ZymoGenetics Goes in for the Kill

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This one could get messy, Fools. At least both sides of this impending pharmaceutical battle have a drug designed to stop bleeding.

Yesterday, ZymoGenetics (Nasdaq: ZGEN) went on the offensive, asking the Food and Drug Administration to pull King Pharmaceuticals' (NYSE: KG) Thrombin-JMI off the market.

Thrombin-JMI is used to stop bleeding during surgeries. The protein product is isolated from cows, which can trigger antibody production in patients if their immune system recognizes the protein as foreign. Those antibodies could interfere with the coagulation process, leading to complications. ZymoGenetic's competing blood-clotting drug, Recothrom, is a human protein manufactured in a plant, so it generally doesn't have that issue.

King's product had sales of $96 million in the first half of the year, while Recothrom sales were a paltry $10.5 million. Johnson & Johnson (NYSE: JNJ) also has a thrombin, Evithrom, which is derived from human plasma, but the sales are a rounding error for the health-care giant, so it doesn't break them out individually.

If ZymoGenetics' drug is so much safer, why hasn't Recothrom become the king of the operating room? Because "safer" is relative.

ZymoGenetics says that it has found more than 25 published cases of antibodies causing issues with coagulation since 2000. That's really not very many, and while some would argue that one is too many, based on sales, it seems that doctors aren't that worried about it. I doubt the FDA will be, either.

ZymoGenetics was up nearly 7% on the news yesterday, and it has climbed higher today, but Fools should be careful here. Recothrom is ZymoGenetics' only product, but it'll never be a blockbuster, even if the FDA fulfills ZymoGenetics' wildest fantasies.

The company's future -- and therefore its stock price -- lie in the success or failure of its pipeline, including finding a partner for Interleukin-21, which has shown decent results when combined with Bayer's and Onyx Pharmaceuticals' (Nasdaq: ONXX) Nexavar, and its hepatitis C treatment, PEG-interferon lambda, on which it has partnered with Bristol-Myers Squibb (NYSE: BMY).