Genzyme said today that a draft consent decree sent by regulators would force it to hand over $175 million in profits earned from drugs made at its troubled Allston Landing manufacturing facility--a figure most investors seemed to find rather mild. Regulators also laid out a penalty of 18.5 percent of sales on products if it can't meet a set of deadlines for moving its fill/finish process out of the facility.
Failure to meet compliance standards in 2011 and 2012 would trigger a fine of $15,000 a day, according to the company's release on its quarterly results. At the same time, the Cambridge, MA-based biotech announced that it expected fresh delays for delivering Cerezyme to patients with Gaucher's disease. And its quarterly profit slid to 43 cents in the first quarter, a sharp drop from the 70 cents recorded a year ago.
Genzyme blamed a power outage in Boston for new delays in supplying Cerezyme. As a result, the biotech says that it can only provide half of the needed amount of the drug for two to three months to come.
Calling the $175 million disgorgement a "likely outcome," Genzyme booked the expense in the first quarter. Investors seemed to be ready for something far worse. Genzyme, one of the country's biggest biotechs, saw its shares surge close to two percent this morning. In recent months Genzyme CEO Henri Termeer has been hammered repeatedly by Wall Street raider Carl Icahn, who is mounting a fight to gain control of the company.
- here's the Genzyme release
- and here's the Reuters story