Second Clinical Study Will Complement Lupus Nephritis Clinical Trial

SEATTLE, WA, USA | January 15, 2008 | ZymoGenetics, Inc. (NASDAQ:ZGEN), today announced that its partner Merck Serono has received agreement from the U.S. Food and Drug Administration (FDA) regarding a Special Protocol Assessment (SPA) for a Phase 2/3 trial with atacicept in patients with general systemic lupus erythematosus (SLE). Together with a previously announced agreement from the FDA for a Phase 2/3 study in lupus nephritis, which was initiated in December 2007, these studies are intended to support an application for marketing authorization in the U.S. for the treatment of patients with SLE.

The randomized, double-blind placebo-controlled multi-center clinical trial will be conducted internationally and will evaluate approximately 500 patients with general SLE. The trial will evaluate the efficacy and safety of atacicept compared to placebo in the prevention of SLE flares in this population. The primary efficacy endpoint will be the proportion of subjects experiencing a new flare during the 52-week treatment period following randomization.

"We’re pleased that our partner has received agreement from the FDA regarding this second clinical trial in lupus," said Nicole Onetto, M.D., Senior Vice President and Chief Medical Officer. "We believe that our current program will allow us to demonstrate the clinical benefit of atacicept. The mechanism of action of atacicept provides a strong rationale for the development of this new agent for treating patients suffering from lupus."

ZymoGenetics and Merck Serono are developing atacicept as a potential treatment for autoimmune diseases and B-cell malignancies. Merck Serono is the sponsor for both clinical studies, and will conduct the general systemic lupus erythematosus trial. ZymoGenetics will operationally conduct the lupus nephritis study.

About the SPA

In the SPA process, the FDA evaluates the design of a clinical trial that will form the basis of an efficacy claim to support a new drug application. The SPA provides a binding agreement between the FDA and a company that the study design, trial size, endpoints and data analyses plan, are acceptable to the FDA and would provide certain types of data needed to support a license application for marketing in the U.S.

About General Systemic Lupus Erythematosus (SLE)

Lupus is a chronic inflammatory disease, where the immune system attacks the body’s own tissues and organs. General systemic lupus erythematosus is the most common form of lupus and can result in swollen, painful joints, skin rash, extreme fatigue and kidney damage. In the U.S., general SLE affects 1 person in 2000, with higher rates among women and among individuals with African, Asian, and Hispanic genetic heritage.

About Atacicept

ZymoGenetics and Merck Serono, an affiliate of Merck KGaA, Darmstadt, Germany, are developing atacicept (formerly referred to as TACI-Ig) for the treatment of autoimmune diseases and B-cell malignancies. Atacicept contains the soluble TACI receptor that binds to the cytokines BLyS and APRIL. These cytokines are members of the tumor necrosis factor family that promote B-cell survival and autoantibody production associated with certain autoimmune diseases such as SLE. Current data indicates that levels of BLyS and APRIL are elevated in patients with rheumatoid arthritis, SLE and B-cell malignancies. Atacicept has been shown to affect several stages of B-cell development and may inhibit the survival of cells responsible for making antibodies.

About ZymoGenetics

ZymoGenetics creates novel protein drugs with the potential to significantly help patients fight their diseases. The Company is developing a diverse pipeline of product candidates that are moving into and through clinical development. These candidates span a wide array of clinical opportunities that include bleeding, autoimmune diseases and cancer. 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, 2006. 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.

SOURCE: ZymoGenetics, Inc.