Exhibit 99.1
For Immediate Release | | Media Contact: | | Investor Contact: |
February 11, 2009 | | Erin Emlock | | Patrick Flanigan |
| | (617) 768-6923 | | (617) 768-6563 |
Strong Fourth Quarter for Genzyme Concludes Productive Year
Non-GAAP EPS Reaches $1.04 in Fourth Quarter and $4.00 for 2008
Company Provides Confident Outlook for 2009
CAMBRIDGE, Mass. — Genzyme Corp. (NASDAQ: GENZ) today announced solid fourth-quarter revenue and earnings growth and provided guidance for 2009 that underscored its positive outlook for the year.
GAAP net income rose to $86.7 million, or $0.31 per diluted share, compared with $78.9 million, or $0.29 per diluted share, in the prior fourth quarter. Non-GAAP net income increased 16 percent to $288.5 million compared with $249.2 million in the fourth quarter of 2007. Non-GAAP earnings rose 14 percent to $1.04 per diluted share from $0.91 per diluted share in the same period in 2007.
GAAP figures for the quarter include a non refundable upfront fee to Osiris Therapeutics Inc. for a late-stage product candidate, amortization and stock compensation expenses, and a charge to write off overhead and material associated with incomplete process validation runs at the company’s Belgium manufacturing facility.
“We had an excellent year last year and exceeded our earnings expectations despite the economic environment and the challenges we faced with Myozyme,” said Henri A. Termeer, Genzyme chairman and chief executive officer. “We delivered on our
financial objectives but did not ignore our future. We continued to expand and invest in our pipeline and now have seven exciting late-stage programs with the potential to sustain our growth over the long term. Genzyme is stronger today than it was a year ago, and we feel confident about our future.”
As previously announced, fourth-quarter revenue rose 13 percent to $1.17 billion, reflecting an approximate $39 million negative impact of foreign exchange, compared with $1.04 billion in the same period in 2007.
Individual product sales for the fourth quarter and the year, along with expectations for the longer-term growth of Genzyme’s business segments, were detailed in a January 13, 2009, press release coinciding with the company’s presentation at the JPMorgan Healthcare Conference.
2008 Results
Total revenue in 2008 increased 21 percent to $4.6 billion from $3.8 billion in 2007. GAAP net income was $421.1 million, or $1.50 per diluted share, compared with $480.2 million, or $1.74 per diluted share, in 2007. Non-GAAP net income increased 18 percent to $1.1 billion, compared with $939.9 million in 2007. Non-GAAP earnings increased 15 percent to $4.00 per diluted share from $3.47 in 2007.
Genzyme generated approximately $1.5 billion in cash predominantly from operations in 2008 and utilized this cash flow to substantially eliminate all debt, invest in its global infrastructure, repurchase shares, and complete strategic transactions that significantly strengthened its late-stage pipeline.
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Financial Guidance for 2009
Earnings
· Genzyme is on-track to achieve its goal of 20 percent compound average non-GAAP earnings growth from 2006 — 2011. Non-GAAP earnings are projected to rise to approximately $7.00 per diluted share by 2011.
· Non-GAAP earnings in 2009 are expected to increase to $4.70 per diluted share. GAAP earnings, which include amortization and stock compensation expenses, are expected to reach $3.50 per diluted share.
· Non-GAAP earnings in the first quarter of 2009 are expected to be similar to earnings for the fourth quarter of 2008. Genzyme anticipates that its non-GAAP earnings will accelerate starting in the second quarter, as two key regulatory approvals for Myozyme® (alglucosidase alfa) are secured: E.U. approval of Myozyme produced at the 4000 L scale, which will help provide the capacity to meet the strong global demand for the product; and U.S. approval of Myozyme produced at the 2000 L scale, which will be called Lumizyme™ (alglucosidase alfa), giving the company the ability to promote the Pompe disease therapy produced at this scale in the U.S. market. Mozobil™ (plerixafor injection), which was launched last month, will also help drive earnings growth.
Revenue
· Revenue is expected to reach $5.2 — $5.4 billion in 2009. This reflects an approximate $150 million unfavorable impact of foreign exchange. Genzyme anticipates strong volume growth in all five of its business segments:
Total revenue for the Genetic Disease segment is expected to reach $2.47 — $2.53 billion this year, compared with $2.23 billion in 2008.
· Within this segment, Myozyme revenue is expected to increase to $430 — $440 million, compared with $296 million in 2008. The company anticipates FDA action by February 28 on its filing for U.S. approval of Lumizyme. European Commission approval of Myozyme produced at the 4000 L scale would be expected in April under the standard review procedure. Genzyme has requested expedited review of its application.
· Revenue for Fabrazyme® (agalsidase beta), an important growth driver that is performing well in a competitive marketplace, is expected to rise to $560 — $570 million in 2009 from $494 million last year.
· Cerezyme® (imiglucerase for injection) revenue is expected to reach $1.25 — $1.28 billion, compared with $1.24 billion in 2008, reflecting its mature status and the impact of foreign exchange.
The Cardiometabolic and Renal segment’s total revenue is expected to increase to $1.04 — $1.07 billion this year, compared with $956 million in 2008.
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· Within this segment, Genzyme’s sevelamer therapies, Renvela® (sevelamer carbonate) and Renagel® (sevelamer hydrochloride), are expected to produce revenues of $725 — $735 million in 2009, compared with $678 million last year. Anticipated key drivers include E.U. approval of Renvela and the expansion of the product’s U.S. indication to include the treatment of patients with chronic kidney disease who are not on dialysis, both of which are expected in mid-2009. Genzyme is working to transition all remaining U.S. Renagel patients to Renvela, with the goal of completing the transition by September 30, 2009.
