ZymoGenetics rises following analyst upgrade

Shares of ZymoGenetics Inc. rose Friday after an Oppenheimer analyst upgraded the stock, saying Wall Street now has a more reasonable view of the stock, and more modest expectations for the company's blood clotting drug Recothrom.
With shares down 71 percent over the last year, Oppenheimer analyst Kevin DeGeeter upgraded ZymoGenetics stock to "Perform" from "Underperform." He said sales estimates for Recothrom have decreased over the last few months and noted that ZymoGenetics is reducing the price of the drug.
In afternoon trading, shares gained 21 cents, or 5.3 percent, to $4.20. Earlier they climbed as high as $4.93.
The company cut the price of Recothrom on Oct. 1, the first day of the fourth quarter. When ZymoGenetics reported its third-quarter results on Nov. 4, Chairman and Chief Executive Bruce Carter said the company was already seeing the results of the change: he expects Recothrom sales will rise to about $3 million in the fourth quarter, a 60 percent jump from the third-quarter total of $1.8 million.
In a telephone interview, ZymoGenetics Director of Corporate Communications Susan Specht said the change was made because doctors were "price sensitive" as a result of economic conditions.
Recothrom is derived from a synthetic process, while most clotting agents - products designed to reduce bleeding during surgery - are made from human or animal plasma. Specht said recombinant clotting products such as Recothrom are usually priced at a premium to plasma-derived drugs.
Some patients given cattle-derived anticoagulants develop antibodies that fight the drugs, which can cause increased bleeding.
Even with the change, she added, Recothrom still has a premium to animal-derived products.
Analyst DeGeeter said the cut is intended to make Recothrom more competitive with King Pharmaceuticals ' bovine-derived coagulant Thrombin-JMI. He said he had been concerned in the past that price pressures were going to hurt makers of all clotting drugs.

King Pharmaceuticals Inc. Q3 2008

Commenting on the Thrombin market Joseph Squicciarino - Chief Financial Officer, King Pharmaceuticals said "......with Thrombin the update on the competitive landscape is we're doing very well. Price continues to erode due to competition. We're going to be as competitive as we need to be to keep the business and the market is pretty much going as we predicted because there is no huge unmet medical need for a recombinant product that has no safety advantage."

ZymoGenetics pushes to increase lackluster sales of only drug

ZymoGenetics said Tuesday that quarterly sales for its only commercial product increased by 27 percent but still fell short of expectations, spurring a new strategy to ramp up sales.
"Sales are still low, and our focus is and must be to grow sales as quickly as possible," said Chief Executive Bruce Carter in a conference call to discuss its quarterly financial results.
The product, Recothrom, is a genetically engineered form of thrombin, a blood factor used to control surgical bleeding. Net sales of the product amounted to $1.8 million in the third quarter, versus $1.4 million in the preceding quarter.
The Seattle company reduced prices at the beginning of October and is undertaking a more aggressive campaign highlighting the risks of Recothrom's competitor, a similar product derived from bovine blood. Sales are being held down by hospital concerns about prices and limited awareness among doctors about the compound.
ZymoGenetics posted a third quarter net loss of $28.8 million, or 42 cents per share, down from $39 million, or 57 cents per share, in the same period last year.
ZymoGenetics launched Recothrom in January amid great expectations, but the market has been skeptical about the company's ability to achieve higher sales. Its stock price has suffered accordingly.
Last year ZymoGenetics was the region's largest independent biotech by market capitalization, and its share price peaked at $15. On Tuesday, shares traded at $3.85, up 3 percent; the company's market cap now ranks third among local biotechs.
In May, McAdams Wright Ragen analyst Paul Latta cut his 2008 sales outlook to $18 million from $30 million; other analysts more recently reduced that estimate to about $12 million.
On Tuesday, ZymoGenetics issued its first official guidance for Recothrom, predicting 2008 sales of $7 million. In the long term the company expects to lead the market for thrombin, said spokeswoman Susan Specht.
Some analysts have estimated that eventually Recothrom sales could reach $300 million to $400 million.