Earnings call transcript: Zymeworks Q4 2024 sees modest revenue, stock dips

Zymeworks Inc. (ZYME), with a market capitalization of approximately $902 million, reported a net loss of $122.7 million for the fiscal year 2024, or $1.62 per diluted share. The company’s revenue saw a slight increase to $76.3 million from $76.0 million in 2023. Despite a 3.37% increase in the stock price to $12.75 at market close, shares fell 4.7% to $12.56 in aftermarket trading, reflecting investor concerns over the company’s financial results and outlook. According to InvestingPro analysis, the stock is currently trading near its Fair Value, with analysts setting price targets ranging from $12 to $30.

Key Takeaways

• Zymeworks reported a net loss of $122.7 million for 2024.
• Revenue increased marginally to $76.3 million from $76.0 million in 2023.
• Stock fell 4.7% in aftermarket trading following the earnings release.
• Zanodetimab launched by Jazz Pharmaceuticals, potentially boosting future revenue.
• Strong cash position expected to sustain operations into 2027.

Company Performance

Zymeworks’ financial performance in 2024 was marked by a net loss and marginal revenue growth. While the company continues to advance its therapeutic pipeline, its financial results highlight the challenges of sustaining growth in a competitive biopharmaceutical market. The launch of Zanodetimab by Jazz Pharmaceuticals represents a potential revenue stream, but the company’s overall performance remains under scrutiny. InvestingPro data shows the company maintains a "GOOD" overall financial health score, despite current profitability challenges. Subscribers can access 6 additional ProTips and comprehensive analysis in the Pro Research Report.

Financial Highlights

• Revenue: $76.3 million, a slight increase from $76.0 million in 2023.
• Net loss: $122.7 million, or $1.62 per diluted share.
• Cash resources: $324.2 million as of December 31, 2024.

Outlook & Guidance

Zymeworks expects to maintain its cash runway into the second half of 2027. The company anticipates potential milestone payments from partnerships and royalty expectations between 10-20% on partner sales. The submission of an Investigational New Drug (IND) application for ZW251 is planned for mid-2025, with continued investment in its T-cell engager and antibody-drug conjugate (ADC) platforms.

Executive Commentary

"We remain focused on advancing our next generation of wholly owned therapeutics," said Leonie Patterson, CFO. CEO Ken Galbraith emphasized the company’s goal to "advance breakthrough therapies, expanding our collaborations and unlocking new opportunities for growth." Dr. Paul Moore, CSO, highlighted the company’s strategic focus on autoimmune inflammatory diseases.

Risks and Challenges

• Continued net losses could affect investor confidence and stock performance.
• Marginal revenue growth may not meet market expectations.
• Temporary pause in ZW220 development could delay product pipeline progress.
• The competitive landscape in biopharmaceuticals may impact market share.
• Regulatory challenges and approval timelines for new therapies remain uncertain.

Q&A

During the earnings call, analysts inquired about the company’s focus on the NaPi2b target and its disciplined resource allocation. Management reiterated its commitment to accelerating high-impact programs and expressed preclinical excitement for ZW251.

Full transcript - Zymeworks Inc (ZYME) Q4 2024:

Conference Operator: Thank you for standing by. This is the conference operator. Welcome to Zymeworks Fourth Quarter and Year End twenty twenty four Results Conference Call and Webcast. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

I would now like to turn the conference over to Shronal Inamdar, Senior Director of Investor Relations. Shronal, please go ahead.

Shronal Inamdar, Senior Director of Investor Relations, Zymeworks: Thank you, operator, and good afternoon, everyone. Thank you for joining our fourth quarter and year end twenty twenty four results conference call. Before we begin, I would like to remind you that we’ll be making a number of forward looking statements during this call, including without limitation, those forward looking statements identified in our slides and the accompanying oral commentary. Forward looking statements are based upon our current expectations and various assumptions and are subject to usual risks and uncertainties associated with companies in our industry and at our stage of development. For a discussion of these risks and uncertainties, we refer you to our latest SEC filings as found on our website and as filed with the SEC.

In a moment, I will hand over to Leonie Patterson, our Executive Vice President and Chief Business and Financial Officer. Leonie will just be discussing recent corporate updates along with financial results for our fourth quarter and year ended 2024. Following this, Doctor. Paul Moore, our Chief Scientific Officer will talk about key highlights from our fourth quarter, including our expanded focus on autoimmune and inflammatory diseases as well as hematological oncology. At the end of the call, Leonie, Paul and Ken Galbraith, our Chair and CEO will be available for Q and A.

As a reminder, the audio and slides from this call will be available on the Zymeworks website later today. I will now hand the call over to Leonie. Over to

Leonie Patterson, Executive Vice President and Chief Business and Financial Officer, Zymeworks: you. Thank you, Chanel, and thank you all for joining us today. We’re pleased to be reporting on another successful quarter marked by the approval of zanadetimab and continued progress on our clinical development strategy. Our R and D Day in December was a great opportunity for us to evaluate just how far we’ve come, not only with the development of our wholly owned pipeline over the past two years, but also the larger impact we have been able to make through our global strategic partnerships. Over the last decade, we have built a strong track record of successful partnerships with some of the world’s leading pharmaceutical companies, and this timeline slide highlights this commitment to scientific innovation and collaboration.

