FWIW, I've gathered everything I could find from a quick search of the SI and Yahoo boards that might be relevant to GZSP. You will see that Seprafilm was hoped to be a significant product for GENZ. It got off to a slow start, but seems to be catching on. A couple of the clips are portions of the GENZ quarterly reports which have recently contained a brief discussion of Seprafilm progress. Correct me if I'm wrong, but it seems that Seprafilm sales are increasing nicely. Beware, this is a very long post.
Dave
Seprafilm & GZSP related clips
10/96
Genzyme's newly launched Seprafilm, a product to reduce scar tissue after abdominal surgeries. Expectations for the product, which was approved earlier this year, have come down, but ''there's still room for disappointment,'' said Molowa. The meaningful quarter is the fourth, not the third, however, so investors have to wait a bit to gauge Seprafilm's success.
12/96
Does anyone have any specifics about whether Seprafilm, the company's bioresorbable membrane, is doing in the market. Anyone know a surgeon who is using this stuff and whether it really works as well as Genzyme claims?
Michael, what do you mean by "companies guidance to analyst"? Do you mean that the company has indicated to one or more analysts that the seprafilm launch has not gone as well as expected? If so, how do you know this? To what extent has the launch failed to meet expectations? What reasons were given?
Stone said that he expects that the sale of Seprafilm should take off in th second half of 1997. My understanding is that 96 is a bad year for Seprafilm. ( Or at least sales did not meet expectations)
My perception with this company is great company but too diversified and no focus. Lack of focus may have hurt the sales of Seprafilm, as the effort to launch the product was not maximum.
1/97
Genzyme sees strong response to Seprafilm
Reuters Story - January 07, 1997 17:58
FINANCIAL RESF DRU US GENZ V%REUTER P%RTR
SAN FRANCISCO, Jan 7 (Reuter) - Genzyme Corp Chairman and
Chief Executive Officer Henri Termeer said he is "very
encouraged" by the reception of Seprafilm, its product to
prevent surgical adhesions, which won FDA approval last August
and was commercialized in October.
In the first three months of commercialization, he said the
product was ordered by 347 U.S. hospitals, and that of those,
29 percent have reordered it so far.
2/97 Someone's Estimated Sales Breakdown
97e 96e
---------------------------------
Cerezyme 300M$ (270M$)
Service 70M$ (62M$)
Diagnostics 75M$ (63M$)
Pharmaceuticals 30M$ (35M$)
Surgical (DSP) 115M$ (about 50M$)
Seprocoat/film 20M$ (0M$)
R&D 20M$ (25M$)
---------------------------------
(630M$) (505M$)
3/97
Surgical product revenues were $25.4 million in the fourth quarter. As of December 31, Genzyme's anti-adhesion product, Seprafilm(TM) bioresorbable membrane, had been sold to 347 hospitals in the United States, with 29 percent reordering it. By the end of February, the product had been sold to 476 U.S. hospitals, with 39 percent reordering it.
5/97
We were very pleased with the call. We think Dr. Wexner is right about the cost-effectiveness of Seprafilm(TM) and will be supporting studies by him and others to document this. We are hopeful that the majority of surgeons can be convinced to use the product as Dr. Wexner does. For some surgeons who have higher overall costs than Dr. Wexner does, however, short-term cost considerations may be a significant concern.
Steve Push
Genzyme Corp.
genzyme.com
6/97
We are developing second and third generations of Seprafilm, so any comparisons with the first generation of Seprafilm might not be meaningful when, and if, INCERT reaches the market.
7/97
Steve, I read with great interest Karen Bernstein's article on overly opimistic analyst projections on new product launches in July 21st edition of BioCentury. I thought the quotes from all included were very telling. How are you currently feeling about Seprafilm. Do you think it is still eventually a $300 million market for GENZ. David Stone's comment from after attending a surgical adhesions conference was not encouraging. It was also somewhat depressing that surgeons who are regularly cutting open peoples abdomens are not educated on the latest innovations.
We have not changed our guidance on the long-term market for Sepra products. The penetration has been slower than we had hoped, but the growth rate has been increasing steadily. We are continuing to increase our resources devoted to sales and marketing of Seprafilm(TM).
I'm not really surprised that surgeons are slow to accept new technologies.
9/97
Japan Approves Genzyme General's Seprafilm
CAMBRIDGE, Mass., Sept. 3 /PRNewswire/ -- Genzyme General (Nasdaq:GENZ) today announced that its Seprafilm(TM) bioresorbable membrane has been approved for marketing by the Ministry of Health and Welfare in Japan. It is the first bioresorbable medical device to be approved in Japan without first undergoing additional clinical trials there.
Japan is the second largest medical device and pharmaceutical market in the world. Seprafilm is designed to reduce the incidence, severity, and extent of postoperative internal scar tissue, called adhesions, at the site of direct surgical trauma in open abdominopelvic surgical procedures.
