You know, I think being here a year ago, just to reflect a little bit, if that's okay with time. Being over here a year ago, we had just announced our tremendous partnership with Jazz, which was great for the company, very transformative from a deal perspective. But there were lots of open questions when I was here a year ago, and you were asking all those open questions.
Yeah.
You know, how effective is the drug zanidatamab that we partnered with Jazz? We didn't know. We didn't have pivotal data yet. How committed was Jazz to that partnership and the breadth of zanidatamab? How big was the peak sales potential for that drug in terms of being able to, to help patients with HER2-targeted therapy in areas that had not been done before? You know, was that the right strategy to not commercialize this drug yourself, to partner with someone else? You were gonna take that capital and try and build a portfolio behind that, which we did with the 5 by 5. How is that going to work out? And I think over the course of last year, we've answered a lot of those questions.
I think over the course of last year, we're much more confident about all of those questions that might have been here a year ago, and I think it's validated a lot of decisions we made in 2022 and 2023 to reset the business. And I'm really confident about our ability to execute in 2024 and 2025, and I'm happy to address all those open questions that were here last year and how we filled them in. But, you know, we had our first pivotal data result, which is great. We're on the verge of doing regulatory filings on that. Jazz is completely committed to pursuing the breadth of investment that's necessary in an R&D perspective for zanidatamab. They've guided publicly at +$2 billion peak sales potential, so it really is gonna transform their oncology business, the way that that deal transformed our business.
We're starting to look at the 5 by 5 portfolio we're developing, and again, it's full of very interesting compounds of both antibody-drug conjugates and trispecific antibodies, which we think zanidatamab is not gonna be the last great antibody that our protein engineers design. So I think there's a lot of things we've been able to answer over the course of last year that gives us much more confidence going forward in our business. A year ago, when I was here, the stock was $8 a share. Today, it's $7 a share, so obviously there's some other folks who don't share that confidence we have, or it hasn't caught up to the confidence we have about the business.
But I'm happy to fill in the details of all the data and other things that have occurred over the last year that just make us feel really good about our business. Right now, in a maybe terrible market sentiment in the sector, but right now, we feel really enthused about the next two years for Zymeworks and what we're gonna be able to do for patients, and be able to do for investors, and be able to do for our current partners and partners to come.
By the way, outperform the market, that's the-
It's hard to think about $8-$7 outperforming the market, but yeah, thank you for that.
Yeah.
Appreciate that.
Stay positive. Well, okay, so let's hit on that, and there was a, an update you guys provided, with the, the PD-1 ZW25 chemo and gastric in October that I think did fly under the radar. And there is this kind of interesting discussion. I, I think, like, one way that we kind of look at it is it reminds me of renal cell, where you have, you know, the Exelixis regimen, the Merck regimen. They're not super differentiated on efficacy, but it seems like patient experience seems to be what drives, y ou know, CheckMate-9ER, that data seems to have a better quality of life. I wanna hit on that, but I, I actually wanna start off on response rate. If you compare versus KEYNOTE-811, it kinda looks similar, right? It's 76% versus 75%.
That's probably not where there's differentiation. What I do think was kind of interesting, and obviously it is early, is that you had a 16.7 months PFS versus, I think, KEYNOTE-811 was more like 10.0 months. You know, what's going on there, right? Like, it's you have a similar response rate, you have a higher PFS. It's obviously early data, but is there anything mechanistically going on with ZW25 that might lead to more durable responses on a PFS benefit? And really, what's your confidence that that signal maybe replicates in a larger study?
Yeah, no, good question. You know, I think in the HER2-targeted therapy space, I think we've seen, you know, new agents, including T-DXd and also immunotherapy, you know, provide a lot of benefit to patients in a lot of different indications. Not necessarily the case in biliary tract cancer or in gastroesophageal. For some reason, those tumor types have been harder to see how immunotherapy or another agent might move the standard of care. What we found is that for some reason, zanidatamab, either as monotherapy in combination with chemo or in combination with immunotherapy, seems to do that. Mechanistically, there's a rationale now, so when we look at our clinical data, we're able to understand why we get such quick responses, how we get a very consistent response, and we get deep and durable responses.
