Zymeworks Inc. (ZYME) Earnings Call Transcript & Summary

All right. Good afternoon, everyone. I'm Stephen Willey, one of the senior biotech analyst here at Stifel. Appreciate everyone sticking around for the last session here on day 2 of our 2020 Virtual Health Care Conference. Very glad to have with us here today, Ali Tehrani from Zymeworks. He's the Chief Executive Officer. We're going to have a pretty informal discussion, just about the current affair of things right now. There is a chat function, I believe, if you have a pressing question, we can hopefully try to get it asked and answered as appropriate. Ali, I don't know if you want to make any kind of opening statement before we get into Q&A at all. Otherwise, we'll just get right after it.

Just the same as you, good afternoon, wherever you are. Normally, we'd be sitting together somewhere. And right after this, we'll be thinking about a glass of wine or some beer, but here we are. So I'm glad to join you guys. Thank you to Stifel. Thank you, Stephen for organizing and having us today. We are really excited about what's in front of us in 2021 and I'm sure we'll get into it right now in Q&A.

Well, considering this is the last session, I might keep that glass of wine tradition post all that. So I just want to start things off with the news that you announced yesterday, the partnership with ALX combining zanidatamab with their CD47 targeting antibody. Maybe just talk a little bit about the genesis of that, the rationale for that and kind of what you're hoping to see in the clinic? And what biology you're hoping to leverage by combining those 2 drugs?

So I'm jump into some of the potential opportunities here, and then I'll go through the leading questions that you brought into it. Look, I think as some of the people have already surmised and some of the conversations we've had today, first and foremost, there is a potential to unlock a lot of potential here. And that is -- the obvious one is a chemo-free approach. You have 2 antibodies that have related mechanism of action, but they're different and they can truly flank a tumor cell yet both work with the immune system and engage the immune system differently. You have zanidatamab having the capabilities of block HER2 signaling and receptor/receptor interaction to internalize and to really cause the destruction of the cancer cells with a very robust single agent anti-tumor activity, and we've all seen the same with ALX's CD47. The interesting thing about CD47's or ALX's CD47 is that it is a full linked antibody with an inert Fc. So the -- Our 2 molecules can work together and really potentially make the 1 plus 1 equals more than 2. Our wild-type Fc has the opportunity to interact with Fc gamma R receptors to really work and engage macrophages to induce a BCP, CD47 blocking has been very beneficial in stopping a tumor from going ahead. I think this is a bit of a match made in heaven of these 2 specific molecules, with the potential of creating a chemo-free solution with the potential of going into HER2 low breast cancer or just HER2 low across multiple tumor types, really engage the immune system and really flank cancer cells from multiple angles. From a strategy standpoint, if you've been following our story, if you've really been part of the Zyme story, you know that we've always said we want zanidatamab to become a new foundational HER2 molecule, to be where every place Herceptin has been. So Herceptin has been valuable in combination with chemo, has been valuable in combination with tucatinib, has been valuable in combination with PD-1. It is has always been possible to combine Herceptin with something else to do more. And that's exactly what we are showing with zanidatamab. We have studies where we've shown the value in combination with chemo. We're running a study with BeiGene, where we're combining with PD-1. We are running in combination with Ibrance, which is a Pfizer CDK4/6 inhibitor. And now we've added ALX's CD47 to the equation, and we truly believe all of them will show optionality, efficacy, value to patients, all from different angles and the fact that in the space of HER2, which is very complex biology, you're going to need different ways of attacking the tumor to really create that long-lasting survival for patients more than just rates.

Yes. Yes. Okay. So maybe just staying on the zanidatamab chat over on it. We're going to be seeing, I think, some updated biliary and GEA data from the monotherapy expansion cohorts. I think you've indicated at ASCO GI. I guess, what should we be anticipating just in terms of incremental patient data? Or will this just be kind of mostly a follow-up or previously disclosed?

It's -- back in July, when we showed our data, when we showed that little snapshot, at a corporate update, we did get the feedback that we wanted to see the duration. I mean, obviously, you guys have had the rates that our biliary track cancer at 47% response rate has been much higher than the standard of care. Our GEA data has been much higher than the standard of care. So people wanted to see the duration and people wanted to see the full package as 1 would expect at a medical conference. And at our corporate update, that wasn't the venue to do that, but at ASCO GI, I'm happy to say that our posters have been accepted. So I'm happy to confirm that you're going to see us at ASCO GI, providing the full complete package that has some -- a couple of more patients in each case. But more so, let's look at the durations. Let's look at the follow-up. Let's make sure that when you're going for frontline BTC, when you're going for frontline GEA, you can really win on overall survival as opposed to rate. I mean, rate gets you accelerated, rate gives you that opportunity to get that label faster. But ultimately, the prior task is in overall survival and increasing that to the benefit of patients.

Okay. And then I think the other kind of key catalyst for zanidatamab in 2021will be the disclosure of data from the Phase II trial that's evaluating that drug in combination with chemo and BeiGene's PD-1 inhibitor, I think that's kind of plus/minus in terms of how that dosing regimen is structured. What's driving the disclosure strategy around that data set and should we assume that the Phase III registrational trial is probably going to kick off before we end up seeing that frontline Phase II data?

