Zymeworks Inc. (ZYME) Earnings Call Transcript & Summary

Good afternoon. Thanks for joining us for another session at the 44th JPMorgan Healthcare Conference. I'm Brian Cheng. I'm the senior biotech analyst here at the firm. On stage, we have Zymeworks. I will now pass the mic to their CEO, Kenneth Galbraith, for a short presentation, followed by a live audience Q&A. Ken, welcome back. The stage is yours.

Great. Thanks very much, Brian. Good afternoon, everyone. I'm really pleased to be back here at JPMorgan this year on a Wednesday afternoon. We really had an amazing transformative year for Zymeworks, including the readout of the HERIZON-GEA-01 study for zanidatamab that happened last week. So from Thursday of last JPMorgan to Wednesday of this JPMorgan, we've really just transformed the company and also thought about very carefully how we need to evolve the strategy of the company going forward to build on the success we have so far for just continued success in the company. So I have a very thin slide deck that I'd like to highlight some of the transformations that happened during the past year and maybe some of the highlights of how we're evolving the strategy to make sure we continue to build shareholder value from this point forward in the company and then open it up to questions from Brian or the crowd. So let's do that as quickly as I can for you all this afternoon. Here's our forward-looking statement, I advise you to take a look at that. I will try to make forward-looking statements where I can. So please read our SEC filings related to that. Again, just to think a little bit about Zymeworks about where we find ourselves right now. We definitely, with the value of Ziihera underneath us now as an approved agent, -- and now with the HERIZON-GEA-01 data that came out last week, clearly looking like it's going to be the new standard of care in HER2 overexpressing GA population and replace Herceptin after a dozen years as a standard of care. That's amazing. And we're evolving our strategy to understand how we use that value to our advantage to create even more value for our shareholders in maybe different ways than just going back and trying to discover and invent amazing medicines like zanidatamab in our labs, which we did 10 years ago and bring that to market with partners. We have different ideas about how our future success might be a pathway that's different than what we've done to date. From a people perspective, all the success we've had to date is from the people. So we're really focused on making sure that we have a good group of folks who are really aligned on the strategy that we have with the evolving strategy. We've made some changes recently in the leadership of the company from the Board through the management team over the course of evolving that strategy that started last year and has continued this week. So I'll highlight some of those. For our approach, we have a really interesting thought around the way to create value for our shareholders, which sits somewhere between continuing to be an innovative R&D company, but at least recognizing knowledging the value of the royalties and milestone streams we expect in the future from Ziihera, but also other agents like pasritamig from J&J, which is now in Phase III trials and how that value can be utilized to our advantage at the same time as continuing to be an innovative R&D company. And we think the combination of those 2 things together is a pretty unique framework in biotech, and we think can create a lot of optionality for us in how we think about the future business, the ways we can create value for our shareholders and the long-term nature of what we can now focus on with a strong financial foundation built off the back of an amazing drug, zanidatamab, as you saw last week in the HERIZON-GEA-01 study. Happy to answer questions about that as we move forward. I have to have some numbers in the presentation. Again, we've been at this for quite a while. zanidatamab was a 10-year success story, not overnight, of a great invention made in our labs in Vancouver, which has moved forward now to approvals in second-line biliary tract cancer, but more excitingly, a larger patient population as shown by the data last week, which now Jazz and BeOne will put in front of regulators on a global basis. So really excited. We're not new at this. We have an amazing proficiency in technology platforms to design complex biologics, whether it's antibody drug conjugates or multi-specific antibody therapeutics. And when we think about that, we think about something that's more than a bispecific. So we're not new at this. We've shown our ability as protein engineers to build amazing medicines like zanidatamab. I think pasritamig is going to be another one of those. We're excited to do that. We do this on a global basis. And we do this in conjunction with strategic partners who have the ability to move these innovations forward to market in a way that maybe we can't do on our own, but we're still able to capture a lot of that financial value from that success for our own shareholders. We think right now, we've proven kind of the execution of how to conduct partnering in the context of a very important molecule. We brought Jazz Pharmaceuticals on as a partner back in 2022 to go along with BeOne, our partner in Asia Pacific. I think that was very important to bring along somebody who had deeper pockets financially than we did to provide capital at lower cost of capital, had some development capabilities that were