Thank you for standing by. This is the conference operator. Welcome to Zymeworks conference call and webcast to discuss Zymeworks portfolio updates. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Shrinal Inamdar, VP of Investor Relations. Shrinal, please go ahead.
Thank you, operator, and good afternoon or good morning, depending on where you're joining from. During today's call, Adam Schayowitz, our Head of R&D, will provide an overview of how our R&D strategy and the Roche partnership announced by Zymeworks on Friday last week both work together as part of our broader business strategy. As a reminder, the Roche agreement remains subject to HSR clearance. Paul Moore, our Chief Scientific Officer, will then provide a deeper dive into the design of ZW209 and the underlying platforms and technologies that made the design and development of this molecule possible. Lastly, Sabeen Mekan, our Chief Medical Officer, will provide an overview of the data presented at ESMO on ZW191 and zanidatamab by our partners, Jazz and BeOne. Ken Galbraith, our Chair and Chief Executive Officer, will join us at the end as we open up for Q&A.
As usual, I'd like to remind you that we'll be making a number of forward-looking statements during the call, including, without limitation, those forward-looking statements identified in our slides and the accompanying oral commentary. Forward-looking statements are based upon our current expectations and various assumptions and are subject to the risks and uncertainties, including those associated with companies in our industry and at our stage of development. For a discussion of these risks and uncertainties, we'll refer you to our SEC filings as found on our website and as filed with the SEC. I'll now pass the call over to Adam.
Thanks, Shrinal, and thank you all for joining us today. Following a busy weekend at ESMO, we're pleased to have the opportunity to share several updates across our portfolio. I'd like to begin by stepping back for a moment and giving an overview of how we think the different components of our business model work together to create multiple pathways for long-term value creation. Our recurring cash flows from commercial products like ZIIHERA, YUPELRI, and VIBATIV provide greater flexibility to invest selectively in our R&D engine, while our business development opportunities create additional opportunities to generate upfront payments, milestones, royalties, and licensing proceeds. This allows us to pursue attractive science without assuming that every program needs to be developed entirely on our own balance sheet.
An important part of our strategy is to build a sustainable R&D organization, one that can contribute to the long-term net asset value into shareholder return while still balancing capital deployment. The partnering model that we're executing on today is central to that ambition. By working with our external partners to advance promising programs, we can access additional funding, expertise, share in development risks retain meaningful participation in future milestones and royalties. This R&D life cycle creates an opportunity to fund and to replenish our pipeline in a more capital-efficient way while continuing to invest in novel science and generate the next wave of value-creating partnerships and opportunities. Our capital allocation approach reflects that philosophy.
We intend to continue to invest in our internal R&D capabilities, to selectively pursue acquisitions and royalty opportunities where we see strong strategic and scientific fit, and to continue to return capital to shareholders through our share repurchase program when we believe it's appropriate. Over time, our goal is to build this diversified royalty portfolio, creating a more durable financial foundation that supports continued innovation while giving us multiple opportunities to participate in the long-term success of the medicines that we help to develop. This strategy builds on a long history of successful partnerships at Zymeworks, and we believe the recent transaction just further demonstrates the potential of our model. With the recent acquisition of Theravance and the new partnership announced last Friday with Roche, of course, pending completion of HSR clearance, we continue to build on that track record.
Across our partnering activities, we have generated almost $1 billion in payments to date, with the potential for substantial additional value over the coming years. Those future opportunities are linked to continued clinical development, regulatory milestones, and ultimately the commercialization of additional candidates by our partners. Several partner programs have already advanced into the commercialization or phase III development, illustrating how our partners' development capabilities and resources can help move Zymeworks-originated science forward. We believe that this is an important differentiator for us. Our partnerships do more than provide capital at a particular point in time. They enable our programs to progress across development stages and geographies while allowing us to retain meaningful participation in their future success through milestones and royalties without the requirement for capital-intensive contributions at risk.
We see this as a repeatable model, originate differentiated science, identify the right partner and structure, and retain attractive economics as the program advances. What excites us most about our platform and partnering model is the opportunity to repeat this approach across the differentiated pipeline of multifunctional therapeutics. Our proprietary engineering capabilities have enabled us to generate innovative candidates that can be developed alongside leading pharmaceutical companies. These partnerships combine our scientific innovation with the development expertise, resources, and commercial reach of our partners. For today's update, we'll start to focus most of our time on the two programs highlighted in this slide, including the latest clinical findings, what they mean, and what they mean for future development. With that context, I'd like to turn to our partnerships with Roche and explain how the economics and the division of responsibilities illustrate our broader strategy.
The Roche partnership is a great example of how we can combine our discovery capabilities with partners' resources, development expertise and still retain meaningful participation in the program's future economics. Under the agreement, and of course, subject to successful completion of HSR waiting period, Zymeworks will receive an upfront payment of $55 million, with a further $40 million payable upon initiation of the phase I-B. Beyond those payments, the agreement includes up to $718 million in additional potential development, regulatory, and commercial milestones together with tiered royalties. The royalty structure ranges from high single digits to mid-teens, with the potential to extend into the 2040s, subject to the contractual royalty terms. Taken together, these economics create the potential multiples on invested capital based on upfront fees and early clinical milestones alone.
Of course, the ultimate return will depend upon the program's clinical progress, achievement of applicable milestones, and ultimately success of commercialization of ZW209 by Roche. Another important aspect of this agreement is how the development responsibilities are funded and structured. Roche is expected to fund the program's research and development, including the phase I-A study, while Zymeworks will leverage its own development capabilities to conduct that initial global study. Roche will then assume responsibility for subsequent development and commercialization in accordance with the agreement. We believe that this structure allows us to advance our science, to limit the long-term capital burden on our own balance sheet, and to retain meaningful upside if the program succeeds. The slide illustrates why we believe the collaboration, once HSR clearance is obtained, is strategically attractive for both Roche and for Zymeworks.
