Standing by, this is the conference operator. Welcome to Zymeworks zanidatamab Licensing Agreement Webcast. As a reminder, all participants are in a listen-only mode, and the webcast is being recorded. I would now like to turn the conference over to Jack Spinks, Head of Investor Relations at Zymeworks. Jack, please go ahead.
Good morning, and welcome, everyone. Thank you for joining. My name is Jack Spinks, Associate Director of Investor Relations here at Zymeworks. Before I turn the call over to Ken, our Chair and CEO, who will speak to you today about this morning's announcement of Zymeworks licensing and global development collaboration with Jazz Pharmaceuticals. I'd like to first briefly remind you that during today's call, we'll be making forward-looking statements. Forward-looking statements to be identified by words such as should, would, will, continue, may, potential, initiate, look forward to, expect, believe, plan, anticipate, enable, and similar words. Forward-looking statements are based upon our current expectations and various assumptions and are subject to the usual risks and uncertainties associated with companies in our industries and at our stage of development.
In this webcast, forward-looking statements include statements about the anticipated benefits of our agreement with Jazz, the anticipated timing of closing of our agreement with Jazz, satisfaction of closing conditions and receipt of upfront payments, the commercial potential of zanidatamab, and our and Jazz's ability to obtain regulatory approval of and successfully commercialize zanidatamab. Our ability to achieve additional milestones and payments under our agreement with Jazz. The timing and status of ongoing and future studies and the related data. Our expectations and ability to successfully advance our other product candidates and future product candidates we identify in advance through our R&D and partnering efforts. Implementation of our corporate goals and meeting expected timelines. Advancement of zanidatamab zovodotin into registrational studies and other product candidates in clinical studies. The timing of and results of interactions with regulators, including future IND filings.
Our expectations regarding future R&D efforts, partnering activity and development priorities. Our anticipated cash runway following the closing of the agreement with Jazz. Our ability to obtain clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and satisfy the other terms and conditions of the transactions contemplated by the agreement between us and Jazz. Statements about the anticipated development of our business and accomplishment of our strategic priorities. For additional details regarding our agreement with Jazz, please refer to our current report on Form 8-K filed this morning with the SEC. For detailed information about the risks and uncertainties faced by Zymeworks, please refer to our filings with the SEC and on SEDAR, including the Risk Factors section of such filings, which filings may be found on our website at www.zymeworks.com, as well as the SEC and SEDAR websites.
As a reminder, the slides for this morning's call are available now on our investor website, and the audio portion from this morning's event will be available on Zymeworks website later today. I will now turn the call over to Ken Galbraith, our Chair and CEO. Ken?
Thank you, Jack, and good morning, everyone. Thank you for joining us. Today we're extremely pleased to announce a significant licensing and global development agreement with Jazz Pharmaceuticals, which provides Jazz with global commercial and development rights to zanidatamab, excluding those territories already governed by our Asia-Pacific partnership with BeiGene. This agreement creates significant value for Zymeworks and its stockholders and fulfills a major strategic objective we identified in January of this year of identifying and enacting a global partnering transaction for zanidatamab within this calendar year. We're excited to partner with Jazz. Jazz is a leading global biopharmaceutical company that brings a wealth of development and commercial experience in oncology. This transaction enables Zymeworks to leverage Jazz's existing integrated capabilities and global infrastructure to commercialize efficiently.
Notably in the U.S., there's a significant overlap with Jazz's existing Xofigo universe, where they have built strong relationships and quickly established Xofigo as a standard of care in second-line small cell lung cancer. Jazz made an attractive financial proposal which we believe reflects the potential value of zanidatamab. The agreement is structured in a manner that meets our financial objectives for this transaction. We look forward to partnering with Jazz to advance the development of zanidatamab as rapidly as possible to provide a foundational HER2-targeted therapy for patients with difficult-to-treat cancers who currently have limited treatment options.
We also believe that a partnership with Jazz will complement Zymeworks' existing relationship with BeiGene to help optimize global capabilities for the future development and commercial success of zanidatamab, as Jazz utilizes its global capabilities and infrastructure in a complementary manner to BeiGene's strength in China and other Asia-Pacific regions. We very much look forward to working with our new colleagues at Jazz immediately and going forward to advance zanidatamab towards patients in global markets while we await formal closing of the transaction, which is expected before the end of 2022. In short order, I'll speak to the transaction and its positive impact on the future of Zymeworks. However, I think it's worth taking a moment to speak about zanidatamab and the history behind developing this exciting molecule. Zanidatamab is a unique bispecific HER2-targeting antibody that was engineered using our Azymetric platform.
It targets two distinct extracellular epitopes of the HER2 protein and induces tumor cell death through multiple distinct mechanisms of action. As you can see in the graphic, the unique geometry and biparatopic nature of zanidatamab prevent it from binding to the same HER2 molecule, which in turn allows HER2 receptor cross-linking and clustering on the cell surface, driving enhanced internalization and HER2 receptor downregulation. Zanidatamab also promotes immune cell killing of tumor cells via antibody-dependent cellular cytotoxicity and phagocytosis, and supports efficient complement-dependent cytotoxicity of HER2-positive tumor cells. A publication explaining the unique and differentiated mechanism of action of zanidatamab is expected to be available in 2023.
Zanidatamab was developed in-house by our team of scientists and protein engineers using our Azymetric bispecific antibody platform, the same leading multi-specific platform being used by Bristol Myers Squibb, Johnson & Johnson, Merck, and other global pharmaceutical companies under various technology licensing and collaborative agreements with Zymeworks. Zanidatamab's investigational new drug application was accepted by the FDA in 2016, and the first patient was dosed in our initial phase one clinical trial shortly thereafter. Steady clinical progress resulted in the FDA granting breakthrough therapy designation for previously treated advanced HER2 gene amplified biliary tract cancer, or BTC, in 2020, as well as the initiation of two pivotal studies, the first in BTC and the second in HER2 positive GEA patients.
