9
the first half of 2002.
There are other products that will
contribute to Genzyme's 2002 revenue,
such as diagnostics, which manage-
ment has forecasted to increase be-
tween 20% to 23%, that translating to
sales between $180-185 million. Also,
revenue from Thyrogen, WelChol and
pharmaceutical intermediates was pro-
jected by the company to be in the
range of $85 to $100 million for 2002.
Therefore, Genzyme has guided
total 2002 revenues of $1.15 to $1.2
billion. Research and development ex-
penses for 2002 are expected to be in
the $210 to $220 million range, and
gross margins to equal 76% to 77% of
total revenue in 2002. Lastly, the com-
pany expects to have approximately
$1.5 to $1.75 billion in cash at year-end.
All this translates to the bottom line
for a 25% increase in earnings for 2002,
compared to 2001, with a range of $1.40
to $1.46 earnings per share prior to
amortization of intangibles. (Genzyme
has indicated that 2002 amortization
expenses will be lower by $40 to $44
million.) The consensus earnings esti-
mate for the company is between $1.39
and $1.50 a share, with the average at
$1.45.
Earlier in the month, Genzyme re-
ported its fourth-quarter earnings of
$63 million before special items, com-
pared with $58 million in the 2001 pe-
riod. Fourth-quarter earnings per
share, adjusted for a 2-for-1 stock split,
fell to 29 cents from 31 cents because
the company issued stock to make ac-
quisitions and convert debt into eq-
uity. Average consensus earnings
were 30 cents. As a result, for the year
2002, earnings came in at 21 cents per
share after amo rtization and special
items. Prior to these adjustments, earn-
ings were $1.17 per share, which fol-
lowed the guidance Genzyme had pro-
the FDA. Both drugs have been ap-
proved in the European Union and
share orphan drug status. Since Tran-
skaryotic filed orphan drug status first,
and both drugs are comparable in
terms of safety and efficacy, Tran-
skaryotic filed the earliest, thus has the
advantage to get FDA approval.
Genzyme's management for the
first time gave guidance for future
Fabrazyme sales. They put 2002 total
sales for the drug between $25 and $40
million. This guidance is based solely
on sales outside the U.S. market. The
product is currently approved in the
European Union, Norway, Iceland, the
Czech Republic and New Zealand. The
company estimates that there are ap-
proximately 300 total patients on the
drug (including clinical trials). The to-
tal market for Fabry's disease is
roughly 5,000 patients.
In November 2001, Genzyme and
partner Biomarin (NASDAQ: BMRN)
announced positive results from a pre-
liminary analysis of data from the
Phase III clinical trial of Aldurazyme,
an enzyme replacement therapy for
patients with MPS I, a rare genetic dis-
order. Based on these results, the com-
panies plan to file for U.S. and Euro-
pean marketing approval this month
for Aldurazyme. The companies re-
ceived orphan drug designation and
fast-track status for Aldurazyme in the
U.S. and Europe, and anticipate prod-
uct approval by year-end.
Genzyme is also in the process of
developing alpha-glucosidase for in-
fants with Pompe disease, and will be
finishing a Phase II trial this summer.
Depending upon the outcome of the
data, the company may try to file a
BLA with this data at the end of the
year. In addition, Genzyme is working
on NZ-1001, a second-generation
product for Pompe disease. NZ-1001
was developed by Novazyme Pharma-
ceuticals and recently acquired by
Genzyme. The initial clinical trial evalu-
ating NZ-1001 is expected to begin in
plants, with the first expected to come
online in mid 2002 and the second
coming online late 2002. Management
expects to see a positive impact on
gross margins for RenaGel as these
plants are completed, an increase of 10
to 15%.
Two additional trials for RenaGel
(RIND and Morbidity and Mortality)
have been fully enrolled. The first of
the two ongoing trials is a prospective
clinical trial designed to evaluate Rena-
Gel's impact on morbidity and mortality
that is, how well it alleviates sickness
and death. Patients will be randomized
for either RenaGel or calcium-based
treatment, and the study will assess
morbidity at 18 months and mortality at
30 months. Data from these two stud-
ies should be available in the second
half of 2003 and also in second half
2004, respectively.
The second Phase IV trial under
way is the RenaGel in New Dialysis
Patients (RIND) study. This study is
designed to show that RenaGel can
prevent calcification, one step beyond
the "Treat to Goal" study determining
RenaGel's ability to slow calcification
progression. The data for the RIND
study is expected to be released in late
2003.
In October 2001, Genzyme re-
ceived a complete response letter from
the FDA for Fabrazyme, used for the
treatment of Fabry disease in the U.S.
(Fabry's disease is a rare, inherited dis-
order which predominantly affects
males. Fabry's disease is a fat storage
disorder caused by a deficiency of an
enzyme involved in the biodegradation
of lipids. Life expectancy for severely
affected Fabry's disease patients is
approximately 40 years.) The FDA re-
quired additional data and information
in order to complete the review of the
biological license application ("BLA").
Approval is expected to occur by the
end of the year. In addition, Transkary-
otic's (NASDAQ: TKTX) Replagal has
also filed for marketing approval with
BioTech Stock Report, April 2002
Genzyme General
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