ZymoGenetics cuts 161 jobs

ZymoGenetics will slash its workforce by one third, cutting 161 jobs, as it narrows its research and development efforts, the Seattle biotechnology company said today.

The company expects to save $30 million a year in operating expenses, it said in a statement.

ZymoGenetics said it will continue to expand the market for its sole approved product, the blood-clotting compound Recothrom Thrombin, but will "focus all future research efforts in immunology, its core strength."

Seattle's largest local biotech company in terms of employees, as well as one of its oldest, ZymoGenetics operates in several buildings along Lake Union near the Fred Hutchinson Cancer Research Center.

Recothrom, the only product it has brought to market since re-emerging as an independent public company in 2002, has been slow to make an impact in the surgical market at which it is aimed.

ZymoGenetics in January struck a potential blockbuster deal with pharmaceutical giant Bristol-Myers Squibb, unveiling an agreement that could yield $1 billion or more in payments if its hepatitis C product reaches certain scientific, regulatory and commercial milestones.

Similar "collaborative transactions will receive greater emphasis" in the future, ZymoGenetics said today, adding that "the company is reducing its internal product development infrastructure related to this shift in strategy."

ZymoGenetics said the terminated employees will get severance benefits. Termination costs of about $8.5 million will be reflected in its second-quarter results.

The company had a net loss of $116.2 million last year on revenues of $74.0 million, and ended the year with $89.9 million in cash and equivalents.

It expects to have positive net cash flow this year thanks to $200 million in anticipated license fees and milestone payments under the Bristol-Myers Squibb collaboration, according to a March regulatory filing.