ZymoGenetics Unloads Drug Candidates to Cut Costs, Spin Off New Company

5/4/09Follow @xconomy

One company’s cost burden can sometimes be a vital building block for another. That’s the impression I got today from Seattle-based ZymoGenetics, which said it is licensing away the rights to eight different drug candidates in early development to a new startup company called Seattle Life Sciences.

Under the deal, ZymoGenetics (NASDAQ: ZGEN) is handing over the rights to the drugs in exchange for an equity stake in the startup company, milestone payments on success in development, and royalties if Seattle Life Sciences can turn them into commercial products, said ZymoGenetics spokeswoman Susan Specht. This is part of ZymoGenetics CEO Doug Williams’s three main strategies for this year: boosting sales of recombinant thrombin, pushing development of pegylated interferon lambda for hepatitis C, and cutting R&D costs on programs outside its core business, Specht says.

“Doug is keen on cutting costs this year,” Specht says. “We’re glad to have these product candidates developed by someone else.”

The new company’s founding chief science officer is Stephen Jaspers, a 15-year veteran scientist from ZymoGenetics who was laid off from the company a year ago, he says. While at Zymo, he became familiar with all eight of those product candidates. The intellectual property package he’s getting includes cancer drug candidates that block targets called PDGF-C and PDGF-D, and another called prokineticin-2. With the rights to these drugs in hand, Seattle Life Sciences hopes to now raise money from angels, venture capitalists, or corporate partners to continue developing these drugs through animal tests, Jaspers says.

“We’d like to see these products get into the clinic,” Jaspers says. “We think they have a lot of value and potential to be useful medicines.”

If the new company has luck attracting funding, Jaspers hopes to hire a few of his former colleagues who lost their jobs in the 161-person layoff there last week. The company is looking for lab space, which “shouldn’t be a problem” because so many companies have been cutting back on R&D, he says.

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