Amendment No. 4 to Schedule TO

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KDg2ZyI4OWC8r2NUv3YCCdxekSHBhtYzj8AYNW+Bzasw4+z4WoOrBfQ1CK4l/mAD rPFvloJE8KBLoSJ5vec2+Q== 0001193125-10-219518.txt : 20100929 0001193125-10-219518.hdr.sgml : 20100929 20100929142726 ACCESSION NUMBER: 0001193125-10-219518 CONFORMED SUBMISSION TYPE: SC TO-T/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20100929 DATE AS OF CHANGE: 20100929 GROUP MEMBERS: ZEUS ACQUISITION CORPORATION SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ZYMOGENETICS INC CENTRAL INDEX KEY: 0001129425 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 911144498 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-78019 FILM NUMBER: 101096117 BUSINESS ADDRESS: STREET 1: 1201 EASTLAKE AVENUE E CITY: SEATTLE STATE: WA ZIP: 98102 BUSINESS PHONE: 206-442-6600 MAIL ADDRESS: STREET 1: 1201 EASTLAKE AVENUE E CITY: SEATTLE STATE: WA ZIP: 98102 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ZYMOGENETICS INC CENTRAL INDEX KEY: 0001129425 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 911144498 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-78019 FILM NUMBER: 101096118 BUSINESS ADDRESS: STREET 1: 1201 EASTLAKE AVENUE E CITY: SEATTLE STATE: WA ZIP: 98102 BUSINESS PHONE: 206-442-6600 MAIL ADDRESS: STREET 1: 1201 EASTLAKE AVENUE E CITY: SEATTLE STATE: WA ZIP: 98102 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BRISTOL MYERS SQUIBB CO CENTRAL INDEX KEY: 0000014272 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 220790350 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T/A BUSINESS ADDRESS: STREET 1: 345 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10154 BUSINESS PHONE: 2125464000 MAIL ADDRESS: STREET 1: 345 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10154 FORMER COMPANY: FORMER CONFORMED NAME: BRISTOL MYERS CO DATE OF NAME CHANGE: 19891012 SC TO-T/A 1 dsctota.htm AMENDMENT NO. 4 TO SCHEDULE TO Amendment No. 4 to Schedule TO

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE TO

TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)

OF THE SECURITIES EXCHANGE ACT OF 1934

Amendment No. 4

ZYMOGENETICS, INC.

(Name of Subject Company (Issuer))

ZEUS ACQUISITION CORPORATION

(Offeror)

A Wholly Owned Subsidiary of

BRISTOL-MYERS SQUIBB COMPANY

(Offeror)

(Names of Filing Persons (identifying status as offeror, issuer or other person))

COMMON STOCK, NO PAR VALUE

(Title of Class of Securities)

98985T109

(CUSIP Number of Class of Securities)

Sandra Leung, Esq.

General Counsel & Corporate Secretary

P. Joseph Campisi, Jr., Esq.

Vice President & Assistant General Counsel

Bristol-Myers Squibb Company

345 Park Avenue

New York, New York 10154

(212) 546-4000

(Name, address, and telephone numbers of person authorized to receive notices and communications on behalf of filing persons)

Copies to:

David Fox, Esq.

Daniel Wolf, Esq.

Kirkland & Ellis LLP

601 Lexington Avenue

New York, NY 10022

(212) 446-4800

CALCULATION OF FILING FEE


Transaction Valuation(1)		Amount of Filing Fee(2)
$883,869,654		$63,020

(1)

Calculated solely for purposes of determining the filing fee. The calculation assumes the purchase of 86,584,072 shares of common stock, without par value, and 99,516 shares of common stock subject to restricted stock units, in each case, at $9.75 per share. The transaction value also includes the aggregate offer price for 8,500,698 shares issuable pursuant to outstanding options with an exercise price less than $9.75 per share, which is calculated by multiplying the number of shares underlying such outstanding options at each exercise price therefor by an amount equal to $9.75 minus such exercise price.

(2)	Calculated in accordance with Exchange Act Rule 0-11 by multiplying the transaction value by 0.0000713.

x	Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.


Amount Previously Paid: $63,020		Filing Party: Bristol-Myers Squibb Company and Zeus Acquisition Corporation
Form of Registration No.: Schedule TO		Date Filed: September 10, 2010

¨	Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

x	Third-party tender offer subject to Rule 14d-1.

¨	Issuer tender offer subject to Rule 13e-4.

¨	Going-private transaction subject to Rule 13e-3.

x	Amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer. ¨

If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:

¨	Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

¨	Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

This Amendment No. 4 to the Tender Offer Statement on Schedule TO (the “Schedule TO”) amends and supplements the Schedule TO relating to the tender offer by (i) Zeus Acquisition Corporation, a Washington corporation (“Purchaser”) and a wholly-owned subsidiary of Bristol-Myers Squibb Company, a Delaware corporation (“Parent”) and (ii) Parent, for all of the outstanding common stock, without par value (the “Shares”), of ZymoGenetics, Inc., a Washington corporation (the “Company”), at a price of $9.75 per share net to the seller in cash without interest and less required withholding taxes, if any, upon the terms and conditions set forth in the offer to purchase dated September 10, 2010 (the “Offer to Purchase”), a copy of which is attached as Exhibit (a)(1)(A), and in the related letter of transmittal (the “Letter of Transmittal”), a copy of which is attached as Exhibit (a)(1)(B), which, together with any amendments or supplements, collectively constitute the “Offer.”

All information set forth in the Offer to Purchase is incorporated by reference herein in response to Items 1 through 9 and Item 11 in this Schedule TO, and is supplemented by the information specifically provided in this Schedule TO.

This Amendment No. 4 is being filed to amend and supplement Items 11 and 12 as reflected below.

Item 11. Additional Information.

Regulation M-A Item 1011

(a) Agreements, Regulatory Requirements and Legal Proceedings. Item 11(a) of the Schedule TO is hereby amended and supplemented by adding the following paragraphs immediately before the last paragraph of the sub-section captioned “General.”

On September 17, 2010, the plaintiff amended the purported shareholder class action complaint captioned Rhonda M. Mesa v. ZymoGenetics, Inc., et al., adding allegations and a corresponding cause of action that the Company and its directors violated Section 14(d)(4) and 14(e) of the Exchange Act by issuing a Solicitation and Recommendation Statement on Schedule 14D-9 that omitted material facts and was materially misleading. The Company and Parent believe the plaintiff’s new allegations, like the previous ones, lack merit.

On September 21, 2010, the plaintiff amended the purported shareholder class action complaint captioned Krivan v. ZymoGenetics, Inc., et al., adding allegations that the Solicitation and Recommendation Statement on Schedule 14D-9 filed by the Company on September 15, 2010, failed to fully and fairly disclose certain material information concerning the proposed transaction. The amended complaint, however, does not allege any additional causes of action. The Company and Parent believe the plaintiff’s new allegations, like the previous ones, lack merit.

On September 21, 2010, the three purported shareholder class action complaints previously filed in the Superior Court of Washington in and for King County, captioned Vereen v. ZymoGenetics, Inc., et al., Krivan v. ZymoGenetics, Inc., et al., and Jaung v. the ZymoGenetics, Inc., et al., were consolidated into one as In re ZymoGenetics, Inc. Shareholder Litigation, Superior Court of Washington in and for King County, Docket No. 10-2-32389-9 SEA. The parties have agreed to expedited discovery, and a preliminary injunction hearing has been scheduled for October 7, 2010.

On September 20, 2010, a purported shareholder class action complaint was filed in King County Superior Court. The complaint, captioned Eyster v. ZymoGenetics, Inc., et al., names as defendants the members of the Company Board, as well as the Company and Parent. The plaintiff alleges that the Company’s directors breached their fiduciary duties to the Company’s shareholders, and further claims that the Company and Parent aided and abetted the purported breaches of fiduciary duty. The complaint alleges that the proposed transaction between the Company and Parent involves an unfair price, an inadequate sales process and unreasonable deal protection devices and that defendants agreed to the Merger to benefit themselves personally. The complaint seeks injunctive relief, including to enjoin the transaction, in addition to attorneys’ and other fees and costs and other relief. The Company and Parent believe the plaintiff’s allegations lack merit and will contest them vigorously.

On September 23, 2010, a purported shareholder class action complaint was filed in the United States District Court for the Western District of Washington. The complaint, captioned Zhou v. Bruce L.A. Carter, Ph.D., et al., names as defendants the members of the Company Board, as well as the Company and Parent. The plaintiff alleges that the Company’s directors breached their fiduciary duties to the Company’s shareholders, and further claims that the Company and Parent aided and abetted the purported breaches of fiduciary duty. The complaint alleges that the proposed transaction between the Company and Parent involves an unfair price and an inadequate sales process and unreasonable deal protection devices and that defendants agreed to the transactions to benefit themselves personally. The complaint seeks compensatory damages and injunctive relief, including to enjoin the transaction, and an order to permit a shareholders’ committee to ensure a fair procedure in connection with the proposed transaction. The complaint also seeks attorneys’ and other fees and costs, in addition to seeking other relief. The Company and Parent believe the plaintiff’s allegations lack merit and will contest them vigorously.

Item 12. Exhibits.

Regulation M-A Item 1016

Item 12 of the Schedule TO is amended and supplemented by adding the following exhibits:


Exhibit No.

(a)(11)		Amended Class Action Complaint dated September 17, 2010 (Mesa v. ZymoGenetics, Inc., et al.).

(a)(12)		Amended Class Action Complaint dated September 21, 2010 (Krivan v. ZymoGenetics, Inc., et al.).

(a)(13)		Class Action Complaint dated September 20, 2010 (Eyster v. ZymoGenetics, Inc., et al.).

(a)(14)		Class Action Complaint dated September 23, 2010 (Zhou v. Bruce L.A. Carter, Ph.D., et al.).

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.


ZEUS ACQUISITION CORPORATION

By		/S/ JEREMY LEVIN
Name:		Dr. Jeremy Levin
Title:		President

Date:		September 29, 2010

BRISTOL-MYERS SQUIBB COMPANY

By		/S/ JEREMY LEVIN
Name:		Dr. Jeremy Levin
Title:		Senior Vice President, Strategy, Alliances and Transactions

Date:		September 29, 2010

EXHIBIT INDEX



Exhibit No.

(a)(1)(A)		Offer to Purchase, dated September 10, 2010.*

(a)(1)(B)		Letter of Transmittal (including Internal Revenue Service Form W-9).*

(a)(1)(C)		Notice of Guaranteed Delivery.*

(a)(1)(D)		Letter from the Information Agent to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees.*

(a)(1)(E)		Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees.*

(a)(1)(F)		Joint Press Release of ZymoGenetics, Inc. and Bristol-Myers Squibb Company, dated September 7, 2010 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed by Bristol-Myers Squibb Company with the Securities and Exchange Commission dated September 9, 2010).*

(a)(1)(G)		Summary Advertisement as published on September 10, 2010.*

(a)(5)		Press Release issued by Bristol-Myers Squibb Company, dated September 10, 2010.*

(a)(6)		Class Action Complaint dated September 9, 2010 (Vereen v. ZymoGenetics, Inc., et al.).*

(a)(7)		Class Action Complaint dated September 9, 2010 (Krivan v. ZymoGenetics, Inc., et al.).*

(a)(8)		Class Action Complaint dated September 9, 2010 (Jaung v. the ZymoGenetics, Inc., et al.).*

(a)(9)		Class Action Complaint dated September 15, 2010 (Mesa v. ZymoGenetics, Inc., et al.).*

(a)(10)		Press Release issued by Bristol-Myers Squibb Company, dated September 28, 2010.*

(a)(11)		Amended Class Action Complaint dated September 17, 2010 (Mesa v. ZymoGenetics, Inc., et al.).

(a)(12)		Amended Class Action Complaint dated September 21, 2010 (Krivan v. ZymoGenetics, Inc., et al.).

(a)(13)		Class Action Complaint dated September 20, 2010 (Eyster v. ZymoGenetics, Inc., et al.).

(a)(14)		Class Action Complaint dated September 23, 2010 (Zhou v. Bruce L.A. Carter, Ph.D., et al.).

(d)(1)		Agreement and Plan of Merger, dated as of September 7, 2010, by and among ZymoGenetics, Inc., Bristol-Myers Squibb Company, and Zeus Acquisition Corporation (incorporated by reference to Exhibit 2.1 to the Form 8-K filed by ZymoGenetics, Inc. with the Securities and Exchange Commission on September 9, 2010).*

(d)(2)		Form of Tender and Support Agreement, by and among Bristol-Myers Squibb Company, Zeus Acquisition Corporation and Stockholder, dated September 7, 2010 (incorporated by reference to Exhibit 2.2 to the Form 8-K filed by ZymoGenetics, Inc. with the Securities and Exchange Commission on September 9, 2010).*

*	Previously filed.

EX-99.(A)(11) 2 dex99a11.htm AMENDED CLASS ACTION COMPLAINT DATED SEPTEMBER 17, 2010 Amended Class Action Complaint dated September 17, 2010

Exhibit (a)(11)

JUDGE JAMES L. ROBART

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON


RHONDA M. MESA, individually and on behalf of all others similarly situated,		No. 2:10-cv-01486-JLR

Plaintiff,		AMENDED COMPLAINT FOR BREACH OF FIDUCIARY DUTY
v.		AMENDED COMPLAINT FOR BREACH OF FIDUCIARY DUTY
ZYMOGENETICS, INC., BRUCE L.A.
CARTER, JAMES A. HARPER, DAVID I.		JURY TRIAL DEMANDED
HIRSH, LARS FRUERGAARD
JORGENSEN, JONATHAN S. LEFF,
DAVID H. MacCALLUM, A. BRUCE
MONTGOMERY, KURT A. NIELSEN,
EDWARD E. PENHOET, DOUGLAS E.
WILLIAMS and BRISTOL-MYERS
SQUIBB COMPANY,

Defendants.

