ZymoGenetics' longtime CEO is stepping down

ZymoGenetics Chief Executive Bruce Carter will step down Jan. 2, to be succeeded by current President Douglas Williams.
Carter, 65, a prominent figure in local biotech circles, became president and chief executive of ZymoGenetics in 1998, when the Seattle company was a subsidiary of Novo Nordisk.
He led the spinoff that turned the Seattle-based biotech into an independent company in 2000. Eight years later, he presided over the launch of the company's first commercial product, Recothrom, a genetically engineered form of a blood protein used to control surgical bleeding.
He leaves as ZymoGenetics, which once ranked highest in market capitalization among Seattle-area biotech firms, has seen its shares plummet 77 percent in the past year because investors are disappointed at sluggish Recothrom sales.
"It has been an honor to lead ZymoGenetics and a privilege to work with so many bright and talented people. It is also satisfying to think that discoveries at ZymoGenetics have led to lives saved," said Carter in a statement.
"In many ways it is sad to leave, but all organizations are invigorated by new blood, and I am confident that in Doug we have the right person to drive this company forward and capitalize on the opportunities we have created for patients and shareholders."

It's official: J&J to pay $438m for Omrix

Biological sealant maker Omrix Biopharmaceuticals today officially announced that Johnson & Johnson (NYSE: JNJ) will acquire the company for $438 million - $25 per share. Omrix rose 16.3% in early trading today to $24.60, giving a market cap of $421 million, after rising 30% on Friday, when reports of the acquisition first emerged.
Johnson & Johnson (JNJ) and Omrix Biopharmaceuticals (OMRI), a biopharmaceutical company that develops and markets biosurgical and immunotherapy products, announced a definitive agreement whereby Omrix will be acquired for approximately $438 million in a cash tender offer. Omrix is expected to operate as a stand-alone entity reporting through ETHICON, a J&J company and leading provider of suture, mesh, hemostats and other products for a wide range of surgical procedures.
The acquisition of Omrix would strengthen its presence in active, biologic-based hemostats and convergent products for various surgical applications. ETHICON currently has exclusive distribution rights in the U.S. and the European Union for EVITHROM(TM) Thrombin Topical (Human) and EVICEL(TM) Fibrin Sealant (Human), two active, biologic-based hemostats manufactured by Omrix. ETHICON and Omrix are also partnering on a Fibrin Pad product candidate, currently in Phase II clinical trials, as an adjunct to control mild to moderate soft tissue bleeding.
Terms
-J&J to purchase all outstanding shares through a tender for $25/share
- 18% premium over last close and ~51% over last months average trading price
- $358M total net of estimated cash on hand
Assuming this transaction closes in 2008, Johnson & Johnson is expected to incur an estimated one-time, after-tax charge of approximately $120 million reflecting the write-off of in-process research and development charges (IPR&D). The acquisition is expected to be breakeven to slightly dilutive to Johnson & Johnson’s earnings per share in 2009.
Omrix has taken a big hit this year dropping from their 52 week high of 38.18 to a low of just 8.99 after a disappointing update regarding their phase 2 fibrin coagulant patch. I think JnJ got a pretty good bargain here.