During this time, our cutting edge platforms such as Effect and Azimetric have driven multiple partnerships across oncology and beyond with industry leaders including Bristol Myers Squibb, Daichi Sankyo, Janssen, Merck, GSK, Jazz and BeiGene. One of the key aspects that we believe makes us a preferred partner is our ability to rapidly evolve our platforms to address emerging therapeutic challenges. Whether it’s by peritopic engineering or the development of our TopoONE platform for ADCs, we strive to continuously push the boundaries of biologics and multiple multifunctional therapeutics. Looking ahead, we remain focused on advancing our next generation of wholly owned therapeutics. Our expansion into autoimmune and inflammatory diseases as well as hematologic indications reflects our commitment to staying at the forefront of innovation and value creation.

For our partners, this means continued access to potential best in class biologics, a de risked approach to development and a shared vision for bringing transformative therapies to patients. Over the past year, there has been significant progress in our partner programs, achieving multiple key milestones that reflect the strength of our collaborations and the commercial potential of our pipeline. In total, we have earned over $45,000,000 over the past twelve months from our partnerships, which I will outline in more detail in the following slides. More recently, in January 2025, we achieved a $14,000,000 research milestone from GSK under our 2016 license agreement related to a clinical milestone, which we believe is a testament to the potential long term value of our innovative approach. As part of this agreement with GSK, we remain eligible for further research, development and commercialization milestones, underscoring the potential for continued value creation.

In relation to our partnership with Jazz, Zenera achieved net product sales of $1,100,000 in Q4 twenty twenty four, following the product launch in December 2024 and FDA approval in November 2024. Our royalties from net sales by JAS have been reflected in our income statement in Q4 twenty twenty four. These recent achievements reflect the strength of our partnerships and the ability of our innovative platforms to drive additional clinical and commercial success. We remain committed to advancing breakthrough therapies, expanding our collaborations and unlocking new opportunities for growth. With this foundation of trust, proven execution and differentiated technology, we are well positioned to continue exploring the potential for partnerships and unlocking new opportunities together.

Our goal is to advance our broad and diverse pipeline towards clinical trials as we continue to evaluate and pursue synergistic global and regional business development opportunities, leveraging Zymeworks experience as a trusted and preferred strategic partner. Now turning to our financial position. This afternoon, Zymeworks reported financial results for the fourth quarter of twenty twenty four. Zymeworks net loss for the year ended 12/31/2024 was $122,700,000 or $1.62 per diluted share compared to a net loss of $118,700,000 in 2023. The increase in net loss was primarily due to a $17,300,000 noncash impairment charge recognized in 2024 related to zanodetimab, zobodotin and an increase in income tax expense, which was partially offset by lower research and development and general administrative expenses.

As reported, our revenue for the year ended 12/31/2024, was $76,300,000 compared to $76,000,000 for the same period in 2023. Revenue for 2024 included $25,000,000 of milestone revenue from JAS in relation to the FDA approval of ZEHERA for the treatment of HER2 positive BTC. Thirty seven point five million dollars for development support and drug supply revenue from Jazz $8,000,000 of milestone revenue from Beijing in relation to the acceptance by the CDE of the MPA in China of the BLA for zanodetimab for second line treatment of HER2 plus B2C two point five million dollars of milestone revenue from GSK in relation to the sequence 10 nomination under the 2016 license agreement, dollars 3,000,000 from Beijing for drug supply and research support payments and $200,000 from other partners for research support and other payments. Revenue in 2023 included $71,500,000 for development support and drug supply from Jazz, dollars one point six million from Beijing for drug supply and other research support payments and $2,900,000 from our other partners for research support and other payments. Overall, operating expenses were $213,400,000 for the year ended 12/31/2024, compared to $214,100,000 in 2023, representing a slight increase of 0.3 year over year.

This slight increase is overall and overall operating expense has resulted in from a decrease in both research and development expenses and general administrative expenses. This was offset by a noncash impairment charge of $17,300,000 as a result of the company’s decision to discontinue the zanodetimab zoverdosing clinical development program, which utilized the technology represented by acquired and processed research and development assets. The decrease in research and development expenses year over year was primarily due to a decrease in expenses from Datadatimat as a result of the transfer of responsibility for this program to JAS and a decrease in expenses for DW171 and ZW191 as the majority of manufacturing and IND enabling studies were completed in 2023 prior to filing of the IND applications in 2024. This decrease was partially offset by an increase in manufacturing and ID enabling supporting activities for ZW220 and ZW251 along with other preclinical and research activities. Stock based compensation expense increased primarily due to new grants during 2024 and a lower expense in 2023 as a result of the cancellations and modifications of awards in respect of employees transferred to Jazz.

Turning to G and A, the decrease in G and A expense was primarily due to a decrease in external consulting expenses for information technology, legal fees and other expenses for advisory services, insurance and depreciation and amortization expenses compared to 2023. This was partially offset by costs incurred due to the termination of our long term facility lease in Seattle in 2024 and an increase in stock based compensation expense over 2023, primarily due to new grants during 2024 and reversal of compensation expense for auction cancellations and modifications in 2023. Other income net was $20,500,000 for the year ended 12/31/2024, compared to $18,800,000 for the same period in 2023. Other income net for 2024 included $19,900,000 of interest income and $800,000 of foreign exchange gains, partially offset by other miscellaneous charges. Other income net for 2023 included $19,700,000 of interest income and $300,000 of miscellaneous income, partially offset by $1,200,000 of foreign exchange losses.