Genzyme General will co-market Seprafilm with Kaken Pharmaceutical Co., Ltd., Tokyo, a leading pharmaceutical company in Japan, with which Genzyme General signed an agreement earlier this year. The terms of the agreement call for Kaken to receive co-marketing rights to Seprafilm in exchange for an undisclosed distribution rights fee and milestone payments. Genzyme General retains the right to promote, market, and sell Seprafilm in Japan, but the companies will share equally the profits from all of the Seprafilm sold by Kaken.
''The approval of Seprafilm is a very significant achievement in building our business in Japan,'' said Henri A. Termeer, Genzyme Corp.'s chairman and chief executive officer. ''For the second time, we have been able to obtain regulatory approval in Japan on our own, without going through a Japanese partner.''
Once a reimbursement price has been set by the Japanese government, Genzyme will begin selling Seprafilm in Japan with Kaken, which has a sales organization of more than 500 people. Genzyme General estimates that it will receive pricing approval in the fourth quarter of this year, and expects to launch the product in Japan in the first quarter of 1998.
Genzyme General has estimated that there are 370,000 surgical procedures performed in Japan each year in which Seprafilm could be used.
Genzyme General currently markets Seprafilm in the United States, Canada, and Europe. Its Tokyo office markets the company's lead product, Ceredase(R) (alglucerase injection) enzyme for treating
Gaucher disease. Japanese distributors market the company's portfolio of diagnostic and research products in Japan. Genzyme General also provides prenatal genetic testing services in Japan.
The agreement with Kaken also includes co-marketing rights to Genzyme General's Sepracoat(TM) coating solution and an option for co-marketing rights to Sepragel(TM) bioresorbable gel, which is in development.
Genzyme Corp., a biotechnology and health care products company, focuses on developing innovative products and services for major unmet medical needs. Genzyme General develops and markets pharmaceuticals, genetic diagnostic services, and diagnostic, surgical, and specialty therapeutic products. A division of Genzyme Corp., Genzyme General has its own common stock intended to reflect its value and track its performance.
10/97 Qtr Report
Sales of Seprafilm bioresorbable membrane continued to grow at an accelerating rate. The sales increase in the third quarter was the largest quarter-to-quarter increase since the product was launched. Genzyme General is targeting the top 350 hospitals which perform 27 percent of the colorectal and general abdominal surgeries in which Seprafilm could be used in the United States. As of September 30, 220 of the 350 target hospitals had bought the product and the reorder rate was 88 percent. In the third quarter, 95 of the 350 target hospitals were ordering more than three boxes, or 30 sheets, per month.
To further spur the growth of Seprafilm sales, the company recently hired and trained 20 people dedicated to selling Seprafilm. These specialists will continue to target the top 350 hospitals, with the
goal of converting them to routine use of the product. Several major hospitals are already using Seprafilm routinely in colorectal surgery.
Approval in Japan
Also during the quarter, Seprafilm was approved for marketing in Japan. This was the first bioresorbable medical device to be approved in Japan without first undergoing additional clinical trials there.
Genzyme General plans to launch the product in Japan with its partner, Kaken Pharmaceutical Co., Ltd., Tokyo, in the first quarter of 1998, pending pricing approval from the Japanese government. Genzyme General estimates that there are 370,000 surgical procedures performed in Japan each year in which Seprafilm could be used.
Post-Marketing Study
In the first quarter of 1998, the company plans to begin enrollment of a 2,500-patient, 15-center study in colorectal surgery. The purpose of this study will be to measure long-term outcomes related to small bowel obstruction in patients who receive Seprafilm during surgery compared to patients who do not.
''The continued growth of the Cerezyme and Ceredase business, the increased penetration of Seprafilm in the United States, and our expanding pipeline are positioning the company for future growth,'' said Henri A. Termeer, Genzyme's chairman and chief executive officer. ''We are very encouraged by the increasing evidence that Seprafilm is catching on in the surgical arena.''
7/98
I believe that Genzyme's main earnings problem is that Seprafilm has not added $200 million to revenues as anticipated.
I recently had a chance conversation with an excellent abdominal surgeon and he had not heard of Seprafilm. However, when I told him about it, he was very interested and said that he would investigate it.
Perhaps surgeons are conservative as has been previously noted. Perhaps they are too busy to keep up on their reading. Perhaps they don't follow up on the long term side effects of surgery.
In any case, abdominal adhesions really are a BIG problem in major surgery. They are also a fundamental problem and it is unlikely that advances in surgical technique will eliminate them. Seprafilm appears to be a solution. It could be argued that Seprafilm should be a standard tool in most abdominal procedures. It simply hasn't caught on yet.
