Good morning everyone. Thanks for joining this next session with Zymeworks. I'm Ami Fadia, Biotech Analyst here at Needham. It's my pleasure to be hosting Scott Platshon, Chief Business Officer at Zymeworks. He's just a couple of days into his new role. I'm glad to be having this conversation with you Scott today. Why don't I turn it over to you to take us through a presentation? We'll have some time at the end for Q&A. Just a quick reminder for our listeners, you're always welcome to send me a question that you might want me to ask through the dashboard. Over to you Scott.
Perfect. Thank you to everyone on the webcast listening and to Ami and the Needham team for hosting us today. Really excited to be here. I'll take us through a quick presentation and give a little bit of an overview of what we're up to and the strategy at Zymeworks, and then make sure we save some time for a Q&A. Oops! Okay. Can you see that full screen?
It's not yet in presentation mode. Okay, now it's full screen. There you go.
Excellent. Okay. Thanks again for the opportunity to be here. Keep switching. Sorry, some minor technical difficulties. There we go. Again, thanks for the opportunity to be here. For those of you who don't know me, I very recently joined Zymeworks as the Chief Business Officer. I joined from EcoR1, who's been a long-term and very large investor in Zymeworks, so really excited to be on the operational side of things. Zymeworks really started out as a protein engineering organization with some really deep and amazing expertise in designing and developing novel multifunctional assets. The business is actually over 20 years old. The business has really been recognized by leading pharma as one of the greatest protein engineering shops out there.
Our technology has become embedded into the pipelines of a number of the world's largest, and leading pharmaceutical companies, including Jazz, BeOne, J&J, to just give a small snapshot of that partnered pipeline. We've also built our own pipeline internally of novel assets using proprietary platforms. The most well-known of those assets that we've partnered out with Jazz and BeOne. A few years ago is now known as Ziihera, or zanidatamab. I'm not sure why that's. One second. Sorry folks.
Yeah, it keeps flipping back.
Yeah.
Maybe if you just try page down, that might work.
Yeah. Okay. The economics from the zanidatamab partnership have really allowed us to redefine what success looks like at Zymeworks, and I'll talk a little bit about our sort of new, evolved strategy, which is really a hybrid of R&D, keeping some of that amazing robust infrastructure, and development capability we have with an asset aggregation strategy. We'll also talk a little bit about a recent deal we did in March with Royalty Pharma that provided $250 million of upfront non-dilutive capital, which was secured against just a portion, a minority portion of the future Ziihera royalties. That $250 million really strengthened our balance sheet and was able to support an ongoing stock repurchase program as we think the business continues to be undervalued, potential future strategic acquisitions, and a very long-term cash runway with public guidance of beyond 2028. It's a really interesting and exciting time for the business.
We are evolving from a sort of traditional development stage biotech to more of a diversified asset aggregating business. We're really excited about this. We think it's something that no one else is doing in the way that we are, and we're able to aggregate assets by extracting value and leveraging our internal R&D organization for future partnerships. The business and the management team and the whole company is really focused on creating long-term shareholder value through very, very disciplined capital allocation, and building what we think is a long, long-term compounder for our shareholders. We also think this new strategy has really reduced that binary risk that also is associated with a lot of businesses in our sector. Internal R&D is going to and-- is and will remain a very, very important pillar at Zymeworks, and is really a core to our business model.
We are really excited about our pipeline. We continue to advance some clinical programs. ZW191 is the most advanced, which is a folate receptor alpha topo ADC, which is currently in dose optimization with some updated data at AACR this weekend. ZW251 is a GPC3 topo ADC, also in dose escalation, and excited about the IND submissions for 209 and 1528, which are on track for this year. Our longer-term future development is going to focus on multispecific antibody and engineered cytokine platforms. Those will be partially funded with early-stage partnerships, and out-licensing and various collaborations. If we zoom out, our objective really here is to generate novel differentiated assets that can ultimately become future royalty or commercial opportunities.