Omrix Q3

Robert Taub
Thank you, Asaf. As Asaf mentioned, this quarter was another record quarter for biosurgery product sales – $9.5 million. Evicel is continuing to be a strong performer. The number of total accounts continues to increase steadily, and in quarter three, end user sales by our partner, Ethicon, once again included a very significant amount of repeat business. By year-end, we believe that total sales of Evicel will be approximately the same as our competitor.
Additionally, as mentioned in a recent press release, we announced that the EMEA approved Evicel in Europe. Evicel is now licensed for marketing in 27 plus three countries – the 27 countries of the European Union plus another three in Europe, and Ethicon will begin to sell Evicel on a country-by-country basis as Quixil is gradually phased out.
Next, Evithrom, our human-based thrombin standalone product continues to experience moderate dollar sales growth in this market. In quarter three, the total number of accounts purchasing Evithrom, however, increased by 50%, with new customers comprising 52%. As you're probably aware, however, there is currently fierce price competition in the thrombin standalone market, and as we have predicted, the market is moving toward thrombin enhanced hemostats, and we are currently developing two such products.
I would now like to update you on our Fibrin Pad. As you may recall, we have two trials, one in the U.S. in mild-to-moderate bleeding and a second one in Israel in severe bleeding.
With respect to the U.S. trial, we completed enrollment of the 90 patients needed to conduct interim analysis. We were pleased to report that the analysis showed superiority of the Fibrin Pad over Surgicel. Having demonstrated superiority, we are now able to continue with open-label enrollment. The trial will continue to enroll patients only to the Fibrin Pad arm, and according to the study design, we are required to treat at least 100 total patients for safety, which means another additional 40 patients with the Fibrin Pad.
Shortly after we announced that we had achieved superiority we were informed that the U.S. Phase II study had been suspended after a patient had experienced postoperative bleeding. This patient was not among the first 90 enrolled, but part of the subsequent 40 already. Many of you have asked why the trial was suspended if rebleeding is an expected event in surgery and in this protocol. The reason is simple. The protocol is written so that if there is a case of postoperative bleeding the trial must be suspended and an investigation must be conducted. Therefore, the decision to suspend the trial was an administrative one.
A Data Safety Monitoring Board, or DSMB, conducts the investigation and then provides a recommendation on how the trial is to proceed or if it is to be modified or even discontinued. We have now reported that the DSMB concluded their investigation and recommended that the clinical trial resume without any modifications, which it did.
I want to clarify that the DSMB's role is not to determine the relationship between the adverse event and the product. We, however, conducted a thorough product investigation and concluded that there is no issue with the clinical material.
I would still like to emphasize that a trial continuation with no modification is the absolute best case outcome. Therefore, we remain on target to complete enrollment of the 130 patients by the end of '08 or early '09. Although we still expect to be within the window of prior timeline guidance, due to the two-week investigation we are now more comfortable with an early '09 time frame. Once we complete the two-month follow-up and finish analyzing the data, we expect to file the BLA with the FDA in the first half of '09 and then assuming a standard 10-month review, we expect the approval in the first half of 2010.
Now, regarding the severe bleeding indication, I am pleased to inform you that we now have the approval from the British MHRA on behalf of the European Union to conduct a study in soft tissue severe bleeding.
I draw your attention to the fact that the indication and protocol are quite similar to the mild-to-moderate study which is ongoing in the United States. This EU severe bleeding study will be a pivotal study leading to an indication for the use of the Fibrin Pad in severe bleeding in soft tissue surgery. This kind of bleeding is different from the target bleeding in the exploratory Phase II study which we started some time ago in Israel.
Indeed, the Israeli study was purposefully designed to be the most challenging as it addresses the control of severe bleeding when the product is applied directly onto the resected solid organ, such as a kidney, a prostate, a liver or highly vascularized organs, and these organs are not soft tissues.
As you know, we reported a postoperative bleeding event in the Israeli trial. We are conducting an investigation, and pending the conclusion of the investigation of the rebleeding case we have decided to discontinue enrollment of additional patients in that Israeli trial and are focusing on initiating the European trial. But you should understand that the clinical development plan of the Fibrin Pad is proceeding well with a mild-to-moderate study in the United States and a severe bleeding study which will be initiated in Europe in the first half of '09.
Let me give you some details on the European study design. As I mentioned, it is a pivotal clinical study evaluating the safety and efficacy of our Fibrin Pad in soft tissue severe bleeding in abdominal, pelvic, retroperitoneal and noncardiac thoracic surgery. The study is a randomized multicenter clinical study evaluating the superiority of Fibrin Pad versus the standard treatment in controlling challenging severe bleeding in soft tissue for which standard methods of achieving hemostasis are ineffective or impractical.
Alright. Now, moving on to our passive immunotherapy business. Immunotherapy product and byproduct sales amounted to $10.1 million in the third quarter of 2008. And regarding our Phase III clinical trial in the United States for IVIG, the trial is proceeding according to expectations, and we are on track to file the BLA in the third quarter of 2009.
Erik Schneider – UBS
Okay. Great. Evithrom in the U.S., you previously said that it was – had higher sales than Zymo's Recothrom. Both are now in IMS. What is it – what's different about that channel that the IMS data show Evithrom with smaller dollars, but you're confident that they're actually larger?
Robert Taub
No, we don't know what ZymoGenetics sales are other than what we read in a press release from analysts or from their own public statement, so all I can say is that we definitely are way ahead of ZymoGenetics in terms of sales.
Erik Schneider – UBS
Okay. And what we've heard from them is that they're having trouble selling the product and in fact they're seeing pricing pressure in that market, particularly, with hospitals focused on saving money where they can. Have you seen anything like that with either Evithrom or that could be affecting Evicel going forward?
Robert Taub
No, I think that I mentioned in my script that there is a fierce price competition in the thrombin area, and I think ZymoGenetics itself is triggering that. So yes, there's tremendous competition in pricing currently ongoing, but we haven't seen anything in Evicel or in the (inaudible) area. So I don't think it's an overall statement here that has to be made about the Zymo stats in the United States, but rather a very specific thrombin related situation with Kings, ZymoGenetics, Ethicon and Omrix.
Source - seekingalpha

