Doug Williams, one of the few nationally prominent biotechnology executives in Seattle, has officially left his job as ZymoGenetics CEO now that the company’s $885 million takeover by Bristol-Myers Squibb has been completed, Xconomy has learned.

Both Williams and former ZymoGenetics president Stephen Zaruby have left the company after it was acquired last month by Bristol-Myers Squibb, according to Bristol spokeswoman Jennifer Fron Mauer. She didn’t say who else on the senior management team has left, or who is now in charge of Bristol’s new operation in Seattle. The New York-based pharma giant hasn’t yet decided what to do with the remaining Zymo employees, or its local facilities, she says.

Now that Williams, 52, is officially a free agent again, he will have his pick of various plum jobs. He has deep roots in Seattle going back to the 1980s, and has built up a big Rolodex and gained lots of executive experience at Immunex, Amgen, Seattle Genetics, and ZymoGenetics. Williams is obviously still young enough to run another mid-cap biotech company, start a new venture, or do something else. As his longtime friend and legal advisor Stephen Graham of Fenwick & West once said, Williams has a reputation as a “calm, thoughtful, insightful and unflappable” business leader.

“Doug is one of the key players in the Seattle market that has CEO experience and a solid scientific background,” says Bob Nelsen, managing director with Arch Venture Partners in Seattle. “He can do anything he wants, from CEO, startup, to VC. Hopefully he stays here! I would back him any day.”

When I spoke with Williams yesterday by phone, he confirmed he’s looking at a number of different job opportunities. “I’m not ready to hang up the cleats yet,” he says. “I sort of feel that after 20-plus years in the business, I’m starting to figure out some of the do’s and don’ts. I’m definitely not ready to stop. I enjoy working in this business.” [For the full interview with Williams, check Xconomy tomorrow.]

As with anybody who’s been around biotech for a long time, Williams has a track record with its share of ups and downs. He was the chief technology officer at Immunex when that company had its breakthrough success with etanercept (Enbrel), and he was there when the company failed … Next Page »

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ZymoGenetics has some shareholders out there wondering if the company has agreed to be acquired by Bristol-Myers Squibb for too low of a price. Today there’s a small, but potentially important piece of data that might make a few more investors pause about whether now is really the time to sell.

The Seattle-based biotech company (NASDAQ: ZGEN) said today that patients who got one of its experimental drugs for melanoma that has spread through the body survived a median time of 12.4 months. More than half (53 percent) of the 40 patients who enrolled in the study of IL-21 were still alive after one year, the company said.

While this is just a result from a preliminary study, and it’s impossible to really compare this drug to another treatment because the study didn’t randomly assign patients to a control group, it’s still an eye-opening result. Metastatic melanoma, a deadly form of skin cancer that has spread through the body, is one of the toughest malignancies to treat. Bristol-Myers Squibb (NYSE: BMY) dominated the headlines (and overshadowed ZymoGenetics) earlier this year at the American Society of Clinical Oncology when one of Bristol’s experimental drugs was found to help metastatic melanoma patients survive a median of 10 months, compared with 6.4 months for people in a control group. About 8,700 people in the U.S. die each year from metastatic melanoma, according to the American Cancer Society.

“The median overall survival of 12.4 months in the Phase 2 study with IL-21 in advanced melanoma patients is very encouraging,” said Eleanor Ramos, ZymoGenetics’s chief medical officer, in a statement. “We look forward to further results.”

I wrote about how ZymoGenetics showed some more preliminary data from this same IL-21 study back at the ASCO meeting in June, where Bristol was the belle of the ball. ZymoGenetics, back then, had data saying that its treatment shrank tumors in about 23 percent of patients and kept them from spreading for a median of about four months. The results were intriguing, especially since IL-21 is a genetically engineered protein drug made to stimulate the immune system to fight cancer cells, a mechanism of action unlike any other marketed drug for melanoma.

But the data was from too small a study, and the findings were still too preliminary, to really compare with a big study of more than 670 patients like the one presented by Bristol-Myers.

Bristol-Myers, of course, is interested in ZymoGenetics for a lot more than just its potential to treat melanoma. Bristol made big corporate news earlier this month when announced its intention to acquire ZymoGenetics for $9.75 a share, or about $885 million. The prime asset in that deal, Bristol has said, is a different compound ZymoGenetics has in the pipeline for treating hepatitis C, a chronic liver infection. Bristol has said it wants to retain ZymoGenetics’ sole marketed product, recombinant thrombin (Recothrom) for treating surgical bleeding, and some of its pipeline. Bristol said in its takeover announcement that it wants IL-21 for melanoma, so if it finalizes the ZymoGenetics takeover in the coming weeks, it will be interesting to see what Bristol does next with the drug.

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The drug discovery and development process is a difficult one that takes considerable expertise in both the research and business realms. Seattle currently has approximately 103 biotechnology companies, 21 of which are publicly traded. The area also has a number of non-profit research organizations that participate in a variety of efforts to find new medicines. Biotech companies have been operating here for some 30 years now, during which time some 42 companies have either been acquired or gone out of business. So what are the prospects for developing new drugs here in Seattle? To address this question, I thought it might be helpful to look back at the track record of our local biotechs. Just how many drugs have we developed locally?

