Zymeworks Inc. (ZYME) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Barclays Global Healthcare Conference. My name is Gena Wang. I'm SMid-cap biotech analyst. It's my great pleasure to introduce our first presenting company Zymeworks. With me, we have Neil Klompas, Chief Operating Officer.

Good morning. Thank you, Gena, for the kind introduction, and thank you, everybody, for attending our presentation this morning. Before we get going, just a couple of words about forward-looking statements. As always, we will be making forward-looking statements. For more information on risks and forward-looking statements, please refer to our SEC documentation as provided online. For those of you who aren't familiar, Zymeworks is a late-stage technology company focused on the next wave of multifunctional biotherapeutics for hard-to-treat cancers. There's no question that there is a paradigm shift taking place in our industry away from traditional monoclonal antibodies and first-generation ADCs, and Zymeworks is at the forefront of developing first-in-class and best-in-class multifunctional therapeutics based off of a suite of proprietary antibody-based biologic platforms. We go beyond the traditional monoclonals to look at combining multiple functionalities to create true fit-for-purpose biotherapeutics. How do we do this? We do this by leveraging a suite of proprietary therapeutic platforms, as you can see on this slide. There are 4 key elements to our platform therapies. The first is Azymetric, a broadly adopted bispecific antibody platform that leverages a suite of different geometries to ensure that the modality of the disease is best met by the specific multifunctional therapeutic that we develop. Next, our ZymeLink technology, a best-in-class antibody-drug conjugate platform using a combination of auristatins and our next-generation topoisomerase ADCs, to ensure that we match disease mechanism to the right antibody-drug conjugate solution for the disease. EFECT, which is our effector function platform, which allows the up or down regulation of immune interaction to leverage disease modalities. And finally, ProTECT, our next-generation masking multifunctional therapy that allows immune checkpoint modulation to hone in on disease mechanisms. Together, these allow a plug-and-play solution where the interchangeability and the combinability of these platforms allow both our direct developers and the biopharmaceutical companies that we partner with to develop true first-in-class and best-in-class therapies. This is a scalable platform and we would be happy to talk about how we're using these technologies to address hard-to-treat cancers. Our lead therapeutic candidate is zanidatamab, a biparatopic, bispecific antibody using our Azymetric platform. Zanidatamab targets the ECD2 and ECD4 paras on HER2 to introduce new mechanisms of action to HER2-targeting biotherapeutics. Because of the unique geometry leveraging the Azymetric technology, zanidatamab cross links HER2 targets, resulting in greater cell coverage up to 2x traditionally what is seen with combinations of Herceptin and PERJETA. This additional binding and cross-linking of HER2 targets allows for greater clustering and aggregation of the drug on the cell surface, which in turn increases ADCC, ABCP and CDC and also significantly increases internalization and degradation of the receptors. These new mechanisms of action targeting a well-known target, HER2, increases the utility and scope and potentially, the addressable markets within the HER2 segment. As you can see, there is significant opportunity within the HER2 sector for a new breakthrough therapeutic, such as zanidatamab, to bring much needed therapy to the patients with HER2-expressing cancers. As you can see, we have multiple different clinical studies across a host of HER2-expressing tumors, including breast, gastroesophageal cancers, biliary tract cancer and colorectal cancers. Notably, we have 2 late-stage pivotal studies ongoing in the HER2 space. HERIZON-GEA-01 addressing gastroesophageal adenocarcinomas and HERIZON-BTC-01 addressing biliary tract cancers. In the fall of last year, we provided The Street with a deep dive into the design and progression of HERIZON-GEA-01, our pivotal study addressing gastroesophageal junction cancers. This is a 3-arm study with a total patient population of over 700 split into 3 arms. Arm A, a control arm with standard of care; Arm B, including zanidatamab and chemotherapy; and Arm 3, zanidatamab plus standard of care chemotherapy plus our partner, BeiGene's PD-1 targeting molecule tislelizumab. This study is powered to show contribution of parts and to allow for approval of either zani plus or minus tisle. This is a global study with over 300 sites, and we're leveraging the power of our partner, BeiGene, in their territory of Asia Pacific, excluding Japan, which is still a Zymeworks territory. We're excited about the progression of this study, and we've reiterated our guidance of fully enrolling the study by the end of next year. As you can see, the lead-in data for this study, which we presented at the ESMO conference of last year, shows very promising antitumor activity across a range of patients with gastroesophageal adenocarcinoma. More importantly, we've demonstrated this is durable antitumor activity across a range of diseases. Notably, we believe that when compared against recent data provided by Merck in the KEYNOTE-811 study with promising antitumor activity, we're showing superior PFS and durability as opposed to this emerging standard of KEYTRUDA. Now on to HERIZON-BTC-01. This is a pivotal study with zanidatamab monotherapy in late-line biliary tract cancers. This study has been enrolling well, and we reiterate our guidance of fully enrolling the study by the middle of this year. Again, the lead-in data shown in late-line monotherapy BTC cancers presented at ASCO GI last year shows that we stand positioned to significantly