ZymoGenetics Snags $1.1 Billion Partnership With Bristol-Myers For Hepatitis C Drug

Luke Timmerman1/12/09Comments (2)Follow @ldtimmerman

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pretty quickly to form this partnership. ZymoGenetics dropped a patent infringement lawsuit against Bristol as recently as October, when it agreed to settle for a $21 million cash payment.

The two companies will now join forces to compete in a marketplace of new drugs for hepatitis C that is fast becoming crowded. Cambridge, MA-based Vertex Pharmaceuticals is leading the way with an experimental drug called telaprevir, a protease inhibitor, that’s shown an ability to cure roughly two-thirds of patients with hepatitis C in about six months, compared with about one-third who do that well after taking standard pegylated interferon alpha and ribavirin for almost a year. Other drugs in different classes, such as nucleoside inhibitors and non-nucleoside inhibitors, are at earlier phases of testing, attempting to attack the virus from different angles. That makes it likely that an HIV-style cocktail approach will be widely used in the future, says Steve Worland, CEO of Anadys Pharmaceuticals, a San Diego-based company with a non-nucleoside drug in an early phase of development.

ZymoGenetics’ Williams, in an interview in September, said he welcomes the progress of Vertex and its fast-followers. ZymoGenetics is hopeful that its new version of interferon could someday replace the standard interferons, which are the backbone of hepatitis C therapy today. The side effects of the standard drugs are so bad that only a fraction of the estimated 3.2 million people infected in the U.S. seek treatment, so any way to get their virus-killing ability with fewer side effects could open up a large potential market, he said.

The ZymoGenetics candidate, in its first 18 patients, didn’t show any signs that it caused fevers or damaged blood cell counts, a couple of the side effects that plague the standard interferons.

Update: 1:20 pm Pacific. ZymoGenetics said in a regulatory filing that it will pay 20 percent of the cost of developing pegylated interferon lambda, and Bristol-Myers will pay for 80 percent of costs, provided that ZymoGenetics pays the first $100 million of development costs, taking the drug beyond the initiation of Phase II clinical trials. ZymoGenetics will get 40 percent of the U.S. profits if it elects to co-promote the drug, with Bristol-Myers getting 60 percent. Bristol-Myers also can terminate ZymoGenetics’ co-promotion rights if Zymo’s cash balance falls below $35 million, and it is unable to boost the cash balance above $35 million within 10 days. If that happens, ZymoGenetics would get a royalty stream on U.S. sales, according to the filing.

Luke Timmerman is the National Biotech Editor of Xconomy, and the Editor of Xconomy Seattle. E-mail him at ltimmerman@xconomy.com or follow him on Twitter at twitter.com/ldtimmerman.