Seattle biotech gets OK for drug

ZymoGenetics won U.S. approval to market its first product, a drug to stop excess bleeding in as many as 1 million surgeries a year. The Seattle-based company's shares ended 8.8 percent higher at $13.05 after climbing as much as 20 percent during the day.

The drug, Recothrom, was cleared for sale by the U.S. Food and Drug Administration, ZymoGenetics said Thursday. The medicine, a genetically engineered copy of a human clotting protein, will compete with a standard product derived from cow's blood, the company said.

ZymoGenetics and its marketing partner, Bayer, will attempt to persuade surgeons to switch from the standard therapy made by King Pharmaceuticals. That drug had $247 million in sales in 2006. The new treatment will also chase Evithrom, a competitor from Johnson & Johnson and Omrix Biopharmaceuticals that was approved in August.

"We view Recothrom as best-in-class versus Omrix's and King's" products, said Akhtar Samad, an analyst with Bear Stearns in New York, in a Dec. 16 note to clients.

Recothrom, previously called rThrombin, will have a wholesale cost of $86 for a small vial, about 20 percent higher than King's product, said ZymoGenetics Chief Executive Officer Bruce Carter in a conference call with analysts Thursday.

"We believe this premium will be well-received in the marketplace, reflecting the advantages" of a genetically engineered product, Carter said.

The approval enables surgeons to choose between a genetically engineered product and others derived from human or cow blood, Jesse Goodman, director of the FDA's Center for Biologics Evaluation and Research, said in a statement.

ZymoGenetics hopes to have the product on wholesalers' shelves within two weeks, President Doug Williams said on the conference call.

Many investors were betting against ZymoGenetics. About 8.1 million shares of ZymoGenetics were in a short position at the end of December, according to data compiled by Bloomberg. Short-sellers try to profit on a falling stock by borrowing shares, selling them, buying back cheaper shares later and pocketing the difference.

ZymoGenetics suffered a setback in August, when the FDA delayed Recothrom by three months to look at data from a facility in Italy, where the product is put into vials. That pushed back a $40 million milestone payment from Bayer to ZymoGenetics and cost the companies time in the competition with Omrix and J&J.

Recothrom is the first marketed drug for ZymoGenetics, which was founded in 1981. The company spent 12 years as a research wing of Danish drugmaker Novo Nordisk A/S, and its discoveries contributed to products that generated $3.7 billion in sales for other companies in 2006, ZymoGenetics has said.