7/98
Most analysts have dialed in Seprafilm sales of $150-$200 million annual revenue in the 2001-2003 time frame. Current run rate is less than $15 million. The long term studies of cost effectivness are the major way Seprafilm will hit these numbers, if they hit it at all. The numbers I have seen are a prevelance of abdominal adhesions in apx. 2.5% of procedures. (Anyone else have a number here). Many of these complications require repeat surgeries and are expensive. The theory is that Seprafilm (two to three sheets @$300) used in every procedure will pay for itself. So far the dogs are not eating the dog food. Long term studies will take several years and I believe that many forecasters are unsure of their out year numbers. Hence a quality of future earnings concern.
But now we have several new therapeutic compounds coming on line. The quality of these earnings are much better than Seprafilms and the discount rates are lower as well. Wall Street will give a higher p/e to these earnings. (At least in theory).
What would drive your abdominal surgeon to use Seprafilm? At this point I have not included in my estimates material upside in eprafilm sales. If it happens - it's gravy. My investment in GENZ is predicated on the therapuetic pipeline.
7/98
I think that in a few years not using anti adhesion products will be considered to be unacceptable. I would be pretty pissed off if I had to undergo repeat surgery only because my surgeon did not use an available anti adhesion product. The bigger question of course is if Seprafilm is still the favoured product when anti adhesion usage finally catches on.
I think just about any company that is working with hyaluronic acid has an anti adhesion development program. Anika claims that their not yet approved anti adhesion product works better than the current Seprafilm.
Life Medical Sciences CHAI has an anti adhesion product from another base material that worked much better than Seprafilm in preclinical animal studies. CHAI will run out of cash in the next 3 months and its current market cap of $11 million is probably too low to raise the necessary development money by selling shares. A partnership or straight buyout is probably necessary to keep CHAI running in the long term. Maybe Genzyme should play it save and acquire the rights to this promising technology.
7/98
Just wait for the first lawsuit! We have clients who are doctors using Seprafilm and they unequivocally say it works in their areas of expertise. Can you imagine a young lady who becomes infertile because of adhesions?! Just because Seprafilm wasn't used.
This scenario probably will not occur until more data is collected on Seprafilm. But the product does work and I feel it's just a matter of time before it's commonly used.
7/98
Re: Seprafilm. I have never felt that long term studies of cost effectiveness are going to be the driving force behind Seprafilm. Rather, I believe that Seprafilm or a similar product would simply become a standard of high quality healthcare. An analogy would be pain medication. Hospitals give all kinds of pain medication
nowadays to make patients more comfortable. I don't think pain medication is cost-effective. It has simply become the standard of care.
And my understanding is that the rate of surgical adhesions is much, much higher than 2.5%, although most of those do not require another surgery. Simply opening the abdomen and touching anything inside (with a gloved hand, for example) seems to traumatize the tissue in such a way that adhesions can form.
7/98
My understanding is that surgical adhensions do occur in most procedures at some level. Usually they are not significant or cause any long term harm to the patient. The 2.5% figure I quoted earlier is for the more serious adhension formations. I lifted this figure from an analyst report that was written many months ago. As I am not a doctor (and do not play one on the internet) I cannot make a judgement call on this score.
I do know that the definition of a pioneer is "He's the one with arrows in his chest" GENZ is taking its lumps on Seprafilm becuase they are trying to change the standard of care for surgical procedures. This is hard even when the results are fairly conclusive (many, many angioplast procedures are done without platlett inhibitors even though the trial data strongly points to their use). Seprafilm so far has not generated "a buzz" about Seprafilm strong enough to overcome surgeon resistance to change. I have read reports that say, in effect, that Seprafilm is a cure in search of a problem. Time will tell, but that time is expensive.
1) Purchase price of DSP to augment Seprafilm
2) Opportunity cost of those funds.
3) Equipment and manufacturing purchases (and their opportuity costs)
4) Management time and attention
5) Time lapse allows competitors a chance to catch up lowering margins permanently
In the end I hope Seprafilm catches on, but it has to really catch on. I suspect, (in a highly unscientific way) that Seprafilm will need to do over $100,000,000 annually with high gross margins just to recoup the investment the company has made in the product.
4/99 Qtr Report
Surgical Products
During the first quarter of 1999, surgical products revenues increased 18 percent to $30.1 million, compared to $25.6 million in the first quarter of 1998.
Sales of Sepra products increased 58 percent this quarter compared with the first quarter of last year, as Genzyme continues to see positive results from its aggressive marketing program for Seprafilm® Bioresorbable Membrane. Genzyme continues to build awareness about the extent and seriousness of post- operative adhesions through publications and conference presentations.
