Despite Weak Stock, Genzyme Highlights Growth Prospects (GENZ)
Genzyme Corp. (NASDAQ: GENZ) has presented its plan for sustainable growth at today’s Analyst Day Meeting. The company reaffirmed its goal of $7 billion in annual revenue by 2011 and more than 20% growth in compound non-GAAP earnings through 2011. Genzyme is changing its presentation for earnings and has revised its presentation of GAAP to non-GAAP reconciliation for 2002 to 2008.
Genzyme had previously forecast 20% compound average growth in non-GAAP EPS from $2.77 in 2006 to $7.00 in 2011. Under the revised presentation, 2006 non-GAAP EPS was $2.01 and 2011 non-GAAP EPS is now expected to be $5.84, a 24% increase in the compound average growth rate. The $5.84 non-GAAP estimate includes $0.80 of amortization and an estimated $0.36 of discrete items (based on the last three years actual experience).
Genzyme reaffirmed its 2009 revenue guidance of $5.15 to $5.35 billion and revised its non-GAAP EPS from $4.58 to $3.52. This non-GAAP estimate includes $0.70 of amortization and an estimated $0.36 of discrete items.
Genzyme said it is modifying its earnings presentation to provide a simpler picture for investors. INVESTMENT METRICS as follows:
- Return on invested capital is anticipated to be approximately 13% in 2011 and total cash return on invested capital is expected to be 17%.
- It expects to generate approximately $5.6 billion in cash from operations through the end of 2011.
- Genzyme plans to invest approximately $1.9 billion of this total to expand and maintain its global infrastructure, approximately $1 billion to repurchase shares and approximately $700 million to make potential milestone payments to partners.
The launch of Myozyme® (alglucosidase alfa) has been more rapid than the launch of any of Genzyme’s other treatments for lysosomal storage disorders, and the FDA has informed Genzyme that it is ready to review the company’s submission addressing all of the items from the agency’s complete response letter for the 2,000 L-scale product, Lumizyme™ (alglucosidase alfa) and will not require inspection of Genzyme’s Allston Landing manufacturing facility prior to initiating the review.
The FDA has agreed that clinical data from Genzyme’s Pompe patient registry can now fulfill the requirements for a verification study. Genzyme is preparing the data and expects to make its submission by the middle of May. Because the submission will include clinical data, Genzyme anticipates this to be a class 2 resubmission with a six-month PDUFA goal. However, given the ongoing dialogue between Genzyme and the FDA, the company expects that the agency will expedite the review process.
Genzyme and the FDA are also in active discussion regarding the submission of an sBLA for the 4,000 L-scale product.
Genzyme presented new data from a phase 2 study of GENZ-112638, an oral therapy in development for patients with Gaucher disease type 1. After one year, the data showed that the compound improved or stabilized the bone disease that is a consequence of Gaucher disease.
A recently completed phase 2 study of modified release recombinant human thyroid stimulating hormone in patients with multinodular goiter met its primary endpoint of improving goiter reduction compared to placebo at six months. Genzyme expects to begin a phase 3 study in the middle of next year.
The recent U.S. launch of Synvisc-One (hylan G-F 20) is exceeding expectations and projected to be a key growth driver for the Biosurgery business. After one month on the market, Synvisc-One accounts for approximately 30% of total U.S. sales of Synvisc® (hylan G-F 20).
The company’s oncology and transplant businesses together are expected to generate approximately $1 billion in revenue by 2011.
The recently announced transaction with Bayer HealthCare enhances this position with two products that complement the company’s existing products in oncology and bone marrow transplant. The transaction will also extend the business’s global reach to include a commercial presence in more than 90 countries. That transaction is expected to close this quarter and will also provide Genzyme with primary responsibility for the development and commercialization of alemtuzumab for multiple sclerosis.
Genzyme and Isis Pharmaceuticals Inc. expect top line data from a phase 3 study of mipomersen in homozygous familial hypercholesterolemia (hoFH) this quarter. The study is designed to demonstrate that after six months the treatment provides a 20 percent reduction in LDL-cholesterol compared with placebo in patients on maximally tolerated statins.
Genzyme has more than 11,000 employees in locations spanning the globe and 2008 revenues of $4.6 billion. Thomson Reuters has revenue estimates at $5.16 Billion for 2009 and expect revenues to be $6.02B for 2010.
At $54.40, Genzyme is at the bottom of its $50.05 to $83.97 trading range of the last year. This may change by tomorrow or next weak after analyst adapt their numbers, but the average price target still appears to be north of $70.00 from analysts.
JON C. OGG