Plaintiff Rhonda M. Mesa ( “Plaintiff”), by and through her attorneys, alleges the following upon information and belief, except as to those allegations pertaining to Plaintiff which are alleged upon personal knowledge:

SUMMARY OF THE ACTION

1. This is a class action on behalf of the shareholders of ZymoGenetics, Inc. (“ZymoGenetics” or the “Company”) against ZymoGenetics and its Board of Directors

AMENDED COMPLAINT-1

(“Board”) arising out of their breaches of fiduciary duty in connection with their efforts to complete the sale of ZymoGenetics to Bristol-Myers Squibb Company (“BMS”) for inadequate consideration and with grossly inadequate disclosure. The Board was aided and abetted in its breaches of fiduciary duty by ZymoGenetics and BMS.

2. On September 7, 2010, ZymoGenetics and BMS announced that they had entered into a definitive Agreement and Plan of Merger dated September 7, 2010 (“Merger Agreement”), whereby BMS would acquire all outstanding shares of ZymoGenetics for $9.75 in cash per share in a transaction valued at approximately $885 million, or $735 million net of cash.

3. Specifically, under the terms of the Merger Agreement, BMS is to commence a cash tender offer to purchase all of the outstanding shares of ZymoGenetics common stock for $9.75 per share in cash (“Tender Offer”) and will acquire any ZymoGenetics shares not purchased in the Tender Offer in a second-step merger at the same price per share paid in the Tender Offer (the “Merger Agreement” together with the “Tender Offer,” the “Proposed Acquisition”).

4. The Tender Offer is conditioned on the tender of at least 56% of the outstanding shares of ZymoGenetics common stock. Simultaneously with the execution of the Merger Agreement, however, ZymoGenetics entered into a Tender and Support Agreement with Novo Nordisk and Warburg Pincus, who together own approximately 36% of the outstanding shares of ZymoGenetics common stock, whereby Novo Nordisk and Warburg Pincus have agreed to tender all of their shares in the Tender Offer, subject only to the ZymoGenetics Board of Director’s (“Board”) continued recommendation of the transaction (“Tender Agreement”). Thus, it is a foregone conclusion that the public shareholders of ZymoGenetics will be stripped of their ownership interest in ZymoGenetics for the inadequate consideration offered in the Proposed Acquisition.

AMENDED COMPLAINT-2

5. BMS commenced the Tender Offer on September 10, 2010 by filing its Tender Offer Statement on Schedule TO (“TO”) with the U.S. Securities and Exchange Commission (“SEC”) and disseminating it to the Company’s public shareholders.

6. On September 15, 2010, ZymoGenetics filed its Recommendation Statement on Form 14D-9 with the SEC (“Recommendation Statement”). In an attempt to convince shareholders to tender their shares for the inadequate consideration offered in the Tender Offer, the Recommendation Statement misstates and/or omits material information regarding the Proposed Acquisition that is essential to the Company’s public shareholders’ ability to make a fully-informed decision on whether to tender their shares in support of the Proposed Acquisition.

7. As described below, both the value to ZymoGenetics shareholders contemplated in the Proposed Acquisition and the process by which defendants propose to consummate the Proposed Acquisition are fundamentally unfair to Plaintiff and the other shareholders of the Company. In pursuing the unlawful plan to facilitate the acquisition of ZymoGenetics by BMS for grossly inadequate consideration, through a flawed process and based upon grossly inadequate disclosures, each of the defendants violated applicable law by directly breaching and/or aiding the other defendants’ breaches of their fiduciary duties of loyalty, due care, independence, good faith and fair dealing.

8. For these reasons and as set forth in detail herein, Plaintiff seeks to enjoin defendants from taking any steps to consummate the Proposed Acquisition or, in the event the Proposed Acquisition is consummated, recover damages resulting from the Individual Defendants’ (defined herein) violations of their fiduciary duties of loyalty, good faith, due care, and full and fair disclosure.

AMENDED COMPLAINT-3

JURISDICTION AND VENUE

9. This Court has jurisdiction over all claims asserted herein pursuant to 28 U.S.C §1331 in that Plaintiff’s claims arise in part under the Constitution and laws of the United States, including the Securities Exchange Act [15 U.S.C. §78aa] and 28 U.S.C. §1331. This Court also has supplemental jurisdiction pursuant to 28 U.S.C. §1367(a).

10. This Court retains general jurisdiction over each named defendant who is a resident of Washington. Additionally, this Court has specific jurisdiction over each named non-resident defendant because these defendants maintain sufficient minimum contacts with Washington to render jurisdiction by this Court permissible under traditional notions of fair play and substantial justice. ZymoGenetics maintains its corporate headquarters and operations in Washington. Defendants’ conduct arose out of Washington and was purposefully directed at Washington. Finally, exercising jurisdiction over the named non-resident individual defendants is reasonable.

11. Venue is proper in this District pursuant to 28 U.S.C. §1391 because one or more of the defendants, including ZymoGenetics, either resides in or maintains executive offices in this District, and a substantial portion of the transactions and wrongs that are the subject of this complaint, occurred in substantial part in this District. Finally, the defendants have received substantial compensation in this District by doing business here and engaging in numerous activities that had an effect in this District.

AMENDED COMPLAINT-4

PARTIES

12. Plaintiff at all times relevant hereto has been and is a shareholder of ZymoGenetics and a citizen of the state of California.

13. Defendant ZymoGenetics is a Washington corporation with its headquarters located at 1201 Eastlake Avenue East, Seattle, Washington. The Company’s stock is publically traded on the NASDAQ exchange under the ticker symbol “ZGEN.” ZymoGenetics is a biopharmaceutical company focused on the development and commercialization of therapeutic proteins for the treatment of human diseases. According to the Company’s quarterly report for the period ended June 20, 2010, filed with the SEC, there were approximately 85.9 million shares of ZymoGenetics stock outstanding as of July 29, 2010.

14. Defendant Bruce L.A. Carter is Chairman of the Board and previously served as the Company’s CEO from April 1998 to January 2009.

15. Defendant James. A. Harper is a member of the Board and has served since July 2004.

16. Defendant David I. Hirsch is a member of the Board and has served since November 2000.

17. Defendant Lars Fruergaard Jørgensen (“Jørgensen”) is a member of the Board and has served since June 2010. Jørgensen is a Senior Vice President at Novo Nordisk A/S (“Novo Nordisk”) which owns approximately 26% of ZymoGenentics’ stock.

18. Defendant Jonathan S. Leff (“Leff”) is a member of the Board and has served since November 2000. Leff is a General Partner of Warburg, Pincus & Co. and a Managing Director of Warburg Pincus LLC (collectively “Warburg Pincus”). Warburg Pincus and its affiliates own approximately 11% of ZymoGenentics’ stock.

AMENDED COMPLAINT-5

19. Defendant David H. MacCallum is a member of the Board and has served since April 2005.

20. Defendant A. Bruce Montgomery, M.D. is a member of the Board and has served since March 2010.

21. Defendant Kurt Anker Nielsen is a member of the Board and has served since June 1997.

22. Defendant Edward E. Penhoet is a member of the Board and has served since May 2000.

23. Defendant Douglas E. Williams has served as a member of the Board and as the Company’s CEO since January 2009.

24. The defendants named in ¶¶ 14 - 23 are sometimes collectively referred to herein as the “Individual Defendants.”

25. BMS is a global biopharmaceutical company, engaged in discovering, developing, and delivering medicines that help patients prevail over serious diseases. BMS is incorporated in Delaware and maintains its principal place of business in New York.

CLASS ACTION ALLEGATIONS

26. Plaintiff brings this action on Plaintiff’s behalf and as a class action on behalf of all holders of ZymoGenetics stock who are being and will be harmed by defendants’ actions described below (the “Class”). Excluded from the Class are defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any defendant.

27. This action is properly maintainable as a class action.

AMENDED COMPLAINT-6

28. The Class is so numerous that joinder of all members is impracticable. There are more than 85.9 million shares of ZymoGenetics common stock outstanding held by thousands of shareholders geographically dispersed across the country.

29. There are questions of law and fact which are common to the Class and which predominate over questions affecting any individual Class member. The common questions include, inter alia, the following:

(a) whether defendants have beached their fiduciary duties of undivided loyalty, independence or due care with respect to Plaintiff and the other members of the Class in connection with the Proposed Acquisition;

(b) whether the Individual Defendants are engaging in self-dealing in connection with the Proposed Acquisition;

(c) whether the Individual Defendants are unjustly enriching themselves and others insiders or affiliates of ZymoGenetics;

(d) whether the Individual Defendants have breached any of their other fiduciary duties to Plaintiff and the other members of the Class in connection with the Proposed Acquisition, including the duties of good faith, diligence, honesty and fair dealing;

(e) whether the defendants, in bad faith and for improper motives, have impeded or erected barriers to discourage other offers for the Company or its assets;

(f) whether Plaintiff and the other members of the Class would suffer irreparable injury were the transactions complained of herein consummated; and

(g) whether the Recommendation Statement misstates and/or omits material information regarding the Proposed Acquisition that is essential to the Company’s shareholders’ ability to make a fully-informed decision on whether to tender their shares in support of the Proposed Acquisition.

AMENDED COMPLAINT-7

30. Plaintiff’s claims are typical of the claims of the other members of the Class and Plaintiff does not have any interests adverse to the Class.

31. Plaintiff is an adequate representative of the Class, has retained competent counsel experienced in litigation of this nature and will fairly and adequately protect the interests of the Class.

32. The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the Class. 33. Plaintiff anticipates that there will be no difficulty in the management of this litigation as a class action. A class action is superior to other available methods for the fair and efficient adjudication of this controversy.

34. Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole.

DEFENDANTS’ FIDUCIARY DUTIES

35. By reason of the Individual Defendants’ positions with the Company as officers and/or directors, said individuals are in a fiduciary relationship with Plaintiff and the other shareholders of ZymoGenetics and owe Plaintiff and the other members of the Class a duty of good faith, fair dealing, loyalty, due care and full, candid and adequate disclosure.

36. Each of the Individual Defendants is required to act in good faith, in the best interests of the Company’s shareholders and with such care, including reasonable inquiry, as

AMENDED COMPLAINT-8

would be expected of an ordinarily prudent person. In a situation were the directors of a publicly traded company undertake a transaction that may result in a change in corporate control (particularly when it involves a decision to eliminate the shareholders’ equity investment in a company), applicable law requires the directors to take all steps to maximize the value shareholders will receive rather than use a change of control to benefit themselves. To diligently comply with this duty, the directors of a corporation may not take any action that: adversely affects the value provided to the corporation’s shareholders; contractually prohibits them from complying with or carrying out their fiduciary duties; discourages or inhibits alternative offers to purchase control of the corporation or its assets; or will otherwise adversely affect their duty to search and secure the best value reasonably available under the circumstances for the corporation’s shareholders.

37. As described herein, the Individual Defendants have breached their fiduciary duties by taking actions designed to deter higher offers from other potential acquirers so as to ensure that certain defendants receive hundreds of thousands of dollars in personal benefits at the expense of ZymoGenetics’s shareholders. Defendants cannot possibly fulfill their fiduciary obligations after implementing provisions which disable them from maximizing shareholder value. The Individual Defendants have breached their fiduciary obligation to act reasonably.

SUBSTANTIVE ALLEGATIONS

38. ZymoGenetics is a biopharmaceutical company focused on the development and commercialization of therapeutic proteins for the treatment of human diseases. The Company’s product includes RECOTHROM® for use as a topical hemostat to control moderate bleeding during surgical procedures. Its immunology product candidates include PEG-IFN-lambda, a Phase II clinical trial product for the treatment of hepatitis C virus infection; IL-21, a Phase II clinical trial product as a treatment for metastatic melanoma; and IL-31 mAb, a preclinical

AMENDED COMPLAINT-9

stage product as a treatment for atopic dermatitis. The Company’s out-licensed product candidates include Atacicept, a soluble form of the TACI receptor; and IL-21 monoclonal antibody, a human monoclonal antibody. Its other out-licensed product candidates include rFactor XIII for the treatment of bleeding disorders; Fibroblast growth factor-18 for healing cartilage damaged by injury or disease; IL-17 receptor C soluble receptor; IL-20 monoclonal antibody; and IL-22 receptor subunit alpha monoclonal antibody for the treatment of psoriasis. ZymoGenetics also offers out-licensed commercial products comprising Novolin and insulin analogs for diabetes; NovoSeven for the treatment of hemophilia; Regranex for non-healing diabetic ulcers; GEM 21S for periodontal disease; GlucaGen for hypoglycemia and gastrointestinal motility inhibition; Cleactor for treatment of myocardial infarction; and Augment Bone Graft.

The Tender Offer

39. On September 7, 2010, ZymoGenentics and BMS issued a joint press release announcing they had entered into the Merger Agreement whereby BMS, in a transaction valued at approximately $885 million, or $735 million net of cash, will acquire all the outstanding shares of the Company.

40. Specifically, the Merger Agreement provides that BMS will make a Tender Offer for all of the outstanding shares of ZymoGenentics common stock in exchange for $9.75 in cash for each share of ZymoGenentics common stock. Upon successful completion of the Tender Offer and closing of the Proposed Acquisition, ZymoGenentics will become a wholly owned subsidiary of BMS.

41. The joint press release notes in relevant part:

(NEW YORK, NY and SEATTLE, WA, September 7, 2010) - Bristol-Myers Squibb Company (NYSE:BMY) and ZymoGenetics, Inc. (NASDAQ: ZGEN) announced today that the companies have signed a definitive agreement

AMENDED COMPLAINT-10

providing for the acquisition of ZymoGenetics by Bristol-Myers Squibb, for $9.75 per share in cash. The transaction, with an aggregate purchase price of approximately $885 million, or approximately $735 million net of cash acquired, has been unanimously approved by the boards of directors of both companies. The board of directors of ZymoGenetics intends to recommend that ZymoGenetics’ shareholders tender their shares in the tender offer. In addition, shareholders holding approximately 37% of the outstanding shares of ZymoGenetics’ common stock have entered into agreements with Bristol-Myers Squibb to support the transaction and to tender their shares in the offer.

