Genzyme and Veracyte Ink Deal - Analyst Blog

By Zacks Equity Research,

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Sanofi's ( SNY ) subsidiary, Genzyme, recently announced that it has entered into a co-promotion agreement with Veracyte, Inc., to provide a personalized solution for thyroid patients.

As per the agreement, Genzyme will shoulder the commercialization responsibilities of Veracyte's Afirma Thyroid fine needle aspiration (FNA, a minimally invasive procedure in which suspected cells are extracted for test) analysis, which helps in competent thyroid nodule diagnosis. Genzyme will commercialize the product in the US first and later in rest of the world. Detailed terms of the agreement were not provided.

The agreement follows the announcement of a positive coverage decision taken by Palmetto GBA, a national Medicare benefits administrator, on January 9, 2012.

Genzyme currently has a thyroid cancer product, Thyrogen (thyrotropin alfa for injection), in its portfolio. Thyrogen is approved as an adjunctive diagnostic tool for serum thyroglobulin (Tg) testing with or without radioiodine imaging. It is also approved as an adjunctive treatment for radioiodine ablation of thyroid tissue remnants in patients who have undergone complete or close to complete thyroidectomy for well-differentiated thyroid cancer and who do not have evidence of advanced thyroid cancer.

Afirma and Thyrogen together will facilitate better diagnosis and treatment of thyroid cancer patients. Veracyte's product will obtain more visibility in the US and rest of the world using Genzyme's sales force and infrastructure.

Thyroid nodule FNAs are a popular method of diagnosing thyroid cancer, with approximately 450,000 such procedures being performed in US annually. However, in approximately 30% (135,000) cases, the results are inconclusive.

Among the unclear FNA results, approximately 20% - 30% patients have a chance of suffering from thyroid cancer. Thus, for better diagnosis, surgery is recommended for most of these patients. Surgery is both invasive and costly and can lead to several side effects.

Afirma has the potential to prevent many unnecessary surgeries. According to a study published in the Journal of Clinical Endocrinology & Metabolism , routine use of Afirma would reduce the direct cost by more than $600 million in a span of 5 years.

Our Recommendation

We currently have a Neutral recommendation on Sanofi. The stock carries a Zacks #5 Rank (Strong Sell rating) in the short run.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: SNY

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