even beyond our own approach and the ability to tackle something that was probably a much higher peak sales potential product than maybe we realized when we invented it. At the same time, we're able to capture not only just capital upfront to run our business, but keep a nice share of the success in zanidatamab along the way. So we feel we're actually really sharing financial and success that Jazz and BeOne as our partners are experiencing. And this value has grown significantly from 2022 to today because of advancement of the product closer to the market, but also the realization this might be a higher peak sales potential opportunity that maybe we realized back in 2022 when we started this. So that value appreciation has finally started to come through in our listed stock price. It doesn't come all at once. And we're going to continue to look at the value that's going to appreciate from zanidatamab continuing to be successful and other agents coming along behind that. So we think its financial foundation gives us just a different way to think about our business that might be longer term in nature than a traditional biotech, a little bit less worried about having a cash flow issue than maybe having an excess cash flow issue, and that's really what we think is why we think about evolving the strategy further from there. Just an example, we don't give our own guidance around sales estimates. That's not what we do. We'll leave that to Jazz and BeOne to do that. But if you just look at Wall Street consensus, analyst estimates from back at kind of close to the end of 2022, when we completed the Jazz partnership to today, you can see that not only we're much closer to the market with zanidatamab, but the potential of that due to the clinical studies that we're conducting and looking at the competitive environment is getting much better. And we do expect and hope that this will continue not just with the HERIZON-GEA-01 data and the potential to help patients in GEA. There's obviously a number of other clinical studies being undertaken by Jazz and BeOne, which we hope will find other settings for zanidatamab to be useful for patients and provide a clinically meaningful benefit to them. And we think this is only going to get better and better over time. And we're sharing that success with every increased dollar in peak sales, where every time we get closer to that peak sales potential, we see that value run through our business, and hopefully, it does run through our stock price every once in a while in this marketplace. Beyond that, we're just not a one potential cash flow stream from zanidatamab. We have a number of other legacy deals that are moving forward. The most significant one is pasritamig, which is the KLK2 T-cell engager that J&J made on our Azymetric platform. We have a financial stake in that because of that. That's advanced really rapidly from not knowing anything about that target to seeing great Phase I data at ASCO to be now putting right into Phase III and having J&J I think that could be a $1 billion to $5 billion peak sales opportunity for them in their prostate cancer franchise. I hope that's not the last one to come out of these legacy partnership deals. A number of other these are really right at the stage where KLK2 was 18 months ago. So we think it just adds to the future cash flow stream of milestones and royalties we expect to have in the company. We're not afraid to hold those longer term. There's a lot of value in holding those through key development events to get to peak sales. So we're going to hold on to those and get that value attributed back to our shareholders and run the business realizing. We start to look like a big royalty portfolio inside an innovative biotech. That's okay because that could be a very valuable construct for the way we think about running the business. Different ways and pathways to return and compound value for our shareholders. So I think we found ourselves last week exactly where every biotech wants to be, presentation of a large randomized global study where it looks like the agent you invented 10 years ago is going to be the standard of care in a meaningful population with a peak sales potential that's very significant for us. It's where we all want to be, but very few biotechs get to that point. Sometimes on biotech, that's the only success you might have. From our perspective, we think we can compound this one success in the multiple successes, but we need to do it in a slightly altered strategy. So not trying to do it in exactly the same way by handing capital back to the same scientists, the same lab bench with the same platforms, hoping to do it exactly the same way. So replicating that success is not always proven to be something you could depend upon. So giving ourselves more opportunities to be successful in the future by developing agents that maybe we didn't invent. We've never done that before. So maybe accessing a product outside our organization, bringing it in using our development capabilities, using our BD capabilities to bring it at a certain price, develop it and move forward. Everything we've done so far, we've invented, we've developed, we've partnered. It doesn't always have to be that way in the future strategy. We're still investing in internal R&D. We'll supplement that with working on products we can access outside the company. In addition to that, we have a really valuable royalty stream from zanidatamab. We hope we have that from pasritamig. Those royalty streams can become