With results from numerous clinical trials reported over the past four years, studies of zanidatamab have generated clinical data showing promising efficacy and tolerability in multiple indications. We confirm our expectations on a top-line data readout from its first pivotal clinical trial before the end of this year, with full clinical data in BTC expected to be presented at a major medical meeting in the first half of 2023. This would represent zanidatamab's first opportunity for filing review with global regulatory agencies. This slide shows the range of diseases where HER2 is a potential therapeutic target, and the green checks indicate where we've seen single agent antitumor activity with zanidatamab in our clinical studies. HERIZON-BTC-01 is our first pivotal study of zanidatamab as monotherapy in previously treated advanced HER2 gene amplified biliary tract cancer.
Again, we confirm our expectations that this study will report out top-line data before the end of this year. Our second registrational study, HERIZON-GEA-01, is in first-line HER2-positive gastroesophageal adenocarcinoma and evaluates zanidatamab in combination with standard chemotherapy, with or without tislelizumab, a PD-1 inhibitor from BeiGene. This study is actively enrolling patients globally, and we currently expect to be fully enrolled by the end of 2023, with top-line data expected in 2024. In addition to these pivotal studies, zanidatamab is being evaluated in phase 2 trials in multiple other HER2-expressing indications, including in several lines of treatment in breast cancer, as well as in first-line BTC patients and first-line colorectal cancer patients.
Maturing data from these ongoing studies may support the potential for zanidatamab to benefit patients across a variety of indications and underscores our belief that zanidatamab has significant value that can be realized by broad clinical development in the future. Now turning to the licensing and global development agreement announced today. We're very pleased to announce this exciting collaboration with Jazz Pharmaceuticals, which covers exclusive global commercial rights to zanidatamab, excluding certain Asia Pacific territories already included in our partnership with BeiGene.
Under the terms of the agreement, Zymeworks will receive $375 million in upfront payments in two separate tranches, both currently expected before the end of 2022, consisting of a $50 million upfront payment subject to expiration or early termination of the process under Hart-Scott-Rodino, and a second payment of $325 million at Jazz's option upon readout of the top-line clinical data from HERIZON-BTC-01. In addition, we're eligible to receive up to $525 million in regulatory milestones. A further $862.5 million in milestones are available to Zymeworks upon the achievement of specified commercial milestones. Zymeworks is also entitled to receive tiered royalties between 10%-20% of net sales of zanidatamab, pending approval.
In addition, Zymeworks will also be reimbursed for 100% of costs associated with ongoing zanidatamab-related clinical studies, with Jazz to fund 100% of future clinical development costs for studies not already in progress. While we and Jazz will establish and maintain various joint committees to coordinate future activities such as development, manufacturing, and regulatory, Zymeworks will continue to oversee clinical studies that are ongoing today through completion. Additionally, in the partnership with Jazz, Zymeworks will submit the first BLA for zanidatamab, and we'll partner with Jazz on future regulatory filings.
This involvement that will continue is critical as we continue advancing our ongoing clinical studies of zanidatamab towards regulatory filing and hopefully approval, allowing our employees to finish what they started many years ago with the goal on day one of striving to improve patient outcomes over the current standard of care in a variety of HER2-expressing tumor indications. As you heard me say already on this call, this transaction is a significant step forward for Zymeworks as a company and represents validation of the valuable development work our company's undertaken to bring zanidatamab to this stage of development. Importantly, this transaction allows us to secure the necessary commercial capabilities and infrastructure for zanidatamab from our collaboration partners, Jazz and BeiGene, in order to bring zanidatamab to a broad patient population globally.
After this transaction, we will focus our efforts and attention on advancing our exciting early-stage product pipeline while continuing to work with both Jazz and BeiGene to seek regulatory approvals and potential launches of zanidatamab in global markets. We'll also focus on incremental clinical development investments in zanidatamab zovodotin, or ZW49, our first antibody-drug conjugate in clinical trials. With the goal of having this program move into at least one registrational study by 2025. In addition, we believe this transaction will enable us to more aggressively fund and rapidly advance product candidates with a focus on our key technology platforms, both our next generation antibody-drug conjugates and our multi-specific antibody therapeutics. As Dr. Paul Moore, our new Chief Scientific Officer and research leadership team, will speak to in detail at our early R&D day tomorrow, Thursday in New York City.
We believe Zymeworks has the capacity and capability to advance five new product candidates into clinical studies within the next five years, inclusive of potential INDs for ZW171 and ZW191, which are both currently expected in 2024. Building on our experience and expertise from the discovery and development of zanidatamab and zanidatamab zovodotin, we believe that there is the potential to build an internal oncology portfolio of best-in-class compounds utilizing our expertise in ADCs and multi-specific antibodies. Importantly, we also intend to continue our focus on advancing and expanding our product candidate portfolio through future partnerships and collaborations. We believe the collaboration we're announcing today provides further validation of our ability to consummate collaborations with high quality partners on financially attractive terms that enhance our ability to build and grow Zymeworks into a successful biotech company.
Going forward, we plan to seek partners for ZW49 and future product candidates in markets outside the U.S. prior to initiating any registrational studies, while retaining U.S. rights for potential future commercialization of our own products in the U.S. in the future. Leveraging a partner's global commercial capabilities, similar to what we're doing today for zanidatamab with Jazz and BeiGene, as well as retaining commercial rights for potential future commercial launch in this market, are considerations we will evaluate in the future as we grow and develop our capabilities within Zymeworks. We look to the future. We intend to focus our R&D strategy on clinical development opportunities in difficult to treat cancers where we can leverage our in-house multi-specific antibody therapeutics and antibody drug conjugate platforms.
With these antibody platforms and our ability to develop indication-specific treatments in either the multi-specific or drug conjugate format, we seek to develop first and second line opportunities in difficult to treat patient populations with accelerated approval pathways. Further, we'll look to develop product candidates and therapeutic indications with the potential for attractive market share, which we define as greater than $500 million in global potential peak sales in the lead indication for a product candidate. This focused R&D strategy with our two research pillars of our multi-specific and antibody-drug conjugate platform, we believe we can drive the next wave of best-in-class, antibody-based multifunctional therapeutics and provide us an opportunity to continue the success we've seen with zanidatamab and zanidatamab zovodotin today. We do look forward to speaking about this further at our early R&D day tomorrow in New York, as I mentioned.