The positive outcome from zanidatamab, now Ziihera's HERIZON-GEA-01 study in frontline HER2-positive gastric cancer and beyond, have driven this increased consensus of Ziihera revenues by over 90% since February 2023, now currently standing at north of $2.3 billion. Beyond zanidatamab, it's really important for our existing and potential future shareholders to appreciate we are not a single-asset company, but this is really exciting as it's the first real validation of our platform in a global randomized setting, and it was really gratifying to see all that hard work pay off with a dramatic overall survival benefit, and very clinically meaningful data for patients.
Ziihera, just to put a stamp on it, is a very strong proof point that we can create valuable therapeutics, and that financing with Royalty Pharma enables us to capitalize on that success, and build out a new model for our diversified portfolio of revenue-generating assets. Let's unpack some of what I've alluded to on sort of this hybrid R&D royalty business and how those two sides of the business might interact synergistically. We think this is new, we think this is novel, and we think it's a really exciting way within the industry to build a long-term valuable business. We're able to combine the strengths of an innovative biotech company with the shareholder return emphasis of an organization focused on maximizing valuable economics from partners. The two parts of the business really work together, and that's the magic of this model.
The R&D engine is able to develop new partnerships and bring new future royalties and milestones to the business, while the investment portfolio is able to aggregate further royalties and programs for the R&D organization to develop. We have two primary sources of substrate on that R&D side. Our pipeline and research collaboration represent future opportunities for partnership. As I mentioned on the investment side, we're interested in acquiring organizations with trapped partner economics or R&D programs where we can further develop with our scientific expertise for future partnerships and therefore create more royalties. We think this is the right way to show it as this sort of flywheel effect. I appreciate this is a little bit of a new concept. We can either dive into this in the Q&A or talk about it in one-on-ones throughout the day.
I mentioned how pleased we are from our partners, Jazz and BeOne, reporting the recent success of the HORIZON GEA study in frontline HER2 positive gastric. You can see we anticipate near-term milestones of $440 million. And just a reminder, we receive a 10% - 20% tiered royalty on a north of $2 billion peak sales program. Our plan is to deploy this capital with a real laser focus on shareholder returns across both the R&D and investment side of the business from that flywheel we just talked about. And again, most importantly, just want to highlight for folks, this is a really sustainable long-term model, and the business currently has a runway beyond 2028. As we think about our substrate available from the investment side of the business, there are a wide variety of existing royalties to build in.
That includes, just to highlight a few, pasritamig from J&J, currently initiating three phase III studies in prostate cancer, as well as a number of research collaborations from the platform that are a bit earlier. Just to highlight for folks, I think it's worth going back to look at the J&J data for pasritamig, a CD3 x KLK2 bispecific. They shared publicly some data at ASCO GU in combination with chemotherapy, which we were really excited and pleased to see the very strong safety and efficacy. We're also in very active conversations with many companies externally who have royalties or programs where we think we can extract value with further R&D at our business. When appropriate and when publicly available, we'll continue to share further updates on those programs. We're in a very strong cash position, $271 million on the balance sheet.
Just to highlight for folks that does not include the $250 million royalty-backed note. Again, as I mentioned, a long royalty beyond 2028, $440 million in near-term milestones. Given a strong sense of what we believe our business is worth, we announced $125 million share repurchase last November, and we've completed, as of March 2nd, $62.5 million so far and will continue to provide updates on that repurchase program as appropriate. The value from our new and legacy partnerships is really delivering returns. Revenue in 2025 was $106 million, almost a 40% increase year-over-year versus 2024. The proceeds from our Royalty Pharma transaction really strengthen our balance sheet and support that stock repurchase program, potential strategic acquisitions, and enable us to run our business sustainably for the foreseeable future. Just a little bit on what to expect in the near term.