When you look at KEYNOTE-811 and the recent study that just came out, the response rates are very similar.
Mm.
But if you don't have a durable response for a patient, why, why does that matter as much? So if you do not have a durable, deep response for a patient initially, it's not gonna translate into a longer progression-free survival, and it's not gonna translate into a, an overall survival benefit. So you look at KEYNOTE-811, a great idea to try and take trastuzumab chemo and, and add a PD-1 element to see what you can do for patients in GEA or in gastric and gastroesophageal junction. But again, no OS benefit seen in any interim analysis. I don't see how it's gonna be likely in a final analysis. So getting a response is great. If it's transitionary or is not durable, then it's not gonna help that patient get to where we wanna get to.
You know, with trastuzumab chemo, which has been the standard, and adding trastuzumab to chemo was an incremental benefit, you get to about a seven-month median PFS. You know, our phase II data suggests that in the doublet combination, we can get over a year in PFS, and we can likely get to an OS figure that's at least two years. That's a pretty profound difference from the current standard of care. We think we can do that across all patients-
Mm
... populations, whether you're PD-L1 negative, PD-L1 positive, whether you're in any of the other subpopulation, Asian ethnicity, older patients, male, which doesn't happen with every therapy. So we think we can get there. For some patients, we think there might be the ability to combine with a PD-1 and get an added benefit, and maybe we can get up to the 16 months that we saw as a median PFS in our phase II study, or an OS that gets you closer to 2.5 years than two years. That, that's such a fundamental change in the nature of care for these patients.
Instead of being fragmented with different therapies that might be applied because nothing seems to be able to do that, you could see a situation with our current data, if we can replicate that in our phase III study, which reads out next year, to really become the standard of care for that patient population across the demographic if our subpopulation data holds. That's. That could be pretty profound. That's the stuff that gets you standing ovations at oncology conferences now.
Right.
That's the type of stuff that gets you a +$2 billion peak sales product, because of the, you know, the unmet need in that patient population, that if something that really moves the needle on not just PFS, but OS as a, as an endpoint.
Understand. By the way, be careful on standing ovations. The last standing ovation was Padcev, and I don't think Astellas or Pfizer stock has moved, but... an aside. But you did say something that's quite provocative, and I wanna dig into that.
Sure.
Okay, so this question of the doublet or the triplet.
Yeah.
You just said for the doublet, you could show maybe two years on overall survival. Your triplet right now is screening out to, like, 16 months on overall survival for gastric. What gives you the confidence that the doublet might actually have a better... Because you would think, like, the fat tail on an IO regimen would be contributing to the, you know, survival benefit here. Why would a doublet actually be better? 'Cause, like, to your point, you actually have a higher response rate, but, you know, maybe it's a little too early to talk on PFS. So what gives you the confidence that the doublet might actually have better OS?
Yeah, I think if you look at the immunotherapy studies that have been done in this population, but, you know, either in biliary tract cancer or in GEA, you know, you do see some initial response rate improvement. But, you know, for the majority of patients, unless you've got a really high PD-L1 score, you don't see a substantial longer term benefit-
Hmm
... from that regimen. And I think that's in the, it's in other data sets which have been published. It's in the KEYNOTE-811 data set as well. So, you know, what you tend to see is in a PD-L1 negative patient, let's say, you really see no benefit. In the case of KEYNOTE-811, there was a negative survival.
Right
... factor. HR of 1.4, 1.3 is never a good score. It's probably a little bit anomaly of the size of the data. It's probably not quite that. But, you know, I think what we see in, in our study is the ability with zanidatamab, because of the mechanism that's specifically targeting HER2, and targeting in a very unique way that's, you know, not Traz, it's not Pert, it's not T-DM1, it's not T-DXd. None of them were really successful in that patient population. But the mechanism of how that biparatopic antibody works seems to be extremely well suited for that tumor type.
Hmm.
