ZymoGenetics, Inc. (ZGEN) reported fourth quarter earnings of 19 cents per share, which was above the Zacks Consensus Estimate by a penny. The company had suffered a loss of 13 cents in the year-ago quarter. For full year 2009, the company suffered a loss of 62 cents per share, which compares favorably to the loss of $1.69 suffered in fiscal 2008.
Revenues for the quarter came in at $62.1 million as against $36 million in the year-ago quarter, up 72.5%. Total revenue for 2009 came in at $136.9 million as against approximately $73.9 million in 2008. Net sales of Recothrom came in at $29.6 million for the full year 2009 and $10.6 million for the fourth quarter of 2009. Recothrom net sales were $4.6 million and $8.8 million in the fourth quarter and fiscal 2008, respectively.
Collaboration and license revenues came in at $106.1 million for the full year 2009 and $51.2 million for the fourth quarter of 2009, as against $58.9 million and $29.9 million, respectively, for the same periods in 2008. The increases were primarily attributable to revenues from the PEG-Interferon lambda collaboration with Bristol-Myers Squibb (BMY), coupled with the fourth quarter 2009 recognition of $34.4 million of previously deferred revenue resulting from the amendments to the Bayer license and co-promotion agreements pertaining to Recothrom.
PEG-Interferon, used during surgery to stop bleeding, is ZymoGenetics’ only marketed product. However, royalty revenue in the reported quarter fell to $271,000 from $1.5 million in the year-ago quarter.
Balance Sheet
Research and development expenses for 2009 came in at $99.2 million as against $126.7 million in 2008. Research and development spend for the fourth quarter of 2009 fell marginally to $24.0 million compared to $24.2 million in the year-ago quarter.
Selling, general and administrative expenses stood at $62.2 million and $16.8 million for fiscal 2009 and the fourth quarter of 2009, as against $60.2 million in 2008 and $14.6 million for the fourth quarter of 2008. The annual increase was primarily driven by incremental commissions paid to Bayer on U.S. sales of Recothrom, partially offset by reduced legal fees. For the fourth quarter of 2009, the increase was primarily attributable to higher commissions paid to Bayer and higher patent and legal fees.
ZymoGenetics had $174.1 million of cash, cash equivalents and short-term investments as of December 31, 2009. The company expects to suffer a loss in the range of $20 million – $35 million or 23 cents – 41 cents per share. The Zacks Consensus Estimate points at a loss of 29 cents per share in 2010.
ZymoGenetics forecasts revenues between $125 million and $140 million in 2010. Revenue from Recothrom sales is expected between $48 million to $54 million in 2010. The company intends to spend $75 million to $85 million on research and development in 2010. Furthermore, ZymoGenetics expects to end 2010 with cash and investments in excess of $140 million.
Zacks Rank & Recommendation
ZymoGenetics currently has a Zacks Rank #3 (Hold), implying that the stock is expected to perform in line with the broader U.S. equity market over the next one to three months. We are Neutral on the company in the long-term as well. Our Neutral recommendation implies that the stock is expected to perform in line with the overall U.S. equity market over the next six to twelve months.
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