ZymoGenetics “Sleeper” for Hepatitis C Aims to Wipe Out Side Effects of Anti-Viral Therapy

[Guest guest]

http://www.xconomy.com/seattle/2008/09/30/zymogenetics-sleeper-for-hepatitis-c-a\

ims-to-wipe-out-side-effects-of-anti-viral-therapy/

ZymoGenetics “Sleeper” for Hepatitis C Aims to Wipe Out Side Effects of

Anti-Viral Therapy

Luke Timmerman 9/30/08

Lots of people on Wall Street are hyped up about new treatments for hepatitis C

from Vertex Pharmaceuticals and Schering-Plough. But a little-known drug in

development from Seattle-based ZymoGenetics (NASDAQ: ZGEN) could steal a bit of

thunder, and possibly ride the wave of enthusiasm those companies are creating

among doctors and patients.

Hepatitis C, a deadly liver infection, has made headlines in the past year, as

Vertex (NASDAQ: VRTX) and Schering-Plough (NYSE: SGP) have both shown that

protease inhibitors in development can roughly double the cure rate over the

standard of care. An estimated 6 million people in the U.S. and Europe have

chronic hepatitis C infections, so the opportunity is huge, possibly worth $2.6

billion for Vertex alone by 2013, says McMinn, an analyst with Cowen &

Co. in San Francisco.

One catch here is that both the Vertex and Schering-Plough drugs must be taken

in tandem with the standard of care—a regimen that consists of pegylated

interferon alpha and ribavirin. That backbone of therapy causes flu-like

symptoms, depression, and anemia, and it must be taken for almost a year. That

means most patients opt against getting treatment at all, says ZymoGenetics

president Doug . Instead of developing another protease inhibitor to be

taken in addition to the standard of care, ZymoGenetics has developed an

alternative that has the viral killing power of interferon alpha, without

causing the side effects. It calls its version of the standard of care

“pegylated interferon lambda,” or IL-29.

“Interferon based regimens are the backbone of therapy and they will continue to

be for the forseeable future, and we have one with a better tolerability

profile,” says , an Xconomist.

This wasn’t immediately obvious from the start at ZymoGenetics, which has bet

much of its research and development budget in recent years on atacicept for

autoimmune diseases and IL-21 for cancer. Earlier this month, it handed over its

partial stake in atacicept to its partner, Merck KGaA to save cash, while its

lone marketed product struggles to find a footing in the marketplace.

ZymoGenetics hasn’t talked much about the peg-interferon lambda program in the

past, so it was striking to hear say it wants to pour more of its

resources into this program. Besides some promising clinical trial data that’s

rolling in, there are a couple of strategic business reasons to do this. For

one, ZymoGenetics stills owns a 100 percent stake in the product, so it has some

bargaining leverage to work with. And two, it believes it is the only company

with an improved interferon in clinical trials.

“The sleeper here is starting to wake up,” says.

Results from a 20-patient clinical trial, presented at the European Association

for the Study of the Liver in April, showed that the ZymoGenetics drug candidate

didn’t cause the widespread immune-system activation that causes the side

effects with the standard drugs. That study was in healthy volunteers, and the

company needs to confirm that finding in patients with hepatitis C.

More results from the ZymoGenetics drug, and its ability to kill viruses, will

be available in November at the American Association for the Study of Liver

Disease meeting in San Francisco, says. An early peek of data from the

first six patients, who got one of the lowest doses in testing, shows antiviral

activity in four of them, according to an abstract of the data that company

spokeswoman Specht sent me in an email. Data from three cohorts of

patients will be presented at the liver meeting, she says.

The company is clearly setting some high expectations heading into that meeting.

ZymoGenetics CEO Bruce said that the company’s most important strategic

move of the past year was to hold on to pegylated interferon lambda, rather than

sell it off, according to an August interview with Biotech Stock Research, an

independent equity research firm in Seattle. “Now we see it as an important

investment,” said.

ZymoGenetics has said it plans to find a partner to help with the final stages

of development of this drug, and if the data presented in San Francisco back up

what it’s been saying, then the price will surely be going up. Just don’t count

on it making much of a splash in the news, as ZymoGenetics will surely be

overshadowed by the folks at Vertex and Schering-Plough.

