucosidase alfa (Myozyme(R)) produced at the 2000L bioreactor scale,
following the submission of a BLA on May 30. European approval of Myozyme
produced at the 4000L scale is expected in the first half of next year.
-- The company anticipates that the labeling for Renvela(R) (sevelamer
carbonate) will be expanded by mid-2009 to include the treatment of chronic
kidney disease patients with elevated phosphorus levels who are not on
dialysis. Genzyme, along with two other companies, submitted a position
paper to the FDA in May regarding this expanded use of phosphate binders.
-- Genzyme also expects that the labeling for Clolar(R) (clofarabine)
will be expanded by the middle of next year to include its use in treating
adult patients with acute myelogenous leukemia. The company plans to file
supplemental marketing applications this year to broaden Clolar's
indication.
-- Genzyme expects to launch Mozobil(TM) (plerixafor) in the United
States and Europe during the first half of next year, following regulatory
approval. The company submitted marketing applications for the product last
month. Mozobil is intended to enable patients with certain types of cancers
to successfully receive a stem-cell transplantation.
-- FDA action on Genzyme's marketing application for Synvisc-ONE(R)
(hylan G-F 20) is anticipated this year. The company submitted a response
to the agency in June that included additional analysis and data requested
in a November 2007 letter.
Genzyme continues to expect non-GAAP earnings for this year of
approximately $3.90 per diluted share. GAAP earnings in 2008 are expected
to be approximately $2.20 per diluted share. The GAAP estimate now reflects
Genzyme's equity investment in Isis Pharmaceuticals, the mipomersen
licensing fee, along with anticipated amortization, stock-compensation
expenses and the effect of contingent convertible debt.
Second-Quarter Product Sales
Within the Therapeutics business, Myozyme revenue rose 65 percent
compared with last year's second quarter, despite the constraint on U.S.
sales resulting from the delay in approval of 2000L-scale production.
Revenue increased to $77.2 million from $46.7 million in the same period a
year ago. The FDA is expected to convene an advisory committee meeting in
October to discuss the BLA for alglucosidase alfa produced at the
2000L-scale, as required for all new drug and biologics license
applications under the FDA Amendments Act enacted last year. FDA approval
of 2000L-scale production is needed to provide broader access to product
for adult patients in the United States.
The launch of Myozyme has been more rapid than the launch of any of
Genzyme's other treatments for lysosomal storage disorders, driven by
faster than expected adoption by physicians and patients and consistent
support from health authorities in more than 40 countries. To meet the
global demand for Myozyme, Genzyme is working to secure approval of
production at its 4000L bioreactor scale manufacturing plant in Belgium,
which would significantly expand capacity. The company is conducting
process validation runs for Myozyme produced at the 4000L-scale, which it
expects to complete this year and subsequently file for EMEA approval. The
company expects that European authorities will approve Myozyme production
at the facility during the first half of 2009. Approval of 4000L-scale
production in Belgium will be necessary to meet the anticipated global
demand for Myozyme. Product supply in 2009 is expected to be particularly
tight until the Belgium plant is approved.
Genzyme's other treatments for lysosomal storage disorders also
continue to experience strong, double-digit growth. Second-quarter
Cerezyme(R) (imiglucerase for injection) sales rose 13 percent to $319.4
million, compared with $283.0 million in the previous second quarter. Sales
of Fabrazyme(R) (agalsidase beta) grew 21 percent, rising to $126.6 million
from $104.3 million. Sales of Aldurazyme(R) (laronidase) increased 33
percent to $38.8 million, compared with $29.1 million in the second quarter
last year when the product's sales were recorded under the joint venture
with BioMarin Pharmaceutical Inc.
The company also reported preliminary results from a Phase 2 trial of
its investigational oral therapy for Gaucher disease Genz-112638. The
results were consistent with those observed for patients beginning enzyme
replacement therapy, and they highlight the potential of this compound to
provide a convenient treatment alternative for patients and a broader range
of treatment options for physicians. Genzyme is developing protocols for
two Phase 3 trials that it expects to initiate early next year.
Sales of Thyrogen(R) (thyrotropin alfa for injection) remained strong,
increasing 34 percent to $39.4 million from $29.5 million. The use of
Thyrogen in ablation procedures is contributing to the product's growth in
the United States, while its growth in Europe is being driven by increasing
diagnosis of thyroid cancer and its international adoption is being driven
by expansion into new geographic markets.
