Biotech Values

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Ahead of the Bell: ZymoGenetics rises on deal
Tuesday January 13, 9:05 am ET
ZymoGenetics shares rise in premarket trading on Bristol-Myers Squibb development deal

NEW YORK (AP) -- Shares of ZymoGenetics Inc. jumped in premarket trading Tuesday after the biotechnology company signed a deal worth up to $1.2 billion with drug developer Bristol-Myers Squibb Co.

The stock gained $1.75, or 56 percent, to $4.87 before the opening bell. The stock has ranged between $2.06 and $15.23 over the past year.

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The $1.2 billion dollar deal to develop a hepatitis C drug comes as many biotech companies face potential financing problems amid tight credit markets.

Citi analyst Dr. Lucy Lu said the deal's initial payments of $105 million, plus a $95 million milestone payment, should provide the company with enough operating cash for two or more years.

She reaffirmed a "Hold" rating and $5 share price target.

Under the deal, Bristol-Myers pays $85 million up front for rights to develop the compound and $20 million for a licensing fee. Additional payments could total over $1 billion.

The companies will test the drug jointly in the United States and Europe.

About 170 million people worldwide are infected with hepatitis C, a virus transmitted by blood that damages the liver and is difficult to treat.