Hit 'em where they ain't. That's a pithy summary for profitable biotech Genzyme
Second-quarter results appear to reflect more of the same solid performance. Revenue climbed 22% from the year-ago quarter, and margins expanded once again. Reported net income climbed a further 58% ($0.46 per share), even with the inclusion of higher amortization expenses.
As the top-line performance might suggest, Genzyme's major signature drugs performed well in the quarter. Sales of Cerezyme climbed 13% to $236 million, Renagel sales climbed 15% to slightly less than $101 million, and sales of the relatively new Fabrazyme jumped 50% to more than $74 million. Other products, such as Aldurazyme, Thyrogen, Synvisc, and transplant drugs Thymoglobulin and Lymphoglobuline, did their part to contribute as well.
Moving back to Renagel for a moment, investors should soon see the top-line results for the Dialysis Clinical Outcomes Revisited (D-COR) study. For those new to the story, D-COR studied the comparative long-term benefits to mortality and morbidity from using Renagel versus calcium-based phosphate binders. Should the results be positive, that would be a boost to Genzyme's sales efforts; Renagel is expensive, but if Genzyme can show strong long-term data, more doctors and patients may be willing to use the drug.
Looking at the pipeline, Genzyme isn't particularly strong in terms of late-stage candidates, but the pipeline as a whole is solid. Phase 3 candidates include Myozyme for Pompe disease, Tolevamer for a type of hospital-acquired diarrhea, and multiple new indications of Synvisc. Behind those, Genzyme has multiple Phase 2 trials involving treatment for a wide range of diseases.
As time has gone on, Genzyme has done a good job of diversifying its business, without stretching too far beyond its core philosophy of targeting rare and/or badly underserved diseases. What some large pharmaceutical executives sniff derisively at as "niche markets" have proved to be significantly lucrative for Genzyme already, and I would expect that to continue.
Valuing these shares, though, is a bit tricky. Genzyme lives in the no-man's-land of profitable biotechs -- companies that actually have real earnings but aren't directly comparable with pharmaceutical companies like Motley Fool Inside Value recommendation Pfizer
For those willing to accept the group of Amgen
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).