Total revenue for the Biosurgery segment is expected to reach $540 — $570 million this year, compared with $491 million in 2008.
· FDA approval for Synvisc-One™ is expected soon, and the product is expected to be a significant growth driver for the franchise over the longer term.
The Hematologic Oncology segment’s total revenue is expected to rise to $185 — $210 million this year, compared with $117 million in 2008.
· Within this segment, Mozobil revenue in 2009 is expected to reach $40 — $50 million. The launch of this treatment is going well, with broad adoption by transplant centers. Mozobil was approved in the United States in December, and E.U. approval is expected in the second half of 2009. Genzyme expects that the product will become an integral part of the treatment regimen for stem-cell transplantation because of the clinical and economic benefits it offers to patients, physicians and transplant centers.
Other revenue is expected to reach $1.02 — $1.08 billion in 2009, compared with $814 million in 2008.
· This segment includes revenue from the company’s Genetics, Diagnostics, Transplant and Pharmaceuticals businesses, and other product revenue.
Gross Margin
· The non-GAAP gross margin for 2009 is expected to be approximately 75 percent of revenues, compared with 76 percent in 2008. The gross margin reflects underutilized capacity at the two plants where larger scale production of Myozyme is starting to come online. It also reflects changes in product mix.
Expenses
· Non-GAAP selling, general and administrative expenses are expected to represent approximately 26 percent of revenue in 2009, lower than SG&A expenses of 27 percent of revenue in 2008. SG&A spending this year will reflect several major
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product launches, including Mozobil in the United States and Europe and Synvisc-One™, Lumizyme, and Clolar® (clofarabine) for adult AML in the United States.
· Non-GAAP research and development spending is expected to represent approximately 16 percent of revenue in 2009, consistent as a percentage of revenue with R&D spending in 2008. Genzyme continues to make a significant investment in its pipeline to sustain its future growth. The company is currently conducting approximately 100 clinical trials.
Tax Rate
· Genzyme’s non-GAAP tax rate this year is expected to be approximately 29 percent. The GAAP tax rate is expected to be 30 percent.
Capital Expenditures
· Capital expenditures are expected to total $600 — $650 million this year. Genzyme continues to make a significant investment in manufacturing capacity to support the growth of existing products and prepare for the launch of products in late-stage development. Construction is underway on two new manufacturing facilities: one for Thymoglobulin® (anti-thymocyte globulin, rabbit) in France, and one for cell culture production in Framingham, Mass.
Development Programs
Genzyme’s R&D pipeline includes seven major late-stage programs with the potential to sustain the company’s growth beyond 2011:
Clolar for adult AML
Genzyme has filed for FDA approval of Clolar as a first-line therapy for adult acute myeloid leukemia. If this application receives priority review, Clolar could be approved for this indication in the first half of 2009. An E.U. filing is anticipated in the second half of 2009, with approval expected in the first half of 2010. Clolar is currently approved in the United States and Europe for the treatment of acute lymphoblastic leukemia in relapsed and refractory pediatric patients.
Alemtuzumab for multiple sclerosis
Genzyme continues to enroll patients in two phase 3 trials of alemtuzumab, which has the potential to become a new standard of care in the treatment of multiple sclerosis. Enrollment in the study involving previously untreated patients is expected to conclude by mid year, and enrollment in the study involving treatment-experienced patients is expected to conclude in the first half of next year. The design of the latter study has been modified to eliminate its high-dose arm based on final phase 2 data showing that both the high and low doses of alemtuzumab were efficacious when compared to
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interferon beta-1a. Results for the treatment naïve study are expected in 2011, and Genzyme anticipates approval of alemtuzumab in 2012.
Mipomersen for high-risk hypercholesterolemia
Genzyme and Isis Pharmaceuticals Inc. formed a collaboration in 2008 to develop and commercialize the novel lipid-lowering drug mipomersen for patients with high cholesterol who are at high risk of cardiovascular disease. The companies have begun three late-stage studies of mipomersen during the past year, and a fourth is currently screening patients. The companies have also completed enrollment in a phase 3 trial involving patients with homozygous familial hypercholesterolemia. Top-line data are expected in mid-2009. The submission of a U.S. marketing application for this indication is anticipated during the second half of 2010, and the first approval is expected in 2011. An outcome study is expected to begin by mid-2010.
Prochymal™ for graft vs. host disease and Crohn’s disease
Genzyme and Osiris Therapeutics Inc. formed a collaboration last year to develop and commercialize the adult stem cell treatment Prochymal. Data from phase 3 studies of Prochymal in graft vs. host disease (GvHD) and Crohn’s disease are expected in 2009, and Osiris also expects to seek FDA approval for the GvHD indication this year.
GENZ-112638 for Gaucher disease
Genzyme is preparing to initiate two phase 3 studies of Genz-112638, a potential oral therapy for Gaucher disease, following the positive outcome of a recent meeting with the FDA to discuss study design. Patient enrollment is expected to begin during the first half of the year. Final results from the open-label phase 2 study will be presented February 20 at the Lysosomal Disease Network’s WORLD Symposium.
Ataluren for Duchenne muscular dystrophy
Genzyme and PTC Therapeutics Inc. formed a collaboration in 2008 to develop and commercialize ataluren (formerly known as PTC124), a novel oral therapy for the treatment of genetic disorders due to nonsense mutations, which is potentially applicable to hundreds of diseases. A pivotal phase 2b trial of ataluren in Duchenne muscular dystrophy (DMD) is fully enrolled and results are expected next year. A trial in cystic fibrosis (CF) is expected to begin during the first half of this year.
