ZymoGenetics, Inc. (Nasdaq: ZGEN) announced that, together with its collaborator Merck Serono, it has reached agreement with the U.S. Food and Drug Administration (FDA) on a Special Protocol Assessment (SPA) to conduct a pivotal clinical trial with the investigational new drug atacicept for the treatment of patients with lupus nephritis. This is one of two clinical studies intended to form part of the application for marketing authorization.

The randomized, double-blind placebo-controlled multi-center clinical trial will be conducted at sites in North America, Europe, Latin America, and Asia. Approximately 200 patients with active lupus nephritis will be enrolled in this trial, aimed at demonstrating the efficacy and safety of atacicept as compared to placebo.

"Together with Merck Serono, we concluded that an SPA provided the clearest path to ensure that this trial will support the application for atacicept marketing authorization," said Nicole Onetto, M.D., Senior Vice President and Chief Medical Officer. "We're pleased to have reached agreement with the FDA about the design of this study and plan to begin enrolling patients in the fourth quarter of 2007."

In the SPA process, the FDA evaluates the design of clinical trials intended to 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 are adequate to support a license application for marketing in the U.S.

ZymoGenetics and Merck Serono are developing atacicept as a potential treatment for autoimmune diseases and B-cell malignancies. Merck Serono is the study sponsor, however ZymoGenetics will operationally conduct the lupus nephritis study. The companies plan to conduct a second study in patients with general systemic lupus erythematosus, for which the SPA review process is ongoing.

About Lupus Nephritis

Lupus nephritis is a complication of systemic lupus erythematosus(SLE) and is characterized by inflammation of the kidneys. Patients with lupus nephritis typically have damage to the glomerulus and progressive loss of kidney function. In the U.S., SLE affects 1 person in 2000, with higher rates among women and among individuals with African, Asian, and Hispanic genetic heritage. Published studies estimate that clinical renal involvement occurs in at least 30% of those with SLE.

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 zymogenetics.

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.

ZymoGenetics, Inc.
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