Novo Nordisk in-licenses intellectual property rights to IL-21 antibodies

Novo Nordisk A/S (NYSE:NVO) and ZymoGenetics, Inc. (NASDAQ:ZGEN) today announced an agreement where Novo Nordisk in-licenses a fully-human anti-IL21 monoclonal antibody (IL-21 mAb) developed by ZymoGenetics, as well as broad intellectual property rights covering IL-21 mAb and the development of other IL-21 antibodies. The IL-21 mAb is a pre-IND candidate for the treatment of autoimmune and inflammatory diseases. Novo Nordisk in-licensed intellectual property rights to IL-21 antibodies outside North America in 2001 and now has worldwide rights.

Under the terms of the license, Novo Nordisk has agreed to pay ZymoGenetics an initial upfront cash payment of 24 million dollars. In addition, as the development programme of the IL-21 mAb advances, ZymoGenetics may receive further milestones from Novo Nordisk of up to 157.5 million dollars over the term of the agreement including a 1.5 million dollar milestone payment upon filing an investigational new drug application and a 8.5 million dollar milestone payment at the start of phase 1 studies with the mAb, plus royalties on net sales. ZymoGenetics also has a right to co-promote the IL-21 mAb product in the US if the company contributes to phase 3 clinical development costs.

“Novo Nordisk is currently building a pipeline of products to treat autoimmune and inflammatory diseases such as rheumatoid arthritis, lupus and inflammatory bowel disease,” said Mads Krogsgaard Thomsen, executive vice president and chief science officer of Novo Nordisk. “It was important for us to secure the worldwide rights to the IL-21 mAb project as well as worldwide patent rights to IL-21 antibodies, and we look forward to initiating a phase 1 trial with this IL-21 mAb in 2010.”

”ZymoGenetics has a rich pipeline and, while the IL-21 mAb is an exciting molecule, we believe for our company that other development programmes have a better return on investment profile,” said Douglas E. Williams, PhD, chief executive officer of ZymoGenetics. “We believe that Novo Nordisk will be able to develop and create value for this asset. Furthermore, we have the option to increase our participation in commercialization of the product, retaining long-term upside potential for our shareholders.”

As part of the agreement, ZymoGenetics retains the option to fund a portion of phase 3 clinical development costs in exchange for an increased royalty rate on US sales and US co-promotion rights. If ZymoGenetics exercises the option, it would pay a fixed fee of 10 million dollars together with 15% of the costs of phase 3 clinical trials, and royalties on US sales would increase from single to double digits.