“The acquisition of ZymoGenetics brings us full ownership of a promising investigational biologic that strengthens our very diversified Hepatitis C portfolio. Building on our leadership in virology, we are developing a strong portfolio to help patients with Hepatitis C,” said Lamberto Andreotti, chief executive officer, Bristol-Myers Squibb. “In addition, ZymoGenetics brings proven capabilities with therapeutic proteins and revenue from a marketed specialty surgical biologic. This acquisition is another example of our strategic, targeted approach to business development.”

“By joining forces with Bristol-Myers Squibb, we believe we will enhance the long-term potential of ZymoGenetics’ portfolio of assets, while providing a compelling valuation for our shareholders,” said Douglas E. Williams, Ph.D., chief executive officer of ZymoGenetics. “Our collaboration with Bristol-Myers Squibb in the development of PEG-Interferon lambda has been extremely positive and it has given us an opportunity to fully appreciate their capabilities. We believe that this transaction will maximize the potential for our products and product candidates to make a meaningful difference for patients in need.”

Bristol-Myers Squibb gains the following as a result of the acquisition:

•

Full ownership of pegylated-interferon lambda, a novel interferon in Phase IIb development for the treatment of Hepatitis C infection, which, if approved, could be an important contributor to Bristol-Myers Squibb’s future growth. The companies have collaborated on the development of pegylated-interferon lambda since January 2009. Four-week and 12-week results from a Phase IIa study will be presented at the American Association for the Study of Liver Diseases meeting later this year.

•

RECOTHROM^®, a recombinant thrombin approved by the U.S. Food and Drug Administration for use as a topical hemostat to control non-arterial bleeding during surgical procedures.

•

IL-21 protein, a cytokine currently being tested in an open-label, Phase II clinical study as a potential immunotherapy treatment for metastatic melanoma.

•

An earlier-stage pipeline of six biologic drug candidates, including an anti-IL-31 antibody, currently in pre-clinical development for atopic dermatitis.

•

Potential milestone and royalty payments from six partnered programs in various stages of clinical development by EMD Serono, Inc., an affiliate of Merck KGaA, and Novo Nordisk.

AMENDED COMPLAINT-11

“ZymoGenetics is a leader in advancing novel biologics, particularly genomics-based therapies,” said Elliott Sigal, M.D., Ph.D., executive vice president and chief scientific officer, Bristol-Myers Squibb. “We expect ZymoGenetics’ pipeline and biologics capabilities to complement and enhance our existing efforts in Hepatitis C, oncology and immunoscience.”

Initially, the transaction is expected to be modestly dilutive to earnings per share (EPS) for Bristol-Myers Squibb. In 2010, the transaction is expected to be dilutive to EPS by approximately $0.03. In 2011, the transaction is expected to be dilutive to EPS by approximately $0.07.

Under the terms of the definitive agreement, Bristol-Myers Squibb will commence a cash tender offer on or about September 9, 2010, to purchase all of the outstanding shares of ZymoGenetics’ common stock for $9.75 per share. The closing of the tender offer is subject to customary terms and conditions, including the tender of a number of shares which is equal to or greater than 48,282,192 shares (which represents approximately 56% of the outstanding shares as of August 31, 2010, which represents a majority of the shares on a fully-diluted basis, excluding certain shares underlying derivative securities that are significantly out-of-the-money), and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The agreement also provides for the parties to effect, subject to customary conditions, a merger to be completed following the completion of the tender offer which would result in all shares not tendered in the tender offer being converted into the right to receive $9.75 per share in cash. The merger agreement contains a provision under which ZymoGenetics has agreed not to solicit any competing offers for the company. Bristol-Myers Squibb will finance the acquisition from its existing cash resources. The companies expect the tender offer to close approximately thirty days after commencement of the tender offer.

42. Rather than permitting the Company’s shares to continue to trade freely and allowing its public shareholders to reap the benefits of the Company’s increasingly positive prospects and future financial success, the Individual Defendants acted for their own benefit and the benefit of BMS, and to the detriment of the Company’s public shareholders, by entering into the Proposed Acquisition. The Individual Defendants’ effectively capped ZymoGenetic’s price at a time when the Company’s stock is poised to grow. ZymoGenetics’ pipeline includes a “potential blockbuster” drug, PEG-IFN-lambda, which shows great promise in a market worth $4 billion in 2009 and is projected to grow at a compound annual growth rate of 9.8% to reach $8.5 billion by 2016. In addition to other promising drugs in the pipeline and products which the Company out-licenses, ZymoGenetics is currently selling RECOTHROM®,

AMENDED COMPLAINT-12

a compound that can help control bleeding in hospital settings, from which ZymoGenetics derived $11.9 million in the second quarter of 2010. If defendants are able to consummate the Proposed Acquisition, the Company’s public shareholders will not be able to share in the future success of ZymoGenetics.

The Preclusive Deal Protection Devices

43. In addition to agreeing to an inadequate price in the Proposed Acquisition, the Board has further breached its fiduciary duties by agreeing to preclusive deal protection devices in connection with the Merger Agreement the Company entered into with BMS. These provisions, which collectively preclude any competing offers for the Company, include: (i) the Tender Agreement whereby shareholders holding approximately 36% of the outstanding shares of ZymoGenetics’ common stock have agreed to tender their shares in the Tender Offer; (ii) a no-solicitation provision that precludes the Company from providing confidential Company information to, or even communicating with, potential competing bidders except under extremely limited circumstances; (iii) a matching rights provision that allows BMS three business days to match any competing superior proposal; (iv) a termination fee provision which obligates the Company to pay BMS $28.7 million in the event the Proposed Acquisition is terminated in favor of a superior proposal, or $57.4 million in the event the Proposed Acquisition is terminated by the Company for other reasons; and (v) a Top-Up Option which allows BMS to acquire up to 90% plus one share and pursue a short form merger under Chapter 23B.11 of the Washington Business Corporations Action without any requirement of a shareholder vote.

44. The Individual Defendants are attempting to circumvent the requirement of a shareholder vote through the Top-Up Option, which ZymoGenetics’s Board granted to BMS.

AMENDED COMPLAINT-13

The Top-Up Option allows BMS to acquire up to 90% plus one share and pursue a short form merger under Chapter 23B.11 of the Washington Business Corporations Action. The Company has approximately 150 million shares authorized, and 85.8 million shares outstanding, so BMS can purchase over 60 million shares to effectuate the transaction. In conjunction with the 36% of the outstanding shares committed to the Tender Offer by Novo Nordisk and Warburg Pincus pursuant to the Tender Agreement, the Top-Up Option will allow defendants help to deliver the Company to BMS.

45. Specifically, Section 2.2 of the Merger Agreement (“Section 2.4”) provides for a “Top-Up Option” as follows:

Section 2.2 Top-Up Option.

(a) The Company grants to Merger Sub an irrevocable option (the “Top-Up Option”), exercisable only upon the terms and conditions set forth in this Section 2.2, to purchase from the Company up to the number of newly-issued shares of Company Common Stock equal to the lesser of (i) the number of shares of Company Common Stock that, when added to the number of shares of Company Common Stock owned by Merger Sub at the time of exercise of the Top-Up Option, constitutes one share more than 90% of the sum of (x) the number of shares of Company Common Stock outstanding immediately after the issuance of all shares of Company Common Stock subject to the Top-Up Option plus (y) all shares of Company Common Stock which the Company may be required to issue as of such date upon the vesting (including vesting solely as a result of the consummation of the Offer), conversion or exercise of all Company Options, the Company Warrant and other derivative securities, including warrants, options, convertible or exchangeable securities or other rights to acquire Company Common Stock, regardless of the conversion or exercise price or other terms and conditions thereof, or (ii) the aggregate number of shares of Company Common Stock that the Company is authorized to issue under the Company Articles of Incorporation but that are not issued and outstanding (and are not subscribed for or otherwise committed to be issued or reserved for issuance) at the time of exercise of the Top-Up Option.

46. Accordingly, Plaintiff seeks injunctive and other equitable relief to prevent the irreparable injury that Company shareholders will continue to suffer absent judicial intervention.

AMENDED COMPLAINT-14

The Materially Misleading and/or Incomplete Disclosure Documents

47. On September 15, 2010, ZymoGenentics filed its Recommendation Statement in connection with the Tender Offer with the SEC.

48. The Recommendation Statement fails to provide the Company’s shareholders with material information and/or provides them with materially misleading information thereby rendering the shareholders unable to make an informed decision on whether to tender their shares in support of the Proposed Acquisition. In particular, the Recommendation Statement is deficient and should provide, inter alia, the following:

(a) the criteria used by Goldman Sachs in the Discounted Cash Flow Analysis for selecting discount rates ranging from 10% to 14% based on weighted average cost of capital and perpetuity growth rates ranging from 2% to 3% for ZymoGenetics. In addition, the definition of “free cash flows” used in this analysis;

(b) a description of whether the Discounted Cash Flow Analysis included consideration of stock-based compensation;

(d) a description of the criteria used by Goldman Sachs for selecting price to net income per share multiples ranging from 18.0x to 22.0x and a discount rate of 10% to 14% based on cost of equity in its Illustrative Present Value of Future Share Price Analysis and description as to why Goldman Sachs selected 2019 forecasted net income in the same analysis;

(e) a description for the reason that Goldman Sachs used the same discount rate based on weighted average cost of capital and cost of equity in its analyses;

AMENDED COMPLAINT-15

(f) a description of the criteria for the companies selected and premiums observed by Goldman Sachs for each company in its Selected Transactions Analysis; and

(g) a description of whether Goldman Sachs conducted any market approach analysis to evaluate the Proposed Acquisition (i.e. comparable companies analysis). If not, an explanation for its decision not to conduct any market approach analysis.

(h) a description of whether Goldman Sachs conducted any analysis to evaluate the Proposed Acquisition on the basis of the per share Tender Offer price relative to revenue, EBITDA, or price/earnings multiples. If not, an explanation for the decision not to conduct any multiples analysis.

49. The Recommendation Statement also fails to disclose material information concerning Goldman Sachs. In particular, the Recommendation Statement fails to disclose the specific services provided by Goldman Sachs to BMS, Novo Nordisk, or Warburg Pincus or its related entities in the past five years as well as the fees received for such services. It is material for shareholders to be informed of any financial and economic interests Goldman Sachs may have in the Proposed Acquisition or in the parties involved that could be perceived or create a conflict of interest.

50. The Recommendations Statement should also disclose additional information related to the Top-Up Option, including number of authorized and outstanding common shares to date and the trigger amount of shares necessary for BMS to be able to exercise it.

51. Accordingly, Plaintiff seeks injunctive and other equitable relief to prevent the irreparable injury that Company shareholders will continue to suffer absent judicial intervention.

AMENDED COMPLAINT-16

FIRST CAUSE OF ACTION

Claim for Violations of Section 14(d)(4) and 14(e) of the Exchange

Against ZymoGenetics and the Individual Defendants

52. Plaintiff incorporates by reference and reiterates each and every allegation contained above, as though fully set forth herein.

53. Plaintiff incorporates each and every allegation set forth above as if fully set forth herein.

54. ZymoGenetics and the Individual Defendants have caused the Recommendation Statement to be issued with the intention of soliciting shareholder support of the Proposed Acquisition.

55. Sections 14(d)(4) and 14(e) of the Exchange Act require full and complete disclosure in connection with tender offers. Specifically, Section 14(e) provides that:

It shall be unlawful for any person to make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or to engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any tender offer or request or invitation for tenders, or any solicitation of security holders in opposition to or in favor of any such offer, request, or invitation. The Commission shall, for the purposes of this subsection, by rules and regulations define, and prescribe means reasonably designed to prevent, such acts and practices as are fraudulent, deceptive, or manipulative.

56. The Recommendation Statement violates Sections 14(d)(4) and 14(e) because it omits material facts, including those set forth above. Moreover, in the exercise of reasonable care, ZymoGenetics and the Individual Defendants should have known that the Recommendation Statement is materially misleading and omits material facts that are necessary to render them non-misleading.

57. The misrepresentations and omissions in the Recommendation Statement are material to Plaintiff and the Class, and Plaintiff and the Class will be deprived of their entitlement to make a fully informed decision if such misrepresentations and omissions are not corrected prior to the expiration of the Tender Offer.

AMENDED COMPLAINT-17

SECOND CAUSE OF ACTION

Claim for Breach of Fiduciary Duty Against the Individual Defendants

58. Plaintiff incorporates by reference and reiterates each and every allegation contained above, as though fully set forth herein.

59. The Individual Defendants have knowingly and recklessly and in bad faith violated their fiduciary duties of care, loyalty, good faith, candor and independence to the shareholders of ZymoGenetics and have acted to put their personal interests ahead of the interests of ZymoGenetics’s shareholders.

60. The Individual Defendants have knowingly or recklessly and in bad faith violated their fiduciary duties by entering into a transaction with ZymoGenetics without regard to the fairness of the transaction to ZymoGenetics’s shareholders and by failing to disclose all material information concerning the Proposed Acquisition to such shareholders.

61. As demonstrated by the allegations above, the Individual Defendants knowingly or recklessly failed to exercise the care required and breached their duties of loyalty, good faith, candor and independence owed to the shareholders of ZymoGenetics because, among other reasons:

(a) They failed to take steps to maximize the value of ZymoGenetics to its public shareholders and they took steps to subvert the sale process, to cap the price of ZymoGenetics’s stock and to give defendants an unfair advantage by, among other things, failing to solicit other potential acquirers or alternative transactions;

(b) They failed to properly value ZymoGenetics;

AMENDED COMPLAINT-18

(c) They failed to disclose all material information that would permit ZymoGenetics’s stockholders to make an informed decision on whether to tender their shares in support of the Proposed Acquisition; and

(d) They agreed to implement deal protection devices which were designed to and are favoring BMS to the detriment of the Class.

62. Because the Individual Defendants dominate and control the business and corporate affairs of ZymoGenetics, and are in possession of private corporate information concerning ZymoGenetics’s assets, business and future prospects, there exists an imbalance and disparity of knowledge and economic power between them and the public shareholders of ZymoGenetics which makes it inherently unfair for them to pursue any proposed transaction wherein they will reap disproportionate benefits to the exclusion of maximizing stockholder value.

