Running interferon

Bristol-Myers Squibb, ZymoGenetics PEG-Interferon lambda deal could be worth $1 billion

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SEATTLE—ZymoGenetics Inc. has secured a global collaboration deal with Bristol-Myers Squibb Co. for PEG-Interferon lambda, a novel type 3 interferon currently in Phase Ib development for the treatment of hepatitis C, and its related development program. Doug Williams, CEO of ZymoGenetics, notes that the timing of this transaction, during Phase Ib clinical studies, is a strategic move to assure the most rapid path to approval.

Under the terms of the collaboration, Bristol-Myers Squibb agreed to pay ZymoGenetics an upfront cash payment of $85 million for the development and commercialization rights to PEG-Interferon lambda, and to pay an additional license fee of $20 million in 2009.

Moreover, ZymoGenetics could receive additional payments of up to $430 million based on predefined development and regulatory milestones for PEG-Interferon lambda in Hepatitis C, up to $287 million in development and regulatory milestones for other potential indications, and up to $285 million based on pre-defined sales-based milestones.

"We've consistently said that a partnership was an essential element of our strategy for the development and commercialization of interferon lambda," Williams says. But ZymoGenetics didn't want just any partner, and the company "set some stringent criteria for what we wanted in a partner and a partnership," he says.

Specifically, ZymoGenetics sought a partner with a proven track record and ongoing commitment to antiviral drug development and commercialization and a vision of the potential of interferon lambda in alignment with its own.

"Bristol Myers is a partner with a common vision of interferon lambda becoming the interferon treatment of choice for patients with chronic hepatitis C infection," Williams says, adding that he believes interferon lambda to be the most differentiated interferon in development and says it offers the possibility of antiviral activity at least as good as the current interferons but with a superior safety and tolerability profile.

"The success BMS has had in the development of their HIV and hepatitis B franchises as well as their robust internal program for antiviral agents for HCV provides ZymoGenetics with a knowledgeable and committed partner who will work with us to rapidly develop and gain marketing approval for interferon lambda in markets around the world," Williams explains.

The companies have agreed to co-develop PEG-Interferon lambda and share development costs in the United States and Europe. Most likely, ZymoGenetics will conduct a significant portion of continuing Phase I and certain Phase II development activities, and it will have the option to co-promote in the United States and to share profits on product sales with Bristol-Myers Squibb.

ZymoGenetics also has retained the option to pass on the co-development, co-promotion and profit sharing arrangement in the United States, in which case ZymoGenetics would receive double-digit royalties on PEG-Interferon lambda sales worldwide.

Outside the United States, Bristol-Myers Squibb will be responsible for commercialization and ZymoGenetics will receive double-digit royalties on product sales.

"We welcome the opportunity to combine ZymoGenetics' strong foundation in discovering and developing therapeutic proteins, with our own internal research and development expertise in working on this innovative hepatitis C therapy that has the potential to help patients prevail over this serious disease," says Dr. Francis Cuss, senior vice president of discovery and exploratory clinical research at Bristol-Myers Squibb. "The profile of PEG-Interferon lambda offers the possibility of improvements in the safety and effectiveness of combination treatment for hepatitis C and makes it an ideal fit with our emerging portfolio of small molecule antivirals."

Williams says that preclinical data coming out of his company's interferon lambda research suggests the compound may be useful in hepatitis B therapy and for certain multiple sclerosis applications, though there are no official plans to go after those indications at this time. DDN

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