ZymoGenetics has taken action to slow down its financial bleeding. The Seattle biotech company (NASDAQ: ZGEN) said today in its quarterly earnings report that it finished the fourth-quarter with a much narrower-than-usual net loss of $9.2 million, and entered the new year with $89.9 million left in the bank.
ZymoGenetics, a company that has never been profitable, found itself in a bit of a cash squeeze in late 2008 after its first marketed product, recombinant thrombin for surgical bleeding, got off to a slower than expected start. The drug generated $4.7 million in U.S. sales in the fourth quarter, and $8.8 million for the full year after it won FDA approval in January 2008—far below the tens of millions that analysts had been expecting. The company now expects the product, marketed as Recothrom, to do $25 million to $35 million in sales in 2009.
The financial outlook for ZymoGenetics looks a bit brighter than it did a few months ago. The big difference is that the company expects to receive $200 million in cash this year from its new partner, Bristol-Myers Squibb, for the right to co-develop pegylated interferon lambda, a drug made to be less toxic for patients with hepatitis C. That’s making it possible for the company to plan only modest spending cuts on R&D. This year, ZymoGenetics expects to spend $115 million to $125 million on R&D, down from $126.7 million in 2008.
The company, led by new CEO Doug Williams, has a goal of building its cash reserves back up to at least a two-year operating cushion. ZymoGenetics didn’t say for certain in its statement if it’s getting to that threshold, but it does expect to close at least one more partnership this year, and finish 2009 with $120 million to $140 million in cash left on the books.
“Congratulations on a much improved year-end,” said Edward Tenthoff, an analyst with Piper Jaffray, on a conference call with ZymoGenetics management after the announcement.
Shares of ZymoGenetics climbed 10 percent in after-hours trading to $5.50 at 4:22 pm Eastern time.