ZW209 builds on Zymeworks' proprietary and clinically validated Azymetric platform, which has generated multiple partnered assets with a significant commercial potential. Our capabilities reflect years of work in antibody engineering, including extensive exploration of binding regions, molecular formats to identify and optimize our Co-Stim trispecific T -cell engagers. With the IND clearance from the U.S. FDA complete, Zymeworks will conduct a global phase I-A study with the first patient dose expected in 2026. This allows us to apply our established development capabilities and move efficiently into the clinic without the need for an immediate operational handover. It also reflects the trust that Roche places in our ability to execute early clinical development, while the funding structure allows the program to benefit from Roche's broader resources and capabilities as it advances.
Looking beyond the initial study, Roche can bring global clinical development capabilities and commercial experience in first-in-line extensive small cell lung cancer. Its established relationships with prescribers, with payers, and clinical trial networks may help accelerate development and broaden the program's reach across potential lines of therapy. The opportunity is also worth highlighting that Roche has additional programs that may create future combination opportunities, potentially expanding the development options for the asset over time. By partnering with Roche before the commencement of the phase I-A study following HSR clearance, Roche can help us shape the early clinical development programs and, with us, utilize our ability to execute the phase I-A study, which means the program will not lose any time in a very competitive environment where combination regimens may need to optimize for patient benefit.
We are also able to reallocate capital derived from the upfront payments and from the Phase I R&D costs that will be funded by Roche to drive additional value-adding investments to our business. We believe that this is a strong example of how we can advance innovative programs, how we can share risk, preserve and thoughtfully reallocate capital while participating in the potential long-term value created by our R&D innovation. With that, I'll hand the call over to Paul, who will provide more background on the ZW209 program and our Co-Stim platform. Paul?
Thanks, Adam. One of the key challenges with T cell engagers, particularly in solid tumors, is that even when we successfully redirect T cells to recognize and attack cancer cells, the tumor microenvironment can limit the effectiveness and durability of the response. In many solid tumors, there may be relatively few T cells infiltrating the tumor, and the T cells that are present may be functionally exhausted. This can limit the depth and durability of the anti-tumor response. There's therefore been significant interest in how we can build additional functionality into T cell engagers to address these limitations. One attractive approach is to take inspiration from natural T cell biology. Effective T cell activation generally requires not just the initial signal that recognizes a target, but also a second costimulatory signal that helps support T cell activation, proliferation, and survival.
We have seen the importance of this principle in CAR T therapies, where incorporating costimulatory domains has helped improve their activity. The question is whether we can apply the same underlying biology to T cell engagers in a way that is effective, controllable, and safe. One pathway that has attracted considerable interest is CD28, which provides an important costimulatory signal. There's been substantial exploration of CD28-directed approaches, including bispecific antibodies evaluated alone, alongside checkpoint inhibition or in combination with conventional CD3 T cell engagers. However, translating costimulation into an antibody-based approach has proven challenging. The key is not simply to increase T cell activation, it is to ensure that activation occurs in the right context while avoiding unwanted activation elsewhere.
Trispecific approaches offer an opportunity to integrate tumor recognition, CD3-mediated T cell engagement, and costimulation into a single molecule. Early approaches, however, have highlighted the importance of carefully balancing binding affinity, molecular format, and conditional activity. This is where we believe our engineering capabilities can make a difference. Rather than simply adding a high-affinity CD28 binder to a T cell engager, our approach has been to explore how the different components can be engineered together so that co-stimulation is conditional on the appropriate cellular context. The objective is to support a stronger and potentially more durable antitumor response while maintaining control over how and where T cells are activated. That is the rationale underpinning our TriTCE Co-Stim platform. Achieving this balance requires considerably more than selecting the right three targets.
The geometry of the molecule, the relative binding affinities, and the way its individual components interact can all influence both activity and safety. To address this, we undertook a broad screening and optimization campaign that combined computational and AI-guided paratope engineering with our Azymetric platform, high -throughput format engineering and production, in vitro functional assessment, and early developability testing. We evaluated hundreds of variants across different molecular formats, valencies, geometries, and binding affinities. This allowed us to assess not just whether a molecule can engage its target, but how effectively it could generate the desired biological response and how differentiated that response was from alternative approaches. The strength of this approach is the integration of biology and engineering. We can examine multiple design variables in parallel and assess the trade-offs between functional activity, conditional activation, safety-related characteristics, and the developability, rather than optimizing any one property in isolation.
Through this work, we have identified a differentiated design approach that we believe achieves the balances of features we were seeking. We are showing a representative format on this slide to illustrate the underlying design principles. Our preclinical work supports the potential of conditional co-stimulation to improve T cell function and antitumor activity compared with conventional T cell engager approaches. Importantly, design is intended to enable CD28 binding and co-stimulation on the same T cell that has already been engaged by the CD3 binding moiety of the molecule rather than providing unrestricted co-stimulation. Furthermore, as with traditional bispecific T cell engagers, primary T cell activation through this TCR remains contingent on binding to the tumor antigen. What is important is that the work has allowed us to move beyond a theoretical concept and establish an engineering approach that we can now evaluate across different target and indication settings.
Looking ahead, we remain very interested in selected solid tumor indications, where improving T cell activity and the durability of response could make a meaningful difference for patients. Our initial areas of interest include thoracic and digestive system tumors, colorectal cancer, and prostate cancer, alongside the potential to address multiple solid tumor types where the underlying biology and target expression support the approach. We are also interested in the opportunity to extend the platform into hematological malignancies, including multiple myeloma and acute myeloid leukemia, or AML. In AML, one of the challenges is heterogeneity, not just across the tumor cell population, but also between the bulk leukemia cells and the leukemic stem cells that can contribute to disease persistence and relapse. We believe it is worth exploring whether carefully engineered conditional T cell engagement could help address some of these challenges.
