<PAGE>

                                                                   EXHIBIT 10.25

                            Cross-License Agreement

This Cross-License Agreement, effective as of the Effective Date, (the
"Agreement") governs disposition of certain intellectual property rights between
ZymoGenetics, Inc., a Washington corporation having a principal place of
business at 1201 Eastlake Avenue East, Seattle, Washington 98102 ("ZGI") and
Novo Nordisk A/S, a Danish corporation having a principal place of business at
Novo Alle, DK-2880, Bag-svaerd, Denmark ("NN").

WHEREAS, ZGI, formerly an indirectly wholly owned subsidiary of NN, is engaged
generally in the research and development of biopharmaceutical products;

WHEREAS, ZGI wishes to acquire licenses to certain rights to patents, patent
applications, know-how and proprietary technology relating to proteins, protein
production and protein delivery resulting from the research and development work
carried out by or for NN; and

WHEREAS, NN wishes to acquire licenses to certain rights to patents, patent
applications, know-how and proprietary technology relating to proteins, protein
production and protein delivery and resulting from the research and development
work carried out by or for ZGI;

NOW THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:


                                   ARTICLE 1
                                  Definitions
                                  -----------

SECTION 1.1.  "Additional Patents" means:  any patents or patent applications of
              --------------------
ZGI or NN that are not ZGI Patents or NN Patents.

SECTION 1.2.  "Affiliate" shall mean any company, joint venture partnership, or
              -----------
other business entity which controls, is controlled by, or is under common
control of a party hereto. A business entity shall be deemed to control another
business entity if it possesses, directly or indirectly, the power to order or
cause the direction, management and policies of such other business entity,
whether through the ownership of voting securities, by contract or otherwise.

SECTION 1.3.  "NN Core Business Areas" shall mean the business areas set forth
              ------------------------
in Appendix 6 attached here to.

SECTION 1.4.  "Commercialization Rights" means:  (a) the right to conduct
              --------------------------
research (including research with academic and other non-profit institution
collaborators), use, sample, develop (including clinical development), promote,
manufacture, market, offer to sell, import, export, distribute, sell, and have
sold products; and (b) the right to conduct research, use, sample, develop
(including clinical development), manufacture, promote, market, offer to sell,
import, export, distribute, sell and have sold products together with one or
more third parties as part of a co-marketing agreement, strategic partnership,
joint venture relationship or the like in which NN or ZGI continues work on
research and development of products; and (c) the right to sublicense one or
more third parties to manufacture, promote, market, offer to sell, import,
export, distribute, sell and have sold products.

SECTION 1.5.  "Commercialization Partner" means:  a third party to whom NN or
              ---------------------------
ZGI has extended rights consistent with SECTION 1.4(b) above.


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SECTION 1.6.  "Effective Date" means:  the date on which external investors have
              ----------------
first invested at least fifty million United States dollars (US$50,000,000) in
ZGI which money dilutes NN's ownership interest in ZGI to below eighty percent
(80%) and which date is noted for the sake of clarity on the signature page of
this Agreement.

SECTION 1.7.  "NN IP" means:  NN Patents, Additional Patents owned or controlled
              -------
by NN and NN Know-How.

SECTION 1.8.  "NN Know-How" means:  all inventions, discoveries, know-how,
              -------------
methodologies, technology, tangible materials (including nucleic acids,
peptides, vectors, proteins, and the like) that:  (a) pertain to at least one NN
Patent; and (b) were invented, discovered, developed or otherwise generated by
or for NN.

SECTION 1.9.  "NN Patent" means:  any patent or patent application owned or
              -----------
controlled by NN within a patent family listed in Appendix 1 or 2

SECTION 1.10.  "Negotiation Fields" means:  [*]
               --------------------

SECTION 1.11.  "Sublicensee" means:  a third party to whom NN or ZGI has
               -------------
extended a sublicense consistent with SECTION 1.4(c) above.

SECTION 1.12.  "ZGI IP" means:  ZGI Patents, Additional Patents owned or
               --------
controlled by ZGI and ZGI Know-How.

SECTION 1.13.  "ZGI Know-How" means:  all inventions, discoveries, know-how,
               --------------
methodologies, technology, tangible materials (including nucleic acids,
peptides, vectors, proteins, and the like) that:  (a) pertain to at least one
ZGI Patent; and (b) were invented, discovered, developed or otherwise generated
by or for ZGI.

SECTION 1.14.  "ZGI Patent" means:  any patent or patent application owned or
               ------------
controlled by ZGI within a patent family listed in Appendix 3 or 4.


                                   ARTICLE 2
                              Ownership of ZGI IP
                              -------------------

As of the Effective Date, ZGI will own all ZGI IP and will have all rights
attendant to such ownership, subject to NN's rights described herein.  Before
the Effective Date, NN and ZGI shall determine the method and vehicle by which
to transfer to ZGI such ownership of the ZGI IP, and ZGI and NN shall cooperate
so that such transfer is complete no later than the Effective Date.


