By Debbie Strickland
In the wake of the late-summer FDA licensing of its lead product, Genzyme Tissue Repair grossed $31 million in a public offering of 4 million shares priced at $7.75 each.
Though the offering fell short of the prospectus' proposed $40 million, it roughly tripled the available cash at Genzyme Tissue Repair (GTR), which has recorded net losses of about $10 million per quarter over the past year.
The offering's comanagers — Credit Suisse First Boston Corp., Cowen & Co. and PaineWebber Inc., all of New York — have an overallotment option of 600,000 shares.
GTR is a division of Cambridge, Mass.-based Genzyme Corp., but like Genzyme Molecular Oncology and Genzyme General, it has a separate tracking stock. In late August, GTR, of Cambridge, received a biologics license for its lead product, Carticel autologous cultured chondrocytes for the treatment of damaged articular knee cartilage.
That license opened the door for insurance companies to reimburse for the $10,000 procedure that had been available as an unregulated service since 1995. GTR has said the product could potentially benefit about 100,000 patients annually.
The launch has been slower than expected due to difficulties obtaining reimbursement from insurance companies, GTR officials said. The regulatory stamp of approval, along with a growing force of surgeons trained in the procedure (1,708 at last count) and GTR's efforts to educate third-party payers, could improve matters.
In the wake of the licensing, the number of people covered by health plans with protocols for reviewing Carticel reimbursement requests jumped from 15 million to 53 million.
Carticel was used in 172 implants in the third quarter, up from 156 in the second quarter and more than double the 70 patients who received the procedure in the third quarter of 1996.
Led by higher Carticel sales, GTR's third-quarter revenues hit $3.1 million, a 65 percent gain over the $1.9 million reported in the comparable 1996 period. Carticel accounted for $1.7 million in revenues, more than double the $726,000 in sales recorded in the third quarter of 1996, while Epicel autologous skin cells brought in $1.4 million, up 21 percent.
The company recorded a net loss of $11 million and ended the quarter Sept. 30 with $13.9 million in cash.
Carticel marketing is one of several planned uses of proceeds from the public offering. In addition, some of the cash will go toward payments to meet funding obligations to Diacrin/Genzyme LLC, a joint venture with Charlestown, Mass.-based Diacrin Inc. GTR committed $20 million to the venture in 1997 and 1998.
GTR's shares (NASDAQ:GENZL) closed Thursday at $8.563, down $0.188. *