Within the Renal business, sales of sevelamer therapies Renagel(R)
(sevelamer hydrochloride) and Renvela grew 16 percent to $168.6 million
from $144.9 million in the second quarter last year. Genzyme launched
Renvela in the United States in March, and the product is now included in
more than 85 percent of health plan formularies. Formulary access equal to
that of Renagel is expected by the end of the third quarter, ahead of
Genzyme's expectations.
Within the Transplant business, second-quarter sales of
Thymoglobulin(R) (Anti-thymocyte Globulin [Rabbit]) and Lymphoglobuline(R)
(Anti-thymocyte Globulin [Equine]) rose 10 percent to $45.6 million from
$41.4 million in the second quarter last year. Worldwide demand for
Thymoglobulin continues to grow, and Genzyme is working to build inventory
to meet anticipated demand following resolution of a manufacturing issue
during 2007 that affected product appearance in some lots. The company has
begun construction of a new manufacturing plant for Thymoglobulin in France
to support the long-term growth of the product.
Genzyme continues to prepare for the U.S. and European launch of
Mozobil next year, and it is also planning to seek regulatory approvals
globally. The company anticipates peak annual sales of Mozobil in the
transplant setting of $400 million. More than 900 patients have already
received the product through a compassionate use program in the United
States, and similar compassionate use programs have recently begun in
Europe. Genzyme continues to invest in studies exploring additional
potential applications for Mozobil, including its use in conjunction with
chemotherapy.
Within the Biosurgery business, sales of Synvisc(R) (hylan G-F 20) and
Synvisc-ONE rose to $70.9 million from $64.9 million, an increase of 9
percent. The growth was driven by the increasing strength of Synvisc in the
U.S. market and the initiation of direct sales of the product in Latin
America. Genzyme is introducing Synvisc-ONE in a growing number of European
and Southeast Asian countries. The product is designed to simplify
osteoarthritis pain management and thereby reach a broader set of patients.
Also within the Biosurgery business, sales of Sepra(R) products have
remained consistently strong over recent quarters. Sales rose 39 percent in
this year's second quarter to $34.8 million from $25.1 million in the same
quarter a year ago. This growth is being driven by the expanded U.S. sales
force for Seprafilm(R) adhesion barrier, which is helping to expand the
product's use in gynecologic and colorectal surgery and C-section
procedures.
Second-quarter revenue for the Genetics business increased 7 percent to
$78.5 million from $73.7 million. This growth was driven in part by the
continuing demand for prenatal screening for genetic conditions.
Additionally, Genzyme experienced increased demand for its KRAS mutation
testing for colorectal cancer, as recent studies have shown that
identifying KRAS mutations can assist oncologists in selecting treatment
for patients with colorectal cancer. This increasing recognition of the
value of diagnostics in personalized medicine will continue to fuel organic
growth in the Genetics business.
Oncology revenue rose in the second quarter to $33.3 million from $17.4
million based on increasing sales of Clolar and Campath(R) (alemtuzumab).
The increase also reflects the addition of European sales of Clolar, which
Genzyme began recording following its acquisition of Bioenvision Inc. late
last year. Genzyme is working to introduce Clolar worldwide as well as
expand its indications. The product is currently approved in the United
States and Europe as a third-line treatment for pediatric patients with
acute lymphoblastic leukemia. Genzyme is developing Clolar for use globally
as a first-line therapy for adult AML and myelodysplastic syndromes,
significantly larger indications that the company estimates will drive peak
annual sales of the product to approximately $600 million. Last month,
Genzyme reported encouraging results from its pivotal CLASSIC II trial
evaluating the use of Clolar to treat older adult patients with acute
myeloid leukemia. Oncology revenue also reflects growing first-line use of
Campath in the treatment of patients with B-cell chronic lymphocytic
leukemia.
Genzyme took a number of major steps during the second quarter to
create opportunities for growth beyond 2011 by significantly strengthening
its pipeline and expanding its global infrastructure:
-- The company secured exclusive worldwide rights to mipomersen, an
innovative cholesterol-lowering drug in Phase 3 development that has the
potential to change the standard of care for severely ill patients whose
needs cannot be addressed by current therapies.
-- Genzyme also formed a collaboration this month with PTC Therapeutics
to develop and commercialize PTC124, a novel oral therapy under development
initially for Duchenne muscular dystrophy and cystic fibrosis. The product
has broad potential in a range of other inherited disorders.
-- Genzyme continued to enroll patients in two ongoing Phase 3 trials
of alemtuzumab for the treatment of multiple sclerosis. Final, three-year
efficacy and safety data from the Phase 2 trial comparing alemtuzumab with
Rebif(R) (interferon beta-1a) for the treatment of relapsing-remitting
multiple sclerosis were presented during the quarter as part of a
scientific platform session at the American Academy of Neurology. The
company is awaiting publication of these results.
