Zymeworks Inc. (ZYME) Earnings Call Transcript & Summary

Yes. I think the approach we took with zanidatamab was to find a mechanism of action that was quite different from the nature of the antibody in the binding. So that's why we design this biparatopic or bispecific binding with 2 epitopes. And I don't think we truly understood the differentiated mechanism of action you would see with that against other HER2 antibodies or HER2 ADCs, and we've published that recently. And so I think the way that it works is quite different. And so it's not surprising that when you look in BTC or GEA or other patient populations we studied it, you can find some significant differences in clinical benefit to patients that was not possible with our first generation HER2 agents [Technical Difficulty] T-DM1 has not been seen with some of the other agents in development moving forward. So I think that taught us to really focus on unique and differentiated aspects that might drive mechanism in a different way [Technical Difficulty] seen before. And zanidatamab is certainly that. I think when you look at our top line data in biliary tract cancer patients we got in December, those were amazing results in a patient population that truly needs an improved standard of care. There is no HER2 target therapy in that patient populations. When you see the detailed data coming up at ASCO shortly, I think you'll get a better understanding of how that mechanism relates to the clinical benefit we saw in a patient population that has not seen a benefit from other HER2 agents being applied. Hoping that when we see our top line data from the first-line GEA study next year, we're hoping we can see that also with zanidatamab plus chemotherapy and zanidatamab plus chemotherapy plus BeiGene's tisle added that we'll be able to see the same mechanism in the clinical results for that patient population and go well beyond trials and chemo that's been used as the standard of care.

Absolutely. And then the added benefit of an ADC form with zanidatamab. And how does that fit against, say, a number of the other ones out there in HER2 Kadcyla.

Yes. We think it's interesting. It's the same backbone. So you still get the same biparatopic nature and we think that's important for internalization and other things. We did put out some mechanism of action poster in April at AACR, which you can take a look at for more detail. But I think it's a unique mechanism. I think also what we've seen from zani-zov, our HER2 ADCs, is it has a completely different mechanism of action than Kadcyla or in HER2 in the marketplace right now. And I think the position right now is that I think KOLs appreciate being able to use an ADC in a HER2 patient. But when they progress, which they always do, they're looking for what's next. And I think when they are looking for what's next, they're looking for something that's completely different. They don't want to use a trastuzumab antibody because there might be some concerns about using one after the other. We're starting to see posters being presented about DXd acquired resistance with the lead agents. So they're trying to find a payload that's not DXd or not a topo payload. And again, that was not that payload. And I think the linker strategy we have there was a very stable compound with a low DAR, seems to work extremely well from a tolerability perspective with other agents. And because of the mechanism of action of the auristatin payload with immunogenic cell death, there's some good synergistic action with immunotherapy agents. So we're looking at positioning it as the second choice ADC in a post DXd marketplace, which right now is defined in breast cancer and non-small cell lung cancer. And we're looking at doing that where we can in combination with other agents, in this case, we'll be using PD-1 plus zani-zov in non-small cell lung cancer, HER2 amplified patients, HER2-expressing patients. And we hope that's a really -- it's a really attractive economic opportunity. There's a real pressing need from KOLs to use another ADC sequentially for patients who progress, but use something that's quite different than they've used before to avoid cumulative toxicities to hopefully get a different mechanism on top of patient who's progressed. So I think our positioning there is good. We just need to generate the data to show that, that thesis is correct.

Got you. Maybe just briefly pivoting to the commercial aspect. What was the rationale for the Jazz partnership? And what does it bring to the table?

Yes. I think from our perspective, we think zanidatamab is going to be an excellent drug, and I think we're well on our way for that. We had an existing partnership with BeiGene in the Asia Pacific. I think the company was unsure about whether to take a commercial opportunity themselves or not with zanidatamab. My preference from 35 years is to find a way to take a lead compound, partner with people who can do well commercially, not take on the execution risk, build up a good financial base to build a company. I think if you can be a very productive R&D company, which means doing it more than once, then I think that's the right chance then to try and take a commercial opportunity focused in the U.S. So I think we're quite comfortable with having BeiGene and Jazz market zanidatamab. I won't record a dollar of sales, but we will get a tremendous financial benefit from the success of zanidatamab. And I think the Jazz collaboration we struck last year allows us to not take the commercial risk. Jazz is providing their commercial infrastructure. They're continuing to fund all the future development costs. We had a nice upfront payment last year, which allowed us to give us the balance sheet and the cash runway through 2026 to build a broader R&D portfolio in the company. So I still think that's the right decision. And I think zanidatamab does well. We'll share in the economic success of that with BeiGene and Jazz. And I think we can focus on being a really productive R&D company with these 5 medicines coming forward with moving zani-zov forward. And then we'll have an opportunity to be a commercial biotech company in the future and maybe a way that we're better financed with a better portfolio and we can do it in a different way that hopefully might be more successful in the end. And that's just the [Technical Difficulty] I brought to the CEO job last year.

Makes sense. And then to what extent, and maybe this is somewhat of an overlook dynamic, does the zani data by itself derisk zani-zov?

Yes. I think there are 2 different molecules. They are looking at different indications. So I think there's still work for us to do to get clinical data to prove the thesis we have. Obviously, the experience we have with zanidatamab using the same biparatopic antibody gives us some comfort on that part of the mechanism of the ADC. So I think it does derisk it somewhat. But we're moving in indications, especially non-call cell lung cancer, where zanidatamab is not currently under development. So I think in that context, there's something to learn. Obviously, combination with PD-1 with the auristatin payload. We need to understand how that works in the clinic. We know preclinically, there is a synergistic combination of the dual blockade of HER2 with zani and PD-1. So we want to explore that in clinical studies in the non-small cell lung cancer setting. So to that extent, we haven't done that yet. We've only got monotherapy data on zani-zov. So we need to understand its use in combination with PD-1. We've done that successfully with zani, with chemo and with immunotherapy, but we need to see if that repeats itself with the ADC format of zani.

Makes sense. We are almost out of time, but I did want to ask you. I mean, you have a fairly rich platform and early-stage pipeline. What makes an indication worth pursuing? What's the strategy here? And how do you think about these things with specifically your capabilities?

Yes, we have a chart that we use back in our offices where we have a big circle around the most difficult to treat cancers that we still have today. And that's defined by the lowest 5-year overall survival rates. So the areas where innovation has not transformed life for a patient, that's where we work. So gastric cancer is one of those, biliary tract cancer is one of those, non-small cell lung cancer in the HER2 population is one of those, but pancreatic cancer, where we're going later, ovarian cancer where we're going, triple-negative breast cancer. Those are the areas we specifically want to apply our multifunctional therapeutics and novel biologics to make a difference for those patients. That's our starting point, then it's interesting targets, then it's product format and then it's the real work of getting things to the clinical studies.

Wonderful. We are out of time, but I do want to thank you so much for joining us.

Thanks, Jason. Appreciate it.