With the shift in investing our own cash resources away from zanidatamab into other product candidates, we will be able to dedicate additional time and R&D funding to further study zanidatamab zovodotin, our bispecific antibody drug conjugates currently in phase 1. As we recently presented at the European Society for Medical Oncology meeting in Paris, zanidatamab zovodotin has shown encouraging single agent activity in multiple HER2 expressing tumor types with an acceptable tolerability profile in heavily pre-treated patient populations. With no signs of pulmonary toxicity such as interstitial lung disease, no significant neuropathy, and no significant neutropenia noted to date across 100 or so patients that we've now treated in our ongoing phase 1 clinical study. We believe this tolerability profile is unique and differentiated compared to all the other HER2 ADCs in development currently.
With the current activity and safety data seen to date from our ADC, we believe there are multiple avenues of development of the drug and indications that are both commercially meaningful and where additional novel approaches are needed as first or second line standards of care. One indication of interest for further clinical evaluation is in treating patients with non-small cell lung cancer across the three distinct patient subpopulations of HER2 amplified, HER2 expressing, and HER2 mutants. With zanidatamab zovodotin’s tolerability profile and lack of interstitial lung disease or overlapping toxicities with potential combination agents such as cytotoxic chemotherapy and potential synergies when used in combination with PD-1 inhibitors, we believe additional clinical studies in this patient population are warranted as both monotherapy and in combination with current standards of care such as PD-1 inhibitors.
There's also the potential to explore zanidatamab zovodotin's differentiated safety profile and single agent activity in other indications, such as in metastatic breast cancer patients with lower levels of HER2 expression or after previous treatments with other HER2-targeted ADCs. We also have seen promising initial responses in gastroesophageal patients and in other pan-tumor indications such as ovarian, endometrial, and bladder cancers that may warrant further evaluation in clinical studies. With the strengthened financial position that this agreement brings to Zymeworks, we will be able to fund further development of zanidatamab zovodotin as appropriate in order to further study its potential effectiveness and differentiation in these indications. We look forward to providing further guidance related to the scope of the development program and specific goals for 2023 after final determination of the recommended phase 2 dose, additional commercial assessments, and any necessary regulatory consultation.
The other important aspect of this transaction lies in its ability to transform the financial profile of the company and our balance sheet. Given the current state of the biotech equity markets, additional attention needs to be given to availability and cost of capital as compared to potential returns from additional pre-clinical, clinical, and commercial investments. We have been applying enhanced financial discipline at Zymeworks since I began earlier this year as we evaluate additional investment across our product portfolio and company infrastructure. As mentioned earlier, under the terms of the agreement, we expect to receive payments of $375 million from Jazz prior to the end of 2022. These expected funds, when combined with our existing cash balances, which were approximately $242 million as reported on June 30th, 2022, provide a significantly improved balance sheet to support our planned development activities.
We believe that this significantly improved cash position, together with the expected R&D funding from Jazz for zanidatamab development and expected milestone payments from other existing collaborations, should provide funding of our planned operations through at least 2026 and potentially beyond. With closing this transaction and finalization of future spending plans, we expect to be able to provide further financial guidance in conjunction with disclosure of our 2023 corporate goals and expected milestones in early 2023. As we recognize this significant milestone for the company today, we have an exciting next few years ahead of us in all aspects of our business. We expect to see numerous zanidatamab-related clinical data catalysts, followed by the anticipated release of our top-line data from our first pivotal study, HERIZON-BTC-01, in second-line HER2-amplified biliary tract cancer patients later this year.
Next year, we look forward to presenting the full results from that pivotal trial, as well as follow-up data from our phase two study of zanidatamab in frontline GEA, which was initially presented at ESMO last year. In the latter half of 2023, we currently expect to complete enrollment for our second pivotal trial, HERIZON-GEA-01, in first-line gastroesophageal adenocarcinoma patients. Longer term, in 2024, we're focused on submitting two new IND applications and further leveraging our platforms to drive additional pre-clinical product candidates into the clinic. With this agreement today, we are continuing to successfully implement our strategic priorities in the manner discussed at the commencement of my role as CEO in January. We successfully negotiated a transaction that provides a meaningful improvement to our current financial position and future cash runway.
Through this agreement, we have the opportunity to continue accruing benefits from regulatory approvals and commercialization of zanidatamab while aggressively advancing our pipeline of product candidates, including zanidatamab, zovodotin, ZW171, ZW191 over the next few years, with the goal of potentially having five new product candidates in clinical studies over the next five years. We've been able to negotiate a transaction with a structure that provides significant upfront payments consistent with the late stage of clinical development of zanidatamab, support for funding ongoing development costs of zanidatamab, significant potential future milestones based on regulatory approvals of zanidatamab, which we expect are achievable, and a fair and reasonable share of the successful commercialization of zanidatamab without the necessity for future investment in building our own commercial infrastructure now.
Hopefully, this transaction provides an indication of our ability to form and integrate important partnerships and collaborations that will be helpful to every aspect of our business. We continue to have discussions about interest in further partnerships and collaborations throughout our product pipeline and look forward to reporting progress on these in the future. While this transaction with Jazz provides a significant financial benefit for the company and stockholders, we believe that patients will be an important beneficiary of this agreement through our ability to secure the funding and capabilities from our partners, Jazz and BeiGene, that allow zanidatamab to advance to a broad group of patients globally in need of additional novel therapies that may improve patient outcomes beyond the current standard of care.
We also have the opportunity to reinvest the proceeds of this agreement over time to utilize in further discovering and developing additional best-in-class therapeutics targeted towards difficult-to-treat cancers consistent with our mission to seek novel approaches to cancer therapy that have the potential to dramatically improve patient outcomes over the current standard of care. I want to thank you all for listening to the prepared remarks. I'll now pass the call over to the operator for Q&A, where myself and the Zymeworks executive team are available to answer questions.
We'll now begin the Q&A session. To join the question queue, please press star one one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. We will pause for a moment as callers join the queue. Our first question comes from Stephen Willey with Stifel. Your line is open.