-- Genzyme announced plans for a research and development center in
China and also began building a commercial organization in India,
initiatives that reflect the company's commitment to establishing a
long-term presence in both countries.
This press release contains forward-looking statements regarding
Genzyme's financial outlook and business plans and strategies, including
without limitation: its 2008 earnings guidance; its expectations for
approval of Myozyme produced at the 2000L and 4000L-scale capacities, the
timing thereof and its assessment of product supply; its plans to seek
regulatory approvals of existing products for use in new indications,
including Renvela for CKD and Clolar for adult AML, the timetables
therefore and the impact of such approvals on the company; its plans and
estimated timetables for new and next- generation product filings,
approvals and launches, including for Mozobil, Genz-112638, and
Synvisc-ONE, its estimates of the sales potential of Clolar and Mozobil;
its anticipated growth drivers for certain products and businesses,
including Genetics; and its expectations for Renvela formulary access.
These statements are subject to risks and uncertainties that could cause
actual results to differ materially from those forecasted. These risks and
uncertainties include, among others: Genzyme's ability to obtain and
maintain regulatory approvals for products and manufacturing facilities,
including Myozyme produced at the 2000L scale in the US and at the 4000L
scale in Europe and the timing of receipt of such approvals; Genzyme's
ability to successfully complete preclinical and clinical development of
its products and product candidates, including Mozobil and Genz-112638;
Genzyme's ability to expand the use of current and next-generation products
in existing and new indications, including Renvela, Clolar and Synvisc-ONE;
Genzyme's ability to manufacture its products, including Thymoglobulin and
its LSD therapies in a timely and cost effective manner and in sufficient
quantities to meet demand; and the risks and uncertainties described in
Genzyme's SEC reports filed under the Securities Exchange Act of 1934,
including the factors discussed under the caption "Risk Factors" in
Genzyme's 2008 Quarterly Report on Form 10-Q for the quarter ended March
31, 2008. Genzyme cautions investors not to place substantial reliance on
the forward-looking statements contained in this press release. These
statements speak only as of today's date and Genzyme undertakes no
obligation to update or revise the statements.
Genzyme(R), Myozyme(R), Fabrazyme(R), Cerezyme(R), Thyrogen(R),
Renagel(R), Renvela(R), Thymoglobulin(R), Synvisc(R), Campath(R) and
Clolar(R) are registered trademarks of and Mozobil(TM) and Synvisc-ONE(TM)
are unregistered trademarks of Genzyme or its subsidiaries. Aldurazyme(R)
is a registered trademark of BioMarin/Genzyme LLC. All rights reserved.
About Genzyme
One of the world's leading biotechnology companies, Genzyme is
dedicated to making a major positive impact on the lives of people with
serious diseases. Since 1981, the company has grown from a small start-up
to a diversified enterprise with more than 10,000 employees in locations
spanning the globe and 2007 revenues of $3.8 billion. In 2007, Genzyme was
chosen to receive the National Medal of Technology, the highest honor
awarded by the President of the United States for technological innovation.
With many established products and services helping patients in nearly
90 countries, Genzyme is a leader in the effort to develop and apply the
most advanced technologies in the life sciences. The company's products and
services are focused on rare inherited disorders, kidney disease,
orthopaedics, cancer, transplant, and diagnostic testing. Genzyme's
commitment to innovation continues today with a substantial development
program focused on these fields, as well as immune disease, cardiovascular
disease, and other areas of unmet medical need.
Conference Call Information
Genzyme will host a conference call today at 11:00 a.m. Eastern to
discuss results for the second quarter of 2008. To participate in the call,
please dial 1-773-799-3828 and refer to passcode "Genzyme." A replay of
this call will be available by dialing 402-998-1342. This call will also be
Webcast live on the investor events section of http://www.genzyme.com. Replays of
the call and the Webcast will be available until midnight July 30, 2008.
Upcoming Events
Genzyme will host a conference call on October 22, 2008 at 11: 00 a.m.
Eastern to discuss financial results for the third quarter of 2008. To
participate in the call, please dial 773-799-3828 and refer to pass code
"Genzyme." A replay of this call will be available by dialing 402-998-1342.
This call will also be Webcast live on the investor events section of
http://www.genzyme.com. Replays of the call and the Webcast will be available
until midnight on October 29, 2008.
Genzyme's press releases and other company information are available at
http://www.genzyme.com and by calling Genzyme's investor information line at
1-800- 905-4369 within the United States or 1-678-999-4572 outside the
United States.
