CAMBRIDGE, Mass., July 19 /PRNewswire/ -- Genzyme Tissue Repair
(Nasdaq: GZTR) today reported revenues of $6.3 million for the second quarter
of 2000, a 35 percent increase from $4.7 million in revenues reported in the
second quarter of 1999.
Increases in revenue were led by a 42 percent growth in U.S. sales of
Carticel(R) (autologous cultured chondrocytes). U.S. sales of Carticel
increased to $4.0 million for the second quarter of 2000, compared to $2.8
million in the second quarter of 1999.
Net loss for the second quarter of 2000 decreased 52 percent to $4.0
million, as compared to $8.4 million in the second quarter of 1999. The loss
per share for the second quarter of 2000 decreased to a loss of $0.14 per
share, as compared to a loss of $0.37 per share in the second quarter of 1999.
This improvement is due to increased revenue and gross margin improvement, as
well as the transfer of the NeuroCell program-a joint venture between Genzyme
and Diacrin, Inc.-to Genzyme General (Nasdaq: GENZ) in May 1999.
Gross profit more than doubled for the second time this year, increasing
126 percent in the second quarter of 2000 to $3.3 million compared to $1.4
million in the second quarter of 1999. Gross margin as a percent of total
revenue was a record 52 percent for the quarter, up from 31 percent for the
same quarter last year. The increase in gross profit is due mainly to an
increase in sales volume and leveraging of production production costs.
Operating losses for the second quarter of 2000 were $3.8 million, a decrease
of 41 percent from $6.7 million in the second quarter of 1999.
"Genzyme Tissue Repair continues to drive Carticel revenues with
consistent average yearly growth of 40 percent in U.S. sales," said Russell
Herndon, president, Genzyme Tissue Repair. "Additionally, our consistent
improvements in gross margin to record levels continue to be a major
contributor to our success in decreasing our loss each quarter."
Worldwide sales of Carticel increased 21 percent to $4.6 million for the
second quarter of 2000, up from $3.8 million in the second quarter of 1999.
European Carticel sales were $0.6 million in the second quarter of 2000, down
42 percent from $1.0 million in the second quarter of 1999, which was an
atypical and record quarter for Carticel in Europe.
Revenue from Epicel(TM) (cultured epidermal autografts) increased a record
97 percent to $1.7 million in the second quarter of 2000, compared to $0.9
million for the second quarter of 1999. Epicel revenues fluctuate from
quarter to quarter depending on the need for severe burn care.
Genzyme Tissue Repair ended the quarter with $4.4 million in cash.
Genzyme Tissue Repair has access to $15.0 million under an interdivisional
financing arrangement from Genzyme General, as well as access to additional
funding from Genzyme's revolving credit facility.
Orthopedic Product Development Update
In the second quarter of 2000, Genzyme Tissue Repair submitted a 510(k)
filing on schedule to the U.S. Food and Drug Administration (FDA) for
clearance to market its Quick Tack(TM) periosteal fixation system. Quick Tack
is a small device designed to replace the use of sutures during the Carticel
implantation. It is expected to simplify the procedure and decrease the time
needed for the surgery. In addition, Quick Tack is the first step from the
current open-knee procedure toward an arthroscopic (closed knee) Carticel
Carticel Phase 4 Study Update
Genzyme Tissue Repair has made significant progress in all of its three
Carticel post-marketing studies, including the completion of one study. The
studies are required by the U.S. Food and Drug Administration as part of
Carticel's accelerated marketing approval.
During the quarter, the first of these three studies, the Registry Based
Study, was completed ahead of schedule and has been sent to the FDA for
review. The study met its primary and secondary endpoints related to efficacy.
