Zymeworks Inc. (ZYME) Earnings Call Transcript & Summary

My name is Maury Raycroft, and I'm one of the biotech analysts at Jefferies. Thanks, everyone, for joining us for our Jefferies Healthcare Conference in London. I'd like to welcome Ali Tehrani, the CEO of Zymeworks. Thanks for joining us, Ali. Zymeworks is a very interesting company with innovative pipeline and technology with bispecific and ADC development. And so without further ado, I'll turn it over to Ali to tell everyone more about Zymeworks.

Good morning, good afternoon, good evening to everyone that is on this call. Maury, thank you very much for inviting us. Thank you to the Jefferies team for organizing at this virtual conference. And hopefully, in the not-too-distant future, we can have the human-to-human interactions again and the coffees and the walks and the hallways and the elevators to continue these. It is a pleasure to use this opportunity to introduce anyone out there that might not be familiar with Zymeworks and to also provide details and look into 2021 for those who are familiar with the story and are looking for an update. So to get started, what I wanted to do is take a half step back and introduce Zymeworks before we go into some details and some look into the future. For those of you that are not familiar, Zymeworks is focused on the research and development of multifunctional protein therapeutics. Very specifically, our current focus is antibody-based therapeutics. Over the course of the last 14 years since the company has been founded, we have built a number of platforms from the ground up to research and develop protein therapeutics. These platforms include protein modeling and protein engineering, along with optimizations to proteins necessary to meet a biology. These platforms are wholly owned by Zymeworks. These platforms represent a very large patent family that covers, as I mentioned, protein modeling and engineering, which together really becomes our core competency. What the modeling and the engineering enables us to do is enables us to investigate a protein such as an antibody in terms of structure function relationship and to later ask proprietary questions in terms of what structural changes can we make that either increases a function or decreases a function as necessary for having an outcome relative to a therapeutic need. These platforms that we built have been validated through a number of external validations that I'll cover for you. And the takeaway from this is that Zymeworks is focused on becoming a fully integrated biopharmaceutical company, based on platforms, based on a robust pipeline, based on clinical assets that will be commercialized and ultimately provide the opportunity for Zymeworks to become self-sustained. Now moving into a quick snapshot of today and what is in front of us. As of our last guidance as of the Q3 financial and quarterly update, Zymeworks had close to $500 million in the bank. What that really means is that we have a comfortable runway into 2022 and potentially beyond that based on various milestones, based on business development activity and more. Our team has grown to be well over 325 people between our locations in Vancouver, Canada and Seattle, Washington in the United States. The team in Seattle, Washington is primarily composed of our clinical team and our team in Vancouver, Canada as our research and organizational team. In terms of our 2 lead assets that are in the clinic, namely, zanidatamab, zani, formerly known as ZW25. And then also our second asset ZW49. Over the course of the next 6, 8, 12, 18 months, there are a number of events that will result in data readouts and sharing that data at various medical conferences. I'm happy to say that immediately in front of us is ASCO GI. That will be in January of 2021. I'm happy to confirm that multiple posters have been accepted for zanidatamab. And these posters will further elaborate in detail our data in last-line biliary tract cancer for zanidatamab and gastroesophageal cancer, where we shared a snapshot back in July of this year. We -- for those of you that have been following the story, in July, we provided a snapshot of the data now at ASCO GI, you will get a more complete comprehensive data set for BTC last line and GEA last line. Why that is critical and why that is important is because in biliary tract cancer or BTC, we have launched a registrational study in second line, a Phase II registration-enabling study. That is enrolling patients and is underway. And the data that you will see at ASCO GI further supports and demonstrates our conviction in this Phase III registration-enabling study that has the potential for accelerated approval, has the potential for breakthrough status and has the potential for submission of a BLA in 2022. For GEA and the data that will be shared at ASCO GI, we're really setting the stage and showcasing the data ahead of data release at likely in ASCO 2021 or thereabouts for the Phase II studies that are underway in frontline GEA. These Phase IIs include studies that we have been running, looking at zanidatamab plus chemo in first-line GEA and then in collaboration with our partner, BeiGene, where they are looking at the