Other Key Programs
Genzyme expects to begin a pivotal trial of an advanced phosphate binder (APB) this year. The APB is designed to more effectively bind phosphate for a substantial improvement in potency over existing therapies while maintaining all the benefits of sevelamer. The company anticipates that the APB will be approved by the time the core patent estate for sevelamer expires in 2014.
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During the first half of 2010, Genzyme expects to file an IND for a potential second-generation enzyme replacement therapy for Pompe disease that in preclinical studies to date has demonstrated a five-fold greater substrate clearance vs. alglucosidase alfa.
About Genzyme
One of the world’s leading biotechnology companies, Genzyme is dedicated to making a major positive impact on the lives of people with serious diseases. Since 1981, the company has grown from a small start-up to a diversified enterprise with more than 11,000 employees in locations spanning the globe and 2008 revenues of $4.6 billion. In 2007, Genzyme was chosen to receive the National Medal of Technology, the highest honor awarded by the President of the United States for technological innovation.
With many established products and services helping patients in approximately 100 countries, Genzyme is a leader in the effort to develop and apply the most advanced technologies in the life sciences. The company’s products and services are focused on rare inherited disorders, kidney disease, orthopaedics, cancer, transplant and immune disease, and diagnostic testing. Genzyme’s commitment to innovation continues today with a substantial development program focused on these fields, as well as cardiovascular disease, neurodegenerative diseases, and other areas of unmet medical need.
This press release contains forward-looking statements regarding Genzyme financial outlook and business plans and strategies, including without limitation: its anticipated compound average earnings growth rate from 2006-2011; its Q1 2009, YE 2009 and YE 2011 EPS guidance and drivers of EPS growth; its projected 2009 revenues for the company, for each business segment, for certain products, including Myozyme, Fabrazyme, Cerezyme, Renagel/Renvela, and Mozobil, and all other revenues, as well as the anticipated drivers of such revenue growth; the expected timing of receipt of regulatory approvals for alglucosidase alfa produced at the 2000L scale in the US and 4000L scale in the EU; its regulatory approval plans and timetables for existing products, including EU approval of Renvela, US approval of Renvela for use in CKD patients not on dialysis, EU approval of Mozobil, US approval of Synvisc-One, US and EU approval of Clolar for use in adult patients with AML, and US approval of alemtuzumab-MS; its plans and estimated timetables for new and next-generation product filings and approvals, including for mipomersen, Genz-112638, Prochymal, Ataluren, and APB; its projected 2009 non-GAAP gross margin, SG&A and R&D expenses as a percentage of revenues; its expected 2009 GAAP and non-GAAP tax rates; and its projected 2009 capital expenditures. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those forecasted. These risks and uncertainties include, among others: the ability of Genzyme and its collaboration partners to successfully complete preclinical and clinical development of new products, including mipomersen, Prochymal, Genz-112638, and Ataluren; Genzyme’s ability to expand the use of current and next-generation products in existing and new indications, including Renvela, Synvisc-ONE, Mozobil, Clolar, alemtuzumab-MS and the APB;
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Genzyme’s ability to obtain and maintain regulatory approvals for products and manufacturing facilities, including alglucosidase alfa produced at the 2000L and 4000L scales and the timing of receipt of such approvals; Genzyme’s ability to manufacture products and product candidates in a timely and cost effective manner and in sufficient quantities to meet demand; Genzyme’s ability to maintain and enforce intellectual property rights; Genzyme’s ability to successfully identify and market to new patients; the scope of third-party reimbursement coverage for Genzyme’s products and services; and the risks and uncertainties described in Genzyme’s SEC reports filed under the Securities Exchange Act of 1934, including the factors discussed under the caption “Risk Factors” in Genzyme’s Quarterly Report on Form 10-Q for the period ended September 30, 2008. Genzyme cautions investors not to place substantial reliance on the forward-looking statements contained in this press release. These statements speak only as of today’s date and Genzyme undertakes no obligation to update or revise the statements.
Genzyme®, Myozyme®, Fabrazyme®, Cerezyme®, Renagel®, Renvela®, Synvisc®, and Clolar® are registered trademarks and Mozobil™, Synvisc-One™ and Lumizyme™ are trademarks of Genzyme Corporation or its subsidiaries. Prochymal™ is a trademark of Osiris Therapeutics Inc. All rights reserved.
Genzyme’s press releases and other company information are available at www.genzyme.com and by calling Genzyme’s investor information line at 1-800-905-4369 within the United States or 1-678-999-4572 outside the United States.
Conference Call Information
Genzyme will host a conference call today at 11:00 a.m. Eastern. To participate in the call, please dial 773-799-3828 and refer to pass code “Genzyme.” A replay of this call will be available by dialing 402-998-1342. This call will also be Webcast live on the investor events section of www.genzyme.com. Replays of the call and the Webcast will be available until midnight on February 18, 2009.
Upcoming Events
Genzyme will host a conference call on April 22 at 11: 00 a.m. Eastern to discuss financial results for the first quarter of 2009. To participate in the call, please dial 773-799-3828 and refer to pass code “Genzyme.” A replay of this call will be available by dialing 402-998-1342. This call will also be Webcast live on the investor events section of www.genzyme.com. Replays of the call and the Webcast will be available until midnight on April 29, 2009.