The second post-approval study, called STAR (Study of the Treatment of
Articular Repair), is ahead of schedule in site initiation and patient
enrollment. Genzyme Tissue Repair received protocol approval for STAR in the
first quarter of 2000 and to date, 17 sites have been initiated and 7 patients
have received Carticel implantation. Investigators will evaluate
approximately 100 patients in this study and will follow these patients for
Genzyme Tissue Repair has also made significant progress in its third
post-approval commitment-a preclinical study assessing the contribution of the
cells to the cartilage repair. The study is designed to compare the results
from the Carticel procedure (cultured cartilage cells implanted in the defect
are covered with a patch of periosteum to hold them in place) versus placing
periosteum over the defect without Carticel. The periosteum is a membrane
covering the shin bone. Data collection for this study is expected to be
complete by the end of 2000.
In the second quarter of 2000, the Genzyme Corporation Board of Directors
extended the first milestone date for the NeuroCell program. The milestone
date to initiate a phase 3 clinical trial of NeuroCell-PD to treat Parkinson's
disease was extended to December 31, 2000, from June 30, 2000.
The milestone date and related financial obligation to Genzyme General
were extended to allow time to complete and review the current blinded phase 2
clinical trial. In the meantime, preparations for the phase 3 clinical trial
are moving forward. The FDA has reviewed the phase 3 trial protocol and trial
sites and investigators have been selected. The first Institutional Review
Board (IRB) approval for the protocol was obtained in May 2000.
Genzyme transferred its interest in the NeuroCell joint venture from
Genzyme Tissue Repair to Genzyme General in May 1999. The milestone, based
on the initiation of a phase 3 clinical trial, is part of the terms of the
Formation of Genzyme Biosurgery
Progress continues toward the proposed merger which would combine Genzyme
Tissue Repair with Genzyme Surgical Products (Nasdaq: GZSP), and acquire
Biomatrix Inc. (NYSE: BXM) to form a new publicly-traded division of Genzyme
Corporation called Genzyme Biosurgery.
The merger has received clearance from the Federal Trade Commission under
the Hart-Scott-Rodino Antitrust Improvements Act and is being reviewed by the
Securities and Exchange Commission. Once effective, a joint proxy
statement/prospectus will be mailed to shareholders of each company. A
special shareholder meeting will be held to vote on the proposed merger plan.
The meeting is expected to occur in the third quarter.
The formation of Genzyme Biosurgery will create critical mass in the area
of bio-orthopedics and establish the business as a leader in this field with
two marketed break-through bio-orthopedic products: Biomatrix' Synvisc for
osteoarthritis and Carticel. The financial and technical strength of the new
business will also allow Genzyme Tissue Repair to accelerate development of
its pipeline products including Carticel II, intended to allow implantation
arthroscopically, and its small molecule therapy under development for the
treatment of osteoarthritis.
Upon formation, Genzyme Biosurgery will have approximately 1,300
employees; six dedicated manufacturing facilities; global clinical and
regulatory capabilities; cutting-edge scientific and technological expertise;
an extensive intellectual property portfolio; several established sales
organizations in focused surgical markets in both the United States and
Europe; and marketing and distribution agreements with a number of large,
multinational health care companies.
Genzyme Tissue Repair is a leading developer of biological products for
the treatment of orthopedic injuries such as cartilage damage, and severe
burns. It is a division of Genzyme Corp. and has its own common stock
intended to reflect its value and track its performance.
