CAMBRIDGE, Mass.--(BUSINESS WIRE)--Genzyme
Corp. (NASDAQ: GENZ) today detailed its accelerating financial
recovery and other factors underpinning its value, at a meeting with
investors and securities analysts in New York. Genzyme convened the
meeting to present its near-term financial outlook, report progress on
its actions to enhance shareholder value, communicate expectations for
its late-stage pipeline, and outline why the Sanofi-Aventis’ tender
offer of $69-per-share dramatically undervalues the company.
“The members of the board and I are fully committed
to creating maximum value for shareholders, and we are open to all
available alternatives to deliver that value.”
Genzyme’s board of directors has rejected the Sanofi-Aventis offer and
urged shareholders not to tender their shares. Genzyme management will
begin a road show on Monday to meet directly with shareholders.
The company today provided an outlook for strong near-term growth. Its
fourth-quarter non-GAAP earnings guidance of $0.90-$0.95 per share is
significantly higher than results for recent quarters, underscoring the
recovery that is underway. For 2011, the company expects to generate
non-GAAP earnings of $4.30-$4.60 per share, compared with guidance of
$1.85-$1.90 per share for 2010. Genzyme expects that strong growth in
its rare disease business, gross margin improvements, and cost
reductions from its value improvement program will drive earnings next
year. Revenue is expected to increase to $5.0 billion-$5.1 billion in
2011 from an expected $4.1 billion for 2010. Revenue guidance excludes
Over the five-year period from 2008-2013, the company expects revenue to
increase at a compound annual growth rate of 12 percent, non-GAAP
earnings to increase at a compound annual growth rate of 35 percent, and
cash flow from operations to increase at a compound annual growth rate
of 27 percent. During the coming three-year period from 2011-2013, the
company expects to generate cumulative cash flow from operations of
approximately $5.6 billion.
“Our board is unanimous in its view that the Sanofi-Aventis offer does
not approach the real value of the company, nor does it reflect our
financial recovery, the achievement of manufacturing and product-supply
milestones, and the increasingly recognized commercial potential for
alemtuzumab,” said Henri A. Termeer, Genzyme’s board chairman and chief
executive officer. “The members of the board and I are fully committed
to creating maximum value for shareholders, and we are open to all
available alternatives to deliver that value.”
At its meeting today, Genzyme also provided an update on the progress it
has made in executing its five-point value creation plan launched in
May. Through this plan, the company is focusing on its core business and
working to establish operational excellence in manufacturing;
capitalizing on near-term growth drivers; divesting non-core businesses;
reducing operating costs and improving margins; and maintaining capital
allocation discipline. Highlights from today’s meeting include the
The company’s manufacturing and supply recovery is on track.
- U.S. patients receiving Cerezyme ® (imiglucerase for
injection) were able to begin returning to normal dosing levels in
September, and patients globally are expected to be able to do so during
the fourth quarter. Genzyme has begun the process of doubling
allocations of Fabrazyme ® (agalsidase beta), starting in the
United States, and will do so globally throughout the fourth quarter.
The company expects to be able to fully supply the global market during
the first half of 2011.
- Genzyme is on schedule to meet the November consent-decree deadlines
for ceasing fill/finish at its Allston plant for products sold in the
United States. The company has transferred a significant portion of this
work to its facility in Waterford, Ireland, and is in the process of
transferring the remainder to a third-party manufacturer, where initial
lot release has begun.
- Engineering runs are ongoing at the newly expanded fill/finish
operations in Waterford, and regulatory approval is expected in 2011.
The company’s new Framingham cell culture facility is operational with
Fabrazyme engineering runs underway, and approval is anticipated in late
Genzyme expects peak alemtuzumab sales of nearly $3 billion.
- This projection is derived from multiple studies Genzyme has conducted
since 2006 to understand the commercial potential of alemtuzumab. These
studies have included more than 2,500 physicians and payers in six
countries, and were reinforced by a recently completed objective
assessment conducted by a leading independent advisory firm.