Deriving an answer to this question turned out to be anything but simple. Some drugs were discovered and developed here, some drugs were discovered elsewhere but were developed for new clinical indications by Seattle companies, and some drugs were simply acquired and then sold by our local biotechs. There are a few other caveats I should point out. A majority of these drugs were developed with the help and financial assistance of big pharma partners. Biotechnology also formed the technological basis for several companies that developed medical devices that went on to become FDA approved and treat patients, as noted below. Finally, I want to acknowledge that there have been a number of successes locally in medical devices, agricultural biotech, diagnostics, and biocomputing software applications. However, my focus today is on drug discovery and development. Let’s take a look back and see where we’ve been:

Seven Drugs Discovered and Developed by Seattle Biotechs

Leukine (sargramostim) was developed by Immunex and was FDA approved in 1991 to stimulate the proliferation of white blood cells in patients recovering from bone marrow transplants. Leukine only captured a small share of the market due to stiff competition from Amgen’s competing drug filgrastim (Neupogen), which was approved a month earlier by the FDA for a much wider clinical indication. Amgen’s purchase offer for Immunex led to the divestiture of Leukine to Berlex, the US subsidiary of Schering AG, for antitrust reasons. Berlex was in turn acquired by Bayer in 2006, who subsequently sold Leukine to Genzyme in 2009.

Enbrel (etanercept) was originally developed by Immunex for use in the treatment of sepsis, but it failed in its clinical trials. While most companies would have buried a failed drug, Immunex resurrected Enbrel by testing it in clinical trials with rheumatoid arthritis patients. Strongly positive results led to FDA approval in 1998. Subsequent clinical trials expanded its use for a number of disorders, including juvenile rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, and plaque psoriasis. Acquiring Enbrel was the primary reason Amgen purchased Immunex in 2002. Enbrel went on to become the best selling biologic drug in the world, with worldwide sales in 2008 of $7.4 billion. Amgen’s purchase of Immunex also brought on board the monoclonal antibody that would become panitumumab (Vectibix), and prevented a nasty patent war between the companies over intellectual property that led to the newly approved osteoporosis drug denosumab (Prolia).

Cialis (tadalafil) was initially discovered by … Next Page »

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Hope sprang eternal at this year’s JP Morgan Healthcare Conference, the annual kickoff event for the biotech industry. A few Seattle biotech companies offered some reasons for people to think a little hope may be justified.

—VentiRx Pharmaceuticals said it raised $25 million to further develop its drugs that stimulate the innate immune system against cancer and allergies. A pair of local investors, Arch Venture Partners and Frazier Healthcare Ventures, chose to re-invest in the Seattle and San Diego-based company, while MedImmune Ventures, a unit of AstraZeneca, led the new round.

—Stephen Friend is at it again. The visionary founder of Sage Bionetworks said he struck a partnership with the world’s largest drugmaker, Pfizer, to support Sage’s effort to spark an open-source-style movement for biology. Pfizer is paying to support research at Sage to find new cancer drug targets and predict which patients are likely to respond to therapies in development. Terms weren’t disclosed.

—Gilead Sciences (NASDAQ: GILD), the world’s largest maker of HIV medications, is deepening its roots in the Seattle area with a $50 million respiratory disease research center looking out over Lake Union. The company hasn’t yet seen U.S. product sales to justify its $365 million acquisition of Corus Pharma in 2006, although it is hoping to get the green light from the FDA next month to start selling Corus’s inhalable antibiotic for cystic fibrosis.

—ZymoGenetics (NASDAQ: ZGEN), the granddaddy of Seattle biotech companies, closed on a financing that netted about $90.9 million. The company plans to use the cash to support R&D, and to boost sales of its lone marketed product, recombinant thrombin (Recothrom) for surgical bleeding.

—Seattle-based Targeted Genetics (NASDAQ: TGEN) said it is allowing itself to be de-listed from the NASDAQ exchange in order to save cash. The longtime gene therapy stalwart is down to the equivalent of six full-time employees.

—The Institute for Systems Biology was found to have the highest scientific impact of any research center in the U.S., and the third highest in a global survey of more than 2,100 research centers, according to an analysis by Spain-based SCImago Research Group. The report looked at total research output, how much each institute collaborates with other centers, the influence of its publications, how often they are cited by other scientists, and other factors.

—SonoSite (NASDAQ: SONO), the Bothell, WA-based developer of portable ultrasound machines, said it plans to spend $100 million to buy back shares of its stock.

—Kineta, the Seattle-based biotech company, raised $942,000 in new capital, according to a regulatory filing. The company is developing anti-viral therapies, as well as drugs for autoimmune diseases.

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The New Year kicked off with a lot of exclusive biotech news and features, and next week will be even busier when I’m attending next week’s JP Morgan Healthcare Conference in San Francisco.

—Alder Biopharmaceuticals was one of the Seattle biotech companies that emerged in 2009, but few people realize what humble beginnings it had six years ago when all the founders lost their jobs in a downsizing at Celltech. We published the story of how they bootstrapped the Bothell, WA-based company for its first 20 months, putting it on a course to snag a $1 billion partnership with Bristol-Myers Squibb.