Currently, we have approximately 69,600,000.0 shares of common stock outstanding and approximately 5,100,000.0 shares of common stock distributable under pre funded warrants. As of 12/31/2024, we had 324,200,000 of cash, resources consisting of cash, cash equivalents and marketable securities as compared to $456,300,000 as of 12/31/2023. For additional details on our quarterly and year end results, I encourage you to review our earnings release and other SEC filings as available on our website at www.zyeworks.com. Based on current operating plans, our strong financial position of $324,200,000 in cash resources as of 12/31/2024, together with certain anticipated regulatory milestone payments, continues to provide an expected cash runway into the second half of twenty twenty seven. Just a reminder that we may also be able to extend this runway or fund an expanded R and D scope through potential additional regulatory approval milestone payments in connection with our existing partnerships, most notably with Jazz and Beijing, and potentially new partnerships and collaborations, which we may choose to form.

In addition, pending applicable regulatory approvals, we are eligible to receive commercial milestone payments based on annual sales of the Sahara and also tiered royalties between 1020% on Jazz’s annual net sales and between 1019.5% on Beijing sales. We began earning royalty revenue from our Jazz partnership associated with BTC approval in Q4 twenty twenty four. With that, I’d like to hand over to our Chief Scientific Officer, Doctor. Paul Moore, who will provide an overview of key highlights from our R and D Day, which took place in December 2024, as well as provide updates on our Phase one clinical trials for ZW-one hundred and seventy one and ZW-one hundred and ninety one.

Dr. Paul Moore, Chief Scientific Officer, Zymeworks: Thanks, Leonie, and good afternoon, everyone. And thank you to those of you who joined us in New York for our R and D Day back in December. We hope you found it to be an informative event. As a refresher for those who attended and also for those of you who were not able to attend, I wanted to spend a few minutes now to briefly provide an overview of the progress we reported. First of all, this slide provides a visual remainder of the tumor types we’re prioritizing that all fall within the blue sphere and comprise cancers with poor survival rates, those where three or five year survival remains unacceptably low together with a threshold level of incidence.

In blue font are the molecules we’ve already developed, ZANI or are developing the five by five and the tumor types they cover within this framework. As you can see, our work to date aligns closely with our strategic focus on solid tumors, specifically thoracic, gynecological and digestive tract cancers, which reinforce our commitment to tackling the most challenging cancers, while also identifying opportunities for additional development. In purple font are the oncology as we are pursuing with our advanced portfolio. These are areas where we believe our next generation molecules can make the biggest impact. In addition to thoracic and digestive tract cancers where we already have planted a foothold, we see opportunity also for hematological malignancies such as multiple myeloma, DLBCL and acute myeloid leukemia.

As you can see here, ZYNWERTS current oncology pipeline is designed to address unmet needs across lung, gynecological and digestive tract cancers, leveraging either multi specific T cell engagers or ADC therapeutic modalities to build a diverse and de risk portfolio. At R and D Day, we were excited to announce the nomination of ZW209, a next generation T cell engager incorporating conditional CD28 co stimulation and potentially first in class models are designed to enhance the precision and durability of T cell responses against DLL3 expressing cancers. This nomination highlights the continued innovation and our approach of developing next generation T cell engagers beyond CD3 activation. Our evolution from designing ZW-one 71, where we will leverage a trivalent binding approach to our current leading preclinical candidate ZW209 at tri specific, reflects our commitment to driving innovation. With ZW209, we have refined our platform to help optimize T cell activation through addition co stimulatory mechanisms with the goal of enhanced specificity and potent anti tumor responses.

We believe that innovative strategy not only maximizes the therapeutic potential of T cells, but also aims to deliver durable target efficacy against cancer. By leveraging obligate T cell binding and conditional CD28 engagement in the design of two zero nine, this novel approach is specifically designed to prevent potential unintended T cell activation, while enabling targeted tumor cytotoxicity. In preclinical studies, this candidate has demonstrated differentiated long term cytotoxicity in vitro even at low effective to target ratios. We’ve also observed enhanced T cell proliferation and survival, which could significantly improve the durability of responses for patients. Together, our T cell engager programs such as 171 targeting mesothelin and two zero nine targeting DLL3 with a novel CD28 co stimulant mechanism aim to enhance immune activation and tumor selectivity, potentially improving response durability and safety.

Our antibody drug conjugate or ADC candidates, including 191, two 20 and two 50 one utilize our innovative linker payload to optimize tumor penetrant and therapeutic index. These assets target well validated tumor antigens such as folate receptor alpha, NAPI2b and GPC3, positioning them for potential best in class differentiation. As outlined with our press release this afternoon, we have prioritized resources to advance two fifty one with an IND application now planned for mid-twenty twenty five. Hepatocellular carcinoma remains an area of high unmet medical need and we believe two fifty one represents a compelling opportunity to help hepatocellular carcinoma patients. By accelerating this program, we are positioning ourselves to potentially bring that transformative therapy to patients sooner.

Encouraging preclinical results and well defined clinical and regulatory path for February made it our clear choice for prioritization. As part of this strategic prioritization, we have paused preparations for the commencement of Phase one studies for ZW220 at this time. However, it is important to note that two twenty remains a highly differentiated IND ready ADC with strong potential in ovarian cancer and non small cell lung cancer. We remain confident in the assets potential and we’ll continue to evaluate the optimal timing for its clinical development, including potential partnership opportunities. We look forward to providing future updates on the development for two twenty in the near future.