We have a number of very, very meaningful catalysts coming up, both from our partnered and wholly owned data. I'll flag on the next slide some of the robust kind of breadth of data we have at AACR upcoming. We've already seen the very, very positive frontline HER2-positive gastric data that I'd encourage everyone to go take a look at ASCO GI. Jazz has guided publicly that they have completed the sBLA in the Q1 , and that therapy has Breakthrough Therapy Designation. There's an opportunity for us to present more clinical data from our wholly owned pipeline. We prefer to do those types of presentations at medical meetings, and so we'll provide updates as appropriate, and when abstracts come out. We're working hard to move the pipeline forward and execute new deals that are aligned with our strategic initiatives that we've just talked about.
Just to give a plug for those headed to San Diego for AACR, we have seven presentations, a really robust portfolio spanning a phase I update on ZW191 from our folate receptor alpha through some very, very exciting earlier stage preclinical data. I would specifically highlight the first public disclosure at a scientific meeting for our pan-RAS ADC portfolio, really exciting, especially given some of the exciting news from peer companies working in the RAS space this week, and we're really excited about that platform. I'll wrap up there and move towards any Q&A that we can go from folks either on the line or from you, Ami.
Okay. Great, Scott. Thank you for that presentation. Just a quick reminder for the listeners to send me any questions you might want me to ask. Maybe if I could just sort of get started with maybe a broad question. You've taken on this new role at the company recently, and there's been a few other appointments in the organization. Help me understand sort of how we should interpret or what is sort of the impetus for that, and how does that change or enhance the direction in which the company was moving?
Yeah. I'm almost a week in as the Chief Business Officer, so really excited and humbled to be here. Thanks for asking the question. I think it gives me a good opportunity to talk about it. Zymeworks is a company that I had followed in my investment seat for a very, very long time. I heard buzz of how kind of prolific the R&D team were and some of the novel therapeutics they were working on for a very, very long time. It's a company that we started at my prior seat investing in over three years ago. I essentially fell in love with the business, and the team, and the opportunity there.
I think the business remains very undervalued, and there's an incredible opportunity to create very long-term value for shareholders, and was very grateful that there was enough support from our Board and Management Team to have me join full time. We also announced a couple other appointments. Kristin Stafford joined us from Royalty Pharma, and Adam Schayowitz was a colleague of mine at EcoR1 and spent a long time as a drug developer at various organizations, including Pfizer and many others. The CFO role and what Kristin's going to be doing is connecting capital management with execution on partnering and investment strategy, and how we allocate capital to the pipeline. Given we're becoming sort of more professional capital allocators, she's going to be really integral in driving that.
Adam joined as Head of R&D. He is looking to ensure that we have both scientific and operational leadership that's guided towards a clear commercial vision, and alignment towards this sort of new partnering focus strategy. My role as CBO really will be to lead external partnering and deal-making, but also managing that large and, we think, very, very valuable existing royalty portfolio.
I think that Zymeworks sort of revealed its sort of strategy some time ago, but I think that there might be still some misconceptions around how it is different either from royalty aggregators or companies that have traditionally sort of developed drugs and partnered them out and own royalties based off of that. Can you hone in on what is sort of different or what might be misconceptions about the company's strategy?
Yeah. Thanks for the opportunity. I think it's an incredibly important question. The background for why this business is doing that is we think the existing partnered portfolio we have today is incredibly valuable and not yet fully valued or appreciated by the market. When we talked about our new strategy, concurrent with some of the frontline HER2-positive gastric data from our partners at Jazz and BeOne. Wh at I think hasn't quite been fully appreciated yet is how we might be different and actually complementary to some of the existing sort of more royalty-focused organizations in our business. Traditional royalty aggregators are really focused on sort of a single pathway, buying royalties, and they're incredibly good at it. They have ultra-low cost of capital.
They're brilliant, have deep investment teams, have optimized tax structures, and that's not a game we have any interest in competing with. We really have a different aperture and different opportunity to aggregate assets and royalties. There's kind of really four pathways that we think about. We're able to, one, create royalties from discovery collaborations. We can create royalties from our internal developed assets. We can create royalties by developing acquired assets, and we can acquire royalties through a more of a traditional structure, but access them in places that might not be accessible to traditional royalty players.