And again, HER2 is the issue, then deal with HER2. If you also have a high PD-L1 score, that might be the ability to get an additional benefit over and above that. But you know, we see a really strong benefit regardless of PD-L1 status, regardless of PD-L1 score. Just might be an extra benefit, which is why we included the triplet as a third arm. So for all the data we generated over the past year, you know, we've got really confident. Obviously, we're running a large, global, three-arm randomized study that reads out next year, and we need to confirm that benefit, not just overall, but in all those subpopulations that are extremely important in this disease.
But, you know, wouldn't it be wonderful if we were able to, to really you know, improve the standard of care in an area that has not been improved by previous agents, in a way that just gives an obvious first choice for this patient population, and really moves the needle on overall survival, which is what we all want to do in the, in the cancer patients that we try to develop new medicines for? That would be fantastic for the patients, and it'd obviously be fantastic for ourselves and Jazz in BeiGene from a commercial perspective, given the number of patients we could potentially treat with zanidatamab.
Understood. So, as of Q3, I think you have, what? Around $400 million in cash, it will round slightly up. ZW49, right? I'm gonna ask you the same question I did last year.
Yeah.
You know, and I think this comes from a lot of investors, too. It's like, look, you've got, you know, the Seagen... Like, I totally understand cross resistance, not everyone's gonna get treated with a topo ADC, that makes sense, so you have MMAE toxins that you can combine with the PD-1. But you have, you know, compounds like the, you know, the ARX compound, you have the, the Seagen one that's quietly showing over 60% response rate.
Mm-hmm.
They're further ahead than you guys also in development versus ZW49. So why continue to spend on that program? And is there a hard line in terms of what you're willing to invest in order to get a meaningful card flip, let's say, in HER2 expressing NSCLC?
Yeah, I mean, for that program, it's a very modest clinical development investment that we're making right now, and we're making it in an area that does not have an obvious first-line choice. So for us, there's still the opportunity to be the first-line choice in the HER2 overexpressing patient population, non-small cell lung cancer. For us, that's where we like to go. That's where we're in biliary tract cancer, that's where we're in GEA with zanidatamab. You know, I think our partner, Jazz, you know, has other indications in mind that they're pursuing-
Hmm
... that maybe aren't first line, but, you know, are good commercial opportunities for us. We look for first-in-class opportunities. So in the HER2 space for an ADC, there's a lot of complexity, there's a lot of other agents which are doing, you know, great things. In that specific population, for some reason, no other agent has been able to be effective in that HER2 overexpressing non-small cell lung cancer space. Still treated with PD-1 as if you have no actionable biomarker. You know, we looked at the data that was at ESMO in the EV-302 study, we saw the combination of an ADC with a payload that creates immunogenic cell death with a PD-1. It's pretty amazing, the synergy of those two agents together, as opposed to separately.
And we're thinking, can we replicate that with an auristatin payload, which has okay monotherapy data, in combination with a PD-1, which does okay in that patient population? And maybe the combination of those two, you know, could still be the winning opportunity for patients in that setting, and that would be a first-line opportunity. That's worth investing in 'cause it's a very substantial size population, a very substantial commercial opportunity. You know, beyond that with [inaudible], it's hard to find another one like that.
Yeah.
So our clinical investment and strategy may be limited to that, but that's a really substantial commercial opportunity if we're successful in the high expressers. And then, you know, we always thought there was a low-expressing population in non-small cell lung cancer, the way you think about breast cancer and HER2. And I think the MD Anderson paper that finally came out in August-
Mm.
convinced us with a good publication, it's very sizable. So with a biparatopic antibody on an ADC, and we know zanidatamab is an extremely great internalizer, you know, it would be nice to explore, if we're successful on high expressers, whether there's a broader potential in that patient population to go to, you know, moderate or low expressers, the same way that you saw T-DXd do in breast cancer.
Right.
So, that's worth a little bit of clinical investment. It's not the main thing we're doing. It. I don't actually hide it a lot-
Yeah
... because I think it's kind of a sleeper thing. It's a really great opportunity if it happens, and if it doesn't, we have five other great medicines going to clinical studies. We've got Zani out front, which I think is gonna be, you know, a great product. So it is worth a little bit of clinical investment because we could win, and we could win for patients, and if we win that opportunity, it's a really significant return on that modest clinical investment.
