Exhibit 99.1
ZymoGenetics Reports Third Quarter 2004 Financial Results;
Major Business Development Initiatives Enable Greater Focus
on Genomics-Based Pipeline
SEATTLE--(BUSINESS WIRE)--Nov. 4, 2004--ZymoGenetics, Inc.
(Nasdaq:ZGEN) today reported its financial results for the third
quarter and nine months ended September 30, 2004. The company reported
a net loss of $22.0 million, or $0.41 per share, for the quarter ended
September 30, 2004, compared to a net loss of $15.0 million, or $0.32
per share, in the prior year period. For the nine months ended
September 30, 2004, the company's net loss was $65.4 million, or $1.23
per share, versus a net loss of $42.3 million, or $0.92 per share, in
the comparable 2003 period.
The company's financial condition remained strong, with cash, cash
equivalents and short-term investments totaling $250.4 million as of
September 30, 2004. This reported amount does not reflect
approximately $96 million of net proceeds receivable in the fourth
quarter from two transactions completed in October: a strategic
alliance with Serono and a license of recombinant Factor XIII to Novo
Nordisk.
"ZymoGenetics successfully accomplished a number of critical
events over the past several months. In keeping with our strategy of
monetizing our broad pipeline while retaining U.S. rights for our core
products, we signed two significant alliance and licensing agreements,
and each offers sizeable financial rewards," said Bruce L.A. Carter,
Ph.D., President and Chief Executive Officer of ZymoGenetics. "In
addition, we began clinical development of TACI-Ig as a treatment for
B-cell malignancies. Clinical trials with our lead candidates for
treating cancer, autoimmune diseases and surgical bleeding continue to
move ahead. Finally, we hired a well-known industry veteran, Doug
Williams, as our new Chief Scientific Officer and Executive Vice
President."
Revenues for the quarter increased to $11.9 million versus $8.2
million for the same period in the prior year. The increase was
primarily attributable to several license fees and milestone payments
earned in the current year period. These included a milestone payment
from Novo Nordisk related to the start of IL-21 clinical trials
outside North America; fees earned from Novo Nordisk related to the
license of IL-28, IL-29 and IL-31 outside North America; and continued
recognition of IL-20 license fee revenue received from Novo Nordisk
earlier this year. An increase in royalty revenues also contributed to
the overall revenue increase.
Research and development expenses for the quarter increased to
$27.0 million, compared to $17.5 million for the comparable quarter of
2003. The increase was primarily attributable to increased clinical
development costs, including those resulting from higher development
staffing levels and external contracts for process development and
manufacturing of the company's product candidates, as well as
increased payments to Serono to cover the company's share of TACI-Ig
development costs. Also contributing to the increase were cost
reimbursements in the prior year earned from Novo Nordisk related to
the preclinical development of IL-21, which were recorded as
reductions to expense.
General and administrative expenses for the quarter increased to
$4.8 million, compared to $3.8 million for the comparable 2003
quarter, reflecting costs associated with business development
activities, compliance with the Sarbanes-Oxley Act, and growth in
other areas supporting the company's business, particularly human
resources and information technology.
Recent Highlights
Recent company highlights since the start of the third quarter of
2004 include the following:
Product Development
-- Together with our collaborator Serono, began clinical trials
of TACI-Ig, examining the effects of treatment in systemic
lupus erythematosus and rheumatoid arthritis patients.
-- Received regulatory clearance to proceed with testing of
TACI-Ig in patients with B-cell malignancies, and announced
plans, together with our collaborator Serono, to begin two
clinical trials of TACI-Ig in multiple myeloma patients and in
patients with other forms of B-cell cancer.
-- Earned a milestone payment related to the start of IL-21
clinical trials outside North America by Novo Nordisk A/S.
-- Continued enrollment in the Phase 1 study of IL-21 in cancer
patients and Phase 2 studies of recombinant human Thrombin in
surgical bleeding.