improve the standard of care for patients with late-line biliary tract cancers. And more importantly, with a median duration response of 7.4 months, again, this is a durable new treatment for these patients as we move forward. As you can see through the snapshot, the zanidatamab data consists of more than just these 2 lead-in studies with a host of trials that have been progressing as we continue to develop this therapy, across biliary tract cancer, gastroesophageal cancers and breast cancers. And we reiterate that we have provided and submitted abstracts for the ASCO conference of this year in combination with our partner, BeiGene, for 3 studies, the Phase II study of tisle plus chemotherapy in GEA and 2 breast cancer studies in combination with BeiGene, we'll be presenting Phase II chemo combo data as well as a study combining with Pfizer's Ibrance CDK4/6 inhibitor and fulvestrant. Speaking of breast cancer. At the San Antonio Breast Cancer Symposium last year, we provided some zani plus chemo data in third line plus breast cancer. Again, you can see from this early data set promising antitumor activity with a host of different chemotherapies. Zani differentiates in this space as it is a naked bispecific antibody with a well-tolerated safety profile, which allows for combinability with a host of different chemotherapies and allows for physicians to combine and use this therapy across a host of different settings. With the recent interest across the sector in HER2 therapies, this uniquely positions zanidatamab to take advantage of renewed interest in this well-known target, and we believe that as the market continues to expand and as molecular testing becomes more and more prevalent, zani will find a home in treating patients with hard-to-treat HER2 cancers moving forward. We've spoken a lot about our partner, BeiGene, throughout this short presentation. BeiGene is our partner for zanidatamab and our first ADC molecule, ZW49, in the Asia Pacific regions, excluding Japan. We're pleased to be working with BeiGene on a host of different projects, and they are a key partner in enrolling, especially in Asia Pacific, where gastroesophageal cancers are highly prevalent. Speaking quickly of ZW49. ZW49 leverages the foundational molecule of zanidatamab, our HER2-targeting bispecific, and attaches our first ZymeLink molecule to it to create a potentially best-in-class antibody-drug conjugate targeting HER2. We reiterate our guidance that in the second half of this year at a medical conference, we'll be providing up-to-date data on the Phase I study and be talking about the path forward with this molecule. Core to the Zymeworks' hypothesis is how well adopted and validated the Zymeworks platforms are. As you can see from the slide, multiple partners are progressing biotherapeutics based on the Azymetric platform through clinical studies. Moreover, our partner list with our platform technology represents who is who of leading biotherapeutic companies from emerging biotechs through large-cap firms. This presents us with a significant upside in nondilutive revenue as we move forward with a total of over $8 billion in potential milestones and having received over $200 million in nondilutive revenue to date. In January of this year, we discussed our key strategic priorities for 2022 and 2023. From a clinical perspective, we reiterate that we are looking to fully enroll the HERIZON-BTC-01 study by the middle of this year and are on track to execute on that deliverable as well as fully enrolling the HERIZON-GEA-01 study by the end of next year. We are in the process of closing out, and we'll be presenting data on some of the early studies that allowed us to establish our hypothesis that zani is poised to provide a breakthrough new therapy in the HER2 space, and we'll be communicating, as we mentioned, the path forward for ZW49 in a medical conference in the second half of this year. On the preclinical pipeline front, we are committed to advancing 2 new therapies to IND by 2024 based on our multifunctional therapeutics platforms, including our next-generation ADC platforms and supporting and advancing our ongoing collaborations with our partners across the globe. More importantly, we are executing on new partnerships for both our lead therapies and our platform technologies, which will continue our track record of bringing in nondilutive revenue and further strengthening the balance sheet and extending our runway. Zymeworks presents a unique investment opportunity within a crowded space. We have near-term market catalysts with 3 submitted abstracts for ASCO of this year and 2 well-enrolling pivotal studies in hard-to-treat cancers that provide multiple opportunities for us to bring new therapies in a much-needed space. We have an advancing R&D pipeline based on well-established and validated platforms, including next-generation ADCs and significant additional upside with ZW49 and near-term partnership opportunities across our therapeutics and platform technologies. These are underpinned with a new management team following the restructuring in the first quarter of this year, an improved financial position and a portfolio of existing partnerships and collaborations that continue to provide value to our shareholders. Management is further focused on extending our runway. Currently, cash and cash equivalents provide us a runway into the second half of 2023, and we believe that with additional partnership opportunities and nondilutive cash, we can extend that runway into 2024. Additionally, our execution on existing partnerships and focus on new collaborations provides us an exciting opportunity as we look forward to generating both more nondilutive revenue and bringing zani to market and ensuring that it has an ability to treat patients across the globe. We have an experienced and accomplished leadership team, and we're excited for what the future looks like at Zymeworks. Thank you very much.

