Staff Writer

On top of plans to build a $90 million plant in China, Genzyme Corp. continued to report good news Wednesday, with earnings of $1.1 billion for the first quarter.

The company met its goal of delivering a 20 percent non-GAAP earnings group, reporting a 24 percent increase to $260.9 million compared with the first quarter of 2007. Non-GAAP earnings increased 22 percent to 95 cents per diluted share from 78 cents in the first quarter of last year. Non-GAAP earnings per share for the second quarter are expected to top 90 cents. Genzyme predicts Non-GAAP earnings will rise to approximately $7 per diluted share by 2011.

Genzyme's GAAP net income in the first quarter of 2008 totaled $145.3 million, compared with $158.2 million in 2007. That drop translated to 52 cents per diluted share in 2008, compared to 57 cents per diluted share for 2007. The company projects GAAP earnings of approximately $2.65 per diluted share for 2008, compared with prior guidance of approximately $2.75 per diluted share.

The Cambridge, Mass.-based company saw its revenue grow by 25 percent, despite a request from the FDA yesterday to submit a separate biologics application for the 2,000 liter formulation of its lead products, Myozyme.

News of the FDA's request for an additional application for the 2000 L application prompted the company to lower its expected earnings for the product. Sales for Myozyme now are predicted to be $275 million to $285 million this year, compared to prior previous estimates of $320 million to $330 million. That amounts to a $46 million impact on product sales.

The Myozyme news also spurred Genzyme to lower its earnings per share guidance by 2.5 percent, to $3.90. The company previously set that guidance at $4. In total, that translates into a $13 million impact on earnings per share.

Still, Myozyme has fared well, thanks to an infusion of new patients in clinical studies of the drug. First quarter sales for Myozyme rose 78 percent, to $67.30.

The company continues to do well with other top-line products, including Cerezyme for Gaucher disease. First-quarter sales tallied $304.3 million in 2008, compared to first-quarter 2007 sales of $263.8 million.

Sales of Fabrazyme grew 16 percent in the quarter, rising to $116.5 million. According to Genzyme, the product has captured more than a two-thirds share of the international market for Fabry disease.

Genzyme Aldurazyme for mucopolysaccharidosis I saw a sales increase of 38 percent, reaching $37 million in the first quarter.

Thyrogen, a thyroid-stimulating hormone used to detect thyroid cancer, had sales of $33.8 million in the first quarter of 2008, a 28 percent increase from same-quarter 2007 sales. Genzyme credits increased use of Thyrogen in ablation procedures as a major contributor to its growth.

Renagel and Renvela, the company's sevelamer therapies for renal disease, had sales topping $168.7 million in the first quarter, a 23 percent increase over 2007.

The company also is seeing growth in sales of Synvisc-ONE, its single-injection treatment for osteoarthritis pain. The product is being marketed in the UK, Germany and Italy, and sales there totaled $56.1 million in the first quarter of 2008, a 5 percent increase from the $53.6 million that Synvisc-One brought in during the same period in 2007. Genzyme has submitted a marketing application for the product to the FDA and expects the agency to make a decision later this year.

Sepra products, adhesion barriers for use in gynecological and colorectal surgeries, also have enjoyed an increase in sales, rising from $23.1 million to $30.6 million, or 32 percent between the first quarter of 2007 and the first quarter of 2008.

The company's well-rounded portfolio has prompted many analysts to maintain their outperform ratings for Genzyme. Cowen and Co. released a research note lauding the company's growth in product sales. In addition, Cowen's analysts pointed out the Genzyme's expense control pushed its non-GAAP EPS above estimates.

In the first quarter, Genzyme generated about $373 million in cash. The company invested approximately $122 million in capital projects to expand its manufacturing capacity and made a $150 million investment in Isis Pharmaceuticals associated with the licensing of mipomersen.

Mark Schoenebaum, of Bear, Stearns & Co. Inc., also maintained an outperform rating for the company. But in a research note, he predicted that Genzyme's stock would remain flat on the earnings news.

Genzyme's (NASDAQ:GENZ) stock closed up $1.98, or 2.8 percent, on Wednesday to close at $73.53.