-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IlRTb0M7AvH7Xb5+8cMgVI7DxQsUPBotcQ5MIF01VJ0A+8Yegv4YyrhNiuQjbvNg DmVcIxSqLpsGuuoK1Q7IHA== 0001157523-05-001345.txt : 20050211 0001157523-05-001345.hdr.sgml : 20050211 20050211122051 ACCESSION NUMBER: 0001157523-05-001345 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050210 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050211 DATE AS OF CHANGE: 20050211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZYMOGENETICS INC CENTRAL INDEX KEY: 0001129425 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 911144498 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-33489 FILM NUMBER: 05596401 BUSINESS ADDRESS: STREET 1: 1201 EASTLAKE AVENUE E CITY: SEATTLE STATE: WA ZIP: 98102 BUSINESS PHONE: 206-442-6600 MAIL ADDRESS: STREET 1: 1201 EASTLAKE AVENUE E CITY: SEATTLE STATE: WA ZIP: 98102 8-K 1 a4820603.txt ZYMOGENETICS 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________ Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 February 10, 2005 -------------------------------------------- Date of Report (Date of earliest event reported) ZYMOGENETICS, INC. ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Washington 000-33489 91-1144498 ------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission File No.) (IRS Employer of Incorporation) Identification No.) 1201 Eastlake Avenue East, Seattle, Washington 98102-3702 ------------------------------------------------------------------------------- (Address of Principal Executive Offices, including Zip Code) (206) 442-6600 ------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) ------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 1 Item 2.02. Results of Operations and Financial Condition. On February 10, 2005, ZymoGenetics, Inc. (the "Company") issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2004. The full text of the press release is set forth in Exhibit 99.1 attached hereto. The press release should be read in conjunction with the note regarding forward-looking statements, which is included in the text of the press release. The information in this Current Report on Form 8-K, including the exhibits, will not be treated as "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section. This information will not be incorporated by reference into any filing under the Securities Act of 1933, or into another filing under the Exchange Act, unless that filing expressly incorporates this information by reference. Item 8.01. Other Events Bruce L.A. Carter, President and Chief Executive Officer of the Company, has entered into a written plan for trading common stock of the Company (the "Plan") that complies with the requirements of Rule 10b5-1(c)(1) under the Securities Exchange Act of 1934, as amended. The Plan takes effect February 14, 2005, with a term of one year. Pursuant to the Plan, Dr. Carter may sell up to 25,000 shares of common stock every three months, provided the price exceeds a specified price per share. Dr. Carter has entered into the Plan for personal financial planning reasons. The total number of shares that may be sold under the Plan represents approximately 6.7% of Dr. Carter's total holdings of the Company's common stock, including vested and unvested stock options for the purchase of the Company's common stock. James A. Johnson, Senior Vice President and Chief Financial Officer, and Jan K. Ohrstrom, Senior Vice President of Commercial Operations, have entered into similar plans, pursuant to which they may sell up to 5,500 and 7,000 shares, respectively, every three months beginning February 14, 2005. The total number of shares that may be sold under such plans represents approximately 5.6% and 7.5%, respectively, of Mr. Johnson's and Dr. Ohrstrom's total holdings of the Company's common stock, including vested and unvested stock options for the purchase of the Company's common stock. It is possible that other executive officers of the Company may enter into similar plans in the future. 2 Item 9.01. Financial Statements and Exhibits. (c) 99.1 Press Release dated February 10, 2005 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ZYMOGENETICS, INC. Dated: February 11, 2005 By /s/ James A. Johnson --------------------------------- James A. Johnson Senior Vice President, Chief Financial Officer 4 Exhibit Index 99.1 Press Release issued February 10, 2005 5 EX-99.1 2 a4820603ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 ZymoGenetics Reports Fourth Quarter and Year End 2004 Financial Results; Highlights Include Pipeline Advancement, Strategic Transactions and Stronger Financial Position SEATTLE--(BUSINESS WIRE)--Feb. 10, 2005--ZymoGenetics, Inc. (Nasdaq:ZGEN) today reported its financial results for the fourth quarter and year ended December 31, 2004, which were consistent with its expectations. For the fourth quarter of 2004, the company reported a net loss of $23.4 million, or $0.41 per share, compared to a net loss of $17.3 million, or $0.34 per share, for the prior year period. For the year 2004, the company reported a net loss of $88.8 million, or $1.64 per share, compared to a net loss of $59.6 million, or $1.26 per share, for the prior year. The increased net loss reflects the company's increasing investment in its product candidates as they advance through the clinical development process. ZymoGenetics ended the year in a strong financial position, with $325 million of cash, cash equivalents and short-term investments. This amount includes $96 million received in the fourth quarter related to two major transactions: a strategic alliance with Serono S.A. and a license of recombinant Factor XIII to Novo Nordisk A/S. "The year 2004 was one of significant progress for ZymoGenetics, with our three internal