That remains an opportunity to investigate rather than a demonstrated clinical benefit. More broadly, we see potential for our multispecific engineering capabilities to inform additional areas of medicine, including other heme malignancies and, over time, selected autoimmune and inflammatory diseases. These applications require their own target biology, molecular design, and evidence of differentiation. They are longer-term opportunities rather than an assumption that the same construct will translate directly across disease areas. Our focus will be on selecting those opportunities where the biology, the differentiated design, and the potential therapeutic benefit come together most compellingly. We will continue to evaluate these opportunities against clear scientific safety and development criteria and consider the most appropriate development and partnering strategy for each program.
Ultimately, we believe our platform gives us a way to apply Zymeworks antibody engineering expertise to difficult to treat diseases where retaining the flexibility to develop, partner, or otherwise advance individual opportunities in a capital efficient way. Our next generation DLL3 TriTCE Co-Stim program is designed to address an important unmet need in small cell lung cancer or other neuroendocrine tumors. DLL3 is expressed at the surface of these tumor cells but is rarely found in normal cells, making it an attractive target. Small cell lung cancer accounts for approximately 15% of lung cancer diagnosis in the U.S. each year. While there has been progress, including the validation of DLL3 as a T cell engager with the approval of tarlatamab, there remains a significant need for treatments that can deliver more effective and durable responses.
Our approach combines simultaneous engagement of CD3 and CD28 on T cells with DLL3 targeting, bringing tumor recognition, T cell engagement, and conditional co-stimulation together in a single molecule. Using our Azymetric and EFECT platforms, we have optimized binding affinities and molecular geometry to enable coordinated target-dependent activity. The design leverages obligate cis T cell binding and conditional CD28 engagement, with the aim of supporting tumor-directed killing while limiting unintended T cell activation and fratricide. In preclinical studies, ZW209 has demonstrated a differentiated pharmacology relative to DLL3-directed CD3 bispecifics, including tarlatamab. The integrated Co-Stim signal enhances target-dependent T cell proliferation, survival, and antitumor activity. Importantly, we observed no T cell activation, cytokine activation, or T cell fratricide in the absence of DLL3-expressing cells. ZW209 was also well-tolerated at high doses in non-human primates and demonstrated antibody-like pharmacokinetics.
Taken together, these findings support the potential of our conditional co-stimulation approach to improve the activity of DLL3-directed T cell engagers. While these results remain preclinical, we believe this differentiated design provides a compelling foundation for further development in small cell lung cancer and other DLL3-expressing tumors. A key feature of our design is the obligate nature of CD28 engagement. CD28 binding by ZW209 occurs only in the presence of simultaneous CD3 binding. This is clearly shown in the top left panel, where control molecules with either CD3 or CD28 binding knocked out demonstrate that CD28's contribution is conditional on CD3 engagement. This obligate co-stimulation limits potential for unwanted T cell cross-linking or fratricide, an important safety and specificity advantage of our platform. Furthermore, the obligate nature of tumor engagement via DLL3 ensures that ZW209's activity is precisely focused where it is needed.
Additional data presented at AACR in 2025 further supported this dual specificity. What is particularly encouraging is the strength and durability of the responses we are seeing in preclinical models. As shown in the middle top panel, the addition of the CD28 arm enhances T cell fitness and robustness in the presence of DLL3-positive tumor cells. Compared to control molecules lacking CD28 engagement and versus the clinical benchmark, AMG 757 or tarlatamab, ZW209 provides more sustained tumor cytotoxicity across repeated rounds of stimulation, which is accompanied by expansion of T cells with memory phenotype. Under the more stringent conditions of low effector-to-target ratios, the biological impact of ZW209's mediated T cell activation and co-stimulation is reflected in the enhanced anti-tumor cytotoxicity across a range of DLL3-expressing model cell lines, as shown in the bottom left panel.
Here, ZW209 outperformed benchmark controls, including tarlatamab, BI's T-cell bispecific engager, and the Roche/Chugai DLL3 CD3 CD137 trispecific. Efficacy studies in xenograft models of DLL3-positive tumors bearing either engrafted with human PBMCs or admixed with naive T cells, ZW209 exhibits antitumor activity with evidence of enhanced activity relative to tarlatamab. Beyond the data shown here, our AACR poster presented in 2025 further characterized the safety profile of ZW209, incorporating results from a dedicated mouse model of cytokine release syndrome, complementary in vitro cytokine release assays, and studies conducted in non-human primates. In those studies, repeat dosing of 10 mg/kg was well-tolerated, and ZW209 demonstrated an antibody-like pharmacokinetic profile, characteristics that can be associated with more predictable behavior in clinical settings.
Taken together, these data reinforce the significance of the CD28 arm in driving deeper and more durable T-cell responses, while maintaining stringent control and safety through obligate engagement of both T cells and DLL3-expressing tumor cells. I'll now hand over to Sabeen to talk through the updated data for ZW191, as presented at ESMO this weekend.
Thank you, Paul, and good morning, everyone. ZW191-101 is an ongoing study for a folate receptor alpha antibody -drug conjugate, which enrolled participants regardless of folate receptor alpha expression and no limit on the number of prior lines of therapies. Part one of the study was dose escalation, and part two was dose optimization, where participants were randomized one-to-one of ZW191 at 6.4 or 9.6 mg/kg , given intravenously every three weeks. Today, I will present the efficacy and safety results for both doses in patients with platinum-resistant ovarian cancer, with a median follow-up of seven months. Among the 80 patients, 37 received 6.4 mg/kg , and 43 received 9.6 mg/kg . Vast majority of patients, 89%, had high-grade serous carcinoma, while 11%, nine, had clear cell carcinoma.