So define modest. Like, if I were to say, in my model, let's say the incremental spend on ZW49 to get to this card flip is $50 million, would I get a call from you being like, "Akash, why'd you put that number?" I mean, is that ballpark somewhere?
We do, we do things way more cost efficiently than that.
That's what I...
Our cost structure is-
Yeah
... lower than Jefferies. Yeah, so- No, it's a, it's a very modest clinical investment. It's something that could be, you know, a substantial opportunity, and, and-
Yeah
... we'll pursue it until someone else wins it, or until it's obvious we can't win that opportunity.
Now, Ken, I think it was so impressive that you did that deal on, on ZW25, and you were able to make it happen. You've talked about ZW49 in partnership opportunities. Is there any qualitative color you can give us on that, you know, route of potentially partnering this program out to a larger company?
Yeah, I think we're, you know, we're, we're definitely interested in non-small cell lung cancer in multiple targets. You know, we have four different programs now in non-small cell lung cancer, so we have some concentration. So I think doing it's pretty cost effective for us as one additional target. You know, we have another concentration in gynecological cancers with three different programs, and we're developing something a little bit broader in gastric cancer beyond Zani in pancreatic and liver cancer with the new target in HCC. So I think we're developing these areas of concentration. So we kind of like that 'cause it gives us the opportunity not to talk just about product partnerships, but to talk about, you know, therapeutic areas of interest for partners, that we can give them multiple opportunities at the same time to maybe pursue together. So I think I wouldn't think about that as separate.
Mm.
I would think about that as something that might be interesting for someone who's interested in exploring non-small cell lung cancer, which is a sizable opportunity, even broken down by actual biomarkers. And no one has found a way with a HER2-targeted agent to be more effective than just giving Pembro, which gives you about a 20% response rate. If I can double that response rate, and there's a low-expressing population, too, that's a pretty interesting program on its own, but it might be an interesting program for someone to have in colla- with other collaborative programs we might have.
Understood. Now, maybe stepping back and on 5 by 5, you know, folate receptor alpha, the space has definitely changed, right? And, you know, the kind of dark horse, in my opinion, is AstraZeneca. You have a topotecan DAR4. That data's gonna come out in the first half of next year. We, you know, I think we have a sense on what the ImmunoGen data looks like, and I'm guessing PICCOLO is probably gonna show, like, a 45%-50% response rate 'cause a lot of them are prior PARP. But, you know, that is gonna get an IND in 2025, right? So, like, I feel like in terms of investment, you can't be so committed to anything, 'cause, you know, you can have things like Mersana, where, like, you start getting questions on the target itself.
What do you currently view as the room for differentiation on the folate receptor alpha space? And let's say that the Astra compound actually does show what you might have, where it's, you know, folate receptor alpha low and high, you do get an equally good response rate. You have a topotecan that's at least alluding to that possibility. You know, if that actually does show up with the Astra data, what would you do with your program?
No, good question. I think on the ADC space itself, and we have three ADCs going to the clinical studies in the next two years, on a philosophy we think is quite different than the way ADCs have been used before. So we have taken this approach of trying to move ADCs from monotherapy agents that we might use in later line, to things that can be used also in combination, 'cause they're more tolerable in earlier lines of therapy, where we can get a better patient benefit and probably a broader benefit. So to do that, we reduced the potency in the payload.
Mm.
So we're not exatecan, which a lot, a lot of people use in topo for payloads. 'Cause it's generic, you can use it. We did a medicinal chemistry screen to come out with something we think is the ideal agent to be used in topo, and there's a manuscript that'll be published early next year about how we did that and why we did that. So we think the reduced potency is interesting. We focused a lot on the antibody, 'cause we're approaching engineers. So, you know, we focused on things that internalize extremely well and penetrate tumors extremely well. So in folate receptor, if you look at all the antibodies that people are using, including AZ, nothing internalizes as well-
Mm
-as the antibody we have on folate receptor. So we think reduced potency, better internalizing antibody, and then the linker stability, we, we've really undertaken the approach of designing in stability into the linker. So we think designing in stability into the linker reduces some non-specific tox, so it does make it more tolerable, and we think it improves the bystander killing effect. You know, so our philosophy is that with that approach, we can usually create a more tolerable ADC, move it forward, in combination with other agents of standard care in earlier lines of therapy. We think that's a winning combination or strategy in ADCs of the future. You know, in folate receptor alpha itself, what's different than what we're doing than everybody else? Again, proprietary payload. It's not exatecan, which is what most of them are delivering. AZ is also proprietary.
