Value of the agreement could exceed $1 billion if the compound is developed in other indications.

Bristol-Myers Squibb (BMS) will pay ZymoGenetics $85 million up front and an additional $20 million license fee in 2009 for rights to its Phase Ib hepatitis C drug. ZymoGenetics could earn up to $430 million based on development and regulatory milestones for PEG-Interferon lambda in hep. C, up to $287 million in development and regulatory milestones for other indications, and up to $285 million based on sales-based milestones.

The companies agreed to co-develop PEG-Interferon lambda in the U.S. and Europe and will share development costs. It is anticipated that ZymoGenetics will conduct a significant portion of continuing Phase I and certain Phase II development activities. ZymoGenetics will have the option to co-promote in the U.S. and thus share profits. If ZymoGenetics opts out of the co-development, co-promotion, and profit-sharing arrangement in the U.S., it will receive double-digit royalties.

BMS will be responsible for ex-U.S. commercialization, and ZymoGenetics will receive double-digit royalties on product sales in these regions.

PEG-interferon lambda is reportedly a novel type 3 interferon. The native human protein interferon lambda is generated by the immune system in response to viral infection. PEG-interferon lambda has the potential to be uniquely differentiated from available interferon therapy, because interferon lambda mediates antiviral activity through a receptor that is distinct from that used by interferon alpha and is present on fewer cell types within the tissues of the body.


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