much more valuable if they're surrounded by something that looks like a royalty portfolio. That's what additional royalty company would do. So not only can we access products that are unpartnered that we can work on that we didn't invent. We can access products that we didn't invent or didn't partnered, but from a business development standpoint, maybe attribute value to that over time beyond the person who holds that right now. So we have multiple pathways to compound the success we have right now to more success in value and eventually always return that to shareholders over time. Partnering is a big part of it. Always has been. It always has been in biotech since I've been here for 38 years. It's how we get value out of scientific innovation sometimes. And if you structure those partnerships at the right time in the right way, you can get your fair share of value without having to go from being an R&D company to then be a commercial entity. So we have a very valuable construct right now without requiring a sales force to commercialize our innovations that we make inside the company. That can be a valuable construct. It doesn't mean we won't ever do it. But right now, the most valuable way for us to build the company is to focus on using partners to move scientists forward sometimes with their capital, with their development capabilities, with their commercial forces and make sure we share that success in a fair way. So partnering will always be a part of what we do. Zanidetumab is partnered. We have legacy assets the last 3 years, we built a wholly-owned portfolio of really exciting clinical and preclinical assets across a broad spectrum of antibody drug conjugates and multispecific antibodies. That's wholly-owned by us right now, gives us a lot of optionality about how we integrate partnerships in that to get value. We'll always keep unencumbered assets in our R&D portfolio, but we have the time frame to go from being 100% wholly-owned to being maybe a little bit less than 100% wholly-owned and that's what we're starting to execute on this year. Operating from a very strong financial position. Obviously, with the cash we have now and the financing availability for us, especially the milestones that will come in from Jazz and BeOne on eventual GA approval, which we do have to wait for to receive. We think our cash runway runs beyond 2028 at least. And from our standpoint, cash runway may become irrelevant very soon for us as we'll have an excess cash flow problem as opposed to worrying about cash flow, which is traditionally how we run biotech company. So a very privileged position, got to use that strong financial position to our advantage. R&D outlook, we are at the heart, scientific innovators, that will never change. Having a good business strategy, financial plan is really relevant. But without innovations like making zenadatimab, having a Azymetric platform to make things like pasritamig, plus other things we have in our wholly-owned portfolio. It's everything to us, surround it with the right business and financial construct is important to get the value out of it. But we are, at our heart, innovators. We think we're great [ protein ] engineers. We think we've shown that so far with the agents that are now advancing and that will never stop. That will always continue. Generally continues some on our own, some with partners, that will continue as a strategy as well. So we end up with this differentiated pipeline of assets that we have right now, different stages, again, all wholly-owned right now, except for zanidatamab on the legacy programs, really excited. We're already adding to this. So I think you'll see some scientific presentations this year which you'll clearly indicate, we're continuing to innovate, hopefully, at the front edge. I mean don't forget, zanidatamab is really the only biparatopic or bispecific HER2 antibody in the HER2 space. No one else has been able to duplicate our efforts. It's clearly differentiated. And for this past 10 years, we've been working on it. We haven't seen people try to do exactly the same thing, maybe it's too complicated, maybe Azymetric is really special and only our platform can design something that provides the meaningful clinical benefit you saw last week at the Moscone Center when comparing zanidatamab to Herceptin, the standard of care. We'll continue to search for differentiated areas using our own platforms and our own way of thinking about discovery and drug development. So really transformative last year, for the company. I tend to, hopefully, Brian, be back here next year presenting maybe on a Tuesday and talk about the scope and scale of how we're going to transform the company this year. So we have an evolving strategy, a great financial position. We do not intend to waste that. It's very important for us to compound one success in biotech with multiple successes. So you will hopefully see when I come back here next year, execution in every element of the strategy, so you understand the scope and shape of what we're trying to accomplish, that's different than maybe what we had last year as a strategy, really looking forward to reporting that and hopefully exceeding doing what we did last week with zanidatamab results, just exceed expectations. And that's really important to us. I have the team to do that. I have the capital to do that. I have the substrative R&D efforts to do that and the partnerships to do that, and we look forward to reporting that next year. Thank you. Happy to take questions.

