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Q&A With Doug Williams: Reflecting on ZymoGenetics, Looking Ahead at Seattle Biotech

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we could turn that product around. I think Stephen (Zaruby) and his team effectively did that. We would have been at break-even status at the end of this year, and starting to generate a profit on the franchise. The problem was, in a situation where you disappoint Wall Street, they basically put you in the penalty box until you prove you can get yourself out. I think we were close to that point with Recothrom, with nice healthy quarter over quarter sales increases, and getting to the point where it was starting to generate cash for the business which is ultimately always what it was intended to do.

One of the complications for us is that the shareholder base who would have been interested in Recothrom was not necessarily the same shareholder base that was interested in the rest of the pipeline. That created some situations where we probably confused some investors, even though to us, it made perfect sense. We tried articulate the rationale, and while Recothrom didn’t necessarily “fit” with the rest of what we had, it was a great way to generate non-dilutive capital to really plow back into the parts of the business that were going to generate significant value. For some investors, that message resonated, and for others, it didn’t.

X: But when you look at pegylated interferon lambda, if I’m not mistaken, the interferon alpha that’s on the market now is a billion dollar product or close to it. The treatment of hepatitis C is only expected to boom when Vertex Pharmaceuticals and Merck get their new drugs out there, and interferon alpha is still an integral backbone of the standard of care. So, it’s certainly conceivable that pegylated interferon lambda could be a billion dollar product if it replaces the existing interferon, as it should, since it has fewer side effects. And yet, you sold the whole company for $885 million. Do you feel like you have to wonder, what might have been if you could have held on and stay independent?

DW: You always have that sense, where you wonder, ‘what if we made a different decision?’ Time will tell how that all turns out. From an investor perception standpoint, I think Wall Street has become incredibly conservative about what they are willing to stick their neck out for and say is going to become a big drug. It really requires you to have randomized Phase 2b data to get the value of a product opportunity. Fundamentally, what we were able to do by selling the company now was get that kind of value without any risk for the shareholders. As I’ve gone out after the deal was announced and done, and talked to our shareholders, that’s exactly … Next Page »

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