ZymoGenetics Shares Fall On Oppenheimer Downgrade

NEW YORK (AP) — Shares of ZymoGenetics Inc. fell Monday after an Oppenheimer analyst downgraded the stock, citing its valuation and what he called risky development programs.

The stock fell 32 cents, or 5.7 percent, to $5.31 in morning trading. Shares have traded between $2.06 and $6.71 over the past 52 weeks.

Oppenheimer analyst Dr. Brian Abrahams downgraded shares to "Underperform" from "Perform," saying the current stock value understates the company's risky development programs.

He expects sales of Recothrom, which is used to control bleeding during surgical procedures, to grow slowly. It is the company's only marketed product and sales reached $6 million during the second quarter. Also, he said the development of the company's hepatitis C treatment Peg-IFN lambda is complicated, while progress with the IL-21, aimed at inflammatory diseases, is unlikely next year.

"While we do not see a discrete near-term event that would drive downside, as Recothrom's modest long-term trajectory becomes more apparent and potential pipeline setbacks accrue, we would expect downside from current levels," Abrahams said in a note to investors.

In April, the company, headquartered in Seattle, said it would lay off 32 percent of its staff, or 161 employees, in a cost-cutting move. At the time, the company said it expected that move to save $30 million annually, starting in the third quarter.