Record fourth quarter...Conference call today at 4:45.
siliconinvestor.com
Genzyme Surgical Products Reports Fourth-Quarter and 1999 Financial Results
CAMBRIDGE, Mass., March 9 /PRNewswire/ -- Genzyme Surgical Products (Nasdaq: GZSP) announced today that revenues for the fourth quarter of 1999 were a record $30.6 million, compared with revenues of $27.6 million for the same quarter of 1998, an increase of 11 percent.
For the year, revenues were $112.0 million, an 8 percent increase over revenues of $104.0 million in 1998. Revenue growth was led by increasing sales of instrumentation for beating-heart cardiac surgery and sales of Seprafilm(TM) bioresorbable membrane.
The gross margin for the fourth quarter of 1999 was 44 percent, an increase of 4 percentage points from the same quarter in 1998, and up 5 percentage points from the third quarter of 1999. This improvement resulted from increased sales volumes of higher margin products and continued tight control of manufacturing expenses.
Net loss for the fourth quarter of 1999 was $8.7 million, or $0.59 per share, down from a net loss of $9.3 million, or $0.63 per pro forma share, in the fourth quarter of 1998. The net loss for the year was $48.0 million, or $3.25 per pro forma share, down from a net loss of $49.9 million, or $3.37 per pro forma share in 1998.
At the end of the fourth quarter, Genzyme Surgical Products had approximately $126 million in cash and marketable securities.
"Genzyme Surgical Products finished 1999 with solid revenue growth, improved gross margins, and strong momentum in its expanding pipeline of biomaterials and biotherapeutics," said Duke Collier, president of Genzyme Surgical Products. "We are now poised to dramatically accelerate our biosurgery strategy through our recently announced merger with Genzyme Tissue Repair and Biomatrix. The new enterprise we will create -- Genzyme Biosurgery -- will have a powerful combination of financial strength, innovative products, and leading science that is unmatched in the industry."
Cardiovascular Surgery
In the fourth quarter of 1999, revenues from products for cardiovascular surgery increased 10 percent to $21.0 million, compared to revenues of $19.2 million in the fourth quarter of 1998. Products in the cardiovascular line include chest drainage systems, surgical closures, biomaterials, and instruments for conventional and minimally invasive cardiac surgery.
Sales of devices for minimally invasive surgery continued strong, increasing 77 percent from the third quarter to the fourth quarter of 1999. Sales of these products were four times greater in 1999 than in the previous year.
For the year, total cardiovascular product sales were $78.0 million, 5 percent greater than sales of $74.5 million in the previous year.
In January 2000, Genzyme Surgical Products launched several next- generation products in its Genzyme-OPCAB Elite(TM) line for beating-heart coronary bypass surgery and its SaphLITE(R) II line for minimally invasive saphenectomy.
Genzyme also launched C@rdioCommunity, its Internet-based data analysis tool that allows cardiac surgeons to analyze their own surgical results and compare them to aggregate information collected by their peers. C@rdioCommunity is an important component of Genzyme's comprehensive program to help support and train cardiac surgeons in the techniques of minimally invasive heart surgery.
General Surgery
Revenues from products for general surgery increased 21 percent in the fourth quarter of 1999 to $7.2 million, compared with $6.0 million for the same quarter in 1998. For the year, general surgery revenues were $25.2 million, a 24 percent increase over revenues of $20.2 million for the previous year.
Product sales of Seprafilm -- the lead product in Genzyme's family of sophisticated surgical biomaterials -- increased 42 percent in the fourth quarter of 1999 to $4.0 million, compared with $2.8 million in the same period of 1998. For the year, Seprafilm product sales were $13.4 million, up 45 percent from sales of $9.3 million in 1998. In 1999, Genzyme Surgical Products received an additional $0.5 million in licensing fees associated with the distribution of Seprafilm, compared to $1.8 million in licensing fees received in 1998.
Other Revenues
Revenues for the fourth quarter of 1999 also include $2.3 million from sales of instruments for plastic surgery and products sold to original equipment manufacturers, primarily sutures. These products generated $2.5 million in sales in the fourth quarter of 1998.
Pipeline Update
Genzyme Surgical Products recently received clearance from the U.S. Food and Drug Administration to begin a second phase I clinical trial of a proprietary gene therapy product designed to promote the growth of new blood vessels around blocked arteries, a process known as therapeutic angiogenesis. Following a review of the trial's protocol by the Recombinant DNA Advisory Committee of the National Institutes of Health, Genzyme expects to begin enrolling patients.
