Novo spins off ZymoGenetics unit

Novo Nordisk of Denmark has announced plans to spin off its ZymoGeneticsbiotechnology subsidiary, a move which coincides with a $150 million private placement of the latter's shares that will be used to accelerate the development of ZymoGenetic's pipeline of novel protein candidates. Novo will retain a 51% stake in ZymoGenetics after it has been spun off, and the new investor consortium (led by EM Warburg, Pincus & Co) will have a 35% holding. Novo has previously announced it will split into two companies, Novo Nordisk (pharmaceuticals) and Novozymes (industrial enzymes) at the end of the year (Marketletter June 26).

Lars Rebien Soerensen, Novo's chief executive and president-elect, said that the new structure is a logical result of the firm's partnership strategy, claiming that "with new investors on board who are willing to share risks and rewards of a biotech venture, we are allowing ZymoGenetics to maximize the value of its discoveries and expertise." This was a view echoed by Jonathan Leff, managing director of Warburg Pincus, who said that the consortium saw "tremendous value in what has been created at ZymoGenetics over the past two decades," and went on to praise its "unparalleled patent portfolio." ZymoGenetics' chief executive, Bruce Carter, stated that the company "is well positioned to capture high value from its genomics-based drug discovery programs."

After completion of the transaction, ZymoGenetics'employees and executives will own the remaining stake. The agreement is expected to have no significant impact on Novo's financial results for 2000, while it is expected to have a positive impact on profit before tax in 2001 and onwards, the firm said. However, this will be offset by Novo's plans to expand its own R&D activities.