Yeah, good morning. Thanks for taking the questions, and congrats on the transaction. I know this has been a work in progress for a while now. Ken, I know there's a lot of focus on just the kind of option-based nature of the $325 million. Can you maybe just kinda speak to the decision to structure that in such a manner? Then can you just, I guess, provide a little bit of commentary as to whether or not this is just a truly subjective decision on Jazz's part? Is it defined by some threshold response rate or duration of response data that comes out of the trial? Is that decision somehow, or I guess, could that decision somehow be affected by some extraneous circumstances?
I guess specifically anything which might emerge during that time frame on the competitive front.
No, that's a great question, Steve. Thanks. I think in our discussions with Jazz, you know, we had come to the meeting of minds on working together and the financial parameters of that agreement. I think we both felt very strongly that rather than waiting for, you know, the pending top line data disclosure from BTC before the end of this year, optimizing value in the brand and also optimizing the value of that brand for both of us, it was in our interest to start working closely together immediately, to get them engaged in working forward on the zanidatamab.
In doing that though, we had to face the unique circumstance and reality that we had a top line data readout coming up before the end of this year, which, you know, we were not able to share with them, nor do we know the data today. Because as you know, under ClinicalTrials.gov, the primary outcome measure of ORR and the important secondary measures are subject to independent central review, and we could not break the data integrity or validity of the study by sharing it with potential partners. Again, we don't have that data. I think we decided that we could be creative and structure the upfront payments in a way that Jazz would have that data available to them before they were asked to hand over the vast majority of the upfront payments.
I think we were quite comfortable with the timing of being able to get through the Hart-Scott-Rodino process and make that data available to them before the end of this year, such that the entirety of the upfront payment of $335 million could be provided to us by the end of the year. That second payment is structured entirely at their option. They'll be provided with the data and all the analyses. They'll be asked to make that second payment. It's entirely at their option to decide whether they wanna make that payment. Obviously, if they don't make that payment on the timeframe, then the agreement's terminated.
We felt that was the best way to structure it, rather than providing some discount to them on the risk associated with the measures out of that study. The best way to do it from our perspective, and obviously they agreed to it 'cause we agreed and issued the agreement, was to simply make sure that data was available before the majority of the upfront payment was required to be paid by them. We're very confident in our ability to make that data available to them in order for them to decide to make that second payment.
Okay, that's helpful. Maybe just a couple more quick questions, and I'm not sure if you can speak to these or not. I guess, can you say what the timeframe is with respect to how long Jazz has to make that decision once you have delivered the BTC data? I guess the second question just completely escaped me. I guess if you could just answer the first. Oh, and the regulatory payments, I'm not sure if you can speak to how those break out between BTC and GEA. Thanks.
Yeah, sure. I think the nature of the second payment and process, you know, there will be some disclosure of that in filings we'll make related to this agreement. You'll have to wait and read that. I think from our standpoint and Jazz's standpoint, you know, we can deliver that data to them before the end of this year. There's a very tight timeframe for them to then make that second payment to us. The timeframe we've given them should be sufficient for them to evaluate that data and make that decision. I think, you know, we were.
I think it was a completely reasonable request for them to be able to at least have that data before they handed over the majority of the upfront payment. We came up with that creative structure of bifurcating the upfront into two payments. We feel confident we can deliver the data, and we feel confident that they'll still believe in zanidatamab and wanna move forward with the agreement. Otherwise, we would've waited. We did give them the complete option to make that decision based on the data, and we feel quite comfortable in making that decision. I think the timeframe for turnaround is quite tight. Our expectation is that the entirety of the upfront payment will be paid to us before the end of this year.
On your second question, we won't comment further. We obviously have a pretty significant ability to earn milestone payments on regulatory approval of zanidatamab, both for the current pivotal trials and beyond that. The timing of how that's broken down by geography and indication is not something that we'll go further into until those milestones are earned and received and announced.
Very good. Thanks for taking the questions. Congrats again.
Very welcome.
Our next question comes from Yigal Nochomovitz with Citi. Your line is open.
Hi, Ken and team. Congratulations on the deal. Very good news. I just wanted to follow up quickly on Steve's question. As far as I understand it, this is totally subjective up to Jazz with regard to the $325 million for HERIZON-BTC-01. Meaning, as far as I understand it, that there's nothing in the agreement that outlines specific clinical scenarios in terms of degree of benefit and/or specific P value threshold that would automatically trigger the payment of the $325 million. Could you elaborate a little bit on that aspect? Thanks.
Yeah, it's entirely at their option. Yeah, I think that was the only way that we both felt that this could work. Again, we, you know, I think we'd agreed on the collaboration, the financial parameters. I think, you know, we had this unique situation where this data set coming out that we don't have access to the key measurements in the data set because they are in independent central review. You know, both me and Jazz want to make sure we don't affect the integrity or validity of that data set in getting into this agreement.
We had to get a little creative in deal-making and bifurcate the upfront payments into two, one based solely on Hart-Scott-Rodino, and the other is directly related to our ability to give them the data and have them look at it before being asked to make the next payment. I think it's a pretty reasonable request. I'm very comfortable with the way that we structured this relationship. I think allowing us to go forward now so we can get our partner on board working with us collaboratively with a pending data set coming up that could be our first registration going forward was extremely important to both of us. We both realize it's the way to optimize value in zanidatamab, the way not to lose time against competition.
We both have an economic interest in doing that. I think we're able to structure something that we both feel comfortable with proceeding today as opposed to waiting until that data was available and then striking a deal. I think we're very confident in the top-line data which will be coming out this year. We believe that zanidatamab has a place in biliary tract cancer treatment in patients in second line. Therefore, we think this is a way to allow the deal to go forward now. Did not have an impact on the economics of the deal other than structuring the upfront into two different payments. Then once those are behind us, we can move forward in the relationship and we'll be two months further ahead. There's tremendous value in that for both of us.
I think it was just a creative deal structuring moment between the two companies to allow us to go forward without impacting the integrity or validity of that top-line data set, which is extremely important for both of us.
Okay. Got it. I just had two other hopefully quick ones. You mentioned full 100% R&D reimbursement from Jazz. To the extent that you can characterize, you know, just ballpark it, what sort of numbers are we looking at in terms of what level of R&D reimbursement you would expect from Jazz to get through the pivotal trials for both, BTC and GEA? Just roughly, you know, how much above the $375 and upfront would that reimbursement number look like?