Patients were heavily pretreated and had received a median of four prior lines of therapy and had a wide range of folate receptor alpha expression ranging from 0%-100%. All patients had received prior platinum and taxane, 84% had received bevacizumab, 56% had received a PARP inhibitor, and 5% had received nivolumab. ZW191 achieved a confirmed overall response rate of 65% at 6.4 mg/kg and 55% at 9.6 mg/kg doses in high-grade serous platinum-resistant ovarian cancer. Disease control was notable. It was 100% at 6.4 mg/kg and 92% at 9.6 mg/kg . As shown in the waterfall plot, responses were observed across folate receptor alpha expression. Patients with high-grade serous ovarian cancer with FR high expression achieved a confirmed ORR of 69%, while those with intermediate and low negative groups showed ORRs of 50% and 55%, respectively.
Among the four patients previously treated with nivolumab, three had shown impressive responses, including one patient who experienced 100% reduction of all target lesions. Among patients with clear cell carcinoma, confirmed ORR was 20% at 6.4 mg/kg , and disease control rate was 80% and 100% at the doses of 6.4 and 9.6 mg/kg , respectively. The responses to ZW191 were deep and durable. The median duration of response was not reached at this data cutoff at a median of seven months, and 45% of the participants were continuing on treatment at this time. The six-month PFS rate was 65% at both doses in high-grade serous ovarian cancer, and median PFS in the 6.4 mg/kg was 7.9 months. Please note that at this point, the event rate was only 44% and majority of patients were remaining on treatment at this dose.
Median PFS is immature and is expected to evolve over time. Overall, 191 has encouraging PFS outcomes at both doses, with PFS at 9.6 mg/kg , median at 9.8 months, and pending further maturation of 6.4 mg/kg estimate as the follow-up matures. For safety, ZW191 was well-tolerated. Grade 3 or higher adverse events occurred in 54% in 6.4 mg/kg and 74% in 9.6 mg/kg . A large number of these events were non-treatment related. As shown in the figure, nausea, neutropenia, and anemia were the most common events. There were no unexpected toxicities. Grade 3 hematological toxicities were manageable at both doses. Notably at 6.4 mg/kg , the safety profile was very favorable, with less grade 3 or higher hematological toxicities, and the rates of neutropenia were 11% for grade 3, 8% grade 3 anemia, and no grade 3 thrombocytopenia.
Dose modifications and discontinuations were less at 6.4 mg/kg dose, as shown in the table, and TEAEs leading to dose reductions were 5% versus 33%, and the discontinuations noted 14% versus 19%, and there was no treatment-related study deaths. In conclusion, ZW191 demonstrated impressive anti-tumor activity at both doses in heavily pretreated platinum-resistant ovarian cancer, regardless of folate receptor alpha expression. As next steps, we will continue to allow this data to mature with additional follow-up and look for future opportunities to share additional clinical data. In addition, we continue to evaluate strategic options with our advisors, MTS, to fund further development of external capital from partnerships and collaborations. Before passing with a call back to Adam, I want to highlight the broader body of work presented at ESMO in addition to ZW191.
Presentations from our partners, Jazz Pharmaceuticals and BeOne, highlighted new and updated data from the final analysis of the HERIZON-GEA-01 study. With the presentation of this data at ESMO, HERIZON-GEA-01 has now met all primary endpoints and demonstrated sustained survival at three-year follow-up with Ziihera-containing regimens as first-line treatment for HER2-positive advanced GEA. With 35.3 months of median follow-up, Ziihera tislelizumab and chemotherapy achieved median OS of 27 months, the longest reported in a phase III trial in this setting, and reduced the risk of death by 35% versus trastuzumab plus chemotherapy. Nearly 40% of patients receiving Ziihera tislelizumab and chemo were alive at three years, compared with 22.9% of patients receiving trastuzumab plus chemotherapy. Safety and tolerability data demonstrated that diarrhea and treatment-related AE incidents generally decreased over successive treatment cycles.
Together, these results cement Ziihera as the new HER2-targeted backbone therapy in first-line HER2-positive advanced GEA. Adam, I will now pass the call back to you.
Thanks, Sabeen. Thanks, Paul. To wrap up, we hope we've demonstrated on the call today tangible progress on our strategy and how we see this as a platform for future growth. We've made meaningful progress in building a stronger, more diversified business, combining durable financial foundation with the ability to continue advancing innovative science through our own research, through partnerships, and through disciplined business development. The partnership with Roche on ZW209, which remains subject to HSR clearance, is only one form of how we can integrate partnerships and collaborations into our diverse wholly owned portfolio. We'll continue to consider other opportunities, including R&D spinoffs and carve-outs that may provide an opportunity to partner with biotech investors in a dedicated vehicle with specific R&D portfolio assets.
Alongside advancing our current pipeline of partner programs, we continue to explore new opportunities to apply our R&D capabilities to novel therapeutic approaches in areas of significant unmet need. There's exciting work underway at the preclinical stage. We look forward to providing further visibility into some of these emerging opportunities before the year ends and at an R&D day in the first quarter of 2027 as well. Ultimately, our objective remains constant: to build a durable, diversified business that can generate recurring cash flows, maintain discipline in how we deploy capital, and create additional value through innovation, through partnerships, and selective business development. With that, I'll ask Ken to join us for a Q&A.
That's great. Thanks, Adam and Sabeen and Paul. Operator, we're now ready to open for questions.
Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Yigal Nochomovitz of Citi. Your line is now open.
Hi. Your line on for Yigal. Thanks for taking our question. With Rina-S now generating a positive phase III dataset in platinum-resistant ovarian cancer, how does that impact how you approach partnering strategies for ZW191? What other considerations does that trigger regarding differentiation, for example? Thanks.
That's great. Maybe Adam, do you want to take that question with respect to our partnering progress?