This phase I clinical trial will evaluate the use of Genzyme's novel gene therapy known as HIF-1 alpha, which has been shown in pre-clinical studies to turn on the expression of many proteins associated with blood vessel formation. HIF-1a will be administered to patients with coronary artery disease undergoing bypass surgery who have an area of the heart that is not suitable for surgical revascularization.
Genzyme Surgical Products is already conducting a related clinical trial evaluating the use of HIF-1a to treat patients with peripheral vascular disease, a condition caused by blocked arteries in the limbs.
In February, FocalSeal-L surgical sealant received marketing approval in Canada. The product, developed by Focal Inc., is intended for use in sealing air leaks during pulmonary surgery. Genzyme Surgical Products holds exclusive marketing rights to FocalSeal-L in the North American market and will launch the product in Canada mid-year. Genzyme expects to receive approval to market FocalSeal-L in the United States in the second half of this year.
Creation of Genzyme Biosurgery
Earlier this week, Genzyme Corp. and Biomatrix Inc. (NYSE: BXM) announced an agreement to form Genzyme Biosurgery, a new division of Genzyme that will combine Genzyme Surgical Products, Genzyme Tissue Repair (Nasdaq: GZTR), and Biomatrix to create the foremost company in the field of biosurgery. Genzyme Biosurgery will have its own newly created stock.
Under the terms of the definitive merger agreement, Genzyme Biosurgery will be formed by combining the two Genzyme divisions in tax-free stock-for- stock exchanges, and acquiring Biomatrix in a tax-free exchange of stock and cash, to form one unit. Genzyme Surgical Products shareholders will receive 0.6060 of a share of Genzyme Biosurgery stock for each share of Genzyme Surgical Products stock they own and will hold approximately 26 percent of the new division.
Duke Collier, president of Genzyme Surgical Products, will become president of Genzyme Biosurgery. "The creation of Genzyme Biosurgery will allow Genzyme Surgical Products shareholders to participate in a self- sustaining enterprise with substantial financial resources, an expanded product portfolio and pipeline, strengthened technology platforms, and a broader market focus," said Mr. Collier. "This merger transforms our biosurgery franchise and, in doing so, creates tremendous value for shareholders."
Genzyme Surgical Products develops and markets a portfolio of instruments, devices, biomaterials, and biotherapeutics primarily for the cardiovascular and general surgery markets. It is pioneering the field of "biosurgery," which is being created by the increasing convergence of mechanical and biological approaches to surgery and other interventional procedures. A division of the biotechnology company Genzyme Corporation, Genzyme Surgical Products has its own common stock intended to reflect its value and track its economic performance.
This press release contains forward-looking statements, including statements concerning the receipt of marketing approvals for FocalSeal-L, the planned initiation of and progression of clinical trials for a gene therapy product, the completion of the formation of Genzyme Biosurgery, the creation of a new publicly traded stock for Genzyme Biosurgery, the future growth and success of Genzyme Biosurgery, Genzyme Biosurgery's impact on Genzyme Corp.'s involvement in the bio-orthopedic and cardiothoracic markets, expected revenues based on new products and the sufficiency of the cash and other resources of Genzyme Biosurgery. Actual results may differ materially depending on many factors including the accuracy of information about the biosurgery market, the competitive environment for the biosurgery market, market acceptance of Genzyme Biosurgery's products and services, the enrollment rate for clinical trials, the ability to successfully complete preclinical and clinical development of products, the actual safety and efficacy of products, the timing and content of submissions to and decisions by the FDA and other regulatory authorities, conditions in the financial markets relevant to the proposed creation of Genzyme Biosurgery, the likelihood of regulatory and other approvals of the transaction, the operational integration associated with the transactions and other risks generally associated with transactions.
Genzyme Surgical Products' earnings conference call will be broadcast live at 4:45 p.m. EDT today on Genzyme's Web site, www.genzyme.com, on the "What's New" page genzyme.com. To listen to the call, you need RealPlayer and a computer equipped with speakers and a sound card. You can download RealPlayer at the conference call site. A replay of the call will be available until March 16.
Investors may also listen to a replay of the conference call by dialing 1-800-633-8284 in the United States and 1-619-812-6440 outside the United States from 7:00 p.m. EST today through midnight EST on March 16. Please refer to reservation number 14167339. |
