In breaking ground last week on a $150 million expansion of its manufacturing plant in Boston’s Allston Landing section, Genzyme unveiled project renderings intended to reinforce the company’s optimism about its future, even as uncertainty continues over its effort to scale up production of one of the three drugs manufactured at the plant.
Genzyme, which is headquartered in nearby Cambridge, Mass., said the completion of the plant’s 86,000-square-foot addition, planned for 2009, will increase neither the plant’s 12,000-liter manufacturing capacity, nor increase the number of drugs produced there. Instead, the additional space will be used for administrative offices and other manufacturing support functions, the company said.
One of the three drugs currently manufactured at the plant is Myozyme, a treatment for Pompe disease, in which the body lacks enough of the enzyme acid alpha-glucosidase to break down the carbohydrate glycogen. Genzyme has struggled to meet growing demand for Myozyme while it has spent more than a year awaiting approval from the US Food and Drug Administration to market to American patients the version of the drug produced at Allston Landing. The FDA approved a version of the drug last year that is now manufactured at a Framingham facility with a smaller production capacity than that of the Allston Landing plant.
The FDA has not approved Myozyme produced at the Allston Landing plant for sale in the US, but has not disclosed its reason, Last month, the Wall Street Journal, citing an unnamed “person familiar with the matter,” reported the reason hinged on the inability of the Allston Landing plant to produce a carbohydrate attachment needed for the drug to be absorbed by skeletal muscle cells.
Genzyme is using Myozyme from the Allston facility experimentally, such as for a late-onset clinical trial for the drug. “The last patient will be out in the third quarter, that database will be locked in November, and we will process it and look to release results in the first half of 2008,” said David Meeker, president of Lyosomal Storage Disorder Therapeutics at Genzyme, addressing analysts in a July 25 conference call.
Genzyme began the clinical trial in 2005. The company hopes to broaden the number of patients who can use the drug. Currently, Myozyme’s label states that the drug has only been found to improve the survival odds of patients who develop Pompe disease in infancy, “as compared to an untreated historical control, whereas use of Myozyme in patients with other forms of Pompe disease has not been adequately studied to assure safety and efficacy.”
Results from the clinical trial are set to be reported in the first half of 2008.
“We are confident, based on all available data, including the clinical experience of more than 500 patients currently benefiting from Myozyme produced at this larger scale, that there is no difference in the safety or effectiveness of the two sources,” Meeker said in a letter to the Wall Street Journal.
Meeker’s letter also sought to downplay any friction between Genzyme and the FDA because of the review: “As typically happens in such reviews, the agency has asked for additional information, which we will supply in the coming months.”
Last week a Genzyme spokeswoman, Erin Emlock, told BioRegion News the company expects to gain FDA approval to market Myozyme directly to US patients “in the first half of next year.” She noted 33 countries have already approved Myozyme for the high-capacity production level carried out at Allston.
Myozyme has been a successful drug for Genzyme since the FDA approved its use during the second quarter of 2006. Sales of Myozyme have zoomed to $57 million during its first three quarters on the market — including $46.7 million recorded during the first half of this year — with total 2007 sales projected to be $189 million. Myozyme sales are expected to reach $329 million in 2008, John Sonnier, an analyst with William Blair & Company in Chicago, noted in an Aug. 13 report on the biotech sector.
Genzyme’s chairman and CEO, Henri Termeer, told the Wall Street Journal the drug had the potential to generate as much as $900 million in annual sales.
The company has said about 60 percent of patients treated with Myozyme are “late-onset” patients who have developed the disease after infancy. The FDA issue has compelled Genzyme to increase the time duration between doses, and in some instances to offer the drug to patients free on an experimental basis; the treatment typically costs $300,000 a year.
Analyst: No Slowdown Expected
William Blair’s Sonnier told investors last month he did not believe the FDA review of Myozyme would slow down the company’s growth next year.
“We believe any temporary setback in growth during the first half of 2008 would likely be resolved shortly when the bolus of patients transition back onto paid drug,” Sonnier noted in his report.
Sonnier also noted that Genzyme had raised its per-share guidance to investors midway through 2007, to between $3.35 and $3.40 per share versus the earlier forecast of $3.20 to $3.35 for the year. The company anticipates earnings growth of between 21 percent and 23 percent this year, and 20 percent growth each year through 2011.
During the second quarter, Genzyme saw earnings climb 4 percent over the year-ago period, to $139.9 million from $134.5 million, while revenues jumped 18 percent to $933.4 million. Genzyme’s second-quarter revenues, Sonnier noted, surpassed his firm’s $928 million estimate, and surpassed further the $912 million projected by a consensus of Wall Street firms.
“We believe a manufacturing delay of one or two quarters has little impact on our long-term thesis, with the company recruiting patients into a pilot program for drug produced from the [Allston Landing] manufacturing facility,” Sonnier wrote.
Sonnier’s comments came in a section of the report with the sub-headline, “Myozyme Concerns Overdone, in Our View.”
