ZymoGenetics Reports Second Quarter 2008 Financial Results
Tuesday August 5, 4:00 pm ET
- RECOTHROM(R) 20,000-IU Vial and Spray Kit Approved by FDA -
- $100 Million Funding Commitment Secured from Deerfield Management -
SEATTLE--(BUSINESS WIRE)--ZymoGenetics, Inc. (NASDAQ:ZGEN - News) today reported its financial results for the second quarter ended June 30, 2008. The company reported a net loss for the quarter of $37.4 million, or $0.54 per share, compared to a net loss of $37.3 million, or $0.55 per share, in the prior year quarter.
“With FDA approval of the RECOTHROM® 20,000-IU vial and the spray kit co-packaged with this larger vial, we now have a full line of product presentations available for sale. This, together with contracts now in place with several large group purchasing organizations, should help to accelerate market conversion in the second half of the year,” said Bruce L.A. Carter, Ph.D., chief executive officer of ZymoGenetics. “Further, we have increased our financial strength through the $100 million funding commitment from Deerfield Management.”
ZymoGenetics reported significantly higher revenues for the second quarter of 2008 compared to the prior year quarter, primarily due to increased collaboration revenues and product sales of RECOTHROM. Overall, revenues were $12.6 million in the second quarter of 2008, compared to $4.2 million in the prior year quarter. The $8.3 million increase resulted from revenues related to the RECOTHROM collaboration with Bayer Healthcare, milestone payments related to rFactor XIII, continuing sales of the 5,000-IU vials of RECOTHROM (which was approved by the FDA in January 2008), and initial wholesaler stocking of the 20,000-IU vials and spray kits of RECOTHROM (which were approved by the FDA in May 2008). Net sales of RECOTHROM totaled $1.4 million in the second quarter.
Costs of product sales included only the costs of packaging and distributing RECOTHROM that were incurred subsequent to the initial FDA approval in January 2008. All other costs of manufacturing RECOTHROM were incurred prior to the initial FDA approval and were expensed to research and development.
Research and development expenses were $33.1 million in the second quarter of 2008, compared to $32.0 million in the prior year quarter. The increase was primarily due to incremental clinical development costs associated with atacicept. This increase was partially offset by reduced contract manufacturing expenses, as all RECOTHROM manufacturing costs are now recorded as inventory and expensed as costs of product sales when product is sold, and by reduced salary and benefit costs resulting from the company’s February 2008 restructuring.
Selling, general and administrative expenses were $16.0 million in the second quarter of 2008, a $5.8 million increase from the prior year quarter. The increase was largely related to the deployment of the RECOTHROM sales force in the second half of 2007 and marketing costs related to the U.S. launch of RECOTHROM.
Net other expense in the second quarter of 2008 was $753,000 compared to $672,000 of net other income in the second quarter of 2007. The decrease reflects lower investment income, which resulted from lower cash balances to invest and decreased interest rates.
The company ended the quarter with $116.9 million of cash, cash equivalents and short-term investments. In addition to these funds, the company received a $100 million loan commitment in June from Deerfield Management, a leading healthcare investment organization and a significant ZymoGenetics shareholder. The funds generally can be drawn in $25 million installments at any time until January 2010 at ZymoGenetics’ discretion and will be repayable five years from the date of the funding arrangement.
Business Highlights
During the second quarter and to date in the third quarter, ZymoGenetics’ product development and commercialization programs continued to advance, including the following highlights:
RECOTHROM
* Received FDA approval for, and began shipments of, RECOTHROM® Thrombin, topical (Recombinant) 20,000 international unit (IU) vial and co-packaging of the 20,000-IU vial with ZymoGenetics’ Spray Applicator Kit.
* Executed contracts with four of six key group purchasing organizations, the federal government and other hospital networks.
* Presented data from the Phase 2 spray application clinical trial in burn patients, showing that topical application of RECOTHROM using a pump spray device demonstrated a similar safety profile and rate of antibody formation to that observed in the RECOTHROM Phase 3 clinical trial.
Atacicept
* ZymoGenetics and Merck Serono began patient treatment in the Phase 2/3 general systemic lupus erythematosus clinical trial.
* ZymoGenetics and Merck Serono initiated Phase 2 clinical trials evaluating the safety and efficacy of atacicept in patients with relapsing multiple sclerosis and in patients with optic neuritis.
IL-21
* Completed patient enrollment in a Phase 2 study in combination with Nexavar® (sorafenib) tablets in renal cell carcinoma patients.
PEG-Interferon lambda
* Completed enrollment of the second patient cohort and began enrollment of the third cohort in a Phase 1b study evaluating safety, tolerability and antiviral activity in chronic genotype-1 hepatitis C patients who have relapsed after prior therapy.
