Genzyme hit with $8bn lawsuit
The plaintiff alleges that Genzyme took too long to inform shareholders of problems at its manufacturing facilities in Belgium and Boston, Massachusetts, US. According to the lawsuit “serious issues” were first found by federal investigators last autumn.
Discovery of these problems was followed up by two letters that Genzyme received from the US Food and Drug Administration (FDA) on February 27, according to the plaintiff.
One stated that the agency would not approve Lumizyme, the version of Myozyme (alglucosidase alfa) manufactured in larger bioreactors, by the expected date. The second detailed significant problems at the facility that manufactures the drug, according to the lawsuit.
However, Genzyme failed to issue a statement until after the close of trading on March 2. The plaintiff claims that the delay in approval of Lumizyme lowered Genzyme’s profit by about 12 cents a share and this resulted in a three day decline of over 23 per cent in its share price.
Then, on June 16, Genzyme said that it had detected a virus at its facility in Boston and would temporarily halt production at the site that manufactures Myozyme, Cerezyme (imiglucerase) and Fabrazyme (agalsidase beta).
In its Q2 results released on July 22 Genzyme said that disruption to the production was a factor in it lowering of earnings forecasts. Furthermore, between June 26 and July 21 Genzyme’s share price fell by 35 per cent, which the plaintiff attributes to the manufacturing problems.
The lawsuit alleges that this drop in share price lost investors over $8bn and is calling for people who bought shares between June 26 and July 21 to join the action. Henri Termeer, Genzyme’s CEO, is listed as the defendant in the case.
Responding to the lawsuit a Genzyme spokesperson said: "We provide our investors with timely and appropriate information about the issues affecting our business and we are confident in the way we have communicated the recent manufacturing supply challenges we have faced."
In its Q2 results Genzyme reported that the problems at the Boston facility had been resolved and that production would restart this month.