April 22, 2009 / 1:09 PM / 10 years ago

UPDATE 3-Genzyme 1st-qtr profit, revenue, miss expectations

* Q1 net earnings 70 cents/shr

* EPS ex-items $1.04/shr vs $1.05 estimate

* Q1 revenue $1.15 bln vs $1.2 bln estimate

* Shares fall 4 percent

(Updates analyst comment, sales details)

By Toni Clarke

BOSTON, April 22 (Reuters) - Genzyme Corp GENZ.O said on Wednesday its first-quarter earnings rose 35 percent, but revenue was hurt by currency fluctuations and supply constraints on Myozyme, its drug to treat the muscle disorder Pompe disease.

Genzyme’s shares fell 4 percent in mid-morning trading.

The Cambridge, Massachusetts-based biotech company said net profit rose to $195.5 million, or 70 cents a share, from $145.3 million, or 52 cents a share, a year ago.

Excluding one-time items Genzyme earned $1.04 a share. Analysts on average expected earnings of $1.05 a share, according to Reuters Estimates.

Revenue rose roughly 4 percent to $1.15 billion, which is less than the $1.21 billion analysts on average expected.

Genzyme, which makes drugs for rare and chronic disorders, said currency fluctuations knocked down revenue by 6 percent, or $66 million. In addition, a number of adult Pompe disease patients skipped doses of Myozyme as part of a program designed to redirect the product to infants.

The company reaffirmed its guidance, saying it expects 2009 revenue of between $5.15 billion to $5.35 billion and non-GAAP earnings per share of $4.58.

“Revenue was soft across all of the company’s key products,” said Geoffrey Porges, an analyst at Sanford Bernstein, an a research report.

Sales of Cerezyme, the company’s treatment for Gaucher disease, fell 2.7 percent to $296 million, reflecting the impact of foreign exchange. Porges said the consensus estimate for Cerezyme was $311 million.

Sales of Fabrazyme, its drug for Fabry disease, rose 5 percent to $122.2 million, compared to an estimate of $132 million.

Sales of Myozyme were flat at $67.4 million, compared to a consensus estimate of $78 million.

Shortages of Myozyme represent a major thorn in the side of Genzyme. The drug was approved in 2006 but the company is seeking approval to manufacture it in greater quantities.

Currently it is approved in the United States for use when made in 160-liter bioreactors. Because these supplies are relatively small, the drug is reserved for infants, where the disease tends to be more serious.

In February, Genzyme won European approval to make Myozyme at a 4,000-liter manufacturing facility, which will ultimately increase European supply. The company said it is on track to subit an application for the 4,000-liter product this quarter in the United States.

The U.S. Food and Drug Administration has ruled that Myozyme, when produced in larger batches, has a different carbohydrate structure and therefore must be approved separately and named differently. Genzyme has named it Lumizyme.

So far, the U.S. Food and Drug Administration has declined to approve Lumizyme, saying remaining issues need to be addressed. The agency has also demanded that the company rectify deficiencies at its Boston manufacturing site.

Genzyme said it has completed all the measures required to respond to the FDA’s complaints about the manufacturing facility except one, and is now awaiting the FDA’s re-inspection of the plant.

The company said once the FDA inspection is complete, the agency will review the company’s response to the FDA’s issues related to the Lumizyme application.

Genzyme’s shares fell 4 percent to $52.28 in mid-morning trading on Nasdaq. (Reporting by Toni Clarke, editing by Dave Zimmerman)

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