EXHIBIT 99.1
ZymoGenetics Reports Second Quarter 2004 Financial Results
SEATTLE--(BUSINESS WIRE)--Aug. 5, 2004--ZymoGenetics, Inc.
(Nasdaq:ZGEN) today reported its financial results for the quarter
ended June 30, 2004. The company reported a net loss for the quarter
of $24.5 million, or $0.46 per share. For the comparable quarter of
2003, ZymoGenetics had a net loss of $13.8 million, or $0.30 per
share. The increase versus the prior-year period was anticipated,
reflecting the Company's increasing investment in its pipeline of
product candidates.
Revenues for the quarter ended June 30, 2004 increased to $8.4
million, compared to $5.7 million for the same period in 2003, largely
due to higher license fees and milestone payments. During the quarter
the company earned a license fee under an agreement with Amgen
granting rights to certain patents covering a metabolic disease
target. Additionally, a milestone payment was earned from BioMimetic
Pharmaceuticals related to regulatory progress of its product
incorporating a protein licensed from ZymoGenetics. Excluded from
quarterly revenues are the upfront license fees received under three
protein licenses with Novo Nordisk, which are expected to be
recognized as revenue later this year upon completion of certain
administrative contract requirements.
Operating expenses for the quarter increased according to plans to
$32.1 million, compared to $19.9 million for the second quarter of
2003. The increase was primarily attributable to higher research and
development expenses in support of the company's product development
programs. ZymoGenetics is developing a broad pipeline of proprietary
therapeutic protein product candidates, four of which are now in
clinical development. The company has continued to ramp up its
development efforts significantly over the past year. Expense
increases were largely driven by the addition of experienced personnel
and an increase in outsourced development work, primarily process
development and manufacturing. Also contributing to the increase was a
one-time charge of $3.2 million to noncash stock-based compensation
expense related to the repayment by certain employees of loans using
shares of the company's common stock.
The company ended the quarter in a strong financial position, with
$271.5 million of cash and investments. This balance was augmented
during the quarter through the sale of approximately $10 million of
common stock to Amgen in conjunction with a protein licensing
agreement.
"The past several months have been marked by significant progress
in our development programs, including the start of an IL-21 cancer
clinical trial, the start of a TACI-Ig clinical trial in lupus
patients and accrual of patients in our four rhThrombin Phase 2
clinical studies," commented Bruce L.A. Carter, president and CEO. "At
the same time, business development activity has accelerated,
providing both near-term cash flow we can devote to our development
programs and the potential for enhanced long-term value," added Dr.
Carter.
Recent Highlights
Second quarter 2004 and more recent company highlights include the
following:
Product Development
-- Began Phase 2 clinical studies of rhThrombin to evaluate
safety and the control of bleeding in four different surgical
settings: liver resection, spinal surgery, lower extremity
peripheral artery bypass surgery, and formation of vascular
access grafts for dialysis.
-- Began treating patients in a Phase 1 clinical study evaluating
the safety of IL-21 as a potential therapy for metastatic
melanoma and renal cell carcinoma.
-- Together with our collaborator Serono, began a Phase 1
clinical trial of TACI-Ig, examining the effects of treatment
in systemic lupus erythematosus (SLE) patients.
Business Development
-- Completed a license agreement with Amgen granting worldwide
rights to ZymoGenetics' patents covering a metabolic disease
target discovered using its genomics-based discovery platform;
in a related transaction, Amgen made an investment of $10
million in ZymoGenetics common stock.
-- Exercise by Novo Nordisk A/S of its right to extend an
existing option and licensing agreement to November 2006,
under which it will pay ZymoGenetics an option fee of $7.5
million per year for two years in return for the right to
exclusively license a limited number of proteins outside North
America.
-- Completed license agreements with Novo Nordisk A/S, granting
exclusive rights outside North America to ZymoGenetics'
patents covering IL-28A, IL-29 and IL-31, proteins with
antiviral and anti-inflammatory disease therapeutic potential.