Yeah. We won't give out guidance on that today. Obviously, it's a funding mechanism, so to the extent that Jazz funds and reimburses our development costs, you'll see those on an ongoing basis going forward. Again, that reimbursement, you know, starts today. Obviously that's one of the benefits of us starting the agreement today, moving forward. They're working with us today, which is great. I think, you know, it's no surprise if you look at prior disclosures we've made, you know, at least this year, you know, almost 70% of our cost structure is related to zanidatamab. Obviously going forward, and this is all ongoing studies right now currently, so this stretches out for some time period. You know, we're obliged to do the work. We're happy to do the work.
We want to finish what we started, and we're obligated to do this on Jazz's behalf, and they're required to reimburse it. It's, you know, a pretty substantial change in our financial burn rate if we look at zanidatamab being 100% fully reimbursed. Obviously, we have expectations that we'll continue to do work on ZW49, and as you'll hear tomorrow, we want to ramp up the preclinical pipeline beyond 171 and 191. I think once we get through the completion of this transaction at the end of this year, and once we have a chance to fully flesh out our 2023 plans and goals and milestones, we will provide financial guidance on spending early in 2023 when we talk about our 2023 guidelines and milestones.
It's not possible for us to do that today.
Understood. Just one final one. Thinking about clinical development synergies between the two companies. I noticed on the Jazz pipeline, they have a solid tumor drug called rilvegostomig, which is being developed in phase 2 for a number of solid tumors and in phase 3 for small cell lung cancer. Is there any discussion potentially of thinking of ways to do combo work with zanidatamab and rilvegostomig, or the mechanism's just too far afield from one another that wouldn't really be priority?
Yeah. I don't think we'll talk about potential synergies with their pipeline currently. I think you'll have to wait to hear more about how we intend to work with Jazz and BeiGene for further development opportunities. I think we're you know, having spent time with Jazz, we're extremely impressed with the development experience in oncology in that organization. I think they have a whole host of folks who have worked on things inside their portfolio, and we're very interested in having them work with us on the development of zanidatamab as we move forward. Again, I've been very impressed with the expertise and execution on the commercial side of Jazz.
I think we think bringing that development and commercialization experience with zanidatamab is gonna be a significant step towards optimizing the potential value of zanidatamab, and obviously the value of that brand in conjunction with being a very good complementary piece to BeiGene's current strengths in the Asia Pacific market outside of Japan. I think in all of our analysis, you know, it's a very attractive financial proposal from Jazz. I think there's no doubt denying that. I think that proposal is worth it because I think zanidatamab is a potentially extremely valuable addition to HER2-targeted therapy, and obviously Jazz agrees because they've signed up for that.
I think we're really excited to work with Jazz in BeiGene on further development and getting to regulatory filings, getting approvals, getting launches done, and really seeing the true benefit that zanidatamab can bring to hopefully what's a pretty broad patient population. I think it's a really interesting fit for Jazz, with zanidatamab, and I think from Jazz's perspective, if you look at their growth pattern, where they're going in the future, I think zanidatamab is a perfect product for them to add to their portfolio. In the future, they're gonna be extremely glad that they did this.
Got it. Thank you. Our next question comes from Charles Zhu with Guggenheim Partners. Your line is open.
Hi. Good morning, everyone. Thanks for taking the questions and, congrats on this agreement. Maybe just switching gears for my first question a little bit. To what extent did zanidatamab's opportunity in GEA factor into Jazz's decision, and how much line of sight did they have into the ongoing phase two frontline study prior to they making this agreement? Thank you.
Yeah, good question, Charles. You know, obviously, Jazz did a tremendous amount of due diligence on zanidatamab. We made accessible to them everything that was available to us under confidentiality, including data that you mentioned around the ongoing phase 2 GEA study in first-line with zanidatamab plus chemotherapy, which we have guided that we expect to put data out in a peer-reviewed medical meeting in the first half of next year. We gave them everything that we could to allow them to make the best financial proposal and obviously sign this agreement for zanidatamab.
You know, the one piece we couldn't provide them because we don't have it and don't know it is the outcome data for the second line BTC study that we'll read out you know before the end of this year. Obviously we didn't have that. We couldn't provide that to them. We both did not want to affect the validity or integrity of that ICR process, which is extremely important from a future regulatory perspective. We provided them everything we could, including what you mentioned. We just had to you know creatively deal make around the unique situation that we both find ourselves in without having access to data that's pretty imminent but wanting to work together quickly.
I think the structure we came up with was acceptable to both of us, and I'm very confident that we'll be in a position before the end of this year with the upfront payments behind us, the two conditions, Hart-Scott-Rodino, and making the data available from BTC to them behind us, and focus forward on development and commercialization of zanidatamab in their territory.
Got it. Great. Yeah, that makes sense. For my second question, apologies, I'm probably beating a dead horse, but is there a scenario where HERIZON-BTC-01 succeeds based on your predetermined endpoints and Jazz, for whatever reason, chooses not to opt in? Thank you.
Yeah, Charles, it's entirely their option. You know, we've signed agreement today. We've announced it. We're gonna start working forward. There's obviously a $50 million first tranche of the upfront payment that's payable once Hart-Scott-Rodino expires or terminates early. It's entirely their option if they would like to not make that second payment after seeing the data. That's entirely up to them. I know from our perspective, you know, and I think from their perspective, we entered into this partnership on the belief that we would be moving forward together. I think it's entirely a reasonable request before they hand over the vast majority of the upfront payment, which is very sizable, that they're allowed to see the dataset that comes out of our BTC pivotal study.
I think we feel confident in our ability to deliver to them, and we feel confident in the fact that we think it's gonna support the broad applicability of zanidatamab, even beyond BTC. We felt confident enough in that structure to strike that deal today. I think we do get the benefits of working with them earlier, which are substantial for the brand and for both of us. I think given the imminent nature of that dataset, at the same time as we're currently going through the Hart-Scott-Rodino process, we're quite comfortable with that. But it's entirely their option, their decision. There's no rationale required. There's no minimum benchmarks of any kind whatsoever. We'll make the data available to them.
