Friday, December 15, 2006

Calls of Note Part 3

Baird commenting Genzyme (NASDAQ:GENZ), saying that they understand from GENZ that CMS has reversed its prior negative decision (announced in October) to cut Synvisc reimbursement by grouping all viscosupplementation products into one J-code in 2007.

A quick look at the CMS website confirms this positive development. Synvisc reimbursement will be $198/dose (three doses required per course), comparable to the 2006 level.

Orthovisc - Synvisc's closest comp in the category - is reimbursed at $200.54/dose, making the economics fairly comparable across the board.

As things stand today, Synvisc will no longer be unprofitable for physicians to administer, eliminating the need for a dramatic price decrease.

Based on this development, firm is raising their Synvisc revenue estimates to $266M from $229M, resulting in a new 2007 EPS estimate of $3.17.

Notablecalls: The negative reimpursement decision came out 30/10, initially sending the stock down 2 points. Simple logic makes me to expect the same upside today.

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