Joining us for the 46th annual TD Cowen Healthcare Conference, I'm Yaron Werber, biotech analyst here at TD Cowen. It's a great pleasure to have with us today, Adam Schayowitz, who's the Chief Development Officer at Zymeworks and also a partner at EcoR1 Capital. Adam is now in charge of all clinical development and very much involved in strategy as well. As Zymeworks continues to develop their own products, this is a name that we've been very excited about, both because of a zanidatamab and the internally pipeline, including folate receptor alpha ADC, which looks very differentiated from Ladiratuzumab
Also the GPC3 ADC, which is really promising, especially on the heels of BeiGene, mentioning that their GPC3 4-1BB had really nice positive data in phase 1, and they're taking that forward right into a pivotal. Then there's and essentially another two INDs potentially getting filed this year, moving into IND and obviously a financing announced today, which is going to help with strategic initiatives as well. Adam, thanks so much. Great to have you.
Yeah.
We'll do a presentation and then Q&A.
Thanks, Yaron. Appreciate the chance to be here and join you guys. It's fun to be able to talk about our story. As Yaron said, I joined about three or four months ago as Acting Chief Development Officer of Zymeworks. I came from EcoR1, and prior to that, spent about seven years at Pfizer, led oncology portfolio and program management and development portfolio there. Before that, spent a decade or so across small biotech in the Boston area. Interesting kind of experiences across small biotech, bigger pharma, and then on the investment side. A little bit about Zymeworks. Been around for over 10 years, closer to 15 at this point. Really based in protein engineering, experts in ADCs and T-cell engagers.
I think the biggest story to talk about in terms of, like, our success to date has been zanidatamab or Ziihera. It's a drug that recently had some data presented at ASCO GI for frontline gastric cancer and HER2 positive disease. We can unpack that story a little bit and, like, how the success of Zani and the data has set us up for, you know, for the evolution of the company and where we're going to go next. As you can see here, as Yaron mentioned earlier, we did a deal with Royalty Pharma this morning for $250 million in debt financing. We can unpack that one a little bit if there's some questions. It gives us cash runway through or beyond 2028.
We have a handful of partnerships and strategic development programs that I can, I can also highlight. As we think about the evolution of the company, it's a little bit unique in the sense that we are an innovative biotech organization grounded in protein engineering, but also one, thanks to the success of Zani and the royalties that will come from that program, have the opportunity to integrate essentially a royalty company or an asset aggregating engine on top of it.
Really have evolved to an R&D partnership-based organization with the purposes of leveraging our own expertise to develop molecules that we partner out to big pharma and to other smaller biotech companies in the world, holding onto the long-term downstream economics, while in parallel and simultaneously using the capital that we have from the royalties from Zani and from pasritamig, from J&J, to go out and acquire more companies, more molecules, more programs, more royalties that we can then internalize, develop if we think necessary and appropriate, and then partner them back out. Really is this kind of evolved business strategy, revenue generating, but fundamentally differentiated based upon our own in-house capabilities.
When you think about why we can do this, it really is grounded in the fact that, like, not only do we have an innovative R&D engine, but we also have access to capital, right? Like, that's how these two pieces fit. If not, you couldn't really do all of the parts. On the Jazz and on the BeiGene front, $440 million in milestones over in the next year or so, approval milestones from GEA. You can see like double digit, high double digit royalties from Jazz and then also from BeiGene. We have the capital. One of the reasons that we're able to...
The other reason that we're able to do this beyond just the capital and the, and the royalty coming in from Jazz and BeiGene is also from the strength of our pipeline, right? I told you before, really grounded in protein engineering and in T-cell engagers. Two components of this. We have our ADCs, which are up top, and then the MSAT program or the multispecific antibody therapeutics on the bottom, and then the autoimmune disease programs. We can spend a few minutes and kind of go through here 1 by 1. As you think about the ADC programs, the earlier ones are topo-based payloads like ZW191, which is a folate receptor alpha. 191 is data's been presented at the end of last year and then earlier this year.