combination of zanidatamab plus chemo plus tislelizumab, which is their anti-PD-1 in frontline gastric. And our hope and what we're working towards is to find the opportunity to present this data at ASCO 2021 or not too far beyond that. The other important clinical events and accomplishments that are worth noting at this point is that a day ago or so, we announced a new collaboration with ALX Oncology around their anti-CD47 antibody called ALX148, where we're looking at the combination of zanidatamab plus ALX148, the anti-CD47 in breast cancer. This is a 2-part study where in the first part, we'll be looking at the safety profile of this combination. And then the second part of the study, we'll be looking at potential benefits and potential unlocking of value in breast cancer potentially as a chemo-free agent, especially in different tumor types or different HER2 expression levels, pardon me, one of which would be HER2 low breast cancer. We're excited about this study, and we are excited about the potential that zanidatamab has and ZW49 has in terms of covering the landscape of need in HER2-positive cancers. With regards to ZW49, our study is ongoing. We have not reached an MTD or a maximum tolerated dose, and we are excited to provide an update on ZW49 in January of 2021, which I will cover a little bit later. So again, for those of you that might not be familiar with zanidatamab and ZW49, just taking a minute to introduce the programs to you. Zanidatamab, ZW25 was designed as a bispecific molecule that binds to the region that normally you have Herceptin binds to and also the region that PERJETA binds to. And the objective here is to combine the biologies and the benefits of Herceptin and PERJETA into 1 bispecific molecule and to really go above and beyond the potentials that we've seen in Herceptin and PERJETA. We believe in early stages of HER2-positive cancers where signaling receptor interactions and many different aspects of the cancer biology is controlled by the HER2 receptor. The molecule like zanidatamab will be tremendously beneficial, and we'll be able to unlock more value to the benefit of patients than the current standard of care. So again, our objective has been to develop the next foundational drug. 4 HER2-positive cancers, especially in the early lines of treatment across multiple tumor types. In developing ZW49, our thesis and our objective was based on the fact that when a patient becomes metastatic and continues to progress, the dependency on HER2 to drive the cancer becomes less and HER2 becomes more of a biomarker, more of a representation of this being a cancer cell. And this is where a molecule such as ZW49 is able to target the receptor and then get internalized and then destroy the cancer from the insight, irrespective of signaling, irrespective of the other aspects of the biology. Worth noting is that ZW49, the backbone antibody is the same thing as zanidatamab. ZW49 is differentiated from other ADCs antibody drug conjugate in the market based on another linker and payload. The linker is proprietary to Zymeworks, and so is the payload. The payload is a microtubule inhibitor. It is in or statin analog that, again, is proprietary to Zymeworks. And we designed this molecule to ensure maximum potency without sacrificing safety. And this asset is moving forward. This asset currently is in dose escalation. This asset is in 12 different sites around North America. And additional sites are about to open up in the Asia Pacific region for the continual parts of this study. In terms of what to be expected for ZW49 over the course of the next 6 to 12 months, we plan to provide an update in January of 2021. And this update is really going to be anchored in highlighting our go-forward development plans for this asset. We have [ loft ] the ambitious plans for ZW49. We believe this asset is differentiated. We believe this asset can and will continue to generate value for patients and will be a legitimate asset in terms of paving the path for future ADCs based on differentiated backbone antibodies, based on high rate of internalization, based on safety and, of course, efficacy. Then in 2021, we plan to release and be present at a medical conference, where we intend to share our data at the appropriate venue, showcasing all of the necessary and appropriate information in terms of the study that we've been conducting so far. So overall, it will be a busy year for ZW49 in 2021 and a status update, a development plan, clarity, development plan, justification, reasoning, decision-making followed by data update at a medical conference. Two, the strategies behind the development of both of these assets. And what you see here is common to both assets. We have a 4-part strategy for both of them. We believe that both ZW25 and 49 should have a faster market opportunity, should have an opportunity to look at displacing, should have an opportunity to look at expanding, accelerating and diversifying. With regards to ZW25 because, obviously, that asset is further ahead, our fast-to-market strategy is to get a label as quickly as possible, which, in our case, will be in biliary tract cancer, such that we can get ZW25 out in the market in broad hands of