Thank you, Neil, for a very comprehensive overview. So maybe -- I know there's recent senior management change. So maybe you give -- and you shared some color also already. But can you give us a vision you say in the next 3 to 5 years, where do you see the major growth driver for ZYME?

Yes, great question, Gena. So in January, our long-term CEO, Dr. Ali Tehrani stepped down, and we're pleased to welcome Ken Galbraith as both our CEO and Chair to lead us forward in this exciting new chapter at Zymeworks. The next 3 to 5 years are an exciting time at the company. As I mentioned, we have 2 pivotal studies that we'll be reading out in that time period, HERIZON-GEA-01 and BTC-01, a great place for an early-stage biotech company to really transition and to bring these therapies to patients. More than that, though, it's a reiterated and renewed focus on driving value through our pipelines for ourselves. We've guided that we anticipate a minimum of 2 INDs by 2024 and these will be leveraging both our next-generation ADC platform and multispecific platform. We plan on talking about both of these platforms in the second half of the year at an R&D Day and letting investors know just exactly what's in the store for the future from a pipeline perspective.

So maybe regarding your technology, can you just give us a little bit more color where you will see the improvement from both ADC perspective and antibody compared to the current version?

Great question. And it allows me to provide perhaps just a bit of a teaser. We've mentioned and we've developed ZW49 based on our ZymeLink technologies. What we haven't talked a lot about in the past is our new topoisomerase platform. Zymeworks' platforms have always provided a lot of modularity and a lot of tools in the toolbox for drug developers, much like with Azymetric, where it's not just one bispecific format, multiple formats within the bispecific and multifunctional space allow us to tailor it. The same is true of our ZymeLink technology in ADCs. We're augmenting our traditional platforms of auristatins with a new topoisomerase and a host of linkers as well, which are proprietary to Zymeworks at the World ADC Conference in the second -- or in the back end of this month. We'll be providing an update to The Street on what's unique and differentiated about the topo platform. Within the auristatin platform, we've always maintained that the true advantage within ADCs is improved tolerability and a better safety profile that will allow clinicians to actually dose up to demonstrate efficacy across a host of cancers.

That's great. We'll look forward to the data later this month. Yes, and then you will also have quite some like 3 abstracts for the ASCO submitted. So can you give us a little bit more color regarding what kind of data package should we expect to see regarding patient numbers or follow-up? I know you may not be able to specify but if t overall give us a sense compared to, say, last update, how much more we will see?