—Seattle-based ZymoGenetics (NASDAQ: ZGEN) saw its stock double in 2009, and this week it decided to seize on that growing interest to hit up investors for more cash. The company ended up netting $79 million after expenses from an underwritten stock offering. It plans to use the money for R&D, and to inject some life into its lone marketed product, recombinant thrombin for surgical bleeding.

—Bothell,WA-based Halosource, the developer of a cheap and simple technology for purifying water in developing countries, said it has raised $10 million in a new equity financing. The company has gotten some momentum with more than 4 million people using its technology in India, and it plans to use the money to expand further in other countries.

—Antibody drugs that target diseased cells and spare healthy ones have been one of the big successes in biotech, but Seattle Genetics (NASDAQ: SGEN) says it’s not really the cutting edge anymore. The Bothell, WA-based company’s CEO, Clay Siegall, says it is “unlikely” it will introduce any more plain antibodies into clinical trials, and that the future will belong to antibodies that are “empowered” to be more potent.

—We had a number of insightful guest editorials. Stephen Friend, the founder and CEO of Sage Bionetworks, offered his view of five biotechnologies that will fade away this decade. Bob Nelsen of Arch Venture Partners chimed in with his top five innovations to watch during the ’10s (or whatever we’re calling this decade). And Stewart Lyman looked back at the year that was in Seattle biotech.

—Stratos Genomics, the Seattle-based developer of a faster and cheaper DNA sequencing technology, has received three months of access to a microfabrication laboratory at the Washington Technology Center on the University of Washington campus. This was part of a stimulus program for small technology businesses in Washington state.

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ZymoGenetics is on the prowl for a lot more cash from investors—possibly more than $85 million.

The Seattle-based biotech company (NASDAQ: ZGEN) said today it is looking to sell 12 million new shares to investors in an underwritten stock offering, plus another 1.8 million shares to its underwriters. The company currently has about 69 million shares outstanding. Leerink Swann is acting as the sole manager of the offering.

ZymoGenetics didn’t release the terms of the offering, although this is clearly a big transaction in the making. The company’s stock has been on a roll, more than doubling in 2009, and reaching a closing price of $6.77 today. Assuming that ZymoGenetics offers investors a 7 percent discount to today’s close—which is about what Dendreon offered to investors in a similar deal last month—then the investors would get shares at about $6.30 a share. Multiply that by 12 million shares, and ZymoGenetics could pull in $75.5 million, plus another $11.3 million if the underwriters purchase their 1.8 million shares over the following 30-day period.

The company plans to use the cash for both its research and development, and for the commercial push behind its sole marketed product, recombinant thrombin (Recothrom). That drug hasn’t lived up to its initial sales projections, but ZymoGenetics insists that its version will still become the dominant player in a market for surgical bleeding that’s worth more than $250 million a year. Zymo recently retained the full U.S. rights to that drug after its partner, Germany-based Bayer, walked away from the product in every country except Canada.

ZymoGenetics has traditionally tried to keep at least a two-year operating cash cushion in the bank at all times, although it fell below that threshold during some hard times in 2008. It has made efforts to curb its spending in the past year, with two rounds of layoffs that brought its employee headcount down to about 300.

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This was the last week of 2009 that anybody could realistically get deals done, and quite a few did.

—Bothell, WA-based OncoGenex Pharmaceuticals (NASDAQ: OGXI) secured a partnership to develop its experimental prostate cancer treatment with Israel-based Teva Pharmaceutical, the generic drug giant. OncoGenex pulled in $60 million in upfront cash, but investors objected to the deal when they learned that Carlsbad, CA-based Isis Pharmaceuticals will actually capture almost one-third of the future milestones and royalties that would otherwise go to OncoGenex.

—ZymoGenetics (NASDAQ: ZGEN), the Seattle-based biotech company, said it has regained full U.S. rights to recombinant thrombin (Recothrom) after its partner, Bayer, decided to walk away from the product in al markets except Canada. This drug has been a big disappointment in the marketplace, although CEO Doug Williams says the company still expects it to supplant a rival drug from King Pharmaceuticals as the dominant product for stopping excess surgical bleeding.

—Seattle-based Cell Therapeutics (NASDAQ: CTIC) found a way to survive a near-death experience in 2009, and now the board is offering up a potentially lucrative series of management bonuses if the company can hit a few more goals over the next couple years. The executives will certainly be in a much better position to cash in if they succeed in persuading an FDA advisory panel that the company’s treatment for non-Hodgkin’s lymphoma, pixantrone, should be cleared for sale in the U.S. That big day is now scheduled for February 10.

—VLST, the Seattle-based company seeking to discover new targets for drugs against autoimmune diseases, has cut an undisclosed number of jobs to preserve its cash. The company is still working to fill up the pipeline of drug candidates for its partner, Novo Nordisk.

—Seattle Genetics (NASDAQ: SGEN), the Bothell, WA-based developer of antibody drugs for cancer, put the capstone on a big year when it clinched a licensing deal with GlaxoSmithKline that brought in $12 million in upfront cash. GSK will use the Seattle Genetics technology for linking antibodies against an undisclosed number of targets to potent toxins.