They have a quick timeframe to make a decision about making the second tranche payment or not, and if they don't do it, the deal is terminated.
Got it. Fully understood. Thanks again for taking the questions and congrats.
Thank you.
Thank you. Our next question comes from Akash Tewari with Jefferies. Your line is open.
Hi, this is Amy on.
Thanks so much for taking our question. So I guess the first one, just a question around the $325 million option around HERIZON-BTC-01. Given we already have prior data for zanidatamab and BTC, just wanted to see what are the remaining questions on the program. Is Jazz looking to see, you know, longer durability data? Is there an ORR bar? Is there a concern for, you know, ORR getting worse over time? Would they be okay with a 40%? We're trying to understand if this is a de-risking, I guess, de-risking hurdle for BTC, or are they using it kind of to read across to other indications like breast as well? And then overall, what's your confidence that this gets executed? Thank you.
Yeah. No, thank you. I know it's a kind of a unique structure for a unique situation, but I think you may be reading too much into this. We've obviously provided under due diligence a substantial amount of information on zanidatamab, including whatever we could around biliary tract cancer, including our prior data that was available in our earlier clinical study. The one thing we could not provide them with under due diligence, though, was any data or outcomes related to the ongoing pivotal study because we don't have it and we can't break the blind or the database lock on that because it'll affect the validity and integrity of the data. We could not provide that.
I don't think there's anything specific in mind other than I think it was a pretty reasonable request that there's an imminent data set coming up, and it'd be nice to see that ahead of having to write a pretty substantial check in the majority of the upfront payment. I think we were quite happy to make that request. We do get, as I said, the benefits of working earlier with Jazz now rather than waiting until that's available. We're confident in our ability to provide the data for them to make that decision. We're quite comfortable with the structure of how that decision is made in quite a quick time period to make the final payments and such that everything will be done by the end of this year.
We're quite confident in our ability to complete the transaction as indicated. I think we did this unique structure for a unique situation. I think you might be reading too much into it other than it'd be nice for them to see that data set before writing a much bigger check, and we're quite comfortable doing that based on the benefits that the brand gets and both of us get from starting now as opposed to waiting. Obviously they must have some comfort that otherwise there wouldn't be any reason for them to sign and announce a deal today, commit to providing a $50 million check that's related to Hart-Scott-Rodino and not the data.
Obviously you know, they must have some level of comfort and expectation of moving forward on this partnership, otherwise there'd be no reason to agree to this today. Again, it's entirely their option. We'll make the data available, they'll have a quick turnaround time to make the second payment, but it's entirely their option to decide if they want to do that. If they don't do it, then the agreement is terminated.
Okay, that's super helpful. I guess on BTC, how do you see zanidatamab fitting into the broader BTC market? Can you quickly go over the timeline for BTC and launch and then the required SG&A spend to get there?
Yes. We haven't given any guidance whatsoever, and we won't until our top line data is available. Again, that'll be available before the end of this year. The full data set will be out in a peer review setting, our expectation in the first half of next year. We'll see all that data. Obviously we've, you know, fully enrolled this second line study, you know, a little more than six months ago. All the patients will have completed the six-month follow-up time that we usually require for to assess ORR. That's all behind us, which is fantastic.
In the meantime, while we've been making that data set, we have continued to enroll patients in our first line BTC study, our phase two study, which is ongoing, which I think people sometimes forget. That's looking at zanidatamab in a first line population, in combination with Gemcitabine. That'll be an interesting data set for us and we're actively recruiting patients on that study, now. I think, once we have our top line data available, in the fourth quarter of this year, we'll discuss that with both Jazz and BeiGene, who also will not see the data until the database is unlocked. We'll decide, based on the strength of the data, what regulatory consultations we undertake and what the timing of regulatory filings might be in that respect.
This obviously being the first potential HER2-targeted therapy for this patient population, we believe, you know, strength of data will be very convincing arguments for regulators globally to make access for a targeted therapy the same way they have for other mutations or amplifications. We think strength of data matters. We think regulatory consultation is probably important, and we'll use the designations that we already have on zanidatamab and BTC to find the best pathway to make this broadly available to patients as we can globally as fast as we can. I think we'll be happy to provide some guidance and consultation with Jazz in BeiGene after that about specific regulatory filing times, regulatory strategies as we decide to do that. We won't give any guidance until we see the top line data.
Sounds great. Thank you so much.
Thank you. Our next question comes from James Shin with Wells Fargo. Your line is open.
Hey, morning, Ken.
Good day.
Thanks for taking my question and congrats on the collab. Just a couple of questions and kind of sound a little bit similar to the other questions, but
For the biliary tract data that's coming out later this year, can you frame, do you need to see 40% ORR again to consider this a successful top line? Then when the secondary response endpoints become available, can you frame what you would consider to be a positive readout? I think people have been trying to get at this, but are there any specific triggers from Jazz's point of view to lock in this $325 million payment? I know you're saying it's at Jazz's discretion, but are there any metrics that you guys assign like, "Hey, we need to see this to get this $325?
No. There's no predetermined criteria whatsoever. Again, I think that would've been counterproductive and not the best approach to try and reframe it. I think we had agreed on the financial parameters to properly value and structure a transaction with Jazz. Then we used some creative deal-making to deal with the fact that we could start now, while that data set was not available yet. I think from our perspective, we're quite happy just providing them with the absolute option. We'll make the data available to them. They have a pretty quick turnaround to decide whether they wanna make that second payment or not. It's entirely in their discretion and option as to whether they do that. Again, if they don't do that, then the agreement terminates.
I don't think either was going to the expectation that we would sign, announce a deal, structure a $50 million payment around just Hart-Scott-Rodino expiration for this to be a terminated partnership pretty quickly. I think it was a pretty reasonable request for a sizable upfront payment, where the majority is paid second to have the data available before they're being asked to make that payment. There's no predetermined criteria. There's nothing whatsoever. Giving them the entire option and discretion is the simplest way to do this, and we're confident in our ability to deliver the data, and we're confident that this data is going to reflect a potential opportunity for zanidatamab and BTC, in addition to all, you know, zanidatamab having a potential in GEA, and other indications which I mentioned before.
