all the information, none of the junk | biotech • healthcare • life sciences

ZymoGenetics Drug Getting Off to Slow Start in Marketplace

(Page 2 of 2)

—About 45 percent of hospitals said they’d add it to their formulary, or preferred-drug list, along with Thrombin-JMI, while the remaining 25 percent said they wouldn’t buy it. Some of those denials came before June, when ZymoGenetics didn’t have a full product lineup, Carter says.

—ZymoGenetics has said it plans to charge a 20 percent higher price, although that showed some signs of moderating yesterday. When asked by analyst Han Li of Stanford Group whether customers are sensitive to the higher price, Carter said they are willing to pay if they’ve seen a case of a severe bleeding episode from a reaction to the standard drug. If not, “others say they’ve never seen a clotting problem, it’s a theoretical risk. Then they are price-sensitive.” When I followed up in the interview, Carter confirmed that it is selling Recothrom at a “more modest” premium than the original 20 percent to the bulk-buying organizations, and that when King has offered discounts, it has responded by offering its own, Carter says.

—Carter has said repeatedly to investors, before the product was approved, that once hospitals switch to Recothrom, the market works like a “ratchet” and they will never switch back to the alternative derived from cow blood. So far, ZymoGenetics is finding customers in a wait-and-see mode. “Some people fully convert and others say, ‘You guys are new, we’ll put you on the formulary, but we want to see if you can consistently supply us.'”

It will be interesting to watch what happens when Bristol, TN-based King (NYSE: KG) reports its second quarter results on Thursday. If King commits to lower its price to fight off ZymoGenetics, that could pose a threat to both companies, DeGeeter says. “If King cuts price and ZymoGenetics doesn’t follow, King will keep its share,” he says. “This is shaping up to be a lousy market for everyone.”

Wall Street is going to expect Recothrom to generate $15 million to $17 million in sales in the second half, DeGeeter says. ZymoGenetics isn’t giving specific guidance on sales for the period, or further in the future, until it has gathered more data, says chief financial officer Jim Johnson.

Before I hung up with the always-upbeat Carter, he left me with one separate thought. It’s about PEG-interferon lambda, a “distant cousin” of the antiviral interferon-alpha drugs used for hepatitis C, which cause fever and flu-like symptoms that make them difficult for patients to take. An early-stage clinical trial of the ZymoGenetics version suggests it may offer the virus-killing benefits without the toxic side effects. The company dropped hints that partners are interested in co-developing this drug. “This is the big sleeper in our pipeline,” Carter says.

The folks who work at ZymoGenetics and/or invest in the company had better hope he’s right, because Recothrom may end up being a tougher sell than once thought.

Single PageCurrently on Page: 1 2 previous page