SEATTLE, May 05, 2010 (BUSINESS WIRE) -- ZymoGenetics, Inc. announced today that Douglas E. Williams, Ph.D., Chief Executive Officer of ZymoGenetics, will present at the Bank of America Merrill Lynch Health Care Conference in New York City on Wednesday, May 12, 2010 at 10:40 a.m. Eastern Time.
A live webcast of the presentation can be accessed by going to: www.zymogenetics.com. The webcast will be archived for 30 days.
Thrombin-JMI net sales totaled $37 million during the first quarter of 2010 compared to $47 million in the first quarter of last year. Net sales of Avinza totaled $23 million compared to $39 million in the first quarter of 2009.
Marc Goodman – UBS....And then can you talk about THROMBIN a little bit. It just – our understanding is that pricing had stabilized a little bit and share had stabilized but it just seems like this product just keeps going down, I mean you can give us the flavor of how should we think about it. Thanks.
Joe Squicciarino.......THROMBIN, yes so yes we had seen price settle down in the marketplace. The comparison that we’re now making now of course is first quarter of this year versus the first quarter of last year, where price is still a factor. The decline versus last year’s first quarter, once again is split evenly between price and volume, but fortunately we’ve seen price stabilize and hopefully it’ll stay that way.
Source:Seekingalpha
On the RECOTHROM front net sales for the quarter was $9 million. This is doubling of Q1 sales for 2009. January in particular was a very weak month across the hemostat segment and RECOTHROM was no exception. That said, for the quarter actual hospital demand that it's units moving from the wholesaler inventory to hospital end user increased by 14% compared to the fourth quarter of 2009.
RECOTHROM market share in dollars continued to increase in Q1 to approximately 19% versus 17% in the prior quarter. Jim will discuss the factors that influence our reported net sales for the March 31st quarter, but demand in market share continued to grow and based on momentum we see in the market place, we are comfortable with our full year guidance of $48 million to $54 million of net sales............
Net sales of RECOTHROM were $9 million for the quarter, doubling from $4.5 million a year ago. Net sales were approximately the same as the fourth quarter of 2009 even though we had positive trends in units sold to hospitals and market share as Doug described earlier.
There are two primary reasons for this, both of which were related to differences between the timing of hospital purchases and when we record revenue based on sales to wholesalers. First, decreases in wholesaler inventory levels had a significant impact. We estimated there were about 2.4 weeks of sales in the channel at March 31st, compared to about 3.2 weeks at the beginning of the quarter.
Second, the way that the weeks fell in the calendar had a significant impact, in that there was about one week fewer sales included in the three months ended March 31st compared to the three months ended December 31st. Together these two factors caused our reported net sales to be lower than one would expect based on underlying hospital sales trends.............
Brian Abrahams - Oppenheimer and Company
Great. Can you remind us how was [RECOTHROM] reimbursed and what impact the healthcare reforms would you expect?
Stephen Zaruby
Well, as three reimbursement was captured in the cost of any surgery we don’t see there will be any impact on the reform side at all in terms of our pricing and how we capture. So my guess, we are fortunate in that one of the few maybe who are not affected by that..........
David Miller - Biotech Stock Research
Now switching to RECOTHROM for a moment, can we expect the kind of continued slow grind we have seen for RECOTHROM sales on a quarter-over-quarter basis? Going forward, is there some kind of invents that we can look forward to that might provide an inflection or you would be replacing more of the JMI sales out there?
Stephen Zaruby
This is Stephen Zaruby. I think as Doug said we are encouraged by the momentum that we have seen, but moving forward obviously we are very active in the marketplace at all kinds and different touch points and levels be it through our sales force or national accounts people dealing with GPOs and so on and so forth and as Doug said we remain confident in our annual guidance and so it depends how you might forecast or sort of allocate our sales quarter-by-quarter, but we expect to see continued growth and the growth certainly comes largely or entirely at the expense of Thrombin-JMI........
Paul Latta - McAdams Wright Ragen
One another question on the RECOTHROM, you mentioned that the hemostat market was a little soft in January, any thought as to why?
Doug Williams
It's hard to say. I think it was sort of an observation we made looking at the totality of the markets. If you recall Paul we saw similar situation with our fourth quarter to first quarter situation last year, but I don’t know how much of it is sort of seasonally related, but I think beyond the metrics that Jim sketched out in terms of one less week and drawing down the wholesaler inventory levels. Those are really the sort of firm facts we can throw out and beyond that I think we just beat speculation as to what was happening in the market there, but quite clearly January for everyone in the hemostat area was a soft month.
Paul Latta - McAdams Wright Ragen
Is their [year-end] budget plus possibility too?
Doug Williams
Again it's hard to say. I think you could relate it to everything from bad weather on the East Coast to general economic conditions, but I think fundamentally we don't really have a clear-cut answer for you as to why January was soft.
Source: Seekingalpha
Graham Tenneco
What is the direction or do you think drift going to be or trends based on the Obama's healthcare plan and what might meaningful procedures and where an ASP basically?
