Genzyme Corp. (NASDAQ: GENZ) reported third-quarter earnings growth driven by increased shipments of Cerezyme® (imiglucerase for injection). Patients in the United States began returning to normal dosing levels last month, and patients globally are expected to be able to do so this quarter. Earnings growth in the third quarter was also driven by strong revenue from Lumizyme™ (alglucosidase alfa) and cost reduction measures.
Third-quarter revenue was $1.0 billion, compared with $923.8 million in the same period last year. Operating results for the third quarter of 2009 have been revised to exclude the Genetics and Diagnostics businesses, which the company is planning to divest by the end of this year.
GAAP net income was $69.0 million, or $0.26 per diluted share, compared with $16.0 million, or $0.06 per diluted share, in the third quarter of 2009. Non-GAAP net income was $111.5 million, or $0.42 per diluted share, in line with the company’s guidance, compared with $77.9 million, or $0.28 per diluted share, in the same period last year. Non-GAAP net income excludes stock compensation expenses, costs associated with the acquisition of oncology products from Bayer, and the operations of the Genetics and Diagnostics businesses, as they meet the criteria of discontinued operations. At the end of the third quarter, Genzyme’s cash balance was approximately $1.2 billion.
"In the third quarter we saw our financial recovery start to take effect, and we expect that this will accelerate during the fourth quarter as Cerezyme patients are able to return to normal dosing levels and we begin to increase shipments of Fabrazyme," said Henri A. Termeer, Genzyme's chairman and chief executive officer. "We are also implementing measures to reduce our operating costs, while remaining focused on the priorities of transforming our manufacturing operations, strengthening our core genetic disease business, and advancing key pipeline programs to ensure sustainable long-term growth."
During the third quarter, Genzyme made progress in executing its plan to increase shareholder value. The company last month announced that it entered into an asset purchase agreement under which Laboratory Corporation of America Holdings will acquire Genzyme Genetics for $925 million in cash. Plans to divest the Diagnostics and Pharmaceuticals businesses remain on track.
Genzyme completed the first half of a planned $2 billion share repurchase, financed by a $1 billion debt offering. The company has repurchased approximately 15.7 million shares at an approximate average price of $63.90. At the end of the second quarter, the company had 265.3 million basic weighted average shares outstanding. As a result of the buyback, this was reduced to 255.4 million at the end of the third quarter. Approximately 4 million shares of the repurchase were offset by the exercise of stock options. Proceeds from the divestitures of the Genetics, Diagnostics and Pharmaceuticals businesses may be used to finance the second half of the repurchase.
Cerezyme revenue in the fourth quarter is expected to be $235 – $245 million and Fabrazyme® (agalsidase beta) revenue is expected to be $70 – $75 million, based on currently anticipated product release dates. Non-GAAP EPS is expected to be $0.90 - $0.95 per diluted share in the fourth quarter.
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 approximately 10,000 employees in locations spanning the globe and 2009 revenues of $4.5 billion. In 2010, Genzyme was named to the Fortune 500.
With many established products and services helping patients in 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.