Our decision to focus on February aligns with our broader strategy of advancing programs with the highest near term impact, while ensuring prudent financial management. We continue to study advanced ovarian and non small cell lung cancer patients with our ongoing ZW-one 71 and ZW-one 91 Phase one studies, which may provide valuable insights applicable to ZW-two twenty’s future development. Together taken together our balanced portfolio employing diverse modalities and select design criteria, we believe will also enable the potential for multiple combination strategies, whether with standard of care therapies or within our own portfolio and both for induction and maintenance settings. As we continue advancing our pipeline, the strategic approach provides multiple shots enrolled, helping to mitigate risk while maximizing potential value creation in our solid tumor oncology portfolio. During our R and D day, we also unveiled our ability to utilize Zymeworks technology and experience for autoimmune and inflammatory disease with the nomination of ZW1528.

As you know, often in oncology, the immune system is underactive and the goal is to amplify immune responses to fight cancer, such as we do through employment of T cell engager approaches or through checkpoint inhibition. In autoimmunity, it’s the opposite. You essentially have a hyperactive immune system that needs to be controlled. This contrast opens up overlapping pathways for the same molecular mechanisms that activate the immune system in cancer can be reprogrammed to suppress it in autoimmune disease. Many of the tools and models that we use in the development of our oncology pipeline can therefore be adapted to autoimmune and inflammatory disease, which we believe allows for a seamless transition of expertise.

At Zymeworks, we’re well positioned to take advantage of this overlap. Our Chief Medical Officer, Doctor. Jeffrey Smith and myself have worked on the development of autoimmune therapies in the past, giving us the knowledge and experience to advance our molecules through preclinical development IND and into the clinic. We see an opportunity to be selected in how we apply our technology focusing on autoimmune inflammatory diseases where we can make meaningful impact. Regarding application of Zaineworx expertise in antibody engineering and particular bispecific antibodies to autoimmune and inflammatory disease or AIID, we see two initial categories of opportunity.

First in the context of inflammatory disorders from multiple cytokine derived disease progression and blocking a single pathway may not be enough for benefit by developing bispecific antibodies that can block multiple cytokines, we have the potential to improve outcomes beyond traditional therapies. In this context, our previous work with LEO Pharma helped establish a panel panels of antibody specificities, which we leverage to evaluate pre clinically a series of therapeutic candidates. Our first candidate nominated for AIID is ZW1528, which is an IL-four receptor alpha by IL-thirty three bispecific, which we believe to be beneficial beneficial for the treatment of respiratory inflammation such as mixed type chronic obstructive pulmonary disease or COPE by blocking multiple cytokines in a single module, which is supported by our preclinical studies. Second, within autoimmune diseases for self reactive or auto reactive lymphocytic tract disease targeting, modulating or even depleting these populations can lead to therapeutic benefit. This applies to diseases like lupus, rheumatoid arthritis, Type one diabetes, where approaches such as immune cell depletion or immune cell reprogram can be highly effective.

With our understanding of immune modulation experimental systems together with proven expertise in biologics and platform technologies such as our next generation multi specific T cell engagers, we’re well positioned to apply these capabilities to select autoimmune diseases. Moving on now to our candidates in clinical development. As you know, we have initiated two global Phase one clinical trials in 2024 for both ’1 hundred and seventy one and one hundred and 90 one, which are currently enrolling participants in North America, Asia Pacific and Europe and are both in the dose escalation phase. Since our last earnings call, we have continued to advance the clinical development of 171 from North America to having clinical sites activated and patient recruitment ongoing across multiple regions, including Germany, South Korea and The UK. These updates reflect steady progress in our global development strategy with continued focus on advancing seventeen oh one across key markets.

Similarly, since our last standing calls, we have continued to advance the global clinical development of one hundred and ninety one, including the important milestone of dosing our first patient in November 2024. Since then, we have broadened development beyond The United States with clinical sites activated and patient recruitment ongoing in Japan, South Korea, Australia and Singapore. These developments reflect solid progress in expanding one hundred and ninety one’s clinical footprint across key regions, positioning us for continued momentum in the coming quarters. For both of these products, we have the advantage of very tolerable molecules based on preclinical data, which allows us to implement a higher starting dose than you may have seen with other agents in similar classes. This of course provides an advantage to try to go more quickly to an active range while studying the tolerability profile.

We look forward to sharing trial and progress posters for these Phase one clinical trials at an upcoming medical conference. We also expect to have strong presence at the AACR Annual Meeting in Chicago in April and look forward to our scientific presentations at that key event. I’d like to now hand over to Ken for some closing remarks.

Ken Galbraith, Chair and CEO, Zymeworks: Thank you, Paul. We hope the continued progress we’ve made with our Phase one trials demonstrates our ability to translate innovation into clinical progress. And this year, we’re continuing to make significant strides in advancing another promising ADC, ZW251 toward IND submission and Phase one clinical trials. The prioritization acceleration of the IND for ZW251 reflects our disciplined approach to pipeline resource allocation, ensuring we focus on the programs with the highest potential impact. We do look forward to providing an update on the continued development of ZW220 as we continue to have a strong belief in this differentiated DC with our five nineteen payload.

As we advance our R and D portfolio, we intend to actively manage our emerging portfolio by continuing to evaluate our development priorities based on emerging data, the competitive landscape and strategic opportunities to maximize near term value creation. We’re very excited about exploring the potential of ZW251 in clinical studies. Targeting GPC3 with an ADC introduces an innovative approach for hepatocellular carcinoma, an area where new treatment options are urgently needed. With potentially best in class designs and differentiated mechanisms of action, our pipeline offers meaningful opportunities for strategic partnerships and long term value creation. Before I move on to Q and A, I’d like to acknowledge the appointment of Mr.

