Genzyme Taking Aim At Resolution (GENZ)

Genzyme Corp. (NASDAQ: GENZ) has taken steps to remedy its situation with the FDA and to remedy its image.  Genzyme issued some new guidance with an investor update and said it would discard the majority of the work-in-process material under question. Genzyme had been hitting 52-week lows last week as a result of its woes.  Shares closed up almost 5% at $50.54 today, and the after-hours session looks up marginally at $50.70 in thin trading.

This Q2 charge will be $8.4 million on top of the $14.2 million previously disclosed and GAAP net income is now $187.6 million or $0.68 EPS rather than the $192.2 million or $0.70 EPS; non-GAAP net income is now $226.6 million or $0.82 EPS rather than $232.5 million or $0.85 EPS reported.

Genzyme also noted that it continues to evaluate whether to finish the remaining work-in-process material. If Genzyme does not finish and release any of the remaining material, the company said it would be hit with another write-off of $2.7 million.  The company said that it is currently in discussions with appropriate regulatory authorities regarding the release of two lots of Cerezyme that were finished before the plant was shut down.  Genzyme said it will incur an additional write-off of $3.1 million if these finished goods are not released.

Genzyme gave new revised guidance, although it is still conditional.  Cerezyme revenue, total revenue and earnings for 2009 will be at the low end of the guidance ranges given in July: $750 million to $1 billion in Cerezyme  revenues, total revenue of $4.6 to $5 billion; and $2.35 to $2.90 non-GAAP EPS. Genzyme previously adjusted its Fabrazyme revenue guidance for this year to $510 to $520 million from $560 to $570 million.  The new guidance does depend on the release of the two remaining finished Cerezyme lots but no work-in-process material.

Fabrazyme shipments were not put on hold after the shutdown of the Allston plant and dose conservation guidelines for Fabrazyme for a 6 to 8 week period of constraint; product shipments are expected to resume in November and December.

JON C. OGG