—Oncothyreon (NASDAQ: ONTY) looked like a goner a year ago, … Next Page »

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If ZymoGenetics is going to make its lone marketed product into a success, it will have to do it on its own. The Seattle-based biotech company said today that its partner, Germany-based Bayer, is walking away from its U.S. commercial rights to the drug for surgical bleeding.

ZymoGenetics (NASDAQ: ZGEN) said today it is getting back the full rights in the U.S. and every other country except Canada, under a restructured partnership with Bayer. The bigger company will quit co-promoting the drug everywhere except Canada, and it will no longer have to pay ZymoGenetics as much as $16 million in milestone payments for regulatory approvals around the world. ZymoGenetics will have to pay Bayer as much as $12 million in commissions over the next two years, about half of what it could have owed Bayer under the old agreement. The revised deal goes into effect on January 1.

ZymoGenetics struck the original alliance back in June 2007, when hopes were high for the commercial prospects of recombinant thrombin (Recothrom). ZymoGenetics and Bayer were gearing up then to take over the market for drugs that control excess surgical bleeding, which has been dominated in the U.S. by Bristol, TN-based King Pharmaceuticals. The established drug is derived from proteins in cow blood, while the ZymoGenetics product is made of genetically engineered human clotting proteins, which ZymoGenetics has argued is a safer, more reliable source. One analyst projected the drug would reach $308 million in U.S. sales in 2010 at the time the deal was struck with Bayer, but the drug has come nowhere near that kind of success. The ZymoGenetics treatment generated just $8.8 million in sales in 2008, and is projected to reach $28 million to $30 million in sales this year.

ZymoGenetics CEO Doug Williams

Still, ZymoGenetics isn’t ready to give up on the product.

“Why would we do that? It’s a real product with a growing revenue line,” says ZymoGenetics CEO Doug Williams. “Our view of Recothrom hasn’t changed. We feel the same way that we did at the product launch, which is that this will be the dominant product in terms of market share.”

Bayer essentially walked away from the product after completing its own internal portfolio review, deciding to allocate money and people toward other projects, Williams says. The alliance means that ZymoGenetics’ 48-person U.S. sales force will pitch the drug on its own, and ZymoGenetics will look to hire another 10 sales reps, Williams says. ZymoGenetics will seek to keep all the U.S. to itself, but it will seek another partner who is willing to finish development and support commercialization of the product outside of North America, Williams says.

Williams noted in a statement that by going it alone, ZymoGenetics should have better efficiency with one sales organization. It also should lower the company’s sales expenses, ZymoGenetics says.

ZymoGenetics has sustained a couple more ups and downs with the product in recent weeks. The drug was shot down by European Union regulators, who said another clinical trial would need to be run before they could grant clearance to sell the product there. Canadian regulators took a different … Next Page »

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ZymoGenetics (NASDAQ: ZGEN), the Seattle-based developer of a treatment to stop excess surgical bleeding, said today that its partner has voluntarily withdrawn an application to market the product in Europe. Germany-based Bayer, who formed a collaboration with ZymoGenetics to market recombinant thrombin (Recothrom) in 2007, withdrew the European application after regulators there said another clinical trial would be necessary to win approval, according to a regulatory filing. The drug won FDA clearance in January 2008. The product has gotten off to a slow start in the U.S., where it is estimated to generate $28 million to $30 million in sales this year.

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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.

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ZymoGenetics started really playing hardball with King Pharmaceuticals in August, and now a high-and-tight fastball has come right back at the Seattle biotech company.

The projectile in question is a lawsuit filed on November 2 by Bristol, TN-based King in the U.S. District Court in Eastern Tennessee; the suit accuses ZymoGenetics of false advertising, unfair competition, and other violations of federal and Tennessee law. King went so far to ask a federal judge to impose three temporary restraining orders to stop ZymoGenetics (NASDAQ: ZGEN) from making certain claims comparing the two drugs—and it was successful for a couple of days until Zymo got the restrictions overturned on Friday.

The suit, it seems, is at least partly a response to a move made in the summer by ZymoGenetics, maker of a drug for surgical bleeding, to try to get King’s rival product pulled from the market. For those not following all of the two companies’ maneuvering, here’s a quick summary.

The incumbent product, Thrombin-JMI, is made by Bristol, TN-based King Pharmaceuticals (NYSE: KG) for surgeons to dab or spray onto an organ that’s bleeding too much during surgery. The King product has been around in hospitals since 1995, and generated $255 million in sales a year ago. Surgical bleeding drugs (called topical hemostats in the operating room) are used in an estimated 1 million surgeries a year in the U.S.

But ZymoGenetics, whose own drug was approved in January 2008, has been arguing for years that it can do a lot better. The King drug is derived from clotting proteins called thrombins in cow blood. Since that’s from a foreign source, the human immune system recognizes it as such, and can spark a reaction that can lead to severe bleeding and death, ZymoGenetics has argued.

