Genzyme Playing Defense

Follow-up drugs from the same company are often flubs. Sure, there's the rare case like AstraZeneca's (NYSE: AZN  ) success with Prilosec after Nexium, but more often the second drug has a hard time gaining traction -- both Wyeth's (NYSE: WYE  ) new antidepressant Pristiq and Johnson & Johnson's (NYSE: JNJ  ) antipsychotic Invega are good examples of this.

Genzyme (Nasdaq: GENZ  ) doesn't have to worry about that with its Gaucher's disease drug, Genz-112638. The phase 2 drug candidate shouldn't have any problems replacing its big brother, Cerezyme, if it's able to make it to market. Genz-112638 is an oral drug, while Cerezyme is given through intravenous infusions; all it has to do is work just as well and patients are likely to gravitate toward the new drug.

And so far, the oral medication is looking pretty good. Last week, the drug met the primary goal for its phase 2 trial, so Genzyme plans to move it into phase 3 trials in the middle of the year. Hopefully a brand name won't be too far behind, because Genz-112638 isn't very catchy.

While, ahem, Genz-112638 should be a good seller -- Cerezyme had sales of $1.2 billion last year -- it's more of a defensive play than anything else. Gaucher's disease is a rare genetic disorder that affects less than 10,000 patients per year and causes the buildup of a non-metabolized fat molecule in the cells and organs. Cerezyme is the main standard of care. Patients might be a little more compliant about taking Genz-112638, which could result in slightly higher sales, but Genzyme's top-line growth isn't going to come from Genz-112638.

What the oral drug will do is keep sales from dropping. It should help fend off competition from Amicus Therapeutics (Nasdaq: FOLD  ) , which has an oral drug in development for Gaucher's, and Genz-112638 presumably will have a longer patent life than Cerezyme.

While it's not always possible to do, developing an in-house product to extend past a patent cliff is certainly preferable to making a large, overpriced acquisition like Pfizer (NYSE: PFE  ) did.

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