Well, thank you everybody for joining me this afternoon. We've got Zymeworks here with me today. Welcome to sunny Miami again.
Thank you.
I'm told it's sunny. I haven't been outside today, so-
It's sunny. I've been outside.
Okay, there we go. Let's, let's get started with, with just a brief 10,000-foot overview. As we head into 2024, what are you excited about? What should investors be excited about?
I'm excited about so many things. I can't describe it in 20 minutes. I think, spent a lot of time in 2022 and 2023 making some important decisions to reset the company, get its focus in place, and in 2024 and 2025, we should see the signs of that through, you know, hopefully, our first approval is on zanidatamab, hopefully some exciting clinical data with moving some of these new molecules into the clinic, and with some more work around a really novel, diverse, longer-term R&D strategy in the company. So hopefully, in 2022, 2023, I've made the right decisions about, about capital structure, about the partnership with Jazz, about the people we brought on board, about the R&D decisions we made.
In 2024 and 2025, you'll get some good evidence about how right I was, and I hope I'm really right.
Well, so, so do we. Well, let's start with Zani and, and Zani-Zo, with some of those legacy programs-
Sure.
and the partnership with Jazz. Can you talk a little bit first about where Zani stands and what are the opportunities on the table for Jazz, and how much do near-term, you know, to what extent do the near-term milestones there reflect back to Zymeworks?
Sure. It was about a year ago this time that we formed our partnership with Jazz. I'm more convinced than ever after a year that that was the right decision for us, the right decision for the brand, and the right decision for Jazz. I think what you see right now in Jazz is a partner who I think understands the potential breadth of applications for Zani, and if you listen to their last couple of conference calls, you'll see evidence of their intention with the brand, how they're going to invest behind it, their thoughts on this being a $2+ billion peak sales product, which obviously fits nicely in their portfolio in oncology, is the biggest thing they'll have.
So it is the focus of Jazz, and oncology is Zani, and that's great to have a partner like that. I think if you look at what they're putting behind, getting our first filings in for biliary tract cancer, funding the confirmatory study, we're still running our big phase III HERIZON-GEA-01 study, which reads out next year-
Yeah.
which, you know, when you look at our phase II data, we're so encouraged that we could maybe move the standard of care for this patient population in HER2-targeted therapy that's not been moved by other innovations. So we could really make a big difference to this patient population. That's exciting. It's obviously a much larger economic opportunity than biliary tract cancer. Behind that, they're exploring all the other indications where I think we knew Zani could participate in improving care for patients from our phase I data. We just didn't have the capital or the bandwidth to be able to do that, and now Jazz and the structure partnership has that. And from a financial perspective, I you know, we got a really nice upfront payment of $375 million.
They took over all the R&D costs, which they can tell you how expensive that is now when they report. And I've got $500 million of milestones coming up, most of which is all based on BTC and GA approvals-
Yeah, the regular-
for geographies, so that, that's great, and we're on track for that. On the commercial milestones, which are over $750 million, plus a great royalty rate, you know, if they're right about the $2+ billion peak sales opportunity for them, then that's a great way for us to broaden the brand out to a bigger patient population, and obviously, it's a much bigger financial return for us than when we sat here a year ago and talked about it. So they're a great, committed partner, and I think that was the right decision.
I'm more certain today than ever that it was, and we just want to understand Zani get to the market next year in BTC, look at our phase III data, hopefully, it's as promising as we think, and then let Jazz and BeiGene do what they do best, which is get this to patients as broadly as they can, in a way that allows physicians to treat their patients, and hopefully in a way that improves the standard of care way beyond where it has been with traditional therapies.
Now, with Zani-Zo, the ADC version of the molecule, now that's back in your camp. Where are you positioning that relative to the naked antibody, and how do you proceed with the development there?
Yeah. So the company, when I got there, was really just a HER2-targeted company with, with, you know, the biparatopic or bispecific antibody, zanidatamab, in an antibody form, and then they made an ADC format with the same biparatopic antibody, which was pretty cool. But it wasn't clear to me how those would go together. In the partnership with Jazz, we kept the rights to Zani-Zo out of that deal, so we're free to develop it wherever we want. I bought back the rights that BeiGene held in that asset recently by giving them a small reduction in royalties for Zani. So if they sell $2 billion worth of Zani, they get their, you know, a cap back, which is fine for me, and just give us some flexibility to evaluate it.