63. As a result of the Individual Defendants’ unlawful actions, Plaintiff and the other members of the Class will be irreparably harmed in that they will not receive the benefit of a fair sales process. Unless the Proposed Acquisition is enjoined by the Court, the Individual Defendants will continue to knowingly or recklessly and in bad faith breach their fiduciary duties owed to Plaintiff and the members of the Class, will not engage in arm’s-length negotiations on the Proposed Acquisition terms, and will not supply to ZymoGenetics’s stockholders sufficient information to enable them to make an informed decision on whether to tender their shares in support of the Proposed Acquisition, all to the irreparable harm of the members of the Class.

64. Plaintiff and the members of the Class have an inadequate remedy at law. Only through the exercise of this Court’s equitable powers can Plaintiff and the Class be fully protected from the immediate and irreparable injury which defendants’ actions threaten to inflict.

AMENDED COMPLAINT-19

THIRD CAUSE OF ACTION

Claim for Aiding and Abetting Breaches of

Fiduciary Duty Against ZymoGenetics and BMS

65. Plaintiff incorporates by reference and reiterates each and every allegation contained above, as though fully set forth herein.

66. The Individual Defendants owed to Plaintiff and the members of the Class certain fiduciary duties as fully set out herein.

67. By committing the acts alleged herein, the Individual Defendants breached their fiduciary duties owed to Plaintiff and the members of the Class.

68. ZymoGenetics and BMS colluded in or aided and abetted the Individual Defendants’ breaches of fiduciary duties, and were active and knowing participants in the breaches of fiduciary duties owed to Plaintiff and the members of the Class. Plaintiff and the members of the Class shall be irreparably injured as a direct and proximate result of the aforementioned acts.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff demands injunctive relief in Plaintiff’s favor and in favor of the Class and against defendants as follows:

A. Declaring that this action is properly maintainable as a class action;

B. Declaring and decreeing that the Merger Agreement was entered into in breach of the fiduciary duties of defendants and is therefore unlawful and unenforceable;

C. Enjoining defendants, their agents, counsel, employees and all persons acting in concert with them from consummating the Proposed Acquisition, unless and until the Company adopts and implements a fair sales procedure or process that does not advantage any particular bidder and is designed to maximize shareholder value;

AMENDED COMPLAINT-20

D. Rescinding, to the extent already implemented, the Proposed Acquisition or any of the terms thereof;

E. Awarding Plaintiff the costs and disbursements of this action, including reasonable attorneys’ and experts’ fees; and

F. Granting such other and further relief as this Court may deem just and proper.

Dated: September 17, 2010


BRESKIN JOHNSON TOWNSEND PLLC

By:		/s/ Roger M. Townsend
1111 3^rd Avenue, Suite 2230 Seattle, Washington 98101 Tel: 206-652-8660 Fax: 206-852-8290 Email: rtownsend@bjtlegal.com

FARUQI & FARUQI, LLP
David H. Leventhal (pro hac vice pending) 369 Lexington Avenue, 10^th Floor New York, NY 10017 Tel: 212-983-9330 Fax: 212-983-9331 Email: dleventhal@faruqilaw.com

Attorneys for Plaintiff

AMENDED COMPLAINT-21

EX-99.(A)(12) 3 dex99a12.htm AMENDED CLASS ACTION COMPLAINT DATED SEPTEMBER 21, 2010 Amended Class Action Complaint dated September 21, 2010

Exhibit (a)(12)

HONORABLE MARY YU

SUPERIOR COURT OF WASHINGTON IN AND FOR KING COUNTY


WILLIAM KRIVAN, Individually and on Behalf of All Others Similarly Situated,
		No. 10-2-32389-9 SEA
Plaintiff,
		CLASS ACTION
v.
		AMENDED COMPLAINT FOR BREACH OF FIDUCIARY DUTY
ZYMOGENETICS, INC., BRUCE L.A. CARTER, JAMES A. HARPER, DAVID I. HIRSH, LARS FRUERGAARD JORGENSEN, JONATHAN S. LEFF, DAVID H. MacCALLUM, A. BRUCE MONTGOMERY, KURT ANKER NIELSEN, EDWARD E. PENHOET, DOUGLAS E. WILLIAMS and BRISTOL-MYERS SQUIBB COMPANY,
Defendants.

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY

010203-11 395706 v1

I. SUMMARY OF THE ACTION

1. This is a class action on behalf of the public stockholders of ZymoGenetics, Inc. (“Zymo” or the “Company”) against Zymo and its Board of Directors (the “Board”) arising out of their breaches of fiduciary duty in connection with their efforts to complete the sale of Zymo to Bristol-Myers Squib Company (“Bristol”) via an unfair sales process and at an unfair price (the “Proposed Acquisition”). The Board was aided and abetted in its breaches of fiduciary duty by Zymo and Bristol.

2. Zymo is a biopharmaceutical company that focuses on the development and commercialization of therapeutic proteins for the treatment of human diseases.

3. Zymo and Bristol have a cozy, long-term business relationship that provided Bristol with an inside track to acquire the Company. The companies have been collaborating since January 2009 on development of pegylated-interferon lambda, a treatment for Hepatitis C. By purchasing Zymo, Bristol will be able to gain full control of development of the drug, which will put Bristol in position to become the primary player in the treatment of Hepatitis C in the near future. The acquisition of Zymo will also permit Bristol to save $265 million on its initial purchase of the drug. In addition, Bristol will secure the rest of Zymo’s valuable pipeline drugs, which include treatments for metastatic melanoma and atopic dermatitis, as well as potential royalty payments from partnered programs with EMD Serono, Inc. Moreover, Bristol secures the value of Zymo’s RECOTHROM, a drug currently being marketed for use as a topical hemostat to control non-arterial bleeding during surgical procedures. As one analyst put it, after paying for the Hepatitis C drug, Bristol “was basically able to get the rest of the company for free, based on the price they paid.” Bristol is also using $150 million of Zymo’s own cash to finance the Proposed Acquisition.

4. The sales process was driven in part by the desire for liquidity by Novo Nordisk (“Novo”), the Company’s largest shareholder, which holds 26% of the Company’s shares. Bristol secured Novo’s agreement to tender all its shares into the Proposed Acquisition, which is

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 1

010203-11 395706 v1

taking the form of a tender offer (the “Tender Offer”). In addition to Novo, the Company’s second largest shareholder, Warburg Pincus Equity Partners L.P. (“Warburg”), which holds 11% of the Company’s shares, has committed to tender its shares into the Tender Offer, meaning that 36% of the Company’s shares are already locked up.¹ Bristol has stated its intention to close the Tender Offer and consummate the Proposed Acquisition if it gets tender of only 58% of the Company’s shares, or only an additional 22% of the Company’s shares. Thus, the Proposed Acquisition is a virtual fait accompli, and, absent intervention of the Court, the Company’s minority shareholders will have little or no say in this contest for corporate control.

5. On September 10 2010, Bristol commenced the Tender Offer, which is scheduled to expire on October 7, 2010. On September 15, 2010, defendants filed with the Securities and Exchange Commission (“SEC”) the Solicitation and Recommendation Statement on Schedule 14D-9 (the “14D-9”). The 14D-9 fails to fully and fairly disclose certain material information concerning the Proposed Acquisition including, among other things: (i) the sales process for the Company; (ii) conflicts of interest that burdened the Board, its advisors and Company management during the sales process; (iii) the data and inputs underlying the analyses that purports to support the so-called fairness opinion delivered to the Board by Goldman Sachs & Co. (“Goldman”); and (iv) the stand-alone prospects for the Company.

6. In pursuing the unlawful plan to sell Zymo pursuant to a defective sales process and without full and fair disclosure of all material information, the defendants have breached their fiduciary duties of loyalty, due care, independence, candor, good faith and fair dealing, and/or have aided and abetted such breaches. Instead of acting in the best interests of Zymo’s shareholders, defendants spent a substantial effort tailoring the Proposed Acquisition to meet the specific needs of Bristol.

¹	Novo and Warburg collectively hold three seats on the Board, and thus have substantial control over the decisions of the Board.

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 2

010203-11 395706 v1

7. Because defendants dominate and control the business and corporate affairs of Zymo and are in possession of private corporate information concerning Zymo’s assets, business and future prospects, there exists an imbalance and disparity of knowledge and economic power between them and the public shareholders of Zymo which makes it inherently unfair for them to structure and pursue the proposed transaction.

8. Immediate judicial intervention is warranted here to rectify existing and future irreparable harm to the Company’s shareholders. Plaintiff, on behalf of the Class, seeks only to level the playing field and to ensure that if shareholders are to be ultimately stripped of their respective equity interests via the Proposed Acquisition, that the Proposed Acquisition is conducted in a manner that is not overtly improper, unfair and unlawful. Plaintiff seeks to enjoin the Proposed Acquisition or, alternatively, rescind the Proposed Acquisition in the event it is consummated.

II. JURISDICTION AND VENUE

9. This Court has jurisdiction pursuant to Rev. Code Wash. § 2.08.010.

10. This Court has jurisdiction over defendants because Zymo is incorporated in Washington and headquartered in Seattle, Washington, at 1201 Eastlake Avenue East, Seattle, Washington 98102-3702.

11. Venue is proper in this County pursuant to Rev. Code Wash. § 4.12.025(1) in that Zymo transacts business in this County.

III. PARTIES

12. Plaintiff William Krivan at all times relevant hereto has been and is a stockholder of Zymo.

13. Defendant Zymo is a Washington corporation. Zymo is a biopharmaceutical company that focuses on the development and commercialization of therapeutic proteins for the treatment of human diseases.

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 3

010203-11 395706 v1

14. Defendant Bruce L.A. Carter (“Carter”) is Chairman of the Board and a former Chief Executive Officer (“CEO”) of the Company.

15. Defendant James A. Harper (“Harper”) is a member of Zymo’s Board of Directors.

16. Defendant David I. Hirsh (“Hirsh”) is a member of Zymo’s Board of Directors.

17. Defendant Lars Fruergaard Jorgensen (“Jorgensen”) is a member of Zymo’s Board of Directors. Jorgensen is affiliated with Novo, and serves as Novo’s representative on the Board. Novo owns 26% of the Company’s shares, and has committed to tender its shares into the Tender Offer.

18. Defendant Jonathan S. Leff (“Leff”) is a member of Zymo’s Board of Directors. Leff is an affiliate of Warburg, which owns 11% of the Company’s stock and has committed to tender its shares into the Tender Offer.

19. Defendant David H. MacCallum (“MacCallum”) is a member of Zymo’s Board of Directors.

20. Defendant A. Bruce Montgomery (“Montgomery”) is a member of Zymo’s Board of Directors.

21. Defendant Kurt Anker Nielsen (“Nielsen”) is a member of Zymo’s Board of Directors. Nielsen is affiliated with Novo, and serves as Novo’s representative on the Board. Novo owns 26% of the Company’s shares, and has committed to tender its shares into the Tender Offer.

22. Defendant Edward E. Penhoet (“Penhoet”) is a member of Zymo’s Board of Directors.

23. Defendant Douglas E. Williams (“Williams”) is the Company’s CEO and a member of its Board of Directors.

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 4

010203-11 395706 v1

24. Defendant Bristol is a global biopharmaceutical company engaged in discovery, developing and delivering medicines that help patients prevail over serious diseases. Bristol is headquartered in New York, and incorporated in Delaware.

25. The defendants named in ¶¶ 14-23 are sometimes collectively referred to herein as the “Individual Defendants.”

IV. CLASS ACTION ALLEGATIONS

26. Plaintiff brings this action individually and as a class action on behalf of all holders of Zymo stock who are being and will be harmed by defendants’ actions described below (the “Class”). Excluded from the Class are defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any defendant.

27. This action is properly maintainable as a class action.

28. The Class is so numerous that joinder of all members is impracticable. There are more than 85 million shares of Zymo common stock outstanding held by thousands of shareholders geographically dispersed across the country.

(a) whether the Individual Defendants have breached their fiduciary duties of undivided loyalty, independence or due care with respect to plaintiff and the other members of the Class in connection with the Proposed Acquisition;

(b) whether defendants are engaging in self-dealing in connection with the Proposed Acquisition;

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 5

010203-11 395706 v1

(d) whether the Individual Defendants have breached any of their other fiduciary duties to plaintiff and the other members of the Class in connection with the Proposed Acquisition, including the duties of good faith, diligence, honesty and fair dealing;

(e) whether the defendants, in bad faith and for improper motives, have impeded or erected barriers to discourage other offers for the Company or its assets; and

(f) whether plaintiff and the other members of the Class would suffer irreparable injury were the transactions complained of herein consummated.

30. Plaintiff’s claims are typical of the claims of the other members of the Class and plaintiff does not have any interests adverse to the Class.

31. Plaintiff is an adequate representative of the Class, has retained competent counsel experienced in litigation of this nature and will fairly and adequately protect the interests of the Class.

33. Plaintiff anticipates that there will be no difficulty in the management of this litigation as a class action. A class action is superior to other available methods for the fair and efficient adjudication of this controversy.

V. DEFENDANTS’ FIDUCIARY DUTIES

35. By reason of the Individual Defendants’ positions with the Company as officers and/or directors, said individuals are in a fiduciary relationship with plaintiff and the other public stockholders of Zymo and owe plaintiff and the other members of the Class a duty of highest good faith, fair dealing, loyalty, due care and full, candid and adequate disclosure.

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 6

010203-11 395706 v1

36. Each of the Individual Defendants is required to act in good faith, in the best interests of the Company’s shareholders and with such care, including reasonable inquiry, as would be expected of an ordinarily prudent person. In a situation where the directors of a publicly traded company undertake a transaction that may result in a change in corporate control (particularly when it involves a decision to eliminate the shareholders’ equity investment in a company), applicable law requires the directors to take all steps to maximize the value shareholders will receive rather than use a change of control to benefit themselves. To diligently comply with this duty, the directors of a corporation may not take any action that adversely affects the value provided to the corporation’s shareholders, contractually prohibits them from complying with or carrying out their fiduciary duties, discourages or inhibits alternative offers to purchase control of the corporation or its assets, or will otherwise adversely affect their duty to search and secure the best value reasonably available under the circumstances for the corporation’s shareholders.