There'll be more coming obviously in the future and really starting to think about in the process of not just dose escalation, but also dose optimization. Currently, there's approximately 100 patient dose escalation cohort ongoing and more data for that in the GYN onc space across ovarian and endometrial. ZW251 is the GPC3, which is in development in HCC. This is a drug that recently entered the clinic, currently in dose escalation as well, another topo-based ADC payload. Of course, we have ZW220 and ZW327, the NaPi2b and the Ly6E AD-ADC. Really a suite of. These are all kind of the publicly disclosed targets.
We've also mentioned that we have a novel RAS payload program in development as well with a handful of targets, and a few other pieces that have not been disclosed, but really an R&D engine for the purposes of partnership, right? I wouldn't say never, but our intention is not necessarily to take these into commercialization, to not run these registration programs. Our intention is to generate the value, and then when appropriate, based upon an appropriate ROI that we would look at, determine where do we deploy the capital and should we take this forward, and then ultimately partnering them, partnering the programs. On the MSAT side, we have the DLL3 and the Claudin 18.2 that you can see up here that are slightly earlier in development.
Of course Zani, which is obviously approved in BTC and then has the frontline gastric trial ongoing, the breast cancer program, and a handful of other novel combinations. Really a pretty robust program. I should also mention ZW1528 and ZW1572 in terms of the IL-4 alpha, the IL-33, and the IL-31. Really a handful of programs, again, with the purposes of grounded in protein engineering, partnership-based modalities, and thinking about how we move in the future. Getting back to Zani for a little bit, I'd say back in 2023, Wall Street consensus, you know, for peak sales was somewhere around $1.1 billion-$1.2 billion. If you look at where we are now, it's almost 100% growth.
I think what this reflects is the appreciation and the realization of what the potential commercial sales could be. A lot of this is grounded in the success of the frontline gastric data, as you saw from ASCO GI, unprecedented ORR, OS and PFS, really reaching at least 1 year, greater than 1 year in PFS, and then 2 years in overall survival, and a really meaningful improvement in the standard of care for HER2 positive gastric cancer patients. I think this, you know, it's nice to see that the street and consensus is starting to appreciate, you know, what that peak sales looks like over time.
Maybe if I can unpack the Zymeworks strategy just a little bit further because it is unique and probably does create a little bit of some questions or perhaps even some confusion. It really is the opportunity to bring together an innovative biotech company that has a novel pipeline, you know, with a research or with a, I'd say, a royalty organization or royalty portfolio. When these two pieces come together, we're able to extract value from programs that others not necessarily can. By that, I mean, you know, unlike a pure royalty organization leveraging our own R&D expertise, we can actually acquire molecules and acquire programs and acquire pipelines, and we can internalize them. We can do our own development and then partner them out for future opportunities, holding on to the downstream economics.
Really a unique approach to bringing together both an innovative biotech and an R&D organization. We think about the diverse revenue streams that exist from the platform. We also have collaborations with J&J. I should talk about pasritamig, that's a KLK2 T-cell engager in prostate cancer, of course with GSK, with BMS, and a few others on here. Platform opportunities in addition to the development opportunities of the molecules and the programs themselves. This morning, you may have seen the $250 million debt financing deal from Royalty Pharma. Super excited about that opportunity. You know, it's humbling to know that this was a competitive process and there was a lot of parties involved, and we're thrilled to be able to work with a prestige partner like Royalty.
$250 million in debt financing, it allows us to deploy that capital for future business development purposes, future M&A, or even to our own pipeline. I think it's worth noting that, like, we will look at all these different opportunities uniquely and with the appropriate level of diligence and rigor, determine what has the best ROI, and how do we most effectively and efficiently deploy this capital. It's not going to one place or the other necessarily, but it will be on a, on a case-by-case basis. Thrilled to have access to this capital, appreciating that it's largely grounded in Zani and the success of Zani. We can talk about some of the details associated with that deal if there's an interest.
