January 13, 2009 / 3:40 PM / 10 years ago

ZymoGenetics shares soar on deal with Bristol-Myers

BANGALORE, Jan 13 (Reuters) - Shares of ZymoGenetics Inc ZGEN.O jumped as much as 53 percent on Tuesday, a day after the tiny biotechnology company got a much needed cash infusion from its collaboration deal with Bristol-Myers Squibb (BMY.N).

“Partnership with Bristol-Myers is a solid deal, as it gives ZymoGenetics another shot at profitability in a large market after disappointing Recothrom sales and obviates the need for near-term financing,” Citigroup said in a note dated Jan. 12.

The Seattle-based company, which sells Recothrom — a treatment to control bleeding during surgery, ended its third quarter with a loss of $28.8 million and $81.1 million in cash and cash equivalents.

Under the deal, the two companies have agreed to co-develop ZymoGenetics’ PEG-Interferon lambda, a type of protein that is in early-stage trials for hepatitis C, in the United States and Europe and share development costs.

Bristol-Myers agreed to pay ZymoGenetics $85 million cash upfront and an additional license fee of $20 million. [ID:nN12354940].

UBS analyst Jeff Elliott said while it was a big deal for ZymoGenetics, it was not likewise for Bristol-Myers.

“This deal fits with Bristol-Myers’ strategy, and makes sense in the context of Bristol-Myers’ presence in the anti-viral drugs category. That said, this opportunity is still distant, and very early stage,” Elliott wrote in a note dated Jan. 12.

ZymoGenetics shares were up $1.1 at $4.23 in morning trade on Nasdaq. The shares touched a high of $4.80 earlier in the session. Bristol-Myers shares were down 8 cents at $22.07 on the New York Stock Exchange. (Editing by Himani Sarkar)

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