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By Michael Fitzhugh

Genzyme (GENZ) says it will double the size of its newest Massachusetts manufacturing facility in Framingham, Massachusetts to nearly 2 million square feet over the next ten years, expanding on a move it hopes will help it keep pace with demand for two of its top-selling drugs.

The drugs, Cerezyme and Fabrazyme, are used to treat people suffering with the rare and complex Gaucher and Fabry diseases, respectively. Both have been in short supply ever since a virus contaminated the company's Allston Landing, Massachusetts plant last summer, forcing it to shutter production for six weeks and drawing a $175 million fine levied by the FDA for manufacturing violations there.

Genzyme will spend $300 million over ten years to build 757,000 square feet of manufacturing, office and research space at its Framingham campus, which the company bought in July 2008 for $38.9 million, according to a regulatory filing with the U.S. Securities and Exchange Commission. The project includes a new 55,000-square-foot manufacturing plant that will produce Fabrazyme and Cerezyme, and a six-story, 185,000-square-foot quality-control lab that will support the drug manufacturing plant. If regulators approve the facility, bulk drug production will begin there by late 2011, Genzyme says.

Genzyme's Allston plant is once again making Cerezyme and Fabrazyme, but productivity there is lower than expected, according to the European Medicines Agency, which says the company told it that the supply of Fabrazyme, at least, will not return to normal before the end of 2010.

In response, the agency is advising European doctors to consider switching patients to alternative treatment because “the current supply of Fabrazyme will not address the medical needs of the nearly 600 patients receiving Fabrazyme in Europe today.”

The agency’s Committee for Medicinal Products for Human Use is advising that newly identified Fabry patients should not be treated with Fabrazyme, but instead with an alternative, such as Replagal, made by Genzyme’s competitor Shire (OTC:SHPHY).

In another SEC filing, the company says it will continue to have “minimal levels of inventory” for Cerezyme and Fabrazyme until its new Framingham manufacturing facility is approved for bulk production. Meanwhile, it is working to transition manufacturing operations out of its Allston facility to its Waterford, Ireland plant and to a contract manufacturer, it says.

Some investors have taken the debacle as an opportunity to bet against the company's share price. Short interest in Genzyme shares has grown 330 percent, for short trades with a settlement date of June 30, according to Reuters.

Some investors have been snapping up Genzyme shares following a Bloomberg report that Sanofi-Aventis (NYSE:SNY) is poised to launch a $20 billion acquisition of Genzyme, Biogen Idec (NASDAQ:BIIB), or Allergan (NYSE:AGN).

Genzyme too has joined the fray. In June, it entered into an agreement with Goldman Sachs to repurchase $1 billion of its common stock under an accelerated stock repurchase program, a maneuver often undertaken by companies hoping to boost their share prices by retiring company-purchased shares and thus boosting earnings per share.

Source: Despite Uncertainty, Genzyme Expands Its Manufacturing Base