I think fundamentally it puts us in a strong cash position with $270 million in funding through beyond, I should say, beyond 2028. There's $440 million in near-term milestones in the next year that are regulatory-based milestones from Jazz and from BeiGene. We've also talked about a $125 million share repurchase program, just, you know, demonstrating our belief in the value of the stock, and then a little over $100 million in revenue that was recently reported. Strong cash position, strong balance sheet, and really looking to figure out how do we de-deploy that most meaningfully in the most efficient and effective way that provides the best shareholder return, right? That's the fundamental way that we look at this.
We don't just have to take all these proceeds and put them back into our pipeline in a highly risk-adjusted way. We obviously can buy back stock if we think the value of the stock is underappreciated. Then, of course, we can look to acquire companies and programs as assets as we think about the royalty organization and the royalty engine and the royalty portfolio. As we think about, like, the next couple year, next couple of months and what's happening, obviously the submission and approval of Zani is paramount. It's really being led by Jazz. There'll be updated data coming out throughout the remainder of the year. Also data from our pipeline at medical meetings, ACR, ASCO, et cetera, ESMO, that we can talk about.
about the progress around ZW191, the folate receptor alpha. Then of course, hopefully a handful of strategic initiatives and partnerships that expand beyond the, you know, the current relationships that we have and expand our BD portfolio. So with that, I will pause and save a little bit less than half the time to take some questions or open it up to Yaron to drive
Thanks so much, Adam. Let's start off with-
Oh, it's on.
Is this working?
Yeah.
Great. Okay. Sorry about that. Thanks, Adam. Maybe to start us off, you announced the Royalty Pharma deal this morning. If you could just maybe dive into some of the details of that ’cause I know you gave us.
Yep
a nice overview of how you're thinking about utilizing that $250 million. Maybe, like, in terms of the details, the note's gonna be secured by 30% of royalties from the global sales of Ziihera. When it receives cumulative payments of either 1.65 times the note amount by 2033 or 1.925 times the note amount at any time thereafter, there will be no further repayments.
Mm-hmm.
Can you just kinda walk us through how that's gonna work and?
Yeah. It's a, it's a $250 million cap debt deal, right? I think one of the reasons this was most interesting and most useful to us, as you said, is that we actually retain 70% of the revenues from the royalties from Jazz, and 30% goes to Royalty Pharma up to, you know, depending upon the. At a 1.6x or 1.9x, depending upon the year. It allows us to deploy the other 70% of that, of that capital, as we see fit that's best in the, in the portfolio. As I mentioned, it was a, you know, super competitive process, and we're thrilled to have landed the relationship with Royalty and hopefully more for the future.
Awesome. Yeah. Congrats on that. I'll just remind the audience if they have questions, just raise your hand, and we're happy to take them. I think that kinda gives a natural segue to Ziihera. Maybe we'll ask a couple questions there. On the phase 3 HERIZON-GEA-1 results, which were positive for both the Zani chemo doublet and the Zani-tislelizumab triplet-
Mm-hmm
... they showed stat sig improvement in PFS over the Herceptin chemo control, and the triplet showed stat sig OS benefit. Notably, the doublet and the triplet arms had a 12.4-month PFS benefit. Why do you think there was no difference in PFS between the triplet and doublet arms there? Do you think there appears to be a DOR OS difference?
Yeah. I think when you just to ground everybody, doublet versus triplet, you're talking about the addition or subtraction of an IO, right? Of an immunotherapy. I think we all know that the IOs have a survival benefit but don't necessarily have a progression-free survival benefit, so PFS. It wasn't actually surprising that the PFS for both arms were the same. I think the overall survival benefit and the difference in the overall survival benefit is aligned with, you know, expectations of the long-term benefit of an IO agent, not too surprising at all.
Mm-hmm.
I also think that, like, the trial still needs to mature a little bit. Like, it was a win that we hit statistical significance, you know, at this time for the overall survival, and that we were close on the doublet. Obviously, as the doublet arm matures, there, you know, that could perhaps come to fruition as well. Not surprising. I'd say anticipated just based on the modalities and the mechanism of the drugs in what we expected in so many ways.
Sure. Yeah. How do you expect the triplet to be used versus the doublet in first line?