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GENZYME CORPORATION (GENZ)
Consolidated Statements of Operations
(Unaudited, amounts in thousands, except per share amounts)
| | Three Months Ended | | Year Ended | |
| | December 31, | | December 31, | |
| | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | |
Total revenues | | $ | 1,173,560 | | $ | 1,036,758 | | $ | 4,605,039 | | $ | 3,813,519 | |
| | | | | | | | | |
Operating costs and expenses: | | | | | | | | | |
Cost of products and services sold | | 290,711 | | 262,657 | | 1,148,562 | | 927,330 | |
Selling, general and administrative | | 341,329 | | 308,377 | | 1,338,190 | | 1,187,184 | |
Research and development | | 358,430 | | 197,323 | | 1,308,330 | | 737,685 | |
Amortization of intangibles | | 59,884 | | 51,804 | | 226,442 | | 201,105 | |
Charge for impaired assets | | 2,036 | | — | | 2,036 | | — | |
Purchase of in-process research and development | | — | | 106,350 | | — | | 106,350 | |
Total operating costs and expenses | | 1,052,390 | | 926,511 | | 4,023,560 | | 3,159,654 | |
Operating income | | 121,170 | | 110,247 | | 581,479 | | 653,865 | |
| | | | | | | | | |
Other income (expenses): | | | | | | | | | |
Equity in income of equity method investments | | 13 | | 8,489 | | 201 | | 7,398 | |
Minority interest | | 625 | | — | | 2,217 | | 3,932 | |
Gain (loss) on investments in equity securities, net | | 861 | | (969 | ) | (3,340 | ) | 13,067 | |
Other | | (1,021 | ) | (747 | ) | (1,861 | ) | (637 | ) |
Investment income | | 11,245 | | 18,509 | | 51,260 | | 70,196 | |
Interest expense | | (822 | ) | (2,864 | ) | (4,418 | ) | (12,147 | ) |
Total other income (expenses) | | 10,901 | | 22,418 | | 44,059 | | 81,809 | |
Income before income taxes | | 132,071 | | 132,665 | | 625,538 | | 735,674 | |
Provision for income taxes | | (45,421 | ) | (53,766 | ) | (204,457 | ) | (255,481 | ) |
Net income | | $ | 86,650 | | $ | 78,899 | | $ | 421,081 | | $ | 480,193 | |
| | | | | | | | | |
Net income per share: | | | | | | | | | |
Basic | | $ | 0.32 | | $ | 0.30 | | $ | 1.57 | | $ | 1.82 | |
| | | | | | | | | |
Diluted (1) | | $ | 0.31 | | $ | 0.29 | | $ | 1.50 | | $ | 1.74 | |
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
Basic | | 270,658 | | 265,418 | | 268,490 | | 263,895 | |
| | | | | | | | | |
Diluted (1) | | 284,338 | | 283,374 | | 285,595 | | 280,767 | |
All amounts herein are presented in accordance with GAAP and are provided for quantitative analysis only and should be read in conjunction with the text of the Earnings Release. In addition, Genzyme believes that certain non-GAAP financial measures, when considered together with the GAAP figures, can enhance the overall understanding of Genzyme’s past financial performance and its prospects for the future. Please refer to our GAAP to Non-GAAP Reconciliations attached to the Earnings Releases for the above respective periods, which are included in the Investors section of our website at www.genzyme.com. The non-GAAP financial measures are provided with the intent of providing investors with a more complete understanding of the trends underlying our operating results and financial position and are among the primary indicators Genzyme management uses for planning and forecasting purposes and measuring the company’s performance.
Please refer to our Form 10-Q’s and Form 10-K’s for an in-depth discussion and analysis of our results of operations and financial position and for detailed information regarding specific material transactions in a particular period.
(1) In accordance with EITF 04-8, the shares issuable upon conversion of our $690.0 million in principal of 1.25% convertible senior notes are included in diluted weighted average shares outstanding for purposes of computing diluted earnings per share, unless the effect would be anti-dilutive. The notes were redeemed for primarily cash on December 1, 2008. Accordingly, interest and debt fees related to these notes of $1.3 million and $1.9 million, net of tax, for the three months ended December 31, 2008 and 2007, respectively, and $6.9 million and $7.5 million, net of tax, for the years ended December 31, 2008 and 2007, respectively, have been added back to net income. Approximately 6.4 million shares and 8.9 million shares issuable upon conversion of these notes prior to redemption have been included in diluted weighted average shares outstanding for the three months ended and the year ended December 31, 2008, respectively. Approximately 9.7 million shares issuable upon conversion of these notes have been included in diluted weighted average shares outstanding for the same periods of 2007.
GENZYME CORPORATION (GENZ)
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands)
| | December 31, | | December 31, | |
| | 2008 | | 2007 | |
| | | | | |
Cash and all marketable securities | | $ | 973,775 | | $ | 1,460,394 | |
Other current assets | | 1,852,220 | | 1,661,740 | |
Property, plant and equipment, net | | 2,306,567 | | 1,968,402 | |
Intangibles, net (1) | | 3,285,298 | | 2,959,480 | |
Other noncurrent assets | | 518,764 | | 251,725 | |
Total assets | | $ | 8,936,624 | | $ | 8,301,741 | |
| | | | | |
Current liabilities | | $ | 914,265 | | $ | 1,502,406 | |
Noncurrent liabilities (1) | | 687,163 | | 186,398 | |
Stockholders’ equity | | 7,335,196 | | 6,612,937 | |
Total liabilities and stockholders’ equity | | $ | 8,936,624 | | $ | 8,301,741 | |
(1) Effective January 1, 2008, in connection with the restructuring of BioMarin/Genzyme LLC, our joint venture with BioMarin Pharmaceutical Inc., we licensed certain rights to commercialize Aldurazyme from the joint venture and began consolidating the results of the joint venture at fair value in accordance with FIN 46R. As of December 31, 2008, intangibles, net, and noncurrent liabilities each include a net $456,475K for the fair values associated with the joint venture’s manufacturing and commercialization rights to Aldurazyme. Excluding these rights, the fair value of the assets and liabilities of the joint venture as of December 31, 2008 was not significant.
