GENZYME CEREDASE COMPASSIONATE USE FOR ABOUT 10 PATIENTS

GENZYME CEREDASE COMPASSIONATE USE FOR ABOUT 10 PATIENTS with severe cases of Gaucher's Disease is continuing while the company works with FDA on the determination of a reasonable charge for the product. Ceredase (glucocerobrosidase) was approved for wider distribution under FDA's Treatment IND provisions in late November; however, that expanded distribution appears to have been tied up since mid-1989 in part due to the difficulties in arriving at a suitable cost recovery price. The biotechnology company has said that it wants to charge for Treatment IND use ("The Pink Sheet," May 29, p. 13). * Genzyme's apparent difficulties in arriving at a Treatment IND price are instructive of the problems of trying to work with FDA on economic regulatory issues. Ceredase could be an expensive product (with annual costs running in the $2,500 to $5,000 range based on previous revenue estimates by the company). FDA is not organizationally inclined to make high-price decisions that can be second-guessed. Genzyme's wait probably has been extended by the management shifts at the agency. Ceredase Treatment IND approval came within weeks of Commissioner Young's departure. The appointment of Acting Commissioner Benson presumably made it necessary for the company to educate a new group of officials about the pricing decision. As part of its review of Genzyme's request to charge for Ceredase, FDA reportedly is planning to hold a quasi-public meeting in the near future to discuss the pricing of the product with patient groups. The company also has commissioned Coopers & Lybrand to audit its accounting procedures for determining the cost of developing and supplying Ceredase for Treatment IND use. For Genzyme, the delay in Ceredase pricing is coming at an uncomfortable time. The company has developed a reputation as one of the most tightly-run and profit-oriented of the start-up firms. With annual commercial sales projections of $50 mil. to $100 mil., Ceredase could be a major contributor to the company in the future. The firm is now experiencing the disruption of its operating results from the purchase of Integrated Genetics in the spring of 1989, and the repurchase of several early funding mechanisms. Good news from Ceredase could help to mask the merger costs. Genzyme, in fact, referred to Ceredase in an interim financial statement on calendar 1989 released March 2. The company maintained that the "sales of Ceredase" under the Treatment protocol "partially offset the absence of revenue paid to Genzyme by Genzyme Clinical Partners," a limited partnership formed in 1987 to develop the product. For the full year, the company had sales of $34.3 mil. (up 33%), but showed a loss of$13 mil. compared to net earnings of $671,000 in 1988. More than half of the loss ($7.3 mil.) was attributed to one time-charges for buying out a limited partnership (hyaluronic acid) and the purchase of Integrated Genetics. Genzyme Chairman Henri Termeer said "the company is on track to return to profitability on an operating basis in 1990."