We can talk a little bit more about what those are, for sure. The idea here is this will substantially broaden our deal flow and reduce competition, right? The winning strategy is weak competition, so we're looking to go where other folks are really not playing. Ultimately, longer term, we actually think that there might be an opportunity to be more of a collaborator with some of the more traditional royalty aggregating shops.
When you say that you have the opportunity to go in places where others are not going, is that sort of separating from how other royalty aggregators are focused on, or from other sort of drug development companies or biotech companies that are looking to find new assets to add to their portfolio? How is the approach that you take different from either of these?
Yeah. We believe there's incredible value to our R&D team and the portfolio that we're building. We're looking for opportunities where our infrastructure, both from a G&A and R&D side, add value and open possibilities to do deals that wouldn't exist for sort of the traditional royalty players. We're very comfortable buying whole businesses that maybe have trapped economics and some R&D that we think we can ingest both sides of the business, where a traditional royalty player may not be able to find value there.
Given we've publicly disclosed this strategy in November, we've been sort of gearing up, and getting going as we look at and interact with companies. I have to say that it's been very exciting, frankly, because we really are seeing the value that we're much more likely to be a collaborator with those folks than a competitor.
There are so many opportunities where there's either really valuable passive partnered economics, but there's embedded R&D operations or some infrastructure requirements or operational challenges or tax exposure or we could go on and on. There might be an opportunity actually for us to buy businesses either outright by ourselves or actually work with some of those more established players to access those types of businesses. It's early, we haven't done any transactions yet, but we think there's very positive signs that there's going to be opportunities to us that are overlooked and undervalued by many others.
Yeah. What is the range of deals or indication areas that you would be looking at? How should we think about valuing your internal R&D platform under this new strategy?
Yeah. Good question. The company is focused on oncology and immunology. I think we have a very deep and robust expertise there. I think if we talk about why might our business be so undervalued, I think one hypothesis might be we have pasritamig and a deep pipeline of royalties coming, but there's not a huge amount of diversity in terms of therapeutic indications. We're going to focus on our core competency, but I think you might see us add some diversity to that royalty and sort of partnered portfolio over time.
In terms of your second question of how we might value our R&D portfolio, look, I think if we take a step back, zanidatamab is a really exciting proof of concept for us. That is a whole and internally developed and discovered asset that we built, developed, put into phase I, and partnered at the right time and retained really valuable downstream economics. We're really excited to see what Jazz and BeOne are doing and how much capital and time and energy they're investing into that transformative medicine. It's something we're really excited about.
I think it's a great proof of concept that there is an incredible amount of value in the R&D portfolio. For the folks who haven't spent the time to go look at the ASCO GI data, it's really a transformative medicine for those frontline HER2-positive gastric patients. We believe that that's a very strong proof of concept that we can do that again. The R&D team will find that sort of next transformative medicine like zanidatamab.
We're refining that portfolio over time to really focus in on where we're amazing at. We have a high confidence that proof of concept from zanidatamab can be replicated.
I have to ask the next question on zanidatamab. Maybe if you could, in your mind, you, I think, put up a slide which showed the consensus estimates sort of evolving on zanidatamab before and after the data that was released in GEA. What do you see as the market opportunity for zanidatamab across all the territories? Maybe help us think about, what the royalty structure looks like? I think the high end of the range is about 20% royalty for you. What would it need to achieve or what would be needed to unlock that high end of the range?
Yeah. Thanks for the question. I love getting questions about zanidatamab because it's a molecule I'm so proud of. First and foremost, before we talk about detailed numbers, to hit OS at the first interim in such a challenging frontline indication where there really hasn't been a major advancement in so long, and to do that head-to-head against trastuzumab is really exciting. This is a group of patients that hasn't had a dramatic advancement since trast came out in the TOGA study. It's really exciting. I spent the whole ASCO GI conference just walking around and talking to as many physicians I can, and there's a clear and dramatic excitement for the therapy.
