News Release

ZymoGenetics Highlights Product Development Activities at Analyst & Investor Briefing -- Three product candidates enter clinical development in 2003

December 11, 2003

SEATTLE--(BUSINESS WIRE)--Dec. 11, 2003--ZymoGenetics, Inc. (Nasdaq:ZGEN) reported today at its annual Analyst and Investor Briefing held in New York that clinical development is proceeding as planned for its four lead product candidates.

In 2003, the company initiated clinical development of three separate proteins, achieving the goal the company had previously established for itself. Additionally, the company expects to enter a fourth product candidate into clinical development in the first half of 2004. (An archived web cast of today's ZymoGenetics Analyst and Investor Briefing may be accessed at www.zymogenetics.com.)

"We are extremely pleased with the success of our product development efforts this year," commented Bruce L.A. Carter, Ph.D., President and Chief Executive Officer of ZymoGenetics. "We set an aggressive goal to advance three products into the clinic, which we have been able to do. As a result of strengthening our clinical and regulatory groups this past year, we are now in the position to move these product candidates through clinical development in an expedient manner. We look forward to the coming year and the milestones that lie ahead of us."

Briefing Highlights

• ZymoGenetics advanced three therapeutic protein product candidates into clinical development during 2003: 1) TACI-Ig, intended for the treatment of autoimmune diseases; 2) recombinant Factor XIII (rFactor XIII), intended for the treatment of congenital and acquired Factor XIII deficiencies; and 3) recombinant human Thrombin (rhThrombin), intended for use as a general hemostat to control bleeding during surgery. A fourth candidate, IL-21, is expected to enter the clinic in the first half of 2004.
• ZymoGenetics initiated and completed three Phase 1 clinical studies with rFactor XIII, including a study in congenital Factor XIII deficient patients, and two studies in healthy volunteers. The company expects to initiate a pivotal study in mid-2004 in congenital Factor XIII deficient patients. The company previously announced that they had received orphan drug designations for rFactor XIII for the treatment and prophylaxis of this patient population.
• ZymoGenetics, in collaboration with Serono SA, initiated a Phase 1 study with TACI-Ig in healthy volunteers. The company expects to initiate Phase 1 studies in the first half of 2004 in patients with Systemic Lupus Erythematosus (SLE) and later in 2004 in patients with rheumatoid arthritis.
• ZymoGenetics recently received agreement from the FDA to initiate clinical studies with rhThrombin. The company expects to begin treating patients for the dose escalation portion of a Phase 1/2 study in spinal surgery by the end of the year. The company expects to conduct additional concurrent Phase 2 studies in other surgical indications in 2004 with the aim of obtaining a broad label for the product as a general hemostat.
• ZymoGenetics plans to initiate clinical studies with IL-21 in the first half of 2004 for the treatment of cancer.
• ZymoGenetics' financial condition continues to reflect strength. As of September 30, 2003, the company had approximately $235 million in cash, cash equivalents and short-term investments. In addition, the Company raised over $71 million in a follow-on public offering of 6,100,000 shares of common stock in October 2003.
• ZymoGenetics' construction of additional research and development space continues on schedule. The building will contain a pilot manufacturing plant for the production of protein product candidates under GMP conditions, suitable for use in human clinical studies.
Overview of Product Candidates TACI-Ig

TACI is a cell-surface receptor for specific members of the TNF family of pro-inflammatory proteins. TACI is found on B lymphocytes, the cells in the blood responsible for producing antibodies. TACI-Ig is a soluble fusion protein that links the extracellular part of the TACI receptor to the Fc portion of human immunoglobulin (Ig). This fusion protein is being developed as a therapy for autoimmune diseases such as Systemic Lupus Erythematosus (SLE). TACI has been shown to bind to BLyS and APRIL, TNF family cytokines that stimulate B-cell growth and the production of autoantibodies. Over production of BLyS correlates with the onset and severity of autoimmune disease in animal models and elevated levels of BLyS have been observed in the blood of individuals with autoimmune disease. In addition, BLyS:APRIL heterotrimers have been found in the blood of patients with SLE and other autoimmune diseases. These observations suggest that an inhibitor of BLyS and APRIL may have therapeutic value. ZymoGenetics has entered into collaboration with Serono S.A. for the co-development of TACI-Ig for the treatment of autoimmune disease and has started clinical studies with TACI-Ig in healthy volunteers. ZymoGenetics and Serono intend to initiate trials in patients with autoimmune disease in 2004 with SLE as the first indication.

