Genzyme Reports Financial Results for Fourth Quarter of 2010 and Full Year
CAMBRIDGE, Mass.--(BUSINESS WIRE)--Feb 16, 2011 - Genzyme Corp. (NASDAQ: GENZ) today reported fourth-quarter 2010 results that reflect increasing supplies of Cerezyme® (imiglucerase for injection) and Fabrazyme® (agalsidase beta), revenue growth across all major product lines, and reductions in operating expenses. Earlier today Genzyme and sanofi-aventis announced that they have reached a definitive agreement under which sanofi-aventis will acquire Genzyme for $74 per share plus a contingent value right. This news is covered in a separate press release.
Fourth-quarter GAAP net income was $471.9 million, or $1.76 per diluted share, compared with $23.2 million, or $0.09 per diluted share, in the same period in 2009. Non-GAAP net income was $221.1 million, or $0.82 per diluted share, compared with $78.1 million, or $0.29 per diluted share, in the fourth quarter of 2009. Non-GAAP 2010 income excludes items associated with business divestitures, Bayer oncology product acquisition expenses, and stock compensation expenses.
Full-year 2010 GAAP net income was $422.1 million, or $1.57 per diluted share, compared with $422.3 million, or $1.54 per diluted share, in 2009. Non-GAAP net income was $478.5 million, or $1.78 per diluted share, compared with $611.5 million, or $2.23 per diluted share, in 2009. Genzyme exited 2010 with $1.9 billion in cash and equivalents.
Fourth-quarter GAAP revenue grew 23 percent to $1.15 billion from $938.3 million in the fourth quarter of 2009; non-GAAP revenue was $1.13 billion. For the year, GAAP revenue was $4.05 billion compared with $3.98 billion in 2009; non-GAAP revenue was $4.03 billion. Non-GAAP revenue figures exclude the pharmaceuticals and cell therapy businesses, which Genzyme intends to divest.
“Strong growth in the fourth quarter demonstrates that our recovery is fully underway,” said Henri A. Termeer, Genzyme's chairman and CEO. “By executing on the opportunities provided by our core businesses and reducing our operating expenses, we were able to nearly double our earnings from the third quarter to the fourth.”
Genzyme expects to achieve several important manufacturing and product-related milestones during 2011, including:
- Ceasing the remaining fill/finish activities at the Allston facility for all products and transferring those operations to a contract manufacturer during the first half of the year;
- Announcing top-line data from the first phase 3 trial of alemtuzumab for multiple sclerosis mid-year and from the second trial in the second half of the year;
- Fully supplying existing patient demand for Fabrazyme and receiving approval for its production at the new Framingham plant, both expected during the second half of 2011; and
- Maintaining the existing full supply of Cerezyme.
As part of the company's initiative to improve its operating margins, Genzyme last year implemented a program focused on identifying sustainable cost savings opportunities across the organization. This resulted in $26 million in savings during the fourth quarter and is expected to create $275 million in savings in 2011.
Along with the expected 2011 milestones, Genzyme expects that supply recovery, business growth and the company's late-stage pipeline will serve as growth drivers this year.
Supply Recovery of Cerezyme and Fabrazyme
The recovery of Cerezyme supply is on track, with currently treated patients back to full supply and bioreactor performance at the higher end of historical experience. Fabrazyme supply is improving and allocations increased 82 percent from the third quarter to the fourth.
Genzyme is ahead of schedule in its plans to expand its biologics and fill/finish manufacturing capacity. Fabrazyme process validation runs at the company's new Framingham manufacturing facility have begun, and the material created through these runs will become commercial product inventory upon regulatory approval of Fabrazyme production at this facility. This approval is expected during the second half of this year and will enable the company to provide full, sustainable product supply.
During the fourth quarter, Genzyme ceased fill/finish operations at its Allston facility for products sold in the United States, and the company plans to transfer the remaining fill/finish operations to a contract manufacturer during the first half of this year. An expansion of fill/finish operations at the Waterford site creating a four-fold capacity increase is expected to be approved in late 2011.