- The market for multiple sclerosis drugs is expected to reach $14
billion by the anticipated 2012 launch of alemtuzumab. The product is
expected to set a new standard of care and capture a significant portion
of this market, based on its emerging efficacy and safety profile and
the potential for once-yearly treatment.
- Based on its ongoing research involving more than 100 payers in 6
major markets, Genzyme expects that the product will command pricing
equal to, or greater than, current therapies. This research demonstrates
that payers recognize alemtuzumab as a paradigm-shifting therapy and
that most key markets, including the United States, are supporting value
pricing for MS therapies; and payers support a single global price.
Genzyme expects to generate approximately $385 million in sustainable
annual savings by 2012 through its value improvement program.
- The company expects to achieve $20 million-$28 million in savings in
this year’s fourth quarter, which equates to approximately $0.05 per
- In 2011, the company expects to achieve up to $240 million in
operating expense savings from improved procurement practices, reduced
spending and a reduction in force.
In addition, Genzyme’s lead independent director Bob Carpenter outlined
the reasons why the board concluded that the Sanofi-Aventis tender offer
substantially undervalues the company:
The offer’s timing deprives Genzyme shareholders of the opportunity to
fully benefit from the company’s manufacturing recovery.
- Sanofi-Aventis opportunistically launched its tender offer based on a
July 1 stock price that does not reflect the additional value Genzyme is
creating by achieving near-term manufacturing and product-supply,
including the resumption of full dosing for Cerezyme and Fabrazyme, the
transfer of filling and finishing operations from its Allston Landing
facility, and progress in the start-up of the Framingham manufacturing
Genzyme’s 2011 non-GAAP earnings guidance is significantly higher than
- Analyst consensus earnings estimates used by Sanofi-Aventis as the
basis for its tender offer price do not yet reflect Genzyme’s 2011
non-GAAP earnings guidance of $4.30-$4.60 per share, which the company
provided today. This guidance is 20 percent higher than the most recent
- Sanofi-Aventis has stated that the $69-per-share tender offer price
represents a multiple of 20 times consensus earnings estimates. Applying
this multiple to the midpoint of Genzyme’s 2011 guidance would yield an
offer price of $89 per share.
The stock price used by Sanofi-Aventis as the basis for its tender
offer is not an appropriate reference point.
- The tender offer premium is based on Genzyme’s July 1 stock price of
$49.86, which has now become an inappropriate basis for an offer, for
several reasons. Since that date, the S&P 500 and BTK stock indexes have
risen 15 percent. In addition, Genzyme has made substantial progress in
creating additional value through its five-point plan, and the company
expects to achieve more value creating milestones by the time the tender
offer expires on December 10.
The premium for the proposed transaction is not consistent with
- The proposed 31 percent premium is the lowest one-month premium for
any relevant biopharmaceutical transaction. The median one-month
acquisition premium for relevant transactions within the industry is 73
percent. More than half of the transactions cited by Sanofi-Aventis as
precedents are not relevant because they involved stock consideration
and were significantly larger, or because the acquiring company held a
significant ownership position prior to the transaction.
The offer does not recognize the value of Genzyme’s products and
- The offer fails to adequately recognize Genzyme’s rapidly improving
financial performance, including its outlook for double-digit growth in
revenue, earnings and cash flow; its unique portfolio of 12
market-leading products with durable revenue streams; and its valuable
pipeline that includes three significant late-stage drugs scheduled for
launch by 2013.
“Genzyme’s board is completely aligned with shareholder interests and
committed to maximizing shareholder value,” said Mr. Carpenter,
Genzyme’s lead director. “We are fully engaged in evaluating the future
of the company and have initiated activities to better inform ourselves
of all available options to deliver shareholder value.”
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 approximately 10,000 employees in locations
spanning the globe and 2009 revenues of $4.5 billion. In 2010, Genzyme
was named to the Fortune 500.
With many established products and services helping patients in 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. 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.
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.