Oleg Nodleman as the seventh new addition to the Board over the past two years, bringing the total number of representative Board seats for ECHO R1 to two out of the current 11 Board members. Oleg’s appointment reflects the continued growth of ECHO R1’s shareholding, underscoring their confidence in the potential of Zymeworks and this decision follows years of constructive and ongoing discussions with EcoRIOne. The Board remains well governed and this balanced structure ensures robust and independent oversight, while also benefiting from Oleg’s years of experience in the biotech sector. We’re very confident Oleg’s experience and insights in driving value creation across the global biotech sector will be invaluable as we continue to execute on our strategic priorities and have a positive contribution to long term value for all shareholders. So in conclusion today’s update, I believe we’re well positioned to deliver growth and meaningful shareholder value starting with commercial activities from our partner Jazz and the resulting initial royalties from Zahira in BTC.

Along with our wholly owned pipeline catalyst, this is going to be an exciting year for us with top line PFS data from the Horizon GA-one study of zanadimab in combination with chemotherapy now expected in the second half of twenty twenty five, as well as continued progress by JASM Beijing in broadening the commercial reach for ZOHRERA and in evaluating other indications through ongoing investigational trials presented at a meth. We look forward to presenting multiple poster presentations at upcoming medical meetings, including the American Association for Cancer Research Annual Meeting in Chicago, the American Thoracic Society International Conference in San Francisco and others during 2025. With that, I’d like to thank everyone for listening to our call and I’d like to turn the call over to the operator to begin the question and answer session. Operator?

Conference Operator: We’ll now begin the question and answer session. Our first question comes from the line of Stephen Willey with Stifel.

Stephen Willey, Analyst, Stifel: Yes, good afternoon. Thanks for taking the questions. On February, I think you’ve made some commentary in the past, maybe have even reiterated today a desire to get into combination cohorts as quickly as possible. So should we think about the way that you will evaluate this drug in dose expansion as being any different from either one hundred and seventy one or one hundred and ninety one? And should we expect that there will be an urgency to initiate combination cohorts here maybe a bit quicker than for the other compounds?

Ken Galbraith, Chair and CEO, Zymeworks: Yes. Thanks, Steve. I think we have the same strategy for the entire portfolio. I think we’re interested early on to seeing some interesting signs of tumor activity. But we firmly believe that both ADCs and T cell engagers being used in combination with standard of care in the earliest patient setting possible might be the greatest possibility or probability of creating a sustainable response.

And so we’re extremely interested in that in the entire portfolio, specifically with ZW251 in HCC. Obviously, we all know the poor prognosis for patients and the lack of a long term overall survival for that patient population. So we’ll study it in a dose escalation, understand the drug, make sure we see a differentiated tolerability acceptable tolerability profile, some differentiated mechanism and some initial activity. And then we will be interested in studying the drug beyond that in expansion cohorts, both on its own, but also with the greatest possibility of a stronger outcome in an earlier treatment setting in combination as you suggested. So I think we think this way throughout the portfolio for two fifty one itself given the patient population, that’s something that we’re going to look forward to as quickly as we can.

Stephen Willey, Analyst, Stifel: Okay. And then maybe just on NaPi2b, I think you certainly characterize this as being IND ready for the middle part of this year. You guys were fairly optimistic about the target, the biology, the commercial rationale. Can you maybe just expand a little bit on perhaps what either internally or externally kind of prompted this prioritization of February over 02/20? Thanks.

Ken Galbraith, Chair and CEO, Zymeworks: Yes, I think we’ve as we said, we’ve talked before that we do intend to actively manage our emerging and developing portfolio and that means making very specific decisions about resource allocation because every biotech has a limited amount of time focus and resources. We’re very excited about the W-two 51 and we’ve been able to find a way to accelerate the timing to get into clinical studies and we’d like to continue that momentum to make sure that we can accelerate that program as quickly as possible in Phase one studies without losing also the momentum we currently have in our dose escalation recruitment in ZV-one hundred and seventy one and one hundred and ninety one, which is going very well and we want to make sure we don’t lose momentum there as well. So given our excitement about two fifty one and our ability to accelerate that in the clinic, we decided to make that decision. ZW220 remains a very interesting ADC for us. It is highly differentiated based on the data we presented.

We’ve taken it right up to IND ready state. It would not take us long to initiate that program when we decide to do that. But this is primarily about our excitement about prioritizing two fifty one given the excitement we have around looking what impact this agent could have on that patient population, which again is a little different patient population than the gynecological and thoracic indications, which were mostly in ZW 171, one hundred and 90 one and two twenty clinical study plans. So I think we’re still very interested in ZW two twenty, but I think our excitement for February and the ability to accelerate into clinical studies and make sure we can do that continuing in Phase one just made us make that resource allocation decision. And we’re going to actively manage the portfolio, so it’s not the last resource allocation decision we’ll make to move things around when we see an opportunity and a real unmet need and we think that we can go quickly to pursue that opportunity and something that could have a very high impact on that patient population and a very high impact on our portfolio as well.

Stephen Willey, Analyst, Stifel: All right. Thanks for taking the questions.

Ken Galbraith, Chair and CEO, Zymeworks: Thank you.

Conference Operator: Our next question comes from the line of Akash Tewari with Jefferies.