Business Unit Revenue Growth
Record revenue in the fourth quarter shows strength across each of Genzyme's businesses. In 2011, the company expects double-digit revenue growth, driven primarily by Cerezyme and Fabrazyme. In addition, Genzyme expects strong growth from its Pompe disease treatments Myozyme® (alglucosidase alfa) and Lumizyme® (alglucosidase alfa); its viscosupplement treatments Synvisc® (hylan G-F 20) and Synvisc-One® (hylan G-F 20); and its Hematology and Oncology business.
Personalized Genetic Health
Fourth-quarter revenue from the Personalized Genetic Health business grew 45 percent to $505.6 million from $348.0 million in same period in 2009, and 25 percent from $404.2 million in the third quarter of 2010. This growth reflects increasing supplies of Cerezyme and Fabrazyme, and the U.S. launch of Lumizyme.
The company's Pompe disease treatments represent an opportunity that is comparable to that of Cerezyme for Gaucher disease. The company estimates that there are about 10,000 Pompe patients worldwide; approximately 1,400 Pompe patients are currently treated with either Myozyme or Lumizyme, which are the only treatments approved for the disease.
Fourth-quarter revenue of Myozyme/Lumizyme grew 39 percent to $127.5 million compared with $91.9 million in the same period in 2009. Full-year sales increased 27 percent to $411.8 million compared with $324.5 million in 2009. Increases in both fourth-quarter and full-year revenue reflect, in part, sales of Lumizyme following FDA approval in May 2010. U.S. sales of Myozyme/Lumizyme in the fourth quarter were $30.3 million. Myozyme is currently available in 48 markets worldwide and Genzyme expects to increase this to 60 markets by the end of this year.
Fourth-quarter sales of Cerezyme were $222.0 million compared with $105.4 million in the same period in 2009, and full-year sales were $719.6 million compared with $793.0 million in 2009. Genzyme recently won a six-month tender for Cerezyme in Brazil that covers the first half of 2011. Sales of Fabrazyme in the fourth quarter were $61.6 million compared with $58.0 million in the fourth quarter of 2009; full-year sales were $188.2 million compared with $429.7 million in 2009.
GAAP revenue from Genzyme's Biosurgery business grew to $628.8 million in 2010 from $561.8 million in 2009, driven by its viscosupplement treatments Synvisc and Synvisc-One. Non-GAAP 2010 revenue was $615.8 million. GAAP fourth-quarter 2010 revenue was $170.7 million compared with $157.3 million in the same period in 2009; non-GAAP revenue was $157.7 million. Non-GAAP revenue figures exclude the cell therapy business, which Genzyme intends to divest.
Synvisc-One, which was launched in the first quarter of 2009, is the only single-injection viscosupplement approved for the treatment of osteoarthritis (OA) knee pain in the United States, a market that is large, growing and under-penetrated. The percentage of the approximately 9 million eligible OA patients in the United States who are currently treated with viscosupplements grew last year from 14 to 16 percent.
Fourth-quarter sales of Synvisc and Synvisc-One grew 11 percent to $105.9 million compared with $95.4 million in the fourth quarter of 2009, and full-year sales increased 19 percent to $393.1 million compared with $328.5 million in 2009. Genzyme in the fourth quarter received approval of Synvisc in Japan, the largest market in the world for viscosupplements.
Hematology and Oncology
Full-year revenue from Genzyme's Hematology and Oncology business grew 32 percent to $678.8 million in 2010 from $512.9 in 2009, primarily driven by the ongoing launch of Mozobil® (plerixafor injection), the significant growth of Clolar® (clofarabine) in the U.S. and Europe and a full year of sales for the products acquired from Bayer. Fourth quarter revenue was $178.7 million compared with $168.8 million in the same period in 2009.
In 2011, Genzyme expects growth in this business to be driven primarily by Mozobil, Thymoglobulin® (anti-thymocyte globulin (rabbit)) and Clolar through increased penetration in key segments of the U.S. and mature European markets, and expansion in emerging markets such as China. During the second half of this year, the company expects data from a clinical trial of Clolar in adult patients with acute myelogenous leukemia, which if positive could potentially support regulatory filings for an expanded indication for the product.
Renal and Endocrinology
The company's Renal and Endocrinology business performed extremely well in the fourth quarter, delivering 12 percent growth with revenue of $288.9 million compared with $258.2 million in the fourth quarter of 2009. This was driven by strong Renvela® (sevelamer carbonate) performance in the United States, where it remains the market leading phosphate binder; the launch of Renvela in major EU markets including France and Italy; and the new tender in Brazil. Full-year 2010 revenue from the business was $1.07 billion, compared with $1.01 billion in 2009.
