ZymoGenetics Allies With Bayer To Blitz U.S. Hospital Market With rhThrombin

Bayer receives ex-U.S. rights to develop and market the recombinant thrombin therapy.

Bayer HealthCare and ZymoGenetics have agreed to a domestic and global licensing and comarketing agreement for rhThrombin (recombinant human thrombin) that will more than double ZymoGenetics' U.S. sales force for the product.

Under the agreement announced June 19, Bayer will add a 95-person sales force to ZymoGenetics' planned 54-strong detail for three years after FDA approval of rhThrombin, expected later this year, the companies said. In return, Bayer gets ex-U.S. rights to develop and market the therapy in perpetuity.

ZymoGenetics could receive up to $70 million from Bayer in 2007, including a $30 million up-front payment and a $40 million milestone upon FDA approval of the BLA, which has a user fee date of Oct. 18. The Seattle firm also could receive up to $128 million from Bayer in additional development and sales-based milestones.

Bayer will be responsible for ex-U.S. development and commercialization of rhThrombin, paying ZymoGenetics tiered, "double-digit" royalties on those sales. Bayer also is entitled to receive a tiered commission of up to 20 percent of U.S. sales and up to $20 million in bonuses on sales milestones. For two years after the end of the three-year term, Bayer will receive a reduced sales commission with an annual cap, according to ZymoGenetics.

Thrombin is used to control bleeding during surgery. The market in the United States is about 1 million surgeries, with an ex-U.S. market double that, ZymoGenetics Chief Executive Officer Bruce Carter said in a same-day call. The firm believes that saturating the market, which he characterizes as "under-penetrated," during the first few years of the product's life will help expand the market.

"This will allow us to attack the market aggressively, capitalizing on the advantages of our product and converting as many hospitals as soon as possible to recombinant thrombin," Carter said.

"Our intention is ... to displace the current product from where it is today, heading for the hospitals with the big sales accounts, but we also want to move into the areas that are under-penetrated," he noted.

The combined sales team will be "the largest field force in the hemostasis market," Carter said. rhThrombin would directly compete with King's bovine blood-derived product, Thrombin-JMI .

Omrix Biopharmaceuticals received approval May 9 for its human plasma fibrin sealant, Evicel , for use in vascular surgery and anticipates a first-quarter 2008 response from FDA to its sBLA for a broader surgical indication. Johnson & Johnson subsidiary Ethicon is Omrix's marketing partner in the U.S. (¹ (Also see "Johnson & Johnson/Omrix’s Evicel Approved For Use In Vascular Surgery" - Pink Sheet, 15 May, 2007.)).

"Once somebody switches to recombinant thrombin they will never go back to human plasma. They will never go back to bovine plasma. And we want to get that going as quickly as possible," Carter said.

Bovine-derived thrombin has been associated with development of antibodies that may cross-react with human proteins. King's product has a black box warning cautioning physicians to avoid using the therapy on patients with pre-existing antibodies. "In our clinical trial, we found that one in 20 patients coming into the hospital had pre-existing antibodies," Carter said, adding such patients could present liability issues for hospitals.

Thrombin derived from human plasma cannot guarantee the product is free of virus, prions or new viruses, he noted.

Convenience is another advantage of the recombinant thrombin. It has a shelf life of two years at room temperature, whereas bovine and human product must be frozen or refrigerated with a shelf life of 30 days, he said.

Bayer anticipates the first ex-U.S. launch of the product in Europe in early 2009, Carter said. Bayer also will share the work and development costs with ZymoGenetics to add to the thrombin product line.

ZymoGenetics is preparing data to submit a filing for an rhThrombin spray as well (² (Also see "ZymoGenetics Sees Faster Approval Of Second rhThrombin Configuration" - Pink Sheet, 7 Mar, 2007.)).

Bayer and Tarrytown, N.Y.-based Regeneron entered into a similar development deal for a vascular endothelial growth factor trap candidate for wet age-related macular degeneration in October 2006. Under that agreement, the companies plan to jointly commercialize the therapy outside the U.S., while Regeneron retains rights to all indications in the U.S (³ (Also see "Bayer/Regeneron Will Initiate VEGF Trap-Eye Phase III Trial In Second Half" - Pink Sheet, 27 Mar, 2007.)).

Bear Stearns reiterated its "outperform" rating of ZymoGenetics. "We continue to believe rhThrombin is best-in-class," Bear Stearns analyst Arlinda Lee said in a June 19 research note.

-Pamela Taulbee ([email protected])