Genzyme Corporation (GENZ)
Analyst Schedule
(Unaudited, amounts in thousands, except percentage amounts)
| | | | | | | | | | | | Q4-08
vs.
Q4-07 | | | | | | | |
| | Q4-07 | | Q1-08 | | Q2-08 | | Q3-08 | | Q4-08 | | % B/(W) | | FY 2006 | | FY 2007 | | FY 2008 | |
Total revenues: | | | | | | | | | | | | | | | | | | | |
Genetic Diseases | | | | | | | | | | | | | | | | | | | |
Cerezyme | | $ | 300,312 | | $ | 304,303 | | $ | 319,360 | | $ | 309,280 | | $ | 306,034 | | 2 | % | $ | 1,007,036 | | $ | 1,133,153 | | $ | 1,238,977 | |
Fabrazyme | | 114,661 | | 116,475 | | 126,608 | | 125,619 | | 125,558 | | 10 | % | 359,274 | | 424,284 | | 494,260 | |
Myozyme | | 62,496 | | 67,324 | | 77,222 | | 76,663 | | 74,967 | | 20 | % | 59,238 | | 200,728 | | 296,176 | |
Aldurazyme | | — | | 37,015 | | 38,834 | | 38,236 | | 37,579 | | | | — | | — | | 151,664 | |
Other Genetic Diseases | | 7,289 | | 9,772 | | 10,437 | | 11,367 | | 14,039 | | 93 | % | 410 | | 8,314 | | 45,615 | |
Total Genetic Diseases product and service revenue | | 484,758 | | 534,889 | | 572,461 | | 561,165 | | 558,177 | | 15 | % | 1,425,958 | | 1,766,479 | | 2,226,692 | |
R&D Revenue | | 5 | | — | | — | | — | | — | | | | 1,000 | | 1,059 | | — | |
Total Genetic Diseases | | 484,763 | | 534,889 | | 572,461 | | 561,165 | | 558,177 | | 15 | % | 1,426,958 | | 1,767,538 | | 2,226,692 | |
| | | | | | | | | | | | | | | | | | | |
Cardiometabolic and Renal | | | | | | | | | | | | | | | | | | | |
Renagel and Renvela (including Sevelamer) | | 166,173 | | 168,694 | | 168,567 | | 170,992 | | 169,476 | | 2 | % | 515,119 | | 602,670 | | 677,729 | |
Hectorol | | 29,855 | | 29,076 | | 30,852 | | 33,825 | | 34,400 | | 15 | % | 93,360 | | 115,708 | | 128,153 | |
Subtotal | | 196,028 | | 197,770 | | 199,419 | | 204,817 | | 203,876 | | 4 | % | 608,479 | | 718,378 | | 805,882 | |
Thyrogen | | 30,881 | | 33,785 | | 39,448 | | 38,153 | | 37,062 | | 20 | % | 93,687 | | 113,587 | | 148,448 | |
Other Cardiometabolic and Renal | | 92 | | 251 | | 333 | | 573 | | 496 | | >100 | % | — | | 103 | | 1,653 | |
Total Cardiometabolic and Renal product and service revenue | | 227,001 | | 231,806 | | 239,200 | | 243,543 | | 241,434 | | 6 | % | 702,166 | | 832,068 | | 955,983 | |
R&D revenue | | 102 | | 32 | | 85 | | 56 | | 27 | | (74 | )% | 2,142 | | 1,200 | | 200 | |
Total Cardiometabolic and Renal | | 227,103 | | 231,838 | | 239,285 | | 243,599 | | 241,461 | | 6 | % | 704,308 | | 833,268 | | 956,183 | |
| | | | | | | | | | | | | | | | | | | |
Biosurgery | | | | | | | | | | | | | | | | | | | |
Synvisc | | 62,685 | | 56,142 | | 70,927 | | 67,513 | | 68,512 | | 9 | % | 233,858 | | 242,319 | | 263,094 | |
Sepra products | | 29,746 | | 30,604 | | 34,780 | | 33,001 | | 35,278 | | 19 | % | 85,338 | | 104,318 | | 133,663 | |
Other Biosurgery | | 21,122 | | 24,313 | | 24,690 | | 21,787 | | 20,908 | | (1 | )% | 67,480 | | 74,673 | | 91,698 | |
Total Biosurgery product and service revenue | | 113,553 | | 111,059 | | 130,397 | | 122,301 | | 124,698 | | 10 | % | 386,676 | | 421,310 | | 488,455 | |
R&D revenue | | 666 | | 603 | | 818 | | 661 | | 563 | | (15 | )% | 893 | | 5,337 | | 2,645 | |
Total Biosurgery | | 114,219 | | 111,662 | | 131,215 | | 122,962 | | 125,261 | | 10 | % | 387,569 | | 426,647 | | 491,100 | |
| | | | | | | | | | | | | | | | | | | |
Hematologic Oncology | | | | | | | | | | | | | | | | | | | |
Total Hematologic Oncology product and service revenue | | 21,628 | | 22,691 | | 26,443 | | 26,328 | | 27,437 | | 27 | % | 49,179 | | 69,927 | | 102,899 | |
R&D revenue | | 1,216 | | 1,189 | | 1,903 | | 2,292 | | 9,055 | | >100 | % | 8,097 | | 7,006 | | 14,439 | |
Total Hematologic Oncology | | 22,844 | | 23,880 | | 28,346 | | 28,620 | | 36,492 | | 60 | % | 57,276 | | 76,933 | | 117,338 | |
| | | | | | | | | | | | | | | | | | | |
Other | | | | | | | | | | | | | | | | | | | |
Genetic/Diagnostics product and service revenue | | 108,872 | | 114,748 | | 116,863 | | 121,163 | | 124,840 | | 15 | % | 355,866 | | 410,917 | | 477,614 | |
Transplant product and service revenue | | 47,424 | | 45,930 | | 47,763 | | 47,784 | | 50,723 | | 7 | % | 155,966 | | 174,826 | | 192,200 | |
Other product and service revenue | | 27,981 | | 31,009 | | 29,296 | | 28,598 | | 30,252 | | 8 | % | 93,716 | | 108,577 | | 119,155 | |
Total Other product and service revenue | | 184,277 | | 191,687 | | 193,922 | | 197,545 | | 205,815 | | 12 | % | 605,548 | | 694,320 | | 788,969 | |
R&D revenue | | 3,552 | | 6,105 | | 5,905 | | 6,393 | | 6,354 | | 79 | % | 5,354 | | 14,813 | | 24,757 | |
Total Other | | 187,829 | | 197,792 | | 199,827 | | 203,938 | | 212,169 | | 13 | % | 610,902 | | 709,133 | | 813,726 | |
