Wednesday April 22, 4:21 pm Eastern Time
Company Press Release
SOURCE: Genzyme Tissue Repair
Genzyme Tissue Repair Reports U.S. Carticel Sales
Jumped 33 Percent
CAMBRIDGE, Mass., April 22 /PRNewswire/ -- Genzyme Tissue Repair (Nasdaq:GENZL -
news) reported today that first-quarter sales of its Carticel(TM) autologous cultured chondrocytes in
the United States increased 33 percent from the fourth quarter of 1997, and increased 172 percent
over the same period last year.
Carticel sales in the United States were $2.1 million in the first quarter, up from $0.8 million in the
first quarter of 1997 and $1.6 million in the fourth quarter of 1997. Carticel employs a proprietary
process to grow a patient's own cartilage cells to repair damaged cartilage on the thigh-bone part of
the knee.
''The rapid growth in U.S. sales this quarter demonstrates our exceptional achievements in the
Carticel business during the past year,'' said Tim Surgenor, president of Genzyme Tissue Repair.
''FDA approval, increasing payer acceptance, and outstanding long-term patient outcomes provide
a solid foundation for building this business.''
Total Carticel revenues were $2.5 million in the first quarter, compared to $1.1 million in the first
quarter of 1997 and $2.2 million in the fourth quarter of that year. Total Epicel(SM) revenues were
$1.1 million in the first quarter, compared to $.86 million in the first quarter of 1997 and $.94 million
in the fourth quarter of that year.
Increasing Carticel sales produced a positive gross margin for the third consecutive quarter. The
gross margin was 10.4 percent in the first quarter.
Net loss for the quarter was $11.3 million, or $.57 per share, compared to a net loss of $11.9
million, or $.90 per share for the same period last year.
Carticel Performance
Treatments of patients with Carticel in the United States increased 32 percent to 202 in the first
quarter from 153 treatments in the fourth quarter of 1997. The first quarter jump represents the
largest increase in the number of patients treated since the product was introduced in 1995.
Carticel treatments in Europe in the first quarter decreased to 46 from 67 in the fourth quarter of
1997. Unlike the United States, where the biologics license approval helped to spur broad coverage
of Carticel procedures by individual health insurance plans, a majority of treatments performed in
Europe are paid out of hospitals' annual budgets. This is expected to result in slower growth rates in
Europe and a tendency to have more treatments occur at the end of hospital budget years.
Surgeon interest in Carticel increased significantly in the first quarter as a result of easier insurance
reimbursement processes and positive long-term data on the product. The number of surgeons
trained in the use of Carticel in the United States jumped 84 percent to 224 during the first quarter,
compared to 122 surgeons trained in the fourth quarter of 1997. Worldwide, the number of
surgeons trained increased 40 percent, to 250 during the first quarter from 179 in the fourth quarter
of 1997. This brings the total of surgeons trained since the inception of the Carticel program to
2,238.
Reimbursement Gains
Approvals of Carticel cases by payers in the United States increased 25 percent quarter-to-quarter
to 227 in the first quarter of 1998 from 182 in the fourth quarter of 1997.
The increase in the number of people covered by insurance plans that pay for Carticel as a matter of
policy in the United States jumped to 123 million as of March 31, 1998, from 101 million on
December 31,1997, a 22 percent increase. Unlike health plans that review on a case-by-case basis,
those with protocols for Carticel generally approve reimbursement whenever patients meet the
criteria set out in the protocol. Only 15 million people were covered just prior to FDA approval in
the second quarter of 1997.
The expanding ranks of health plans covering Carticel as a matter of policy now includes Blue Cross
and Blue Shield of Massachusetts and Blue Cross of Iowa.
In a related development, the U.S. Office of Personnel Management (OPM) clarified its policy
regarding coverage of drugs, devices, and biological products approved by the U.S. Food and Drug
Administration. As a result, health plans covering over 9 million federal employees and retirees are
now required to cover all FDA-approved treatments, including Carticel, when used for the labeled
indication. OPM's policy also required those plans to cover the cost of administering such products
by injection, infusion, or surgery.
Genzyme Tissue Repair has recently adopted a more aggressive marketing strategy, building on a
successful program in key metropolitan markets to maximize the number of health care plans that
have protocols for Carticel. This strategy to increase the number of patient treatments per trained
surgeon involves adding 27 indirect distributor representatives in four targeted metropolitan areas to
augment the company's existing sales force of seven direct representatives in those areas. These
distributors have been selected and will be in place and trained by the end of the second quarter.