So I spent a bunch of time since I've been here just understanding how that fits in with our new strategy. So in our five new agents that are going to the clinic, you know, starting next year, over, you know, 24 months, we'll have five new things in the clinic. Those are all around a certain strategy. First-class opportunity, be used in combination with other agents, so you can move to an earlier line of therapy and has to be a big enough economic opportunity, especially in the U.S., to keep U.S. rights. For Zani-Zo, that means HER2 overexpressing non-small cell lung cancer. You know, PD-1 is used there because there is no HER2-targeted therapy. Other agents have been tried there, Traz, Pert, Traz plus Pert, T-DM1, T-DXd.
Mm-hmm. Mm-hmm.
Nothing's effective there. It's still a first-class, you know, first-in-class opportunity for us. It's a bigger opportunity than I thought with the MD Anderson paper that finally came out last August, showing that there's a substantial HER2 low population, and you think Zani is a great biparatopic internalizing antibody, could be a bigger economic opportunity. And then, we always liked this idea of an auristatin payload on Zani-Zo, which you can say, well, it's not topo, it's different.
Yeah, it's different.
But with PD-1, you look at the EV-302 data that come out of ESMO, and you go... That's exactly where I can take, Padcev gives you a 20% OR in this population, Zani-Zo gives you up to a 30% OR in this population. Together, can I really move the needle to 40% or 50%? If I can do that in a durable response, that's an amazing opportunity for patients, an amazing opportunity for us. So, you know, that's probably the one area where I still see it's on strategy with what I'm trying to do with the new agents.
Mm-hmm.
So it just took a while to figure that out. There might not be any other indications beyond non-small cell lung cancer to pursue, but if we can get that one right, that's a great opportunity for us and for a potential future partner.
Could you remind us, like, how you narrowed down to this patient population? Also, you had the post-Enhertu breast cancer, but I guess you're looking for partners on that. But, what was the thinking of narrowing down to these? Because the trial was run on a lot broader population, right?
Yeah, we probably started with—you know, so what we do with every agent, we probably start with six or seven different areas we think this would be really interesting, and some of those areas get narrowed for you. So I think the post-Enhertu breast cancer space is pretty interesting. You know, Zani can participate there potentially with Zani-Zo. It just got very complicated with more competitors. And so there's a difference between being the first ADC used after Enhertu or the fifth one being used after Enhertu.
Mm-hmm.
So you've got to be careful there. There's definitely some good response rates in colorectal, gynecological cancers, etc. Some of the pan-tumor data that came out recently shows you that may not be as clear whether you can beat that or not. In non-small cell lung cancer, that Enhertu overexpressing population just kept coming towards us. Competitors we thought were there, weren't there. The market's bigger than we think. There's a good explanation for why a combination of, of PD-1 with Zani-Zo as an auristatin payload might get you something more.
Might be differentiated.
EV-302 kind of validated that thought for us a little bit. We're running the phase II study now.
Mm-hmm.
Won't take long to get that data, till next year. We'll know whether right or not about that. If I am, it's an opportunity that the market doesn't value right now, doesn't know what we're doing, maybe, doesn't give us any credit for it, but it could be a really great patient population served by Zani-Zo that can't be served by Zani or other, other potential-
Or other of these ADCs.
It could be a first-in-class opportunity. Why would you run away from that?
No, certainly. So why don't we transition then to the new targets and the new molecules? You mentioned the five- by- five, these new molecules you're bringing into the clinic. Most of these now announced, obviously, IND is happening over the next couple of years. Let's start with mesothelin, because it's first on my list.
Sure.
Obviously, there's been a fair amount of investigation here recently, and at least one high-profile failure in the space. So what's driving your design philosophy here? You have a two-to-one bispecific. What's driving your choice of patient indication, and how are you characterizing differentiation versus Bayer's failed agent?
Yeah, I think if you look at the whole five-by-five construct first, just to put in context, I think, you know, when I got here, we haven't filed an IND in medicine since 2018 for Zani-Zo. How a biotech survives going five years between IND, I don't know. The worst part of this is this company had a very rich pipeline of novel agents on both ADCs and multi specific sitting there that just wasn't being developed because all the capital potential was being gobbled up by Zani. With the Jazz deal, that kind of unlocks our ability to pay for and focus on novel agents. You know, in all five of those, and again, we could have five agents into the clinic in a 24-month time period. So you go from nothing in five years to five INDs in five-
Well, that averages out.
In 24 months. Yeah, and again, the group's been really productive. I asked them for one IND per year of something really great, and they're giving me two, which is... You can't ask for more than that. All five of these are great, want to move them in. So there's three ADCs, and there's two multi specifics. You know, we may need to make sure we get this right. So we're not as novel on some of the targets as maybe we could be in the future and will be. So mesothelin, we liked as a target for the same reason, folate receptor. The biology is well understood. There's others who maybe have tried and just not been successful because they haven't been using what we think might be the appropriate platform.
Mm-hmm.
