Bristol-Myers to Acquire ZymoGenetics

$885 million.

ZymoGenetics and Bristol-Myers Squibb have been working together since 2009 on developing a potential hepatitis C treatment called pegylated interferon lambda, a novel interferon in Phase IIb development. The drug is in mid-stage clinical testing, and both companies have declared that it could be an important contributor to Bristol-Myers Squibb's future growth, if it is approved. ZymoGenetics is also in clinical test stages of interleukin (IL)-21, a potential treatment for metastatic melanoma, and also has an anti-IL-31 monoclonal antibody in preclinical development, which it expects to test initially as a treatment for atopic dermatitis.

Bristol-Myers Squibb main product is Plavix, a blood thinner that is the world's second-best selling brand name drug. Its other products include the psychiatric disorder treatment Abilify, Reyataz and Sustiva for HIV, Sprycel for cancer, and Onglyza for diabetes, among others. The patents supporting Plavix, however, will expire in 2012, allowing cheaper generic versions to enter the market and eroding sales. Bristol-Myers' blood pressure drug Avapro is also likely to face generic competition the same year. In face of these challenges, the company is looking for ways to shore up its growth in the coming years.

"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, CEO of Bristol-Myers Squibb. "In addition, ZymoGenetics brings proven capabilities with therapeutic proteins and revenue from a marketed specialty surgical biologic. This acquisition is another example of our strategic, targeted approach to business development."

"By joining forces with Bristol-Myers Squibb, we believe we will enhance the long-term potential of ZymoGenetics` portfolio of assets, while providing a compelling valuation for our shareholders," said Douglas E. Williams, Ph.D., CEO of ZymoGenetics. "Our collaboration with Bristol-Myers Squibb in the development of PEG-Interferon lambda has been extremely positive and it has given us an opportunity to fully appreciate their capabilities. We believe that this transaction will maximize the potential for our products and product candidates to make a meaningful difference for patients in need."

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