Phase 2 Program to Start Later This Year

    SEATTLE, Washington and GENEVA, Switzerland, June 26
/PRNewswire-FirstCall/ -- ZymoGenetics, Inc. (NASDAQ: ZGEN) and Serono
(virt-x:SEO and NYSE:SRA) today announced favorable results from a Phase 1b
clinical trial with TACI-Ig in 73 patients with rheumatoid arthritis (RA),
recently presented at the 7th Annual European Congress of Rheumatology
(EULAR). TACI-Ig is a soluble fusion protein that neutralizes molecules
implicated in the pathogenesis of several autoimmune diseases. TACI-Ig
appeared to be well tolerated across the full range of dose levels and
schedules tested. Clear biologic effect was observed as patients showed
schedule and dose dependent decreases in the levels of immunoglobulin (Ig)
and serum rheumatoid factor levels. Although this study was not
specifically designed to evaluate efficacy, encouraging trends were
observed in ACR and DAS 28 scores, commonly used measurements of clinical
benefit. Based on these promising results, ZymoGenetics and Serono expect
to begin the Phase 2 clinical program of TACI-Ig in patients with RA in the
second half of 2006.
    In an oral presentation[1], Alain Munafo, Ph.D., Senior Scientific
Director of Serono, reported that TACI-Ig appeared to be well tolerated in
patients with moderate-to-severe RA. The most common adverse event was a
generally mild injection site reaction affecting approximately 40% of the
patients. There were no serious adverse events reported. No patients formed
detectable antibodies to TACI-Ig, and the patients' vaccination immune
status did not appear to be compromised by the drug.
    TACI-Ig demonstrated clear biological activity, with schedule and dose
dependent reductions of immunoglobulin levels in line with the proposed
mechanism of action. In a cohort that received seven doses of TACI-Ig over
a three-month period, patients showed:
    - Reductions of several biomarkers typically found in RA patients,
including:
    - IgM, IgA and IgG reductions of 54%, 37% and 21% respectively;
    - Reduction of peripheral blood B-cell levels with a maximum decrease
of 30-40%
    - 40-45% reduction of IgM-RF, IgA-RF and IgG-RF
    - Trends toward improvement of the ACR and DAS 28 scores commonly used
to measure disease severity and effects of treatment.
    In a separate poster presentation[2], Ivan Nestorov, Ph.D., Scientific
Fellow of ZymoGenetics, reported that there was a well-defined relationship
between TACI-Ig exposure and immunoglobulin response. IgM levels were found
to be the most responsive to TACI-Ig exposure, followed respectively by IgA
and IgG levels. Dosing frequency seemed to play as important a role as dose
level in the response of the three biomarkers.
    The primary objective of the Phase 1b study was to determine the safety
and tolerability of TACI-Ig in RA patients and to examine the relationship
between TACI-Ig dose and schedule with markers of biologic and disease
activity. The trial enrolled adult male and female patients with active,
moderate-to-severe RA. Patients received single or multiple doses of either
TACI-Ig or placebo for a maximum period of three months.
    Abstracts The abstracts and presentation slides are available at
http://www.zymogenetics.com in the "What's New" section on the home page.
    Background material
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please visit the Serono Media Center http://www.thenewsmarket.com/Serono. You can
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digitally or by tape from this site. Registration and video is free to the
media.
    About TACI-Ig
    ZymoGenetics and Serono are developing TACI-Ig for the treatment of
autoimmune diseases and B-cell malignancies. TACI-Ig is a soluble receptor
that binds to BLyS and APRIL, TNF family cytokines that promote B-cell
survival and the production of harmful autoantibodies, which cause certain
autoimmune diseases such as systemic lupus erythematosus (SLE). Current
data indicates that levels of BLyS and APRIL are elevated in patients with
rheumatoid arthritis, SLE and B-cell malignancies. TACI-Ig has been shown
to affect several stages of B-cell development and may inhibit the survival
of cells responsible for making antibodies. ZymoGenetics is developing
TACI-Ig in collaboration with Serono S.A. and is conducting clinical
studies in patients with SLE, rheumatoid arthritis and advanced B-cell
malignancies, such as multiple myeloma, B-cell non-Hodgkin's lymphoma and
chronic lymphocytic leukemia. Commencing July 1, TACI-Ig will be referred
to by its International Nonproprietary Name 'atacicept'.
    Forward-looking Statements
    For 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, 2005. 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.
    For Serono
    Some of the statements in this press release are forward looking. Such
statements are inherently subject to known and unknown risks, uncertainties
and other factors that may cause actual results, performance or
achievements of Serono S.A. and affiliates to be materially different from
those expected or anticipated in the forward-looking statements.
Forward-looking statements are based on Serono's current expectations and
assumptions, which may be affected by a number of factors, including those
discussed in this press release and more fully described in Serono's Annual
Report on Form 20-F filed with the U.S. Securities and Exchange Commission
on February 28, 2006. These factors include any failure or delay in
Serono's ability to develop new products, any failure to receive
anticipated regulatory approvals, any problems in commercializing current
products as a result of competition or other factors, our ability to obtain
reimbursement coverage for our products, the outcome of government
investigations and litigation and government regulations limiting our
ability to sell our products. Serono has no responsibility to update the
forward-looking statements contained in this press release to reflect
events or circumstances occurring after the date of this press release.
    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 potential proprietary 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 http://www.zymogenetics.com.
    About Serono
    Serono is a global biotechnology leader. The Company has eight
biotechnology products, Rebif(R), Gonal-f(R), Luveris(R), Ovidrel(R)
/Ovitrelle(R), Serostim(R), Saizen(R), Zorbtive(TM) and Raptiva(R). In
addition to being the world leader in reproductive health, Serono has
strong market positions in neurology, metabolism and growth and has
recently entered the psoriasis area. The Company's research programs are
focused on growing these businesses and on establishing new therapeutic
areas, including oncology and autoimmune diseases. Currently, there are
more than 25 on-going development projects.
    In 2005, Serono, whose products are sold in over 90 countries, achieved
worldwide revenues of US$2,586.4 million. Reported net loss in 2005 was
US$106.1 million, reflecting a charge of US$725 million taken relating to
the settlement of the US Attorney's Office investigation of Serostim.
Excluding this charge as well as other non-recurring items, adjusted net
income grew 28.4% to US$565.3 million in 2005. Bearer shares of Serono
S.A., the holding company, are traded on the virt-x (SEO) and its American
Depositary Shares are traded on the New York Stock Exchange (SRA).
    For more information, please contact:

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    ZymoGenetics

    Investor Relations John Calhoun, MD, MBA      Media Relations
    Director, Corporate Communications & Investor
    Relations                                     Susan W. Specht, MBA

    +1-(206)-442-6744                             Associate Director,
                                                  Corporate
                                                  Communications
                                                  +1-(206)-442-6592
    [1] TACI-Ig in patients with rheumatoid arthritis (RA): an exploratory,
multi-center, double-blind, placebo-controlled, dose-escalating, single and
repeat dose phase 1b study (abstract OP0178), 7th Annual European Congress
of Rheumatology (EULAR), June 21 - 24, 2006, Amsterdam, Netherlands
    [2] Characterizing the relationship between TACI-Ig exposure and IgG,
IgM and IgA antibody response in patients with rheumatoid arthritis (RA);
(abstract FRI0157), 7th Annual European Congress of Rheumatology (EULAR),
June 21 - 24, 2006, Amsterdam, Netherlands

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