The challenger in this niche market, ZymoGenetics developed what it considers a safer alternative, recombinant thrombin, a genetically engineered copy of the human thrombin protein. Because the new drug is a human, rather than cow, protein, it shouldn’t provoke as many immune reactions or dangerous bleeding episodes, ZymoGenetics has contended. But ZymoGenetics has struggled to convince doctors that they need to switch, and it has backed away from earlier attempts to charge premium prices. The company forecasts that it will generate $28 million to $30 million in sales of the drug this year.

Back in August, ZymoGenetics found another venue besides the marketplace in which to wage this fight—the FDA. The company gathered evidence of two cases in which physicians attributed patient deaths to bad reactions on its competitor’s drug, and 23 more cases of severe complications. That was some of the ammunition contained in a 31-page citizen’s petition the company filed with the FDA, in which ZymoGenetics asked the agency to pull the drug off the market for the sake of public health. “There are physicians using Thrombin-JMI without a clear understanding of its risks,” said ZymoGenetics CEO Doug Williams in an interview with Xconomy in August. “There are at least three better alternatives in the marketplace now.”

King, a company with a $2.7 billion market capitalization, didn’t comment at the time. But it obviously decided that when ZymoGenetics started playing hardball, it was time to follow suit.

King challenged the ZymoGenetics citizen petition … Next Page »

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One of the key people who transformed ZymoGenetics from a basic research institute into a more balanced biotech company with both R and D, has set up shop in a rival startup just a few blocks away on Seattle’s Eastlake Avenue. If he plays his cards right, this little company will surpass his former employer, with what he hopes will be an even better treatment to control bleeding.

His name is Jan Öhrström (pronounced Yahn Oar-strum), and he’s the former chief medical officer of Seattle-based ZymoGenetics (NASDAQ: ZGEN), and now the chief operating officer of a company called ProFibrix. The newer company is headquartered in the Netherlands, and when it went looking to establish a U.S. presence a year ago, it hooked up with Öhrström to build that in Seattle. The company picked up some momentum in August when it raised $11 million in a Series B venture round, and it has some intriguing technology, so it was time to catch up with Öhrström over lunch to find out what’s up.

ProFibrix sees itself carving out a niche in the market for drugs and sealants that are used to stop excess bleeding, both in the surgical operating room and among paramedics—or on the military battlefield. The company is creating a dry powder that is ready to be used at a moment’s notice, can be sprinkled on a wound, remains stable at room temperature, and can be packaged in a spray or a bandage. It sees its potential edge in convenience when going up against standard treatments that need to be thawed, mixed with another solution, or kept in a fridge. If this new product can be proven effective in clinical trials, ProFibrix will tap into a couple different market segments worth about $600 million a year combined in the U.S.

“There’s no doubt about it, we can make significant inroads in the market,” Öhrström says.

Jan Ohrstrom

When we met over lunch near his home on Mercer Island, Öhrström was excited about getting ProFibrix set up in a new office on Eastlake, complete with all the usual mundane aspects of a startup—getting the lease signed, phones working, and the office furniture assembled (I could relate this part to when Greg and I got the Xconomy Seattle office up and running in June 2008.)

ZymoGenetics is well known for its blood coagulation expertise, although its Recothrom drug has gotten off to a slow start in sales. ProFibrix CEO Jaap Koopman, it turns out, had been cultivating a relationship with Öhrström for years, dating back to when Ohrstrom oversaw the development of recombinant thrombin (Recothrom). The vision was that if ProFibrix could get Ohrstrom on board—somebody … Next Page »

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We’re supposed to be oh-so-laid-back here in the Northwest, so the surprise of the week came when one of the local biotech mainstays showed it was willing to step up and punch a competitor in the nose.

—Seattle-based ZymoGenetics (NASDAQ: ZGEN) showed it was willing to ruffle some feathers in its quest to gain market share for its sole marketed product, recombinant thrombin (Recothrom) for surgical bleeding. The company asked the FDA to pull a competing product from Bristol, TN-based King Pharmaceuticals (NYSE: KG) off the market, citing two deaths attributed to the product.

—Targeted Genetics (NASDAQ: TGEN) only has enough cash to operate through this month, so these could be the final days for this 17-year veteran of the Seattle biotech scene. It never cured anything, but this company is leaving a legacy, with a generation of biotechies making an impact at other local companies. I’ve pulled together a list of 60 Targeted Genetics alumni at last count. If you know of someone I’ve overlooked, please add a comment at the bottom of the story or send me an e-mail at ltimmerman@xconomy.com.

—Seattle-based Omeros is preparing to make a renewed attempt at an IPO, possibly as soon as next month, according to this story we broke on Xconomy yesterday. The IPO market is expected to open up again in the middle of September, because institutional investors like the caliber of companies in the IPO queue, and the bargain prices, says Cascadia Capital CEO Michael Butler.

—Speaking of the IPO market, Kirkland, WA-based OVP Venture Partners sees IPO potential in one of the most flush members of its portfolio, Mountain View, CA-based Complete Genomics. This is the company that’s on a quest to introduce full human genome sequencing for as little as $5,000. OVP joined a syndicate this week that pumped in another $45 million to help the company get its commercial sequencing facility up to full capacity.