GENZYME CORPORATION (GENZ)
Consolidated Statements of Operations
(Unaudited, amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Total revenues $1,171,134 $933,419 $2,271,195 $1,816,602
Operating costs and expenses:
Cost of products and
services sold(1) 300,330 217,598 572,643 420,061
Selling, general and
administrative(1,2) 347,305 339,480 665,691 608,501
Research and development
(1,3,4) 381,861 198,442 644,658 364,562
Amortization of intangibles 55,605 49,465 111,263 99,482
Total operating costs and
expenses 1,085,101 804,985 1,994,255 1,492,606
Operating income 86,033 128,434 276,940 323,996
Other income (expenses):
Equity in income of equity
method investments - 5,945 188 11,557
Minority interest 563 15 1,026 3,927
Gain on investments in equity
securities, net(5,6) 9,153 143 9,928 12,931
Other 19 (278) (141) (803)
Investment income 13,352 17,246 28,222 33,465
Interest expense (1,149) (3,621) (2,804) (7,809)
Total other income (expenses) 21,938 19,450 36,419 53,268
Income before income taxes(1) 107,971 147,884 313,359 377,264
Provision for income taxes(1) (38,407) (64,090) (98,524) (135,283)
Net income(1) $69,564 $83,794 $214,835 $241,981
Net income per share:
Basic $0.26 $0.32 $0.80 $0.92
Diluted(1,7) $0.25 $0.31 $0.77 $0.88
Weighted average shares
outstanding:
Basic 266,904 263,911 267,127 263,693
Diluted(1,7) 284,262 280,564 285,028 280,244
(1) In accordance with the provisions of Financial Accounting Standards
Board, or FASB, Statement of Financial Accounting Standards No., or
FAS, 123R, "Share-Based Payment, an amendment of FASB Statement Nos.
123 and 95," we recorded pre-tax charges for stock-based compensation
expense and related tax benefits of:
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Cost of products and
services sold $(6,311) $(6,865) $(12,825) $(12,761)
Selling, general and
administrative expense (31,904) (35,248) (54,793) (57,747)
Research and development
expense (16,092) (19,143) (28,677) (31,455)
Total pre-tax charges
for stock-based
compensation expense (54,307) (61,256) (96,295) (101,963)
Tax benefit 16,834 18,703 29,371 31,135
Stock-based compensation
expense, net of tax $(37,473) $(42,553) $(66,924) $(70,828)
Diluted earnings per share and diluted weighted average shares
outstanding for the three and six months ended June 30, 2008 and 2007
were computed according to the provisions of FAS 123R.
(2) Includes a pre-tax charge of $(64,000)K recorded in June 2007
to settle the litigation related to the consolidation of our former
tracking stocks.
(3) For the three and six months ended June 30, 2007, includes a pre-tax
charge of $(25,000)K for an upfront milestone payment paid to Ceregene
Inc. in June 2007 for the development and commercialization of certain
gene therapy products.
(4) For the three and six months ended June 30, 2008, includes a pre-tax
charge of $(175,000)K for a license fee paid to Isis Pharmaceuticals,
Inc. ("Isis") in June for the exclusive worldwide rights of
mipomersen. For the six months ended June 30, 2008, also includes a
pre-tax charge of $(69,900)K representing the premium paid to purchase
five million shares of Isis common stock in February 2008.
(5) For the six months ended June 30, 2007, includes a pre-tax gain of
$10,848K recorded on the sale of our entire investment in the common
stock of Therapeutic Human Polyclonals Inc. in March 2007, which had a
zero cost basis.
(6) For the three and six months ended June 30, 2008, includes a net
pre-tax gain of $9,015K recorded in the second quarter of 2008,
consisting of a pre-tax gain of $10,304K resulting from the
liquidation of our investment in the common stock of Sirtris
Pharmaceuticals, Inc., offset in part by a pre-tax impairment charge
of $(1,289)K related to our investment in the common stock of GTC
Biotherapeutics, Inc.
(7) All periods reflect the adoption of Emerging Issues Task Force Issue
No. 04-8, "The Effect of Contingently Convertible Debt on Diluted
Earnings Per Share," or EITF 04-8. As a result of the adoption of
EITF 04-8, the 9,686K shares issuable upon conversion of our $690.0
million in principal of 1.25% convertible senior notes, which were
issued in December 2003, are now included in diluted weighted average
shares outstanding for purposes of computing diluted earnings per
share, unless the effect would be anti-dilutive. In accordance with
EITF 04-8, interest and debt fees related to these notes of $1.9
million, net of tax, for both the three months ended June 30, 2008 and
2007, and $3.8 million, net of tax, for both the six months ended June
30, 2008 and 2007 have been added back to net income and 9,686K shares
have been added to diluted weighted average shares outstanding for
each of those periods for purposes of computing diluted earnings per
share.