37. As described herein, the Individual Defendants have breached their fiduciary duties by taking actions designed to deter higher offers from other potential acquirers so as to ensure that certain defendants receive hundreds of thousands of dollars in personal benefits at the expense of Zymo’s shareholders. Defendants cannot possibly fulfill their fiduciary obligations after implementing provisions which disable them from maximizing shareholder value. The Individual Defendants have breached their fiduciary obligation to act reasonably.

VI. FACTUAL ALLEGATIONS

38. Zymo is a biopharmaceutical company that focuses on the development and commercialization of therapeutic proteins for the treatment of human diseases. It was incorporated in the state of Washington in June 1981 and operated independently until it was acquired in 1988 by Novo. Eventually, the Company became independent from Novo and completed its initial public offering in February 2002. Novo currently holds on to approximately 26.6% of the Company’s shares. Novo also is a party to an option and license agreement with

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 7

010203-11 395706 v1

Zymo pursuant to which Novo is responsible for all development activities and obligated to make payments upon the achievement of predefined development milestones for certain of the Company’s product candidates and to pay royalties on sales of any resulting products. Novo paid Zymo the following in 2009, 2008 and 2007, respectively: (1) $11 million; (2) 7.32 million; and (3) $14.76 million.

39. In or around the first half of 2008, Zymo received indications of interest from several parties, including Novo and Bristol, regarding a potential acquisition of the Company.

40. In or around fall of 2008, Bristol changed its mind, and indicated it was interested in entering into a partnership agreement with respect to the Company’s leading drug Pegylated Interferon-lambda (“PEG-IFN-lambda”), a drug for the treatment of Hepatitis C, instead. The Company agreed to enter into a collaboration agreement with Bristol in January 2009 (the “Collaboration Agreement”). Though the Company had been discussing a potential partnership with several other parties before and during this time, the 14D-9 does not disclose why the Company selected Bristol.

41. Pursuant to the Collaboration Agreement, Bristol is obligated to pay Zymo cash payments based on, among other things, development, regulatory and sales milestones for PEG-IFN-lambda. To date, Zymo has received a total of approximately $200.0 million from Bristol pursuant to the Collaboration Agreement, including $105.0 million in license fees and two milestone payments in the amount of $95 million related to the initiation of Phase 2 clinical trials.

42. Zymo stands to receive, in the future, additional payments up to $335 million based on pre-defined development and regulatory milestones for Hepatitis C, up to $287 million in development and regulatory milestones for other potential indications, up to $285 million based on pre-defined annual sales milestones, and additional amounts pursuant to its profit sharing and co-promotion rights in the United States and right to royalties on sales outside of the United States.

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 8

010203-11 395706 v1

43. PEG-IFN-lambda has commenced its Phase 2B clinical trial, and results of that trial are expected to be available in January 2011. Bristol is responsible for all future manufacturing of PEG-IFN-lambda, including product for Phase 3 clinical trials and commercial sale.

44. Unfortunately, the Company’s shareholders will not see any of this future value, because defendants ensured that the Company and PEG-IFN-lambda would be sold to Bristol pursuant to the desire of Novo and Warburg, who together with Novo own approximately 36% of the Company’s shares.

45. The process that led directly to the unfair Proposed Acquisition began on or around October 2009. At that time, Carter, the Company’s Chairman of the Board, contacted Dr. Jeremy Levin, Bristol’s Senior Vice President to inquire as to Bristol’s interest in acquiring all or some portion of the Warburg’s shares. There is no disclosure in the 14D-9 concerning why Carter, who as the Company’s Chairman of the Board and ostensibly a fiduciary of all shareholders, contacted Bristol on behalf of Warburg, whose interests are not aligned with shareholders.

46. Warburg’s desire for liquidity started the ball rolling on the Proposed Acquisition. Less than a year later, the lock-up agreements that previously precluded Novo and Warburg from selling or transferring any shares of Zymo’s common stock expired on March 8, 2010. On May 3, 2010, Bristol contacted Carter to inquire as to whether Zymo would be willing to sell itself to Bristol. A few days later, Bristol inquired as to whether Novo would be interested in relinquishing their shares in the Company.

47. Pressured by Novo and Warburg’s desire for liquidity, a sale of the Company then became inevitable. Inexplicably, however, the Board abandoned its duty to maximize shareholder value and decided not to contact any other bidders who may have been willing to pay more, and catered the process exclusively to Bristol.

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 9

010203-11 395706 v1

48. On September 7, 2010, defendants announced the Proposed Acquisition in a press release entitled “Bristol-Myers Squibb to Acquire ZymoGenetics.” The press release read, in relevant part:

Bristol-Myers Squibb Company and ZymoGenetics, Inc. announced today that the companies have signed a definitive agreement providing for the acquisition of ZymoGenetics by Bristol-Myers Squibb, for $9.75 per share in cash. The transaction, with an aggregate purchase price of approximately $885 million, or approximately $735 million net of cash acquired, has been unanimously approved by the boards of directors of both companies. The board of directors of ZymoGenetics intends to recommend that ZymoGenetics’ shareholders tender their shares in the tender offer. In addition, shareholders holding approximately 37% of the outstanding shares of ZymoGenetics’ common stock have entered into agreements with Bristol-Myers Squibb to support the transaction and to tender their shares in the offer.

Bristol-Myers Squibb gains the following as a result of the acquisition:

•

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 10

010203-11 395706 v1

•

RECOTHROM®, a recombinant thrombin approved by the U.S. Food and Drug Administration for use as a topical hemostat to control non-arterial bleeding during surgical procedures.

•

IL-21 protein, a cytokine currently being tested in an open-label, Phase II clinical study as a potential immunotherapy treatment for metastatic melanoma.

•

An earlier-stage pipeline of six biologic drug candidates, including an anti-IL-31 antibody, currently in pre-clinical development for atopic dermatitis.

•

Potential milestone and royalty payments from six partnered programs in various stages of clinical development by EMD Serono, Inc., an affiliate of Merck KGaA, and Novo Nordisk.

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 11

010203-11 395706 v1

solicit any competing offers for the company. Bristol-Myers Squibb will finance the acquisition from its existing cash resources. The companies expect the tender offer to close approximately thirty days after commencement of the tender offer.

49. By purchasing Zymo, Bristol will be able to gain full control of development of the drug, which will put Bristol in position to become the primary player in the treatment of Hepatitis C in the near future. The acquisition of Zymo will also permit Bristol to save $265 million on its initial purchase of the drug. In addition, Bristol will secure the rest of Zymo’s valuable pipeline drugs, which include treatments for metastatic melanoma and atopic dermatitis, as well as potential royalty payments from partnered programs with EMD Serono, Inc. Moreover, Bristol secures the value of Zymo’s RECOTHROM, a drug currently being marketed for use as a topical hemostat to control non-arterial bleeding during surgical procedures. As one analyst put it, after paying for the Hepatitis C drug, Bristol “was basically able to get the rest of the company for free, based on the price they paid.” Bristol is also using $150 million of Zymo’s own cash to finance the Proposed Acquisition.

50. The Proposed Acquisition does not reflect the Company’s value and the Company’s prospects going forward. The Proposed Acquisition consideration does not reflect, among other things: (1) the value of PEG-IFN-lambda to Bristol, including Bristol’s ability to save millions on future royalty payments to Zymo and Bristol’s ability to position itself as the primary player in the treatment of Hepatitis C; and (2) the added value of any of Zymo’s other pipeline drugs, including its mid-stage melanoma treatment and its already-on-the-market drug that is used to control non-arterial bleeding during surgery. The Company shareholders will not be compensated for any of the above.

51. On the other hand, via the Proposed Acquisition, defendants will be able to obtain millions of dollars in material personal benefits not shared with the Company’s public shareholders. The Company’s executives and Board members will obtain millions in vested stock options. The Company’s executives will obtain millions more in change of control payments.

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 12

010203-11 395706 v1

52. Douglas E. Williams, Ph.D., the Chief Executive Officer of the Company, will receive a $400,000 transaction bonus. Certain of the Company’s management will have continuing employment in the post-merger company.

53. And, the Proposed Acquisition will provide for Warburg and Novo the ability to monetize their illiquid holdings in the Company. Notably, four of the nine members of the Board are representatives or designees of Novo or Warburg: (1) David I. Hirsh, Ph.D. is a director designee of Warburg; (2) Lars Fruergaard Jørgensen is a director designee of Novo and a Senior Vice President of Novo Nordisk; (3) Jonathan S. Leff is a director designee of Warburg and a general partner and managing director and member of Warburg and or its affiliates; and (4) Kurt Anker Nielsen is a director designee of Novo Nordisk. In addition, Carter, served as Corporate Executive Vice President and Chief Scientific Officer of Novo from 1994 to 2000.

54. Even though several other potential parties had indicated an interest in the Company in the near past, defendants made no attempt to gauge their interest before entering into the Agreement and Plan of Merger the Company with Bristol (the “Merger Agreement”). In fact, defendants made sure that the Company would be sold to Bristol and Bristol only. In connection with the Merger Agreement, Novo and Warburg entered into Tender and Support Agreements (the “Support Agreements”) with Bristol promising, among things, to tender and not withdraw their 36% shares, vote in favor of the Proposed Acquisition, and vote against any alternate transaction.

55. Additionally, the Company gave Bristol an irrevocable option (the “Top-Up Option”), pursuant to which, after accepting shares tendered pursuant to the Tender Offer, Bristol can purchase newly issued shares of the Company so that when added to accepted shares, constitutes one share more than 90%. Not only does this permit Bristol to get around the Washington Business Corporation Act which provides that a tender of less than 90% of the

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 13

010203-11 395706 v1

outstanding shares will require a majority vote of the outstanding shares to complete a merger – this means, combined with the Support Agreements, Bristol can consummate the Proposed Acquisition if merely 20% of independent shares are tendered pursuant to the Tender Offer.

56. Notwithstanding the above, defendants agreed to provisions in the Merger Agreement which collectively preclude any competing offers for the Company, including: (i) a no-solicitation provision that precludes the Company from providing confidential Company information to, or even communicating with, potential competing bidders except under extremely limited circumstances; (ii) a matching rights provision that allows Bristol three business days to match any competing superior proposal; and (iii) a termination fee provision which obligates the Company to pay Bristol $28.7 million in the event the Proposed Acquisition is terminated in favor of a superior proposal. These provisions effectively preclude any other potential bidders for consummating an offer for the Company, and make even more egregious the Board’s utter failure to seek out the best price possible for shareholders before agreeing to the Proposed Acquisition, as is their duty under the law.

57. On September 10 2010, Bristol commenced the Tender Offer, which is scheduled to expire on October 7, 2010. On September 15, 2010, defendants filed the 14D-9. The 14D-9 fails to fully and fairly disclose certain material information concerning the Proposed Acquisition including, among other things:

•

Details about the sales process, including among other things: (i) details on how the Company identified potential parties in 2008 and the level of interest of these parties; (ii) the discussions with Novo and Warburg regarding their interest in selling their shares; (iii) the discussions regarding the value of the PEG-IFN-lambda, any other Company drug, and the value to the parties in partnership agreements with the Company with respect to same; (iv) Goldman’s identification of potential purchasers and partners and the level of interest of these parties; and (v) details of the negotiations of the Support Agreements, Top-Up Option and the deal protection provisions in the Merger Agreement;

•

Details concerning potential conflicts of interest with the Company’s financial advisor, Goldman, including the fees received by Goldman for services to Bristol and Warburg and scope of their prior relationship;

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 14

010203-11 395706 v1

•

The analyses performed by Goldman in connection with the Proposed Acquisition, including among other things: (i) the projections and underlying data; (ii) the basis for inputs, selection criteria and assumptions in the sum of the parts discounted cash flow analysis; (iii) the discounted analyst price target analysis; and (iv) and the premiums paid in selected transactions analysis;

•

Alternate strategies considered by the Board and any valuations of the worth of the termination of Bristol’s obligations under the Collaboration Agreement to Bristol and/or the block of shares held by Novo and/or Warburg;

•

Management’s valuation and assessment of the Company, its sum of the parts analysis, and its stand-alone prospects; and

•

Conflicts of interests inherent in the process.

FIRST CAUSE OF ACTION

Claim for Breach of Fiduciary Duty

Against the Individual Defendants

58. Plaintiff incorporates by reference and realleges each and every allegation contained above, as though fully set forth herein.

59. The Individual Defendants have knowingly and recklessly and in bad faith violated fiduciary duties of care, loyalty, good faith, candor and independence owed to the public shareholders of Zymo and have acted to put their personal interests ahead of the interests of Zymo’s shareholders.

60. The Individual Defendants have knowingly or recklessly and in bad faith violated their fiduciary duties by entering into a transaction with Zymo without regard to the fairness of the transaction to Zymo’s shareholders and by failing to disclose all material information concerning the Proposed Acquisition to such shareholders.

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 15

010203-11 395706 v1

(a) They failed to take steps to maximize the value of Zymo to its public shareholders and they took steps to subvert the sales process, to cap the price of Zymo’s stock and to give defendants an unfair advantage by, among other things, failing to solicit other potential acquirers or alternative transactions;

(b) They failed to properly value Zymo;

(c) They ignored or did not protect against the numerous conflicts of interest resulting from the directors’ own interrelationships or connection with the Proposed Acquisition;

(d) They failed to disclose all material information that would permit Zymo’s stockholders to cast a fully informed vote on the Proposed Acquisition; and

(e) They agreed to implement deal protection devices which were designed to and are favoring Bristol to the detriment of the Class.

