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Genzyme Shares Fall on Myozyme Production Concerns

[An FDA advisory panel on the new production process will be held in October.]

http://biz.yahoo.com/ap/080723/genzyme_mover.html

›Wednesday July 23, 8:40 pm ET

NEW YORK (AP) -- Shares of Genzyme Corp. fell Wednesday after the company reported positive second-quarter financial results but said plans to increase production of its genetic disorder drug Myozyme could be further delayed, pending a regulatory review.

The company already sells the treatment for Pompe disease, which causes muscle impairment. But it is looking to increase production, and the Food and Drug Administration has deemed the proposed process changes akin to a new formula for the biotechnology drug. It will convene an advisory panel in October to consider the new process.

Genzyme shares fell $3.38, or 4.3 percent, to close at $75.92. The stock has traded between $58.71 and $82.08 over the past 52 weeks.

The company's profit fell in the second quarter, mainly because of a hefty licensing payment to Isis Pharmaceuticals. Excluding that payment and some other costs, the company said it earned 98 cents per share, beating Wall Street forecasts by 1 cent. The 25 percent rise in revenue to $1.17 billion also topped forecasts.

Meanwhile, the company reaffirmed full-year profit guidance, excluding charges, of $3.90 per share, seemingly disappointing Wall Street, which expects $3.94 per share.

"The Street might be disappointed," said Citi analyst Dr. Yaron Werber, referring to the lack of a guidance boost, "but we believe that guidance is conservative because, at the current run rate, earnings per share are on track to meet the guidance assuming no growth in the second half."

He maintained a "Buy" rating on the stock and a $4-per-share full-year earnings estimate.

"We do not see any reason that earnings per share won't ramp up as normally in the second half," he said in a note to investors.

Despite the surprise date for the advisory panel, Werber said the new production process will likely be approved, partly because the FDA is comfortable with the safety and effectiveness of the drug. Assuming approval, his 2009 sales estimate of $388 million is intact.

Over the next 12 months, Genzyme said it anticipates six potential approvals for new products or broader indications for existing products.

Goldman Sachs analyst Meg Malloy maintained a "Buy" rating, while Cowen and Co. analyst Phil Nadeau reaffirmed an "Outperform" rating for Genzyme.‹


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