—Seattle Genetics has been saying it’s six months ahead of schedule in enrolling patients in the pivotal trial of its drug for Hodgkin’s disease, and this week the Bothell, WA-based company (NASDAQ: [[ticker:SGEN]) made it official. It completed enrollment in the trial, and expects results in the second half of 2010.

—Seattle-based Cell Therapeutics (NASDAQ: CTIC) said the FDA has agreed to review its application to market pixantrone for non-Hodgkin’s lymphoma. The company still hasn’t heard from the FDA on when the review should be completed, although it expects to be informed of the deadline by Sept. 4.

—AVI Biopharma, the developer of RNA-based drugs that moved its headquarters from Portland, OR to Bothell, WA, loaded up its balance sheet this week with more cash. The company (NASDAQ: AVII) ended up pulling in $34 million through selling common stock and warrants.

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Before it asked the FDA to yank a drug made by its chief competitor, King Pharmaceuticals, off the U.S. market, ZymoGenetics learned that physicians had attributed the deaths of two patients to bad reactions to the drug, says ZymoGenetics CEO Doug Williams.

I spoke with Williams this morning shortly after the Seattle biotech issued a statement saying that it has filed a formal citizen petition with the FDA, asking the agency to force Bristol, TN-based King to withdraw a rival treatment for surgical bleeding from the U.S. market. ZymoGenetics (NASDAQ: ZGEN) contends that King’s Thrombin-JMI product poses a risk of immune-system reactions that can lead to severe bleeding episodes, and even death.

ZymoGenetics has been trying to grab away King’s market share, primarily by arguing its drug is safer. The King product, which has been around for years, is the dominant drug used to control bleeding in an estimated 1 million surgeries a year in the U.S. It generated $255 million in U.S. revenues last year. But ZymoGenetics has sensed an opportunity to supplant King’s drug, because it is derived from cow’s blood, and therefore recognized as foreign by the immune system, which it says can lead to complications with repeated use. ZymoGenetics won FDA approval for its recombinant version of human thrombin, called Recothrom, in January 2008. Just as with insulin for diabetes, animal-derived products eventually lose in the marketplace when safer, genetically engineered human products come along to replace them, the company contends.

Yet ZymoGenetics it has struggled to capture much of the market for surgical bleeding drugs. It generated just $8.8 million in first-year sales—partly because physicians were unaware of the risks associated with the animal-derived product they had been using for many years, Williams says. Now the company hopes to change that, by asking the FDA to take a closer look at how to handle that risk from the cow-derived clotting agent.

“There are physicians using Thrombin-JMI without a clear understanding of its risks,” Williams says. “There are at least three better alternatives in the marketplace now, that don’t have the same risk profile.”

ZymoGenetics CEO Doug Williams

When reached by phone this morning, King Pharma’s vice president of investor relations, Jack Howarth, said the company has no comment.

The 31-page citizen petition, which I reviewed this morning, highlights 25 cases published by researchers that drew a link between cow-derived blood control treatments and bad immune-system reactions that led to severe complications, or death. One report by a physician to the FDA last October attributed a death to usage of Thrombin-JMI, and just this month, ZymoGenetics said it learned of a second case.

The prescribing information for Thrombin-JMI has carried the FDA’s strictest warning, called a “Black Box,” since 1996. It warns physicians of potentially dangerous immune reactions. But ZymoGenetics said few physicians seem aware of the risk, and keep using King’s product anyway. Now that ZymoGenetics’ genetically engineered version is on the market, along with two other products that use clotting proteins derived from human blood—Johnson & Johnson’s Evithrom and Baxter Healthcare’s Gelfoam Plus—there’s no longer any reason … Next Page »

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ZymoGenetics isn’t giving up on its sole marketed product, and it’s playing some hardball to fight for it. The Seattle biotech company said today it is asking the FDA to yank its top competitor’s drug off the market because, it contends, it’s not safe enough.

Thrombin-JMI, made by Bristol, TN-based King Pharmaceuticals (NYSE: KG), is derived from clotting proteins called thrombins in cow blood. Since that’s from a foreign source, the human immune system recognizes it as such, and can spark a reaction that can lead to severe bleeding and death, ZymoGenetics says. The company says it has found more than 25 published cases of patients who developed blood clotting disorders after they were given cow-derived thrombin products.

ZymoGenetics (NASDAQ: ZGEN) has a major dog in this fight, because its only marketed product—a genetically engineered copy of human thrombin—is a direct competitor to the King product. Both are approved by the FDA to control bleeding during surgery. Zymo won FDA approval to market its recombinant thrombin (Recothrom) in January 2008. Zymo has been arguing for years that its version of thrombin is less likely to spark an immune reaction than animal derived-ones, and that it’s therefore safer. But the argument hasn’t done much to sway doctors. The ZymoGenetics drug generated just $8.8 million in sales last year, and the company predicts it will generate $25 million to $35 million this year. Thrombin-JMI, the established player hospitals have used for years, had $255 million in sales a year ago.

Now, ZymoGenetics is clearly going on offense to get a bigger piece of the market. The drugs for bleeding products are used in an estimated 1 million surgeries a year in the U.S.

