ZymoGenetics Axes 52 Jobs, Quits Discovery of Immunology Drugs, to Conserve Cash
Bad news today for employees of ZymoGenetics (NASDAQ: ZGEN). The Seattle-based biotech company said today in a regulatory filing it is cutting 52 jobs, or about 15 percent of its workforce, and scrapping its group that seeks to discover immunology drugs, so that it can put its resources into its marketed drug for surgical bleeding and other drug candidates moving along in development.
The company says it will retain drug discovery capabilities to continue supporting its existing product candidates, and that the cuts will affect new drug discovery. It expects the move will save the company $8 million to $10 million a year, starting in 2010. ZymoGenetics now has about 300 employees left, including about 160 in research and development.
This is the second mass layoff for ZymoGenetics this year, after it cut 161 jobs in April and got out of the cancer research business. The company will continue to invest in the sales and marketing of its lone marketed product, recombinant thrombin (Recothrom) for surgical bleeding. That drug got off to a slow start last year with just $8.8 million in first-year sales, and it is forecasted to generate $28 million to $30 million this year. ZymoGenetics also hopes to bring in more money by forming partnerships with larger drugmakers, like the deal it struck in January that is potentially worth $1.1 billion with Bristol-Myers Squibb, to co-develop pegylated interferon lambda against hepatitis C.
“We’re a different company now than we were a year ago,” says ZymoGenetics spokeswoman Susan Specht in an e-mail. “We’ve changed our business model from discovering many candidates and licensing them at an early stage to focusing on fewer candidates, taking them into development, and partnering them at later stages in deals where we keep an ownership stake with good economics upfront. We now have a narrow and focused pipeline. Human Genome Sciences and Onyx Pharmaceuticals are recent examples of companies that have done this and gone on to achieve success.
“To become a successful company, we must focus our resources and efforts on development candidates with the greatest potential. Our decisions have us focusing our cash on programs that have the greatest potential for value creation in the next 3-4 years and beyond,” Specht says.