Manoj, Analyst, Jefferies: Hey, this is Manoj on for Agash. Thanks for taking our questions. On the Horizon DGA trial, we are seeing from the original Tungentrio trial design paper that you assume the relatively aggressive enrollment compared to the historical trials like TOGAGI, cabote, GenoD-eleven. Do you attribute the current delay in readout timing to slower than initially expected enrollment? Or can we actually say it’s more related to slower event rate accumulation in drug or control arms?

And just one more, what are your expectations on the percentage patients in the PD-one high status in the Horizon GA trial? Given this is an open label trial, is there a risk in geographies where a keynote data alone is approved that PD-one high patients and patients are randomized to the clinical dropout? So the overall trial is more tilted towards PD-one low population. Just wondering how you consider that possibility? Thanks.

Ken Galbraith, Chair and CEO, Zymeworks: No, thanks. On the second question, we just can’t speculate. The clinical data will be here this year and so we’ll wait to see that clinical data. I think Jazz gave a pretty good update last week on their earnings call about the guidance, the changing guidance for the outcome and the rationale for that. I think they addressed that in their press release and remarks plus their Q and A.

So I don’t want to go beyond the guidance they’ve already provided. So I’ll just refer you back to that guidance or refer you back to Jazz for that question.

Conference Operator: Thanks. Our next question comes from Yigal Nochomovitz with Citigroup.

Yigal Nochomovitz, Analyst, Citigroup: Yes. Hi. Thanks. Just a follow on Steve’s question around the 02:51. Was there something specific that you saw that was really sort of as a standout experiment or standout results in preclinical work with two fifty one that made you take this decision?

And was this a fairly recent decision or was this something that has been brewing for some time? Thanks.

Ken Galbraith, Chair and CEO, Zymeworks: No, thanks. I can get Paul to answer the first part of your question. I think the second part, we’re always looking for ways to accelerate getting our programs into clinical studies and ensure we’ve got really good momentum in Phase one clinical studies. And we did that last year with ZW-one hundred and seventy one and one hundred and ninety one of those are going well. And with two fifty one, we have been looking for opportunities to accelerate the timing to get into the clinic and we’ve been able to find that.

And I think we have a really good pathway to generating clinical data for that agent. And so that’s why we’re excited and that’s why we prioritize it with some resource allocation. But Paul, I don’t know if you want to mention anything else about preclinical data of interest around the decision.

Dr. Paul Moore, Chief Scientific Officer, Zymeworks: Yes, absolutely. I mean, I think we’ve signaled some of the exciting data that we’ve had on February in prior presentations, but the data has continued to look very exciting. I think our profile in therapeutic control of HCC models, PDX models that data has continued to mature and support our decision. So with that, from that aspect, we always felt that the opportunity to break into a new therapeutic area was exciting. There’s such an unmet medical need there.

So I think the rationale for moving that forward as quickly as we can is solid. Obviously, as we’re doing our IND enabling studies as well, but those go to a certain pace and we can interpret that data as it comes out. It’s something so you need to navigate that and that’s all been navigated so far as best as we can see. So it gives us the sort of confidence and to accelerate the timeline on that one. So it’s really just it’s always been an exciting molecule and we’ve been able to as Ken and we’ve noted, been able to accelerate it.

So we want to get that back to patients as soon as possible.

Yigal Nochomovitz, Analyst, Citigroup: Okay. And then for 02/20 for the NaPi2b, is the base case assumption that if you were to bring that one back online that it would be through a partnership or through your own efforts or is that unclear or to be determined?

Ken Galbraith, Chair and CEO, Zymeworks: Yes, we haven’t given any guidance on where we might initiate that because I think we need to make wait to make that decision. But obviously, we’ve continued to invest in it to get it to an IND ready state. So we’ve completed everything that we believe we need to take that in clinical studies, including the pre IND consultation, GLP talks and the clinical supply. So that program could be initiated pretty quickly in the clinical studies. And I think as soon as we have guidance on being able to do that, we’ll provide that guidance to you.

Yigal Nochomovitz, Analyst, Citigroup: Okay. Thanks, Ken and Paul.

Ken Galbraith, Chair and CEO, Zymeworks: No, thank you.

Conference Operator: Our next question comes from Brian Cheung with JPMorgan.

Yigal Nochomovitz, Analyst, Citigroup: Hey guys, thanks for taking our questions this afternoon. Maybe just going back to the path on 02/20, was the decision driven by what you saw in part based on the preclinical work or the perception of NaPi2b in general among investors? And then as we think about the rest of the portfolio, and is there any ability for you to now pull forward asset like two zero nine?

Ken Galbraith, Chair and CEO, Zymeworks: Yes. Thanks, Brian. We haven’t changed our guidance on ZW two zero nine, but obviously we’ve shown with DW251 we can find ways to accelerate those programs. I think the decision we took to prioritize resource allocation on two fifty one was simply because of the excitement we have for that. Nothing else about TW220 at all.

I think we want to accelerate two fifty one into clinic. We want to make sure we have good momentum in Phase one studies and we don’t want to lose momentum that we have currently now in our ongoing dose escalation studies for CW-one hundred and seventy one and one hundred and ninety one. And I think we’re just trying to be very careful not to take on too much to make sure we focus and allocate our resources where we think can have the highest impact. And so I think that’s the decision that we took and I think it’s a very disciplined approach. And we look forward to moving February into the clinic and starting those Phase one studies and continue to prosecute the dose escalation studies that are ongoing for 01/1971 and 01/1991 and the good momentum we have there.

Yigal Nochomovitz, Analyst, Citigroup: Okay. Thank you, Ken.

Ken Galbraith, Chair and CEO, Zymeworks: Yes. Thank you, Ryan.

