Exhibit 99.1
ZymoGenetics Reports Second Quarter 2005 Financial Results
SEATTLE--(BUSINESS WIRE)--July 28, 2005--
Pipeline expands to include IL-29, potential treatment for
Hepatitis C, as fourth product candidate;
Important clinical milestones also reported
ZymoGenetics, Inc. (Nasdaq:ZGEN) today reported its financial
results for the quarter ended June 30, 2005. The company reported a
net loss for the quarter of $23.8 million, or $0.41 per share, which
was less than the net loss reported for the comparable 2004 period of
$24.5 million, or $0.46 per share. The company continued to maintain a
strong financial position, with $275 million of cash and investments
as of June 30, 2005.
"Our business is progressing according to plan," stated Bruce L.A.
Carter, president and CEO. "During the quarter we reported promising
data from clinical trials of rhThrombin and IL-21. Our discussions
with the FDA related to Phase 3 testing of rhThrombin have been
constructive and should lead to initiation of a pivotal clinical trial
later this year. Also, our pipeline is expanding with the addition of
IL-29 as a potential treatment for hepatitis C," added Dr. Carter.
Revenues for the quarter ended June 30, 2005 were $8.0 million,
compared to $8.4 million for the same period in 2004. Option fees
increased in 2005 due to the pro rata recognition of deferred revenue
related to a strategic alliance with Serono S.A. that was completed in
the fourth quarter of 2004. License fees and milestones decreased,
reflecting reduced transaction volume in the current year. Royalties
also decreased in the 2005 quarter due to insulin patent expirations
in certain European countries and changes in exchange rates caused by
strengthening of the U.S. Dollar.
Operating expenses for the quarter were $31.7 million, slightly
lower than the $32.1 million reported for the second quarter of 2004.
Research and development expenses increased, reflecting increases in
staffing needed to support the company's advancing product development
programs. General and administrative expenses also increased due to
heightened activities in support of product development and, more
specifically, rhThrombin commercialization. These increases were
offset by a reduction in stock-based compensation expense.
Recent Highlights
The company continues to advance its pipeline of product
candidates. Most recently, IL-29 was designated as an additional, or
fourth, product candidate. Highlights over the past several months
include both important milestones and presentation of encouraging
data.
Clinical Milestones
In late June, an end of Phase 2 meeting for rhThrombin was held
between the company and the FDA. The agenda included discussion of the
proposed Phase 3 pivotal study design and the new process developed
for manufacture of Phase 3 clinical and commercial product supply.
Outcomes from the meeting were positive and constructive. ZymoGenetics
intends to obtain a Special Protocol Assessment before initiating the
Phase 3 study. The company expects to initiate a single pivotal study
later this year, enroll and treat 400 to 600 patients, and complete
the study in 2006.
Dose escalation has been completed in the ongoing Interleukin 21
(IL-21) Phase 1 clinical study and a dose of 30 micrograms per
kilogram of body weight was selected to take forward. The second part
of the study, or Part B, was initiated in early July, in which
additional metastatic melanoma or renal cell carcinoma patients will
be treated to obtain more experience at the established dose.
Based on promising preclinical data showing anti-viral activity
comparable to that of alpha interferon, the decision was made to
advance Interleukin-29 (IL-29) into clinical development as a
potential therapy for Hepatitis C. IL-29 is generated in response to
viral infection, and signals through a receptor expressed primarily on
some liver cells (hepatocytes) and a subset of lung cells (epithelial
cells). In comparison, type-I interferon receptors are present on
cells distributed throughout the body. Research indicates that IL-29
could serve as an alternative to interferons in augmenting patient
responses to viral infection with fewer side effects. Formal
toxicology studies and manufacture of a pegylated form of IL-29 for
use in Phase 1 clinical trials will be initiated over the next several
months to support the filing of an Investigational New Drug
application for IL-29 as a treatment for Hepatitis C in 2006.
Presentations of Clinical Data
The results from two Phase 2 clinical trials of rhThrombin
conducted with patients undergoing either arteriovenous grafting
surgery for hemodialysis or peripheral artery bypass surgery were
presented at the spring meeting of the Peripheral Vascular Surgery
Society in Chicago, Illinois. Favorable outcomes were reported with
respect to safety, immunogenicity and hemostatic effects and support
the advancement of the product candidate to Phase 3 clinical
development.
Interim results from the treatment of the first twelve patients in
a Phase 1 study of IL-21 as a treatment for metastatic melanoma and
renal cell carcinoma were presented at the American Society of
Clinical Oncology 2005 annual meeting held in Orlando, Florida. It was
reported that IL-21, administered in an outpatient setting, showed
evidence of anti-tumor activity and was reasonably well tolerated with
limited and reversible toxicities.
ZymoGenetics will present aggregate results of four Phase 2
clinical studies of rhThrombin as a topical surgical hemostat at the
annual meeting of The International Society on Thrombosis and
Haemostasis (ISTH) held August 6-12, 2005 in Sydney, Australia.
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.
Forward-Looking Statements
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, 2004. 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,
------------------ ------------------
2005 2004 2005 2004
------------------ ------------------
Revenues:
Royalties $1,837 $2,364 $4,218 $4,774
Option fees 2,659 1,875 5,319 3,750
License fees and milestone
payments 3,519 4,114 10,433 5,518
--------- --------- --------- ---------
Total revenues 8,015 8,353 19,970 14,042
Operating expenses:
Research and development,
excluding noncash
stock-based compensation 25,076 22,846 48,671 41,909
General and administrative,
excluding noncash
stock-based compensation 5,719 4,460 11,393 8,395
Noncash stock-based
compensation expense 954 4,760 2,200 6,332
--------- --------- --------- ---------
Total operating
expenses 31,749 32,066 62,264 56,636
--------- --------- --------- ---------
Loss from operations (23,734) (23,713) (42,294) (42,594)
Other expense, net (69) (753) (297) (769)
--------- --------- --------- ---------
Net loss $(23,803) $(24,466) $(42,591) $(43,363)
========= ========= ========= =========
Basic and diluted net
loss per share $(0.41) $(0.46) $(0.74) $(0.82)
========= ========= ========= =========
Weighted-average number
of shares used in computing
net loss per share 57,855 53,207 57,764 52,954
========= ========= ========= =========
BALANCE SHEETS
(in thousands)
(unaudited)
June 30, Dec. 31,
2005 2004
--------- ---------
Cash, cash equivalents and short-term
investments $275,090 $324,998
Other current assets 7,952 9,512
Property and equipment, net 71,508 71,960
Other assets 6,064 5,714
--------- ---------
Total assets $360,614 $412,184
========= =========
Current liabilities $30,383 $37,149
Lease obligations 66,365 66,085
Other non-current liabilities 23,720 30,400
Shareholders' equity 240,146 278,550
--------- ---------
Total liabilities and shareholders'
equity $360,614 $412,184
========= =========
CONTACT: ZymoGenetics, Inc.
Investor Relations
John Calhoun, M.D., MBA
Director, Corporate Communications & Investor Relations
206-442-6744
or
Media Relations
Susan W. Specht, MBA
Corporate Communications Manager
206-442-6592