62. Because defendants dominate and control the business and corporate affairs of Zymo, and are in possession of private corporate information concerning Zymo’s assets, business and future prospects, there exists an imbalance and disparity of knowledge and economic power between them and the public shareholders of Zymo which makes it inherently unfair for them to pursue any proposed transaction wherein they will reap disproportionate benefits to the exclusion of maximizing stockholder value.

63. As a result of defendants’ unlawful actions, plaintiff and the other members of the Class will be irreparably harmed in that they will not receive the benefit of a fair sales process. Unless the Proposed Acquisition is enjoined by the Court, the Individual Defendants will continue to knowingly or recklessly and in bad faith breach their fiduciary duties owed to plaintiff and the members of the Class, will not engage in arm’s-length negotiations on the Proposed Acquisition terms, and will not supply to Zymo’s minority stockholders sufficient information to enable them to cast informed votes on the Proposed Acquisition and may consummate the Proposed Acquisition, all to the irreparable harm of the members of the Class.

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 16

010203-11 395706 v1

64. Plaintiff and the members of the Class have no adequate remedy at law. Only through the exercise of this Court’s equitable powers can plaintiff and the Class be fully protected from the immediate and irreparable injury which defendants’ actions threaten to inflict.

SECOND CAUSE OF ACTION

Claim for Aiding and Abetting Breaches of Fiduciary

Duty Against Zymo and Bristol

65. Plaintiff incorporates by reference and realleges each and every allegation contained above, as though fully set forth herein.

66. The Individual Defendants owed to plaintiff and the members of the Class certain fiduciary duties as fully set out herein.

67. By committing the acts alleged herein, the Individual Defendants breached their fiduciary duties owed to plaintiff and the members of the Class.

68. Zymo and Bristol aided and abetted the Individual Defendants in breaching their fiduciary duties owed to the public shareholders of Zymo, including plaintiff and the members of the Class.

69. Zymo and Bristol colluded in or aided and abetted the Individual Defendants’ breaches of fiduciary duties, and were active and knowing participants in the breaches of fiduciary duties owed to plaintiff and the members of the Class.

70. Plaintiff and the members of the Class shall be irreparably injured as a direct and proximate result of the aforementioned acts.

PRAYER FOR RELIEF

WHEREFORE, plaintiff demands injunctive relief, in plaintiff’s favor and in favor of the Class and against defendants as follows:

A. Declaring that this action is properly maintainable as a class action;

B. Declaring and decreeing that the merger agreement was entered into in breach of the fiduciary duties of defendants and is therefore unlawful and unenforceable;

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 17

010203-11 395706 v1

D. Rescinding, to the extent already implemented, the Proposed Acquisition or any of the terms thereof;

E. Awarding plaintiff the costs and disbursements of this action, including reasonable attorneys’ and experts’ fees; and

F. Granting such other and further relief as this Court may deem just and proper.

DATED: September 21, 2010.


HAGENS BERMAN SOBOL SHAPIRO LLP

By		/s/ Karl P. Barth
		Steve W. Berman, WSBA #12536
		Karl P. Barth, WSBA #22780
		1918 Eighth Avenue, Suite 3300
		Seattle, WA 98101
		Telephone: (206) 623-7292
		Facsimile: (206) 623-0594

		Darren J. Robbins
		Randall J. Baron
		A. Rick Atwood, Jr.
		David T. Wissbroecker
		David A. Knotts
		Eun Jin Lee
		ROBBINS GELLER RUDMAN & DOWD LLP
		655 West Broadway, Suite 1900
		San Diego, CA 92101
		Telephone: (619) 231-1058
		Facsimile: (619) 231-7423

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 18

010203-11 395706 v1

Richard A. Maniskas

RYAN & MANISKAS, LLP

995 Old Eagle School Road, Suite 311

Wayne, PA 19087

Telephone: (484) 588-5516

Facsimile: (484) 450-2582

Attorneys for Plaintiff

AMENDED COMPLAINT FOR

BREACH OF FIDUCIARY DUTY - 19

010203-11 395706 v1

EX-99.(A)(13) 4 dex99a13.htm CLASS ACTION COMPLAINT DATED SEPTEMBER 20, 2010 Class Action Complaint dated September 20, 2010

Exhibit (a)(13)

FILED

10 SEP 20 PM 2:46

KING COUNTY

SUPERIOR COURT CLERK

E-FILED

CASE NUMBER: 10-2-33339-8 SEA

SUPERIOR COURT OF WASHINGTON IN AND FOR KING COUNTY


TIMOTHY EYSTER, Individually and on
Behalf of All Others Similarly Situated,
		No.
Plaintiff,
		CLASS ACTION
v.
		COMPLAINT FOR BREACH OF FIDUCIARY DUTY
ZYMOGENETICS, INC., BRUCE L.A. CARTER, JAMES A. HARPER, DAVID I. HIRSH, LARS FRUERGAARD JORGENSEN, JONATHAN S. LEFF, DAVID H. MacCALLUM, A. BRUCE MONTGOMERY, KURT ANKER NIELSEN, EDWARD E. PENHOET, DOUGLAS E. WILLIAMS and BRISTOL-MYERS SQUIBB COMPANY,

Defendants.

COMPLAINT FOR BREACH OF FIDUCIARY DUTY

TABLE OF CONTENTS


		Page
I.	SUMMARY OF THE ACTION	1

II.	JURISDICTION AND VENUE	3

III.	PARTIES	3

IV.	CLASS ACTION ALLEGATIONS	4

V.	DEFENDANTS’ FIDUCIARY DUTIES	6

VI.	FACTUAL ALLEGATIONS	7

FIRST CAUSE OF ACTION: CLAIM FOR BREACH OF FIDUCIARY DUTY AGAINST THE INDIVIDUAL DEFENDANTS		10

SECOND CAUSE OF ACTION: CLAIM FOR AIDING AND ABETTING BREACHES OF FIDUCIARY DUTY AGAINST ZYMO AND BRISTOL		12

PRAYER FOR RELIEF		12

COMPLAINT FOR BREACH OF FIDUCIARY DUTY

I. SUMMARY OF THE ACTION

1. This is a class action on behalf of the public stockholders of ZymoGenetics, Inc. (“Zymo” or the “Company”) against Zymo and its Board of Directors (the “Board”) arising out of their breaches of fiduciary duty in connection with their efforts to complete the sale of Zymo to Bristol-Myers Squibb Company (“Bristol”) via an unfair sales process and at an unfair price (the “Proposed Acquisition”). The Board was aided and abetted in its breaches of fiduciary duty by Zymo and Bristol.

2. Zymo is a biopharmaceutical company that focuses on the development and commercialization of therapeutic proteins for the treatment of human diseases.

4. The sale process was driven in part by the desire for liquidity by Novo Nordisk (“Novo”), the Company’s largest shareholder, which holds 26% of the Company’s shares. Bristol secured Novo’s agreement to tender all its shares into the Proposed Acquisition, which is

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 1

5. In pursuing the unlawful plan to sell Zymo pursuant to a defective sales process and without full and fair disclosure of all material information, the defendants have breached their fiduciary duties of loyalty, due care, independence, candor, good faith and fair dealing, and/or have aided and abetted such breaches. Instead of acting in the best interests of Zymo’s shareholders, defendants spent a substantial effort tailoring the Proposed Acquisition to meet the specific needs of Bristol.

6. Because defendants dominate and control the business and corporate affairs of Zymo and are in possession of private corporate information concerning Zymo’s assets, business and future prospects, there exists an imbalance and disparity of knowledge and economic power between them and the public shareholders of Zymo which makes it inherently unfair for them to structure and pursue the proposed transaction.

7. Immediate judicial intervention is warranted here to rectify existing and future irreparable harm to the Company’s shareholders. Plaintiff, on behalf of the Class, seeks only to level the playing field and to ensure that if shareholders are to be ultimately stripped of their respective equity interests via the Proposed Acquisition, that the Proposed Acquisition is conducted in a manner that is not overtly improper, unfair and unlawful. Plaintiff seeks to enjoin the Proposed Acquisition or, alternatively, rescind the Proposed Acquisition in the event it is consummated.

¹	Novo and Warburg collectively hold three seats on the Board, and thus have substantial control over the decisions of the Board.

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 2

II. JURISDICTION AND VENUE

8. This Court has jurisdiction pursuant to Rev. Code Wash. § 2.08.010.

9. This Court has jurisdiction over defendants because Zymo is incorporated in Washington and headquartered in Seattle, Washington, at 1201 Eastlake Avenue East, Seattle, Washington, 98102-3702.

10. Venue is proper in this County pursuant to Rev. Code Wash. § 4.12.025(1) in that Zymo transacts business in this County.

III. PARTIES

11. Plaintiff Timothy Eyster at all times relevant hereto has been and is a stockholder of Zymo.

12. Defendant Zymo is a Washington corporation. Zymo is a biopharmaceutical company that focuses on the development and commercialization of therapeutic proteins for the treatment of human diseases.

13. Defendant Bruce L.A. Carter (“Carter”) is Chairman of the Board and a former Chief Executive Officer (“CEO”) of the Company.

14. Defendant James A. Harper (“Harper”) is a member of Zymo’s Board of Directors.

15. Defendant David I. Hirsh (“Hirsh”) is a member of Zymo’s Board of Directors.

16. Defendant Lars Fruergaard Jorgensen (“Jorgensen”) is a member of Zymo’s Board of Directors. Jorgensen is affiliated with Novo, and serves as Novo’s representative on the Board. Novo owns 26% of the Company’s shares, and has committed to tender its shares into the Tender Offer.

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 3

17. Defendant Jonathan S. Leff (“Leff”) is a member of Zymo’s Board of Directors. Leff is an affiliate of Warburg, which owns 11% of the Company’s stock and has committed to tender its shares into the Tender Offer.

18. Defendant David H. MacCallum (“MacCallum”) is a member of Zymo’s Board of Directors.

19. Defendant A. Bruce Montgomery (“Montgomery”) is a member of Zymo’s Board of Directors.

20. Defendant Kurt Anker Nielsen (“Nielsen”) is a member of Zymo’s Board of Directors. Nielsen is affiliated with Novo, and serves as Novo’s representative on the Board. Novo owns 26% of the Company’s shares, and has committed to tender its shares into the Tender Offer.

21. Defendant Edward E. Penhoet (“Penhoet”) is a member of Zymo’s Board of Directors.

22. Defendant Douglas E. Williams (“Williams”) is the Company’s CEO and a member of its Board of Directors.

23. Defendant Bristol is a global biopharmaceutical company engaged in discovering, developing and delivering medicines that help patients prevail over serious diseases. Bristol is headquartered in New York, and incorporated in Delaware.

24. The defendants named in ¶¶ 13-22 are sometimes collectively referred to herein as the “Individual Defendants.”

IV. CLASS ACTION ALLEGATIONS

25. Plaintiff brings this action individually and as a class action on behalf of all holders of Zymo stock who are being and will be harmed by defendants’ actions described below (the “Class”). Excluded from the Class are defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any defendant.

26. This action is properly maintainable as a class action.

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 4

27. The Class is so numerous that joinder of all members is impracticable. There are more than 85 million shares of Zymo common stock outstanding held by thousands of shareholders geographically dispersed across the country.

28. There are questions of law and fact which are common to the Class and which predominate over questions affecting any individual Class member. The common questions include, inter alia, the following:

(b) whether defendants are engaging in self-dealing in connection with the Proposed Acquisition;

(e) whether the defendants, in bad faith and for improper motives, have impeded or erected barriers to discourage other offers for the Company or its assets; and

(f) whether plaintiff and the other members of the Class would suffer irreparable injury were the transactions complained of herein consummated.

29. Plaintiff’s claims are typical of the claims of the other members of the Class and plaintiff does not have any interests adverse to the Class.

30. Plaintiff is an adequate representative of the Class, has retained competent counsel experienced in litigation of this nature and will fairly and adequately protect the interests of the Class.

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 5

31. The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class which would establish incompatible standards of conduct for the party opposing the Class.

32. Plaintiff anticipates that there will be no difficulty in the management of this litigation as a class action. A class action is superior to other available methods for the fair and efficient adjudication of this controversy.

33. Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole.

V. DEFENDANTS’ FIDUCIARY DUTIES

34. By reason of the Individual Defendants’ positions with the Company as officers and/or directors, said individuals are in a fiduciary relationship with plaintiff and the other public stockholders of Zymo and owe plaintiff and the other members of the Class a duty of highest good faith, fair dealing, loyalty, due care and full, candid and adequate disclosure.

35. Each of the Individual Defendants is required to act in good faith, in the best interests of the Company’s shareholders and with such care, including reasonable inquiry, as would be expected of an ordinarily prudent person. In a situation where the directors of a publicly traded company undertake a transaction that may result in a change in corporate control (particularly when it involves a decision to eliminate the shareholders’ equity investment in a company), applicable law requires the directors to take all steps to maximize the value shareholders will receive rather than use a change of control to benefit themselves. To diligently comply with this duty, the directors of a corporation may not take any action that adversely affects the value provided to the corporation’s shareholders, contractually prohibits them from complying with or carrying out their fiduciary duties, discourages or inhibits alternative offers to purchase control of the corporation or its assets, or will otherwise adversely affect their duty to search and secure the best value reasonably available under the circumstances for the corporation’s shareholders.

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 6

36. As described herein, the Individual Defendants have breached their fiduciary duties by taking actions designed to deter higher offers from other potential acquirers so as to ensure that certain defendants receive hundreds of thousands of dollars in personal benefits at the expense of Zymo’s shareholders. Defendants cannot possibly fulfill their fiduciary obligations after implementing provisions which disable them from maximizing shareholder value. The Individual Defendants have breached their fiduciary obligation to act reasonably.

VI. FACTUAL ALLEGATIONS

37. Zymo is a biopharmaceutical company that focuses on the development and commercialization of therapeutic proteins for the treatment of human diseases.