There's nothing specific there. In terms of the data, you know, we've announced our early clinical study data, which we presented, which obviously was very encouraging and was the reason that we moved into the pivotal phase 2 study. Again, I don't think we're gonna frame any guidance ahead of time. You know, the patient population is second-line plus. This population of patients, as you know, has a pretty poor prognosis with the current standard of chemotherapy regimen, which, you know, is between 5%-15% and much closer to five, which is one of the reasons from a regulatory perspective, we were not required to have a comparator arm in the study and only have a treatment arm with patients.
Obviously, the early study gives us confidence that we can be successful in providing, you know, the first HER2-targeted therapy regimen for this patient population, and make that available by providing our data to regulators. You know, it's important to remember also this is zanidatamab in monotherapy, so, you know, the adverse event tolerability profile you expect with this regimen is only zanidatamab. Obviously, the chemotherapy regimens which are used generally in patient populations have some pretty severe toxicity effect on a pretty frail patient population. From an adverse event profile, this is zanidatamab only that you need to be concerned about. You know, the adverse event profile for zanidatamab has been established in many, many patients in many, many different clinical indications. I think it's well understood, and we don't expect any surprises there.
I think the main thing we'll be looking for the top-line data is obviously, you know, strength of overall response. More importantly, you know, durability of response is very important to us. You'll note from our disclosures on ClinicalTrials.gov, we're very focused around a duration response of at least 16 weeks in patients, and that was what we put in place after consultation with FDA and other regulators. We'd like to see, you know, a good response rate in these patients because they don't have it now in the standard of care. We'd like to see, for those who get a response, a very durable response. We'll follow that duration as far forward as we can with zanidatamab's monotherapy.
After that study with our first-line BTC study, we'll get a bit more of a sense of what happens in an earlier patient population when we combine zanidatamab with Gemcitabine. There's the potential, obviously, with that to have some improvement in efficacy by going into an earlier stage population and also doing a combination with chemotherapy, and we'll just have to assess the you know adverse event profile and tolerability of that combination versus the potential enhancement in efficacy. I think they have a good strategy that doesn't depend on any particular framework or reference point in the primary endpoint of confirmed ORR, and the secondary outcomes are extremely important.
You know, we will have a pretty full data analysis at the top line data point of the primary measure, but also all the important secondary measures. We obviously haven't made decisions yet about the extent of our disclosure on top-line data versus the full data set and peer-reviewed medical conference. All of those data points will be made available to Jazz as soon as they're available to us to allow them to make that decision. We'll have a very fulsome data disclosure, which unfortunately we're not able to give them today, but found a nice way to structure the agreement to allow us to work together today in anticipation of that data set being available before the end of this year.
Got it. Just one follow-on. This is more of a looking towards the future question obviously. There's a slide that mentions that ex-U.S. market is gonna be part of the strategy, but does that seem to indicate that Zymeworks is gonna bring U.S. markets in-house or try to keep the economics for U.S. markets to itself going forward?
Yeah, I think you know, I think we wanna indicate pretty early on here that you know, our. You know, we have a host of potential partnership and collaboration opportunities in front of us that are still in discussion. This agreement we announced with Jazz today is fantastic, and it's the one that we've really been focused on this year to conclude for a variety of reasons, but this is not the only discussion that we have ongoing. From a deal-making perspective at Zymeworks, you should know this. We're getting started. This is the first in a series of transactions that we hope to complete, which will integrate partnerships and collaborations throughout the product portfolio.
One of our key criteria going forward, obviously, with having zanidatamab fully licensed with both BeiGene and Jazz globally, I think as we go forward to future compounds, we'd like to take the opportunity, at least leave ourselves the opportunity in the future to be able to commercialize some of the drugs that we discover, engineer, and develop moving forward. Obviously, biotech companies like to do that in the U.S. to start, 'cause it always seems to be the safest place to start with your first launch.
I would expect that our future partnership and collaboration opportunity will be focused on working with partners or monetizing rights ex-US and retaining unencumbered rights in the US to our entire portfolio as long as we can, to be able to then make that decision about whether we start a commercialization effort around a portfolio product or whether we license globally as we are with zanidatamab. If you look at the slide deck, and if you look at tomorrow, you will see that with, you know, within five years, we could have a pretty substantial clinical-stage oncology programs with both ZW49 and up to five other agents, including ZW171 and ZW191 in clinical development.
That's a pretty interesting. Can be a pretty interesting oncology pipeline for us to look at rather than building a commercialization effort primarily in the US around our own portfolio and not having to deal with the continuous problem as a biotech, launching one and then trying to in-license a bunch of others from elsewhere to feed your commercial force, which I just don't think is a great strategy in biotech. I think the strength of that internal oncology pipeline, how big it is, the potential we see for best-in-class in those agents, will drive our partnering strategy. Even before then, I think you'll see us be very active in deal-making. This is just the start for us.
I'd stay tuned to different ways that we'll weave partnerships and collaborations integrated through the whole product pipeline to make sure we're properly funded, make sure we can expand what we're doing beyond what you'll hear about tomorrow, and do it in a measured way with partners on board in markets that we, you know, don't intend to commercialize ourselves, at least for the foreseeable future.
Appreciate it. Congrats again. Thank you.
Thank you.
Thank you. We have a question from Gena Wang with Barclays. Your line is open.
Hi. Thank you for taking our questions. This is Tong with Gena Wang. Just following your earlier comments on the options. Just to clarify, if Jazz opt to discontinue the collaboration, the deal will be terminated? And could Jazz actually choose to opt in partially with GEA only, for example, or the entire deal will be terminated? Maybe in a more favorable situation, assume Jazz opts to continue the collaboration after the BTC top-line data, and since the development cost will be fully reimbursed now with Jazz or does the plan allow you to try additional indication in parallel to colorectal and breast cancer?
Maybe lastly, just to clarify on the updated cash runway, does that reflect cost saving and upfront only to the year-end, or do you include the potential option, the economics from the continued development with Jazz?