Yes. Great question, Gena. And as you mentioned, we can't share a ton about those because the abstracts have been submitted. We look forward about talking about the data. But these will be more comprehensive than you've seen in the past, and provide insight into studies, which we haven't talked a lot about in the past, including our combination with Pfizer's CDK4/6 inhibitor, Ibrance, and some more mature data packages coming out of studies done in collaboration with our partner, BeiGene.

Okay. Very helpful. Since you mentioned different combinations. So maybe -- and you do have like chemo, CDK4/6 and also PD-1 of all different combinations, where do you see the highest probability of success? I know it's data-driven. But mechanistically, where do you see that could be the best approach there?

Yes. That's a great question. I think one of the strengths of zani has always been that it is -- and I'll use some common parlance. It's just a great antibody. And its strength lies in its combinability across the whole host of companion therapeutics, be it PD-1s or CDK4/6s or different chemos or, as we've demonstrated in the BTC, its utility as a monotherapy. So I think it's really hard to say where we see the greatest opportunity. I think the greatest opportunity is in that breadth of opportunities that it presents us with and more importantly presents our patients with.

That makes sense. So what kind of profile will you be looking for when you're adding like the combo with all these? Like how much more -- I assume similar safety, but how much more clinical benefit you will be looking for to adding that you think it will be like a win for you?

Well, I think we're pretty happy with where zani is sitting already based on the initial data. Take, for instance, our first-line GEA studies. As we mentioned, we've showed some of the data on the lead end. From a durability and a PFS perspective, we believe we're already well positioned to capture a first-line GEA market. So really, the additional benefit brought by combination of therapies in that space would truly be additive to what's already based on a small data population already a win. So we look forward to any additional, but we're well positioned to take that space with and without.

Okay. And I think the last update with the breast cancer, we did see some diarrhea -- with a higher rate of diarrhea. And I'm just wondering any updated thoughts why we only saw that in that particular trial, we did not see any other trials. And then what is the latest thoughts on prophyl managing of the diarrhea?

Yes. We're really happy with how the prophylactic treatment of diarrhea. And when we do talk about that, and we know that this is a concern across the HER2 sector, but the majority of our cases have been grade 1 or grade 2, as you mentioned, manageable with prophylaxis. So it's not really a concern. Again, in these late-line therapies, with very sick patients, grade 1 and grade 2 diarrhea is manageable and treatable and provides a real meaningful path forward with zani for these patients.

Good. We have 2 minutes, and I wanted to ask about ZW49. So you said you will have a comprehensive data update later in 2022 and to decide the next step. Can you be a little bit more specific like what kind of a data package or profile you think that, that [indiscernible] any further development, what kind of data package do you think that's -- there is -- we wanted to identify the better next generation?

It wouldn't be a chat with a leading analyst without a question on ZW49. That's for sure. It's hard for us to predict, and we would prefer let the data speak for itself in the second half of this year. We have been dose escalating across multiple different regimens for the last couple of years, and we're excited about looking forward to the second half of the year when we can finally share that data and provide The Street a more comprehensive look forward. In the [indiscernible] ZW49 data and information, we prefer to bear from that and provide a more complete data package in the second half of the year. So you just have to stay tuned.

Okay. I understand. So we know that in HER2 setting a bar there for the, say, third line and now move to the second line metastatic breast cancer. So do you think that that's a right bar or you think the ZW49 still will have a chance even not reaching the same level in terms of efficacy?

Yes, I can definitely say that our clinical team is excited about the opportunities and more importantly, the opportunities to really differentiate within the space. I think if in HER2 AZ and Daiichi have taught us anything, it's that there's definitely still unmet need across the space. And while they've been able to expand the patient population, it doesn't end there. There's opportunities across a variety of different cancers, and we really look forward to being able to talk about those in the second half of this year.

Great. Well, thank you very much, Neil. I think we are on time. Thank you.

Thank you.

Thank you, everyone.

Thank you.