                                   ARTICLE 3
                  License Grants, License Fees and Reporting
                  ------------------------------------------

SECTION 3.1.  Licenses Granted to NN.  ZGI hereby grants toNN the worldwide,
              --------------------
fully paid up, perpetual co-exclusive right to practice all Commercialization
Rights under the ZGI Patents recited in Appendix 3.  ZGI hereby grants to NN the
worldwide, fully paid up, perpetual non-exclusive right to practice all
Commercialization Rights under the ZGI Patents recited in Appendix 4.  The
SECTION 3.1 rights to sublicense shall extend only to products discovered,
developed or in-licensed by NN.

SECTION 3.2.  Licenses Granted to ZGI.  NN hereby grants to ZGI the worldwide,
              -----------------------
fully paid up, perpetual co-exclusive right to practice all Commercialization
Rights under the NN Patents recited in Appendix 1.


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NN hereby grants to ZGI the worldwide, fully paid up, perpetual non-exclusive
right to practice all Commercialization Rights under the NN Patents recited in
Appendix 2, except that the rights granted by NN to ZGI with respect to the NN
Patents designated as HC4567 in Appendix 2 shall be exclusive, worldwide rights
to practice all Commercialization Rights Notwithstanding the foregoing, ZGI
shall not have the right to practice the Commercialization Rights set forth in
1.4(b) or 1.4(c) in the NN Core Business Areas using the NN Patents set forth in
Appendix 1 and/or Appendix 2. NN is however on a protein-by-protein basis
willing to grant ZGI the rights as set forth in 1.4(b) and 1.4 (c) to proteins
[*], provided that ZGI on a protein-by-protein basis notifies NN of its desire
to obtain such rights, and that NN's grant of such rights is not restricted
towards third parties and/or in NN's opinion conflicts with ongoing NN projects
at the time of ZGI's notification to NN. Also notwithstanding the foregoing, ZGI
shall not have any rights beyond the right to use for research purposes, NN
patents in patent families HC3143, HC3371 and HC3321 as set forth in Appendix 2.
The SECTION 3.2 rights to sublicense shall extend only to products discovered,
developed or in-licensed by ZGI.

SECTION 3.3.  Co-exclusive Licenses.  For the avoidance of doubt, co-exclusive
              ---------------------
means that ZGI and NN have between or among them the totality of the
Commercialization Rights associated with the ZGI Patents listed in Appendix 1
and the NN Patents listed in Appendix 3.

SECTION 3.4.  Sublicensees and Commercialization Partners.  All grants of
              -------------------------------------------
Commercialization Rights by ZGI or NN under Section 1.4(b) or 1.4(c) shall be
the subject of written agreements between the party and its Sublicensee or
Commercialization Partner.

SECTION 3.5.  No Other Right Granted.  Except for the licenses expressly granted
              ----------------------
in this ARTICLE 3, no further or different right, option or license is granted
or implied to NN or to ZGI, under any patent or other intellectual property, in
any field, in any geographic territory.

SECTION 3.6.  Other NN-ZGI Agreements.  ZGI and NN anticipate entering into
              -----------------------
agreements from time to time covering particular services, intellectual property
and the like (e.g., [*], etc.).  If the terms of those specialized agreements
              ----
conflict with the terms of this Agreement, the terms of the specialized
agreements shall prevail.

SECTION 3.7.  License Fee.  For any calendar year in which ZGI uses technology
              -----------
encompassed by a claim in a NN Patent or asserts, either itself or through NN, a
NN Patent against a third party, ZGI shall pay to NN a license fee of [*] on or
before January 31 of the subsequent calendar year. For any calendar year in
which NN uses technology encompassed by a claim in a ZGI Patent or asserts,
either itself or through ZGI, a ZGI Patent against a third party, NN shall pay
to ZGI a license fee of [*] on or before January 31 of the subsequent calendar
year.

SECTION 3.8.  Record Keeping and Reporting.  ZGI and NN each shall devise a
              ----------------------------
record-keeping system to determine if the SECTION 3.7 license fee is due to the
other party.  On or before January 31 of each calendar year following the
Effective Date, ZGI and NN shall report upon their respective use or assertion
of the other party's patents.


                                   ARTICLE 4
                              Negotiation Rights
                              ------------------

SECTION 4.1.  NN's Negotiation Rights.  During the term of this Agreement as set
              -----------------------
forth in Section 10.1, NN may approach ZGI about extending the terms of this
Agreement to any Additional Patent owned or controlled by ZGI within the
Negotiation Fields.  If such rights are available, ZGI and NN shall execute an
amendment to Appendix 4 of this Agreement to add such Additional Patent.  If NN
desires greater than non-exclusive rights and such greater rights are available,
ZGI and NN shall negotiate in good faith for


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ninety (90) days the terms of an agreement to grant NN such greater rights.
Unless mutually extended by the parties, NN's right of negotiation will expire
upon the expiration of such ninety (90) day period.

SECTION 4.2.  ZGI's Negotiation Rights.  During the term of this Agreement as
              ------------------------
set forth in Section 10.1, ZGI may approach NN about extending the terms of this
Agreement to any Additional Patent owned or controlled by NN within the
Negotiation Fields.  If such rights are available, ZGI and NN shall execute an
amendment to Appendix 2 of this Agreement to add such Additional Patent.  If ZGI
desires greater than non-exclusive rights and such greater rights are available,
ZGI and NN shall negotiate in good faith for ninety (90) days the terms of an
agreement to grant ZGI such greater rights.  Unless mutually extended by the
parties, ZGI's right of negotiation will expire upon the expiration of such
ninety (90) day period.