We think that's a smart move. On the antibody itself, we have a much better internalizing antibody. We've also taken an approach of using DAR 8 versus DAR 4, because we think in a tolerable setting with reduced potency, that'll get you more tumor types, but more breadth in tumor types and more breadth in expression levels.
Hmm.
Finally, on the linker strategy, it's quite different. So if you look at that-
Versus Astra?
Yeah, if you look at that specific ADC, again, it's not built the way that the ones they work with, with Daiichi. It's built around originally the Spirogen technology, which is a much more stable and firm linker. You know, from our work that we do, we think that builds in the potential for more non-specific toxins. And so we've taken our approach of design and stability. So if you look at what's different, you know, we have a different payload, we have a different DAR, we have a different linker strategy. We think we have the best antibody on an ADC of any of the folate receptor alpha-targeted ADCs. So there's three or four different things we've structured and designed into it, which are different. The question in the clinic: does it matter?
Right.
With Zani, we couldn't answer that question. Why do you do a biparatopic antibody in HER2, and why do you do it that way? The mechanism turned out to be so unique and differentiated, it works better than any other one that's been designed in GEA and BTC, at least. In breast cancer, it didn't matter as much, but in those tumor types, it did. So eventually, we'll get clinical data to understand whether those differences mattered. You know, there's enough of them. And then in the portfolio, you look at NaPi2b, which we think is a really great target for ovarian and non-small cell lung cancer. We took the approach of let's do a DAR 4 there versus a DAR 8, and let's mute the Fc, which we didn't do in folate. So there's a little bit of diversity built into our-
Hmm
... thoughts about this philosophy, but they're all the same. And our last one, GPC3, it's also a DAR 4. It's meant to be used in earlier stages of HCC in combination with A plus B or A plus T to hopefully get, you know, some overall survival that's meaningful to this patient population, so DAR4 made sense there versus DAR8. So I think we've been consistent with our philosophy of all three of those. There's some diversity of targets on each of those, some diversity of therapeutic indications, some diversity of design elements that I think, you know, allows us some latitude. But I think in folate receptor alpha, we think we've made all the right choices on how to design and engineer the best ADC.
Hmm.
In clinical data, we've got to prove that those things mattered.
Understood.
That clinical data will tell us the same way it did on Zani.
Understood. The last thing on folate receptor alpha is-
Mm-hmm
... like, kind of the lurking giant coming from behind is you have, you know, Merck, which I thought, oh, may have overpaid on that deal, but-
I don't think-
CDH-
I don't think they did.
I-
I think those are good deals.
Okay, so if you-
Those are good precedents from my perspective.
All right, so biggest upfront payment, $22 billion. Right.
I'm using those precedents a lot. Yeah, sure. Yeah.
But, you know, that data is really, really provocative. You don't have a biomarker at CDH6. It's a 44% response rate, but that's actually not, right, a fair take. If you actually look at the higher cohort over six with the 17 patients, that was showing like a +60% response rate there. You know, if that data continues to show up, right, and, and you can actually have a biomarker-
Mm-hmm
... agnostic approach in ovarian cancer, what does that leave, you know, room for you in the folate receptor alpha kind of targeting space? And how would more Merck- Daiichi data maybe change the way that you view your own program?
Yeah, I think at this point, you know, we need to see more data, but we're, you know, we're pretty convinced that biomarker strategy with ADCs is the way to go. I mean, we... You know, we heard this with Trop-2 as well, right? So Trop-2 in breast cancer, maybe I see, you know, benefit for patients without the biomarker. In non-small cell lung cancer, you know, the benefit and efficacy in that patient population is based on a biomarker that identifies the patients who get the efficacy.