Genzyme recently completed a pivotal study of Renvela in Chinese patients with chronic kidney disease (CKD) on dialysis. The study met its primary endpoint, and the company anticipates filing for approval of Renvela's use in treating hyperphosphatemic dialysis patients in China during the first half of 2011. The company expects sustainable growth of Renvela in 2011 as it continues to launch the product in Europe, where the company has marketing approval for the product's use in hyperphosphatemic CKD patients who are on dialysis, and in those who are not on dialysis.
Promising Late-Stage Pipeline
Within Genzyme's late-stage product pipeline, three approvals are expected by the end of 2013: alemtuzumab for multiple sclerosis, mipomersen for familial hypercholesterolemia, and eliglustat tartrate for Gaucher disease type 1.
- Based on promising phase 2 data, alemtuzumab has the potential to become a new standard of care for multiple sclerosis treatment, a market that is expected to reach $13 billion by 2012. Two phase 3 trials are fully enrolled; results of the trial in treatment-naïve patients are expected mid-year, and results of the trial in treatment-experienced patients are expected during the second half of this year. Genzyme anticipates U.S. approval of the treatment in the second half of 2012.
- Genzyme is partnering with Isis Pharmaceuticals Inc. on the development of mipomersen for familial hypercholesterolemia (FH) patients who are unable to achieve healthy LDL-cholesterol levels with current treatments. The companies have completed four phase 3 trials of the novel treatment, all of which met their primary endpoints. Genzyme plans to file for EU approval of the treatment for patients with homozygous FH (HoFH) in the first half of this year. This filing may also include severe heterozygous FH (HeFH). Following recent FDA feedback, Genzyme is determining the timing of the U.S. HoFH filing, which may shift to the second half of this year.
- Three-year follow-up data from the phase 2 study of eliglustat tartrate, Genzyme's investigational oral therapy for patients with Gaucher disease type 1, will be presented this week at the Lysosomal Disease Network WORLD Symposium. At the three-year timepoint, sustained or further improvements were observed across all endpoints, including bone disease, compared with baseline. Eliglustat tartrate, which is currently in phase 3 trials, has the potential to transform the treatment experience for patients with Gaucher disease by providing an oral capsule option instead of bi-weekly infusions.
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 approximately 10,000 employees in locations spanning the globe.
With many established products and services helping patients in approximately 100 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 immune disease. Genzyme's commitment to innovation continues today with a substantial development program focused on these fields, as well as cardiovascular disease, neurodegenerative diseases, and other areas of unmet medical need.
Genzyme's press releases and other company information are available at 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.
This press release contains forwarding-looking statements regarding Genzyme's financial results and outlook and business plans and strategies including, without limitation: expectations regarding revenue growth; the expected completion and timing of ceasing fill/finish operations at the Allston facility and the transfer of those operations; the anticipated receipt and timing of alemtuzumab clinical trial data results; expectations regarding Fabrazyme supply and meeting patient demand; expectations regarding the timing and results of validation runs at, and receipt and timing of regulatory approval of, the new Framingham facility; expectations regarding the supply of Cerezyme; the expected receipt and timing of regulatory approval of the expanded fill/finish operations at the Waterford facility; expectations regarding Myozyme/Lumizyme commercial opportunities and future growth; plans to divest additional businesses, including the cell therapy business, and the timing of such divestitures; the expected amount of savings resulting from cost-saving efforts and opportunities; the expected receipt, timing and results of clinical trial data for Clolar; the anticipated timing of filing for regulatory approval for Renvela in China; the expected receipt and timing of regulatory approvals for alemtuzumab, mipomersen and eliglustat tartrate; the expected size of the MS market and expectations regarding submissions, including scope and timing, of regulatory filings for mipomersen. These statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among others: that production and shipment of Fabrazyme and Cerezyme does not continue as planned due to any reason, including contamination, equipment malfunctions, cell growth at lower than expected levels, fill-finish inefficiencies, power outages, human error or regulatory issues; that Genzyme's business is negatively impacted by adverse events or circumstances, including further manufacturing issues, lower than expected product demand due to competition or higher than expected operating expenses; that Genzyme cannot obtain on expected timetables or maintain regulatory approvals for its products and manufacturing facilities, including the Allston manufacturing facility, the new Framingham facility, and the expanded fill/finish operations in Waterford; that Genzyme is unable to successfully transition fill/finish operations out of the Allston facility on planned timelines; that Genzyme is not able to successfully complete clinical development and obtain regulatory approvals of its pipeline products within anticipated timeframes and for anticipated indications, including alemtuzumab-MS, mipomersen and eliglustat tartrate for any reason, including trial results that are not as favorable as expected and safety profiles that reduce the potential target patient population; that Genzyme is unable to complete the sale of its pharmaceuticals business or sell other businesses as planned or on anticipated timeframes; that Genzyme will not be able to implement its plan to increase shareholder in a manner consistent with expectations, including an inability to reduce operating expenses or sustain any achieved cost savings as expected; that Genzyme is unable to accurately assess, estimate or forecast patient populations and product 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 Management's Discussion and Analysis of Financial Condition and Results of Operations in Genzyme's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010. Genzyme cautions investors not to place substantial reliance on the forward-looking statements contained in this press release. These statements speak only as of the date of this press release and Genzyme undertakes no obligation to update or revise them.
