ZymoGenetics Inc. (ZGEN) announced recently that it has restructured the agreements with Bayer Schering Pharma AG and Bayer HealthCare relating to its bleeding control product Recothrom. The revised agreement, effective from Jan 1, 2010, will see Bayer stop promoting Recothrom in the United States. Zymogenetics will promote the drug outside the U.S apart from Canada, where Bayer will market and sell the product. Consequently, ZymoGenetics will continue to get royalties on Recothrom sales in that country.
Under the restructured agreements, Zymogenetics will pay commissions to Bayer which will steadily decrease over the next 24 months and will not have to pay bonuses on U.S. sales, while Bayer will pay royalties on Recothrom sales in Canada but won’t have to make milestone payments to ZymoGenetics. Even though Bayer is slated to receive normal commissions on Recothrom sales for the remainder of 2009, the commissions from sales of the drug are capped at $12 million through the end of 2011 as against the maximum of $25 million it could have received under the original agreement.
As ZymoGenetics will market the drug in the U.S. from 2010, the company will not have to make bonus payments totaling $20 million to Bayer on U.S. sales of Recothrom. The payments were expected to have been made in 2010 and 2011, or upon termination of the co-promotion agreement. Furthermore, the return of ex-U.S. rights to ZymoGenetics except in Canada spares Bayer from paying up to $16 million in milestone payments on non-U.S. regulatory approvals.
Earlier in the month ZymoGenetics trimmed its workforce by 15% to focus on building the market for its only marketed product, Recothrom which is indicated as an aid to hemostasis whenever oozing blood and minor bleeding from capillaries and small venules is accessible and bleeding cannot be controlled by standard surgical techniques.
Read the full analyst report on “ZGEN”
Zacks Investment Research
Uncategorized