Yeah. I think, you know, having gone to, like, ASCO GI and talked to physicians, there's pretty good consensus and I'd say universal enthusiasm that, you know, the triplet will be the standard of care for, you know, for most patients. There's most physicians in KOLs would tell you that there's really no reason not to use the triplet based upon the efficacy and the tolerability, and we see it as a, you know, standard of care, game-changing, you know, opportunity.
Great. Then for the next OS analysis for HERIZON-GEA-1, do you expect to have enough alpha left to compare the doublet versus the triplet regimen?
Yeah. It's hard to speculate. I guess I should start by, like, reminding everybody that the trial wasn't... When you run these three-arm designs, they're not necessarily designed to compare the two experimental arms, right? You typically compare the experimental to the control and the other experimental to the control. It'd be rare to power the study to compare the two. We need to obviously wait and see how the results turn out, I think fundamentally the main and primary purpose of the trial was not to compare the doublet versus the triplet. It was to compare each of those independently to the standard of care.
Okay. Fair enough. Then when we're thinking about PD-L1 status or IHC 3+ versus IHC 2+, can you just kind of orient us, like, what expectations should look like there?
Yeah
Yeah.
Maybe we kinda unpack each one independently. The PD-L1 status was an exploratory endpoint, right? It was not formal, it wasn't pre-specified, et cetera. There's always challenges with, like, reading into that data too much in terms of what was collected and analyzed. I think the main piece to take home is that, you know, across all patients, the all-comer, that there was statistically significant activity, and it was seen in both the high and the low populations, right? The PD-L1 high and PD-L1 low.
That same story is true for the IHC 3+ versus IHC 2+ I think as well is that there really is activity across both. There's activity in both groups, you know, the strategy and hopefully the utilization will be across all subsets based upon the totality of the data.
Great. I know Jazz expects to complete the sBLA submission in Q1 of this year.
Mm-hmm.
With the potential launch in second half of 2026, how should we think about the timeline to file in Europe, Japan, rest of world?
Yeah. It's, it's tough. I can't really comment on Jazz, right? It wouldn't be fair. It's up to them to determine, you know, when and how they submit, but I'm sure that we'll all be informed and we'll plan accordingly when we have more, more insight into that one.
Awesome. Okay. Just check if there's no questions from the audience. On the Azymetric platform, kind of switching gears.
Yeah.
I know Azymetric is positioned as a key enabler across both the multi-specific and the ADC platform. Can you kind of explain how the Azymetric platform supports the novelty of your ADC platform?
Yeah. It at scale with efficiency allows us to do protein engineering and protein modeling and look at a large, you know, group of molecules where you can move around different targets to different locations with the different antibodies and different targets. It really is it's an efficiency and productivity platform that not only we develop, but we've also, as you saw on the slide earlier, licensed to a number of companies that have access to development leveraging our own platform.
Excellent. You've noted that Zymeworks' ADCs have strong antibody linker stability and bystander activity. What mechanisms and design choices kind of reinforce these advantages?
Yeah. It's a fit for purpose question.
Yeah
... right, in some ways, right? We believe that you don't always need the strongest linker and the most stable antibody because depending upon like the internalization, you may get increased toxicity if the ADC doesn't break apart, right? I think it's important to think about fit for purpose, and we spend a lot of time thinking about, you know, what is the right strength and the binding affinity of the linker and of the payload, and what is the right strength of the payload so they can be titrated accordingly to be most effective and efficient. I would also say tolerable, right?
Like if you look at ZW191 or folate receptor alpha, we think one of the key differentiating aspects on that program is the tolerability, and a lot of that is because of the linker payload decisions that were made in the development of the compound, and that's an underlying piece of the platform and the biology and some of the expertise that we have in-house.
Totally. When I look at your ADC platform, I think ZW191 really stands out to me as maybe the most exciting, probably because we've seen the most data for that one also. Given the responses across the high and low folate receptor alpha expression levels, how are you thinking about patient selection and registrational strategy? Do you think the opportunity is more compelling in ovarian and endometrial cancer first, or do you see kind of thoracic indications emerging as just as important?