Sure. Yeah. Happy to. Thanks. Appreciate the question. We're very encouraged to see the data from Rina-S. We're also equally as encouraged by the data from 191 that we walked you through and from ESMO. I think always, as we said earlier, we will take a very disciplined approach to capital allocation and make sure that further investment in the portfolio is justified based upon the partner ability and the interest. I think you've also heard us say that we're working with MTS in terms of partnering that program and also looking to partner it actively, and probably wouldn't be moving forward without a partner into registration program. So, the data's encouraging. We think we have a very competitive molecule, certainly differentiated on a number of aspects. And, we'll work to actively partner that as we move forward as well.
Thanks for the question.
Thank you.
Thank you. Our next question comes from the line of Reni Benjamin of Citizens. Your line is now open.
Hey, guys. Sorry, can you hear me okay?
Yeah, we can hear you, Renny. Go ahead.
Great. Thanks. Just going back to that same question with ZW191, is there anything that you could see in the follow-up data that could show up that suddenly you decide, "You know what? We're definitely going to take this independently. We no longer need to partner this." And just a follow-up or a second question for Paul, is there further tweaking of the trispecific backbone construct continuing with the company? Are you looking at other co-stimulatory molecules, or is it all about swapping out targets? If it is the latter, does the success of one program significantly de-risk other target programs, or should we really view that independently?
Yeah. Thanks for the question, Renny. I'll take the first one, and I'll pass the second one to Paul after I'm finished. But I think Adam's statement for the last question was very clear. I think we really like what we built with ZW191. We think it's very competitive in the ovarian cancer space. It's obviously becoming increasingly competitive, and I think ESMO disclosures have continued to show that, just not with performance of different molecules, but moving to earlier lines of therapy and moving to combination regimens.
For us, I think that means to us that in order to move this forward, we would look to a partner to be able to provide the types of resources that would be necessary to compete with the other molecules and necessary to be able to put together the different combination regimens, which are probably going to be likely to move forward into earlier patient settings. So I think that's why we've been very clear all year that we think that beyond the study we have right now, which can continue to mature, and could be the subject of additional data disclosures, that we think a partner at this time would be the appropriate strategy to be able to compete for market share in this space. I think we try to be very clear for that.
So, highly unlikely that we would be moving forward with any of our own capital to push this into multiple phase III trials to try to compete with the other molecules that you've seen at ESMO make progress. It's increasingly competitive and increasingly looking like combination regimens in early line settings are going to be relevant for that competition. So, hopefully we're clear on that between Adam Schayowitz's answer and my answer. I think we have lots of available capital that there are other places that we can put it that we think will drive an appropriate return for us with the appropriate amount of risk that we want to take on behalf of our shareholders. I'll pass the second one over to Paul.
Thanks, Ken. Renny, regarding your question about where we see going next and with T-cell engagers and with our platform technologies. So we do really feel that the CD3/CD28 platform can really open up a lot of opportunities in of itself, and that's by then attacking different tumors through different targets, as you alluded to, and that is what we showed in one of the slides. We like CD28 a lot because of the biology, but also the temporal expression with CD3. So we think for the strategy that we wanted to deploy here, we had conditional activation of conditional co-stimulation simultaneous with CD3. That CD28 was the perfect target to go after because they're co-expressed temporally on the same T cell. That's not to say we're not interested in other approaches to enhance T-cell engagers, either through other mechanisms, through cytokines, through other co-stimulation.
But this platform, we think the way we've built it, is very available to actually target different tumor types because of its sort of universal strategy of targeting both CD3 and CD28 simultaneously. So that's the thinking there, and you'll see more work coming from us in different areas, but for sure, we think we've got a lot of exciting opportunity with this platform.
Great. Thanks, guys.
Thanks, Renny.
Our next question comes from the line of Charles Zhu of LifeSci Capital. Your line is now open.
Good morning. Thanks for taking the questions. I had a couple on ZW209. What kind of early clinical signal would you or Roche need to observe in order to not only gain conviction that you refer to the Co-Stim is differentiated beyond the tarlatamab or other DLL3 T-cell engagers in the space? Might those early clinical signals help decisions at various stages in development? Thank you.
Okay. I will ask Adam if he wants to answer that, and I am sure Sabeen can add to that as well.
Yeah, happy to, Ken. Charles, just so I'm clear, was the early signals that we'll see in ZW209 that would differentiate a Co-Stim, that was your question? It was a little hard to hear you.
Yes.
Yeah.
Early clinical signals, yes.
Yeah. Look, if you, much like any phase I-A, phase I-B study, you can appreciate that it's dose escalation, right? I think predominantly when you talk about early, let's kind of frame up what the timeframe is associated with that. The first handful of patients in this trial is really going to be safety based, right? Then, we'll be looking at early signals of ORR. I think that when you talk about early signals of efficacy, you're really getting into the phase I-B population in terms of differentiation. Response rate, tolerability, and combination are going to be the two that we're going to look at. I think they're pretty obvious in this patient population. But appreciating that the early signs of this are going to be a bit away, right?
It's going to be well into the phase I-A and then into the phase I-B before we start seeing these signs of activity. Sabeen, not sure if anything you want to add to that.
I think Adam, you've been very comprehensive. I would say that since this is a well-validated target in small cell lung cancer, in addition to very early efficacy signals and safety signals, I think they're going to be also looking at some translational early exploratory data to try to understand the mechanism as it translates from the preclinical to the clinical setting and to set the base forward for potential future combinations to take this into earlier lines of therapy. But having said that, usually phase I trials are generally looking at baseline safety and seeing if there was any early efficacy signals that would show that this was going to be better than tarlatamab in terms of efficacy.
Great. Thanks for taking the questions and good luck.
Thanks, Charles.
Thank you. Our next question comes from the line of Yaron Werber of TD Cowen. Your line is now open.
