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Genzyme Corp's (GENZ) third-quarter net income more than quadrupled on strong product sales as it recovers from major manufacturing and regulatory problems, while warding off a hostile takeover approach from Sanofi-Aventis SA (SAN.FR SNY).

Genzyme officials didn't discuss the Sanofi offer Wednesday but said efforts to increase its manufacturing capacity are progessing, and that it continues to work on ending shortages of its top-selling products.

Shares of Genzyme rose 35 cents to $72.24.

Overall, results from the Cambidge, Mass., biotech missed analyst estimates, and it narrowed fourth-quarter earnings projections toward the lower end of its previous view.

Sanford Bernstein analyst Geoffrey Porges said investors are likely encouraged by the manufacturing update and that the company's fourth-quarter sales projections for its top products are close to Wall Street's current expectations. The company has been plagued by disappointments related to its operational issues that have made investors skeptical.

The results come as Genzyme has repeatedly rejected an $18.5 billion takover offer, now hostile, from France's Sanofi. Genzyme has shunned the bid, amounting to $69 a share, as too low and refused to negotiate.

Genzyme is holding a meeting Friday with investors and analysts to provide 2011 financial guidance and make its case that the offer doesn't adequately value its existing business, its recovery plans or its pipeline products.

Genzyme's management has presented Sanofi's approach as opportunistic because it comes as the company's manufacturing problems have hurt its business and depressed its stock price.

In a conference call Wednesday, Chief Executive Henri Termeer said the fourth quarter will be "the first more-normal quarter since the manufacturing distruptions started."

Looking ahead, the company now expects fourth-quarter adjusted per-share earnings between 90 cents and 95 cents, narrowed from a previous view of 90 cents to $1. Wall Street analysts are projecting 88 cents a share.

"That then becomes the base for how we think about 2011," Termeer said, referring to the fourth-quarter projection. If the company maintained even the low-end of that projection throughout 2011, it would earn $3.60, exceeding the current Wall Street projection of $3.56 a share.

Genzyme's business has been damaged by manufacturing and regulatory problems in recent years, leading to the long-term regulatory oversight, called a consent decree, of its main Allston, Mass., production facility.

After repeated setbacks in fixing the problems, the company has made major changes to its board and started a restructuring plan that includes job cuts and shedding noncore businesses.

Genzyme said Wednesday it is on schedule to meet the November consent-decree deadlines for ceasing the final stage of production at Allston for products sold in the U.S. It has transferred "a significant portion" of the work to an Ireland facility and is moving the remainder to Hospira Inc. (HSP).

A new manufacturing facility in Framingham, Mass. that is important to long-term supply of its drugs is already operational, the company said Wednesday. The site will begin producing inventory of Fabrazyme in the first quarter that can be used upon expected Food and Drug Administration approval of the site in late 2011. Genzyme expects it will have two to three months supply of the drug ready at that time.

"We really need the additional capacity of the Framingham plant to set up true safety inventory," Termeer said.

The company reiterated its previous projection for having full global supply of Gaucher's disease treatment Cerezyme by year-end. It has continued increasing the supply of Fabry disease drug Fabrazyme in the U.S. and will return to full supply everywhere in the first half of 2011.

Genzyme said Wednesday that the efficiency of Fabrazyme production in Allston has reached its highest level since 2008. The development is notable because production had been slower than expected since restarting the plant last year, delaying the resumption of supply to patients.

Third-quarter sales of Cerezyme nearly doubled to $179.8 million reflecting increasing shipments. Fabrazyme sales dropped to $33.9 million from $115.2 million because of the shortage.

Genzyme expects sales to increase as supply of the drugs increases. It projected fourth-quarter Cerezyme revenue of $235 million to $245 million and Fabrazyme revenue of $70 million to $75 million. The projections are roughly in-line with full-year projections given in July.

For the three months ended Sept. 30, Genzyme reported a profit of $69 million, or 26 cents a share, down from $16 million, or 6 cents a share, a year earlier. Excluding items, per-share earnings were 42 cents, far below analyst estimates of 50 cents.

Revenue rose 8.4% to $1 billion, also below expectations of $1.085 billion.

The company's year-ago results were revised to exclude the genetics and diagnostics businesses, which the company is planning to divest by the end of this year.

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

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