Yeah, sure. Thank you for that. Again, I'm, you know, this is a very unique structure, I realize, for a very unique set of circumstances, which I think were crafted by ourselves and Jazz to be able to allow us to work together. I think the structure of bifurcating the upfront payments into two different tranches, you know, just allowed them to at least have access to the data which they can't have today, before making the majority payment that they're required to do. It's very simple that way. There's a $50 million payment, which will need to be paid when we get through the Hart-Scott-Rodino process, and it either expires or terminates early. That payment, again, has nothing to do with the data.
We'll make the BTC data available to them in concurrent with us receiving it as well. They have a very quick turnaround to make the second payment. Failure to make the second payment terminates the deal. Very simple process. I think we came up with this unique structure. We tried to keep it very simple. We gave them complete discretion option to make that second payment or not make it and have the deal terminate. That's entirely their discretion, and we think that's the best way to structure in this unique situation without making it overly complicated or without requiring discounts or other renegotiations of any way, shape, or form. We're confident in our ability to get through Hart-Scott-Rodino.
We're confident in our ability to get through providing the data in such a way that we can receive all of the $335 million upfront payments before the end of this year. That would obviously make a big difference to our financial position as we laid out earlier on this call. Other financial details around that, we'll give guidance early in 2023 after completion and receipt of the upfront payments and setting out our 2023 goals and milestones. You'll see that guidance in early 2023, and until then, we just won't provide any further financial guidance.
And, and, uh, th-thank you for that.
Thank you. Our next question comes from Andrew Berens with SVB. Your line is open.
Hi, thanks, and congrats on the deal. I know it's been a long time in the making. Sorry if you already said this, I came in late, but how long do you think it will take to get clearance from the regulatory agencies for the deal? Since we're already in mid-October, is it possible you'll have the top line data set from the HERIZON-BTC-01 trial before then? The last one is, are there any competitive data sets or regulatory decisions in the BTC space that are expected before Jazz could make the decision on the $325 million payment?
No. Thanks for the questions. Again, we haven't guided specifically around Hart-Scott-Rodino exploration or early termination. I think you know, from our perspective, looking at the product portfolio of Jazz, that we feel confident in our ability to get through that process in a pretty reasonable timeframe. We do have to go through that process, and it's something that we both took a look at from the perspective of potential risk of that. We feel quite comfortable being able to go through that process in a pretty reasonable timeframe. We haven't given specific guidance around the BTC data availability other than we've previously guided that we will have the top-line data available before the end of this year. That's still the case. I confirm that.
We will be able to meet our obligation to provide that data to Jazz before the end of this year. Then the timeframe for their decision to make the second payment is pretty quick and pretty clear. We have every expectation and confidence that we'll be able to work our way through the Hart-Scott-Rodino process, make the data available to Jazz, have them make the second payment before the end of this year. Again, they have the total option not to make that payment. Whether influenced by other factors in the BTC data, I'm not sure. Again, we're confident in zanidatamab. We're confident in our data. I think in creating this unique structure for this unique circumstance, we wanted to keep it very simple and very clear between the parties, and that's the way it is.
Again, they can see the data and make that decision. I think, you know, we both had the expectation of announcing and signing this deal, today and starting to work together. I think they have an expectation of making a $50 million payment upon Hart-Scott-Rodino being cleared on the basis that we're gonna move forward. It's not an unreasonable request for them to be able to have access to one key data set that we're not able to give them during due diligence before they're asked to hand over the largest part of the upfront payment. I think that's a pretty reasonable request, and we structured between each other in a very creative deal-making way that I think allows us to get through that process and then just work forward together on zanidatamab.
All right. Well, I guess the only question is why not just wait a couple of months and do the whole deal at one time since it's possible you might not even get regulatory clearance for the deal until the top-line data set is available?
Yeah. Sorry you came in late. You missed all my comments on that, but I did talk about that during the course of the conference call, and you can go back and read that. Again, I think we have every expectation that Hart-Scott-Rodino will be able to work through that process. We've obviously assessed that ourselves, and Jazz has assessed that, based on what we need to go through. We have to go through that process because of the size of the deal. To a certain extent, you like to have to go through those things because it means it's a significant transaction. I think the option we had was also to wait till later on. I think there is value in the brand in working with Jazz right now. We both benefit from that.
I think we felt very strongly that we wanted to start working together and not lose time, and it's a competitive environment obviously for in the HER2-targeted space, so there's no reason to lose time. We were able to creatively structure something for the unique circumstance we find ourselves in, that allows us not to lose that time, to keep that value for both of us and move forward while respecting their thought that they'd like to see that important data set before being asked to hand over the bulk of the upfront payment, which seems pretty reasonable.
I think we found a way creatively to work on that deal-making structure, and we feel very comfortable in doing that and did not want to lose the potential value in the brand that we both benefit from by just waiting a short time period.
Okay. Doesn't sound like you're aware of any competitive data sets that could be coming or regulatory decisions ahead of Jazz's decision?
I'm not aware of any that will affect the space. Again, it's their option. That option is completely at their discretion. That's the simplest, clearest way to frame it. I'm sorry, it's just the unique structure for the unique situation that we're in. We feel quite comfortable. Again, we have to go through the Hart-Scott-Rodino process now. The time period seemed to line up, at least from our perspective, reasonably well to be able to complete both of those conditions and receive the totality of the upfront before the end of this year.
Great. Well, thanks and congrats again on the deal.
Thank you.
Thank you. There appears to be no further questions. I'd like to turn the conference back over to Zymeworks for closing remarks.
Well, thank you very much, operator, and appreciate the questions. Again, as I said earlier, this is a very significant transaction for Zymeworks, and we think creates a tremendous amount of value for our stockholders in being able to confirm the further development and commercialization strategy for zanidatamab with our partners BeiGene and Jazz. As you'll hear tomorrow, it should put us in a financial position to be able to support advancements of the early-stage pipeline. We're hoping you'll hear some exciting elements of that early-stage pipeline tomorrow, and you'll hear more about that as we move forward. Really appreciate your attention, and please stay tuned and follow our progress.
We're really delighted with this Jazz partnership, but from a deal-making business development perspective, this is just the start of what we expect to do in this company, integrating partnerships and collaborations through the product pipeline. Please stay tuned.
Participants, you may now disconnect.
Much and have a great day.
This concludes today's conference call. Thank you for participating. You may now disconnect.