Good morning, management. This is Steven on for Yaron. Congratulations on the data at ESMO. A couple from us on ZW191. The discussion at ESMO noted that it might be interesting to see data for the 8 mg/kg dose, given that the 6.4 performed better than the 9.6. Any plans to test that 8 mg/kg in the future? It sounds like that might depend on what a potential partner might do, but some color on that would be great. Then more in general, why do you think the lower dose performed better than the higher dose? Then a follow-up on that would be just why you think the safety with kind of the limited heme tox and ocular tox that you see with ZW191 looks better than the other FR alpha -targeted ADCs. Thanks so much.
Thanks. Sabeen, do you want to start on those? Then Adam can add anything on top of that if you'd like.
Sure. I think for ZW191, from a safety perspective, well, starting with the dose perspective, it is pretty clear that we've seen at least as good efficacy with 6.4 mg/kg dose as compared to 9.6, and definitely a better safety profile. Although we are pending further follow-up to see maturity of duration of response and PFS as well. I would say that when we selected doses, we were very careful in the two doses that we moved forward with according to the Project Optimus guidelines. The reason for that was we saw that 9.6 was a very active dose and the safety was manageable at that. And the lower dose, 6.4 mg/kg that we chose from a clinical pharmacological perspective, that was around 30%-31% lower PK compared to 9.6 dose.
If we chose 9.6 and 8, we probably wouldn't have seen enough of a difference. It was less than 20%, which is considered equipoise. So we're relatively comfortable with the doses that we selected and moving forward with dose optimization. Whether or not we would like to test another dose would depend upon who we partner with and if they're interested, particularly in relation to combinations and further maturation of the efficacy data at 6.4 mg/kg . But as of now, we're relatively very comfortable that we're seeing a really good efficacy at 6.4 mg/kg with a very manageable and actually a very favorable safety profile. So with that, what was the second part of your question?
The safety perspective with
Yes. Oh, the
assessment of heme and ocular tox.
Okay, why are we seeing better efficacy at 6.4? We've chosen our ADCs due to higher internalization of the antibodies that we select at a moderately toxic payload. That's given us a very much wider therapeutic windows compared to many other ADCs which have used more toxic payloads and off-the-shelf antibodies. As you saw in our dose escalation, we started to see activity at 3.2 and continued to see activity all the way at 9.6, which was manageable safety profile. This gives us more leverage to choose the right dose with the best balance of efficacy and safety. One of the reasons we're thinking about why we saw slightly better efficacy could be limitations in sample size. The other things that we are seeing is that the safety profile at 6.4 is better, which allow patients to be less dose reduced and can continue on treatment.
It could be target saturation at higher doses. Those are all things that we are continuing to evaluate and look at.
Sabeen, maybe the only other thing I will just add is that if you look at the ORR and the PFS from the data, I think it just reflects also a slightly immature data set, right? I hear you that the ORR is better in the 6.4 mg versus the 9.6, but if you look at that other slide, the PFS is actually slightly greater in the 9.6 dose, right? So I think that there is some maturity in the data set that will evolve as this goes up, that may help that align a little bit better. But we are definitely in the right spot from a dose optimization perspective.
Makes sense. Thanks so much.
Thank you. Our next question comes from the line of Gregory Renza of Truist Securities. Your line is now open.
Hi, guys. It's Anish on for Gregory. Congrats on all the developments and for taking our questions. Just a couple from us. Just reflecting on ESMO with the longer-term HERIZON-GEA-01 data reinforcing both doublet and triplet regimens, how do you see these each shaping the treatment duration royalty opportunity? Also bigger picture across YUPELRI cash flows, Ziihera royalties, and new partnerships like Roche, how are you balancing further asset allocations with internal R&D, and what would move capital towards one opportunity over another? Thanks.
No, good questions. Let me try and take both of those, and I can ask the team to add to that. I think on HERIZON-GEA-01, certainly great data with intermediate analysis number two, as you've seen, and an update maybe on the median OS for the triplet. So we'll have to see how in the real world practitioners decide to prescribe zani regimens, whether the triplet or the doublet, in what circumstance they do, and that will tell us a lot. Obviously, from the data you can see a slightly longer, at this stage in the data, duration of treatments on the triplet than the doublet, but we'll just have to wait till the data matures a little bit. But I think we'll have to wait to see some real-world experience before we can understand the impact on royalties of patients on a triplet or a doublet regimen.
At this point, we're just looking for conversion for newly diagnosed patients to have a zani regimen as opposed to a pembro trastuzumab or a trastuzumab regimen. So we'll just have to wait to see some real-world experience about that over the course of the next year, likely. On the second one, I think, we try to practice very thoughtful capital allocation, whether that's continuing to buy back our own shares because we still think they're undervalued, and we can generate returns for our shareholders in the future by reducing share count. We're still doing that today, as you're aware. We obviously put some capital to work in the Theravance Biopharma acquisition, which drove some additional long-term durable revenues to add to zanidatamab and hopefully eventually pasritamig. We're still funding a very interesting R&D portfolio.
Yes, our R&D spend this year is we have guided is about 20% less than last year. Obviously, partnering ZW209 relieves some additional R&D spend of the clinical studies, which now Roche will fund, as well as providing the Roche upfront fee. I think the way we look at it is we've got three different areas of the business that we can invest in. And we look at each of those opportunities individually, and we look at the collective mix of how we drive both continued R&D, being innovative inside of Paul's laboratories in Vancouver, how we think about future M&A that might affect the company positively, whether that's royalties or R&D or multi-component, as we've talked about.
From a share purchase perspective, we will continue to invest in additional share repurchase in the current program and likely in the future, until such time as we think that shares are better appreciated. Obviously, one of the tricky parts to looking at R&D investment versus thoughtful capital allocation is timing of partnering. We are really excited about ZW191, but we think for competitive reasons, now is the right time to find a partner to provide the capital to move that one forward, given the additional competition we see in ovarian cancer and endometrial cancer ADCs. You have seen for ZW209, we obviously made that same decision. We love ZW209. Roche does as well, and they have joined us. We felt it was appropriate to find a partner prior to commencement of clinical studies, and Roche provided the terms to allow us to consider doing that.