clinicians, investigators and doctors so they can investigate the benefit of the asset in their own hands in a broad population, different tumor types, different lines of treatment as they see fit off-label. And this starts to generate the momentum, further momentum for the asset in terms of its potential to ultimately displace Herceptin as a foundational drug. Speaking of displacing, we have our own strategy to showcase the potential for zanidatamab to displace Herceptin through our front-line gastric study. And in this study, what we are aiming to do, especially in the Phase III registrational, we have a 3-arm study, where in the control arm, we have Herceptin plus chemo, which is the standard of care in gastroesophageal cancer. In the first study arm, we have zanidatamab plus chemo and in the second study arm, we have zanidatamab plus chemo plus BeiGene's anti-PD-1 tislelizumab. And the idea here is to really definitively show that either ZW25 plus chemo and/or ZW25 plus chemo plus tislelizumab will displace and has the potential to displace tras plus chemo in front-line gastric. Again, the Phase II data that give us the conviction, give us the belief in the decision-making process that this is possible and this is a likely success will be shared at ASCO or our hope is to share it at ASCO 2021. In terms of diversification and expansion for ZW25 zanidatamab, we have plans in breast cancer. We have plans in colorectal cancer. We have plans in endometrial cancer, essentially every HER2-positive tumor type besides breast and gastric, where we believe zanidatamab single agent in combination with chemo or a chemo-free option, such as in combination with ALX with CD47 or different CDK4/6 inhibitors, such as our study with Pfizer's Ibrance or different targeted agents could be the future. And these studies are underway, and this gives us the opportunity to diversify and expand and really position both our assets, ZW25 and 49 as the go-forward, go-to therapeutics and HER2-positive cancers, any line, any different tumor type. Regarding ZW49 and our plans, as I mentioned in our January update and our development plans that will be highlighted and discussed, we intend to provide the same clarity in terms of fast to market, displace, expand, diversify in that update as part of our go-forward development plans. And again, the reasoning, the justification that we have to believe that is possible and to support that. So look for that to come in the near future. As far as what I just mentioned just to drive a little bit more into the details. As I mentioned, our fast-to-market strategy is our biliary tract, as you can see here, we have initiated our registration-enabling study in BTC, and we believe that in a not-too-distant future, we have the opportunity in 2022 to submit a BLA and then ultimately become the standard of care in biliary tract cancer. In terms of our displace strategy, as I mentioned, we have multiple studies in gastroesophageal. And again, what to look forward to is likely at ASCO 2021, our data in combination with chemo or potentially BeiGene's data in combination with tislelizumab to support the Phase III study that is on track to start in the first half of next year that also has the potential of readouts into other HER2-positive tumor types that have benefited from PD-1 by itself or PD-1 with trastuzumab and now that could be replaced by zanidatamab. And over the course of 2021 and over the course of -- beyond that, looking more into 12 months and 18 months, we have a number of studies, zanidatamab plus Ibrance, zanidatamab plus chemo in first-line breast cancer with BeiGene, and of course, our study with ALX. So this is the right opportunity moment to quickly touch base on the study that I've been talking about and the collaboration just kicked off, which is our collaboration with ALX. Again, the takeaway points are that there is a potential here for a chemo-free solution breast cancer, there is a potential here for a differentiated angle in HER2 low breast cancer, there is an opportunity beyond breast cancer. We're studying is starting with breast cancer where we're certainly not limiting this to breast cancer, and we're very excited about where this could go. Worth noting is that we have, again, multiple combinations being studied with zanidatamab, with chemo, with a CDK4/6 inhibitor, with an anti-CD47. And other combinations that will be announced in the near future with PD-1, where we really believe this will showcase the power, the potential and the benefit of zanidatamab as a foundational drug. Data. This data was shared back in July of this year. And I just want to provide it as a refresher ahead of ASCO GI that what was shared was very exciting response rates. In BTC, we showed a response rate of greater than 40%, 45% response rate, in a tumor type that the standard of care or second line generates anywhere between 5% and 20% response rate. So we're well above the bogey. We're well above the bar that we need to beat. And our goal at ASCO GI is to show the totality of the data, perhaps with some incremental additions, but what we really want to showcase is the incredibly encouraging response rate, the duration and the safety profile