ZymoGenetics and Novo Nordisk Enter into Preclinical Development Alliance for Interleukin 21; Companies to Share Costs and Preclinical Data Leading up to IND Filing.

Business Editors & Health/Medical Writers

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SEATTLE--(BUSINESS WIRE)--Jan. 9, 2003

ZymoGenetics, Inc. (Nasdaq:ZGEN) announced today the Company has signed a collaborative agreement with Novo Nordisk A/S (NYSE:NVO) for the preclinical development of Interleukin 21 (IL-21).

Under terms of the agreement, ZymoGenetics and Novo Nordisk will collaborate on all research and development activities leading up to the filing of an Investigational New Drug application (IND) by ZymoGenetics in the United States. Novo Nordisk will reimburse ZymoGenetics for a portion of its costs incurred prior to this agreement, and the two companies will equally share all costs of the program going forward. In total, ZymoGenetics could receive up to $11 million in payment or services under the agreement.

Previously, Novo Nordisk licensed the rights to IL-21 outside North America, however, the two parties were working independently to develop the protein. Under the collaborative agreement, ZymoGenetics will continue to maintain full commercial rights to IL-21 in North America, while Novo Nordisk may use all data, materials and intellectual property generated by the parties in its IL-21 development program outside North America. IL-21 is a protein that stimulates classes of immune cells that are involved in the body's ability to fight malignant or infected cells, and is being developed as a potential therapeutic for the treatment of cancer.

"This agreement marks a significant advance in the IL-21 development program and demonstrates our strategy to enter into collaborative partnerships as a way of leveraging our cash resources," commented Bruce L.A. Carter, Ph.D., President and Chief Executive Officer of ZymoGenetics. "Novo Nordisk's significant investment demonstrates their enthusiasm for the IL-21 project, and their intention to help move the product into the clinic. We are pleased to have expanded our relationship with Novo Nordisk, one of the world's leading developers of therapeutic proteins."

"IL-21 is an example of the high quality product candidates that ZymoGenetics has identified through its bioinformatics-driven discovery efforts," stated Mads Krogsgaard Thomsen, Executive Vice President and Chief Science Officer of Novo Nordisk A/S. "Partnering with ZymoGenetics to share preclinical development efforts should allow Novo Nordisk to advance IL-21 into clinical development outside North America in a more rapid and cost effective manner than if the two companies continued working independently. We are extremely pleased to have expanded our relationship with ZymoGenetics as we jointly work to move IL-21 towards the clinic."

Under the terms of the collaboration, ZymoGenetics and Novo Nordisk will form a joint steering committee to oversee the ongoing preclinical development activities for IL-21. The bulk of the work is expected to be performed by ZymoGenetics, with the IND scheduled to be filed in the first half of 2004. Additionally, the two companies agreed to continue negotiations toward a second agreement that could encompass further non-clinical and clinical development activities through to commercialization of IL-21. Additional details of the collaborative agreement were not disclosed.

About Interleukin 21 (IL-21)

IL-21, a novel protein discovered by ZymoGenetics' scientists, has been shown to activate key classes of immune cells, including cytotoxic T cells and Natural Killer cells, cell types that can destroy malignant or infected cells. In preclinical studies, IL-21 has been found to be an effective therapy in a number of animal models of cancer.

Based on its mechanism of action and effectiveness in animal models of tumor growth, ZymoGenetics is developing IL-21 for the treatment of cancer. The Company anticipates initiating clinical studies with IL-21 in 2004. Metastatic melanoma and renal cell carcinoma are the first two indications the Company intends to target.

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, comprising genomics, bioinformatics, protein chemistry and preclinical biology, ZymoGenetics has generated a broad pipeline of proprietary product candidates. ZymoGenetics intends to commercialize these product candidates through internal development, collaborations with biopharmaceutical partners, and out-licensing of 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, 2001.