We think given the competition you also see in small cell lung cancer, as you see the possibility for future combination regimens, as we saw with tarlatamab and PD-1, as you think about others who are testing T-cell engagers and ADCs together, I think Roche provides not only additional capital to explore that, but obviously has these other elements that might be used in combination regimens. So we think carefully about that with zanidatamab. We took that into phase III studies ourselves, before bringing in Jazz to join BeOne, who was our partner in Asia Pacific.
I think one part of the capital allocation decision for us is just deciding if we bring in partners to help fund R&D when we do that, and we have talked about the ability to bring in multiple partnerships and collaborations, the potential for carve-outs or spin-outs with investors. So trying to find ways to move a pretty diverse R&D portfolio forward and just not off of all of our P&L right now. So I think we are trying to be disciplined about the way we manage the financial part of our business.
At the same time, it is trying to find ways to exploit all the innovative science that comes out of our laboratories and move it forward to be eventually approved new medicines. So I think you will still continue to see a mix. I think you will see us be opportunistic. We do not predefine capital allocation into the business.
We pursue the opportunities that have the best ability to drive returns for shareholders over the long term, and the extent that we can fund a mix of those that working together could provide some really interesting risk-return for shareholders over the long term. That is what we are trying to accomplish. As we do more partnerships going forward or spin-offs or carve-outs or make these decisions about partnering, I think you will see that continuing to play through.
Thanks so much.
Yep.
Thank you. Our next question comes from the line of Yun He of Evercore. Your line is now open.
Hey, guys. This is actually John Miller on here. Congrats on all your data at ESMO and on the recent partnership. One on ZW191 first. Ken, you've mentioned the desire to go into a partner to get to earlier stages in combination setting. That all makes sense. When I look at the data that you gave us this weekend, obviously there are some maturity things that we're still waiting for, but I'm not sure what I'm focused on in terms of dose response, in terms of what the big drivers are going to be heading into those early-stage combinations in earlier lines of therapy. What do you view as the most important levers on the ability to put this small molecule into the right partnership? What do you think is going to be the most important thing that a potential partner will be looking at from this data set?
Secondly, on DLL3, I noticed a couple of interesting, obviously great preclinical data here, but I'm curious, when you compare your molecule to more traditional DLL3 TCEs, you seem to see both deeper responses and longer duration responses in the preclinical models. Can you talk a little bit about mechanisms of resistance in DLL3 treatment and to what extent stronger T-cell stimulation with the addition of the CD28 is going to improve durability? As I understand it, tarlatamab does see loss of DLL3 expression, at least in some cases of resistance. Can you talk me through how you expect that could play out as you make the translation into the clinic?
No, two great questions, John. Thanks very much. Maybe I'll get Paul to answer the first one on DLL3, and then he'll turn it over to Adam and Sabeen to talk a little bit more about 191 and the treatment settings there at ESMO, covering all additional data which was disclosed and some of the thoughts of others around earlier line settings and combination regimens as well. So maybe, Paul, do you want to start first and then pass it over to Adam and Sabeen for the second question?
Yep, sure. Very good question, John. I think we've thought about that a lot. I think you're right that in the context of complete loss of antigen, that would be challenging then to resurrect that. I think our feeling is that that may be in some situations, but that won't be universally the case. I think in a lot of cases, and you see that the actual level of response that you can get with tarlatamab is very good, but it can be enhanced. So for instance, with adding in PDL1, you can get enhancement. So there's definitely something there.
There's room for improvement that's been proven in the clinic, and I think by adding in this co-stimulation, that is another way to get that, to sort of raise the bar on the level of T cell activation and T cell stimulation that you can get, in this case, through CD28. We still feel that on top of that, you can still then get the additional benefit of having checkpoint inhibition on top of that. So they are mutually separate pathways, but it does show you that there's more to be gained, even in patients, than you can get with tarlatamab by adding in additional mechanisms. And we've done some experiments in vitro.
I can't say too much about those, but we do have evidence to suggest that there are T cell states that our molecule, that would be representative of the T cells that you would have in the tumor, even post tarlatamab, that we can actually mobilize that type of T cell better than tarlatamab can itself. So that's maybe the best way I can answer your question.
I will jump in on the ZW191 side in terms of the ability to partner and what to focus on. I mean, the cross-trial comparisons are always difficult and challenging and everybody says you shouldn't do them, and then of course we all do them to understand how the molecule compares. I think when you just look at the ORR and you look at the PFS from a response rate perspective, at the 6.4 mg per dose, numerically perhaps the most meaningful response rate, or numerically superior response rate across the programs, right? Really meaningful data set and real clear signals of efficacy and activity, and that's in both the folate receptor alpha high as well as the all-comer population. I think the other thing that comes down to the combinability and the desire to get into the front line is the AE profile.
When you look at some of the grade 3 incidents of neutropenia, when you look at some of the other heme-related toxicities, numerically, one of the cleanest safety profiles compared to some of the other studies. There's lots of caveats, of course, that have to go into that, so I think it's important to be thoughtful in making those comparisons. But we do believe that this molecule is differentiated on both efficacy and in tolerability, and we're optimistic that that will resonate with future partners.
I don't have anything to add on top of what Adam said. I do believe that we are still potentially best in class from both efficacy and safety perspective, obviously with the caveat that's the phase I data set. Ultimately, the thoughtfulness of the development plans and the combinations are going to drive the best benefit. That's why we have to be very thoughtful in terms of the partner we choose and the ones we choose us in taking this forward.
Makes sense. Thanks so much.
Yeah, I hope that answered your question. Thanks, John.
Thank you. Before we continue, we have several questions in the queue. To allow as many participants as possible to ask their questions, we kindly ask that each caller limit themselves to one question. Thank you for your cooperation. Our next question comes from the line of Asthika Goonewardene of Leerink. Your line is now open.