Conference Operator: Our next question comes from Jonathan Miller with Evercore ISI.

Yigal Nochomovitz, Analyst, Citigroup: Hey, guys. Thanks for the question. I’ll pile on NAPI 2b while we’re on the topic. Obviously, you haven’t made final decisions here, but I noticed it’s still in your pipeline slides. You’re still talking about an epi2b as a target, but obviously it seems a little bit in limbo.

Should I still think of this as part of the initial slate of targets that really matter to you, that five by five slate? Or should I be thinking more about promoting some of those autoimmune or inflammatory programs into those five by five slots, Just in terms of the whole pipeline development, where is NaPi2b ranking now compared to the six or seven programs that you’ve talked about explicitly?

Ken Galbraith, Chair and CEO, Zymeworks: Yes. As hemifute twenty is still a very high interest molecule to us. And I think you saw from the preclinical data we presented before including last year, it is highly differentiated and we’re interested in exploring that. I think this decision is more about our excitement for February and being able to accelerate that into the clinic and get good momentum in the Phase one studies as well as not lose momentum from the dose escalations we have going on now from one hundred and seventy one and one hundred and ninety one. So you’ll see it’s in our pipeline, it’s of high interest.

We’ve taken it right up to the point of IND filing and it would not take us much time or effort to initiate those clinical studies, but we’ll just decide to do that at the right time just to make sure that for the portfolio itself, we can follow the areas of high impact and February is definitely that and make sure we can move momentum throughout the entire portfolio as it grows and it’s nothing other than that.

Yigal Nochomovitz, Analyst, Citigroup: Okay. I won’t call it attrition.

Ken Galbraith, Chair and CEO, Zymeworks: No, no.

Yigal Nochomovitz, Analyst, Citigroup: Can I then ask on Xani, obviously you still got material regulatory milestones left that it was very exciting about and I’m sure you can’t speak with any detail on what is going to enable those, although I think we can all sort of guess? Can you just say how many indications and geographies are the remaining milestones split between? Is there one is there an expectation that one is really driving the bulk of that remaining $500,000,000 or should I expect that to be more split?

Ken Galbraith, Chair and CEO, Zymeworks: Yes, we’re not we’re unfortunately not able to guide on the future milestones. You obviously saw the milestone we got for the BPC approval and you obviously saw the milestones we received from Beijing in their territory. And as those events continue to happen, we’ll report what those milestones are and you just have to wait until that occurs. We’re really excited that Sahara is launched. And The U.

S. And BTC, we’re really excited about the potential for that to be broadened to both China and Europe where there’s regulatory matters pending and obviously really excited to see the results of the top line RISE and GA1 study in the second half, as well as excited by the progress that JASM Beijing are making on the other registration studies for expansion purposes that they have ongoing. And I think we’re extremely excited about the partnerships and I think our share of royalties and milestones will report as they come along and then we’ll be able to add it up after the fact.

Yigal Nochomovitz, Analyst, Citigroup: All right. Makes sense. I guess then finally, can you give us an update on your current expectations for data disclosure on the internal programs? I mean, obviously, you’re still relatively early for 01/1991 in the escalation phase, but how are you thinking about when you might disclose data? How much data you’d want to have in hand before you start sharing that publicly?

Ken Galbraith, Chair and CEO, Zymeworks: Yes. We’ll continue to evaluate that as data comes in. I think those studies are progressing very nicely for us. And I think we want to make sure that continues even though we’re accelerating February into clinical studies and have that go as well as the first two have. I think we’ve been very clear that we intend to provide updates on our clinical programs on a regular basis.

We’ll do that at a peer reviewed medical or scientific meeting. And I think we have said before, we won’t give any guidance until we’ve decided we have an update of this meaningful to present in that peer reviewed format. And once we’ve done that and submitted it and have an abstract accepted and talk about the title, then we’ll guide that you’ll see data at that point. And we just don’t want to get ahead of ourselves with that guidance at all. The studies are progressing well, but as you say relatively early and we want to make sure that we have something meaningful to put in front of that peer reviewed audience about the status of the work that we’re doing and what’s going to come next.

So you just have to wait for that guidance to occur.

Dr. Paul Moore, Chief Scientific Officer, Zymeworks: All right. Thanks so much. Yes.

Ken Galbraith, Chair and CEO, Zymeworks: Thanks, John.

Conference Operator: Our next question comes from Jay Olson with Oppenheimer.

Jay Olson, Analyst, Oppenheimer: Oh, hey, congrats on the progress, including the addition of OLED to your board. And thanks for providing this update. We have two questions. First on autoimmune and inflammatory diseases. Can you talk about the gating factors for filing the IND for 1528 and could that be accelerated based on read across from competitors programs like Regeneron’s IL-thirty three readout and COPD?

Ken Galbraith, Chair and CEO, Zymeworks: Yes, thanks. I can let Paul talk about work that will take us up to IND. And obviously from our experience of 01/1971, ’1 hundred and ’90 ’1 last year and now at February, we always look for opportunities for programs of the highest possible impact in our portfolio to find ways to accelerate those. So we’ll continue to do that for this program as well. But Paul, do you want to talk about Paul about what work we need to get done to get to IND of the nature of that work?

I know go ahead.

Dr. Paul Moore, Chief Scientific Officer, Zymeworks: Yes, sure. Yes, I know. I mean, obviously, we shared some data at the R and D Day on that. So we’re very excited about the preclinical profile. We have some pilot NHTP study, some pilot PK.