In mesothelin, specifically, the issue has always been trying to this small differential between normal expression normal tissue, and the tumor is hard.
Mm-hmm.
So all the ADC approaches, last one's probably Bayer-
Yeah
But there was a BMS one before that, and others. Just didn't seem to work well.
No window.
Yeah, no window. So we, you know, we thought this T cell engager approach might be really interesting. You know, the two plus one design just gives you, you know, two binders on mesothelin, which might be an additional measure that you need. And we're using this low-avidity CD3 that's not been used before, that we licensed from Daiichi Sankyo under a collaboration, which was thank you very much. And so that might be really interesting. So this approach of getting better tolerability by limiting CRS and other events to grade one-two, getting a little bit more binding of mesothelin to maybe get over this normal expression. If you can still get the tolerability levels down, you can think about that being potentially combined with something else.
Mm-hmm.
Like a PD-1 or, or something else. So we really like that. You know, when I saw the STEAP1 data that was at ESMO-
Mm-hmm.
The two + one against STEAP1-
Yeah.
That's exactly what we're trying to do.
More tolerable-
That was pretty interesting.
Better indicated target.
Yeah, the CRS goes down because you've got this new CD3 idea, which is great.
Mm-hmm.
And the two binding sites on STEAP1 just gave you that little extra, at least in the patients that we saw. That looks. That doesn't look like a bispecific. That looks like a next-generation bispecific. That's what we're trying to do. Three binding sites, building an extra binding site seems to make it more complicated, but it actually makes it more useful. So the mesothelin is the first one. Behind that, we'll come in with our next tri-specific platform, which is incorporating the CD28 co-stimulation with a CD3 against a target. We haven't named yet, but we'll name next year.... We think you can control the CD28 co-stimulation better in the same structure than throwing it in a separate antibody, as you've seen others try-
Sure.
U nsuccessfully.
Yes.
So, I think we have this really, you know, great engine inside the company that can work with our different platforms, whether it's ADCs or, you know, designing complicated antibodies. Sometimes they cross over, like they will when we start doing bispecific ADCs.
Mm-hmm.
Which is kind of where we're going next-
Mm-hmm.
Beyond these three. You can just see the power to try and create something that hasn't been created before. So mesothelin is a known target, something that has not been validated positively, or negatively than positively. But here's a brand-new platform and a new approach that gives you some thoughts that maybe that's a way to solve it, where others have not. So that's kind of the approach we've taken with all five of those molecules.
Well, I was about to say, maybe in a similar vein, you've got NaPi2b-
Yeah.
W hich also has a mixed history, let's say.
Mm-hmm.
I recall a couple of months ago, when you announced the target, there were a lot of very skeptical questions on the earnings call.
Yeah.
Maybe rightly so, given the history of the target. So what are the key differentiating features here, which I think you've obviously spent some time defending, but,
Yeah
What are—you know, what are we to make of going after an old target, a negatively validated target, as you say, with a new set of technology? What have we learned in the past couple of years since the last failure here that allows us to move forward?
Yeah, we think that target in gynecological cancers and lung cancer just gives you an alternative to folate receptor, where we're also participating.
Right.
I think if you look at the two agents that were in development a long time period in that area, neither of them was topo. Neither of them really had a bystander killing effect. We think you do need to do that, and neither of those antibodies was really perfectly designed. So we, you know, we had a great construct with a reduced potency topo payloads. We think reduced potency is important-
If you're gonna-
to actually get tolerability.
Engineer in by-
Yeah
Bystander effect.
You know, that antibody is just like the folate receptor one. If you take all the folate receptor antibodies on the folate receptor ADCs in the clinic, and you sequence them, and make them, which we did, no one internalized like the one we have.
Right.
NaPi2b, same thing. It's a really strong internalizing antibody 'cause we're protein engineers. The bystander killing effect on that ADC is exactly what we have a folate receptor. We design instability, and so you get a good bystander killing effect. For collateral tissue, that may not, may not have the biomarker, but it's a reduced potency. That's really important, I think, to controlling tolerability. So we're, we're just as excited about that one as we are with folate receptor. The thing that was keeping us from moving ahead in NaPi2b was having a competitor ahead of you in phase III, potentially making development more difficult. We kinda have that with folate receptor 'cause Mirv is approved-
Mm.
For a certain population, that's great. But it does make it more difficult to think about how you develop and compete. NaPi2b had the same thing, so I might, I know it might sound contrarian, but as soon as that agent didn't go forward past phase III and failed, that was the last thing that for us that said, "Here's a first-in-class opportunity." We got a good approach for pursuing it, and we don't have to worry about somebody ahead of us from a development or commercial standpoint. So it actually made us wanna do it, and we wanted to do it so quickly. We announced it right away after the failure, which might have been too soon. But, you know, I think we were so excited to get going on that program.