Hi, good morning, everyone. This is Karbi on for Asthika from Leerink. Just a couple of questions. On ZW191, have you seen any differences in efficacy or tolerability between Asian and Western patients? On ZW209, when could phase I-B begin, and what needs to happen before that transition? Thank you so much.
Oh, that's great. Thanks for the two questions. Huosh will answer both for you. Maybe I'll let Sabeen think about both of those questions, and Adam can add to that as well.
Sure. For ZW191, the answer is pretty straightforward. We have not seen an efficacy difference or a safety difference between Asian and Western patients. You have to realize with the caveat that this is a small study with our data set of 80 patients, and a majority of our patients come from Asia, but we still have a sizable Western population, but currently, we do not see any difference. For ZW209, coming to that, we plan to enroll our first patient very quickly or before the end of this year, and the plan would be to go over for dose escalation, as you would do in a typical phase I, to achieve maximum tolerated dose. As you are very well aware, in T-cell engagers, you may have to go through multiple doses to achieve the maximum tolerated dose.
Once we determine the RDE and want to move forward, either as monotherapy or in combinations, the plan would be to transfer this to Roche at that point in time. We haven't disclosed the time point yet.
Okay, got it. Thank you so much.
Thanks, Karbi.
Thank you. Our next question comes from the line of Stephen Willey of Stifel. Your line is now open.
Hey, good morning. This is Josh on for Steven. Congrats on all the data at ESMO, and thanks for taking the question. Maybe just a quick one on ZW251. I think we saw some pretty interesting data from BI's bispecific program, and was just hoping you could provide some color on maybe when we can see initial data here and whether the data from BI give you any confidence as to a path forward. Thank you.
Yeah, thanks for only having one question, and I will let Adam answer that for you.
Thanks, Josh. Look, as you guys know, the 251 study was started end of last year, early this year, got up and running. We have not put out any guidance as to when exactly you are going to see that data. So it is an ongoing data set. As it matures, we will figure out what the right time is to appropriately publish that. Always a balance, right, between data maturity and being able to tell a complete story, but wanting to get the exciting information out to the world as quickly as we can.
Certainly aware of the competitive landscape, as you mentioned from BI and from others. And I think the GPC3 is a really interesting target. HCC represents a really meaningful unmet need. If you look at that second-line patient population, the response rates are in the single digits based upon the standard of care, like low to mid-single digits.
And I think there's a real opportunity to have a meaningful impact for patients, and being able to change that landscape. We're excited, and you're just going to have to wait and see as the data matures, and we'll figure out when we put it out there to the world. No more details, unfortunately, at this point.
Thanks, Josh.
Thank you. As a reminder, we kindly ask that each caller limit themselves to one question. As we approach the end of the Q&A session, please note that if we are unable to address all questions during today's call, Zymeworks' Investor Relations team will follow up to arrange time to address any remaining questions. Thank you. We'll now take our next question. Our next question comes from the line of Mayank Mamtani of B. Riley. Your line is now open.
Good morning. Mike for Mayank Mamtani. And congrats on the Roche deal and the ZW191 data. On Ziihera, do you and Jazz see a Category 1 upgrade for both regimens ahead of routine cycle? What would that mean for 2027 uptake and ex-U.S. milestones timing? Finally, on Pan-RAS, where does the spin route stand ahead of 2027 INDs, and what should we expect at the February R&D Day? Thank you.
Yeah, thanks for your two questions, Mayank. We'll answer them both. On the first one with Ziihera, we won't comment on that. Obviously, that is a question for Jazz to address, and they do have their earnings call coming up soon. So I'm sure they'll provide some guidance on that, or you'll be able to ask a question when they've made their earnings call. On the Pan-RAS, I'll turn it over to Adam to address that question.
Yeah, thanks, Ken. As we've said publicly before, we're in the process of looking to partner that program out through multiple modalities, be it partnership or new co-creation, kind of carve out spinco. Haven't given any guidance or any details on the IND timing, I don't believe, and we continue to move forward with those programs at full speed. But I do think you could expect to see them be partnered via spinco carve-out or other, sometime soon.
Great. Thank you.
Thanks, Mike.
Thank you. This does conclude the question and answer session. I would now like to turn it back to Ken Galbraith for closing remarks.
That's great. Thank you, operator. Thank you, everyone. I know it's been a busy weekend for those of you that have been in Madrid following lots of data disclosures. We appreciate you spending some time with us. We had the opportunity to hopefully give you an update on three important things for us this weekend. One is the HERIZON-GEA-01 interim analysis number two data disclosure by our partners Jazz and BeOne, which I think was really, hopefully very interesting for Ziihera establishing itself as a standard of care in first-line GEA in the HER2 overexpressing population. Two, some additional clinical update on ZW191, which I think positions ZW191 still at the front of the pack for the potential of an ADC to address ovarian cancer.
Three, our exciting new partnership with Roche, which will allow us to move ZW209 with Roche into clinical studies before the end of this year. We're so happy to be able to have all three of those things be able to be discussed on this call. As we've previously indicated for quarterly earnings calls, we do have our third quarter earnings call coming up. We're not going to hold our webcast conference calls. We'll do webcast conference calls with investors around important clinical data or scientific announcements and business transactions, which we're doing today and doing three of them all on the same call. Except for our annual financial results, which we expect to release in late February, early March, then we will have an investor conference call around that, but don't expect one around the Q3 earnings call, sorry, Q3 earnings release.
Also to say that, we have a little over two months left in the remainder of 2026. We still have hopefully some important events and milestones to go for Zymeworks before the year is done. Please stay tuned for further developments from us. Thank you again for your time and attention on today's call. Thank you.
Thank you for your participation in today's conference. This concludes the program. You may now disconnect.