product candidates being tested over the course of the year in a growing number of clinical indications," stated Bruce L.A. Carter, Ph.D., President and Chief Executive Officer of ZymoGenetics. "Our alliances with Serono and Novo Nordisk have given us added financial strength and should enable us to discover more product candidates and push more candidates through development and commercialization." ZymoGenetics reported 2004 revenues of $35.7 million for the full year and $9.7 million for the fourth quarter, compared to $26.0 million and $5.8 million for the prior year and quarter, respectively. The 38% increase for the year 2004 primarily resulted from higher royalty and license fee revenues. Royalties increased due to higher sales of underlying products as well as favorable effects of exchange rate fluctuations. License fee revenues were higher as a result of transactions completed during the year with Novo Nordisk, Amgen and Serono. Research and development expenses in 2004 totaled $94.3 million for the full year and $25.4 million for the quarter, both of which increased from the $63.5 million and $17.0 million reported for the prior year and quarter, respectively. The increases were primarily attributable to increased clinical development costs, including those resulting from higher development staffing levels and external contracts for process development and manufacturing of the company's product candidates, as well as increased payments to Serono to cover the company's share of TACI-Ig development costs. Also contributing to the increases were cost reimbursements in the prior year earned from Novo Nordisk related to the preclinical development of IL-21, which were recorded as reductions to expense. General and administrative expenses in 2004 totaled $19.0 million for the year and $5.9 million for the quarter, both of which increased over amounts reported for the prior year and quarter of $15.8 million and $4.3 million, respectively. The increases reflect costs associated with compliance with the Sarbanes-Oxley Act of 2002; legal costs related to business development activities; state and local taxes related to transaction fees received; and growth in other areas supporting the company's business, particularly strategic marketing and human resources. The company's 2004 net loss reflected non-cash stock-based compensation expense of $9.3 million and $1.5 million for the year and fourth quarter, respectively. 2004 Highlights During 2004, ZymoGenetics made the following significant advancements in its product development programs and other critical business areas: rhThrombin -- Completed a Phase 1 clinical study in spinal surgery -- Initiated and completed patient treatment in four Phase 2 clinical studies in spinal surgery, liver resection, peripheral artery bypass surgery, and formation of vascular access grafts for dialysis -- Presented initial results of the Phase 2 clinical study in spinal surgery -- Manufactured bulk drug substance at commercial scale for use in Phase 3 clinical trials TACI-Ig -- Completed a Phase 1 single-dose clinical trial in healthy volunteers, demonstrating safety, half-life and effects on B-cell function consistent with preclinical studies -- Initiated two Phase 1b clinical studies in rheumatoid arthritis and systemic lupus erythematosus patients -- Initiated Phase 1b clinical studies examining TACI-Ig as a potential treatment for B-cell cancers Interleukin-21 -- Initiated a Phase 1 clinical trial examining IL-21 as a potential treatment for metastatic melanoma and renal cell carcinoma -- Demonstrated in preclinical studies the potential synergy between IL-21 and anti-cancer monoclonal antibodies Business Development -- Completed a strategic alliance with Serono designed to increase research and development throughput, while reducing funding requirements and maintaining the right to 50% of U.S. profits from products co-developed -- Completed a license of rFactor XIII to Novo Nordisk, increasing the potential value of the program and retaining substantial economic interest -- Signed a license agreement with Amgen for exclusive worldwide rights to patents covering a metabolic disease target discovered using ZymoGenetics' genomics-based discovery platform. -- Generated, in the aggregate including the agreements named above, over $110 million of cash received from transaction fees and related equity investments Other -- Completed construction of a 45,000 square-foot facility expansion, which includes a pilot-scale facility for the GMP manufacture of products to supply future clinical trials -- Hired Douglas E. Williams, Ph.D. as Executive Vice President, Research and Development and Chief Scientific Officer -- Appointed James A. Harper, former Group Vice President of Global Marketing and Sales at Eli Lilly, to the board of directors Outlook for 2005 The Company has established a series of milestones for 2005, including the following: -- Complete the analysis of rhThrombin Phase 2 data and present initial findings in the first quarter -- Initiate a Phase 3 pivotal study of rhThrombin as a topical surgical hemostat in the second half of the year -- Complete the ongoing Phase 1b studies of TACI-Ig in rheumatoid arthritis and systemic lupus erythematosus in the second half of the year -- Establish a maximum tolerated dose and complete the ongoing Phase 1 study of IL-21 in metastatic melanoma and renal cell carcinoma -- Present interim results of the IL-21 Phase 1 -- File an Investigational New Drug application in the second half of the year to test IL-21 in combination with Rituxan(R) "With the planned start of rhThrombin Phase 3 pivotal studies later this year, we expect to take a big step toward our goal of commercializing therapeutic proteins," commented Douglas E. Williams, Ph.D., Executive Vice President and Chief Scientific Officer of ZymoGenetics. "We believe we have the potential to generate clinical proof of concept data in 2005 that demonstrate the exciting medical promise of TACI-Ig and IL-21, the first two novel, proprietary proteins to emerge from our genomics-based discovery engine." 