Exhibit 99.1
Contact
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INVESTOR RELATIONS MEDIA RELATIONS
John Calhoun, MD, MBA Susan W. Specht, MBA
Director, Corporate Communications Associate Director,
& Investor Relations Corporate Communications
(206) 442-6744 (206) 442-6592
FOR IMMEDIATE RELEASE
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ZYMOGENETICS REPORTS THIRD QUARTER 2006 FINANCIAL RESULTS
Seattle, WA, November 1, 2006 - ZymoGenetics, Inc. (Nasdaq: ZGEN) today reported
its financial results for the third quarter and nine months ended September 30,
2006. The company reported a net loss of $31.2 million, or $0.47 per share, for
the quarter ended September 30, 2006, which was slightly better than its plans.
The company's net loss was $20.4 million, or $0.33 per share, for the comparable
2005 quarter. The Company has continued to increase its investment in product
candidates under development. For the nine months ended September 30, 2006, the
company's net loss also increased to $92.9 million, or $1.39 per share, from a
net loss of $62.9 million, or $1.06 per share, in the comparable 2005 period.
The company's financial condition remained strong as of September 30, 2006, with
cash, cash equivalents and short-term investments totaling approximately $290
million.
"The quarter was highlighted by the positive results from our rhThrombin Phase 3
clinical trial," said Bruce L.A. Carter, Ph.D., President and Chief Executive
Officer of ZymoGenetics. "We are now focused on the submission of a high-quality
license application with FDA later this year and readying for product launch. At
the same time, we are making significant progress with atacicept (formerly
TACI-Ig) and IL-21, both of which should be in Phase 2 testing by the end of the
year."
Revenues for the quarter decreased to $5.6 million versus $7.5 million for the
comparable period in the prior year. The decrease was primarily attributable to
the completion of revenue recognition for a recombinant Factor XIII license fee
received from Novo Nordisk in 2004. The company recorded revenue of $2.3 million
per quarter over the period of its continuing obligations relating to that
license, which ended in the second quarter of 2006.
Research and development expenses for the quarter increased to $30.3 million,
compared to $23.0 million for the third quarter of 2005. The increase was
attributable to employee growth, particularly in areas related to product
development; higher costs related to the manufacture of rhThrombin in support of
the planned license application filing; and stock-based compensation expense
recorded pursuant to new stock option accounting rules that took effect in 2006.
ZymoGenetics Third Quarter 2006 Results
November 1, 2006
Page 2 of 5
General and administrative expenses for the quarter increased to $8.0 million,
from $5.6 million for the comparable 2005 quarter. Most of the increase was
attributable to stock-based compensation expense recorded under the new
accounting rules. Employment growth and related recruitment costs also
contributed to the increase.
Net other income and expense increased to $1.5 million, from $776,000 for the
comparable quarter of 2005. This increase reflects higher investment income,
which was largely driven by higher rates of interest earned on investments.
Overall, for the full year 2006, the company now expects its net loss and net
cash usage to be lower than originally anticipated. The company's net loss for
the year is now expected to be within the range of $125-135 million, compared to
the original guidance of $135-150 million. Net cash usage is projected to be
within the range of $110-120 million, versus the original guidance of $125-140
million.
CONFERENCE CALL AND WEBCAST INFORMATION
ZymoGenetics Q3 2006 Financial Results Conference Call will be held on November
1, 2006 at 4:30 p.m. Eastern Time and may be accessed at www.zymogenetics.com or
by dialing 877-407-0782. The international dial in number is 201-689-8567.
Participants should dial in to the call approximately 10 minutes prior to the
scheduled start time to register. The webcast will be archived for 30 days.
For replay, use the following information:
o Replay number: 877-660-6853
o International replay number: 201-612-7415
Replay passcodes (required for playback): account #: 286 and conference
ID #: 218462
RECENT HIGHLIGHTS
During the third quarter of 2006, ZymoGenetics made the following significant
advancements in its product development programs:
RHTHROMBIN
ZymoGenetics completed its pivotal Phase 3 trial of rhThrombin in the third
quarter of 2006, with last patient visit in mid-July. The company reported
positive results of this trial at the Society for Advancement of Blood
Management annual meeting in mid-September. ZymoGenetics is currently preparing
for filing of an electronic Biologics License Application with the FDA by the
end of this year.
The company is also enrolling patients in a Phase 2 trial using rhThrombin in a
spray applicator as an adjunct to hemostasis in autologous skin grafting for
burns and other traumatic skin injuries. ZymoGenetics began enrolling patients
this August, with plans to enroll up to forty patients in this open-label study,
expected to finish near the end of 2006.