Zymogenetics Q3 highlights

Bruce Carter CEO (ZGEN)
Thank you, Doug. I’ll update you now on RECOTHROM sales. Net sales for the third quarter were $1.8 million versus $1.4 million in the second quarter, a 27% increase. If we discount the wholesale pipeline filling in quarter two, the quarter-on-quarter increase in sales is nearly fourfold. Nevertheless, sales are still low and our focus is and must be to grow sales as quickly as possible.
Year-to-date through September, 177 P&T committees have made a decision about RECOTHROM. Fifty-nine have made RECOTHROM the sole thrombin on the formulary. Fifty-two have added RECOTHROM to the formulary and thus have more than one thrombin product. So 63% of committees have had a positive outcome. Sixty-six committees had declined to add RECOTHROM up to the end of September, which is approximately 37%.
We have now been on the market for most of this year. What have we learned that will help us convince customers to buy our product? We have learned that there is a limited awareness of and ability to properly diagnose bovine-immune mediated coagulopathies from surgeons, nurses, and pharmacists. So we must focus on making customers aware of the occurrence and consequences of bovine-immune mediated coagulopathies.
Second, we have to highlight the advantages of our Recombinant product, RECOTHROM. Third, we’ve been listening to the pharmacists concerns about their budgets and we’ve responded to their concerns with a new pricing strategy.
What are we doing to educate the market with respect to bovine-immune coagulopathies? Well, we recently sponsored a webinar in which surgeons discussed recent cases that they had experienced this year where they had to deal with this issue. The webinar’s educational objective was to create an awareness of the clinical presentation of coagulopathies and to demonstrate the overall impact and consequences to patients and to the hospital’s use of resources. It highlighted three cases from this year showing that this is a current problem.
We’re also convening a consensus panel of expert hematologists, surgeons and pharmacists and this consensus panel will evaluate the scientific evidence and other information available in the area of post-operative bleeding, identifying gaps in the scientific literature and education of health care professionals and we’ll recommend actions to close these gaps.
What are we doing to demonstrate some of the advantages of our product? We will present data from our Phase IIIb trial at the American Society of Hematology in December. This was a 200 patient study using RECOTHROM in patients undergoing repeat spinal or vascular surgery and thus patients having a high likelihood of prior exposure to bovine thrombin and as such, an increased risk of having pre-existing antibodies to bovine thrombin.
The primary objective of this study was to demonstrate that RECOTHROM can be given safely to patients with pre-existing antibodies to bovine thrombin and I would remind you again that the back box falling on bovine thrombin says “patients with antibodies to bovine thrombin preparations should not be re-exposed to these products.”
The third way to influence purchases is of course price and most of the declines that we had through the end of the fourth quarter are related to pricing. We’ve listened to our customers concerns and responded at the beginning of October, with an enhanced discounting program that allows conversion to RECOTHROM while at the same time being budget neutral to these hospitals.
Our new pricing has only been in place since the beginning of October, but we are beginning to see its effect. We have seen hospitals where we had been approved for an addition to the formulary switching to full conversion, but we are very pleased to see hospitals which had previously declined RECOTHROM converting fully to RECOTHROM on the formulary.
We believe that fourth quarter net sales will be in the region of $3 million, a 60% increase on the third quarter and thus 2008 sales will be in the region of $7 million.
We are facing challenges with a long hospital sales cycle and pricing concerns; however, we believe that the Recombinant protein is better than a protein from human or cow blood.
We believe RECOTHROM is best in class with a strong label and product profile and we believe that with our new pricing strategy, we are seeing increased traction in the marketplace. The process has taken longer than we had projected, but we believe RECOTHROM will be the market leader in the coming years.........
Source: seekingalpha

