By Lisa Seachrist

Washington Editor

WASHINGTON — Genzyme Tissue Repair, a division of Genzyme Corp., received a license from the FDA to market its cartilage culturing service, Carticel, in the U.S.

The FDA issued Carticel's biologics license for treating damaged knee cartilage under an accelerated review process and requested two post-marketing studies. The agency's action opens the door for insurance companies to reimburse for the $10,000 procedure that has been available as an unregulated service since 1995.

"The first principle for insurance companies is that if something is experimental — typically defined as not approved by FDA — they won't reimburse it," said Tim Surgenor, president of Genzyme Tissue Repair, a separately traded unit of Genzyme, of Cambridge, Mass. "We've now met the criteria of FDA approval. This is a major win for patients."

Surgenor noted the company had seen an increase in insurance reimbursements since an FDA advisory panel recommended Carticel for approval in March. (See BioWorld Today, March 7, 1997, p 1.) He said with an estimated 100,000 patients who could benefit from Carticel therapy, "it wouldn't take much market penetration for Carticel to turn a profit."

Jeffrey Swarz, an analyst with CS First Boston Corp., in New York, estimated 40,000 patients could benefit from Carticel, but noted the product could easily provide Genzyme with $100 million in revenues each year.

The company is in the enviable position of launching a product with a sales force that has two years' experience and a cadre of surgeons that have been trained for several years.

Genzyme Tissue Repair's stock (NASDAQ: GENZL) closed Monday at $10.625, unchanged. Genzyme (NASDAQ:GENZ) ended the day at $27.062, up $0.50.

The Carticel treatment system involves extracting a patient's cartilage cells (chondrocytes), growing those cells in cell culture, then reimplanting the cells into the knee, where they grow and replace damaged cartilage.

Carticel was launched in 1995, but at the time, the agency had no regulations regarding autologous cell therapies. After an initial safety evaluation, the agency considered the product an unregulated medical device and Genzyme Tissue Repair began marketing the service.

It is the first manipulated autologous structural cell therapy product to be granted a biologics license under the agency's new tissue regulations. (See BioWorld Today, March 4, 1997, p. 1.)

The agency approved the therapy based on case reports of 153 patients treated in Sweden. Of patients who were followed for at least 18 months, 70 percent showed improvement. In addition, biopsies performed showed the cartilage that grows is hyaline cartilage — a strong, shock-absorbing variety that doesn't develop when using current alternative therapies. Early U.S. patient data correlate with the Swedish data.

As a result, the FDA granted Carticel accelerated approval for treatment of cartilage damage on the femoral condyle (thigh bone end) of the knee joint. The agency specifically noted Carticel therapy is not indicated for cartilage damage that results from osteoarthritis.

Like most accelerated approvals, the FDA required post-marketing studies for Carticel's approval. The company is already involved in the first study, which follows 300 patients for five years to compare the long-term effects of Carticel compared to other therapies such as abrasion and microfracture.

Post-Marketing Study Causing Controversy

Because the agency considers Carticel's benefit to derive from both the implantation of the cells and the surgical procedure needed to implant the cells, the agency required the company to perform a randomized study in 80 patients where half receive Carticel and the control group receives a placebo implant in order to determine how much of a role the implantation of the cells plays in the clinical benefit.

The study requires, in effect, a sham surgery. Surgenor noted some surgeons already have stated they will refuse to take part in the clinical trial on ethical grounds. The company expects accrual to be slow for the study, which will take up to five years to complete.

"It is an ethically gray area; but there is no argument that it is a scientifically valid question," Surgenor said. "It is quite clear that the agency is setting a very high standard for tissue-based therapies and the next competitor will have to do these studies prospectively rather than in a post-market environment." *