[Guest guest]

http://www.xconomy.com/seattle/2008/09/30/zymogenetics-sleeper-for-hepatitis-c-a\

ims-to-wipe-out-side-effects-of-anti-viral-therapy/

ZymoGenetics “Sleeper” for Hepatitis C Aims to Wipe Out Side Effects of

Anti-Viral Therapy

Luke Timmerman 9/30/08

Lots of people on Wall Street are hyped up about new treatments for hepatitis C

from Vertex Pharmaceuticals and Schering-Plough. But a little-known drug in

development from Seattle-based ZymoGenetics (NASDAQ: ZGEN) could steal a bit of

thunder, and possibly ride the wave of enthusiasm those companies are creating

among doctors and patients.

Hepatitis C, a deadly liver infection, has made headlines in the past year, as

Vertex (NASDAQ: VRTX) and Schering-Plough (NYSE: SGP) have both shown that

protease inhibitors in development can roughly double the cure rate over the

standard of care. An estimated 6 million people in the U.S. and Europe have

chronic hepatitis C infections, so the opportunity is huge, possibly worth $2.6

billion for Vertex alone by 2013, says McMinn, an analyst with Cowen &

Co. in San Francisco.

One catch here is that both the Vertex and Schering-Plough drugs must be taken

in tandem with the standard of care—a regimen that consists of pegylated

interferon alpha and ribavirin. That backbone of therapy causes flu-like

symptoms, depression, and anemia, and it must be taken for almost a year. That

means most patients opt against getting treatment at all, says ZymoGenetics

president Doug . Instead of developing another protease inhibitor to be

taken in addition to the standard of care, ZymoGenetics has developed an

alternative that has the viral killing power of interferon alpha, without

causing the side effects. It calls its version of the standard of care

“pegylated interferon lambda,” or IL-29.

“Interferon based regimens are the backbone of therapy and they will continue to

be for the forseeable future, and we have one with a better tolerability

profile,” says , an Xconomist.

This wasn’t immediately obvious from the start at ZymoGenetics, which has bet

much of its research and development budget in recent years on atacicept for

autoimmune diseases and IL-21 for cancer. Earlier this month, it handed over its

partial stake in atacicept to its partner, Merck KGaA to save cash, while its

lone marketed product struggles to find a footing in the marketplace.

ZymoGenetics hasn’t talked much about the peg-interferon lambda program in the

past, so it was striking to hear say it wants to pour more of its

resources into this program. Besides some promising clinical trial data that’s

rolling in, there are a couple of strategic business reasons to do this. For

one, ZymoGenetics stills owns a 100 percent stake in the product, so it has some

bargaining leverage to work with. And two, it believes it is the only company

with an improved interferon in clinical trials.

“The sleeper here is starting to wake up,” says.

Results from a 20-patient clinical trial, presented at the European Association

for the Study of the Liver in April, showed that the ZymoGenetics drug candidate

didn’t cause the widespread immune-system activation that causes the side

effects with the standard drugs. That study was in healthy volunteers, and the

company needs to confirm that finding in patients with hepatitis C.

More results from the ZymoGenetics drug, and its ability to kill viruses, will

be available in November at the American Association for the Study of Liver

Disease meeting in San Francisco, says. An early peek of data from the

first six patients, who got one of the lowest doses in testing, shows antiviral

activity in four of them, according to an abstract of the data that company

spokeswoman Specht sent me in an email. Data from three cohorts of

patients will be presented at the liver meeting, she says.

The company is clearly setting some high expectations heading into that meeting.

ZymoGenetics CEO Bruce said that the company’s most important strategic

move of the past year was to hold on to pegylated interferon lambda, rather than

sell it off, according to an August interview with Biotech Stock Research, an

independent equity research firm in Seattle. “Now we see it as an important

investment,” said.

ZymoGenetics has said it plans to find a partner to help with the final stages

of development of this drug, and if the data presented in San Francisco back up

what it’s been saying, then the price will surely be going up. Just don’t count

on it making much of a splash in the news, as ZymoGenetics will surely be

overshadowed by the folks at Vertex and Schering-Plough.