BioSyntech

Established in 1995 and traded on the TSX Venture since 2004, BioSyntech has created and developed innovative biotherapeutic thermogels for regenerative medicine (tissue repair) and therapeutic delivery, which appeal to large unsatisfied markets.
BST-DermOn™ is a topical therapy, which conforms well to the wound and may help stimulate the natural healing process. It may maintain the wound’s moist environment while allowing gas exchange. The wound healing, as well as inherent hemostatic and bacterio-static properties of the chitosan component of BST-DermOn™ has well-documented in the scientific literature. Our animal studies have shown that it stimulates and supports the intrinsic healing process of slow or non-healing wounds.
Claude LeDuc President and CEO BioSyntech Inc. said "As part of the implementation of the streamlined business plan we will concentrate and focus our efforts and resources on advancing BST-CarGel® through the clinic. While we continue to believe strongly in the market opportunity of our other programs, given the current limited financial resources at BioSyntech, enrollment for the BST-DermOnTM clinical trial and development work on BST-InPodTM has been suspended at this time."

Researchers Use New Method to Control Bleeding in Hemophilia

MILWAUKEE, Nov 13, 2008 /PRNewswire via COMTEX/ -- Investigators at Children's Research Institute, BloodCenter of Wisconsin's Blood Research Institute and the Medical College of Wisconsin have discovered a new way to help the blood clot by having the missing clotting factor packaged in the patient's own platelets. In the October 2008 edition of Blood, investigators describe how a gene-modified bone marrow transplant can be used to initiate clotting in hemophilia. This type of approach may work in the 30 to 35 percent of hemophilia patients that have developed inhibitory antibodies against the missing clotting protein.
The bone marrow is removed from the patient and stem cells are treated with Factor VIII, a clotting factor, which is placed in the platelets. The marrow is given back to the patient, who then retains the essential clotting mechanisms to stop bleeding that otherwise would lead to complications.
For people suffering from hemophilia, this research means the potential relief of a constant, burdening disease. People who have hemophilia previously had to be treated every time they bled. Currently, they can receive treatments three times a week, but these are very costly and time consuming. The results from this study provide hope that people with hemophilia could potentially lead a disease-free life.
The scientific community once believed that hemophilia would be treated successfully by gene therapy. Research then showed that gene therapy typically resulted in the patient not retaining a substantial amount of clotting factor, which is integral in preventing serious bleeding.
This research was a collaborative effort that included investigators Qizen Shi, PhD, MD; David A. Wilcox, PhD; and Robert Montgomery, MD.

Vascular Solutions Ranked as One of the 500 Fastest Growing Technology Companies in North America

Vascular Solutions, Inc. today announced that it has once again been included on the 2008 Deloitte Technology Fast 500, a ranking of the 500 fastest growing technology companies in North America. Rankings are based on percentage revenue growth over five years, from 2003-2007.
Vascular Solutions' CEO, Howard Root, commented: "This is the fifth year that we have been ranked as one of the 500 fastest growing technology companies in North America, which is a testament to the continued dedication and hard work of our employees. It is especially pleasing to be able to achieve our 346% revenue growth over the past five years through advancing our mission of delivering excellence in vascular devices. We are honored to be one of just three Minnesota companies on the Deloitte's Technology Fast 500 list for 2008."

Natures Superglue

How does an aquatic bacterium that colonizes streams, rivers, and water pipes resist being swept away by a forceful current or running tap water? The answer lies in a bacterially-produced, secreted substance, consisting of polysaccharides (long chains of sugar molecules) along with other unidentified sticky molecules, on the "holdfast" at the tip of its long, slender, stalk-like appendage, with which it affixes itself to solid surfaces.