Tony Koblish
We can't know all of that what's going to happen. However, I think the concept of evidence-based medicine and clinical data and clinical value proposition to the patients; I believe is going to be more and more important as we go forward. I think that we are exceptionally well positioned across all of our product platforms for that day, not just with Cortoss, which happens to have superb therapeutic benefit, value proposition to the patient, subsequent fracture benefit to the patient also reduced healthcare expenditure and re-hospitalization as shown in our clinical data, but we have an excellent proposition around the Vitoss business relative to more expensive therapies in bone grafting and our Vitagel business is also plays to demonstrate some effected clinical data around knee replacements etcetera. So, I think we are very well positioned in terms of comparative effectiveness, clinical data value proposition that one trend that’s not going to go away and I think that’s going to just be the price to play going forward. We are not going to get there all at once, but it’s going to happen and so I think cost effective, clinical value proposition we are very well situated for that eventuality, which is I think going to be the major fallout long-term.
Source: Seekingalpha
This is a brief overview of information related to FDA’s approval to market this product. See the links below to the Summary of Safety and Effectiveness Data (SSED) and product labeling for more complete information on this product, its indications for use, and the basis for FDA’s approval.
Product Name: Quick-Close® Vascular Suturing System
PMA Applicant: Interventional Therapies, LLC
Address: 1 Gorham Island, Westport, CT 06880
Approval Date: April 8, 2010
Approval Letter: http://www.accessdata.fda.gov/cdrh_docs/pdf8/P080029a.pdf
What is it? The Quick-Close Vascular Suturing System is used to stop the bleeding of a puncture site following a surgical procedure using the major artery of the thigh (femoral artery). It consists of the Quick-Close Suture Applier and the Quick-Ti Cinch Applier. The Suture Applier has a pistol grip shape and contains a single strand of an artificial suture (polybutester [Novafil] ™) fitted with stainless steel rings. The Cinch Applier has a syringe-type shape with an extended handle.
How does it work? The Suture Applier is used to gain access to the puncture site of the femoral artery. Using manual control, and relying on the sense of touch, the device is used to place one end of the suture through one edge of the arterial wound. The Suture Applier is then re-positioned and the other end of the suture is inserted through the opposite edge of the wound site. As the Suture Applier is withdrawn from the wound site, the 24 inch length of suture is forced out of its housing. The Suture Applier places a single stitch of a non-absorbable, single thread suture to the wound site. The Cinch Applier gathers the two ends of the suture and then it places a stainless steel ring that acts in place of a knot to secure the suture in a closed position to stop the bleeding.
When is it used? The Quick Close Vascular Suturing System is used to close a puncture in the femoral artery following surgery. It is designed for use in small vascular punctures in blood vessels with diameters of 4 mm or larger.
What will it accomplish? The Quick-Close Vascular Suturing System is an alternative to applying manual pressure (compression) to stop bleeding. It allows patients to become mobile sooner than is possible with standard compression methods.
When should it not be used? There are no known contraindications for this device.
Source: MedMarket Diligence, LLC
Steven Anderson
During the first quarter progress continued on the European post market study for BioFoam at three EU centers. The focus of the study is the assessment of BioFoam as a surgical hemostatic adjunct in the open repair of liver parenchyma following liver resection or liver transplant surgery. A total of 53 patients have been enrolled into the study with a target enrollment of 55 patients at these three centers. This includes 13 in the United Kingdom, 15 in France and 25 in Germany.
Interim analysis shows achievement of HemoStase within 1 minute in 88% of the application site and within 3 minutes in 94% of the application site. We are adding a fourth center from Leipzig, Germany to increase overall enrollment to 70 patients. As we broaden our clinical approach CryoLife is also establishing an online data registry for surgeons to document clinical information related to the use of BioFoam.
Based on the successful outcomes and surgical technique refinements developed during the European post market study, distributor and direct sales team training was conducted in late January at the Annual European kickoff meeting that was held in Rome. The product was formally introduced to the marketplace at the European Association for the study of liver which was held in Vienna in mid-April this year. Initial sales to date have been made to distributors and clinics in Germany, Italy, France and Spain.
Early acceptance of BioFoam by clinicians has been encouraging with more than 70 applications of the BioFoam product to-date. On December 9th the company received approval from the Department of Defense to move forward with the IRB submissions at pilot centers for the BioFoam IDE in the United States. This is the last step in the DoD approval process for the IDE study. As you will recall the DoD is funding the US clinical study for BioFoam. FDA has already provided approval for this IDE study. We expect to receive final written approval from the DoD within the next four to six weeks.
We expect patient enrollment for the United States IDE for BioFoam used as an adjunct to conservative measures of achieving HemoStases on resected liver parenchyma tissue to commence in Q2. An interim analysis is planned once all 20 patients from the two pilot centers reach 12-month follow-up. The study report along with a request to initiate the pivotal phase of the study will be submitted to FDA and DoD at that time.
During the recent preclinical testing of BioFoam it was observed that it was effective and withstanding aortic blood pressures. Accordingly, a decision was made to design a study to evaluate HemoStases in a cardiovascular application.
The animal work is beginning and will consist of 25 animals to be followed for up to three months. BioFoam's effectiveness will be evaluated against the effectiveness of Gelfoam and BioGlue. This study is expected to begin during the second half of this year.
