Genzyme Corporation Q1 2010 Earnings Call Transcript

Genzyme Corporation Q1 2010 Earnings Call Transcript
By Seeking Alpha ,

Genzyme Corporation (GENZ)

Q1 2010 Earnings Call

April 21, 2010 11:00 AM EST

Executives

Patrick Flanigan – Senior Director, IR

Henri Termeer – Chairman and CEO

Mike Wyzga – EVP, Finance and CFO

Scott Canute – President for Manufacturing Operations, Global

Pam Williamson – Head of Global Regulatory Affairs

Thomas DesRosier – Chief Legal Officer

Ron Branning – Head of Quality Operations, Global

David Meeker – COO

Mark Enyedy – SVP and President Genzyme Oncology

Geoff McDonough – SVP

John Butler – SVP; President, Cardiometabolic & Renal

Analysts

Michael Yee – RBC Capital Markets

Jim Birchenough – Barclays Capital

Eun Yang – Jefferies

Geoff Porges – Bernstein

Salveen Kochnover – Collins Stewart

Yaron Werber – Citi

Ian Somaiya – Piper Jaffray

Josh Schimmer – Leerink Swann

Geoff Meacham – JPMorgan

Ram Selvaraju – Hapoalim Securities

Bill Tanner – Lazard Capital Markets

Steve Harr – Morgan Stanley

Shiv Kapoor – Morgan Joseph

Aaron Reames – Wells Fargo Securities

Jon Stephenson – Summer Street Research

Rachel McMinn – Bank of America Merrill Lynch

Phil Nadeau – Cowen

Chris Raymond – Robert Baird

Presentation

Operator

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Welcome to the Genzyme Corporation’s first quarter financial results conference call. All parties will be in a listen-only mode until the question-and-answer session. (Operator Instructions). Also this call is being recorded. If you have any objections you may disconnect at this time.

I would now like to turn the call over to Mr. Patrick Flanigan, Senior Director of Investor Relations. Sir, you may begin.

Patrick Flanigan

Welcome everyone to our first quarter earnings conference call. As a reminder, on this call, we will be making forward-looking statements including those regarding our current Cerezyme and Fabrazyme supply expectations, our plans to increase manufacturing capacity, and the to exit fill-finish operations at our Allston facility. Our expectations regarding the terms and timing of the consent decree being negotiated with the FDA, our product development plans and regulatory timetables for Lumizyme and our late-stage pipeline, and our assessment of the future of the business.

These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. Please refer to the Risk Factor section of our 2009 10-K on file with the SEC for more information on those risks. These statements speak only as of today's date, and we undertake no duty to update or revise them.

If during this call, we use any non-GAAP financial measure, you will find on our website a reconciliation to the most directly comparable GAAP financial measure. And also just as a reminder, we are going to host an Analyst Day on May 6

th

, space is limited. So we do recommend that URCP as soon as possible for a seat at Analyst Day.

And with that, I would like to now turn the call over to Genzyme's Chairman and CEO Henri Termeer.

Henri Termeer

Thank you, Patrick, and thank you, everybody participating this morning. I have with me, Mike Wyzga, Chief Financial Officer; he will go through the financial details. Also Scott Canute, our new President for Manufacturing Operations Globally and he will talk about where we are in the manufacturing recovery programs. David Meeker is here, our new Chief Operating Officer, whom all of you know and Ron Branning, our Head of Quality Globally and he will make some comments and respond to Q&A. Actually he will respond to Q&A, Ron. And then Pam Williamson is here, the Head of Regulatory Affairs Globally, and the usual business unit leaders that all of you are familiar with are here too to respond to Q&A.

The first quarter was a very eventful quarter and a quarter where a number of things happened in our route to – our path to fully recovery and the least start of sustainable growth, that actually were constructive in some way and somewhat counterintuitive if you look at the fact that we had during the quarter, the issuance of at least the beginnings of discussions with the agency, the FDA on the consent decree and also late in the quarter, we had a manufacturing interruption that was talked about in the release.

It was very clear that in the short term our most important value creating and important thing for us to be able to accomplish is to get our manufacturing operations specifically, Allston into shape, so that we can produce at the high productivity in a reliable and productive way. Our, these two key products that have been impacted now for the last 12 months, Cerezyme and Fabrazyme, and Scott will talk about that. And it is very clear that we are making progress in this regard. We are seeing it on a daily basis when you are close to it, you can see it, discuss and talk about what that progress is. But it is something that has to stay in focus for us for the remainder of the year. If this clearly the subject around the consent decree, but it’s very importantly it impacts our ability to come back to full supply for Fabrazyme and Cerezyme.

And those two programs have been impacted now for a period of time. It is gratifying to see how – these are tremendous efforts, throughout the corporation, we are able to maintain connection into the marketplace that works and (at least) work well, the loyalty in the marketplace is really quite gratifying, but we clearly have to be able to get to full supply in order to maintain the right clinical impact of these therapies. We are hopeful indeed that the progress that we are making will expand itself in a much more reliable flow of product starting now.

The consent decree situation is much clarified. I think we did receive the draft from the agency, we did tell you in the release what that draft shares and we are in the middle of discussing important elements of this and the most important ones are – is a schedule, and the schedule that allows us to get out of the Allston facility in terms of filling and get to Waterford, our fill-finish operation in Ireland and to our CMO, Hospira in this case as (good way), predictable way and safer way, so that we don’t interrupt supply to products, but we do meet the schedule that we reown this agency. That’s where the discussions are taking place. Thomas DesRosier, our Chief Legal Officer is here, so I am sure if you have questions, he will be happy to answer them.

The business was also pretty good during this quarter. We have made very progress indeed on a number of new products that were introduced last year or recently. Myozyme was up 28% from last year, despite an impact on shipping late in the quarter that we are recovering in the second quarter. Synvisc was 26% from last year and the first quarter is really a tough quarter for – the seasonality is quality pronounced around this product, the second quarter has actually traditionally been a very, very strong quarter. We are off on a strong start in the second quarter. And Synvisc-One is now 70% of revenues in that area and it’s quite gratifying to see how that product in an important way is making contribution to the company now. Mozobil was up 75% in the first quarter versus last year and we only introduced it across by the year-ago. And Clolar was up 36%, results are quite gratifying to see and a product that has long ways to go.

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