2nd UPDATE: Genzyme Drug In Short Supply From Allston Delay

Genzyme Corp. (GENZ) is dealing with a shortage of its Thyrogen cancer treatment due to a delay at its long-troubled Allston, Mass., production plant.

The Cambridge, Mass., biotechnology company expects to have the drug available again in mid- to late November, but will provide a status update on that timeline by next week. A company spokeswoman said the shortage is due to an equipment-related delay in Allston, but said that no other products are currently impacted by the problem.

The company's top-selling products, rare-disease treatments Cerezyme and Fabrazyme, are recovering from shortages that stemmed from a contamination-related shutdown of the plant last year.

Genzyme's business has been damaged by manufacturing and regulatory problems in recent years, leading to the long-term regulatory oversight of the Allston facility. As part of that oversight, production of Thyrogen was restricted to a level that meets the needs of patients for whom the Food and Drug Administration deemed the drug to be medically necessary. The drug, which had $170.6 million in sales last year, is used in the treatment and follow-up diagnosis of thyroid cancer.

The FDA's restrictions will be in place until Thyrogen produced at another location becomes available.

The last stage of Thyrogen's production, called fill and finish, occurs at the Allston plant and the main manufacturing is done at a plant in Framingham, Mass. Genzyme is in the process of moving its fill and finish operations out of Allston, as required under a consent decree with the FDA.

The Genzyme spokeswoman said the delay doesn't affect its plans to move those operations.

The latest problem stems from the need to "re-validate" equipment that is used in the fill-and-finish process.

The move, which involves running the equipment three times to ensure consistent results, is done to make sure the it is running properly as part of standard manufacturing practices. The process must be completed before Thyrogen can be released for shipping, the Genzyme spokeswoman said.

The fallout from the Allston problems and resulting drug shortages led to changes at the company and its board, along with a turnaround program that includes cutting costs and shedding noncore businesses.

Separately on Friday, Genzyme said it began the first wave of its layoff program by eliminating 392 jobs, expected to result in a fourth-quarter charge of $24 million to $27 million. The move is part of the company's previously announced program to cut 1,000 jobs over 15 months.

Genzyme is in the midst of a takeover pursuit from French drug giant Sanofi-Aventis SA (SNY, SAN.FR). Genzyme has repeatedly rejected Sanofi's $18.5 billion bid as too low and refused to negotiate on a better price. The offer, amounting to $69 a share, has since turned hostile, and Genzyme has recommended that shareholders do not surrender their shares.

Shares of Genzyme closed down 1 cent at $71.69.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com

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