Slides from today’s meeting are available on the Investor section of
Genzyme’s website: www.genzyme.com.
A replay of today’s meeting is expected to be available beginning
Monday, October 25, 2010.
Genzyme has filed with the Securities and Exchange Commission a
Solicitation/Recommendation Statement on Schedule 14D-9 relating to the
tender offer by Sanofi-Aventis. Genzyme shareholders are advised to read
the company's Solicitation/Recommendation Statement on Schedule 14D-9
because it contains important information. Shareholders may obtain a
free copy of the Solicitation/Recommendation Statement on Schedule
14D-9, as well as any other documents filed by Genzyme in connection
with the tender offer, free of charge at the SEC's website at http://www.sec.gov.
In addition, investors can obtain free copies of these documents from
Genzyme by directing a request to Genzyme at 500 Kendall Street,
Cambridge, MA 02142, Attention: Shareholder Relations Department, or by
calling 617-252-7500 and asking for the Shareholder Relations Department.
This press release contains forwarding-looking statements regarding
Genzyme’s financial outlook and business plans including, without
limitation: its outlook for near-term growth, including expected
non-GAAP EPS, revenue and cash flow growth, growth in its rare disease
business, improvements in gross margin and expected cost reductions; its
expectation for the commercial potential of alemtuzumab for multiple
sclerosis, including peak alemtuzumab sales and market share, the size
of the multiple sclerosis market, expected pricing of alemtuzumab, and
the expected safety and efficacy of alemtuzumab; its expectations
regarding Cerezyme and Fabrazyme supply and patient dosing of Cerezyme;
its assessment that the company is on track to meet its deadlines to
transition all Allston fill/finish operations for products sold in the
U.S. to a third party manufacturer; its expectation that its new
Framingham manufacturing facility will be approved in late 2011 and that
its expanded fill/finish operations in Waterford, Ireland will be
approved in 2011; its plans to generate sustainable annual savings
through its value improvement program, including expected fourth quarter
savings and savings in 2011; and its plans to continue implementation of
its five-point plan to increase shareholder value, including
expectations of achieving value creating milestones before Sanofi’s
tender offer is schedule to expire. These statements are subject to
risks and uncertainties that may cause actual results to differ
materially. These risks and uncertainties include, among others: that
production and shipment of Fabrazyme and Cerezyme does not continue as
planned due to any reason, including contamination, equipment
malfunctions, cell growth at lower than expected levels, fill-finish
inefficiencies, power outages, human error or regulatory issues; that
Genzyme is unable to meet its financial guidance for any reason,
including due to lower than expected revenues attributable to further
manufacturing issues or higher than expected operating expenses; that
Genzyme cannot obtain on expected timetables or maintain regulatory
approvals for its products and manufacturing facilities, including its
Allston manufacturing facility, its new Framingham facility, and its
expanded fill/finish operations in Waterford; that Genzyme is unable to
successfully transition its fill/finish operations out of its Allston
facility on planned timelines; that Genzyme is not able to successfully
complete clinical development and obtain regulatory approvals of its
product candidates within anticipated timeframes and for anticipated
indications, including alemtuzumab-MS, mipomersen and eliglustat
tartrate for any reason, including trial results that are not as
favorable as expected and safety profiles that reduce the potential
target population; that Genzyme is unable to complete the sale of
Genzyme Genetics or complete its other planned business divestitures on
the anticipated timeframes; that Genzyme will not be able to implement
its plan to increase shareholder in a manner consistent with
expectations, including an inability to reduce operating expenses to the
extent expected; that Genzyme is no longer operating as an independent
company; 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 Management’s
Discussion and Analysis of Financial Condition and Results of Operations
in Genzyme's Quarterly Report on Form 10-Q for the quarter ended June
30, 2010. Genzyme cautions investors not to place substantial reliance
on the forward-looking statements contained in this press release. These
statements speak only as of October 22, 2010 and Genzyme undertakes no
obligation to update or revise them.
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