Long-Term Patient Results
A study presented in March at the annual meeting of the American Academy of Orthopedic
Surgeons (AAOS) provided long-term data on the effectiveness of autologous chondrocyte
implantation, the procedure in which Carticel is used. Of patients who had good to excellent results
two years after being treated with Carticel, 96 percent had good to excellent results five to 10 years
after treatment. Conventional therapies for this type of injury produce good results initially but usually
fail within five years. The study was presented by Lars Peterson, M.D., Ph.D., of the University of
Gothenburg, Sweden.
Also at the AAOS meeting, two-year outcomes data from the Carticel patient registry was
presented for the first time. The data showed that 86 percent of patients treated with Carticel
continued to show improvement two years after their therapy. It was the fourth report of the
Cartilage Repair Registry, with data provided by 410 surgeons worldwide. Copies of the report are
available to the public upon request.
Genzyme Tissue Repair also received important ISO 9002 certifications in Quality Management
System Standards from Lloyd's Register Quality Assurance. These certifications allow compliance
with European CE mark requirements.
NeuroCell Study Results
During the first quarter, the FDA approved the protocol for a pivotal phase II/III trial for
NeuroCell(TM)PD, which is the first fetal porcine cell product being evaluated for its ability to
regenerate human brain tissue damaged by disease. The product is being developed by
Diacrin/Genzyme LLC, a joint venture formed by Genzyme Tissue Repair and Diacrin Inc
[Nasdaq:DCRN - news].
NeuroCell interim safety data from phase I trials will be presented at a meeting of the American
Academy of Neurology that begins on April 27 in Minneapolis. The meeting will include
presentations regarding patients transplanted with NeuroCell(TM)-PD and NeuroCell(TM)-HD
porcine neural cell products to replace brain cells lost due to advanced Parkinson's and Huntington's
diseases. These patients were participants in the first FDA- approved clinical trial involving porcine
neural cells. An update on NeuroCell treatments will also be given at the annual meeting of the
American Association of Neurological Surgeons starting on the same date in Philadelphia.
Genzyme Tissue Repair is a leading developer of biological products for the treatment of cartilage
damage, severe burns, chronic skin ulcers, and neurodegenerative diseases. It is a division of
Genzyme Corp. [Nasdaq:GENZ - news] and has its own common stock intended to reflect the
division's value and track its performance.
This press release contains forward-looking statements about the growth rate of Carticel treatments
in the U.S. and Europe. Actual results may differ materially from these statements depending on the
ability of Genzyme Tissue Repair to increase the approval rate for reimbursement of Carticel
treatments from third-party payers, to continue to show positive long-term data and clinical
effectiveness of the Carticel product versus alternative treatment, and the successful implementation
of Genzyme Tissue Repair's marketing strategy using distributors.
Genzyme's releases are on the World Wide Web at genzyme.com. They are also
available from Genzyme's fax-on-demand service at 1-800-436-1443 within the U.S. or
1-201-521-1080 outside the U.S.
Genzyme Tissue Repair will host a conference call to discuss this report today at 5 p.m. EST. A
replay of the conference call will be available from 7 p.m. today through 5 p.m. April 27. To hear
the replay, please call 1-800-633-8284 in the United States or 303-248-1201 outside of the United
States. Callers should refer to reservation number 4084300.
GENZYME TISSUE REPAIR
Combined Statements of Operations
(Amounts in thousands, except per share amounts)
Three Months Ended
March 31,
1998 1997
Revenues:
Net service sales $3,611 $1,987
Operating costs and expenses:
Cost of services sold 3,234 2,856
Selling, general and
administrative 6,313 6,454
Research and development 3,086 2,768
Total operating costs
and expenses: 12,633 12,078
Operating loss $(9,022) $(10,091)
Other income (expenses):
Equity in net loss of
joint venture (1,931) (1,589)
Interest income 447 186
Interest expense (814) (377)
Other income (expenses) (2,298) (1,780)
Net loss $(11,320) $(11,871)
Net loss per Genzyme Tissue Repair Common Share
(Basic and Diluted):
Net loss $(0.57) $(0.90)
Weighted average shares
outstanding 20,002 13,178
Condensed Combined Balance Sheets
(In thousands)
March 31, December 31,
1998 1997
Cash and all marketable
securities $21,711 $31,915
Other current assets 5,907 4,926
Property, plant and
equipment (net) 18,991 19,524
Other assets 403 453
Total assets $47,012 $56,818
Current liabilities $5,597 $5,407
Noncurrent liabilities 31,701 31,208
Division equity 9,714 20,203
Total liabilities
and division equity $47,012 $56,818
SOURCE: Genzyme Tissue Repair |
