Bristol-Myers Squibb has linked up with ZymoGenetics and gained the rights to the latter’s investigational hepatitis C treatment PEG-interferon lambda.

The deal for the drug, which is a novel type 3 interferon currently in Phase Ib development, will see B-MS make an upfront payment of $85 million for development and commercialisation rights to the compound, plus an additional $20-million license fee. Zymogenetics is also eligible to receive as much as $430 million on the attainment of certain development and regulatory milestones in hepatitis C, plus $287 million in additional payments in other indications, and up to $285 if certain sales targets are reached.

The companies have agreed to co-develop PEG-interferon lambda in the USA and Europe, with ZymoGenetics retaining rights to co-market the drug in the former territory and share profits. Should the Seattle-based group opt out of the co-promotion agreement, the company would receive double-digit royalties on global product sales.

Francis Cuss, senior vice president of discovery and exploratory clinical research at B-MS, said that the profile of PEG-interferon lambda “offers the possibility of improvements in the safety and effectiveness of combination treatment for hepatitis C and makes it an ideal fit with our emerging portfolio of small molecule anti-virals”.

The firms said that PEG-interferon lambda has the potential to be “uniquely differentiated from available interferon therapy” because it mediates anti-viral activity through a receptor that is distinct from that used by interferon alpha and is present on fewer cell types within the tissues of the body. As a result, “the possibility exists for more targeted delivery of interferon therapy and an improved therapeutic index,”, they added.