-- Earned a milestone payment related to the filing of a license
application by BioMimetic Pharmaceuticals on its GEM 21S
product for the treatment of periodontal disease, which
contains PDGF-BB under license from ZymoGenetics. On July 13,
an FDA Dental Products Advisory Panel unanimously recommended
approval of GEM 21S.
About ZymoGenetics
ZymoGenetics is a biopharmaceutical company focused on the
discovery, development and commercialization of therapeutic proteins
for the prevention or treatment of human diseases. The Company is
developing a diverse pipeline of potential proprietary product
candidates that are moving into and through clinical development.
These span a wide array of clinical opportunities that include
bleeding, autoimmune diseases and cancer. ZymoGenetics intends to
commercialize these product candidates through internal development,
collaborations with partners and out-licensing of patents from its
extensive patent portfolio. For further information, visit
www.zymogenetics.com.
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on the current intent and
expectations of the management of ZymoGenetics. These statements are
not guarantees of future performance and involve risks and
uncertainties that are difficult to predict. ZymoGenetics' actual
results and the timing and outcome of events may differ materially
from those expressed in or implied by the forward-looking statements
because of risks associated with our unproven discovery strategy,
preclinical and clinical development, regulatory oversight,
intellectual property claims and litigation and other risks detailed
in the company's public filings with the Securities and Exchange
Commission, including the company's Annual Report on Form 10-K for the
year ended December 31, 2003. Except as required by law, ZymoGenetics
undertakes no obligation to update any forward-looking or other
statements in this press release, whether as a result of new
information, future events or otherwise.
ZYMOGENETICS, INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------------
2004 2003 2004 2003
-------- -------- -------- --------
Revenues:
Royalties $ 2,364 $ 2,364 $ 4,774 $ 4,760
Option fee 1,875 1,875 3,750 3,750
License fees and milestone
payments 4,114 1,482 5,518 3,444
-------- -------- -------- --------
Total revenues 8,353 5,721 14,042 11,954
Operating expenses:
Research and development,
excluding noncash
stock-based compensation 23,879 14,893 43,912 30,568
General and administrative,
excluding noncash
stock-based compensation 3,427 3,079 6,392 6,173
Noncash stock-based
compensation expense 4,760 1,898 6,332 3,664
-------- -------- -------- --------
Total operating expenses 32,066 19,870 56,636 40,405
-------- -------- -------- --------
Loss from operations (23,713) (14,149) (42,594) (28,451)
Other income (expense), net (753) 321 (769) 1,153
-------- -------- -------- --------
Net loss $(24,466) $(13,828) $(43,363) $(27,298)
======== ======== ======== ========
Basic and diluted net loss per
share $ (0.46) $ (0.30) $ (0.82) $ (0.59)
======== ======== ======== ========
Weighted-average number of
shares used in
computing net loss per share 53,207 46,016 52,954 45,944
======== ======== ======== ========
BALANCE SHEETS
(in thousands)
(unaudited)
June 30, December 31,
2004 2003
------------ ------------
Cash, cash equivalents and short-term
investments $ 271,543 $ 299,892
Other current assets 10,346 8,652
Property and equipment, net 69,035 62,341
Other assets 5,393 5,024
----------- -----------
Total assets $ 356,317 $ 375,909
=========== ===========
Current liabilities $ 20,955 $ 21,131
Lease obligation 65,662 50,570
Construction advance from landlord -- 7,918
Other non-current liabilities 8,258 8,375
Shareholders' equity 261,442 287,915
----------- -----------
Total liabilities and shareholders'
equity $ 356,317 $ 375,909
=========== ===========
CONTACT: ZymoGenetics, Inc.
Investor Relations:
John Q. Calhoun, 206-442-6744
or
Media Relations:
Susan W. Specht, 206-442-6592