UPDATE 2-Genzyme net profit falls, sticks by forecast

(Recasts, adds analyst comment, pipeline details, share price, byline)

By Bill Berkrot

NEW YORK, July 23 (Reuters) - Genzyme Corp (GENZ.O) reported second-quarter results on Wednesday that exceeded expectations, but it failed to raise its full-year earnings forecast and announced another delay in large-scale production of a newer drug, sending its shares down about 3 percent.

Net profit fell 20 percent on costs for licensing a promising cholesterol medicine, but revenue jumped 25 percent on strong demand for its drugs to treat rare diseases and genetic disorders.

The Cambridge, Massachusetts-based biotechnology company posted a net profit of $69.6 million, or 25 cents per share, compared with a profit of $83.8 million, or 31 cents a share, a year earlier.

Excluding items, Genzyme earned 98 cents per share, edging analysts' average expectations by a penny, according to Reuters Estimates.

The company said net results reflect a $175 million payment to Isis Pharmaceuticals Inc (ISIS.O) to secure the rights to its highly anticipated mipomersen treatment for extreme high cholesterol.

Genzyme said it still expects full-year earnings, excluding items, of about $3.90 per share. Wall Street is betting it will top that and is estimating $3.94 per share.

Revenue for the quarter rose 25 percent to $1.17 billion, helped by increases across all of Genzyme's drug portfolios. That topped Wall Street estimates of $1.13 billion.

"This is another really strong quarter for a large-cap biotech company," said Sanford Bernstein analyst Geoffrey Porges.

"This is an industry that appears to be doing pretty well even in a very difficult economic environment, and I think that's going to continue to attract the attention of investors."

JPMorgan analyst Geoff Meacham agreed it was a strong quarter that beat revenue and earnings-per-share expectations.

"That said, we are surprised that Genzyme did not raise EPS guidance of $3.90," Meacham said in a research note, adding that it is the only large cap biotech company not to raise its forecast in the second quarter.

Myozyme sales rose 65 percent to $77.2 million, but U.S. sales of the treatment for Pompe disease remained constrained due to delays by regulators in approving larger-scale production. FDA approval is needed to provide broader access to the product for adult U.S. patients, Genzyme said.

It said the Food and Drug Administration was going to convene an advisory panel in October to discuss the application, signaling a further delay.

"What's going to spook people is this panel for Myozyme," Porges said. He said he still expects eventual approval, but news that the FDA wants to first hold an advisory panel is "going to be something of a disappointment."

Sales of Cerezyme for Gaucher disease rose 13 percent to $319.4 million, while sales of Fabrazyme for Fabry disease were up 21 percent at $126.6 million.

Its kidney disease franchise of Renagel and the much newer Renvela saw sales increase 16 percent to $168.6 million,

Over the next 12 months, Genzyme said it anticipates six potential approvals for new products or broader indications for existing products, further enhancing its lack of dependence on any one drug, unlike many of its peers.

"Their dependence upon Cerezyme, their biggest product, is actually decreasing," Porges said. "Overall there's just so many ways this company can win, and that's one of the reasons we think it's a pretty good stock."

Genzyme shares were down $2.60, or 3.2 percent, at $76.69 on Nasdaq. (Editing by Dave Zimmerman and Maureen Bavdek)