Great. Let's start with the Q&A. For those who are in the audience, if you have any questions, feel free to raise your hand for those joining us virtually, you can also submit questions on the portal. So I want to start off with more of the broader strategy question. When you think about directionally moving forward with a royalty-driven model, how do you balance self-sustainability and also building out the pipeline? Is being self-sustainable important? And also just how do you really think about risk tolerance?

Yes. And again, I would -- like I wouldn't describe this as royalty driven, although that probably comes from our communications. So probably [indiscernible]. But there's nothing wrong with a large royalty and a successful product, which grows over time, provides a great amount of financial independence from equity capital markets or partnering other sources that we usually build biotech companies with. I think what we're trying to get to with the evolving strategy is, everyone is so focused on making one success in a biotech company over their career lifetime. We're at that point. Making that first success is really difficult. We know that 1% probability of discovering a compound and having it get to market. So we've been able to fortunately do that some way, somehow over time, do that. Now when we think about what do you do next in combining -- compounding success, doing it exactly the same way is no guarantee that those odds are going to improve for you. So we've decided to take a different path than maybe thinking about monetizing the royalty and selling that off and not wanting to hold those and just focus back on the core business of being great scientific innovators. We think by holding those royalty streams and milestone entitlements for a long term, that's the best way to get the value out of them for our shareholders. It can be a source of capital to either return to shareholders or fund something. It's the lowest cost of capital we can get to run a biotech. So why would we split it apart? Why we monetize this point for a much bigger discount? So we'll be scientific innovators, and we'll focus on holding those royalty streams in longer term and trying to enhance both parts of that business. We don't need to choose between being an R&D company or having a commercial interest. And that's really the way we think about the royalties and milestones. I think combining those 2 opens up all sorts of possibilities of how you build value for shareholders. And it's more limiting to think about just being nothing against being a royalty company, but a royalty company or being an innovative biotech. We think they work together really well in constructs. And I think we found a strategy where we can make that work for our shareholders and ourselves and how we build this business and have multiple chances to be successful in the future. Could be innovation, could be from business development practice when we think about the royalty or accessing external products.

Any questions from the audience?

Quick question. So how do you see the competition from trastuzumab deruxtecan or the opportunity, for example, you see trial -- head-to-head trial in HER2 breast cancer versus trastuzumab deruxtecan?

Yes. Good question. This is the 4-year anniversary of me becoming the CEO of Zymeworks I can't believe it. But it's 4 years in. I think 4 years ago, when I assessed zanidatamab, I was probably much more concerned about competition back 4 years ago. What we were facing there in the GA population itself was Merck adding pembro to tras chemo potentially being the standard of care in this patient population in a way that we couldn't beat. And at that point, T-DXd looked like it was going to be the first-line treatment for every patient who had HER2 expression, whether it was HER2 high or HER2 lower HER2 nulls. And that was something that we probably worried a lot about in 2022. We weren't really ahead of those people. We were kind of at the same place as T-DXd and behind Merck. If you fast forward to today, the outcome of Merck study and pembro tras chemo and KEYNOTE-811 did not satisfy all the needs of replacing Herceptin was something that would push innovation. Yes, it would label for some part of the population, improved care, but not in a way that we couldn't get there with zanidatamab, we thought. T-DXd is approved in second line GEA, if you think about that indication. So it's very useful second-line treatment. They have struggled to find combinations in first line to move ahead with that took longer. So now their Phase IIIs are reading out much later maybe than ours are. They have 2 Phase IIIs going with different combinations. One is still projected to read out to 2028. And the other one last week at ACCO GI move back from 2028 to 2030. So still competitive threats. Unfortunately, for patients with GEA, they are not a host of innovations on the HERIZON to do what I think we did last week with the zanidatamab results where we just provided a new benchmark for the standard of care in that patient population. If it lasts for 12 years, the way that Herceptin was a standard of care that no one could beat that, that would be great. So I think in GEA, the competitive environment is a lot more in favor of zanidatamab now, partly because of the data we generated because we need to be providing the best numbers for PFS and OS, which we saw last week. And our competitors haven't been as successful as we may have thought, even though we're ahead of us. And everywhere we go, we see Merck and AZ and wonder how you can meet them. I think looking at other indications in the HER2 space for zanidatamab. Obviously, T-DXd plus PERJETA is the first-line standard of care in metastatic breast cancer. I'm not sure who beats that with anything, but we don't have to be the first-line agent to do -- to find a setting there that's really attractive. And so obviously, Jazz started the EmpowHER-303 study looking at utilizing zani plus chemo versus tras plus chemo in [indiscernible] HER2 patient population, that's really interesting for us. We think we now have a randomized study result in a large population where zani shown to be a superior HER2-targeted agent to tras. Hopefully, we can repeat that in other tumor types. We have some thoughts that we may be able to, a little bit more confidence given the fact we have one positive clinical trial, but we'll have to wait for that trial reads out. Fortunately, that study, as Jazz indicated this week, is going to read out sooner than we had originally intended. So I think from a competitive standpoint, we're actually in a much better position than maybe we got credit for back in 2022 and maybe that's why the peak sales potential was lower, as I indicated consensus. Maybe it's why we're trading at $5 a share because we were trying to out maneuver, Merck and AstraZeneca first by ourselves with just BeOne, but then with Jazz's help, we've been able to transform and get a much better competitive position 4 years later. I always worry about Merck and AZ and others. But I think our position with the power of zanidatamab as illustrated by the clinical data last week, puts us in a really strong position, not just in GA, but I think overall with HER2-expressing -- other HER2-expressing tumor types.