38. Zymo and Bristol have a cozy, long-term business relationship that provided Bristol with an inside track to acquire the Company. The companies have been collaborating since January 2009 on development of pegylated-interferon lambda, a treatment for Hepatitis C. By purchasing Zymo, Bristol will be able to gain full control of development of the drug, which will put Bristol in position to become the primary player in the treatment of Hepatitis C in the near future. The acquisition of Zymo will also permit Bristol to save $265 million on its initial purchase of the drug. In addition, Bristol will secure the rest of Zymo’s valuable pipeline drugs, which include treatments for metastatic melanoma and atopic dermatitis, as well as potential royalty payments from partnered programs with EMD Serono, Inc. Moreover, Bristol secures the value of Zymo’s RECOTHROM, a drug currently being marketed for use as a topical hemostat to control non-arterial bleeding during surgical procedures. As one analyst put it, after paying for the Hepatitis C drug, Bristol “was basically able to get the rest of the company for free, based on the price they paid.” Bristol is also using $150 million of Zymo’s own cash to finance the Proposed Acquisition.

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 7

39. Defendants announced the Proposed Acquisition in a press release entitled “Bristol-Myers Squibb to Acquire ZymoGenetics.” The press release read, in relevant part:

Bristol-Myers Squibb gains the following as a result of the acquisition:

•

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 8

•

RECOTHROM®, a recombinant thrombin approved by the U.S. Food and Drug Administration for use as a topical hemostat to control non-arterial bleeding during surgical procedures.

•

IL-21 protein, a cytokine currently being tested in an open-label, Phase II clinical study as a potential immunotherapy treatment for metastatic melanoma.

•

An earlier-stage pipeline of six biologic drug candidates, including an anti-IL-31 antibody, currently in pre-clinical development for atopic dermatitis.

•

Potential milestone and royalty payments from six partnered programs in various stages of clinical development by EMD Serono, Inc., an affiliate of Merck KGaA, and Novo Nordisk.

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 9

40. The sale process was driven in part by the desire for liquidity by Novo, the Company’s largest shareholder, which holds 26% of the Company’s shares. Bristol secured Novo’s agreement to tender all its shares into the Tender Offer. In addition to Novo, the Company’s second largest shareholder, Warburg, which holds 11% of the Company’s shares, has committed to tender its shares into the Tender Offer, meaning that 36% of the Company’s shares are already locked up. ² Bristol has stated its intention to close the Tender Offer and consummate the Proposed Acquisition if it gets tender of only 58% of the Company’s shares, or only an additional 22% of the Company’s shares. Thus, the Proposed Acquisition is a virtual fait accompli, and, absent intervention of the Court, the Company’s minority shareholders will have little or no say in this contest for corporate control.

FIRST CAUSE OF ACTION

Claim For Breach Of Fiduciary Duty

Against The Individual Defendants

41. Plaintiff incorporates by reference and realleges each and every allegation contained above, as though fully set forth herein.

42. The Individual Defendants have knowingly and recklessly and in bad faith violated fiduciary duties of care, loyalty, good faith, candor and independence owed to the public shareholders of Zymo and have acted to put their personal interests ahead of the interests of Zymo’s shareholders.

43. The Individual Defendants have knowingly or recklessly and in bad faith violated their fiduciary duties by entering into a transaction with Zymo without regard to the fairness of the transaction to Zymo’s shareholders and by failing to disclose all material information concerning the Proposed Acquisition to such shareholders.

²	Novo and Warburg collectively hold three seats on the Board, and thus have substantial control over the decisions of the Board.

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 10

44. As demonstrated by the allegations above, the Individual Defendants knowingly or recklessly failed to exercise the care required and breached their duties of loyalty, good faith, candor and independence owed to the shareholders of Zymo because, among other reasons:

(b) They failed to properly value Zymo;

(c) They ignored or did not protect against the numerous conflicts of interest resulting from the directors’ own interrelationships or connection with the Proposed Acquisition;

(d) They failed to disclose all material information that would permit Zymo’s stockholders to cast a fully informed vote on the Proposed Acquisition; and

(e) They agreed to implement deal protection devices which were designed to and are favoring Bristol to the detriment of the Class.

45. Because defendants dominate and control the business and corporate affairs of Zymo, and are in possession of private corporate information concerning Zymo’s assets, business and future prospects, there exists an imbalance and disparity of knowledge and economic power between them and the public shareholders of Zymo which makes it inherently unfair for them to pursue any proposed transaction wherein they will reap disproportionate benefits to the exclusion of maximizing stockholder value.

46. As a result of defendants’ unlawful actions, plaintiff and the other members of the Class will be irreparably harmed in that they will not receive the benefit of a fair sales process. Unless the Proposed Acquisition is enjoined by the Court, the Individual Defendants will continue to knowingly or recklessly and in bad faith breach their fiduciary duties owed to plaintiff and the members of the Class, will not engage in arm’s-length negotiations on the Proposed Acquisition terms, and will not supply to Zymo’s minority stockholders sufficient information to enable them to cast informed votes on the Proposed Acquisition and may consummate the Proposed Acquisition, all to the irreparable harm of the members of the Class.

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 11

47. Plaintiff and the members of the Class have no adequate remedy at law. Only through the exercise of this Court’s equitable powers can plaintiff and the Class be fully protected from the immediate and irreparable injury which defendants’ actions threaten to inflict.

SECOND CAUSE OF ACTION

Claim For Aiding And Abetting Breaches Of Fiduciary

Duty Against Zymo And Bristol

48. Plaintiff incorporates by reference and realleges each and every allegation contained above, as though fully set forth herein.

49. The Individual Defendants owed to plaintiff and the members of the Class certain fiduciary duties as fully set out herein.

50. By committing the acts alleged herein, the Individual Defendants breached their fiduciary duties owed to plaintiff and the members of the Class.

51. Zymo and Bristol aided and abetted the Individual Defendants in breaching their fiduciary duties owed to the public shareholders of Zymo, including plaintiff and the members of the Class.

52. Zymo and Bristol colluded in or aided and abetted the Individual Defendants’ breaches of fiduciary duties, and were active and knowing participants in the breaches of fiduciary duties owed to plaintiff and the members of the Class.

53. Plaintiff and the members of the Class shall be irreparably injured as a direct and proximate result of the aforementioned acts.

PRAYER FOR RELIEF

WHEREFORE, plaintiff demands injunctive relief, in plaintiff’s favor and in favor of the Class and against defendants as follows:

Declaring that this action is properly maintainable as a class action;

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 12

Declaring and decreeing that the merger agreement was entered into in breach of the fiduciary duties of defendants and is therefore unlawful and unenforceable;

Enjoining defendants, their agents, counsel, employees and all persons acting in concert with them from consummating the Proposed Acquisition, unless and until the Company adopts and implements a fair sales procedure or process that does not advantage any particular bidder and is designed to maximize shareholder value;

Rescinding, to the extent already implemented, the Proposed Acquisition or any of the terms thereof;

Awarding plaintiff the costs and disbursements of this action, including reasonable attorneys’ and experts’ fees; and

Granting such other and further relief as this Court may deem just and proper.

DATED: September 20, 2010


HAGENS BERMAN SOBOL SHAPIRO LLP

By		/s/ Karl P. Barth
		Steve W. Berman, WSBA #12536
		Jeniphr Breckenridge, WSBA #21410
		Karl P. Barth, WSBA #22780
1918 Eighth Avenue, Suite 3300
Seattle, WA 98101
Telephone: (206) 623-7292
Facsimile: (206) 623-0594

Darren J. Robbins
Randall J. Baron
A. Rick Atwood, Jr.
David T. Wissbroecker
David A. Knotts
Eun Jin Lee
ROBBINS GELLER RUDMAN & DOWD LLP
655 West Broadway, Suite 1900
San Diego, CA 92101
Telephone: (619) 231-1058
Facsimile: (619) 231-7423

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 13

Jonathan M. Stein

LAW OFFICE OF JONATHAN M. STEIN, P.L.

120 East Palmetto Park Road, Suite 420

Boca Raton, FL 33432

Telephone: (561) 961-2244

Facsimile: (561) 750-5964

Attorneys for Plaintiff

COMPLAINT FOR BREACH OF FIDUCIARY DUTY - 14

EX-99.(A)(14) 5 dex99a14.htm CLASS ACTION COMPLAINT DATED SEPTEMBER 23, 2010 Class Action Complaint dated September 23, 2010

Case 2:10-cv-01538-MJP Document 1 Filed 09/23/10 Page 1 of 13

Exhibit (a)(14)

U.S. DISTRICT COURT FOR THE

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE


LONG ZHOU, Individually, and On Behalf of	)	Case No.:
All Others Similarly Situated,	)
	)
Plaintiff,	)	COMPLAINT – CLASS ACTION
vs.	)
	)
	)
BRUCE L.A. CARTER, Ph.D., JAMES A.	)
HARPER, EDWARD E. PENHOET, Ph.D.,	)
LARS FRUERGAARD JORGENSEN, A.	)	JURY TRIAL DEMANDED
BRUCE MONTGOMERY, M.D.,	)
JONATHAN S. LEEF, DAVID I. HIRSCH,	)
Ph. D., DAVID H. MACCALLUM, KURT	)
ANKER NIELSEN, DOUGLAS E.	)
WILLIAMS, Ph. D., ZYMOGENETICS,	)
INC., and BRISTOL-MYERS SQUIBB	)
COMPANY,	)
	)
	)
Defendants.	)

Plaintiff Long Zhou (“Plaintiff”), by his undersigned attorneys, for his class complaint against defendants, alleges upon knowledge as to his own acts and upon information and belief as to all other matters, based upon the investigation made by and through his attorneys, which investigation included, inter alia, reviewing United States Securities and Exchange Commission (“SEC”) filings, press releases, analyst reports, news articles and other materials as follows:

COMPLAINT - 1

Case 2:10-cv-01538-MJP Document 1 Filed 09/23/10 Page 2 of 13

NATURE OF THE ACTION

1. Plaintiff brings this action individually and as a class action on behalf of all persons, other than defendants, who own the securities of ZymoGenetics, Inc. (“ZGEN” or the “Company”) and who are similarly situated, for compensatory and rescissory damages arising from ZGEN’s agreement to be acquired by defendant Bristol-Myers Squibb Company (“BMY”) pursuant to a two-step process – first a tender offer, commenced September 9, 2010, under which BMY is offering $9.75 per share for ZGEN shares, to be followed by a merger of the two companies (the combined process is referred to herein as the “Transaction”). The Transaction is already occurring and is proceeding by means of an unfair process and at an unfair price. Plaintiff seeks to recover damages caused by the breach of fiduciary duties owed by the director defendants.

2. The Transaction and the acts of the ZGEN director defendants, as more particularly alleged herein, constitute a breach of the defendants’ fiduciary duties to the Plaintiff and the class (also defined below) and a violation of applicable legal standards governing the defendants herein.

3. The ZGEN director defendants’ authorization to pursue the Transaction breached the director defendants’ fiduciary duties owed to ZGEN stockholders to take all necessary steps to ensure that the stockholders would receive the maximum value realizable for their shares in any transaction effecting the change of corporate control. In the context of this action, the ZGEN board of directors (“Board”), having agreed to the Transaction, failed to take all reasonable steps to assure the maximization of stockholder value, including the proper exploration of strategic alternatives that would return greater or equivalent short-term value to the Plaintiff and the class, in particular, by agreeing to a provision under which ZYGEN agreed not to solicit any competing offers for the Company.

COMPLAINT - 2

Case 2:10-cv-01538-MJP Document 1 Filed 09/23/10 Page 3 of 13

JURISDICTION AND VENUE

4. This Court has jurisdiction over all claims asserted herein pursuant to 28 U.S.C. §1332(a)(2). Diversity exists between Plaintiff and each defendant, and the amount in controversy exceeds $75,000. This Action is not collusive designed to confer jurisdiction on a court of the United States it would otherwise not have.

5. Venue is proper in this District pursuant to 28 U.S.C. §1391(b) insofar as many of the acts and practices complained of herein occurred in this District. ZGEN is headquartered in this District, and one or more defendants either reside in and/or maintain executive offices in this District.

PARTIES

6. Plaintiff has been a continuous owner of shares of ZGEN common stock at all relevant times described herein. Plaintiff is a citizen of the state of Maryland.

7. Defendant ZGEN is a Washington corporation headquartered at 1201 Eastlake Avenue East, Seattle, Washington 98102. The Company is focused on the development and commercialization of therapeutic proteins for the treatment of human diseases. As of April 30, 2010, ZGEN had 85,709,457 shares of common stock outstanding.

8. Defendant Bruce L.A. Carter, Ph.D. (“Carter”) has served as the Company’s Chairman of the Board since April 2005 and a director since 1987. Previously, Dr. Carter served as Chief Executive Officer from April 1998 until retiring in January 2009 and as President from April 1998 to July 2007. From 1994 to April 2000, Dr. Carter served as Corporate Executive Vice President and Chief Scientific Officer of Novo Nordisk A/S (“Novo”), a health care

COMPLAINT - 3

Case 2:10-cv-01538-MJP Document 1 Filed 09/23/10 Page 4 of 13

company. In addition, from 1994 to December 1998, Dr. Carter served as Chairman of the Board and, from 1988 to 1994, as President. He joined ZGEN in 1986 as Vice President of Research and Development. Carter is a citizen of Washington.

9. Defendant James A. Harper (“Harper”) has served as a Company director since July 2004. Harper is a citizen of Indiana.

10. Defendant Edward E. Penhoet, Ph.D. (“Penhoet”) has served as a Company director since May 2000 and as lead independent director since June 2005. Penhoet is a citizen of California.

11. Defendant Lars Fruergaard Jorgensen (“Jorgensen”) is a Company director designed by Novo pursuant to a shareholders’ agreement among the Company, Novo, Warburg, Pincus Equity Partners, L.P. (“Warburg”), and certain other investors effective as of November 10, 2000. Mr. Jorgensen has served as Senior Vice President, Information Technology and Corporate Development of Novo, since September 2004. Jorgensen is a citizen of a country other than the United States.

12. Defendant A. Bruce Montgomery (“Montgomery”) has served as a Company director since March 2010. Montgomery is a citizen of California.