| | | | | | | | | | | | | | | | | | | |
Total revenues | | $ | 1,036,758 | | $ | 1,100,061 | | $ | 1,171,134 | | $ | 1,160,284 | | $ | 1,173,560 | | 13 | % | $ | 3,187,013 | | $ | 3,813,519 | | $ | 4,605,039 | |
All amounts herein are presented in accordance with GAAP and are provided for quantitative analysis only and should be read in conjunction with the text of the Earnings Release and our audited financial statements filed with the Securities and Exchange Commission. Please refer to our Form 10-Q’s and Form 10-K’s for an in-depth discussion and analysis of our results of operations and financial position and for detailed information regarding specific material transactions in a particular period.
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
For the Three Months Ended December 31, 2008
(Amounts in thousands, except percentage and per share data)
| | | | | | (1) | | | | | | | | | | | | | |
| | | | | | Dilution | | (2) | | | | | | | | | | | |
| | | | | | Due to | | Validation/ | | (3) | | | | | | | | | |
| | | | | | Common Stock | | Inventory | | License | | | | FAS 123R | | GAAP | |
| | NON-GAAP | | Equivalents | | Write-offs | | Fee | | Amortization | | Expense | | As Reported | |
| | | | | | | | | | | | | | | | | | | |
Income Statement Classification: | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Total revenues | | | | $ | 1,173,560 | | | | | | | | | | | | | | $ | 1,173,560 | |
| | | | | | | | | | | | | | | | | | | |
Cost of products and services sold | | | | $ | (270,293 | ) | | | $ | (12,614 | ) | | | | | $ | (7,804 | ) | | | $ | (290,711 | ) |
Gross margin | | 77 | % | $ | 903,267 | | | | $ | (12,614 | ) | | | | | $ | (7,804 | ) | 75 | % | $ | 882,849 | |
| | | | | | | | | | | | | | | | | | | |
Selling, general and administrative | | | | $ | (317,599 | ) | | | | | | | | | $ | (23,730 | ) | | | $ | (341,329 | ) |
| | | | | | | | | | | | | | | | | | | |
Research and development | | | | $ | (188,040 | ) | | | $ | (11,039 | ) | $ | (146,000 | ) | | | $ | (13,351 | ) | | | $ | (358,430 | ) |
| | | | | | | | | | | | | | | | | | | |
Amortization of intangibles | | | | $ | — | | | | | | | | $ | (59,884 | ) | | | | | $ | (59,884 | ) |
| | | | | | | | | | | | | | | | | | | |
Charge for impaired asset | | | | $ | (2,036 | ) | | | | | | | | | | | | | $ | (2,036 | ) |
| | | | | | | | | | | | | | | | | | | |
Equity in income (loss) of equity method investments | | | | $ | 13 | | | | | | | | | | | | | | $ | 13 | |
| | | | | | | | | | | | | | | | | | | |
Minority interest | | | | $ | 625 | | | | | | | | | | | | | | $ | 625 | |
| | | | | | | | | | | | | | | | | | | |
Gains (losses) on investments in equity securities | | | | $ | 861 | | | | | | | | | | | | | | $ | 861 | |
| | | | | | | | | | | | | | | | | | | |
Other | | | | $ | (1,021 | ) | | | | | | | | | | | | | $ | (1,021 | ) |
| | | | | | | | | | | | | | | | | | | |
Investment income | | | | $ | 11,245 | | | | | | | | | | | | | | $ | 11,245 | |
| | | | | | | | | | | | | | | | | | | |
Interest expense | | | | $ | (822 | ) | | | | | | | | | | | | | $ | (822 | ) |
| | | | | | | | | | | | | | | | | | | |
Summary: | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | | $ | 406,493 | | $ | — | | $ | (23,653 | ) | $ | (146,000 | ) | $ | (59,884 | ) | $ | (44,885 | ) | | | $ | 132,071 | |
| | | | | | | | | | | | | | | | | | | |
(Provision for) benefit from income taxes | | 29 | % | $ | (118,006 | ) | $ | — | | $ | 5,724 | | $ | 52,401 | | $ | 1,116 | | $ | 13,344 | | 34 | % | $ | (45,421 | ) |
| | | | | | | | | | | | | | | | | | | |
Net income (loss) | | | | $ | 288,487 | | $ | — | | $ | (17,929 | ) | $ | (93,599 | ) | $ | (58,768 | ) | $ | (31,541 | ) | | | $ | 86,650 | |
| | | | | | | | | | | | | | | | | | | |
Net income (loss) per share: | | | | | | | | | | | | | | | | | | | |
Basic | | | | $ | 1.07 | | $ | — | | $ | (0.07 | ) | $ | (0.35 | ) | $ | (0.22 | ) | $ | (0.12 | ) | | | $ | 0.32 | |
| | | | | | | | | | | | | | | | | | | |
Diluted (1) | | | | $ | 1.04 | | $ | (0.02 | ) | $ | (0.06 | ) | $ | (0.33 | ) | $ | (0.21 | ) | $ | (0.11 | ) | | | $ | 0.31 | |
| | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | |
Basic | | | | 270,658 | | | | | | | | | | | | | | 270,658 | |
| | | | | | | | | | | | | | | | | | | |
Diluted (1) | | | | 277,928 | | 6,410 | | | | | | | | | | | | 284,338 | |
GENZYME CORPORATION
RECONCILIATION OF GAAP to NON-GAAP CASH GENERATED
For the Three Months Ended December 31, 2008
(Amounts in thousands)
Non-GAAP Net Income | | $ | 288,487 | |
| | | |
Depreciation, net of tax | | 24,684 | |
| | | |
Proceeds from the issuance of common stock | | 24,150 | |
