Atacicept R&D Cost Gone, ZymoGenetics Makes Plans

Recothrom launch gains momentum as P&T committees meet, GPO deals are forged.

ZymoGenetics plans to eliminate some programs and partner others as its streamlining effort continues past the recent handoff of atacicept development to partner Merck-Serono, President Douglas Williams said Sept. 9 at the Morgan Stanley Global Healthcare Unplugged Conference in New York.

"We're certainly cognizant of the fact we need to reduce our burn. Atacicept was sort of the first step in a multistep process to really achieve that aim," Williams told investors. The Seattle firm is in the midst of determining what programs can be eliminated and which to develop or partner, he said.

On Sept. 3, ZymoGenetics and Merck said they had restructured their partnership for the autoimmune disease candidate atacicept. In the switch, Merck took over 100 percent of the development and commercialization costs in exchange for exclusive worldwide development and commercialization rights, while ZymoGenetics now holds a worldwide royalty license ¹ (Also see "Merck-Serono Takes Over Atacicept Development In Partnership Restructuring" - Pink Sheet, 3 Sep, 2008.)).

ZymoGenetics was looking at around $300 million as its cost share for moving the program across the goal line - spending that it can now direct to other candidates, Williams said. The company had $117 million in cash, cash equivalents and short-term investments at the end of the second quarter.

Atacicept is in two Phase III trials, for systemic lupus erythematosus and lupus nephritis, in Phase II for multiple sclerosis and rheumatoid arthritis, and in Phase I in hematological malignancies.

Data will be available in November for in-house candidate PEG-interferon lambda (IL-29), in development for hepatitis C, and the firm is already planning Phase II studies, with plans to eventually partner the drug.

"It's foolhardy for us to think we're going to have the muscle and the infrastructure and the ability to run the sort of multinational clinical program necessary to do the sort of non-inferiority head-to-head with standard of care" required for registration, Williams said.

In October, preliminary data will be available on interleukin 21 (IL-21) in studies for kidney cancer with Bayer's Nexavar (sorafenib). Final data from that study and from one in melanoma, available in the first half of 2009, will make for "an important decision point" on the future of that program, Williams said.

Hospital Recothrom sales a learning experience

ZymoGenetics' only marketed product Recothrom , a topical recombinant thrombin used to control oozing and minor bleeding during surgery, won FDA approval in January (² (Also see "ZymoGenetics Will Ship Topical Hemostat Recothrom In Two Weeks" - Pink Sheet, 17 Jan, 2008.)). The firm took that product all the way through U.S. registration.

Bayer HealthCare and ZymoGenetics are now partnered on Recothrom, and a combined sales force details the product in the U.S. under a five-year deal designed to beef up the U.S. launch (³ (Also see "ZymoGenetics Allies With Bayer To Blitz U.S. Hospital Market With rhThrombin" - Pink Sheet, 19 Jun, 2007.)). Bayer has ex-U.S. rights in perpetuity, but will pay ZymoGenetics tiered double-digit royalties.

Williams announced in New York that Bayer has submitted the European marketing application and will be filing in other parts of the world "in short order."

But meanwhile, he admitted getting the product into U.S. hospitals has been more of a chore than anticipated. The Pharmacy & Therapeutics Committee process takes "a little longer than perhaps we had anticipated," he said. Once the product is accepted on a formulary, more time passes while operating room staff are educated on reconstituting and using it, he noted.

At the end of June, 169 P&T committees had considered the product, and 66 had not rendered a decision. Of the 103 that decided, 46 added Recothrom to their formulary. A quarter of the hospitals rejected the therapy, while a third substituted it completely for the standard of care, King's bovine product Thrombin-JMI , Williams said.

Williams expects adoptions to increase, now that group purchasing organization contracts have been negotiated for Recothrom. "In essence we've gone from a situation where we were comparing the discounted King price to our [wholesale acquisition] price. We now have those discounts in place," he said.

The sales force is working on pull-through by talking to surgeons in accounts where the product has been adopted or substituted for the King product. It's also conducting educational programs to highlight "the consequences associated with the coagulopathies that develop with the bovine product," Williams said.

Bovine-derived thrombin is associated with development of antibodies that may react with human proteins. King's product has a "black box" warning that directs physicians to avoid it with patients who have pre-existing antibodies.

-Shirley Haley ([email protected])