Zymeworks Inc. (ZYME) Earnings Call Transcript & Summary

Great. Good morning, everyone. My name is Ken Galbraith. I'm the Chair and CEO of Zymeworks. I want to thank Barclays for the opportunity to come to Miami Beach and present our story to you today. First of all, this is our forward-looking statement, as you see here. I encourage you to read it with a bigger print, and I can encourage you to go to our website and look at our SEC filings. So trying to summarize Zymeworks one slide for you here. So our work is focused on kind of the power of multifunctional therapeutics, initially on oncology but eventually beyond. So essentially, we work as an integrated R&D engine that is capable of generating 2 different types of multifunctional therapeutics, and then we use those as a crossover as well, but to the different platforms, which I'll talk about. First, we start on with a focus on the worst patient prognosis, like the difficult-to-treat cancers, those with the lowest 5-year overall survival rate. We focus on those indications. We find a target or a pair of targets we think might be interesting to look at to get a clinical benefit for those patient beyond what we've seen to-date. And then we decide between our R&D engine a number of different multiple product formats and different iterations of those formats that we think might have the potential to drive the most patient value between our multispecific antibody therapeutic or MSAT, which I'll talk about, and our novel antidrug conjugate platform or ADC platform I'll talk about. And again, we're focused on looking at market opportunities that are first or second line that can truly make a difference in what's important to patients, which is overall survival. We do look for accelerated approval pathways to try to get quickly to market. And we try to focus on what we think are indications that can make a difference to patients, but also be economically attractive from a development standpoint. The way we think about our business, as we talked about in January, we do think about it as a sum of the parts. So we have an enterprise value framework, which really has 5 different components of our business, which I'll describe some of them today. And the goal of the management team this year is to do what we did last year, which is trying to advance every aspect of our business and hope that in a combination of moving all those different parts, we can add to enterprise value year-over-year on a combined basis. And I'll try to highlight a few of these for you today. So we had a pretty exciting 2022. We were very active in a number of things, culminating in a great collaboration with Jazz Pharmaceuticals for our lead agent, zanidatamab, at the end of the year, which was transformative for us financially and really allowed us to complete the commercialization framework for zanidatamab with our partnership with Jazz and our existing partner, BeiGene. But '23 and '24 are very active for the company as well. We're working on a number of different activities across the company's enterprise value in a way that we think has a number of value-adding milestones that we can accomplish over 2023 and 2024, which both advances our products, advances our basic platform and it advances the company closer to its goals. As I said last year, we had a tremendous financial transformation. We're using that transformation to build a really exciting R&D portfolio underneath that. In addition, we're looking to drive value through not just our last collaboration with Jazz, but we are looking at trying to form additional collaborations up and down our product portfolio, which I'll talk a little bit about today, which we think will allow us to do more, bring in Jazz in, who can assist with personnel and with capital and to build a portfolio which has both un-partnered products, which we own ourselves in a completely unencumbered way, and also build products which have partnering as their core. So in essence, we work with 4 different technology platforms. Azymetric was the original platform for the company, which allowed us to design bispecifics and trispecifics for partners as well as for ourselves with our biparatopic zanidatamab and our biparatopic ADC, ZW49 or zanidatamab zovodotin. So that is still a really important core technology platform for the company, is using the starting point for everything that we do beyond that. In addition, our drug conjugate platforms provide for multiple payloads, multiple linkers, multiple ways of thinking about how to design and engineer drug conjugates, which I'll talk about. We also have some other platforms on the right, which we can utilize when it's appropriate for the indication of interest or for trying to design the type of clinical benefit we hope to achieve for patients. I won't have time to talk much about those today. So this is a proven platform. So we use these platforms ourselves as well as with a number of collaborations we have. But we use this for -- it is the basis for how we created zanidatamab, which is our lead program in Phase III right now, which is a biparatopic, a HER2 antibody, as well as zanizo, which we call for short, which is our ADC product formula, which is also still biparatopic binding on the antibody. So these are things that we've clinically validated ourselves, they're our own products. And we have a range of other partnerships, who are also clinically validating these platforms. So we feel very comfortable about hitting our goal of trying to engineer products which can create then 5 new IND candidates in the next 5 years, starting with 2 IND filings next year, and products that I'll describe to you. And we feel really comfortable of using this platform to create these novel products. So for zanidatamab in and of itself, it is the basis of our pipeline. That's where we started from. It is partnered with BeiGene