                                   ARTICLE 5
                                    Patents
                                    -------

SECTION 5.1.  Patent Filings and Prosecution.  ZGI shall have sole and exclusive
              ------------------------------
responsibility for protecting all ZGI Patents, including filing, prosecuting,
and maintaining such ZGI Patents.  ZGI shall be solely responsible for the costs
associated with such filings, prosecution and maintenance and the jurisdictions
in which patent protection is sought shall be within the sole discretion of ZGI.
Likewise, NN shall have sole and exclusive responsibility for protecting all NN
Patents, including filing, prosecuting, and maintaining such NN Patents.  NN
shall be solely responsible for the costs associated with such filings,
prosecution and maintenance and the jurisdictions in which patent protection is
sought shall be within the sole discretion of NN.  Notwithstanding the
foregoing, either party shall have the right, but not the obligation, to
prosecute and maintain the patents of the other party that are the subject of
co-exclusive licenses pursuant to SECTIONs 3.1 and 3.2 of this Agreement, should
the other party elect not to do so.  In that event the other party shall
cooperate with the prosecuting or maintaining party.

SECTION 5.2.  Patent Enforcement and Defense.  ZGI shall have sole and exclusive
              ------------------------------
responsibility for defending and enforcing all ZGI Patents, including but not
limited to:  sending cease & desist letters; initiating and participating in
interference proceedings, protest proceedings, reissue proceedings, re-
examination proceedings, and lawsuits; defending declaratory judgment
proceedings; and settling disputes with third parties.  ZGI shall be solely
responsible for the costs associated with such defense and enforcement and shall
retain all damages and monies awarded as a result of such efforts.  Likewise, NN
shall have sole and exclusive responsibility for defending and enforcing all NN
Patents, including but not limited to:  sending cease & desist letters;
initiating and participating in interference proceedings, protest proceedings,
reissue proceedings, re-examination proceedings, and lawsuits; defending
declaratory judgment proceedings; and settling disputes with third parties.  NN
shall be solely responsible for the costs associated with such defense and
enforcement and shall retain all damages and monies awarded as a result of such
efforts.  Notwithstanding the foregoing, either party shall have the right, but
not the obligation, to defend and enforce the patents of the other party that
are the subject of co-exclusive licenses pursuant to SECTIONs 3.1 and 3.2 of
this Agreement, should the other party elect not to do so.  In that event the
other party shall cooperate with the defending party and the defending party
shall retain all damages and monies awarded as a result of such efforts.


                                   ARTICLE 6
                                Confidentiality
                                ---------------

SECTION 6.1.  Confidential Information.  For the purposes of this Agreement,
              ------------------------
Confidential Information shall include all proprietary information and
materials, patentable or otherwise, of a party which is disclosed by or on
behalf of such disclosing party to the receiving party, such as DNA sequences,
amino acid sequences, vectors, cells, substances, formulations, techniques,
methodology, equipment, data, re-


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ports, know-how, assay results, preclinical studies and clinical trials and the
results thereof, patent positioning and business plans, including any negative
developments.

SECTION 6.2.  Confidentiality Obligation.  Except as is otherwise authorized
              --------------------------
under this Agreement, each party shall, during the term of this Agreement and
for a period of three (3) years thereafter, maintain as secret and confidential
all Confidential Information obtained from the other pursuant to this Agreement
and prior to and in contemplation of it, and all other Confidential Information
that it may acquire from the other in the course of this Agreement.  Each party
shall respect the other's proprietary rights in such Confidential Information,
use the same exclusively for the purposes of this Agreement, and disclose the
same only to those of its employees to whom and to the extent that such
disclosure is reasonably necessary for the purposes of this Agreement.

SECTION 6.3.  Release from Confidentiality Obligation.  Notwithstanding the
              ---------------------------------------
foregoing provisions, a party shall be permitted to disclose any Confidential
Information of the other party to its patent practitioner or any patent office
in any country, as is reasonably required for filing or prosecuting any patent
application permitted to be filed by it hereunder.  Furthermore, the obligations
of this ARTICLE 6 shall not apply to Confidential Information which:

     (a)    was properly in the possession of the receiving party, without any
     restriction on use or disclosure, prior to receipt from the disclosing
     party, and such possession can be demonstrated by competent evidence of the
     receiving party;

     (b)    are in the public domain by public use, publication, general
     knowledge or the like, or after disclosure hereunder become general or
     public knowledge through no fault of the receiving party;

     (c)    are properly obtained by the receiving party from a third party not
     under a confidentiality obligation;

     (d)    are independently developed by or on behalf of the receiving party
     without the assistance of the confidential information of the disclosing
     party; or

     (e)    are required to be disclosed by order of any court or governmental
     or regulatory authority after notification of the providing party by the
     receiving party of the necessity to allow the providing party to seek
     protection for the providing party's confidential information from such
     court or governmental or regulatory authority.

