Genzyme : the Future

It appears as though Genzyme’s strong earnings estimates and technical stock picture are the result of its newly released drug Myozyme. It is being hailed as a miracle drug for those with Pompe’s disease, a particularly rare disorder in which glycogen is not able to break down properly resulting in muscle degeneration and death. It is believed to affect 10,000 people worldwide. The cost for the drug is approximately $300,000 per year. There were approximately 1,000 people involved in the clinical trials. If only these 1,000 people merely continue their treatment, that is $150 million immediately added to the top line. Looking at the International Pompe Association website (http://www.worldpompe.org/) I came across updates on the supply of Myozyme. There is actually a short supply of the drug and Genzyme is having to ration the drug to younger patients who are more likely to have significant improvements in their quality of life. Myozyme is a must-have drug. Governments of developed countries are even seeking ways to provide the funding for its citizens to pay for the massive yearly bill. It is a disheartening situation for patients who are worried about how they can afford to essentially survive.

The current bottleneck on Myozyme’s revenues is a supply side issue. In my opinion, a supply side concern is much easier to overcome than a demand side one, especially with drugs. For this reason, I have full confidence that eventually Myozyme will reach its full revenue potential. Genzyme is currently in the process of seeking FDA approval of a large-scale manufacturing facility for Myozyme in Massachusetts. Although the approval is technically “uncertain” I believe that both Genzyme and the FDA eagerly want the approval to go through, as this is a vital drug to thousands. The drug is not only the sole viable option for those with Pompe’s disease, it is truly a great one. Patient’s are expected to add years to their lives so long as they have uninterrupted treatment. This fact that patients need continual uninterrupted treatment of Myozyme is key. It’s like having a lifetime cell phone subscriber. Imagine a cell or cable company that doesn’t have to worry about subscriber losses. When Genzyme recruits new patients they are not simply booking $300,000. They are taking in an annuity of $300,000 year. In reality, this will only last until a better treatment for Pompe’s comes along. But in the meantime, that figure is outstanding.