Yeah. The majority of the work we've done is in ovarian and endometrial, right? I think that we believe that that's probably you know, the lead opportunity. We have enrolled, you know, both high and low expressing patients and I think we're gonna have to let the data determine, you know, where we go with that. I will say we've seen activity across the range, so there doesn't seem to be a reason to narrow the population just yet. We'll wait and see how the data matures, and then we can figure out what the right approach is for that, for that program as we move forward.
Great. Yep. Oh yeah, question.
What do you compare your FR alpha against?
It's in dose optimization right now.
No.
Oh
which other FR alpha ADC are you comparing it with?
In terms of like a cross-trial comparison, you mean. We don't have to get into the detail. I won't get into the details, but there are obviously four or five other folate receptor alphas that are in development. You know, cross-trial comparisons with all the caveats, we look at, you know, the PFS, you know, and the response rate of those programs, as well as the tolerability profile to see how we stack up.
Great. Any other questions? Okay. Maybe I'll switch over now to the GPC3 ADC...
Mm-hmm
... which is ZW251. That's positioned as a potential first-in-class GPC3 targeted ADC and hepatocellular carcinoma. That setting is dominated by IO-based regimens. What are the earliest clinical signals that you need to see in order to validate that an ADC can kind of thread the needle on efficacy and tolerability in this space?
I mean, look, it's. We all know it's a pretty low response rate in that patient population, you know, activity, once we get to a therapeutically active dose is gonna be the most meaningful piece. Of course, the tolerability is gonna be important as well. We'll look early on in the dose escalation, you know, cohorts that are ongoing, of those, of those programs and see what, see how it compares.
Great. As you think about the development efficiency for ZW251, when are you going to think about introducing combinations for that one versus just letting monotherapy data mature, and especially given the non-chemo backbone in hepatocellular carcinoma today?
Yeah. I think we'll have to see the early data, right? As I said, we're, you know, just in the early parts of the dose escalation. You know, lots of people ask, like, "When are we gonna see that data? When is it gonna get published," et cetera. We haven't put out any official guidance. What I can tell you know, comparably to the ZW191, the folate receptor alpha program, we went from first in human to a publication at a medical meeting in about 10-12 months. I think that that's a reasonable timeframe, you know, internally for us as a benchmark to figure out, you know, what does that data look like.
As that data is generated and matures, you know, we obviously in parallel will be looking at thinking about combinations and, you know, tolerability and safety profile for being able to do that. At this point it'd be too premature to speculate.
Okay. Sure. On kind of switching gears to your non-ADC platform, so on the DLL3 trispecific T-cell engager.
Mm-hmm
... DLL3 we know is already a well-validated target with approved T-cell engagers, and you have Imdelltra and things like that. In your view, what would matter most for differentiation in the clinic? Would it be lower CRS, greater durability, depth of response or, outpatient feasibility, all of the above?
Yeah, I mean, that's an easy question. It's kind of all of the above, right? You know, I think that the tolerability is gonna be paramount, right? That is a major challenge with some of the DLL3 drugs that are out there. I think the ability to demonstrate efficacy with tolerability is gonna be equally as important as we think about the landscape and how to navigate that space moving forward.
Great. Then on the dual cytokine blockers, you have ZW1528.
Mm-hmm.
You've expanded that into, so that's a IL-4 receptor alpha and IL-33.
Yep
... dual targeted, cytokine blockade. This is. Sorry, this is shifting into kind of outside oncology.
Auto, autoimmune. Yep
autoimmune. Exactly.
Yeah, inflammation. Yep.
Are you thinking about creating a new partnership lane for a different economic strategy, or are you thinking to develop this primarily in-house and then eventually license this out? I guess, what's like the development strategy?
What's the plan?
Long term.
You know, we don't, we don't think of them very differently, the autoimmune versus the oncology. You know, they're very much. They're both grounded in protein engineering, right? They're both grounded in our internal biology and our internal expertise in what we do. I think how we think about their future is very much the same as well, right? Like, these are programs that we believe in the preclinical data package, we're generating more, they are poised for entering the clinic, you know, in the near future, and we, and we think about them from a partnership perspective in the very same way that we would any of the oncology programs, right?
