Washington Editor

ZymoGenetics Inc. is suing Bristol-Myers Squibb Co. for patent infringement.

The lawsuit, filed with the U.S. District Court for the district of Delaware, relates to the Seattle-based company's immunoglobulin fusion protein technology. ZymoGenetics, which is seeking injunctive relief and damages, has charged that BMS' production of the rheumatoid arthritis drug Orencia (abatacept) has run afoul of Zymo's intellectual property.

"We have contacted them to try to do something about it before going into litigation," John Calhoun, ZymoGenetics' director of corporate communications and investor relations, told BioWorld Today. "But we haven't been able to do so."

A biological product, Orencia works at the T-cell level to block one of the signals that causes a T cell to become active. It is delivered in a monthly intravenous infusion. The FDA approved the product at the end of last year, and BMS launched it in February. Through June 30, it generated $23 million in sales.

Calhoun said ZymoGenetics remains "open" to settling with New York-based BMS before the suit reaches a courtroom. A hearing on the matter has yet to be scheduled.

Greg Wade, an analyst with Pacific Growth Equities LLC in San Francisco, noted that ZymoGenetics' broad intellectual property assets play a significant role in his investment thesis on the company. "Every time they attempt to exert that, and do so successfully, points to the value of what they've created," he told BioWorld Today. "So clearly with this lawsuit, they believe that they can win."

The first patent in question, issued in December 1998, relates to production methods for secreted receptor analogues and biologically active dimerized polypeptide fusions. The second, issued January 2000, relates to biologically active dimerized and multimerized polypeptide fusions.

ZymoGenetics' immunoglobulin fusion proteins are produced using recombinant DNA technology whereby a portion of an antibody is combined with the portion of a second protein, typically the portion of a cell-surface receptor that is responsible for binding to a growth factor. One of its clinical-stage products, atacicept (formerly known as TACI-Ig), is based on these patents, which were discovered by the company.

A soluble fusion protein that links part of a cytokine receptor called TACI to the Fc portion of immunoglobulin (Ig), it is being evaluated as a therapy for autoimmune diseases that result at least in part from inappropriate activity of B lymphocytes, including systemic lupus erythematosus, rheumatoid arthritis and a variety of B-cell cancers. The Phase I product is the centerpiece of an exclusive co-development and commercialization agreement with Serono SA, of Geneva.

Other companies that have access to ZymoGenetics' fusion protein technology include Amgen Inc. and Regeneron Pharmaceuticals Inc., both of which agreed to licenses after settling their own infringement charges.

The settlement arrangement with Amgen, of Thousand Oaks, Calif., permitted the company to produce Enbrel (etanercept), a dimeric fusion protein, after making a one-time $30 million payment to ZymoGenetics in December 2002. It was filed in March 2002 against Seattle-based Immunex Corp., which Amgen eventually purchased.

The June 2002 agreement with Regeneron, of Tarrytown, N.Y., relates to Trap molecules, and terms of that nonexclusive agreement call for ZymoGenetics to receive royalties on sales of any Trap products that employ the immunoglobulin fusion protein technology.

ZymoGenetics had $310 million in cash and investments as of June 30. Beyond this lawsuit, Wade noted that "investors are most keenly focused on" the company's recombinant human thrombin (rhThrombin) product, with Phase III data due next month. A biologics license application is expected to be filed by the end of this year.

On Tuesday, its stock (NASDAQ:ZGEN) gained 41 cents to close at $18.57.