Genzyme Reports Clinical Data and Business Updates

Today the biotech company Genzyme announced updates on anticipated near-term regulatory milestones, new clinical data and plans for continued sustainable growth across each of its businesses. The company reaffirmed its estimated goal of $7 billion in annual revenue by 2011, as growth continues to be driven by an increase in sales of existing products as well as by the launch of new treatments and "continued operating leverage from the company’s global infrastructure." According to Henri A. Termeer, Genzyme’s chairman and CEO, "We are modifying our earnings presentation to provide a simpler picture for investors. We continue to meet our financial commitments, increasing the profitability of the company while investing in new therapies and bringing them to the market."

Genzyme measures its financial activities not just by earnings but also by a number of other parameters and metrics which include cash flow, return on equity, return on assets and return on invested capital, all of which are expected to increase through 2011. Return on invested capital is estimated to be approximately 13% in 2011, with approximately $5.6 billion in cash from operations through the end of 2011. Additionally, the company plans to invest approximately $1.9 billion of this projected total in the expansion and maintenance of its global infrastructure, with approximately $1 billion allocated for repurchasing shares and approximately $700 million designated for potential milestone payments that are scheduled to be made to partners.

The company reported that pipeline as well as business developments have exceeded expectations. According to the report, "The launch of Myozyme (alglucosidase alfa) 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." Genzyme also presented new data from a Phase II clinical trial of GENZ-112638, which is an oral therapy currently in development for patients with Gaucher disease type 1. Data at the end of the first year indicate that the compound either improved or stabilized the bone disease that is caused by Gaucher disease.

In the product portfolio for the hematologic oncology field, the company estimates revenue of $1 billion by 2011. In oncology and bone marrow transplant, a recently announced transaction with Bayer HealthCare extends Genzyme’s commercial presence to more than 90 countries. Cardiometabolic and renal proprietary products are currently in Phase II/III clinical trials in which 315 hyperphosphatemic dialysis patients are enrolled. Results for the primary endpoint of serum phosphorus changes are expected during the first half of next year, and the core patent estate for sevelamer will not expire until 2014.

Additionally, in December of last year Genzyme received approval from the U.S. FDA for the marketing of its proprietary adult stem cell stimulating product, Mozobil, which is a novel, proprietary small-molecule CXCR4 chemokine receptor agonist. When used in combination with G-CSF (granulocyte-colony stimulating factor), Mozobil has been shown to increase the number of stem cells circulating in the peripheral blood by mobilizing hematopoietic stem cells in the bone marrow and stimulating the cells to migrate into the bloodstream for easier collection and subsequent autologous transplantation. According to John DiPersio, M.D., Ph.D., a professor at Washington University in St. Louis, "Mozobil is an important advancement in the treatment of patients with certain types of cancer who require a stem cell transplant. This product should become an integral part of the treatment regimen for transplantation because of the benefits it offers to patients, physicians and transplant centers." Approximately 55,000 hematopoietic stem cell transplants are performed each year globally for multiple myeloma, Hodgkin’s and non-Hodgkin’s lymphoma, for which Mozobil is expected to be used in the majority of such cases. Peak annual sales of Mozobil are projected to reach $400 million. Genzyme has also submitted applications to the respective regulatory agencies in Europe, Australia and Brazil for marketing approval of Mozobil, and additional applications in up to 60 countries are planned.

In November of 2008, Genzyme announced a strategic alliance with Osiris Therapeutics for the commercialization of two adult stem cell products. According to the agreement, Osiris will commercialize the proprietary products Prochymal and Chondrogen in the U.S. and Canada, while Genzyme will commercialize the products throughout the rest of the world. Genzyme made an upfront payment of $130 million to Osiris in additon to milestone and royalty payments that will be made in the future and which are estimated to be worth approximately $1.3 billion. Prochymal and Chondrogen are therapies that use allogeneic (in which the donor and recipient are different people) adult mesenchymal stem cells derived from bone marrow. Both of the products are late-stage treatments for a wide variety of diseases.

Genzyme, the world’s largest maker of drugs for rare genetic disorders, is well known for commercializing first-in-class biotechnologies. In addition to its large orthopedic franchise, Genzyme’s products are focused on rare genetic disorders, kidney disease, cancer, transplant and immune disease, diagnostic testing, cardiovascular disease, neurodegenrative diseases, endocrinology and other medical specializations in which patient needs are not adequately met. Genzyme’s strategic alliance with Osiris marks a major expansion by Genzyme into the field of cell transplant therapies. Founded in 1981, Genzyme now has more than 10,000 employees around the world with revenues in 2007 of $3.8 billion. Its products and services are available in nearly 90 countries worldwide. In 2007, Genzyme was awarded the National Medal of Technology, the highest honor awarded by the President of the United States for technological innovation.

Genzyme’s stock closed at $60.85 today.

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