Sure, but if you were considering a best-in-class approach-
Yeah.
W hy not be first in class?
Yeah. So we... You know, we think on those two, and then, you know, and after that, we-- you know, I think after that was probably more contrarian. We just nominated our GPC3 ADC, where, you know, there's- I know there's CAR T-
Well-
We shouldn't say CAR T today, but there's CAR T today.
Yeah.
Other T cell engagement approach, but we think, you know, liver cancer has not been able to develop a chemotherapeutic approach on its own or an ADC construct. We think we've designed something that could be used extremely well to deliver a topo payload to this patient population, but do it in an earlier line of therapy in combination A plus B. So you think about a topo payload being delivered with a PD-1, with bev-
Go ahead
I n an earlier line of therapy, where it's tolerable as a combination.
Mm-hmm.
That could really move response rates and give that patient population some thoughts about survival that don't exist today and haven't existed for a long time. So that one was probably, I think, more contrarian than thinking about NaPi2b, because no one's doing a GPC3 ADC. We're out there-
Right
On our own.
That was gonna be my question about it.
Yeah.
Obviously, GPC3 is a target that's getting interest, but everybody using a more T cell-mediated and immune-mediated approach. And you have that in your toolbox, but chose an ADC instead.
Yeah, you know, we always take the same approach, and part of the benefit of being an ADC company and an antibody company is, you know, we can look at a target and look at a specific indication, look at what we wanna combine with.
Mm-hmm.
And that's important too-
Mm
W hat you wanna combine with in the end. So from the very beginning, we think about combination strategies. So we say: Okay, can we do a T cell engager approach, an ADC approach? Do we do a bispecific ADC? Do we do a tri-specific on the other side? And then, we just pick the best product format. So we don't have to pick an ADC 'cause we're an ADC company. We pick it because we think that'll get you the best benefit in combination with other therapies. A T cell engager approach in this patient population in combination might be more complicated than an ADC. So, so that's why we went that approach.
Mm.
And I think with the reduced potency and the payload, the bystander killing effect, the way we think about the antibody being strong internalizing, even in the liver, could be the thing that, you know, breaks through for this patient population. And GPC3 is well understood target, highly expressed. If you wanna hang an ADC of something in the liver, that's the one.
Mm.
So I think that's novel, novel, novel, novel, and hopefully, that was the right decision. Hopefully, we see data that's great in monotherapy, and we can even improve it in combination in an earlier line of therapy for these patients who really need it if you look at the survival rates.
So we've got a couple minutes left. Before we move on to maybe a more general closing questions, remind us what are the timelines for these five- by-five , the INDs that I realize are coming two a year for the next couple of years, but what are your anticipated timelines for getting first data readouts out of these novel programs?
I think it depends which one it is. Obviously, the T-cell engagers takes you a little bit more on dose escalation because you usually have to start lower. Hopefully, you don't have to, but that's not the decision we make, that's a regulatory decision. But, you know, you'll see these two INDs in 2024, two INDs in 2025. The last one will be first half of 2026, so there'll be five of them in 24 months. I think the data that's generated out the other side and dose escalation or expansion depends on whether it's ADC or the other, but you're starting the clock on data readouts on those five compounds. And then for us, it's about reading what the data tells you. Does it still have the same value proposition? Is it still on TPP?
One of the benefits of putting five things into the clinic over that time period is you don't really have a lead program. You can pick the best of those five, and hopefully, there's more than one. I don't know if there'll be five, because I'm not sure my head of R&D is that good, but he's pretty good. So I think hopefully we get, you know, three or so of those that really fit and justify investment going forward in phase III. And then because we're 18 months ahead of that process, we're already looking at the longer-term approach, because we could file two INDs per year on really great stuff on ADCs and trispecifics for the foreseeable future. We just got to figure out how we do that.
Makes sense. Last couple of seconds here. You've obviously achieved a very fast timeline with these five- by- five, accelerated even versus your own initial guidance for a, a pretty rapid-
Mm.
Entry to the clinic. What are the lessons that you've learned, and how is it gonna change your strategy moving forward beyond these initial five programs?
I think we learned how to go fast, and it was contrarian. Cut the R&D group in half, put them in two separate groups to be very focused around, you know, a smaller population. You know, cut down the bureaucracy of R&D, put one person in charge who gets to make all those decisions. He picks the portfolio and challenge them. And it's amazing what scientists will do when you challenge them around their art, and they've certainly outproduced so far, and I think they're gonna continue to do it with novel compounds, as far as I can see.
All right. Well, we're very excited to see the readouts, and we're very excited to see the upsides of all that.