REFILE-ANALYSIS-Genzyme virus exposes vulnerable plant processes
(Refiles to insert dropped word "Cerezyme" in paragraph 15)
* No quick answers to Genzyme's manufacturing woes
* Competitors work to upgrade plants, reduce risk
By Toni Clarke
BOSTON, Oct 20 (Reuters) - Genzyme Corp GENZ.O, which is struggling to regain its footing after a viral contamination forced it to close a plant and restrict supplies of two key drugs, remains vulnerable to future contaminations if it does not alter its manufacturing methods.
The company has cleaned the plant, and expects to be able to supply patients fully by early next year, but experts say without some costly risk-containment measures, there is no easy way to prevent a recurrence.
Genzyme's shares have fallen 26 percent over the past year. The number of regularly traded shares held "short" by investors betting that the stock will fall has risen by 67 percent over the same period; and lawsuits from disgruntled investors are already in the works. [ID:nN29300394]
The company's inability to supply patients with Cerezyme, its treatment for Gaucher disease, or Fabrazyme, its treatment for Fabry disease, has left its reputation with patients in tatters and management credibility at an all-time low.
What's more, these are not easy problems to fix.
Biotechnology drugs are produced in living cells that are grown and fed with vast quantities of organic and inorganic raw materials. The potential for viral and bacterial contamination is always present.
Genzyme, like many others in the industry, uses bovine serum to help grow its cells. Serum is often thought to be the source of viral contaminations.
"People in the industry are trying to move away from animal-derived products as quickly as possible," said Richard Schoenfeld, who as former head of manufacturing at Genzyme helped build the Allston Landing plant in Boston which was shut down in June after contamination with a virus.
Some rivals have moved to heat-treating their serum, but Genzyme has been reluctant to do so.
"The challenge of pasteurizing or irradiating the serum is that you have to prove to regulators that the process does not alter the protein that comes out at the end," said Genzyme Executive Vice President David Meeker.
That is difficult, expensive and time-consuming. But some companies, including Roche Holding AG's (ROG.VX) Genentech unit, have done it.
Genentech began heat-treating its raw materials after it was hit in 1993 and 1994 with a parvovirus known as Minute Virus of Mice. It has not had a viral contamination since it installed its new system in 1996.
"It was a difficult process that took place over several years," said Robert Kiss, director of process research and development at Genentech. "But we decided it was worth the investment because the impact of these kinds of events can be so significant."
Genzyme's crisis has given a leg up to rival Gaucher disease drugs being developed by British drugmaker Shire Plc (SHP.L) and Israeli drugmaker Protalix BioTherapeutics Inc (PLX.A). Earlier this year the U.S. Food and Drug Administration said it would allow patients access to their drugs even though they have not yet been approved.
Gaucher is a lucrative market despite a world patient population of just 5,500. Cerezyme can cost as much as $300,000 a year, making it one of the most expensive in the world. Last year it generated sales of $1.2 billion.
CHINESE HAMSTERS VS CARROTS
Cambridge, Massachusetts-based Genzyme is not expected to lose its dominant market position for now. But Shire and Protalix may benefit over time from more modern, cost-effective manufacturing processes.
Genzyme built its production facility in Allston in the early 1990s, and has expanded it on several occasions. But it has not made substantive changes to the process, and that could hurt the company as rivals sprint ahead with new technologies.
Like many biotech companies, Genzyme makes its drugs in big stainless steel bioreactors using cells from Chinese hamster ovaries. The cells are grown and fermented in a process analogous to making beer or wine.
But Shire, for example, makes its Gaucher disease drug velaglucerase alfa in human cells and feeds them with chemical, not animal, nutrients. It also uses novel bioreactors and disposable bags, which avoid the need for expensive steam-cleaning equipment.
"It is a risk-mitigation strategy," said Sylvie Gregoire, president of Shire's Human Genetic Therapies business.
Protalix's drug, Uplyso, is made even more simply, using genetically engineered carrot cells that are fed with sugar and water in disposable plastic bags. It remains to be seen, of course, whether either drug works as well as Cerezyme.
Genzyme is building a plant in Framingham, Massachusetts, that will be operational in 2011. Until then, it will not have enough inventory to survive another crisis.
Genzyme has not identified the source of the virus, known as Vesivirus 2117, but it is not the first time it has appeared. It showed up in September 2008 at the company's plant in Belgium. Two months later it hit the Allston plant. This year it hit Allston once again. [ID:nN16267721]
"The fact that it showed up at various sites suggests a common raw material," said Barbara Potts, a virologist and former principal scientist in the quality control group at Genentech. "The Vesivirus is a difficult virus to kill."
Some investors have accused Genzyme of spending too much on acquisitions and not enough on manufacturing. But defenders say Genzyme is doing everything it can.
"Every process is a series of compromises," said Schoenfeld, who is now a principal consultant at Bioworks Consulting, which advises companies on manufacturing. "You have to balance yield, cost and risk."
Genzyme says it is now able to screen for the virus, and is trying to increase segregation at its plants. But some experts say Genzyme will eventually have to make more substantive changes, and they will likely be painful.
"Once you start down a particular path you very quickly become committed," said Jill Myers, president of BioPro Consulting Inc, which advises companies on manufacturing and process development. "Change is very, very expensive." (Reporting by Toni Clarke, editing by Matthew Lewis)
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