Genzyme General gave an upbeat earnings report for2001 and a cheery forecast for 2002, but sales growth in its key drugRenagel stalled in the fourth quarter, leading someWall Street professionals to question the company'srosy assumptions for the current year.
The Cambridge, Mass.-based biotech firm said fourth-quarter revenue grew 30% to $264 million. For theyear, the company's revenue grew 29% to $981 million.But sales of Renagel, the company's chief source ofrevenue growth, came in flat for the fourth quarter at$56 million compared with the third quarter.
That's below some Wall Street estimates. Salomon Smith Barney, for instance, was looking for fourth-quarter Renagel sales of just under $59 million.
Shares of Genzyme were down 92 cents, or 1.7%, to$52.80 a share in recent Tuesday trading.
While this isn't a huge miss by any stretch, it iscausing some fund managers to question the ability ofGenzyme to so confidently predict stronger Renagelsales this year. The company says 2002 Renagel saleswill reach a range of $260 million to $280 million,compared with $177 million in 2001.
The bear case on Renagel is that the drug, used in the treatment of dialysis patients, is bumping intoresistance from Phoslo, an older and less expensivetreatment option. Renagel has been able to grab aboutone-third of the market from Phoslo in the UnitedStates in a relatively short period of time, but thatmarket penetration will begin to slow, critics say.
Addressing the issue at the JPMorgan H&Q health care conference, Genzyme CEO Henri Termeer said the company expected Renagel sales to stall in the fourth quarter because of inventory stocking and a price increase in the third quarter. Furthermore, he says publication ofnew studies and treatment guidelines expected thisyear will convince more doctors of the benefits ofusing Renagel over Phoslo. Genzyme is also still rolling out a higher dose of Renagelthat will increase revenue per patient.
Termeer said Genzyme will post 25% earnings growth in 2002, on overall revenue of $1.15 billion to $1.2 billion. Longer term, he said, the company's goal is to reach revenue of $2.5 billion in 2006, or anaverage annual growth rate of at least 20%.
Genzyme is expected to post 2001 earnings of $1.18 a share and 2002 earnings of $1.47, according to consensus figures compiled by ThomsonFinancial/First Call.