Genzyme Corp has entered into an agreement under which it will buy back from Wyeth Pharmaceuticals the sales and marketing rights to Synvisc (hylan G-F 20) in the United States and five European countries. The cash transaction is expected to close in January and will be accretive to Genzyme.
With this transaction, Genzyme will obtain all Synvisc end-user revenue in the US and five European countries. Synvisc is the top-selling viscosupplementation product for the treatment of pain due to osteoarthritis of the knee in the US and Canada, and one of the leading products in this category in Europe. Its worldwide, end-user sale in 2004 is estimated by Genzyme to be around $240 million, the company release says.
Under the terms of the agreement, Genzyme will pay Wyeth up-front payments of $121 million in cash for the marketing rights to Synvisc in the US and five European countries (Germany, Poland, Greece, Portugal and the Czech Republic). Genzyme will make a series of milestone payments based on the volume of Synvisc sales. These additional payments could extend out to June 2012, or could total a maximum of $294 million, whichever comes first. Genzyme plans to issue specific guidance related to this accretive transaction after the transaction closes as part of its annual guidance in early 2005.
As part of the agreement, Genzyme will offer employment to Wyeth's 95-person, Synvisc-dedicated US sales force and its 10 district sales managers. Genzyme currently employs a 36-person US sales team that is dedicated to Synvisc and to Carticel (autologous cultured chondrocytes), a cell therapy product used to repair injuries to articular knee cartilage that have not responded adequately to prior treatment.
"Buying back the sales and marketing rights to Synvisc is a strategic move that will provide immediate financial benefit to Genzyme upon closing," stated Henri A. Termeer, chairman and chief executive officer of Genzyme Corporation. "It will have a positive impact on both the top and bottom lines, and increase our gross margin. The Synvisc business is very important to us and we will continue to invest in the product and its expanding market," he added.
Synvisc has become the top-selling viscosupplement because of the benefits that it provides patients who experience pain due to osteoarthritis of the knee. Since it is delivered locally, Synvisc avoids some of the associated side-effects of traditional non-steroidal anti-inflammatory drugs and COX-2 agents. Additionally, Synvisc can provide up to six months of osteoarthritis knee pain relief, with the fewest number of injections per treatment regimen of any viscosupplement on the market. For these reasons, Synvisc has been used to treat more than three million patients worldwide, the company claims.
Once the transaction closes, Genzyme will be the only company to manufacture, distribute and sell its own viscosupplementation product in the US and in major European countries.
Genzyme and Wyeth will work together during the near term, both before and after the close, to ensure a seamless transition for all Synvisc customers. Wyeth will continue to fully support all aspects of the Synvisc business until the transaction closes, at which time Genzyme will take full responsibility for selling and supporting the product.