Just a couple of days after making an increased offer in its long-running bid to acquire Canada’s AnorMed, Genzyme Corp suffered a bit of a setback as it announced a significant decline in its earnings for the third quarter.

Net income sank over 86% to $16 million, but the firm was quick to point out that the decline was almost entirely due to one-time items, such acquisition-related charges and various stock option expenses. Without those items, earnings were up 22% to $195.9 million.

Revenues rose by a healthy 14% to $808.6 million, driven by sales of Gaucher disease treatment Cerezyme (imiglucerase), up 6% to $252.2 million and Fabry disease drug Fabrazyme (agalsidase beta), which added $93.2 million (+18%) to the coffers. However Genzyme was most excited about the contribution of Myozyme (alglucosidase alfa), its new treatment for Pompe disease, which brought in $20.4 million in its first full quarter.

Another strong contribution to turnover came from Renagel (sevelamer HCl), which treats end-stage kidney disease and was up 26% to $134.7 million.

Chief executive Henri Termeer said the company’s products “across the board have good traction and momentum” and behind these there are a number of late-stage programmes which should be hitting key milestones in the next six-to-12 months.

However it is the present that is interesting many analysts and the

sweetened offer for AnorMed, raised by $200 million to some $580 million, is well up on Millennium Pharmaceutical’s $515 million offer. The Canadian firm’s directors certainly seem to like it, calling it a “superior proposal” to the friendly takeover bid by Millennium.

Nevertheless, the Vancouver-based company¹s chairman, Kenneth Galbraith, added that “if they match or exceed the proposal, we will support Millennium¹s revised offer.” If there is no new bid, Genzyme will win the day.

Still, the latter¹s shareholders seem less excited about the improved offer and its stock has been slipping. The jewel in AnorMed’s crown is Mozobil (AMD3100), a drug designed to improve the success of stem cell transplantation procedures, but some analysts believe it will bring in sales of only $100-$200 million per year and they fear Genzyme may be overpaying.