GENZYME CORPORATION (GENZ)
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands)
June 30, December 31,
2008 2007
Cash and all marketable securities $1,254,494 $1,460,394
Other current assets 1,868,455 1,661,740
Property, plant and equipment, net 2,212,044 1,968,402
Intangibles, net (1) 3,394,232 2,959,480
Other noncurrent assets (2) 453,627 251,725
Total assets $9,182,852 $8,301,741
Current liabilities $1,492,143 $1,502,406
Noncurrent liabilities (1) 649,305 186,398
Stockholders' equity 7,041,404 6,612,937
Total liabilities and stockholders' equity $9,182,852 $8,301,741
(1) Effective January 1, 2008, in connection with the restructuring of
BioMarin/Genzyme LLC, our joint venture with BioMarin Pharmaceutical
Inc., we licensed certain rights to commercialize Aldurazyme from the
joint venture and, in accordance with the provisions of FASB
Interpretation No. 46R, "Consolidation of Variable Interest Entities,"
began consolidating the results of the joint venture at fair value.
As of June 30, 2008, intangibles, net, includes $480,500K for the fair
value of the joint venture's manufacturing and commercialization
rights to Aldurazyme, offset by $(12,012)K of related accumulated
amortization. Our noncurrent liabilities includes $468,488K of
additional net liabilities related to the fair value of these rights.
Excluding these rights, the fair values of the assets and liabilities
of the joint venture as of June 30, 2008 were not significant.
(2) As of June 30, 2008, other noncurrent assets includes $80,100K for the
fair value of the five million shares of Isis common stock that we
purchased in February 2008.
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
For the Three Months Ended June 30, 2008
(Amounts in thousands, except per share data)
Dilution Gain on
Due to Investment
Common Stock in Equity
NON-GAAP Equivalents Securities
Income Statement Classification:
Total revenues $1,171,134
Cost of products and services sold $(294,019)
Selling, general and administrative $(315,401)
Research and development $(190,769)
Amortization of intangibles $-
Purchase of in-process research
and development $-
Equity in income (loss) of equity
method investments $-
Minority interest $563
Gains (losses) on investments in
equity securities $138 $9,015
Other $19
Investment income $13,352
Interest expense $(1,149)
Summary:
Income (loss) before income taxes $383,868 $- $9,015
(Provision for) benefit from
income taxes $(115,322) $- $(3,283)
Net income (loss) $268,546 $- $5,732
Net income (loss) per share:
Basic $1.01 $- $0.02
Diluted (1) $0.98 $(0.03) $0.02
Weighted average shares outstanding:
Basic 266,904
Diluted (1) 274,576 9,686
License FAS 123R GAAP
Fee Amortization Expense As Reported
Income Statement
Classification:
Total revenues $1,171,134
Cost of products and
services sold $(6,311) $(300,330)
Selling, general and
administrative $(31,904) $(347,305)
Research and development $(175,000) $(16,092) $(381,861)
Amortization of intangibles $(55,605) $(55,605)
Purchase of in-process
research and development $-
Equity in income (loss) of
equity method investments $-
Minority interest $563
Gains (losses) on
investments in equity
securities $9,153
Other $19
Investment income $13,352
Interest expense $(1,149)
Summary:
Income (loss) before income
taxes $(175,000) $(55,605) $(54,307) $107,971
(Provision for) benefit
from income taxes $33,749 $29,615 $16,834 $(38,407)
Net income (loss) $(141,251) $(25,990) $(37,473) $69,564
Net income (loss) per share:
Basic $(0.53) $(0.10) $(0.14) $0.26
Diluted (1) $(0.50) $(0.09) $(0.13) $0.25
Weighted average shares
outstanding:
Basic 266,904
Diluted (1) 284,262
(1) GAAP As-Reported diluted earnings per share and diluted weighted
average shares outstanding reflect the adoption of EITF 04-8. In
accordance with the provisions of EITF 04-8, interest and debt fees
related to our 1.25% convertible senior notes of $1,886K, net of tax,
have been added back to net income and approximately 9,686K shares
have been added to diluted weighted average shares outstanding for
purposes of computing GAAP As-Reported diluted earnings per share.
SOURCE Genzyme Corporation
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