The Phase III registrational study is on track for first half of 2021. And we've always promised that given the size, the scope, the value of that trial, we would share the Phase II data at our earliest possible point where it was mature enough. And ASCO 2021 is a point at a time that we believe that's going to happen. We're obviously working with BeiGene. And the value of these Phase II data obviously is in frontline GEA to show that not only compared to today's standard of care, which is Tras plus chemo, we are ahead, also but to the anticipated future label, which is going to be something, something plus PD-1. And we want to show that we have that future. By the time zanidatamab launches in GEA, PD-1 is going to be part of the equation, and we have that baked in into our trial, and we get to show that we are there as opposed to that we'd be last year's standard of care. Also, the combination with PD-1 has a read into other tumor types that are HER2 positive, namely potentially non-small cell. That is an area where we've seen PD-1s be active and generate value. And we do know that there are HER2-positive lung cancer patients out there. So there is almost like a triple win here baked in to what is going to come together at ASCO 2021. You're going to see data in comparison to Tras plus chemo, which has read through in any other place that Tras and chemo is the standard of care or the method of choice. You're going to see the use of PD-1 and how that sets the stage to ensure the label in frontline is achievable by the time we launch. Thirdly, you're going to see how the addition of a PD-1 could be safe, efficacious, easily combinable to start thinking about the other major areas of need such as non-small cell.

Got it. Okay. So I know in your prior comments, right, you were talking about wanting to make sure that you kind of maximize the value of 25 and kind of go wherever Herceptin is. And you've been a little bit more explicit, I guess, regarding your desire to want to find a partner for zanidatamab over the past 3 to 6 months. So is there anything that you can just broadly say regarding the level of inbound interest that you've been receiving here and just whether the objective of any such partnership would be to interrogate this asset specifically in earlier stage breast cancer?

I would say very confidently that we know the deal we want, who we wanted and when do we want it. We are very confident, and I would, again, confidently say that others are very confident that zanidatamab is a drug. I think there's very little doubt that it is an approvable drug. Now it comes down to what line, tumor types, broad, specific, HER2 high, HER2 low. And we are well resourced to keep going. But we've always said that expanding and accelerating is a key part of drug development. And we are very particular in terms of what we want, who we wanted with and where do we want it to ensure that zanidatamab is expanded in its development plan and expand -- accelerated and expanded. We are capable of bringing this drug to market, while I believe others, very specific others, will be able to do it faster and broader. And that is undeniable. And as I said, we know when, where and who.

Okay. So when you kind of look at the totality of data that you generated with this today and presumably that includes data that has not yet been publicly disclosed. Do you think that there's sufficient amount of evidence to kind of convince the strategic at this point that this is indeed, that's zanidatamab is indeed kind of a better version of combo Herceptin Perjeta across a variety of different applications?

I would say that it is an easy leap of faith.

Okay, and is that a leap of faith that you get a sense of some of the folks that you're talking to are maybe comfortable making?

I believe so. I believe the data that we have, coupled with the data that will be coming for us to make it less of a leap of faith and more of a fact. Again, if we were to go through in breast, we have a combination with Ibrance. Now we kicked off a combination with CD47. We have a combination with PD-1. We believe Tras plus Pert plus chemo can meet, and this doesn't have to be just chemo, it can be 25-plus a targeted agent.

Great.

So that's always been a thesis, and that's how we've been executing.

Okay. So let's shift gears maybe to ZW49, which I think you know probably better than I, has dominated the narrative for most of the last year or so. So look, you're now kind of formally guiding to an update of the Phase I program in early '21, I think, which is kind of consistent with what you said you would do in the absence of hitting a DLT or maximum tolerated dose. So should we imply that this guidance that you've now provided suggests that you have yet to hit a dose in toxicity in this trial. And I guess, if you have it, is that more a function of some of the slower-than-expected enrollment kinetics that you had to talk about before? Or is it a function of the fact that this widened therapeutic window hypothesis is now [indiscernible] okay?

So let's go over the guidance that we provided. We said as soon as we reach MTD, we will provide sort of that guide or that update to everyone. And that could be tomorrow, that could be December 26. We have not reached MTD. If we reach MTD, that will be provided. The second thing that we said is that we really are prepared. We've been doing everything that we can to get into expansion cohorts. And I'm happy to say that we are honing on -- honing in on a go-forward dose and that the expansion cohorts will start sooner rather than later. So the update that we want to provide is to provide that level set in terms of, all right, what can we expect in expansion cohorts? When are they going to start? What do they entail? How you decide that kind of a level set? And then at a subsequent medical conference and not a corporate setting, we want to share the appropriate data from the escalation, which provides the details and the totality of what went into our decision-making to kick off the expansion. So expansion is in front of us. Studies are going very well, and we have not reached MTD.

And so when you say that you're closer to kind of settling on a go forward dose, does that include a go-forward schedule as well? Because you have been looking at this as in a couple of different administration schedules in parallel, correct?

We do have our favored schedule and dose in mind.

Okay. Great. I know that you had kind of talked previously, right, about this trial enrolling a pretty broad spectrum of HER2-positive tumors including some patients with prior HER2 experience. Has that trend remained consistent since the last update in terms of incremental patients that have come into the study?