Genzyme Slips After Guidance

The biotech company's second- quarter forecast falls short of analysts' earnings estimates.
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Updated from 11 a.m. EDT

Genzyme

(SYMBOL)

reported Thursday that first-quarter earnings and sales slightly exceeded consensus estimates by Wall Street analysts but issued mixed guidance for the second-quarter and full-year periods.

The Cambridge, Mass.-based biotechnology company said it earned $85.6 million, or 37 cents a share, on revenue of $491.3 million for the three months ended March 31. The earnings exclude special items and amortization relating to two acquisitions.

The consensus of analysts polled by Thomson First Call was predicting first-quarter earnings of $77.9 million, or 37 cents a share, on revenue of $472.5 million.

When special items are included, Genzyme earned $67.9 million, or 29 cents a share, compared with a profit of $61.9 million, or 28 cents a share, for the same period last year. Comparisons with the first quarter of 2003 are difficult because Genzyme was still reporting results from three different tracking stocks for the first and second quarters of 2003. The company ended the tracking stocks on June 30 and consolidated all of its financial results; but first quarter 2003 results reflect only the former

Genzyme General

, one of the three entities with tracking stocks.

The company said it was predicting a 2004 second-quarter profit -- excluding special items -- in the range of 39 cents to 41 cents. The consensus Wall Street view is 42 cents. (The earnings prediction based on generally accepted accounting principles is 32 cents to 34 cents.)

Responding to an analyst's question during a telephone conference call, Henri A. Termeer, Genzyme's chairman and CEO, said the second-quarter EPS guidance wasn't a low-ball estimate. "When we put out guidance, we mean it," said Termeer. "We try to be as accurate as possible. This was a good, solid estimate."

Termeer also reaffirmed Genzyme's full-year EPS guidance of $1.65 to $1.75. Analysts polled by Thomson First Call have an average estimate of $1.71, with a wide range of $1.63 to $1.83.

Genzyme reiterated its belief that it can close during mid-2004 its acquisition of

Ilex Oncology

(ILXO)

. Genzyme said in late February that it would pay $1 billion in a stock-for-stock deal for the San Antonio, Texas company that specializes in cancer therapies.

During the first quarter, Genzyme was paced by strong growth of Renagel, a drug for kidney disease patients undergoing dialysis, which produced $83.5 million in sales, a 42% jump from the same period last year. The company said it still cannot predict the potential impact on future Renagel sales caused by changes in Medicare regulations being developed to take effect in 2006.

Genzyme's biggest selling drug, Cerezyme, a treatment for the metabolic disorder Gaucher's Disease, enjoyed a 21% rise in revenue to $203 million. Another big gainer was Fabrazyme for the metabolic disorder Fabry Disease. First-quarter revenue more than tripled to $38.1 million.

Shares were down 57 cents, or 1.2%, to $46.35.