Genzyme has been planning for full-scale production of Myozyme at Allston Landing since 2004, when it spent $53 million to expand the plant’s production capacity.
In addition to Myozyme, also known as alglucosidase alfa, the plant produces two other Genzyme drugs — Cerezyme, a treatment for Type 1 Gaucher disease, and Fabrazyme, for Fabry disease. Both are caused by the absence of enzymes to metabolize lipids.
At Allston Landing, Genzyme also carries out filing and packaging for two other products manufactured elsewhere: Aldurazyme for MPS 1 disease, caused by the lack of enzymes to combat complex carbohydrates called glycosaminoglycans; and Thyrogen, used via injection in the screening of patients who have had thyroid cancer.
Genzyme executives led by Termeer joined Massachusetts Gov. Deval Patrick, Boston Mayor Thomas Menino, and other dignitaries in a groundbreaking ceremony held Sept. 18 under a chilly but sunny morning sky.
Needed: Places to Sit
The plant expansion will take about two years — Genzyme does not have a more specific time frame — and will allow the drug discovery giant to add 90 new jobs to the facility’s current workforce of more than 400 employees, who work in round-the-clock shifts.
Hiring of the 90 staffers will take place gradually: “We expect that to be ongoing over the next few years, and that by the time we actually finish the expansion, we’ll be up to the 490,” Emlock said.
“We’re busting at the seams in terms of space, and we have maximized our manufacturing capacity in the building. In order to utilize that to the best possible way that we can, we need to add in extra space for manufacturing support functions” such as administrative offices and space to ensure quality control, Emlock added. “We need places for our employees to actually sit.”
More important than the jobs, Genzyme said, is the vision it intends to communicate through the design of its addition, at 500 Soldiers Field Road. The design incorporates a glass curtain wall system with a brick façade at the lower levels of the addition, on its west side. The brickwork is designed to blend with the original brick lab building, which had been a manufacturing site before its conversion by Genzyme.
“[Termeer] decided that he wanted to have a new expression, expressive of the 21st century, at the corner of the building, and make it more transparent. So we’ve accommodated that with a glass façade, which added some challenges,” said Jeffreys Johnson, a principal with the project’s architectural firm, ARC/Architectural Resources Cambridge.
Among those challenges, he said, is managing the building’s energy use to ensure the expansion project meets the Leadership in Energy and Environmental Design standards set for environmentally friendly building development by the US Green Building Council.
“We will be, at a minimum, certified,” said Johnson, a LEED accredited professional.
To ensure energy is always available for the plant, Genzyme will build a new 26,000-square-foot underground cogeneration plant, which will produce steam to run the facility’s operations as well as electricity. The cogeneration plant is intended to replace the current steam power system owned by the site’s landlord, Harvard University, which wants to redistribute power for its own facilities. Backing up the new power system will be a trio of generators to be used during emergencies.
With its expansion, Johnson said, Genzyme also aims to restore some amenities that had been removed over the years as the company’s manufacturing operations grew over the past decade and a half, to the current 185,000 square feet.
Amenities for the plant will include office space and conference rooms, as well as a new 120-seat cafeteria. Genzyme filled out the old cafeteria with manufacturing space three years ago when it increased the manufacturing capacity of the plant, which began operations in 1996. Genzyme started work on the plant in 1991 and completed construction two years later, with the goal of creating a place where it could produce Cerezyme. Even then, Genzyme envisioned expanding the site; the company fitted out a second cell culture hall for production of Myozyme and Fabrazyme.
“We started doing master planning of the site about the time they finished putting in the second and third projects in 2004. We’ve gone through many iterations of a master-planning process,” Johnson said.
One iteration, Johnson said, had to be scaled back because it called for a larger, 126,000-square-foot lab building than wanted by Harvard: “We had to redesign on a reduced footprint after negotiations with Harvard. That changed the design somewhat and reduced it.”
Also inside the expanded plant, in a new gallery section, will be works of art crafted by users of Genzyme’s medicines, as well as works created by local artists commissioned by the company.
“This is a fast-track project, so while the foundations are currently going in, we still have not yet finished designing the façade or the structure or the interiors,” Johnson said.
The Allston Landing expansion is one of several projects through which Genzyme has sought to expand its manufacturing capacity in Massachusetts. Within the past year, Genzyme has completed a new 180,000-square-foot Science Center in Framingham and added 55,000 square feet to its facility in another Boston suburb, Waltham, Mass.
Genzyme reasons that the Massachusetts plants — three of 17 operated by the company worldwide — offer the advantage of tapping into the state’s cluster of biotech businesses, researchers, and institutions. Genzyme is an anchor of that cluster, having been established in Boston in 1981. The manufacturing plants also explain why nearly half the company’s total work force of 10,000 employees is based in the Bay State.
“We’re busting at the seams in terms of space, and we have maximized our manufacturing capacity in the building. In order to utilize that to the best possible way that we can, we need to add in extra space for manufacturing support functions.”