I tend to think when there's that much excitement and that much clear benefit, the economics will follow. Let's talk a little bit more about that specifically. Jazz has provided a peak sales guidance of at least $2 billion+ in their territories. They've not updated that in a little while or broken that down by indication, so I'll leave you to chat with them and that to Jazz management. Consensus estimates today represent a peak sales value of about $2.5 billion for zanidatamab.
Again, that's I think part of the strategy and very promising. It's about double the value that they were from a consensus perspective at the time of the partnership back in 2022 with Jazz. We remain eligible to get at the top end, as you mentioned, 20% of royalties at sales over $2 billion. I think that's the extent of the kind of detail we've given on the royalty range. We also have up to a 19.5% royalty on annual net sales above $1 billion from our partner, BeOne.
I see. Sorry, up to 19% over $1 billion.
19.5%. That's right.
19.5% over $1 billion for BeOne. Okay. How does breast cancer factor in, or this is irrespective of indication, is that right?
That's correct. That's right.
Yeah. Okay. Maybe with this fantastic data that we've seen in GEA, what does this mean in terms of the potential to demonstrate the benefit in breast cancer? Jazz is running multiple different studies, and they're going to announce some data at the medical meeting this weekend also, maybe just one of the studies we're going to have some data on. Maybe talk to us about, what is the read-through into breast cancer from your perspective, and where do you see the most opportunity in breast cancer? What is being underappreciated?
Yeah. Thanks for the question. I love the opportunity to talk about it. Jazz and BeOne, our partners, are running a global breast cancer study in the post-Enhertu setting for HER2-positive patients. Enhertu is a medication that everyone knows at this point, as it moves up the breast cancer treatment paradigm. At ASCO last year, Daiichi and AstraZeneca presented the early data from DB-09, which was Enhertu in frontline. We're really excited to see Enhertu moving up the treatment paradigm. Really as patients progress from Enhertu, there's really no prospective data and no therapies for those patients.
We believe that the EmpowHER-303 study that our partners are running could be the first opportunity to see real prospective, high-quality data in that setting. That is a very, very meaningful market opportunity. We'll leave it to Jazz and BeOne to quantify how big that might be down the line. We were very pleased to see the robust demand from an enrollment perspective. Jazz announced at JP Morgan that they were accelerating their guidance for top-line data by a meaningful amount based on very robust enrollment.
The public guidance at this point is that data could be available during the H2 of 2027 or early 2028, which speaks, I think, to the robust demand from physicians. Given the very encouraging, again, hitting OS at the first interim in GEA, we have a very high degree of confidence that that will bring meaningful benefit to breast cancer patients. Gastric has been historically one of the most challenging HER2 settings to drive any benefit over standard of care.
I think as you think about the de-risking profile across a variety of indications, not just breast, but pan-tumor, and some of the other ongoing studies that Jazz and BeOne have, we think that the probability of success has gone up meaningfully. We remain excited for that data and for additional readouts from the program.
Okay, maybe moving on to some of the other parts of the portfolio, what do we make of the Tubulis acquisition from Gilead, given you have a NaPi2b ADC?
Yeah, look, I think we're really excited to see the acquisition of Tubulis. I think it's clearly a great outcome for them and their shareholders and excited to see that Gilead is really still very excited about this modality. That deal, I think, validates the very high level of interest that large pharma has, and the ongoing demand for ADC platforms to pair with their internal pipelines. Our takeaway from that is it really reinforces ADCs as an ongoing, very high priority modality in oncology.
We think that we have a differentiated offering. As you mentioned, we have a NaPi2b program that is phase I-ready, we think is a great asset, very high quality. We think our platform is also differentiated. We have proprietary payloads. AACR will start to talk about some of the pan-RAS, and there's a lot of ongoing research.