This press release contains forward-looking statements, including
statements about Genzyme Tissue Repair's expected benefits of Quick Tack, the
anticipated timing of regulatory submissions and the completion of clinical
studies, the planned acquisition of Biomatrix, the anticipated creation of
Genzyme Biosurgery, the timing for the creation of Genzyme Biosurgery, the
expected growth and success of Genzyme Biosurgery, Genzyme Biosurgery's
anticipated impact on Genzyme Corp.'s involvement in the biosurgery and bio-
orthopedic markets and the expected effects of the creation of Genzyme
Biosurgery on Genzyme Tissue Repair's development of products. Actual results
may differ materially due to many factors, including the results of
operations, the actual benefits of Quick Tack, enrollment rates for trials,
the actual safety and efficacy of products, the time involved in compiling and
analyzing clinical trial data, the timing and content of submissions to and
decisions by the FDA and other regulatory authorities, the likelihood of
regulatory and other approvals of the planned acquisition of Biomatrix and the
creation of Genzyme Biosurgery and related matters, the operational
integration associated with the anticipated transactions and other risks
generally associated with such transactions, the accuracy of information about
the biosurgery and bio-orthopedic markets, the competitive environment for the
biosurgery and bio-orthopedic markets, and the ability to successfully
complete preclinical and clinical development of products. GZTR stock is a
class of common stock of Genzyme Corporation, therefore GZTR shareholders are
subject to the risks and uncertainties described in Genzyme's filings with the
Securities and Exchange Commission under the Exchange Act of 1934, as amended,
including Exhibit 99.2 to Genzyme's Annual Report on Form 10-K for the year
ended December 31, 1999.
Genzyme Tissue Repair's second quarter earnings conference call will be
broadcast live over the Internet at 11:00 a.m. EDT today on Genzyme's website:
http://www.genzyme.com/ir/events.htm. The conference call will be available
through midnight EDT July 27.
Investors can also listen to a playback of a conference call discussing
the second quarter financial results by phone by dialing 1-800-633-8284 in the
United States or 1-858-812-6440 elsewhere from 1pm EDT today through 12
midnight EDT July 27. Refer to reservation number 15487322.
Genzyme's releases are on the World Wide Web at http://www.genzyme.com.
They are also available from Genzyme's fax-on-demand service at 1-800-436-1443
within the United States and 1-201-521-1080 outside the United States.
Media Contact: Investor Contact:
Elizabeth Heller Kristen Nally
GENZYME TISSUE REPAIR
Combined Statements of Operations
(Amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Total revenues $6,287 $4,665 $12,154 $8,688
Operating costs and
Cost of services sold 3,023 3,221 6,046 6,219
Selling, general and
administrative 5,626 6,115 11,365 12,429
development 1,452 2,003 3,323 3,971
Total operating costs
and expenses 10,101 11,339 20,734 22,619
Operating loss (3,814) (6,674) (8,580) (13,931)
Other income (expenses):
Equity in net loss of
joint venture - (1,361) - (3,368)
Other - - (5) -
Interest income 106 72 208 165
Interest expense (323) (419) (625) (864)
Total other income
(expenses) (217) (1,708) (422) (4,067)
Net loss $(4,031) $(8,382) $(9,002) $ (17,998)
Net loss per GZTR
basic and diluted
common share $(0.14) $ (0.37) $(0.31) $(0.81)
shares outstanding 28,666 22,764 28,598 22,355
Condensed Combined Balance Sheets June 30, December 31,
(In thousands) 2000 1999
Cash and all marketable securities $4,382 $9,373
Other current assets 8,519 7,615
Property, plant and equipment, net 2,099 2,545
Other assets 101 115
Total assets $15,101 $19,648
Current liabilities $3,536 $4,876
Noncurrent liabilities 18,152 18,227
Division equity (6,587) (3,455)
Total liabilities and division equity $15,101 $19,648
Carticel Performance Indicators
1995 1996 1997 1998 1Q99 2Q99
US 60 251 476 855 227 258
Europe/ROW 0 52 184 239 79 121
Total Treated 60 303 660 1094 306 379
US Reimbursement Activity
Third Party Coverage
(est millions of lives) 101 525 141 142
Cumulative # of Payors
with protocol to
routinely pay for
Carticel 67 325 89 92
US Patient Approvals 72 301 543 1078 278 335
3Q99 4Q99 1Q00 2Q00 Since
US 252 339 308 325 3351
Europe/ROW 70 93 88 74 1000
Total Treated 322 432 396 399 4351
of lives) 164 169 179 179
to routinely pay
for Carticel 99 101 103 103
324 377 396 402
SOURCE Genzyme Tissue Repair