and Jazz. We'll not be recording sales in this product ourselves, but it still is a very important product for us. And we're looking forward to working with BeiGene and Jazz to complete the regulatory filing process for our BTC pivotal study to finish the Phase III program, which is ongoing right now in the first-line GEA patients as well as to look for opportunities to expand zanidatamab beyond BTC and GEA patients as we move forward. Beyond that, for ourselves on this slide, these are things, which we're focused on as our own proprietary program. So we have our HER2 ADC zanizo, which I'll talk a little bit about. Behind that, I'd like to focus first on the early-stage portfolio of oncology opportunities we have, which will be 2 million IND next year. But I'd like to spend some time talking about those on both the ADC side and on the multispecific antibody therapeutic side and opportunities for us to look to meld the 2 of those together. So let's do that. So again, as I mentioned, the starting point for everything we think about, again, is looking for those difficult-to-treat cancers and specifically targets of interest, whether they be validated or novel or pairs of targets that we think might be interesting to provide a clinical benefit that has not been shown before. Then in the middle is where we do all of our work on this slide. What we try to do is work our way through a multiple number of technology systems or modalities and different iterations of modalities to try and come up first in what we think is the best product format and characteristics to actually hopefully achieve in some of these patients with a target that's not been seen before. And this provides tremendous amount of optionality. So if we were still be focused in the ADC space, we would look at every target as something to design an ADC around. We're both good protein engineers and also good medicinal chemists on the ADC side. And we get the optionality of being able to look at multiple different platforms, modalities, other iterations, that we see here in the middle, to hopefully come up with what we think is the best platform, the best geometry on that platform, the best parts of every part of an eventual product format to move forward. We think this deep quality science and this screening methodology which we use hopefully ends up with a higher quality portfolio over time. When we think about our multispecific T-cell engager strategy, which I'll talk about now, we believe that T-cell engaging strategies are -- can be made better. We think where we've got to a bispecific strategy is good. We think to go further in trying to find a way to make bispecific more useful and available to other tumor types and broader populations, we need to go to a trispecific. So we're using our platforms initially on ZW171, our first multispecific T-cell engager in the clinic next year, which is a 2 + 1 mesothelin targeted T-cell engager, which I'll talk about, to solve one of the first problems, which we think is trying to find a way to mitigate cytokine release syndrome with a very novel CD3 antibody, which will be a different approach to a TCE module. Beyond that, we think trying to design in another mechanism to make a true trispecific in 2 different formats, adding a consummatory effect -- in this case, we add CD28 -- or by building in a checkpoint inhibitor into a bispecific, which we believe will be PD-1. And we look at both of those approaches as potentially solving problems that exist today with bispecifics, which we think are holding back some of those compounds from being more successful. So to get there, we'll focus on getting ZW171 in the clinic. It's a mesothelin from CD3. It's 2 + 1, so there are prevalencies. And it's a T-cell engaging antibody. We think mesothelin is a releasing target for a whole range of potential tumor types. It's just been a very hard target to find something that can be effective and tolerable for patients. So we think we have a really interesting format that we've engineered. After looking at, again, the screening methodology of looking at multiple formats, we got something that we think can create some benefit at the top never seen before. We've shown that in preclinical data and we're looking forward to getting it to the clinic next year and proving that out. When we think about designing ADC candidates from the other side of our R&D engine, again, we're totally focused on targets to start with beyond that, focused on every element of the ADC and trying to build quality into every element and then look at all those elements put together. So the starting point for a great ADC is designing an optimal antibody. So that's the starting point. So we apply our protein engineering skills before our medicinal chemistry skills come forward to that. From a payload perspective, we're starting to work now with what we think is a great proprietary TOPO1 payload, which we think is state-of-the-art today. We may pick something in the future, in a number of years now, but that's really what we think is an optimal payload, which we think can drive some really interesting next-generation ADCs, which is what we're trying to do. Our first one of those ZW191 is our folate receptor alpha with a TOPO1 payload, which we'll move in the clinic. I think it's a validated target from a perspective of high-expressing ovarian cancer. We think that folate receptor alpha is indicative of a range of other indications, which we've not been able to approach it clinically. We think we'll design a very interesting asymmetric antibody attached to what we think is a state-of-the-art payload now, which we think will open up other clinical indications that would be interesting from a folate receptor target perspective. So we're looking forward to going forward with that in 2024 as well. It will be our first ADC new HER clinical studies with our