ZymoGenetics Initiates Phase 2 Clinical Trial

ZymoGenetics Initiates Phase 2 Clinical Trial of PEG-Interferon lambda in Hepatitis C with Bristol-Myers Squibb

Tue Oct 27

PEG-Interferon lambda is a Targeted Type 3 interferon in development for
Hepatitis C

SEATTLE--

ZymoGenetics, Inc. (NASDAQ: ZGEN) today announced the initiation of a Phase 2
clinical trial of PEG-Interferon lambda (IL-29) and ribavirin in treatment-naïve
patients with chronic hepatitis C virus (HCV) infection (the "EMERGE" study).
The first patient has been dosed in the study, triggering a $70 million
milestone payment to ZymoGenetics from Bristol-Myers Squibb Company (NYSE:BMY),
pursuant to the terms of a previously announced collaboration agreement.

"In the Phase 1b clinical trial, PEG-Interferon lambda demonstrated robust
antiviral activity and was well tolerated in patients with genotype 1 hepatitis
C," said Eleanor L. Ramos, M.D., Senior Vice President and Chief Medical Officer
of ZymoGenetics. "Because PEG-Interferon lambda binds to a unique receptor, it
has the potential to treat HCV without many of the treatment-limiting side
effects associated with current interferons."

The EMERGE study is an international, randomized multi-center clinical trial
that will enroll approximately 50 patients in the first, open label portion that
will explore a wide range of doses to be tested in the second part of the study.
The second part of the study is designed to enroll approximately 500 patients.
Weekly subcutaneous doses of PEG-Interferon lambda will be administered for up
to 48 weeks. The study will assess the safety and antiviral efficacy of
PEG-Interferon lambda compared to PEGASYS®. All patients will also receive daily
ribavirin. The primary endpoint of the trial is the proportion of patients who
achieve undetectable levels of HCV RNA after 12 weeks of therapy (cEVR).
Sustained virological response (SVR) defined as undetectable levels of HCV 24
weeks after treatment will also be assessed.

PEG-Interferon lambda

PEG-Interferon lambda (IL-29) is a novel type 3 interferon in development for
hepatitis C. The native human protein Interferon lambda is generated by the
immune system in response to viral infection. In a Phase 1b clinical trial in
patients with relapsed HCV, administration of PEG-Interferon lambda over four
weeks in combination with ribavirin was shown to be well-tolerated and resulted
in significant antiviral activity.

About ZymoGenetics

ZymoGenetics is focused on the creation of novel protein drugs to improve
patient care and address unmet medical needs. The company`s strategy is to
discover, develop and commercialize its products independently, in collaboration
with partner companies or through out-licensing. ZymoGenetics developed and
markets RECOTHROM® Thrombin, topical (Recombinant), a synthetic version of a
human blood-clotting enzyme used to stop bleeding during surgery. The company is
developing a proprietary portfolio of immune-based product candidates.
PEG-Interferon lambda is a novel type-3 interferon in clinical development for
the treatment of chronic hepatitis C infection. Interleukin-21 is a novel
cytokine in clinical development for the treatment of metastatic melanoma and
renal cell carcinoma. Several other proprietary product candidates are in
preclinical development. In addition, ZymoGenetics has licensed rights to
multiple clinical and preclinical drug candidates being developed by other
companies. For further information, visit www.zymogenetics.com.

ZymoGenetics Forward-Looking Statements

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
and uncertainties associated with clinical development.For example, the results
of preliminary studies do not predict clinical success, and larger and
later-stage clinical trials may not produce the same results as earlier-stage
trials.In addition, the forward-looking statements in this press release are
subject to the 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, 2008 and Quarterly Report on Form 10-Q
for the quarter ended June 30, 2009. 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.

PEGASYS® (Peginterferon alfa-2a) is a registered trademark of Hoffman La Roche.

Media and Investors
ZymoGenetics, Inc.
Susan W. Specht, 206-442-6592
spechts@zymogenetics.com