Professor Yves BrunThe common, hydrophilic bacterial strain Caulobacter crescentus (C. crescentus) is a gram-negative, rod-like bacterium that lives in all sorts of water sources, including lakes, streams, sea water, waste water, and even bottled spring water, attaching itself to solid substrates such as plants, other microorganisms, glass, stone, and metal. Evolution has enabled C. crescentus to live under nutrient-poor conditions, hence its ability to exist even in tap water. Producing no human toxins, its presence in drinking water is innocuous to humans.While studying developmental aspects of C. crescentus, Indiana University biologist Yves Brun and lab members discovered that the bacteria could not be removed with strong washing from plastic overhead transparencies. In contrast, they found that their genetically-manipulated C. crescentus mutants, which lacked these sugar molecules at the tip of the stalk, were no longer able to bind to surfaces. In collaboration, Brown University physicist Jay Tang (formerly of Indiana University) and colleagues determined that three times as much force had to be applied to remove a single C. crescentus bacterium from a glass pipette compared with a pipette containing a similar amount of commercial super glue. Furthermore, they measured the physical force required to remove C. crescentus from its affixed glass surface, determining it to be over an incredible 70 N/mm2 (newtons per square millimeter; about 5 tons/in2), equivalent to the downward force exerted by three cars balancing on a quarter.
This natural, non-toxic glue, which can be found in small quantities in drinking water, has the strongest adhesion force of any known natural material. Unlike commercial super glues, which are often toxic, it sticks well under water, even salt water, and, thus, has a wide range of potential applications, from biodegradable surgical or dental adhesives to repairing industrial surfaces that suffer rain or sea exposure.

Orthovita Q3 comments on Vitasure Intro

Michael Matson – Wachovia
Okay and then just one quick question. Can you give us the VitaSure sales for the quarter?
Anthony Koblish
The VitaSure sales were above $200,000 for the quarter. The product was launched in mid July.
Dale Provanik – Canaccord Adams
Okay and just a client of VitaSure told me that if you from the initial response you’ve seen a couple of hundred grand is pretty impressive considering what the revenue price plan is on that product. How can a contribution in this scale – do you think that you will get 50%, 60%, or 70% penetration relevant to using VitaGel and what does that 10%, what does that equate in annualized dollar rate and 20% just for above any out there?
Anthony Koblish
Well I think that you’ve got to remember that our (inaudible) for VitaGel is really around spine and orthopedics. So it is not the full Gem I [ph] hemostasis field. However, that said the combination of VitaGel and VitaSure is a very nice hemostasis to our surgery product portfolio. That is up quite well with our competitors. At the gen 1 and gen 2 products, it’s a mixed of price point approximately $200 versus upper $400 let’s say and that qualifies for VitaGel and we use them at different points in the procedure. Gen 1 products is typically used intraoperatively while the procedure is being done and the gen 2 product, VitaGel, is pretty much used at the end of procedure as you’re closing with airbrush. So it gives us a nice style of surgery portfolio. That said, I think the growth and expansion of VitaSure is going to look more like VitaGel in its early days than what the bone graft substitute platform looks like. So the nature of the biosurgery business is different.
The nature of that business is really based on getting the product into different surgery in an array of customers whereas the work of our logics in bone grafting business is more driving into a specific procedure and growing deeper and broader. So it’s a little bit of a different sales strategy and so I think with VitaGel we saw that grow a nice pace over time and really start to gain whole as it got broader and broader and broader and we expect VitaSure to do a similar type of penetration as well. But I think right now it’s too early for me to get as specific as what you ask. However, given our experience I think with VitaGel I do feel confident in the way these are rolling out and right now I’d say we’re in the learning mode and that learning is in the part where it is setback into the point where we probably got to go through a few more of the receipt back loops and cycles to see where we are and take a little bit more time. However, I agree with you. We started cold. We didn’t slip any business that was already out there, first 200K was all VITA new relationships. So I do see a great potential with that business and I do think that it will behave similarly with VitaGel over time.
Source: seekingalpha

