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Protein payoff

Last week's deal between ZymoGenetics Inc. and Serono S.A. is a matter of productivity, giving ZGEN the opportunity to monetize the downstream value of its prolific research, while allowing the Swiss biopharmaceutical company to bulk up and broaden its pipeline while keeping management focused on its core skills in development and commercialization.

For Serono (SWX:SEO; SRA, Geneva, Switzerland), the decision to do a large early stage deal with ZGEN is a way to double the productivity of research, as SEO believes the deal will provide about 50% of compounds entering its pipeline going forward. The collaboration also tips new areas of therapeutic interest for the company, as SEO potentially could add three new indications to its portfolio.

For its part, ZGEN has now set up two large partnerships - the other is with Novo Nordisk A/S - that are reminiscent of the original deal between Genentech Inc. and Roche from which ROCZ has an exclusive option to ex-U.S. rights to DNA compounds. The difference is that ZGEN (Seattle, Wash.) has two partners and hasn't had to give up half the company. The deal thus gives ZGEN built-in ex-U.S. partners and U.S. co-development partners, and helps secure its financial future with less need to access the equity markets.

Under the five-year deal, ZGEN granted SEO access to a portfolio of

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