So that’s checking a lot of boxes for us. So now we have to do the IND enabling activities, think about the top study plan, have the materials for that, have the materials to support filing. So that pretty much takes a standard amount of time. And as Ken alluded to and we’ve shown with the other programs, there are some places where we can contract on that, but we prefer to give realistic guidance as best we can to satisfy we’re seeing second half of twenty twenty six. I mean, I think you mentioned that there are other readouts coming from Regeneron and we know also AstraZeneca and other companies have IL-thirty three readouts.

Certainly, that will we’ll be keeping an eye on that, but we’re very confident in the design of our molecule and how we’ve designed that and how it adds benefit to blocking both of those pathways that we will be focused on our molecule. But certainly, we realize that that could add additional clinical validation to our strategy.

Ken Galbraith, Chair and CEO, Zymeworks: And we do expect to continue to report on some of that preclinical data as we progress towards IND the same way we did for our other agents one hundred and seventy one and one hundred and ninety one and others. So expect to see additional data as we make our way towards IND.

Jay Olson, Analyst, Oppenheimer: Okay, great. Thank you. That’s super helpful. And then secondly, in cancer, can you just share your thoughts on multi payload ADCs and is that something that you might be interested in?

Yigal Nochomovitz, Analyst, Citigroup: Go ahead, Paul.

Dr. Paul Moore, Chief Scientific Officer, Zymeworks: Well, absolutely. Certainly, we think a lot about payloads. We’re investigating additional payloads. We could build multi payload molecules even with the capabilities we have in house just now. I think there it’s really important to think about the challenge or the therapeutic rationale for making such molecules.

We see so we do think about that, but it has to really provide a benefit in design for us and thinking about that. So certainly we’re aware that we’ve really invested significantly on generating what we believe will be a best in class TOEFL platform. But behind that, we thought about other payloads and then how you could combine that either with TOEFL or with themselves is certainly on our radar. But a lot of it will come down to the biology of the target indication and the need for do you need that or is that the right solution for what you develop?

Jay Olson, Analyst, Oppenheimer: Great. Thank you so much for taking the questions.

Yigal Nochomovitz, Analyst, Citigroup: Thanks, Steve.

Conference Operator: Our next question comes from Justin Zielen with BTIG.

Justin Zielen, Analyst, BTIG: Thanks for taking my questions and congrats on the progress. For two fifty one, can you speak to your desired target product profile from an efficacy, safety and or dosing differentiated profile from the competitive landscape? And I have a follow-up on 191.

Ken Galbraith, Chair and CEO, Zymeworks: Yes. Paul, do you have any comments you want to make about two fifty one? I don’t think we’re so specific about our target product profile, but Paul, do you think you’d like to add about two fifty one from what we see in preclinical data that we think we’d like to try and accomplish?

Dr. Paul Moore, Chief Scientific Officer, Zymeworks: Yes. No, I think there we know what the benchmarks are in those therapeutic areas and we feel that we’ve been striving for to demonstrate in the clinical studies, certainly from preclinical data, the efficacy that we see across a broad range of I mean, I mentioned a broad range of hepatocellular PDX models is you’ll get excites us, the GLIFIKIN III target. We are big believers in the importance of the target when we’re designing our molecules. The penetrance of GPC3 looks broad. What we need to enrich, we will find out.

So that may also be a factor in our final target product profile. But as of now, based on the data that we see from the preclinical studies, we seem to be able to have broad range of the population and that translates into the clinic. We feel this could be really impactful for patients that are in big need for additional options of lines of therapy.

Justin Zielen, Analyst, BTIG: Makes sense to me. And regarding 01/1991, can you talk to how stable your linker is relative to competitor technologies? And that is to say, do you expect the toxicity profile for one hundred and ninety one to be similar to free ARINOTECAN or TRUDELLVI, for instance?

Dr. Paul Moore, Chief Scientific Officer, Zymeworks: I’ll take that. I can take the first half. I mean, our linker stability is what we would consider a traditional linker stability. What we have avoided here is using highly stable linkers. We’re more in the realm of what others have used for approved ADCs.

So that more traditional linker stability. Regarding the profile of the safety profile, I think the tolerability that’s been something that we’ve really focused in on when we’ve been developing our ADC, our TOEFL. I think one of the earlier questions was on combination strategies and we really that was really cornerstone that we had a tolerable profile. A, so that we could get the dose up in patients, so that we could get to a certain threshold level that we think is important that you get to get maximal antitumor activity, as well as the ability then to do combinations where you’ve got a more tolerable profile. So obviously we need the efficacy, we can’t lose that, but by being able to dose higher, we think we can get a more efficacious response as well having a more drug profile that’s more compatible with other standard of cures.

So that’s really our thinking there. And our preclinical data supports that in the tolerability that we’ve seen for one hundred and ninety one, where we’ve been able to dose up to sixty mgs per kg with a DAR8 topo and have a clean bill of health. So that’s really our philosophy and thinking on the design.

Justin Zielen, Analyst, BTIG: Excellent. Well, thanks again for taking my questions.

Ken Galbraith, Chair and CEO, Zymeworks: No, thank you.

Conference Operator: We’re showing no further questions in queue at this time. I’d like to turn the call back to Ken Galbraith for closing remarks.

Ken Galbraith, Chair and CEO, Zymeworks: That’s great. Thank you, operator. Well, thank you everyone for listening to our progress on the call today and look forward to reporting continued progress at Zymeworks on the portfolio in the months ahead. So thank you very much.

Conference Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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