“Serious adverse events, including death, linked to bovine thrombin continue to be reported to the FDA,” said George Rodgers, a pathologist at the University of Utah, and medical director of the coagulation laboratory at Salt Lake City-based ARUP Laboratories, in a ZymoGenetics statement. “These adverse events are a serious, ongoing safety issue for patients undergoing surgery.”

ZymoGenetics CEO Doug Williams says the company remains committed to boosting sales of its drug in its second year on the market, as part of an overall strategy to reduce its cash spending rate and stabilize the company in a bad financing market. ZymoGenetics struggled in its first year to get hospitals to try the product, because many didn’t consider the bleeding drugs they use to be a problem, Zymo chairman Bruce Carter has said.

Via a citizen petition to the FDA, ZymoGenetics argues that the risks of treating people with the King product outweigh the benefits, and it should be pulled from the market. Physicians don’t have a readily available diagnostic test for when patients have developed antibodies to previous doses of the drug, and therefore don’t know when a follow-up treatment has the potential to cause a bleeding disorder, the company argues.

King Pharmaceuticals, when confronted in the past by ZymoGenetics’ arguments that its product isn’t safe enough, has generally dismissed them as exaggerations. I’ll add any comments here if the company responds to the latest salvo in the thrombin battle.

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Some of the lesser-known names in Seattle life sciences made some noise this week, just when we here at the Xconomy biotech desk thought things might slow down a tad in the dog days of summer.

—AVI Biopharma (NASDAQ: AVII), the Portland, OR-based maker of RNA-based therapies, is now getting a new tagline as the Bothell, WA-based maker of RNA-based therapies. This company, led by CEO Les Hudson and chairman Christopher Henney, decided to move its headquarters to the Seattle area to tap into this region’s deeper biotech talent pool as it advances drugs through clinical trials for Duchenne Muscular Dystrophy, Ebola and Marburg virus, and other tough-to-treat conditions.

—Seattle-based Dendreon (NASDAQ: DNDN) has one of the most avid fan bases in the biotech industry, but few people realize it has a low-key neighbor across the lake in Bothell, WA, that has also produced some very impressive results against prostate cancer this year. Scott Cormack, the CEO of OncoGenex Pharmaceuticals (NASDAQ: OGXI) told me this week in an exclusive feature that he’s fielding “competitive” partnership proposals from a number of Big Pharma companies that want a piece of its action.

—Sometimes you have to strike while the iron is hot in biotech, and that’s what Seattle-based Oncothyreon did this week. The company (NASDAQ: ONTY) said on Monday that some follow-up data suggests its immune-boosting therapy for lung cancer was able to generate long-term tumor responses without causing any serious side effects. This boosted the stock 26 percent on Monday. One day later, Oncothyreon CEO Bob Kirkman seized on the newfound demand for his shares by selling some more shares, and refilling the company coffers with $15 million.

—Scientists over at PATH, the Seattle-based nonprofit that works to improve health in poor countries, were pumped up about a new formula they developed that was shown to protect hepatitis B vaccine from getting damaged by hot or cold temperatures. This work, financed by the Bill & Melinda Gates Foundation, only adds one-tenth of a penny to the cost of a vaccine dose, and PATH says it ought to work just as well for a wide range of vaccines.

—Seattle-based ZymoGenetics (NASDAQ: ZGEN) said this week that second-quarter sales started to pick up, as expected, for its sole marketed product for surgical bleeding. The company reported $6 million in sales of recombinant thrombin (Recothrom), which puts it on pace to reach its full-year sales forecast of $25 million to $35 million.

—Buddhists and biotechies don’t usually go hand-in-hand, but this sort of unlikely alliance might yield some big future opportunities for biomedical entrepreneurs in mental health, according to Seattle’s Ben Shapiro. He’s the former executive vice president of worldwide research at Merck, who has been exposed to these ideas through serving on the board of the nonprofit Mind & Life Institute in Boulder, CO.

—Does the laid-back Northwest lifestyle keep this region from reaching its full potential as a dynamic hub of innovation and entrepreneurship? Janis Machala, the champion of startup creation at the UW TechTransfer office, stirred the pot last week with some thought-provoking comments about this idea at an event hosted by the Washington Biotechnology & Biomedical Association. This generated a lot of comments, many of them quite thoughtful, at the tail end of the story.

—Seattle-based Amnis, the maker of an instrument for high-speed imaging of cells, said it closed on the first $839,000 out of a $1.5 million round of financing. The company, which has seen rising demand for its second-generation product, raised the cash from CVF LLC, MedVenture Associates, and OrbiMed Capital, and angel investors.

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ZymoGenetics, the Seattle-based biotech company, said today that it generated $6 million in second-quarter sales of recombinant thrombin (Recothrom). That performance is an improvement on the $4.5 million the company reported in the first quarter, and puts ZymoGenetics (NASDAQ: ZGEN) on pace to reach its 2009 sales forecast of $25 million to $35 million. The company trimmed its net loss to $27 million in the second quarter, and had $118.2 million in cash on the balance sheet at the end of June.

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ZymoGenetics is still struggling to generate sales from its lone commercial product. The Seattle biotech company said today it had $4.5 million in sales of recombinant thrombin (Recothrom) for surgical bleeding in the first quarter, which is down slightly from $4.7 million in the previous quarter.