as it belongs in medical conference. Similarly, in gastroesophageal cancer in salvage line, heavily pretreated patients, zanidatamab single agent has been able to generate very eye-catching data. And this is really the beginning of hope and promise to patients that the landscape of GEA and gastric cancer is going to change and Zymeworks is supposed to be paving the path and being a leader there. Single-agent zanidatamab has generated data that, frankly, Herceptin by itself or Herceptin and PERJETA by themselves have not been able to generate. And this is truly something very encouraging. In combination with chemo, we've been able to show that the data, the responses, the durations are even more eye-catching. Again, this data was shown in July, and it will be updated, it will be presented in a more comprehensive fashion in ASCO GI. And then subsequently, at ASCO 2021, our aim is to provide the front-line data. So in summary for zanidatamab, we believe we have a drug. There is little doubt in my humble opinion, in our opinion, that this has a very bright future. And our goal, as I mentioned in our strategy is to find a path, which we believe is the BTC as quickly as possible to the market, then expand and accelerate And that expansion and acceleration may involve a strategic partnership for a partner to come in and expand the scope, expand the potential and accelerate the development plan to the benefit of patients and everyone. In terms of ZW49, this asset is a key part of our strategy. This asset by itself is showcasing, validating the novelty in our linker, payload in our biology. This asset will pave the path for future ADCs that will come from Zymeworks. And this asset will showcase why the backbone antibody, the linker and the payload are 3 critical components of a differentiated antibody drug conjugate versus 1 or more of these factors by themselves. We're excited about the future of ZW49, and we're excited to share the development plan or the go-forward development plan for ZW49 in January of 2021. Shared this data in the past is the preclinical data for ZW49, supporting our excitement or enthusiasm of why it will be differentiated in terms of efficacy and safety. We've shown that this asset has exceptional internalization, which is key to its mechanism of action. It has very strong encouraging toxin uptake inside the cell and then that uptake results in the cytotoxicity that ultimately results in efficacy. And this asset has been compared to validated, notable approved assets such as Kadcyla and in HER2. This is a data that has been shared in the past. So far, in the 25 minutes or so that I've had chatted about our lead asset, zanidatamab and ZW49. But it's very important to note that Zymeworks is more than ZW25 and ZW49. As I mentioned in the beginning, we have developed platforms, and we continue to develop platforms because the company that we're headed to become is a fully integrated biopharmaceutical company that has a robust pipeline of preclinical and clinical assets supported by its factors. So far, the world has seen our bispecific platform, our Azymetric platform, they've been familiar with our ADC platform, ZymeLink, and to some degree, with our EFECT platform, which is our effective function mediation platform. Our goal in our aspiration at AACR 2021 is to introduce everyone 2 platforms that we have not talked about in the past. As highlighted on this slide, and discussed before, we have been working on platforms that relate to the tumor microenvironment, a conditional activation to masking technologies. And to the opportunity to bring cytokines into the equation as a cytokine fusions and beyond. And this sets the stage for Zymeworks to obviously be a leader in oncology, but also to start planning and setting the stage for new therapeutic areas right next to oncology, including inflammation, autoimmune and beyond. Our cycles have been validated and will continue to be validated through our existing tech licensing collaborations. Here, you see our partners. All of these deals are active. As I mentioned, they remain nonexclusive, meaning that they don't encumber our preclinical aspirations. And we believe 1 or more of these partners will announce their own INDs in 2021 on molecules that they have built using our platforms. The platforms are highlighted on the second column between Azymetric EFECT or some combination thereof and even our ZymeLink ADC platform, they will announce INDs and entering the clinic over the course of the next 6 to 12 months. I will conclude my presentation by, again, reinforcing the fact that at Zymeworks, we've been very busy in building a fully integrated company that's capable of thinking it, developing it, testing it, iterating it and ultimately commercializing it. That's the dream, that's the aspiration here. And I hope over the course of all of these conferences and presentations to further provide milestones and achievements to that end. I will end my presentation by simply coming back to this slide that we've had a very busy 2020, and we expect even a busier 2021. And we look forward to chatting with you through these venues or in one of these conversations. Thank you very much for your attention.