To your question, is that we look carefully at what is the appropriate investment that should be made in that program, how do we get the appropriate return on the investment, and how far should we take it, you know, as we think about partnership. No difference, you know, in term of oncology versus autoimmune or other.
Makes sense. Okay. Any other questions?
Question. For the GPC3, aside from HCC, is gastric sort of the next one? Maybe non-small cell on the adeno side? Kinda how you thinking about expanding that?
I think we'd probably I mean, in HCC, GPC3 is like overexpressed in like 90+% right? It's the, it's the low-hanging fruit and the right place to start. There's a handful of other.
Yeah
... which is obviously a place that we know well. Squamous non-small cell lung is another one that actually has a fair amount of GPC3 expression. I think those are the few that we think about, initially, and obviously you can, you can look in the literature and see, like based on expression. The piece to appreciate though is that I'm not sure that we're convinced that expression actually matters from an efficacy perspective at this point, right? We'll, we'll have to see, you know, as we expand, but even within HCC, there's both high and low GPC3 expressers and, you know, at this point, we're enrolling everybody, and we'll do a retrospective analysis to see what makes sense.
For the folate receptor alpha maybe, and I think, in terms of how much more granularity do you think we'll see on the dose expansion this year?
In terms of like patients or data sets.
Data. Yeah.
... all the above. Yeah. We haven't put any guidance in terms of what. I will say that very much prefer the medical meeting when possible, so obviously that has some limitations on the data set. We are actively enrolling the dose optimization cohort, so as soon as we have some more data, we will get it into a meeting as quick as possible and publish it.
Because I imagine you probably wanna have at least six months follow-up or so when you release the data.
The. Yeah. When we present the data, right? Like, the duration of response is obviously gonna be really critical from a differentiation perspective, for sure.
Is the next stage a phase two, or is the next stage moving right into a pivotal, given that it's a validated target?
I think it's a conversation with the agency. You have to figure out what the tolerance is. I think that there's a lot of places you could take that compound. Obviously, ovarian cancer as a monotherapy. I think endometrial cancer is also another good opportunity to be considered. Of course, there's lots of people that are interested in combination work with that program, right? I think there's, depending upon where you go, would dictate, you know, necessarily how fast you go there, right? If you wanna start combination work, obviously that has some other implications than going forward as a monotherapy in the registration state.
Yeah, 'cause I think endometrial is kind of the next indication now for sutro-gyn-e, and then they're doing a pilot in non-small cell as well.
Yeah, I mean, it would make sense based upon folate receptor alpha expression that those are the places you would go.
'Cause Lilly's going right into phase 3.
Mm-hmm
... from phase I.
Mm-hmm.
Now, that's a very Lilly-esque strategy in general these days, you know, in oncology.
Yeah. One of the reasons that we actually made the decision to commit to the dose optimization was because of the understanding and the appreciation of the landscape, right? We felt that if we took our foot off the gas pedal and weren't moving full speed with this compound, knowing that the ultimate goal was to partner it, that it would do a disservice to anybody who was interested in picking up the program, and they'd be behind the competition. To keep the momentum going, we said, "Look, we'll run the whole dose optimization so it's as close to a registration-ready molecule as possible, depending upon where, you know, we decide to take it for the future.
Yeah. In terms of stock buybacks, I think you did another...
Yep
sixty-two and a half or so.
60, yep. Mm-hmm.
is that sort of the cadence that you'll continue, or it's based on, you know, being a just opportunistic or just a, an ongoing program that's very fixed?
Yeah. Maybe, like I answered the question in a roundabout way, which is like we will, we will look at investment opportunities and determine which one makes the most sense based upon ROI. At the moment, you know, if there's... Whether it be BD deals in front of us or it be a pipeline investment or a share buyback, like we look at it knowing what we know about the, you know, the potential royalty from Jazz and from Zani, what the peak sales could be. Really simply put, like we think that the stock was undervalued, so it's a great place to deploy capital. That may not always be the case, and then we may decide to deploy it in other places, be it into business development or into the pipeline or somewhere else.
All right.
We're at time.
Awesome.
Thank you. Terrific.
Thank you for the time.
Thanks, Adam.
Appreciate it.