proprietary TOPO1 payload. But beyond that, we are moving from a transition from last year to this year in Zymeworks. I think for the last 5 years, we've been working in the HER2 space with zanidatamab and zanizo. Beyond that, we've been focused more on our platform technologies and building products for others based on those platforms. Moving forward, as we go from 2023 to 2027, we are now working on our proprietary product pipeline outside of HER2 to try and build 5 new molecules in the clinic next 5 years, which will be our internal pipeline. As well as that, we'll be still forming additional partners to move more of our pipeline opportunities forward beyond those products. So we are moving specifically from being more technology platform oriented to being more product-focused organization. So for zanidatamab, which is our bispecific antibody, for it to express to cancers, as I said, we formed a great collaboration last year with Jazz, the terms are shown here. I think Jazz is an excellent partner for us. They're a partner in every territory except which was being partnered with BeiGene. I think the economic term is indicative of what we believe and I hope what Jazz believes can be the potential for zanidatamab if we're able to complete the clinical studies and file and get approval and launch. So we think this provides a great foundation for transforming our balance sheet now, which is -- this upfront payment was the reason we had almost $500 million in cash at the start of this year. But I think some of the economic terms and being able to share in the success of future regulatory approvals and commercial success is a fantastic financial foundation for us to build the technique, as I just described to you, around. So we're really looking forward with our cooperation with Jazz. It's off to a great start, working really well together. I really appreciate how quickly they've dug into zanidatamab and helped us move that forward. Beyond that, we have an older partnership with BeiGene in the Asia Pacific region, except for Japan. BeiGene has been a tremendous partner for us in developing zanidatamab to-date and working with us. And we're pretty much looking forward to them having the ability to get their first indication in their territory to file and seek approval and launch based on getting approval. Again, there are some similarities in the financial structure of these transactions, but they are somewhat different. I refer you to our SEC filings to look for further details about that. So we do have Jazz and BeiGene now working with us together on these 2 pivotal studies which we're advancing now, our HERIZON-BTC-01 study, which we had a top line read on late last year, which we'll look for an opportunity to present the full data set in the first half of 2023, as well as our ongoing global pivotal study in first-line HER2-positive GEA patients, which is ongoing now with Jazz and BeiGene and where we expect to have top line data in 2024. We did have some Phase II data presented at ASCO GI in January, which was very encouraging and got us extremely excited. We are working as hard as we can, as fast as we can to complete this pivotal study and look at the top line data, because we really think this could make a potentially significant difference to patients with GEA. So for zanidatamab zovodotin, or zanizo as I call it, which is now not a part of the Jazz collaboration. So it's a product that we made, again, to make an ADC format around the same antibody backbone, zanidatamab. So still a biparatopic ADC. It's very unique because of that. We think the mechanism related to zanizo is pretty interesting. We will have 11 abstracts at AACR across the company, which will be released by AACR at 4:30 today. One of those 11 abstracts on the mechanism of Zanizo here, so we think it's a really differentiated mechanism action that we're looking to floor in the HER2 ADC space. We've obviously developed this through Phase I now, and we have recommended Phase II just to move forward. We've thought very carefully about a focused clinical development plan from here in areas where we think we can really make a difference as a differentiated HER2 ADC. So we have planned 2 Phase II studies, which will be started this year. One is in non-small cell lung cancer, the HER2 targeted space. And this would be in HER2 over-expressing population, HER2 amplify population and the HER2 mutant population as well. It's a really interesting area for Zanizo that would be used. And again, we'll be exploring this in combination with other agents initially with a PD-1 inhibitor. So we think a HER2 agency that can be used in combination as well as standard of care could be pretty interesting in looking at some of these patient populations. Secondly, we will study also patients in metastatic breast cancer setting in 2 different cohorts. We'll look at a HER2 low population, but we'll also look at a HER2-positive population after progression with T-DXd. So we think those are both interesting areas for us to consider for Zanizo. We have a Phase I dose escalation ongoing in Japan. Beyond that, we'll get going on our Phase II studies this year. We've continued to enroll Phase I patients on monotherapy in this study since our data at ESMO last year, and we'll do a final way to present that during 2023. We think we could be in a registration pathway by end of 2025. We would seek to find an ex U.S. partner to help us with that process based on the data that's being generated from this Phase II. So some great catalyst, I think in the clinical data highlights. I think beyond the efficacy, I think the tolerability profile of Zanizo is what set apart from all of the other HER2 ADCs in development right now. Yes, we did see keratitis in our Phase I study. It's very well characterized as grade 1 or [indiscernible] so it's been very manageable across the