Genzyme®, Cerezyme®, Fabrazyme®, Myozyme®, Lumizyme®, Synvisc®, Synvisc-One®, Renvela®, Mozobil®, Clolar® and Thymoglobulin® are registered trademarks of Genzyme Corporation or its subsidiaries. All rights reserved.
Genzyme has filed with the Securities and Exchange Commission a Solicitation/Recommendation Statement on Schedule 14D-9 relating to the tender offer by sanofi-aventis. Genzyme shareholders are advised to read the company's Solicitation/Recommendation Statement on Schedule 14D-9 because it contains important information. Shareholders may obtain a free copy of the Solicitation/Recommendation Statement on Schedule 14D-9, as well as any other documents filed by Genzyme in connection with the tender offer, free of charge at the SEC's website at http://www.sec.gov. In addition, investors can obtain free copies of these documents from Genzyme by directing a request to Genzyme at 500 Kendall Street, Cambridge, MA 02142, Attention: Shareholder Relations Department, or by calling 617-252-7500 and asking for the Shareholder Relations Department.
|GENZYME CORPORATION (GENZ)|
|Consolidated Statements of Operations||Three Months Ended||Year Ended|
|(Unaudited, amounts in thousands, except per share amounts)||December 31,||December 31,|
|2010||2009 (1)||2010||2009 (1)|
|Operating costs and expenses:|
|Cost of products and services sold||335,067||296,136||1,191,540||1,070,347|
|Selling, general and administrative||350,002||340,374||1,553,921||1,244,398|
|Research and development||202,097||224,918||847,284||833,853|
|Amortization of intangibles||67,927||70,237||262,254||253,507|
|Contingent consideration expense||33,310||-||102,746||-|
|Charge for impaired assets||26,873||28,297||26,873||65,584|
|Total operating costs and expenses||1,043,536||959,962||4,012,878||3,467,689|
|Operating income (loss)||108,317||(21,672||)||35,830||509,599|
|Other income (expenses):|
|Equity in loss of equity method investments||(795||)||-||(3,004||)||-|
|Gains (losses) on investments in equity securities, net||(3,583||)||1,276||(30,334||)||(57||)|
|Gain on acquisition of business||-||-||-||24,159|
|Total other income (expenses)||(4,342||)||5,581||(28,517||)||40,098|
|Income (loss) from continuing operations before taxes||103,975||(16,091||)||7,313||549,697|
|(Provision for) benefit from income taxes||(32,968||)||37,608||24,750||(122,766||)|
|Income (loss) from continuing operations, net of tax||71,007||21,517||32,063||426,931|
|Income (loss) from discontinued operations, net of tax||400,904||1,728||390,081||(4,631||)|
|Net income (loss)||$||471,911||$||23,245||$||422,144||$||422,300|
|Net income (loss) per share-basic:|
|Income (loss) from continuing operations, net of tax||$||0.27||$||0.08||$||0.12||$||1.59|
|Income (loss) from discontinued operations, net of tax|
Posted: February 2011