ZymoGenetics Third Quarter 2006 Results
November 1, 2006
Page 3 of 5
ATACICEPT (FORMERLY REFERRED TO AS TACI-IG)
ZymoGenetics, in collaboration with Serono S.A., completed two Phase 1b clinical
trials in patients with systemic lupus erythematosus (SLE) and announced
encouraging preliminary results in late July. Two related abstracts were
accepted for presentation at the American College of Rheumatology annual meeting
in Washington, D.C. Both of these will be presented at the Late Breakers
Session, ACR/ARHP Poster Session B on Monday, November 13. The titles of the
abstracts are as follows:
o Trial of Atacicept in Patients with Systemic Lupus Erythematosus (SLE)
Abstract number L19/499
o A Phase Ib Study to Investigate Atacicept (TACI-Ig) In Patients With
Rheumatoid Arthritis Abstract Number L36/516
Three abstracts involving atacicept were accepted for presentation at the
American Society of Hematology annual meeting in Orlando, Florida. Abstracts
discussing results of the company's Phase 1b clinical studies in multiple
myeloma and in non-Hodgkin's lymphoma will be presented as posters, and an
abstract discussing preclinical findings involving atacicept in a murine model
of multiple myeloma will be featured in an oral presentation.
ZymoGenetics and Serono plan to start a Phase 2 trial with atacicept in patients
with rheumatoid arthritis by the end of this year.
INTERLEUKIN 21 (IL-21)
In July, ZymoGenetics initiated a Phase 1 trial combining IL-21 with Rituximab
for treatment of non-Hodgkin's lymphoma patients. This multi-center trial will
be completed next year, and the company anticipates presenting interim results
at a scientific meeting in 2007.
In partnership with Novo Nordisk, combined results of Phase 1 studies with IL-21
in renal cell carcinoma and malignant melanoma will be presented at the
EORTC-NCI-AACR Symposium held in Prague in November.
The company recently announced the start of a Phase 1/2 clinical trial combining
IL-21 with Nexavar(R) for treatment of patients with advanced renal cell
carcinoma. ZymoGenetics plans to treat 48 patients in this two-part clinical
trial in order to evaluate the safety and potential efficacy of this
combination.
ZymoGenetics Third Quarter 2006 Results
November 1, 2006
Page 4 of 5
INTERFERON-LAMBDA1 (ALSO REFERRED TO AS INTERLEUKIN 29)
ZymoGenetics recently presented an abstract discussing the pharmacological
activity of interferon-lambda1 (also referred to as IL-29) at the Annual Meeting
of the American Association for the Study of Liver Diseases held in Boston. The
company is preparing to submit an Investigational New Drug Application for
interferon-lambda1 as a potential new therapy for Hepatitis C by the end of this
year. The company plans to initiate Phase 1 clinical testing shortly thereafter.
UPCOMING EVENT
ZymoGenetics senior management will hold an Analyst & Investor Briefing on
Thursday, December 14 from 10:00 a.m. to 1:00 p.m., at the Four Seasons Hotel in
New York City. To attend this session, please contact Susan Specht at (206)
442-6592 or media@zgi.com.
ABOUT ZYMOGENETICS
ZymoGenetics creates novel protein drugs with the potential to significantly
help patients fight their diseases. The company is developing a diverse pipeline
of potential proprietary product candidates that are moving into and through
clinical development. These candidates 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, 2005. 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.
-Financial Tables Follow-
ZymoGenetics Third Quarter 2006 Results
November 1, 2006
Page 5 of 5
ZYMOGENETICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
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2006 2005 2006 2005
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Revenues:
Royalties $ 1,707 $ 1,664 $ 5,295 $ 5,882
Option fees 2,687 2,659 8,019 7,978
License fees and milestone payments 1,158 3,175 7,696 13,607
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Total revenues 5,552 7,498 21,010 27,467
Operating expenses:
Research and development 30,296 22,979 94,621 73,398
General and administrative 8,028 5,646 24,132 17,490
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Total operating expenses 38,324 28,625 118,753 90,888
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Loss from operations (32,772) (21,127) (97,743) (63,421)
Other income (expense), net 1,547 776 4,890 479
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Net loss $ (31,225) $ (20,351) $ (92,853) $ (62,942)
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Basic and diluted net loss per share $ (0.47) $ (0.33) $ (1.39) $ (1.06)
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Weighted-average number of shares used in
computing net loss per share 67,124 62,371 66,749 59,317
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CONDENSED BALANCE SHEETS
(in thousands)
(unaudited)
September 30, December 31,
2006 2005
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Cash, cash equivalents and
short-term investments $ 289,694 $ 366,311
Other current assets 8,805 8,884
Property and equipment, net 71,021 71,803
Other assets 6,547 6,355
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Total assets $ 376,067 $ 453,353
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Current liabilities $ 25,895 $ 31,736
Lease obligations 67,063 66,754
Other non-current liabilities 17,421 21,200
Shareholders' equity 265,688 333,663
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Total liabilities and shareholders' equity $ 376,067 $ 453,353
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