trial setting. In grade 1, we just dosed through that as asymptomatic. On grade 2, you'll see some early symptoms of keratitis. We hold the dose, wait till it resolves or goes down to grade 1 and we re-dose at slightly lower dose than the recommended Phase II dose. Then we re-dose it to about 2 mg/kg every 3 weeks, so close to 2.5 mg/kg. We did not see a substantial dose discontinuation in our studies. We see a dose reduction sometimes in patients. We think it's a very manageable tolerability or adverse event. It's really the only significant tolerability factor that we need to manage so far in our clinical studies. We don't see ILD. We don't see neutrophils, neuropathies, neutropenias. We think it really sets it apart from other HER2 ADCs. And we'll continue to manage as we go through the clinical program this keratitis to make sure that we're doing the best for patients and identifying those that might be a risk identifying it quickly, manage those patients. So we can avoid having to interrupt dose or reduce dose going forward. We have a very manageable from a clinical perspective and also our commercial perspective. We look forward to reporting more data on that as we move forward. Beyond that, we also have, as 1 of our elements of enterprise value, a number of legacy partnerships and collaborations, which I think there's 8 or 9 here shown in this slide. They've been a good source of validation for our Asian metric platforms. We have a number of agents in clinical studies. It's also brought in over $180 million in milestones to-date, and we still have an entitlement to model some of the royalties as these continue through the development process. So it's been a great thing for us to work with these collaborators even early on when we did not have our own proprietary programs. As I said now, as we move forward in the company, we'll be working on using our technology platforms for our own benefit and then partnering later as a strategy for commercialization. So with that, I want to thank you. I hope you appreciate that Zymeworks really hard last year to put ourselves in a good financial position, which we are with a very clear and focused R&D strategy of what we want to accomplish from zanidatamab to Zanizo to our earlier-stage pipeline. I think we've really refocused the talent pool around the group of individuals that I think has the capabilities and the opportunities right in front of them to generate a really interesting early-stage oncology portfolio combined of both next-generation ADCs with our TOPO1 payload and also with our thoughts around a trispecific antibody portfolio I think that gives us diversity. And we think as we move forward with this portfolio, we'll build in even more novelty around targets, more now would be around additional elements that we're going to engineer into these structures and hopefully look up to something that can really deal with these difficult to treat cancers, which not for the lack of trying of everyone in this sector, not been able to move long-term overall survival forward, and we need to think about some of these multifunctional therapeutics and more innovative platform as potentially giving us the means to really move clinical benefit in a meaningful way. And that's what we're all about here at Zymeworks. Happy to stop there and answer a question or 2 if there is anything with a couple of minutes available.

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Yes, so the question from the audience was how do you think about the strategy of zanidatamab, the biparatopic HER2 antibody versus the ADC product format with the same antibody backbone? I think what we found is based on the mechanism of action being quite different with those 2 agents. And our mechanism of action manuscript zanidatamab was just published today in Nature Communications is on our website. And that tends to work in a way that's quite different than probably we thought we designed it to get lends itself to certain types of tumors in the HER2 space. And it's no mistake that in BPC and GEA, we've seen some fantastic data and the mechanism probably explains why we're seeing an unusually expectedly positive clinical benefit. And you always like to try to understand that. So I think it's well positioned in the GI space as well as opportunities to expand beyond that and other areas we've seen similar activity. And we'll let Jazz and BeiGene do that part. I think for Zanizo, the ADC construct, which is still the biparatopic ADC. We see that as an interesting ADC to use in combination with other standard of care likely in other areas beyond. We are doing studies in breast cancer in both. But I think when you look at the non-small cell lung cancer, that's going to lend itself, we think, more to an ADC approach. And we think that biparatopic antibody, that's the way we deliver our payload is interesting. And I think being able, because of our tolerability profile, which doesn't overlap with standards of care will allow us to add a checkpoint inhibitor, potentially a standard of care chemotherapy regimen, TKI in a way that's not as easy to do with other ADCs generally and especially in the HER2 space where the tolerability profile doesn't allow it. So I think we'll find that each of them will probably have their own space where they might work best, and they won't overlap. So our strategy to, take a completely different independent approach to those. We have different partnership structures on them. We have clinical plans, which are quite different as you'll see that we've just laid out today. Thank you for the question. I want to thank you all for your time and attention here at Miami Beach hope you enjoy your time down here, and thank you again to Barclays for giving us the opportunity to present our story. And please stay tuned because we're going to make some more progress. So thank you.