Recombinant human Factor XIII (rFactor XIII)

Factor XIII is the terminal enzyme in the coagulation cascade. Factor XIII enhances clot strength by crosslinking fibrin strands within the clot and increases resistance of the clot to fibrinolysis by crosslinking enzyme inhibitors, such as alpha 2 plasmin inhibitor, into the clot. Clinical experience with Factor XIII derived from human blood, which is currently marketed in a limited number of countries, but not the United States, shows significant therapeutic potential for the prevention and treatment of bleeding complications associated with surgical procedures and for treatment of defects in tissue repair processes associated with congenital and acquired Factor XIII deficiencies. ZymoGenetics believes that recombinant human Factor XIII (rFactor XIII) offers several advantages over plasma-based Factor XIII therapies.

In 2003, ZymoGenetics conducted three Phase 1 studies, one in the United States to evaluate the safety and pharmacokinetics of rFactor XIII in patients with congenital Factor XIII deficiency and two in the UK to evaluate the safety and pharmacokinetics in healthy volunteers. Results from these studies, which were presented at the recent American Society of Hematology Meeting, suggest that rFactor XIII can be safely administered, both as a single administration and as repeated administrations. To date, over 60 subjects have been treated with rFactor XIII with no serious adverse events observed in any of the studies. The company also observed an increase in clot strength and stability measured in vitro following administration of rFactor XIII to patients with congenital Factor XIII deficiency. In addition, rFactor XIII was observed to have a long half-life (9-13 days), an important finding that may allow for extended dosing schedules for the delivery of the protein.

Recombinant human Thrombin (rhThrombin)

Thrombin, a key enzyme involved in blood coagulation, is used clinically in surgical settings as a topical hemostat to stop bleeding. Thrombin is used in over 500,000 surgeries per year in the United States. Currently, only thrombin derived from bovine blood is available in the US as a stand-alone thrombin product. Bovine-derived thrombin has been associated with the development of antibodies that may cross-react with human blood proteins. In some cases, these antibodies lead to serious bleeding complications. ZymoGenetics is developing recombinant human Thrombin as an alternative to bovine-derived thrombin. Preclinical data in a surgical kidney model suggests faster time-to-hemostasis when compared with placebo or bovine thrombin. The company recently announced that it had received agreement from the FDA to initiate clinical studies with rhThrombin to evaluate it as a stand-alone topical hemostat. The company is also evaluating other potential indications, including the use of rhThrombin as a component in surgical sealants.

Interleukin 21 (IL-21)

Interleukin 21 (IL-21) is a novel member of the four helical bundle cytokine family, a protein family which includes several proteins already approved for therapeutic use or in clinical trials. IL-21 has potent biological activity in regulating key classes of immune cells, including cytotoxic T cells and natural killer cells. These cell types play key roles in surveillance of the body to eliminate malignant and infected cells. Based upon the ability of IL-21 to inhibit tumor growth in a number of animal models, and its mechanism of action involving regulation of immune cells, malignant melanoma and renal cell carcinoma will be the first indications pursued. ZymoGenetics has retained the commercialization rights for IL-21 in North America and has licensed the commercialization rights outside of North America to Novo Nordisk A/S. The company anticipates initiating clinical development with IL-21 in the first half of 2004.

About ZymoGenetics

ZymoGenetics is a biopharmaceutical company focused on the discovery, development and commercialization of therapeutic proteins for the prevention or treatment of human diseases. Using a product discovery engine that combines ZymoGenetics' strengths in biology, protein chemistry, molecular and cellular biology and bioinformatics, ZymoGenetics is developing a pipeline of potential proprietary product candidates. These span a wide array of clinical opportunities, including cardiovascular disease, autoimmune disease, cancer and tissue repair. ZymoGenetics intends to commercialize these product candidates through internal development, collaborations with partners, and out-licensing of patents from its extensive patent portfolio. For further information, visit www.zymogenetics.com.

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the current intent and expectations of the management of ZymoGenetics. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. ZymoGenetics' actual results and the timing and outcome of events may differ materially from those expressed in or implied by the forward-looking statements because of risks associated with our unproven discovery strategy, preclinical and clinical development, regulatory oversight, intellectual property claims and litigation and other risks detailed in the company's public filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K for the year ended December 31, 2002 and its prospectus supplement filed with the Commission on October 16, 2003. Except as required by law, ZymoGenetics undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.

CONTACT: ZymoGenetics, Inc.
Charles E. Hart, Ph.D., 206-442-6744 (Investor Relations)
or
Susan W. Specht, MBA, 206-442-6592 (Media Relations)

SOURCE: ZymoGenetics, Inc.