Genzyme Corp. said Thursday it filed a registrationstatement to sell up to 3 million shares of its TissueRepair Division common stock, the proceeds of whichwill go mainly toward its new cartilage replacementtherapy.
The offering would gross $45.75 million if the stock soldat Genzyme Tissue's (NASDAQ:GENZL) closing priceThursday of $15.25 per share, which was up 63 cents forthe day. The stock was trading as low as $3.50 earlier thisyear, bounced between $5 and $7 per share in the secondquarter, and took off in early July after the FDA decidednot to immediately regulate the cartilage product, calledCarticel, and certain analysts initiated coverage.
Genzyme Tissue, of Cambridge, Mass., reported having$3.3 million in cash and 8.8 million shares outstanding onJune 30, 1995. CS First Boston, Cowen & Co. andPaineWebber Inc., all of New York, are managing theoffering.
Greg Phelps, senior vice president of Genzyme Corp. andpresident of the Tissue Repair Division, said proceedsfrom the offering should take the division through 1996.
The first Carticel patient was treated in late March. Theprogram then was put on hold because of uncertaintyabout the way such autologous cell and tissue productsshould be regulated. Genzyme resumed the cartilage cellservice in early July after the FDA said it would be not beregulated, and six patients have been treated to date,Phelps said.
The procedure involves taking an autopsy from theinjured person, culturing and growing millions of cells,then implanting them back into an area of the femur.Cells then should integrate back into surrounding tissueand mature into normal cartilage, thus restoring propermovement of the knee.
The FDA intends to address the regulation issue againthis fall. Phelps said the decision on how to regulate suchproducts could range from keeping them unregulated torequiring clinical trials and premarket approvalapplications. "We would prefer to have some kind ofregulation that deals with the manufacturing process andfacility," he said, "but would not require clinical trialsand premarket approval."
Genzyme has market research showing that more than200,000 people currently are candidates for Carticelservice. Much of the money from the offering will beused to invest in sales and marketing efforts for Carticeland to increase manufacturing capacity.
Forty-two U.S. doctors are trained in providing thecartilage service; each treats about one to three patientsper month, a company spokeswoman said. The plan is tohave 75 doctors trained by the end of the year, she said.
"We had expected when we created Tissue Repair [lastyear] that we would need to raise money to supportCarticel," Phelps said. "We had hoped to do an offeringthis fall in any case. You always like to do it when thestock's higher. The challenge to us was to get the divisionwell-enough understood to have strong support for it.That seems to have happened." n
-- Jim Shrine
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