Business Development
-- Entered into a broad strategic alliance with Serono involving
both co-research and co-development of genomics-derived
proteins, which is structured to enhance the company's ability
to identify new development candidates, and to facilitate the
clinical and commercial development of such candidates. The
company receives $81.25 million from Serono upfront, including
a $50 million investment in common stock.
-- Completed a worldwide license of recombinant Factor XIII to
Novo Nordisk A/S, facilitating the company's strategic product
development objectives, while retaining a significant economic
interest in the product candidate. The company receives $15
million upon signing, with $62 million of potential
development milestone payments and potential royalties on
sales.
-- Announced 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 therapeutic potential.
Corporate Leadership
-- Hired Dr. Douglas E. Williams as Chief Scientific Officer and
Executive Vice President, replacing Dr. Frank Collins, who is
retiring. Dr. Williams brings to ZymoGenetics over fifteen
years of experience within the biotechnology industry,
including previous positions as Executive Vice President and
Chief Technology Officer at Immunex Corporation and Chief
Scientific Officer at Seattle Genetics.
-- Appointed James A. Harper to the company's Board of Directors
effective July 1, 2004. Mr. Harper has thirty years of global
experience in the pharmaceutical and medical device
industries, and recently retired from the post of Group Vice
President of Global Marketing and Sales at Eli Lilly and
Company.
Upcoming Event
ZymoGenetics senior management will hold an Analyst & Investor
Briefing on Friday, December 10 from 9:30 am to 1:00 pm, at the Four
Seasons Hotel in New York City. To attend this session, please contact
Susan Specht at 206-442-6592 or spechts@zgi.com.
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 ZymoGenetics' public filings with the Securities and Exchange
Commission, including ZymoGenetics' 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 Nine Months Ended
September 30, September 30,
----------------------------------------
2004 2003 2004 2003
-------- -------- -------- --------
Revenues:
Royalties $ 3,408 $ 2,325 $ 8,181 $ 7,085
Option fee 1,875 1,875 5,625 5,625
License fees and milestone
payments 6,653 4,012 12,171 7,456
-------- -------- -------- --------
Total revenues 11,936 8,212 25,977 20,166
Operating expenses:
Research and development,
excluding noncash stock-
based compensation 26,963 17,504 68,871 46,471
General and administrative,
excluding noncash stock-
based compensation 4,758 3,821 13,153 11,595
Noncash stock-based
compensation expense 1,490 1,707 7,822 5,371
-------- -------- -------- --------
Total operating expenses 33,211 23,032 89,846 63,437
-------- -------- -------- --------
Loss from operations (21,275) (14,820) (63,869) (43,271)
Other (expense) income, net (727) (175) (1,496) 977
-------- -------- -------- --------
Net loss $(22,002) $(14,995) $(65,365) $(42,294)
======== ======== ======== ========
Basic and diluted net loss
per share $ (0.41) $ (0.32) $ (1.23) $ (0.92)
======== ======== ======== ========
Weighted-average number of
shares used in computing net
loss per share 53,762 46,221 53,225 46,037
======== ======== ======== ========
BALANCE SHEETS
(in thousands)
(unaudited)
Sept. 30, Dec. 31,
2004 2003
-------- --------
Cash, cash equivalents and short-term investments $250,372 $299,892
Other current assets 10,033 8,652
Property and equipment, net 69,890 62,341
Other assets 5,372 5,024
-------- --------
Total assets $335,667 $375,909
======== ========
Current liabilities $ 19,508 $ 21,131
Lease obligation 65,839 50,570
Construction advance from landlord -- 7,918
Other non-current liabilities 8,088 8,375
Shareholders' equity 242,232 287,915
-------- --------
Total liabilities and shareholders' equity $335,667 $375,909
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CONTACT: ZymoGenetics
John Calhoun, 206-442-6744 (Investor Relations)
Susan W. Specht, 206-442-6592 (Media Relations)