8
Genzyme General
Overview
Genzyme Corp is a diverse biotech
company with research and develop-
ment in pharmaceuticals, genetic diag-
nostic services, specialty therapeutics
and surgical products. Genzyme Ge n-
eral/NASDAQ: GENZ ("Genzyme") is
a division of Genzyme Corp and is rep-
resented as a tracking stock. Genzyme
has a robust pipeline of therapeutics,
focused on the treatment of genetic
disorders and chronic debilitating dis-
eases.
Valuation
Genzyme's lead product is
Cerezyme, an enzyme replacement ther-
apy for patients with Gaucher disease.
Chronic Gaucher disease leads to an
enlarged liver and spleen, and bone
abnormalities. Cerezyme will continue
to deliver solid revenues. Neverthe-
less, it is a drug that has been on the
market for a number of years and is
already available to all patients who
need it. As a result, its expected
growth rate will slow down over the
next few years. Genzyme's manage-
ment gave 2002 sales guidance for
Cerezyme of $580-600 million, barely
above $570 million from 2001.
The company also sells RenaGel, a
nonabsorbable phosphate binder that
treats hyperphosphatemia in end-stage
renal disease ("ESRD") by lowering
the phosphorus level in kidney dialy-
sis patients. Genzyme is relying on
RenaGel sales to fuel its earnings
growth. Management stated that it
believes there are now over 100,000
patients worldwide on RenaGel. At
current sales levels, Genzyme argues
that the market is approximately 20%
penetrated in the U.S. dialysis popula-
tion, while the European population is
at 5%. Management expects this pene-
tration can increase to 29% in 2002.
Looking beyond 2002, the company
believes that it can eventually achieve
50% penetration into the U.S. market,
which would lead to roughly $450 mil-
lion in U.S. RenaGel sales alone. The
company thinks the overall U.S. market
size for the drug is 300,000 patients
and is growing at 6% year to year. As
a result, Genzyme General estimated
2002 sales of RenaGel will jump at least
47% to 58% to between $260 million
and $280 million, compared with 2001
sales of $177 million.
RenaGel will continue to penetrate
the market over the next several years.
Based upon studies that prove the
effectiveness and safety of the drug,
the medical community will continue to
accept RenaGel for the use of ESRD.
There are several upcoming mile-
stones that should help propel sales of
RenaGel; first, and most important, is
the increased willingness among fed-
eral and state insurance programs to
reimburse patients for the drug.
By mid-2002, we expect the Na-
tional Kidney Foundation to publish
new clinical guidelines for managing
bone disease and mineral metabolism,
which should boost sales of RenaGel
during the second half of 2002.
In late February, Genzyme had a
paper published in the Journal of the
American College of Cardiology ana-
lyzing baseline data collected from he-
modialysis patients who participated in
its Treat-to-Goal clinical trial. The pur-
pose of the study was to determine the
frequency and severity of cardiovas-
cular calcification in hemodialysis pa-
tients; to identify demographic, clinical
or laboratory variables associated with
the severity of calcification; and to
explore the relationship of calcification
with cardiovascular disease. Full re-
sults of the Treat-to-Goal trial are ex-
pected to be published before the end
of the year. The study will also show
comparison of RenaGel with calcium-
based phosphate binders.
Management has indicated that
they plan on increasing their U.S. Re-
naGel sales force from 48 to 80 people.
Then there is the construction of two
additional RenaGel manufacturing
BioTech Stock Report, April 2002
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