ZymoGenetics restructures license and collaboration agreements on RECOTHROM

ZymoGenetics, Inc. (NASDAQ:ZGEN) today announced a restructuring of the U.S. co-promotion and ex-U.S. license and collaboration agreements with Bayer Schering Pharma AG and Bayer HealthCare relating to RECOTHROM^® Thrombin, topical (Recombinant). Effective January 1, 2010, ZymoGenetics regains full promotion rights in the United States and all ex-U.S. rights except in Canada, where Bayer will market and sell the product.

“We intend to seek new licensees to pursue the development of these markets.”

“The amended agreements with Bayer should benefit ZymoGenetics in a number of ways,” said Douglas E. Williams, Ph.D., Chief Executive Officer of ZymoGenetics. “The U.S. marketing and sales operation should achieve greater efficiency with one sales organization. We plan to increase the size of our field force to compensate for Bayer’s exit. However, despite this increase, we expect the change to lower our selling costs and improve our bottom line, while enabling us to continue to gain market share.”

Under the terms of the revised agreements, active co-promotion by Bayer in the U.S. will end on December 31, 2009; Bayer will receive its normal sales commission through that date. Beginning in 2010, Bayer will receive a reduced sunset period commission through December 31, 2011, which was previously capped at $25 million per year and now will be subject to an aggregate maximum of $12 million. ZymoGenetics will no longer be required to pay Bayer U.S. sales bonus payments totaling $20 million, which were anticipated to have been payable in 2010 and 2011 or upon termination of the co-promotion agreement.

Outside the U.S., ZymoGenetics will regain all rights to RECOTHROM except for Canada. In Canada, Bayer will sell the product and pay royalties on net sales to ZymoGenetics. Bayer will no longer be required to pay ZymoGenetics up to $16 million in milestone payments for ex-U.S. regulatory approvals. ZymoGenetics will assume responsibility for all active regulatory files in countries besides Canada.

“We continue to believe there is substantial potential value to be gained from the commercialization of RECOTHROM outside the United States,” added Dr. Williams. “We intend to seek new licensees to pursue the development of these markets.”