We have what we think are very high-quality binders that are highly optimized, rather than just taken off the shelf. Our pipeline also has a potential expansion beyond oncology as well. I think there's a lot of great validation from that acquisition.
Mm-hmm. You've obviously demonstrated a lot of progress on the oncology side. What might be some non-oncology sort of areas or sort of work that you can highlight that we can sort of see progress over time?
Yeah. I'll keep it short because I could spend a lot of time talking about this. We think that there's a really enormous opportunity for high-quality multi-specific engineering in immunology. Our most advanced program that we've publicly disclosed is an IL-4/IL-33 bispecific, that is phase I-ready this year. It's an especially exciting time for that molecule, given AstraZeneca recently press released two phase IIIs in COPD for their IL-33, that were very positive and clinically meaningful. That's exciting validation of that arm. We think that the bispecific format will really bring a lot of value above that. We have a deep pipeline beyond that. Maybe I'll pause there. We think that there's a real opportunity for high-quality multi-specific engineering in immunology.
Okay. Let's go back to kind of the share repurchase program. Do you expect to continue to execute on the program that was announced in November? How should we think about kind of the capital allocation between the internal R&D, the investments, and the repurchase program?
Yeah. Let me just remind you what's been publicly disclosed. Our Board authorized $125 million repurchase program in November, concurrent with the top-line data from our partners. We spend a lot of time internally at the Board and Management level, making sure we know exactly what our business is worth. We've used about $62.5 million as of last disclosure in early March, of that $125 million repurchase program. We think it's a really valuable way to drive the long-term total shareholder return, when there's a very meaningful discount to what we think our business is worth and where it's selling out in the market. Not in a position today to give any new updates on how much we've used. I'll leave that for kind of the public filings.
But really what I can say is we evaluate capital allocation through a very simple lens, which is where does the next dollar go that generates the highest return for our long-term shareholders. So we will fully fund R&D to make sure that we can drive that next leg of growth, make sure we have capital available to run our business in the way that we need to, but any excess capital over that is going to be earmarked towards a very strict focus on driving maximum total shareholder return.
Understood. Okay. Maybe last question for you. Maybe just talk about kind of the cash burn with the current cash position, and how much runway do you have with kind of the projects that are ongoing? You do have a lot of different projects ongoing.
Yeah
We externally kind of think about that cash burn?
Yeah. The business is very well capitalized. Our last reported cash was a little over $270 million. Just to remind folks, that does not include the $250 million from the recently reported RP transaction. We also expect to receive pretty significant near-term payments. We've publicly disclosed $440 in milestones that we expect in the near term from zanidatamab. That capital, with everything fully burdened and the shareholder repurchase program and everything, we expect to take us beyond 2028. We'll likely need to provide more P&L guidance in the future, rather than just cash runway as our sort of business evolves. That's currently the guidance and sort of financial and cash position today.
Maybe just a quick follow-up, how active should we expect you to be in terms of executing on other sort of, as you call it, investments or business development transactions to bring in assets? Whether it's partnerships or outright full acquisition of assets, maybe kind of just give us some color around that.
Yeah. It's something that we're actively looking at. We believe, as I've mentioned, there are interesting opportunities to find businesses with these partnered economics that aren't accessible to maybe traditional asset and royalty aggregators. It's something we're very actively looking at, given BD is a hard thing to predict from a timing perspective. We have a very high bar, given we know what our existing business is worth, and we think that's clearly, given we're buying back stock, is quite undervalued. It's a very high bar, so I won't be able to give sort of timing guidance or anything like that.
No, of course. Yeah.
It is an active area of focus for us.
Okay. All right. Well, with that, Scott, thank you so much for this conversation. It was really interesting, and wish you all the best in this new role and look forward to our future conversations.
Likewise. I really appreciate you hosting us, and thanks for the great conversation.
All right.
Bye-bye.