Genzyme reports Q2 loss after inventory write-off

Allston Landing

Genzyme, the US biotech firm that pharma giant sanofi-aventis is currently trying to purchase, has reported a second quarter loss after having to write off an additional tranche of products that do not meet quality standards.

As a result, the firm is drastically reassessing its financial results and has said as a result, it will take longer than expected to get its troubled Allston Landing manufacturing facility up to code.

The stock that reportedly did not meet sufficient standards are reported to be worth US$6.5 million. This loss will a major blow to the company that, according to a Securities & Exchange (SEC) filing, has already seen product wastage of US$21.9 million in its second quarter results. This now equates to a total Q2 loss of US$3.8 million, compared with net income of US$23,000.

The drugs that were allegedly not up to quality standards were named as Cerezyme (imiglucerase) for Gaucher disease, Fabrazyme (agalsidase beta) for Fabry disease, Thyrogen (thyrotropin alfa for injection) for thyroid cancer and cholesterol reducing Cholestagel (colesevelam).

In reaction to the news, a Genzyme spokesman said that "the quality issues were unrelated to the ongoing compliance problems at Allston Landing, which remains shut down after contamination incidents and other transgressions."

The company's plans for the Allston Landing facility have, as a result, been expanded to three to four years instead of the original timescale of two to three years.

Possible acquisition

Genzyme has been making headlines in recent weeks with news that pharmaceutical giant sanofi-aventis has approached the board of Genzyme with a takeover bid of US$19 billion (€14.6 billion) for the company.

However, due to a lack of other investors, the companies seem to be playing a ‘game of chicken' with each other.

The latest industry news indicates that sanofi-aventis is unlikely to raise its takeover offer for Genzyme or make a hostile approach as long as manufacturing concerns linger and competing bidders fail to emerge.

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