| | | |
Non-GAAP Cash Generated | | $ | 337,321 | |
Notes:
The amounts above represent the Non-GAAP operations and financial position of Genzyme Corporation for the three months ended December 31, 2008. Genzyme believes that certain non-GAAP financial measures, when considered together with the GAAP figures, can enhance the overall understanding of Genzyme’s past financial performance and its prospects for the future. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of the trends underlying our operating results and financial position and are among the primary indicators Genzyme management uses for planning and forecasting purposes and measuring the company’s performance. Such non-GAAP financial measures should not be considered in isolation or used as a substitute for GAAP.
(1) GAAP As-Reported diluted earnings per share and diluted weighted average shares outstanding reflect the adoption of EITF 04-8. In accordance with the provisions of EITF 04-8, interest and debt fees related to our 1.25% convertible senior notes of $1,257K, net of tax, have been added back to net income and approximately 6,410K shares have been added to diluted weighted average shares outstanding for purposes of computing GAAP As-Reported diluted earnings per share.
(2) Represents the write-off of inventory associated with partial production runs $(12,614)K and validation costs associated with our Belgium facility $(11,039)K.
(3) Represents an up-front expense for the license or purchase of certain intellectual property and technology, of which $(130,000)K relates to our collaboration with Osiris Therapeutics, Inc.; and $(10,000)K and $(6,000)K each relate to transactions with two other third parties.
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Year to Date as of December 31, 2008
(Amounts in thousands, except percentage and per share data)
| | | | | | Dilution | | | | | | | | | | | | | | | | | |
| | | | | | Due to | | Validation/ | | | | | | | | | | | | | | | |
| | | | | | Common Stock | | Inventory | | Strategic Equity | | Gain (Loss) on | | License | | | | FAS 123R | | GAAP | |
| | NON-GAAP | | Equivalents | | Write-offs | | Investment | | Investments | | Fees | | Amortization | | Expense | | As Reported | |
Income Statement Classification: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Total revenues | | | | $ | 4,605,039 | | | | | | | | | | | | | | | | | | $ | 4,605,039 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of products and services sold | | | | $ | (1,108,393 | ) | | | $ | (12,614 | ) | | | | | | | | | $ | (27,555 | ) | | | $ | (1,148,562 | ) |
Gross margin | | 76 | % | $ | 3,496,646 | | | | $ | (12,614 | ) | | | | | | | | | $ | (27,555 | ) | 75 | % | $ | 3,456,477 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Selling, general and administrative | | | | $ | (1,235,445 | ) | | | | | | | | | | | | | $ | (102,745 | ) | | | $ | (1,338,190 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development | | | | $ | (749,718 | ) | | | $ | (11,039 | ) | $ | (69,900 | ) | | | $ | (421,000 | ) | | | $ | (56,673 | ) | | | $ | (1,308,330 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Amortization of intangibles | | | | $ | — | | | | | | | | | | | | $ | (226,442 | ) | | | | | $ | (226,442 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Charge for impaired assets | | | | $ | (2,036 | ) | | | | | | | | | | | | | | | | | $ | (2,036 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Equity in income (loss) of equity method investments | | | | $ | 201 | | | | | | | | | | | | | | | | | | $ | 201 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Minority interest | | | | $ | 2,217 | | | | | | | | | | | | | | | | | | $ | 2,217 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Gains (losses) on investments in equity securities | | | | $ | 1,913 | | | | | | | | $ | (5,253 | ) | | | | | | | | | $ | (3,340 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Other | | | | $ | (1,861 | ) | | | | | | | | | | | | | | | | | $ | (1,861 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Investment income | | | | $ | 51,260 | | | | | | | | | | | | | | | | | | $ | 51,260 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Interest Expense | | | | $ | (4,418 | ) | | | | | | | | | | | | | | | | | $ | (4,418 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