Another factor in Genzyme’s favor is the set of tax breaks for which the company qualified when it built its original plant at Allston Landing a decade ago. Genzyme benefited from Chapter 121A of Massachusetts General Laws, which allows businesses, nonprofits, and public-private partnerships to form Urban Renewal Corporations exempt from real and property taxes as well as special assessments, but still required to pay local municipalities a smaller “alternative tax.”
A Boston Redevelopment Authority spokeswoman, Jessica Shumaker, confirmed Genzyme benefited from 121A. She could not detail the size of the company’s exemption but did say the expansion project would entitle the company to additional tax breaks agreed to years earlier when it opened the plant.
Genzyme’s senior project manager John Nadeau told the Allston Civic Association in August the company could build a second building on its property if growth warranted it, according to an Aug. 22 report by GateHouse News Service — a comment Emlock could not confirm. He did not say how big the second building could be, but told the group Genzyme had no current plans for it, according to the report.
Back in April, however, the Boston Herald reported Genzyme was exploring whether to develop 170,000 square feet of new manufacturing space and parking lots.
Genzyme occupies under a long-term lease part of a 48-acre parcel purchased by Harvard in 2000 for $151.75 million from the Massachusetts Turnpike Authority, then seeking to raise quick cash to pay for its “Big Dig” tunnel project.
Genzyme could expand its plant again in the near future, if it can come to terms with Harvard on a land-swap that would give the biotech giant more area for expansion. A land swap could eliminate the need for Genzyme to build a garage to accommodate future parking needs, because it doesn’t have the space for traditional open-air lots, Johnson said.
A Harvard spokeswoman, Lauren Marshall, said the university would not comment on the talks or any details of its arrangement with Genzyme.
Oct. 3 Vote on Harvard Plan
Harvard is not only Genzyme’s landlord, but a key neighbor and player in the future development of life sciences within Allston Landing, located across the Charles River from the university’s main campus in Cambridge. Just southeast of Genzyme’s plant, Harvard has proposed building 589,000 square feet of facilities in four buildings over 8.5 acres on the south side of Western Avenue east of its intersection with North Harvard Street, east of Travis Street, and across the street from the Charlesview Apartments and the campus of WGBH radio-TV.
The Boston Redevelopment Authority is set to vote on the project Oct. 3, following the Sept. 10 end of a public comment period on the Draft Public Impact Report submitted by Harvard to the city in June.
Facilities include centers for stem-cell research, bio-inspired engineering, chemical biology, innovative computing and the school’s systems biology initiative. Also part of the project are 52,000 square feet of underground research support facilities, underground parking for 350 cars and 150 surface parking spaces north of Western Avenue. Other amenities are 6,400 square feet of retail space, an atrium of about 6,800 square feet, about 11,250 square feet of day care facilities, a cafeteria and an approximately 10,100-square-foot auditorium for lectures and special events, with periodic access by community groups.
The architect/design team includes Behnisch Architekten of Germany and two Massachusetts firms, Payette Associates and Stephen Stimson Associates.
Marshall said the city would coordinate the construction plans of Harvard and Genzyme to ensure neither project is disrupted.
The project is part of a larger 20-year master plan to develop 4 million to 5 million square feet of space on 215 of the acres, 140 acres of which are now zoned and used for institutional purposes — such as Harvard Business School, athletics fields, administrative offices, and housing. In all, Harvard owns 352 acres in Boston’s Allston section.
On Sept. 17, Massachusetts secretary of energy and environmental affairs Ian Bowles announced that the state would exempt Harvard from submitting a detailed environmental review of its Harvard Allston Science Complex — a sore point of contention with several neighbors, civic groups and environmental groups, who seek further study of the project’s effects on traffic and the environment, especially the Charles River.
In return, the state promised to conduct periodic reviews of the environmental effects posed by the projects that will comprise the 20-year master plan, while Harvard agreed to limit its greenhouse-gas emissions to no more than 50 percent of federal standards. Harvard thus became the first private developer-applicant to comply with a soon-to-be formalized draft protocol by the state setting limits on carbon emissions, as well as Boston’s goal of lowering the city's greenhouse gas emissions 80 percent by 2050.
“Harvard's Allston campus ultimately will be the university's greatest expression of environmental sustainability,” declared Chris Gordon, chief operating officer of Harvard’s development entity Allston Development Group, in a written statement released after Bowles announced the agreement.
Harvard has defended its pursuit of the environmental-review waiver by arguing the benefits of its project outweigh any environmental impacts. Marshall said the university has maintained dialogue with community groups through weekly meetings with the Allston-Brighton Task Force and more formal, less period meetings of the Harvard Allston Task Force, which includes project developers, civic leaders, and officials representing Boston and Cambridge.
“The science complex will serve a critical need toward advancing cures for cancer and other human ailments, in addition to which it will initiate the transformation of the Western Avenue corridor from an underutilized and largely barren industrialized landscape to a pedestrian-friendly environment, stimulate economic revitalization in the area and foster the growth of cutting edge scientific research as a key component of the greater Boston regional economy,” Harvard wrote in its Supplemental Narrative, Harvard University 20-Year Master Plan, Expanded Environmental Notification Form.