I think I saw a question on this side. So maybe just while we're on zani. I'm curious, what's your take on the performance of the triplet compared to doublets? Are you surprised by the PFS difference. And just any explanation that you see that could attribute to the difference that we saw?

Yes. I mean, I mean obviously, the data was presented, there's lots of KOLs who provided that advice. I mean, from our perspective, when you unblind a large randomized study like that, you're always going to find things that are surprising based on the evidence that you had in preclinical and clinical data. Sometimes, unfortunately, those differences turn out to be better for patients. And that's certainly what we thought when we saw that data, I mean I think the clarity in the data set and how we designed that study was pretty evident. I certainly believe that we support the statement that zanidatamab is a better HER2-targeted agent than trastuzumab in that patient population and PD-1 expression does not change that. It's not relevant for making that statement. Certainly felt that if you look at the comparison of the triplet to the doublet. And again, this was a 3-arm study where the purpose was not to compare the doublet to the triplet, but you can certainly see the evidence of contribution of tisle makes to the doublet. You may not see the median PFS, certainly see it in median OS because the triplet was [indiscernible] already and the doublet is not yet. So it's obviously a more powerful result. The median DOR, you definitely saw that in the doublet, the median DOR was 14 months. KEYNOTE-811 regimen was 11 months or certainly better than that. The triplet median DOR was almost 21 months. That's unheard of in this patient population, never seen before. That's an extra 7 months between the doublet and triplet if we were allowed to compare them, which is not -- we don't do statistically, but we can't ignore that. If you look at the 24-month PFS, there's a benefit of tisle in that over the doublet. Look at the 30-month OS, there's a benefit of adding tisle on top of that zani chemo regardless of PD-1 expression all the way through. So there's certainly something about zani that seems to be superior to trastuzumab in this patient population. There's certainly something about the combination of tisley and zani that gets you an extra benefit over just using zani with chemo. Sometimes that benefits beyond the median or beyond the regulatory endpoint, but it's there and it's very evident physicians who will be looking at that and how they apply zani to their patient population. So I think the data clearly shows the benefit. And again, it's up to regulators to decide what that means for labeled indication around the world, and it's up to physician groups, including NCCN in the U.S. to decide what advice they're going to give to physicians about how to incorporate zani into the current algorithm for treating first-line GEA.

I guess just to kind of -- I don't know if you can comment on how we think about patients who are PD-1 positive versus negative in this GA setting where -- do you think that physicians will pick doublet or triplet in dose who are PD-L1 expressing, what is the consideration here since they've been using KEYNOTE-811 tripled for some time?