SECTION 6.4.  Survival.   The obligations under this ARTICLE 6 shall survive the
              --------
termination of this Agreement.


                                   ARTICLE 7
                 Material Transfer and Limitation of Liability
                 ---------------------------------------------

SECTION 7.1.  Limitations.  MATERIALS TRANSFERRED PURSUANT TO THIS AGREEMENT ARE
              -----------
EXPERIMENTAL IN NATURE AND ARE TRANSFERRED BETWEEN THE PARTIES AS IS.  NEITHER
NN NOR ZGI MAKES ANY WARRANTY OR REPRESENTATION WITH RESPECT TO THE UTILITY,
EFFICACY, NONTOXICITY, SAFETY OR APPROPRIATENESS OF USING THE MATERIALS.
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY USE OF SUCH MATERIALS
TRANSFERRED PURSUANT TO THIS AGREEMENT, OR ANY LOSS WHICH MAY ARISE FROM SUCH
USE.  MATERIALS TRANSFERRED PURSUANT TO THIS AGREEMENT WILL BE USED IN
COMPLIANCE WITH ALL APPLICABLE RULES AND REGULATIONS INCLUDING, FOR EXAMPLE,
THOSE RELAT-


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ING TO RESEARCH INVOLVING THE USE OF HUMAN AND ANIMAL SUBJECTS OR RECOMBINANT
DNA.

SECTION 7.2.  Further Transfer of Materials.  Neither NN nor ZGI shall
              -----------------------------
distribute materials transferred by the other party thereto pursuant to this
Agreement to third parties, without the transferring party's express written
permission.  All authorized distributions of materials will only occur pursuant
to a fully executed, written Materials Transfer Agreement.


                                   ARTICLE 8
                        Representations and Warranties
                        ------------------------------

SECTION 8.1.  Representations, Warranties and Covenants of NN.  NN represents
              -----------------------------------------------
and warrants to and covenants with ZGI that:

     (a)      NN is a corporation duly organized, validly existing and in
     corporate good standing under the laws of Denmark; and

     (b)      NN has the corporate and legal right, title, authority and power
     to enter into this Agreement; and

     (c)      NN has taken all necessary action to authorize the execution,
     delivery and performance of this Agreement; and

     (d)      upon the execution and delivery of this Agreement, this Agreement
     shall constitute a valid and binding obligation of NN, enforceable in
     accordance with its terms, except as enforceability may be limited by
     applicable bankruptcy, insolvency, reorganization, moratorium or similar
     laws affecting creditors' and contracting parties' rights generally and
     except as enforceability may be subject to general principles of equity
     (regardless of whether such enforceability is considered in a proceeding in
     equity or at law); and

     (e)      the performance of its obligations under this Agreement will not
     conflict with or result in a breach of any agreements, contracts or other
     arrangements to which it is a party; and

     (f)      NN will not during the term of this Agreement enter into any
     agreements, contracts or other arrangements that would prevent NN from
     meeting its obligations or adversely impact ZGI's rights under this
     Agreement; and

     (g)      NN will comply with all applicable laws, regulations and
     guidelines in connection with the performance of NN's obligations pursuant
     to this Agreement, including but not limited to all applicable product
     safety, product testing, product labeling, package marking and product
     advertising laws and regulations and the regulations of the United States
     and any other relevant nation concerning any export or other transfer of
     technology, services or products.

SECTION 8.2.  Representations, Warranties and Covenants of ZGI.  ZG1 represents
              ------------------------------------------------
and warrants to and covenants with NN that:

     (a)      ZGI is a corporation duly organized, validly existing and in
     corporate good standing under the laws of the state of Washington; and

     (b)      ZGI has the corporate and legal right, title, authority and power
     to enter into this Agreement; and


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     (c)      ZGI has taken all necessary action to authorize the execution,
     delivery and performance of this Agreement; and

     (d)      upon the execution and delivery of this Agreement, this Agreement
     shall constitute a valid and binding obligation of ZGI enforceable in
     accordance with its terms, except as enforceability may be limited by
     applicable bankruptcy, insolvency, reorganization, moratorium or similar
     laws affecting creditors' and contracting parties' rights generally and
     except as enforceability may be subject to general principles of equity
     (regardless of whether such enforceability is considered in a proceeding in
     equity or, at law); and

     (e)      the performance of its obligations under this Agreement will not
     conflict with or result in a breach of any agreements, contracts or other
     arrangements to which it is a party; and

     (f)      ZGI will not after the Effective Date enter into any agreements,
     contracts or other arrangements that would prevent ZGI from meeting its
     obligations or adversely impact NN's rights under this Agreement; and

     (g)      ZGI will comply with all applicable laws, regulations and
     guidelines in connection with the performance of ZGI's obligations pursuant
     to this Agreement, including but not limited to all applicable product
     safety, product testing, product labeling, package marking and product
     advertising laws and regulations and the regulations of the United States
     and any other relevant nation concerning any export or other transfer of
     technology, services or products.

SECTION 8.3.  Warranty Disclaimer.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
              -------------------
THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO THE ZGI PATENTS
OR NN PATENTS, GOODS, SERVICES OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND
HEREBY DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
AND NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.