Summary: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | | $ | 1,558,759 | | $ | — | | $ | (23,653 | ) | $ | (69,900 | ) | $ | (5,253 | ) | $ | (421,000 | ) | $ | (226,442 | ) | $ | (186,973 | ) | | | $ | 625,538 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(Provision for) benefit from income taxes | | 29 | % | $ | (451,038 | ) | $ | — | | $ | 5,724 | | $ | 13,428 | | $ | 390 | | $ | 94,900 | | $ | 75,399 | | $ | 56,740 | | 33 | % | $ | (204,457 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | | | $ | 1,107,721 | | $ | — | | $ | (17,929 | ) | $ | (56,472 | ) | $ | (4,863 | ) | $ | (326,100 | ) | $ | (151,043 | ) | $ | (130,233 | ) | | | $ | 421,081 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) per share: | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | $ | 4.12 | | $ | — | | $ | (0.07 | ) | $ | (0.21 | ) | $ | 0.02 | | $ | (1.21 | ) | $ | (0.56 | ) | $ | (0.50 | ) | | | $ | 1.57 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Diluted (1) | | | | $ | 4.00 | | $ | (0.11 | ) | $ | (0.06 | ) | $ | (0.20 | ) | $ | (0.01 | ) | $ | (1.14 | ) | $ | (0.53 | ) | $ | (0.45 | ) | | | $ | 1.50 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | 268,490 | | | | | | | | | | | | | | | | | | 268,490 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Diluted (1) | | | | 276,744 | | 8,851 | | | | | | | | | | | | | | | | 285,595 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
GENZYME CORPORATION
RECONCILIATION OF GAAP to NON-GAAP CASH GENERATED
For the Year Ended December 31, 2008
(Amounts in thousands)
| | Q1-08 | | Q2-08 | | Q3-08 | | Q4-08 | | 2008 | |
| | | | | | | | | | | |
Non-GAAP Net Income | | $ | 260,895 | | $ | 268,546 | | $ | 289,793 | | $ | 288,487 | | $ | 1,107,721 | |
| | | | | | | | | | | |
Depreciation, net of tax | | 22,500 | | 23,286 | | 23,881 | | 24,684 | | 94,351 | |
| | | | | | | | | | | |
Proceeds from the issuance of common stock | | 90,243 | | 36,765 | | 167,595 | | 24,150 | | 318,753 | |
| | | | | | | | | | | |
Non-GAAP Cash Generated | | $ | 373,638 | | $ | 328,597 | | $ | 481,269 | | $ | 337,321 | | $ | 1,520,825 | |
Notes:
The amounts above represent the Non-GAAP operations and financial position of Genzyme Corporation in 2008. A reconciliation of GAAP to Non-GAAP net income for each quarter is available in the investors section at www.genzyme.com. Genzyme believes that certain non-GAAP financial measures, when considered together with the GAAP figures, can enhance the overall understanding of Genzyme’s past financial performance and its prospects for the future. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of the trends underlying our operating results and financial position and are among the primary indicators Genzyme management uses for planning and forecasting purposes and measuring the company’s performance. Such non-GAAP financial measures should not be considered in isolation or used as a substitute for GAAP.
(1) GAAP As-Reported diluted earnings per share and diluted weighted average shares outstanding reflect the adoption of EITF 04-8. In accordance with the provisions of EITF 04-8, interest and debt fees related to our 1.25% convertible senior notes of $6,915K, net of tax, have been added back to net income and approximately 8,851K shares have been added to diluted weighted average shares outstanding for purposes of computing GAAP As-Reported diluted earnings per share.
GENZYME 2009 GUIDANCE
| | 2009 Guidance | |
DESCRIPTION | | Ranges | |
Genetic Diseases | | $ | 2,465 | | $ | 2,525 | |
| | | | | |
Cardiometabolic and Renal | | 1,035 | | 1,065 | |
| | | | | |
Biosurgery | | 540 | | 570 | |
| | | | | |
Hematologic Oncology | | 185 | | 210 | |
| | | | | |
Other | | 1,020 | | 1,075 | |
TOTAL REVENUE | | $ | 5,200 | | $ | 5,400 | |
| | | | | |
*GROSS MARGIN | | approx. | | 75 | % |
| | | | | |
*SG&A | | approx. | | 26 | % |
*R&D | | approx. | | 16 | % |
Net Interest / Other | | approx. | | 30 | |
| | | | | |
TAX RATE - GAAP | | approx. | | 30 | % |
*TAX RATE - NON-GAAP | | approx. | | 29 | % |
| | | | | |
GAAP EPS | | approx. | | $ | 3.50 | |
AMORTIZATION | | approx. | | $ | 0.70 | |
FAS123R EXPENSE | | approx. | | $ | 0.50 | |
*NON-GAAP EPS | | | | $ | 4.70 | |
| | | | | |
WTD AVERAGE DILUTED SHARES O/S | | 280 | | 282 | |
| | | | | |
CAPITAL EXPENDITURES | | $ | 600 | | $ | 650 | |
This financial guidance, which is provided as part of a press release dated February 11, 2009, is subject to all of the qualifications and limitations described therein. Actual results may differ from these forward-looking statements due to the numerous factors described in the press release.
*Non-GAAP excludes the impact of amortization, one-time events and FAS123R expense.
SELECT PRODUCT GUIDANCE: | | | | | |
Cerezyme | | $ | 1,250 | | $ | 1,275 | |
Fabrazyme | | 560 | | 570 | |
Myozyme | | 430 | | 440 | |
Mozobil | | 40 | | 50 | |
Renagel/Renvela | | 725 | | 735 | |
| | | | | | | |
