FDA Nod Propels ZymoGenetics

ZymoGenetics(ZGEN Quote - Cramer on ZGEN - Stock Picks) received Food and Drug Administration approval for rThrombin, or Recothrom, Thursday.

The regulatory action propelled shares of the Seattle-based company out of negative territory by $2.06, or 17%, to $14.06 in recent trading.

ZymoGenetics' product is a plasma-free thrombin, used as a blood-clotting agent when oozing blood and minor bleeding is accessible and control of bleeding by standard surgical techniques is ineffective or impractical.

The product will compete with Omrix Pharmaceuticals'(OMRI Quote - Cramer on OMRI - Stock Picks) Evithrom, a human thrombin product approved in August that is distributed by Johnson & Johnson(JNJ Quote - Cramer on JNJ - Stock Picks).

ZymoGenetics signed a collaboration with Bayer HealthCare Pharmaceuticals for its rThrombin in June worth up to $198 million. The approval triggers a $40 million milestone payment from Bayer. Bayer will support the launch of the product in the U.S. for three years, and ZymoGenetics will pay Bayer a tiered commission of up to 20% on U.S. sales and up to $20 million tied to sales milestones.

The FDA was set to make a decision on the product by October last year, but pushed the action date back to today. The stock shrunk back earlier this week when an analyst initiated a sell rating, questioning whether the drug would get approved without further delay.

In a late-stage study, rThrombin had comparable efficacy and a significantly lower incidence of antibody formation compared to the commercially available bovine thrombin product, according to ZymoGenetics.

Shares of Omrix Pharmaceuticals, which also were trading in negative territory, fell further, down 2.9% at $29.99 in recent trading.