SECTION 8.4.  Limited Liability.   EXCEPT IN THE CASE OF GROSS NEGLIGENCE OR
              -----------------
WILLFUL MISCONDUCT, NEITHER NN NOR ZGI WILL BE LIABLE WITH RESPECT TO ANY MATTER
ARISING UNDER THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR (A) ANY PUNITIVE, EXEMPLARY, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR LOST PROFITS OR (B) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, TECHNOLOGY OR SERVICES.


                                   ARTICLE 9
                                Indemnification
                                ---------------

SECTION 9.1.  Personal Injury or Property Damage.  NN shall indemnify and hold
              -----------------------------------
ZGI harmless from and against any and all claims, judgments, costs, awards,
expenses (including, but not limited to, any attorney's fees) or liability of
any kind arising out of personal injury or property damage caused or alleged to
be caused by NN's exercise of its rights to ZGI Patents hereunder.  In addition,
NN shall assume all obligations for warranties and product liability claims that
accompany or result from the sale or use of a product covered in any manner by a
ZGI Patent, and shall indemnify and hold ZGI harmless from and against any and
all claims, judgments, costs, awards, expenses (including, but not limited to,
any attorney's fees) or liability of any kind arising from customers and
relating to such warranty obligations or product liability claims. NN's
obligation to indemnify ZGI under this SECTION 9.1 shall not apply in case of
gross negligence or willful misconduct by ZGI.


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ZGI shall indemnify and hold NN harmless from and against any and all claims,
judgments, costs, awards, expenses (including, but not limited to, any
attorney's fees) or liability of any kind arising out of personal injury or
property damage caused or alleged to be caused by ZGI's exercise of its rights
to NN Patents hereunder.  In addition, ZGI shall assume all obligations for
warranties and product liability claims that accompany or result from the sale
or use of a product covered in any manner by a NN Patent, and shall indemnify
and hold NN harmless from and against any and all claims, judgments, costs,
awards, expenses (including, but not limited to, any attorney's fees) or
liability of any kind arising from customers and relating to such warranty
obligations or product liability claims. ZGI's obligation to indemnify NN under
this SECTION 9.1 shall not apply in case of gross negligence or willful
misconduct by NN.

SECTION 9.2.  Insurance.  NN shall maintain appropriate product liability
              ---------
insurance with respect to development, manufacture and sale of products covered
in any way by ZGI Patents in such amount as NN customarily maintains with
respect to sales of its other products.  NN shall maintain such insurance for so
long as it continues to manufacture or sell products covered in any way by ZGI
Patents, and thereafter for so long as NN customarily maintains insurance with
respect to sales of its other products.

ZGI shall maintain appropriate product liability insurance with respect to
development, manufacture and sale of products covered in any way by NN Patents
in such amount as ZGI customarily maintains with respect to sales of its other
products.  ZGI shall maintain such insurance for so long as it continues to
manufacture or sell products covered in any way by NN Patents, and thereafter
for so long as ZGI customarily maintains insurance with respect to sales of its
other products.

SECTION 9.3.  Survival.  The obligations of this ARTICLE 9 shall survive the
              ---------
expiry or termination, for whatever reason, of this Agreement.


                                  ARTICLE 10
                             Term and Termination
                             --------------------

SECTION 10.1.  Term.  This Agreement shall come into force on the Effective Date
               ----
and, unless terminated earlier in accordance with the provisions hereof, shall
terminate upon the expiration of the last-to-expire patent within the patent
families recited in Appendix 1-4 hereof.  The rights under Article 4 shall
expire [ * ] years after the Effective Date hereof.  If the condition precedent
(investment by external investors as set forth in SECTION 1.6) is not met before
December 31, 2000, this Agreement shall be null and void, and all rights and
obligations hereunder shall be terminated.

SECTION 10.2.  Termination for Cause.  Either party shall have the right to
               ---------------------
terminate this Agreement upon written notice to the other if:

     (a)       if either party at any time materially defaults (i) in making the
     payment of any money due hereunder, or (ii) in fulfilling any of the other
     obligations or conditions hereunder, the other party may in its sole
     discretion waive the default; if not electing to waive the default, the
     other party shall notify the defaulting party in writing of the default and
     allow the defaulting party ninety (90) days from such notification to
     initiate reasonable steps to cure such default. Notwithstanding this
     SECTION 10.2, if the defaulting party disputes the existence, nature or
     extent of any default set forth above, the parties shall use good faith
     efforts to resolve the dispute pursuant to ARTICLE 11. This Agreement shall
     continue until a final decision is reached pursuant to ARTICLE 11, at which
     point this Agreement may be terminated, if applicable, in accordance with
     any decision reached under ARTICLE 11; or

     (b)      Such other party shall enter into liquidation, whether
     compulsorily or voluntarily otherwise than for the purposes of amalgamation
     or reconstruction, shall commit any act of bankruptcy, shall compound with
     its creditors, shall have a receiver or administrator or equivalent
     offi-


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     cial appointed in respect of all or any part of its property or
     undertaking, or shall be subject to any analogous proceeding under any
     foreign law.