Yes. Good question. I mean, I think the data clearly shows that zani is a superior HER2-targeted agent in GA population over trastuzumab. That's what we think the data supports. Obviously, there's a regulatory process underway and physicians have to make their decisions, too. But it clearly supports that, whether it's in the doublet or the triplet, that's what you should be using in a regimen. The contribution of components of tisle is very clear in the data and I think very significant increments. I think physicians can use that to make their information. On the PD-1 expression, we always believed, and this was true before the KEYNOTE-811 result, that PD-1 expression wasn't relevant for a HER2-targeted agent like zani to get a positive result in a patient that you could do that regardless of PD-1 expression. It was always our belief. That's why we designed the study the way we did. We didn't stratify for PD-1 expression. That's the way it was when Herceptin was approved and used. It's used across the levels of PD-1 expression. If you look at first-line biliary tract cancer treatment, it's PD-1 plus GemCis regardless of PD-1 expression. It was the labeling of KEYNOTE-811 regimen of pembro tras chemo that caused this thought that there had to be 2 different populations. We felt that didn't matter to get a benefit for zani. The data certainly confirms that. What it also confirms is that the combination of zani plus tisle gets you a benefit regardless of PD-1 expression as well. And that was certainly evident in the median OS, where the median OS was consistent regardless of PD-1 expression, whether you're positive or negative. So we had a belief about that. We ran the study that way. I know that's contrary to the last thing that got labeled. It doesn't mean that's the way the population exists. So maybe with a tras regimen, there's a difference in PD-1 expression, you need to treat it differently. Maybe with the combination of tisle and zani or zani on its own, it doesn't matter because it is a different mechanism. It's a unique molecule. So I think it's going to cause some rethinking around physicians and regulators about interpreting the results of zani, tisle and the HERIZON-GEA-01 study and understanding how that should be supported. The data supports the labeling that I know Jazz and BeOne are going to claim. And so maybe we're right, maybe PD-1 doesn't matter, but only matters with the regimen tested in KEYNOTE-811. But shouldn't matter to -- didn't matter to tras, it doesn't matter as zani. So we just have to wait out the regulatory processes and those physician recommendations.

Maybe just going back to the royalty question. You spoke about potentially finding other royalty stream as well. Just kind of layering on top of this royalty stream that can come from zani. And also, hopefully, your J&J partnership works out, you also layer on top and another royalty stream, right? So how urgent do you see yourself in identifying another royalty transaction. And monetizing royalty has been one of the go-to vehicle for a lot of the biotech in -- specifically in the recent years. So maybe just can you also talk about how your approach is different compared to what others have done and perhaps also the difficulty in finding a transaction in these days.

Yes. No, good question. And again, we're not adverse to monetizing a royalty eventually. It's just as of today, I don't believe we can get a fair value from a monetization traction where we see the fair value of Zani. And our forecast of what we think the fair value of Zani, is to us and the risk-adjusted NPV of future milestone royalties is higher today than it was a week ago. not only for GEA, but increased confidence that maybe there's other HER2-expressing tumors that zani could become the standard of care or a great second-line choice. And so we think that's higher. So I'm quite happy to sell the royalty milestones for zani to someone if I get paid more than fair value. I just don't think I'll get that. So we're always open to it. So until that time exists, we want to hold on to it. If we want to hold on to, we want to manage it. So that zani royalty is a really high-quality license that I know royalty monetization players like to have. It doesn't mean I can't hold it and get that value for my shareholders. If pasritamig can go from Phase III studies now through approval, and be the agent that J&J thinks it can be, that's another high-quality royalty. If I can find other situations like that, where I can bring those high-quality royalties in, I'll do that. I'll do it in a different way. I mean, it's not that holding the royalty of zani was not without risk. I mean we just lived through the unblinding of a fairly significant global study in HERIZON-GEA-01, which unlocked a lot of value for us from the future royalties and milestones. I didn't pass that risk off to my partners. I held that risk. I mean we did not sell zani outright in 2022 to any party. We held onto it and held on to royalties and milestones to earn future success. But we had to live through completing a Phase III study and looking at the result and realizing why this worked out. This is worth a lot more. So the appreciation and value that we got from zani was because we're willing to hold it through a key development risk. That's what we do is biotech. It's not uncomfortable for us. And as long as we have a good upside in those royalties and milestones, that's worthwhile. I'm going to do the same thing with pasritamig. I'm going to hold that through the promise of, hopefully, multiple Phase IIIs reading out and the promise that, that delivers something to J&J's prostate cancer franchise that maybe is at the high end of their level or maybe is above their peak sales potential. And I'll get that appreciation and value eventually once I get through those events. So we're quite happy with that. We're quite happy finding quality development stage assets, getting them at a good price, holding them through a key inflection risk and getting the benefit on the other side. We've already done it. So what we do in biotech, it's not uncomfortable. It's very uncomfortable for traditional royalty monetization players who think more from a financial perspective and are interested in paying for something where there's commercial risk, but maybe not development risk. So very few of those players will look at those development stage assets. So we think the types of things we're interested in will be things that there's not the same ready market as there might be for something like a zani, it just has to be a high-quality asset that looks like it has the potential of Zani and pasritamig. And so we need to find those. And they're out there. And they might have more value for us in our portfolio construct than they are sitting in a biotech company who can't use it to finance anything. It's just sitting there waiting for it to mature. It's probably not a part of their strategy. I'm going to hold on to my royalty streams longer term, so I can hold on to others. Pay a fair price but hold on and get that value attributed to me. So I think there's a way that we can unlock some of the value of those things that are sitting maybe in biotechs or other institutions and I can put them on my balance sheet because that's what I'm willing to do.

