BMS forges $885M deal to buy ZymoGenetics

Bristol-Myers Squibb has struck a deal to buy Seattle-based ZymoGenetics for $885 million, snaring its development partner on a mid-stage hepatitis C program along with a pipeline that includes new therapies for cancer and inflammatory conditions. For shareholders that $9.75-per-share offer--about $735 million net of the cash that the biotech has in the bank--represented a whopping 84 percent premium.

The heart of this deal is beating for pegylated interferon lambda, which is now in a Phase IIb study. BMS paid ZymoGenetics $85 million upfront to partner on the drug, offering a follow-up $20 million payment in 2009 and up to $430 million in milestones for a successful development program.

Interferon lambda proteins signal through a receptor present on fewer cells than type I interferons, leading researchers to believe that they could be on the trail of a safer and more tolerable therapy for hepatitis C when compared to alpha interferons. Investigators heading the IIb study wrapped enrollment at the end of August. Four-week and 12-week results from a Phase IIa study will be presented at the American Association for the Study of Liver Diseases meeting later this year.

ZymoGenetics does have a drug on the market: Recothrom, a recombinant thrombin, was approved by the FDA to control non-arterial bleeding during surgical procedures.

"The acquisition of ZymoGenetics brings us full ownership of a promising investigational biologic that strengthens our very diversified Hepatitis C portfolio. Building on our leadership in virology, we are developing a strong portfolio to help patients with Hepatitis C," said Lamberto Andreotti, Bristol-Myers CEO. "In addition, ZymoGenetics brings proven capabilities with therapeutic proteins and revenue from a marketed specialty surgical biologic."

- here's the BMS release