SECTION 10.3.  Survival.  Termination for whatever reason or expiry of this
               --------
Agreement shall not affect the accrued rights of the parties or any right
arising in any way out of this Agreement as a result of or as of the date of
termination or expiration and the licenses granted herein shall survive such
termination.  The right to recover damages against the other and all provisions
which are expressly stated to survive this Agreement shall remain in full force
and effect.  Notwithstanding the termination or expiration of this Agreement,
the provisions of ARTICLE 3, ARTICLE 5, ARTICLE 6, ARTICLE 7, ARTICLE 8, ARTICLE
9, ARTCLE 10 and ARTICLE 12 shall survive the termination or expiration and
shall continue to be enforceable to the extent provided therein.


                                  ARTICLE 11
                              Dispute Resolution
                              ------------------

The parties shall attempt to resolve through good faith discussions any dispute
that arises under this Agreement.  All such disputes shall, upon receipt of
written notice from one party to the other regarding the existence and nature of
the dispute, first be referred to each party's chief executive officer or to
their authorized representative.  If they are unable to resolve a dispute other
than a patent dispute within thirty (30) days after the initial meeting between
the authorized representatives then the dispute shall be referred to alternative
dispute resolution in New York, New York in accordance with the rules and
procedures set forth in Appendix 5. Patent disputes arising under this Agreement
shall be resolved in accordance with the rules set forth in Appendix 5 as
administered by the National Patent Board, wherein the decision of the National
Patent Board can be appealed to a Federal Court of competent jurisdiction.


                                  ARTICLE 12
                                    General
                                    -------

SECTION 12.1.  Assignment.  This Agreement may not be assigned by either party
               ----------
without prior written consent of the other party, except for assignment to its
Affiliates.   However, each party may, at its discretion, assign this Agreement
to a third party as part of the sale or merger of all or substantially all of
the party's assets and business.  In the event of any permissible assignment
under this Agreement, the assignor and assignee shall be jointly and severally
liable for assignor's obligations hereunder.

SECTION 12.2.  Relationship between the Parties.  Nothing in this Agreement is
               --------------------------------
intended to create or shall be deemed to constitute a partnership, agency or
joint venture relationship between the Parties or their sublicensees,
contractors or licensees.  Neither Party shall be responsible for the acts or
omissions of the other party, and neither party shall have the authority to
speak for, represent or obligate the other party in any way without the prior
written authority of the other party.

SECTION 12.3.  Public Announcements.  Except as otherwise may be required by law
               --------------------
or regulation, neither party shall make any public announcement, written or
oral, concerning this Agreement or the subject matter hereof, without the prior
written approval of the other party, provided that ZGI and NN shall have the
right to disclose or announce information concerning the existence and general
nature of this Agreement in order to seek third party investors in ZGI.

SECTION 12.4.  Use of Names, Trade Names and Trademarks.  Except as provided
               ----------------------------------------
herein, nothing contained in this Agreement shall be construed as conferring any
right on either party to use in advertising, publicity or other promotional
activities any name, trade name, trademark or other designation of the other
party hereto, including any contraction, abbreviation or simulation of any of
the foregoing, unless the express written permission of such other party has
been obtained.


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<PAGE>

SECTION 12.5.  Force Majeure.  If either party to this Agreement is prevented or
               -------------
delayed in the performance of any of its obligations under this Agreement by
force majeure, and if such party gives written notice thereof to the other party
specifying the matters constituting force majeure, together with such evidence
as it can reasonably give and specifying the period for which it is estimated
that such prevention or delay will continue, then the party in question shall be
excused from the performance of its obligations or the punctual performance
thereof as the case may be as from the date of such notice for so long as such
cause of prevention or delay shall continue.  For the purpose of this Agreement,
"force majeure" shall be deemed to be any cause affecting the performance of
this Agreement arising from or attributable to acts, events, omissions or
accidents beyond the reasonable control of the party.

SECTION 12.6.  Governing Law.  This Agreement shall be governed in all respects
               -------------
by the laws of the State of New York.

SECTION 12.7.  Waiver of Remedies.  No forbearance, delay or indulgence by
               ------------------
either party in enforcing the provisions of this Agreement shall prejudice or
restrict the rights of that party, nor shall any waiver of its rights operate as
a waiver of any subsequent breach, and no right, power or remedy herein
conferred upon or reserved for either party is exclusive of any other right,
power or remedy available to that party.

SECTION 12.8.  Entire Agreement.  This Agreement and the Appendices hereto
               ----------------
constitute the entire agreement between the parties and supersede all prior oral
and written agreements, understandings or arrangements relating to the subject
matter hereof, except the Insulin Agreement dated August 6, 1982 between Zymos
Corporation and Novo Industri A/S, as amended, and the Amended and Restated
Human Glucagon, Analogues of Human Glucagon, Analogs of Human Insulin Letter
Agreement dated September 28, 2000, as amended. No addition to or modification
of any provision of this Agreement shall be binding upon the parties, unless
made in writing and signed by a duly authorized representative of each of the
parties.

