ZymoGenetics, Inc. (ZGEN) has filed a Citizen Petition (CP) with the U.S. Food and Drug Administration (FDA) requesting the agency to remove King Pharmaceuticals’ (KG) Thrombin-JMI from the market in the interest of patient safety. ZymoGenetics filed the CP based on reports of serious or fatal bleeding-related adverse events in surgical patients exposed to bovine (cattle-derived) thrombin.

Thrombin-JMI is indicated as an aid to hemostasis whenever oozing blood and minor bleeding from capillaries and small venules is accessible. The source material for Thrombin-JMI comes from bovine plasma and lung tissue.

The treatment is a key product in King’s portfolio. For the twelve months ended December 31, 2008, Thrombin-JMI accounted for 16.3% of total revenues. As such, the removal of the product from the market would be a major blow for the company.

Thrombin-JMI revenues have been under pressure lately due to the entry of two competitors in the market – ZymoGenetics’ Recothrom, a recombinant human thrombin, and Omrix Biopharmaceuticals’ Evithrom, a topical human thrombin.

Sales declined from the year-ago period in the first half of 2009 mainly due to additional price concessions and tough competition from the new entrants. We believe Thrombin-JMI sales will remain under pressure going forward. Both Omrix and ZymoGenetics have strong marketing partners for their products. While Omrix markets its product with Johnson & Johnson (JNJ), ZymoGenetics’ marketing partner is Bayer Healthcare.

We currently have an Underperform rating on King. While the company got good news recently with the approval of Embeda, we remain concerned about the declining prescription trends for key products and the possibility of Skelaxin facing generics later this year.
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