Monday, June 30, 2008

ZymoGenetics Secures $100 Million Funding Commitment

SEATTLE--(BUSINESS WIRE)--ZymoGenetics, Inc. (NASDAQ:ZGEN), today announced that it has received a $100 million funding commitment from Deerfield Management, a leading healthcare investment organization and a significant ZymoGenetics' shareholder. The funds can be drawn at any time over the next 18 months at ZymoGenetics’ discretion. Funds drawn, together with accrued interest, will be repayable five years from entering into the funding arrangement and can be repaid without penalty at any time at the company’s sole discretion.

“This transaction significantly increases our financial strength and provides capital that we’ll use to build our RECOTHROM® business, including the potential development of RECOTHROM line extension products,” said Bruce L.A. Carter, Ph.D., chief executive officer of ZymoGenetics. “We’re pleased with this vote of confidence from Deerfield, a highly knowledgeable and successful healthcare investment firm.”

Under the terms of the arrangement, Deerfield has committed $100 million that can be drawn by ZymoGenetics in $25.0 million tranches. Each tranche will entitle Deerfield to a royalty equal to 2% of RECOTHROM net sales. In addition, ZymoGenetics will issue Deerfield 1.5 million warrants exercisable at $10.34 at the time of the first draw and 1.0 million warrants upon each subsequent draw exercisable at a 25% premium to the average sale price for a previous 15-day period. All warrants will have a 6 year term and the company has agreed to register with the Securities and Exchange Commission the common stock issuable under the warrants. Interest will accrue on drawn capital at a compounded rate of 4.9% and be due along with outstanding principal in June 2013, subject to acceleration in specified circumstances. ZymoGenetics can repay borrowed amounts in whole or in part at any time, without penalty, and all associated interest and royalty obligations will cease upon repayment. Deerfield received a $1 million transaction fee upon entering into the arrangement.

“We believe that this transaction with Deerfield is structured to benefit our shareholders in several ways,” said James Johnson, chief financial officer of ZymoGenetics. “ZymoGenetics gains access to a significant amount of capital at a competitive cost; there is flexibility in amount, timing and duration of borrowings; and shareholder dilution is minimized. Assuming success in building the market for RECOTHROM and in carrying out our business development objectives, this added capital should fund our company well into the future.”
A live webcast of the presentation can be accessed by going to: www.zymogenetics.com. The webcast will be archived for 30 days.