ZymoGenetics rises following analyst upgrade

Shares of ZymoGenetics Inc. rose Friday after an Oppenheimer analyst upgraded the stock, saying Wall Street now has a more reasonable view of the stock, and more modest expectations for the company's blood clotting drug Recothrom.
With shares down 71 percent over the last year, Oppenheimer analyst Kevin DeGeeter upgraded ZymoGenetics stock to "Perform" from "Underperform." He said sales estimates for Recothrom have decreased over the last few months and noted that ZymoGenetics is reducing the price of the drug.
In afternoon trading, shares gained 21 cents, or 5.3 percent, to $4.20. Earlier they climbed as high as $4.93.
The company cut the price of Recothrom on Oct. 1, the first day of the fourth quarter. When ZymoGenetics reported its third-quarter results on Nov. 4, Chairman and Chief Executive Bruce Carter said the company was already seeing the results of the change: he expects Recothrom sales will rise to about $3 million in the fourth quarter, a 60 percent jump from the third-quarter total of $1.8 million.
In a telephone interview, ZymoGenetics Director of Corporate Communications Susan Specht said the change was made because doctors were "price sensitive" as a result of economic conditions.
Recothrom is derived from a synthetic process, while most clotting agents - products designed to reduce bleeding during surgery - are made from human or animal plasma. Specht said recombinant clotting products such as Recothrom are usually priced at a premium to plasma-derived drugs.
Some patients given cattle-derived anticoagulants develop antibodies that fight the drugs, which can cause increased bleeding.
Even with the change, she added, Recothrom still has a premium to animal-derived products.
Analyst DeGeeter said the cut is intended to make Recothrom more competitive with King Pharmaceuticals ' bovine-derived coagulant Thrombin-JMI. He said he had been concerned in the past that price pressures were going to hurt makers of all clotting drugs.

King Pharmaceuticals Inc. Q3 2008

Commenting on the Thrombin market Joseph Squicciarino - Chief Financial Officer, King Pharmaceuticals said "......with Thrombin the update on the competitive landscape is we're doing very well. Price continues to erode due to competition. We're going to be as competitive as we need to be to keep the business and the market is pretty much going as we predicted because there is no huge unmet medical need for a recombinant product that has no safety advantage."

ZymoGenetics pushes to increase lackluster sales of only drug

ZymoGenetics said Tuesday that quarterly sales for its only commercial product increased by 27 percent but still fell short of expectations, spurring a new strategy to ramp up sales.
"Sales are still low, and our focus is and must be to grow sales as quickly as possible," said Chief Executive Bruce Carter in a conference call to discuss its quarterly financial results.
The product, Recothrom, is a genetically engineered form of thrombin, a blood factor used to control surgical bleeding. Net sales of the product amounted to $1.8 million in the third quarter, versus $1.4 million in the preceding quarter.
The Seattle company reduced prices at the beginning of October and is undertaking a more aggressive campaign highlighting the risks of Recothrom's competitor, a similar product derived from bovine blood. Sales are being held down by hospital concerns about prices and limited awareness among doctors about the compound.
ZymoGenetics posted a third quarter net loss of $28.8 million, or 42 cents per share, down from $39 million, or 57 cents per share, in the same period last year.
ZymoGenetics launched Recothrom in January amid great expectations, but the market has been skeptical about the company's ability to achieve higher sales. Its stock price has suffered accordingly.
Last year ZymoGenetics was the region's largest independent biotech by market capitalization, and its share price peaked at $15. On Tuesday, shares traded at $3.85, up 3 percent; the company's market cap now ranks third among local biotechs.
In May, McAdams Wright Ragen analyst Paul Latta cut his 2008 sales outlook to $18 million from $30 million; other analysts more recently reduced that estimate to about $12 million.
On Tuesday, ZymoGenetics issued its first official guidance for Recothrom, predicting 2008 sales of $7 million. In the long term the company expects to lead the market for thrombin, said spokeswoman Susan Specht.
Some analysts have estimated that eventually Recothrom sales could reach $300 million to $400 million.

The Clotting Cascade and Blood