Genzyme's reaction to FDA warning

The biopharmaceutical company Genzyme (Cambridge, MA) provided an update on its manufacturing operations following the issuance of a draft consent decree by the US Food and Drug Administration regarding the company’s Allston Landing, Massachusetts, manufacturing plant. FDA issued a warning letter to Genzyme in February 2009 following inspection of the facility in Allston Landing for good manufacturing practice (GMP) violations in the manufacture of drug products, bulk drug substances, and drug components for Fabrazyme (agalsidase beta), Cerezyme (imiglucerase for injection), and Myozyme (alglucosidase alfa)

Genzyme reported in its first-quarter 2010 earnings report that the consent-decree draft provides for an upfront disgorgement of past profits of $175 million, an expense that Genzyme booked in the first quarter. Genzyme reported a net loss of $114.9 million in the first quarter of 2010 compared with net income of $195.5 million in the year-ago period, based on results calculated under generally accepted accounting principles (GAAP). The GAAP results reflect the impact of the anticipated $175-million expense associated with the consent decree for the company’s Allston manufacturing facility. If the Allston fill–finish facility is still operating after deadlines for domestic and exported products, the draft consent decree provides for disgorgement of 18.5% of revenues from sales of products manufactured and distributed from Allston after those deadlines.

Genzyme and the FDA are having discussions regarding appropriate deadlines for moving fill–finish operations and the details of the disgorgement provisions, according to the company’s earnings statement. If fill–finish operations are moved from Allston, but certain remediation actions relating to overall GMP compliance are not met by deadlines during coming years in a remediation plan to be approved by FDA, the draft provides for a payment of $15,000 per day per violation until the compliance milestones are met. Genzyme is negotiating with FDA on the terms of the consent decree and expects that the negotiations will be completed during the second quarter. After finalization of the consent decree, Genzyme will provide an update, including a revised 2010 financial guidance.

Product supply update
Genzyme also provided an update of its product supply from the Allston facility. The company said that it met its goal of building a small inventory buffer for Cerezyme during the first quarter. The current shipping allocation of 50% of demand will be extended because of an interruption in operations at the company’s Allston facility late in the first quarter. The company said that the interruption resulted from an unexpected city electrical power failure that compounded issues with the plant’s water system, which have been corrected. The facility is fully operational, according to the Genzyme.

Genzyme estimates that it will need to continue the 50% shipping allocation for two to three months. The company will provide a more precise supply update within a month, after determining whether Cerezyme material that was unfinished when the interruption occurred can be finished, the impact of the pending consent decree on product- release timelines, and a more accurate assessment of global demand.

Genzyme also said that it has made progress in increasing the productivity of the manufacturing process for Fabrazyme. The first run of a new working cell bank (WCB) resulted in a 30% increase in productivity, and a second run is underway. Genzyme’s goal is to increase productivity an additional 30%.

Genzyme estimates that it will need to continue the 30% shipping allocation through the third quarter. The company will provide a more precise update within a month once additional information is available about the productivity of the new WCB, the timing of regulatory clearance of the new WCB, the impact of the pending consent decree on product-release timelines, and whether Genzyme is able to finish the small amount of work-in-process Fabrazyme material that was unfinished when the interruption occurred at the Allston plant.

Manufacturing expansion update
Genzyme says it will continue to work with minimal levels of inventory for Cerezyme and Fabrazyme until the company’s new Framingham, Massachusetts, manufacturing facility is approved, which is anticipated to take place in late 2011. The new Framingham plant is mechanically complete. Preoperational activities, including cell culture, media preparation, bioreactor validation, and staff training, are currently taking place. Engineering and process validation runs are planned for this year. At its Geel, Belgium facility, Genzyme is adding a third bioreactor for the production of Myozyme, and approval is anticipated in mid-2011. The company is also working to transition fill–finish operations out of its Allston facility to its Waterford, Ireland, plant and to a contract manufacturer.

Genzyme also reported that is it seeking to add another member to its board of expertise with manufacturing expertise. Genzyme recently created the position of chief operating officer to establish a sharper focus on commercial execution and appointed executive vice-president David Meeker to this role.

www.genzyme.com

Read a related story:FDA To Take Enforcement Action Against Genzyme for GMP Violations