Bristol-Myers Almost Ready to Seal the Deal, Complete Takeover of ZymoGenetics

ZymoGenetics, one of the driving forces of Seattle biotech the past 30 years, is about to become a thing of the past. The pharmaceutical giant Bristol-Myers Squibb is putting the finishing touches on its acquisition of the Seattle-based biotech company (NASDAQ: ZGEN).

Bristol announced today that 94.9 percent of the ZymoGenetics shareholders agreed to hand over their shares by the previously announced deadline of midnight October 7. That’s more than enough consensus for Bristol to wrap up the deal and complete the takeover of ZymoGenetics. Bristol said it plans to close the transaction through what is known legally as a “short-form” merger, which won’t require a meeting of Zymo shareholders or any more votes for it to buy the whole company.

The closing of the deal is no surprise, since Bristol’s offer of $9.75 a share—for a total price of $885 million—provided ZymoGenetics shareholders a more than 80 percent premium above what the company was worth before the acquisition was announced last month. Bristol is now about to take control of Seattle’s oldest biotech company, with a team of 320 employees and a historic landmark headquarters building along Lake Union. The key asset Bristol is about to obtain is ZymoGenetics’ pegylated interferon lambda, an experimental treatment for hepatitis C that is designed to have fewer side effects than one of the current standards of care. ZymoGenetics also recently announced some intriguing clinical trial data for a drug called IL-21 which suggested it might help people live longer with a deadly form of cancer, metastatic melanoma.

Once Bristol officially takes control, there will be a lot of questions to ask. The biggest on the local level is what will happen to the people who work at ZymoGenetics? How many will get laid off? How many people, and what other assets, does Bristol plan to keep in Seattle? Will the former Zymonites be able to find gainful employment in a tough job market? Will there be any exciting new startups to emerge when the dust settles? How promising is the pegylated interferon lambda data, and is it good enough to become a billion-dollar hit?

All of those questions are important for the future of the Seattle biotech community. But I’ve still been thinking off and on about a retrospective story, which seeks to answer how ZymoGenetics—the company that once aspired to be the “unacquired Immunex” of this region—got itself into such a tight position where it felt the need to sell to a Big Pharma company for less than a billion dollars. If you have any thoughts on this question, please send me a note at the e-mail address below, making clear whether you are comfortable having your comments quoted for the record.

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