Ashley Lee
We are reiterating our guidance for the full year of 2010 subject to the ongoing litigation with Medafor including our continued ability to sell HemoStase. We expect total revenues for the full year of 2010 to be between $118 and $123 million which includes between $1.5 and $2.5 million related to funding received from the Department of Defense in connection with the development of BioFoam.
We have withdrawn our proposal to acquire Medafor and do not currently anticipate a transaction with them occurring during 2010. However should we renew our proposal or take other actions to acquire Medafor such as a proxy contest or tender offer, we could incur expenses or changes in the value of the Medafor derivative that could materially affect our guidance. Medafor informed us on March 18, 2010 that the distribution agreement between the parties was terminated. We filed an emergency motion for preliminary injunction in federal court requesting that the court order of the agreement to not be terminated. The court has set a hearing date for May 10, 2010. If Medafor is successful in its attempt to terminate the agreement and elects to discontinue shipping HemoStase to us, then our full year 2010 guidance would be materially, adversely affected.
We believe that Medafor does not have a basis for terminating the agreement, and the guidance above assumes that it will not be successful; however, there is no guarantee that the outcome will match our expectations. Additionally, we have budgeted for a certain level of expenses related to our ongoing litigation with Medafor. If actual future legal expenses exceed the amounts budgeted, then it could materially, adversely affect our expense and earnings guidance.
Q & A
Matt Dolan – Roth Capital Partners
Okay, with respect to the Medafor agreement, where are you on HemoStase supply at this point, are they still shipping to you and how far along are you on any contingency plans you might have?
Ashley Lee
As it relates to their shipping product to us, the last purchase order that they were shipment was due to us was placed in January and they have substantially fulfilled the shipment of that purchase order. We recently placed additional purchase orders recently and the shipment for those particular purchase orders are not due until mid-May. So we will find out in mid-May as to whether or not they will – they’re planning on continuing to ship product to us.
reg Brash – Sidoti & Company
Okay, and you’re maintaining your guidance, so I’m assuming you have some confidence that (inaudible) determination but if he doesn’t you have plans to bring on some additional products to replace HemoStase.
Steven Anderson
We’ve stated that we remain very active on the business development front and we’re not going to talk about specific areas or specific targets until it’s appropriate to do so, but the HemoStase product line is important to us and to the extent that we came, we would like to protect that revenue stream going forward.
Greg Brash – Sidoti & Company
Okay, switching to BioGlue, some past quarters you were seeing off label use, less off label used pricing pressure, hospitals just curtailing the use of surgical sealing. Any improvement there?
Ashley Lee
We continue to see those types of issues out in the field, I think one of the areas that first of all the business was up year-over-year, that’s the important thing but one of the areas of the country where we did see some challenges more so then recently was in the North East, but all the other issues that we see they’re still out there but we still remain focused on growing that business.
Raymond Myers – The Benchmark Company
Okay that sounds good. And next I wanted you to explain the – why patent loss in – or explain whether the patent loss in Germany would impact your BioGlue sales?
Steven Anderson
We don’t think that that is filled. First of all, Tenaxis, the party that – the other party is Nova Reaction (ph) has already been distributing BioGlue, I mean their products, which is (inaudible) in Europe. So we have been competing against that in Europe for a year or two now.
So even with that competitive product on the market, if I would recall correctly, we increased our revenues in Germany year-over-year about in excess of 20% and we expect to do even more than that in 2010 compared to 2009 as it relates to Germany. And then the Nova Reaction (ph) that resulted in us taking the charge in the first quarter is only specific to Germany, it doesn’t really affect any of the other countries in the EU.
Raymond Myers – The Benchmark Company
Thanks. One other question, how is there a gain on the Medafor stock, when it’s not publicly traded, how do you value that?
Ashley Lee
That’s a long discussion, but I will do my best to answer here Ray. When we initially purchased our position in Medafor, we gave the selling shareholders a makeover provision whereby we could pay them additional compensation for their stock in the event that we were able to successfully acquire Medafor.
So what we had to do is when we initially setup net asset on our books, we had to determine what we could – where that’s considered a couple of factors, the likelihood that we would acquire Medafor, what and eventual price might be. And so a lot of assumptions went into what the ultimate value was that we established on our balance sheet to acquire Medafor.
Since we withdrew our proposal to acquire Medafor, all of those assumptions changed. And since those assumptions changed, the value of the derivative or the likelihood of the transaction might occur, all those assumptions changed and that resulted in us revaluing the derivatives associated with their stock. And as a result of that, we had to take income into other income for the first quarter of this year.
There is going to be a long discussion about that in our 10-Q that we will provide you much more detail. But hopefully in a nutshell that wasn’t too confusing as to how that was altered in the gain in the first quarter.
Raymond Myers – The Benchmark Company
So we shouldn’t assume any quarterly – necessarily any quarterly volatility based on share price or anything else unless there is a material change in your Medafor relationship?
Ashley Lee
That’s fair.
Raymond Myers – The Benchmark Company
Great, thank you.
Source: Seekingalpha