SECTION 12.9.  Notices.  All notices, requests, demands, waivers, consents,
               -------
approvals or other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, faxed with receipt
acknowledged (and with a confirmation copy also sent by registered mail, return
receipt requested), delivered by a recognized commercial courier service with
receipt acknowledged, or mailed by registered or certified mail return receipt
requested, postage prepaid, as follows:

If to NN:          Novo Nordisk A/S
                   Novo Alle
                   DK-2880 Bagsvaerd
                   Denmark
                   Attn: Corporate Vice President
                   Health Care Discovery and Pre-Clinical Development
                   Facsimile: +45 4442 1242

With a copy to:    Novo Nordisk Legal Department
                   Novo Alle
                   DK-2880 Bagsvaerd
                   Facsimile: +45 4498 0670

If to ZGI:         ZymoGenetics, Inc.
                   1201 Eastlake Avenue East
                   Seattle, WA  98102
                   Attn:  Legal Affairs
                   Facsimile:  (206) 442-6678


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or to such other addresses as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed effective (i) as of the
date so delivered (either personally or by courier service) or faxed; or (ii) on
the third (3rd) business day after the same has been mailed.

SECTION 12.10.  Severability.  The parties agree that, if any provision of this
                ------------
Agreement shall for any reason be held to be invalid or unenforceable, such
provision shall be enforced to the maximum extent permitted by law and the
parties' fundamental intentions hereunder, and the remaining provisions hereof
shall not be affected, impaired or invalidated and shall continue in full force
and effect.

SECTION 12.11.  Headings. The article and section headings contained herein are
                --------
for reference only and shall not be considered a part of this Agreement, nor
shall they in any way affect the interpretation hereof.

SECTION 12.12.  Counterparts.  This Agreement may be executed in two or more
                ------------
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

          IN WITNESS WHEREOF, NN and ZGI have caused this Agreement to be
executed in their names by their properly and duly authorized officers or
representatives.


Novo Nordisk A/S



/s/ Mads Ovilsen
-------------------------------
Mads Ovlisen
President &CEO



ZymoGenetics, Inc.



/s/ Bruce L.A. Carter
--------------------------------
Bruce L.A. Carter
President & CEO



EFFECTIVE DATE: 10 November 2000
                ----------------

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                                  APPENDIX 1
                    NN Patents: Co-Exclusive Rights to ZGI

NN Patent Family          Includes US     Title of Patent Application
                          Patent
[*]

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                                  APPENDIX 2
                   NN Patents:  Non-Exclusive Rights to ZGI


NN Patent Family          Includes US       Title of Patent Application
                          Patent
[*]

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                                  APPENDIX 3
                    ZGI Patents:  Co-Exclusive Rights to NN

ZGI Patent Family         Includes US     Derwent Title
                          Patent
[*]

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                                  APPENDIX 4
                   ZGI Patents:  Non-Exclusive Rights to NN

ZGI Patent     Includes Patent or      Derwent Title or Patent Application Title
Family         Patent Application

[*]

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                                  APPENDIX 5
                              Dispute Resolution

If the matter has not been resolved within thirty (30) days of the referral to
the chief executive officers, either party may initiate an ADR proceeding as
provided herein.  The parties shall have the right to be represented by counsel
in such a proceeding.

1.   To begin an ADR proceeding, a party shall provide written notice to the
     other party of the issues to be resolved by ADR. Within 14 (fourteen) days
     after its receipt of such notice, the other party may, by written notice to
     the party initiating the ADR, add additional issues to be resolved within
     the same ADR.

2.   Within 21 (twenty-one) days following receipt of the original ADR notice,
     the parties shall select a mutually acceptable neutral to preside in the
     resolution of any disputes in this ADR proceeding. If the parties are
     unable to agree on a mutually acceptable neutral within such period, either
     party may request the CPR Panels Management Group of the CPR Institute (the
     Group"), to select a neutral pursuant to the following procedures:

     (a)  the Group shall submit to the parties a list of not less than 5 (five)
          candidates within 14 (fourteen) days after receipt of the request,
          along with a Curriculum Vitae for each candidate. No candidate shall
          be an employee, director, or shareholder of either party or any of
          their subsidiaries or Affiliates.

     (b)  such list shall include a statement of disclosure by each candidate of
          any circumstances likely to affect his or her impartiality.

     (c)  each party shall number the candidates in order of preference (with
          the number 1 (one) signifying the greatest preference) and shall
          deliver the list to the Group within 7 (seven) days following receipt
          of the list of candidates. If a party believes a conflict of interest
          exists regarding any of the candidates, that party shall provide a
          written explanation of the conflict to the Group along with its list
          showing its order of preference for the candidates. Any party failing
          to return a list of preferences on time shall be deemed to have no
          order of preference.

     (d)  if the parties collectively have identified fewer than 3 (three)
          candidates deemed to have conflicts, the Group immediately shall
          designate as the neutral the candidate for whom the parties collective
          have indicated the greatest preference. If a tie should result between
          2 (two) candidates, the Group may designate either candidate. If the
          parties collectively have identified 3 (three) or more candidates
          deemed to have conflicts, the Group shall review the explanations
          regarding conflicts and, in its sole discretion, may either (i)
          immediately designate as the neutral the candidate for whom the
          parties collectively have indicated the greatest preference, or (ii)
          issue a new list of not less than 5 (five) candidates, in which case
          the procedures set forth in sub-paragraphs 2(a) - 2(d) shall be
          repeated.