13. Defendant Jonathan S. Leff (“Leff”) has served as a Company director since November 2000. Since January 2000, Mr. Leff has served as a General Partner of Warburg Pincus & Co., an investment company, and as a Member and Managing Director of Warburg Pincus, LLC, a private equity investment firm. Leff is a citizen of New York.

14. Defendant David I. Hirsh, Ph.D. (“Hirsh”) has served as a Company director since November 2000. Hirsh is a citizen of New York.

COMPLAINT - 4

Case 2:10-cv-01538-MJP Document 1 Filed 09/23/10 Page 5 of 13

15. Defendant David H. MacCallum (“MacCallum”) has served as a Company director since April 2005. MacCallum is a citizen of New York.

16. Defendant Kurt Anker Nielsen (“Nielsen”) has served as a Company director since June 1997. From December 2000 until his retirement in September 2003, Mr. Nielsen served as Co-Chief Executive Officer of Novo. Nielsen is a citizen of a country other than the United States.

17. Defendant Douglas E. Williams, Ph.D. (“Williams”) has served as a Company director and Chief Executive Officer since January 2009. From July 2007 to January 2009, Dr. Williams served as its President and Chief Scientific Officer and, from November 2004 to July 2007, as Executive Vice President, Research and Development and Chief Scientific Officer. Williams is a citizen of Washington.

18. Defendants Carter, Harper, Penhoet, Jorgensen, Montgomery, Leff Hirsh, MacCallum, Nielsen, and Williams are hereinafter referred to as the “Director Defendants.” 19. The Director Defendants, by reason of their corporate directorship and/or executive positions, are fiduciaries to and for the Company’s shareholders, which fiduciary relationship requires them to exercise their best judgment, and to act in a prudent manner and in the best interests of the Company’s shareholders.

20. Defendant BMY is a global biopharmaceutical company incorporated in Delaware with headquarters at 345 Park Avenue, New York, New York 10154. BMY is engaged in discovery, development, and delivery of medicines of medicines that help patients prevail over serious diseases.

21. Each defendant herein is sued individually as a conspirator and aider and abettor, as well as in his/her capacity as an officer and/or director of the Company, and the liability of each arises from the fact that he or she has engaged in all or part of the unlawful acts, plans, schemes, or transactions complained of herein.

COMPLAINT - 5

Case 2:10-cv-01538-MJP Document 1 Filed 09/23/10 Page 6 of 13

CLASS ACTION ALLEGATIONS

22. Plaintiff brings this action individually on his own behalf and as a class action, on behalf of all stockholders of the Company (except defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any of the defendants) and their successors in interest, who are or will be threatened with injury arising from defendants’ actions as more fully described herein (the “Class”).

23. This action is properly maintainable as a class action. The Class is so numerous that joinder of all members is impracticable. The Company has approximately 86 million shares of common stock outstanding. The disposition of their claims in a class action will be of benefit to the parties and the Court. The record holders of the Company’s securities can be easily determined from the stock transfer journals maintained by ZGEN or its agents.

24. A class action is superior to other methods for the fair and efficient adjudication of the claims herein asserted, and no unusual difficulties are likely to be encountered in the management of this action as a class action. The likelihood of individual class members prosecuting separate claims is remote.

25. There is a well-defined community of interest in the questions of law and fact involved affecting the member of the Class. Among the questions of law and fact which are common to the Class, which predominate over questions affecting any individual class member are whether:

a. the Transaction is grossly unfair to the public stockholders of ZGEN;

COMPLAINT - 6

Case 2:10-cv-01538-MJP Document 1 Filed 09/23/10 Page 7 of 13

b. defendants willfully and wrongfully failed to maximize shareholder value through an adequate auction or market check process; and

c. defendants have breached or aided and abetted the breach of the fiduciary and other common law duties owed by them to plaintiff and the members of the Class.

26. Plaintiff is a member of the Class and is committed to prosecuting this action. Plaintiff has retained competent counsel experienced in litigation of this nature. Plaintiff’s claims are typical of the claims of other members of the Class, and Plaintiff has the same interests as the other members of the Class. Plaintiff does not have interests antagonistic to or in conflict with those he seeks to represent. Plaintiff is an adequate representative of the Class.

27. The likelihood of individual class members prosecuting separate individual actions is remote due to the relatively small loss suffered by each Class member as compared to the burden and expense of prosecuting litigation of this nature and magnitude. Absent a class action, defendants are likely to avoid liability for their wrongdoing, and Class members are unlikely to obtain redress for their wrongs alleged herein. There are no difficulties likely to be encountered in the management of the Class claims. This Court is an appropriate forum for this dispute.

SUBSTANTIVE ALLEGATIONS

28. By the acts, transactions, and courses of conduct alleged herein, defendants, individually and as part of a common plan and scheme and/or aiding and abetting one another in total disregard of their fiduciary duties, are attempting to deceive Plaintiff and the Class and deprive them unfairly of their investment in ZGEN.

COMPLAINT - 7

Case 2:10-cv-01538-MJP Document 1 Filed 09/23/10 Page 8 of 13

29. On September 9, 2010, ZGEN announced it had agreed to the Transaction. Under the Transaction’s terms, holders will receive $9.75 cash per share in a tender offer, to be followed by a merger. The tender offer has already begun. ZGEN’s stock last closed at the offering price in April, 2008, and reached its all-time high of approximately $25 per share in January, 2006.

30. Defendants announced the proposed Transaction in a press release entitled “Bristol-Myers Squibb to Acquire ZymoGenetics.” The press release read, in relevant part:

Bristol-Myers Squibb Company and ZymoGenetics, Inc. announced today that the companies have signed a definitive agreement providing for the acquisition of ZymoGenetics by Bristol-Myers Squibb, for $9.75 per share in cash. The transaction, with an aggregate purchase price of approximately $885 million, or approximately $735 million net of cash acquired, has been unanimously approved by the boards of directors of both companies. The board of directors of ZymoGenetics intends to recommend that ZymoGenetics’ shareholders tender their shares in the tender offer. In addition, shareholders holding approximately 37% of the outstanding shares of ZymoGenetics’ common stock have entered into agreements with Bristoy-Myers Squibb to support the transaction and to tender their shares in the offer.

* * *

Bristol-Myers Squibb gains the following as a result of the acquisition:

•

RECOTHROM®, a recombinant thrombin approved by the U.S. Food and Drug Administration for use as a topical hemostat to control non-arterial bleeding during surgical procedures.

COMPLAINT - 8

Case 2:10-cv-01538-MJP Document 1 Filed 09/23/10 Page 9 of 13

•

IL-21, protein, a cytokine currently being tested in an open-label, Phase II clinical study as a potential immunotherapy treatment for metastatic melanoma.

•

An earlier-stage pipeline of six biologic drug-candidates, including an anti-IL-31 antibody, currently in pre-clinical development for atopic dermatitis.

•

Potential milestone and royalty payments from six partnered programs to various stages of clinical development by EMD Serono, Inc. an affiliate of Merck KGaA, and Novo Nordisk.

* * *

•

Under the terms of the definitive agreement, Bristol-Myers Squibb will commence a cash tender offer on or about September 9, 2010, to purchase all of the outstanding shares of ZymoGenetics’ common stock for $9.75 per share.
. . . The agreement also provides for the parties to effect, subject to customary conditions, a merger to be completed following the completion of the tender offer which would result in all shares not tendered in the tender offer being converted into the right to receive $9.75 per share in cash. The merger agreement contains a provision under which ZymoGenetics has agreed not to solicit any competing offers for the company. Bristol-Myers Squibb will finance the acquisition from its existing cash resources. The companies expect the tender offer to close approximately thirty days after commencement of the tender offer.

31. The consideration to be paid to ZGEN shareholders in BMY’s acquisition is grossly unfair, inadequate, and substantially below the fair or inherent value of the Company. As reported in an article in Investopedia posted September 10, 2010:

What is Bristol-Myers Buying?

ZymoGenetics actually has quite a lot going on, but Bristol-Myers is almost certainly buying the company in order to have 100% ownership of its PEG-interfon lambda drug. This promising hepatitis C therapy is in Phase 2 testing, but could be a blockbuster ($1 billion or more in sales) in less than five years’ time. Moreover, this drug could fit in nicely with Bristol-Myers’

COMPLAINT - 9

Case 2:10-cv-01538-MJP Document 1 Filed 09/23/10 Page 10 of 13

other clinical HCV candidates, and lead to a potential combination therapy. Just as Gilead (Nasdaq: GILD) has significantly changed the HIV treatment landscape with its combination therapies, Bristol-Myers could possibly do something similar in hepatitis C.

Beyond the HCVB therapy, ZymoGenatics has an early-stage cancer drug, as well as some preclinical compounds. ZymoGenetics also has an approved drug on the market – Recothrom for the control of surgical bleeding. Though this drug has not been a great success so far, perhaps Bristol-Myers can do more with it.

Last and not at all least, ZymoGenetics has partnerships with Merck Serono (part of the “other” Merck, Merck KGaA) and Novo Nordisk (NYSE: NVO) whereby Zymogenetics has out-licensed drug candidates for conditions like lupus and Factor XIII deficiency. In fact, Novo Nordisk owns about 26% of ZymoGenetics (ZymoGenetics was once part of Novo Nordisk), which it will be selling to Bristool-Myers.

A Concentrated Bet

If PEG-interferon lambda is as good as hoped, this will be a solid acquisition for Bristol-Myers. After all, Bristol-Myers was on the hook for more than $900 million in potential milestone payments to ZymoGenetics, as well as royalties on sales. Moreover, given the exceptional profitability of chronic viral therapies, Bristol-Myers could find this deal paying for itself relatively quickly (to say nothing of the possibility of revenue streams from the partnerships and the oncology drug).

32. Thus, even at the announced premium, the Transaction is nonetheless priced at a substantial discount to its true value.

33. Additionally, defendants, in violation of their fiduciary obligations to maximize stockholder value, have not fully informed themselves about other offers or even considered other potential purchasers of ZGEN in a manner designed to obtain the highest possible price for ZGEN public stockholders. As stated in the Press Release “ZymoGenetics has agreed not to solicit any competing offers for the company.”

COMPLAINT - 10

Case 2:10-cv-01538-MJP Document 1 Filed 09/23/10 Page 11 of 13

34. BMY secured Novo’s agreement to tender all its shares (26% of the Company’s shares) in the Transaction. In addition to Novo, the Company’s second largest shareholder, Warburg, which holds 11% of the Company’s shares, has committed to tender its shares into the tender offer, meaning that 37% of the Company’s shares are already locked up.¹ BMY has stated its intentions to close the Transaction if it gets tender of only 58% of the Company’s shares, or only an additional 21% of the Company’s shares. Thus the Transaction is a virtual fait accompli, and, absent intervention of the Court, the Company’s minority shareholders will have little or no say in this contest for corporate control.

35. The Transaction is wrongful, unfair, and harmful to ZGEN stockholders, and represents an attempt by the Director Defendants to aggrandize or, at a minimum, maintain their personal and financial positions and interests through continued management positions and to enrich themselves to the detriment of the public stockholders of the Company. The proposed acquisition will deny Class members their right to share proportionately in the true value of ZGEN’s valuable assets, profitable business, and future growth in profits and earnings, while usurping the same for the benefit of the defendants at an unfair and inadequate price.

36. By reason of all of the foregoing, defendants herein have willfully participated in unfair dealing toward the Plaintiff and the other members of the Class and have engaged in and substantially assisted and aided and abetted each other in breach of the fiduciary duties owed by them to the Class.

37. Defendants have violated fiduciary and other common law duties owed to the Plaintiff and the other members of the Class in that they have not, and are not, exercising independent business judgment, have acted and are acting to the detriment of the Class in order to benefit themselves and/or their colleagues.

¹	Novo and Warburg collectively hold three seats on the board, and thus have substantial control over the decisions of the board.

COMPLAINT - 11

Case 2:10-cv-01538-MJP Document 1 Filed 09/23/10 Page 12 of 13

38. BMY was aided and abetted by the Director Defendants’ fiduciary duty breaches.

39. As a result of defendants’ conduct, Plaintiff and the Class have been and will continue to be damaged, in that they have been deceived, are the victims of unfair dealing, and are not receiving the fair value of ZGEN’s assets and businesses.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff prays for judgment and relief as follows:

A. Declaring that this lawsuit is properly maintainable as a class action and certifying the Plaintiff as proper representative of the Class;

B. Declaring that the Director Defendants and each of them have committed or aided and abetted a gross abuse of trust and have breached their fiduciary duties to the Plaintiff and the other members of the Class;

C. Ordering defendants to permit a stockholders’ committee, comprised of Class members and the representative, to ensure a fair procedure, adequate procedural safe-guards, and independent input by Plaintiff and the Class in connection with any transaction for the shares of ZGEN;

D. Awarding compensatory rescissory damages against defendants, jointly and severally, in an amount to be determined at trial, together with prejudgment interest at the maximum rate allowable by law;

E. Awarding Plaintiff and the Class their costs and disbursements and reasonable allowances for Plaintiff’s counsel and experts’ fees and expenses; and

F. Granting such other and further relief as may be just and proper.

COMPLAINT - 12

Case 2:10-cv-01538-MJP Document 1 Filed 09/23/10 Page 13 of 13

Dated: September 22, 2010


		BADGLEY-MULLINS LAW GROUP, PLLC

By:		/s/ Duncan C. Turner
		Duncan C. Turner
		Columbia Center
		701 Fifth Avenue, Suite 4750
		Seattle, WA 98104
		Telephone: (206) 621-6566
		Facsimile: (206) 621-9686

		HARWOOD FEFFER LLP
		Robert I. Harwood
		488 Madison Ave., 8th Floor
		New York, New York 10022
		Telephone: (212) 935-7400
		Facsimile: (212) 753-3630

		GLANCY BINKOW & GOLDBERG
		Lionel Z. Glancy
		1801 Avenue of the Stars, Suite 311
		Los Angeles, California 90067
		Telephone: (310) 201-9150
		Facsimile: (310) 201-9160

		*Attorneys for Plaintiff*

COMPLAINT - 13

-----END PRIVACY-ENHANCED MESSAGE-----