Today, Genzyme lowered its EPS estimates for 2011 based on delays in returning to projected production levels for Fabrazyme in its Framingham, MA plant. Genzyme had previously announced its expectation to be back in full production by June but has now pushed that back again. Regulatory approval will not be forthcoming until the 3rd or 4th Qtr in 2011.
The results of the delay caused Genzyme management to lower its EPS guidance to $4.10-$4.35 down from the previous $4.30-$4.60 range. It also adjusted its expected earnings down slightly from $5.1 B to $5.0 B for 2011.
Genzyme ability to meet all regulatory requirements to come back into full projection had been one of the issues that was under debate with Sanofi in setting an appropriate purchase price for the company. The other main issue is the value of Genzyme's MS drug in phase III clinicals. Genzyme also lowered expectations for 4th Qtr EPS in 2010 - primarily due to lower Cerezyme revenues and margins - no doubt caused by Shire having entered the market with a competitive product while Genzyme experienced manufacturing problems. See In Pharma.com.
It looks to me that the Sanofi deal will get done and at a lower price than the $80 per share that Genzyme has been flogging.
Posted by Bruce Lehr Jan 13th 2011.
Comments