3.   No earlier than 28 (twenty-eight) days or later than 56 (fifty-six) days
     after selection, the neutral shall hold a hearing to resolve each of the
     issues identified by the parties. The ADR proceeding shall take place in
     New York, New York. Each party to the proceeding shall be entitled to make
     1 (one) document request to the other party, subject to the right of the
     neutral to rule on any objection to such request, which shall not be
     subject to appeal.

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4.   At least 7 (seven) days prior to the hearing, each party shall submit the
     following to the other party and the neutral:-

     (a)  a copy of all exhibits on which such party intends to rely in any oral
          or written presentation to the neutral;

     (b)  a list of any witnesses such party intends to call at the hearing, and
          a short summary of the anticipated testimony of each witness;

     (c)  a proposed ruling on each issue to be resolved, together with a
          request for a specific damage award or other remedy for each issue.
          The proposed rulings and remedies shall not contain any recitation of
          the facts or any legal arguments and shall not exceed 1 (one) page per
          issue;

     (d)  a brief in support of such party's proposed rulings and remedies,
          provided that the brief shall not exceed 20 (twenty) pages. This page
          limitation shall apply regardless of the number of issues raised in
          the ADR proceeding.

5.   The hearing shall be conducted on 2 (two) consecutive days and shall be
     governed by the following rules:-

     (a)  Each party shall be entitled to 5 (five) hours of hearing time to
          present its case. The neutral shall determine whether each party has
          had the 5 (five) hours to which it is entitled.

     (b)  Each party shall be entitled, but not required, to make an opening
          statement, to present regular and rebuttal testimony, documents or
          other evidence, to cross-examine witnesses, and to make a closing
          argument. Cross-examination of witnesses shall occur immediately after
          their direct testimony, and cross-examination time shall be charged
          against the party conducting the cross-examination.

     (c)  The party initiating the ADR shall begin the hearing and, if it
          chooses to make an opening statement, shall address not only issues it
          raised but also any issues raised by the responding party. The
          responding party, if it chooses to make an opening statement, also
          shall address all issues raised in the ADR. Thereafter, the
          presentation of regular and rebuttal testimony and documents, other
          evidence, and closing arguments shall proceeding the same sequence.

     (d)  Except when testifying, witnesses shall be excluded from the hearing
          until closing arguments.

     (e)  Settlement negotiations, including any statements made therein, shall
          not be admissible under any circumstances. Affidavits prepared for
          purposes of the ADR hearing also shall not be admissible. As to all
          other matters, the neutral shall have sole discretion regarding the
          admissibility of any evidence.

6.   Within 7 (seven) days following completion of the hearing, each party may
     submit to the other party and the neutral a post-hearing brief support of
     its proposed rulings and remedies, provided that such brief shall not
     contain or discuss any new evidence and shall not exceed 10 (ten) pages.
     This page limitation shall apply regardless of the number of issues raised
     in the ADR proceeding.

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7.   The neutral shall rule on each disputed issue within 14 (fourteen) days
     following completion of the hearing. Such ruling shall adopt in its
     entirety the proposed ruling and remedy of 1 (one) of the parties on each
     disputed issue but may adopt 1 (one) party's proposed rulings and remedies
     on some issues and the other party's proposed rulings and remedies on the
     other issues. The neutral shall not issue any written opinion or otherwise
     explain the basis of the ruling.

8.   The neutral shall be paid a reasonable fee plus expenses. These fees and
     expenses, along with the reasonable legal fees and expenses of the
     prevailing party (including all expert witness fees and expenses), the fees
     and expenses of a court reporter, and any expenses for a hearing room,
     shall be paid as follows:-

    (a) If the neutral rules in favor of the 1 (one) party on all disputed
        issues in the ADR, the losing party shall pay 100% (one hundred percent)
        of such fees and expenses.

    (b) If the neutral rules in favor of one party on some issues and the other
        party on other issues, the neutral shall issue with the rulings a
        written determination as to how such fees and expenses shall be
        allocated between the parties.  The neutral shall allocate fees and
        expenses in a way that bears a reasonable relationship to the outcome of
        the ADR, with the party prevailing on more issues, or on issues of
        greater value or gravity, recovering a relatively larger share of its
        legal fees and expenses.

9.  The rulings of the neutral and the allocation of fees and expenses shall be
    binding, non-reviewable, and non-appealable except as provided for patent
    disputes in Article 12 of this Agreement, and may be entered as a final
    judgment in any court having jurisdiction.

10. Except as provided in paragraph 9 or as required by law, the existence of
    the dispute, any settlement negotiations, the ADR hearing, any submissions
    (including exhibits, testimony, proposed rulings and briefs), and the
    rulings shall be deemed Confidential Information. The neutral shall have the
    authority to impose sanctions for unauthorized disclosures of Confidential
    Information.

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                                  APPENDIX 6

NN Core Business Areas shall mean the following business areas:

     [*]

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request for confidential treatment filed separately with the Commission.