BMS, ZymoGenetics Enter Global Hep-C Pact

Bristol-Myers Squibb and ZymoGenetics, Inc. entered a global collaboration 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.

Under the terms of the collaboration, ZymoGenetics will receive an upfront cash payment of $85 million for the development and commercialization rights to PEG-Interferon lambda, and will receive an additional license fee of $20 million in 2009. ZymoGenetics could receive additional payments of as much as $430 million based on development and regulatory milestones for PEG-Interferon lambda in Hepatitis C, as much as $287 million for other potential indications, and as much as $285 million based on sales-based milestones.

The companies have agreed to co-develop the compound in the U.S. and Europe and will share development costs. ZymoGenetics will conduct a significant portion of continuing Phase I and certain Phase II development activities. ZymoGenetics will have the option to co-promote in the U.S. and share profits on product sales with BMS. ZymoGenetics can opt out of the co-development, co-promotion and profit sharing arrangement in the U.S., in which case it will receive royalties on sales worldwide. Outside the U.S., BMS will be responsible for commercialization and ZymoGenetics will receive 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,” said Francis Cuss, M.D., senior vice president, discovery and exploratory clinical research, BMS. “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 anti-virals.”

“We believe BMS is the ideal partner for ZymoGenetics and that we share the vision that PEG-Interferon lambda could become an important part of treating patients with Hepatitis C,” said Douglas E. Williams, Ph.D., chief executive officer of ZymoGenetics. “We look forward to a productive partnership focused on bringing PEG-Interferon lambda to Hepatitis C patients as rapidly as possible.”