But you don't think-
And you lose-
Very-
You lose, you lose too much, I think so.
Yeah.
So in this case, sometimes tumor types are different as well, right? So that's a good example where, you know, for the same ADC, it didn't operate from a biomarker perspective in these two tumor types the same. So in folate receptor alpha, our strategy was to try and design an ADC that could be applicable to all the tumor types where folate receptor alpha might be an interesting target and all expression levels.
Hmm.
So that, that's our, that's our approach. You know, is there gonna be one that maybe works better in a specific tumor type at a specific expression level? Possibly. It's a pretty big opportunity in folate receptor, right? That's different than in GPC3, where it's really just a target for HCC that's really interesting. You know, it's a high enough level of expression in those patients that you might be able to get away with a biomarker. But I think in folate receptor and NaPi, same thing, and some of these others. I think a biomarker strategy to stratify patients are gonna benefit most and providers can be there. It, it's the story of PD-1 all over again, right?
Yeah.
PD-1 doesn't benefit all patients. We do the studies in all the patients, regardless of PD-1 score, and we find out scores above five or above 10 is the best place to use for patients. So that's where we use it, because they do come with adverse events, so you need to have a benefit for the cost of efficacy. Just having tolerability issues without any efficacy doesn't make it beneficial for the patient. So I think we need to see more data, but every... You know, we've heard this story before with Trop-2 and others, that we'll be able to treat everyone and not have to worry about a biomarker to identify patients. And the data doesn't really hold together when you look at a substantial amount of data around that. So we'll follow it.
We have strategies, we have options, we have other areas of indications that we could pursue. In HER2, zanidatamab is not treating every HER2 patient. They're treating patients that's best suited for our particular molecule.
Hmm.
And we can still have what Jazz thinks is a +$2 billion peak sales product, not counting the BeiGene piece in their territory. So there's still attractive opportunities without having to be the only product that treats every patient that has a particular biomarker.
Understood. Just the last question to close the loop. You've alluded to wider therapeutic window with your proprietary toxin. Is it fair to say you think you will have, whether it's a combination of the linker stability, whether it's the toxin itself, maybe differentiation on ILD rates? I know Duality's talked about that with their topo-based payloads, but is that something that Zyme might be looking at as well?
We don't know, and again, we don't think about it as wider therapeutic opportunity. We see it as, you know, if you look at the data we put out at AACR, and we also did the triple target meeting, you know, we think MTD is MTD, similar with the chemotherapeutic agent as it is in an ADC payload format. So it's how you use that. So we think you need to get up in the 5 mg per kg range to be effective as an ADC, and then it's how you use that. So being able to more directly target it through internalization, you know, the properties of our payload provide a little bit of sustained release, which with a reduced potency payload, is actually beneficial.
With a higher payload like exatecan, which is too potent, you don't want more exposure in the tumor because it is gonna cause more tolerability issues. So, you know, so from our perspective, it's just how you use the MTD effectively is gonna be the issue. I think, you know, we're pretty convinced that how we have all the elements working together with reduced payload, greater internalization on the antibody side, which we make improvements in because we're protein engineers, and a definite linker strategy of having design and stability into the linker. The combination of all those two things we think is the best way to drive efficacy for the least amount of tolerability you're gonna use up in a patient, which then allows you to think about combinations.
So when you think about our ADC strategy, you know, when we think about folate receptor, we think about we've got to combine with PARP inhibitors potentially, or Bev, or other agents. In HCC, we're gonna combine with A plus B or A plus T or whatever comes along. NaPi, same thing in ovarian and non-small cell lung cancer. So we need to think about the ability for combinations, which might drive more efficacy in a tolerable combination than even a, you know, a more potent ADC approach.
Understood. We're out of time.
Yeah, sure.
This is awesome, as usual, and I really enjoyed. Thanks so much for everyone for joining us, and Ken, thanks so much for that.
Yeah, thanks a lot. Appreciate it.