A study published recently in Diseases of the Colon and Rectum concluded that the incidence of small-bowel obstruction, adhesiolysis for obstruction and additional abdominal surgery after an initial colorectal surgery, are much higher than previously reported. In addition, The Lancet is expected to publish soon the first paper documenting results from a study that examines the 10-year outcomes of more than 50,000 patients who underwent open abdominal and pelvic surgery. Genzyme will also sponsor a symposium on small bowel obstruction at a meeting of the American Society of Colon and Rectal Surgeons in May.
For the quarter, overall sales of surgical instruments and devices increased seven percent compared with the same period a year ago. In particular, Genzyme continues to see very strong sales growth in its line of cardiovascular instruments and devices, which reached record levels in the quarter. At the annual meeting of the American Association for Thoracic Surgery (AATS) this week, Genzyme is introducing several new and second- generation products to its line for minimally-invasive cardiac surgery, including its OPCAB Elite(TM), SaphLift(TM), and MiniSaphLite(TM) products.
7/99 Yahoo Opinions
I heard the new tracking stock presentation last week and was very impressed. Why? This company is different from other Genz trackers in that they should be a tracking stock given the different nature of their business compared to Genz. They are more like Medtronic or Boston Scientific than Genz. Other differences- they have an experienced articulate mgmt team, $100 million in annual sales with solid brand names, a real commercial growing business in an exciting space-Cardiovascular Surgery. What is missing?? A new product pipeline!! There is nothing in the pipe for at least 4 years. What a shame. This company needs new near term products to add to their high risk long term products. The valuation of this company and their value as a potential aquisition candidate will suffer unless this is fixed. Quick--throw out the parachute!
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I just got the prospectus on GZSP. I think they DO have a pipeline including the Sepra products and the gene therapy IP. This is an interesting mix of an "old school" surgical product portfolio with some high risk new strategies. I am luke warm on the stock as I see it right now. The "biosurgery" and "GeneGraft" sound sexy, but if Genzyme can't sell something as simple as Seprafilm in the surgical portfolio... the newer stuff may be nearly impossible.
Did GZSP actually start trading at $8? They are starting with $10/share in CASH so I find it incredible that this company would start trading at below cash value.
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I just got a quote of 6 3/8... Normally these tiny developmental type companies are not for me but the backing from genz should help. In that report biotech guy was talking about genz gives their reasoning for the spinoff and basically for all these spn offs.
"By creating Genzyme surgical products as a seperate division, we hope to maximize the chances of creating a sucessful biosurgery business by allowing analysts, investors, management and employees to focus more on the business."
It's obvious that the tissue repair and this surgical products company don't fit well with the bulk of genz business and probably should have been spun off. Gzmo on the other hand does fit but i think they want to have a seperate company focused on one thing and that's the huge lucrative cancer market. It's all about focus mon...
Personally i wouldn't buy gzsp right now considering what happened to the other spin offs(trading around $2). It will take a while for the street to take notice of any of these companies but if and when they have a product for the market they will take off and it will help genz...
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It has cash of $10 per share. Its 1998 revenue is over $100 million.
It is estimated to grow at ~20% for the next five years and it will be profitable by 2001. Fair value is $25 per share. By any discounting method, $10 a share is a steal!!
Howeverm its president put out a negative spin on its share price trading. I guess by doing so the share price will be depressed. As a result, the president will get very high bonus as option income several years down the road.
Well, this is how insiders to manipulate the stock price to benefit themselves.
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From what i read in the report the total liabilities are around $10.5mm or less than a buck a share. The genz board has authorized that up to 60mm shares can be issued for gzsp. You are right about the cash for now. Gzsp recieved 150mm from genz and with 14.8mm shares outstanding that is slightly more than $10 a share.
GZSP volume - funds that got this in the distribution may be prohibited
from owning stock in a co with a capitalization less than $1B. I bought for the long term
$10 cash - $1 debt + $100M in sales may not be profitable yet, B U T sounds good to me!!!
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It seems like there are two main reasons for tracking stocks. The first is to provide an independent, entrepreneurial venture that is independent from a large parent. The second reason to have a tracking stock instead is to have the tracking stock's financial losses offset the parent's taxable profits.
The main problem with tracking stocks is that an investor is being asked to pay for assets that they do not own. If I understand GZSP correctly, GENZ has legal rights to the assets, but GZSP has control over how they are used. Given this scenario, it is not surprising that GZSP is selling for about $4 when the assets are worth about $25.
One way to resolve this problem is to announce a future date when the tracking stock will be spun off, with asset ownership. This would maintain the tax advantages prior to the spin off and force investors to start viewing GZSP as a viable entity. Thus, an easy way to get GZSP's price up around $25 is for GENZ to just say that it will spun off with full asset ownership at a future date, say December 31, 2001.
Unless there is a hidden agenda, if GENZ will do this, then GZSP can meet its stated objectives. |
