Sunday, August 22, 2010

Genzyme Update

Ok now with an update on Genzyme (Ticker: GENZ)… I’ve been adding to my Genzyme position and like Potash (Ticker: POT), I see this as a very good risk reward opportunity. I have to agree with many observers that the lack of news from either parties means that some sort of talk is under way. You can bet that if progress was not being made, someone will be leaking out some news. I eventually see Genzyme going to Sanofi (Ticker: SNY) in the high 70’s at the very very minimal.

Sanofi is trying to get Genzyme on the cheap because of the manufacturing problems at its Allston facility. There was a good point from one of the analysts stating that all of manufacturing due diligence has been completed for Sanofi by the FDA. This didn’t occur to me, but I have to agree with that assessment. Sanofi has public access to all of the 483s from the warning letter. Both the FDA and Quantic will be keeping a close eye on Allston to make sure it’s in line. Sanofi won’t have to do a thing… Manufacturing problems will always get fixed and there’s no doubt that Allston’s issues will be resolved.

I don’t see Sanofi dragging the talks out too long. The longer the talks drag out, the stronger Genzyme gets. Genzyme is getting stronger day by day and should be able to supply 100% of the Cerezyme market in Q4. Fabrazyme still has some work to do, but that too should be improving. Campath will be reporting phase 3 results in 2011 and this is being over looked by many observers. Campath has the potential to transform the MS market and turn Campath into a multibillion dollar product. Genzyme can no doubt survive this manufacturing blip. The question is do you want the money now or wait for some potential larger gains down the road. I’ll take the money now… As they say, "Time Is Money".


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