2005 Financial Expectations The company expects that a number of factors will contribute to increased research and development expenses in 2005. These factors include: -- costs of expanded clinical trial activity for ongoing product development programs; -- increased staffing to support the advancing programs, particularly in the clinical, medical, regulatory, manufacturing and quality areas; and -- costs of operating the company's new pilot-scale manufacturing facility. Partially offsetting these factors, the Company has shifted the manufacture of rhThrombin registration lots from late 2005 into early 2006. As a result, the company believes that its total research and development expenses in 2005 will increase by less than 10%. General and administrative expenses are expected to increase by up to 25% in 2005, reflecting the company's increasing investment in market research and pre-launch planning for rhThrombin. Revenues are expected to slightly exceed those reported in 2004. The company estimates that its 2005 net loss will fall within the range of $80 million to $90 million, or $1.38 to $1.55 per share. These estimates to do not reflect non-cash stock option compensation expense to be recorded pursuant to recently issued accounting rules. The company anticipates recording this expense beginning in the third quarter of 2005. Besides funding its net operating loss in 2005, the company expects to incur capital expenditures of approximately $6 million to $8 million in 2005. Overall net usage of cash in 2005 is expected to approximate the net loss, thus enabling the company to end the year with over $230 million in cash and investments. About ZymoGenetics ZymoGenetics is a biopharmaceutical company focused on the discovery, development and commercialization of therapeutic proteins for the prevention or treatment of human diseases. The Company is developing a diverse pipeline of potential proprietary product candidates that are moving into and through clinical development. These span a wide array of clinical opportunities that include bleeding, autoimmune diseases and cancer. ZymoGenetics intends to commercialize these product candidates through internal development, collaborations with partners, and out-licensing of patents from its extensive patent portfolio. For further information, visit www.zymogenetics.com. This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the current intent and expectations of the management of ZymoGenetics. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. ZymoGenetics' actual results and the timing and outcome of events may differ materially from those expressed in or implied by the forward-looking statements because of risks associated with our unproven discovery strategy, preclinical and clinical development, regulatory oversight, intellectual property claims and litigation and other risks detailed in ZymoGenetics' public filings with the Securities and Exchange Commission, including ZymoGenetics' Annual Report on Form 10-K for the year ended December 31, 2003. Except as required by law, ZymoGenetics undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise. ZYMOGENETICS, INC. STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Three Months Ended Year Ended December 31, December 31, ------------------- ------------------- 2004 2003 2004 2003 --------- --------- --------- --------- (unaudited) Revenues: Royalties $3,106 $2,311 $11,288 $9,397 Option fees 2,558 1,875 8,183 7,500 License fees and milestone payments 4,053 1,605 16,223 9,060 --------- --------- --------- --------- Total revenues 9,717 5,791 35,694 25,957 Operating expenses: Research and development, excluding noncash stock-based compensation 25,415 16,989 94,287 63,461 General and administrative, excluding noncash stock-based compensation 5,854 4,253 19,007 15,846 Noncash stock-based compensation expense 1,474 1,683 9,295 7,054 --------- --------- --------- --------- Total operating expenses 32,743 22,925 122,589 86,361 --------- --------- --------- --------- Loss from operations (23,026) (17,134) (86,895) (60,404) Other income (expense), net (366) (143) (1,861) 833 --------- --------- --------- --------- Net loss $(23,392) $(17,277) $(88,756) $(59,571) ========= ========= ========= ========= Basic and diluted net loss per share $(0.41) $(0.34) $(1.64) $(1.26) ========= ========= ========= ========= Weighted-average number of shares used in computing net loss per share 56,932 51,113 54,157 47,317 ========= ========= ========= ========= BALANCE SHEETS (in thousands) December 31, ------------------- 2004 2003 --------- --------- Cash, cash equivalents and short-term investments $324,998 $299,892 Other current assets 9,512 8,652 Property and equipment, net 71,960 62,341 Other assets 5,714 5,024 --------- --------- Total assets $412,184 $375,909 ========= ========= Current liabilities $37,149 $21,131 Lease obligations 66,085 50,629 Construction advance from landlord -- 7,918 Other non-current liabilities 30,400 8,316 Shareholders' equity 278,550 287,915 --------- --------- Total liabilities and shareholders' equity $412,184 $375,909 ========= ========= CONTACT: ZymoGenetics Investor Relations John Calhoun, MD, MBA Director, Corporate Communications & Investor Relations 206-442-6744 OR Media Relations Susan W. Specht, MBA Corporate Communications Manager 206-442-6592 -----END PRIVACY-ENHANCED MESSAGE-----