The trend can’t be encouraging, although ZymoGenetics (NASDAQ: ZGEN) suggested the raw numbers may be a bit misleading. That’s because the previous quarter’s product sales were inflated by about $800,000 worth of extra wholesale stockpiling that wasn’t actually sold to hospitals until the first quarter. When factoring out the inventory buildup, sales would have increased 36 percent in the quarter, the company said.

ZymoGenetics won FDA approval to market recombinant thrombin in January 2008, so it has now had more than a year of experience in the marketplace to encourage doctors and hospitals to start buying it. The drug, a genetically engineered copy of a human protein that helps with the normal blood clotting process, is made to compete against a rival from King Pharmaceuticals derived from cow blood, called Thrombin-JMI. The ZymoGenetics product is supposed to be superior, although doctors haven’t started switching en masse. The ZymoGenetics drug generated just $8.8 million in sales last year, and the company has predicted it will generate $25 million to $35 million this year. Thrombin-JMI had $255 million in sales a year ago.

With the first quarter off to a slow start, ZymoGenetics will have to boost sales significantly later this year to reach its goal. ZymoGenetics’ new president, Stephen Zaruby, formerly of Bayer, said everything about the drug—people who sell it, how it’s positioned in the marketplace, and how it’s priced, are subject to change. Still, the round of 161 job cuts announced last week—one-third of ZymoGenetics’ staff—was designed to cut R&D and other departments, while maintaining the company’s ability to market the drug.

“We recognized from the beginning that this was a process of medical education, and that it would take time,” said ZymoGenetics CEO Doug Williams, on a conference call with analysts. “We are beginning to make progress, and it will take continuing efforts to bear fruit.”

Specifically, Zaruby said he remains confident in the product, because of increasing hospital orders in the first quarter, and larger and more frequent orders from existing hospital customers. Pricing, however, is down, he said, as more customers are taking advantage of bulk-buying discounts the company implemented in October to become more competitive with Thrombin-JMI. By the second half of 2010, the product should generate positive cash flow that can be plowed into the rest of the business, Williams said.

As recombinant thrombin has struggled, ZymoGenetics has acted to boost revenues in other ways, while also reducing costs. The company signed a partnership in January with Bristol-Myers Squibb that has brought in $105 million in cash so far this year, and is expected to produce another $95 million for ZymoGenetics this year. That helped the company raise its cash reserves from $89.9 million heading into this year, to more than $152 million at the end of the first quarter, March 31.

The company has shown it wants to make that cash last longer than it would have in the past. ZymoGenetics says its recent job cuts, along with reduced spending on R&D programs, will save $30 million a year.

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ZymoGenetics, the largest independent biotech company in Washington, said today it is cutting one-third of its workforce to conserve cash.

The Seattle biotech company (NASDAQ: ZGEN) said today it is eliminating 161 jobs, or 32 percent, of its staff, which will leave it with about 350 employees. The company said it is cutting costs broadly by getting rid of its cancer drug research capability, cutting manufacturing of drugs for clinical trials, and some product development and some support functions that it will now outsourced, said spokeswoman Susan Specht. The company will continue to concentrate resources on research and development of immunology drugs, a “core strength.”

“Given the financial markets, we had to make the cuts,” Specht says. “We don’t want to be dependent on the financial markets anymore.”

The moves are “better for shareholders,” but sad for the employees, she added.

ZymoGenetics 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 sales in first-year sales, and it is forecasted to generate $25 million to $35 million this year. ZymoGenetics also hopes to bring in more money by forming partnerships with larger drugmakers, like the deal it struck in January potentially worth $1.1 billion with Bristol-Myers Squibb, to co-develop pegylated interferon lambda against hepatitis C.

The company hopes to form a partnership to co-develop one cancer drug it has in clinical trials, IL-21, in the second half of this year, or the first half of 2010, Specht says.

The company expects to save $11 million this year because of the cutbacks, and about $30 million annually in future years, Specht says.

ZymoGenetics has reversed its fortunes a bit this year with the signing of the partnership with Bristol-Myers Squibb, but the company’s stock is still down 60 percent from where it was a year ago, at a share price of $3.63, making it extremely difficult to raise new equity capital from investors. The company, which spun off from Novo Nordisk as an independent company in 2000, has never been profitable.

As I reported last month in this analysis of the cash balances of Seattle biotech companies, ZymoGenetics had $89.9 million in the bank by the beginning of the year, and entered the year expecting to spend $115 million to $125 million on R&D. The Bristol deal is supposed to bring in $200 million total for ZymoGenetics in 2009 to help pay the bills, but that wasn’t enough of a cushion for future years. CEO Doug Williams suggested in his presentation last month at Invest Northwest that cost cuts could be on the way.

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ZymoGenetics’ senior vice president of sales and marketing, Michael Dwyer, has left the company as of yesterday, according to a regulatory filing. The Seattle-based company (NASDAQ: ZGEN) didn’t explain why he left, or financial terms of his departure. Dwyer joined the company in April 2006 to commercialize its first FDA-approved drug, recombinant thrombin (Recothrom). The drug has gotten off to a slow start, generating an estimated $7 million in U.S. sales in 2008.

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