So in other words, you're willing to take the developmental risk, yes, then -- the more so than the more old-fashioned royalty companies. And yes, let's say leave it at that. So maybe just turning to folate receptor alpha ADC. What's the next step there? And what do you want to see?

Yes. Well, I mean, our first clinical data announcement we made at ENA last October showed that's potentially best in class. So we've collected more data since then. We're continuing to collect data. The full dose escalations is done. We're in dose optimization. I'd love to have that data confirm to me that we're still potentially best-in-class or I'd like to be probably best-in-class from potentially. So we need to wait to see that data just to make sure that we properly characterize tolerability and that the activity that we saw early on can be confirmed with more patients and more mature data. We're really excited about that aspect. We did guide that you'll likely see more data on that program in 2026. We didn't say when, we didn't say what conference because that's just the way we operate. But I think you'll see more data, hopefully confirming the promise that, that could be the best one. It's not the first one, but it could be the best one. And then from our standpoint, that sounds great. But we're behind 5 or 6 other people and we need to catch up, and that's hard to do as a biotech yourself. It's not just a question of capital, but it's a question of also having resources to move quickly to catch up. And catching up will create more value from that product. So I think we're interested to see that data, confirm the potential. If there's somebody would like to join us as a partner and pay us fair value and give us upside because we do cherish royalties and milestones in the future not just upfront cash because I have an excess cash flow problem already. So happy to look at those opportunities where a partner could help us move something forward and faster in a broader way ourselves. Zani is a much more valuable construct to us in royalties and milestones because of our partnership with Jazz. So there's nothing wrong with that, but we'll look at that. I think if we were ahead, so maybe ZW251 was our GPC3 ADC, where we just started in Phase 1, there's no one ahead of us. So you think about mirvetuximab being the first ADC put into gynecological cancer treatment, we could be the first 1 that could be applicable to patients with HCC. That's a little different in terms of thinking about that. But again, we need data need to understand if what we saw with 191 translates in a different tumor type and a different target antigen [indiscernible] GPC3, but that might be a different situation. But also if you have best-in-class you'd be first-in-class, you get paid a lot more for those if you do partners. I'm sure we have optionality over deciding if we take value for that or if we think we keep that for us all as longer.

And maybe just turning to maybe 2-part question. One is just how do we think about the first potentially for GPC3 ADC? And then for the IL-4 receptor alpha and also the IL-33 bispecific. Also the same question. When and what could we see from the first Phase I?

Yes. I think with 251, we already know that our payload is very active. We already know from ZW191 that we're able to achieve very high doses of ADCs well beyond what others have been able to achieve in a [indiscernible] format. So I think we'll learn in 251 that hopefully, the payload activity is very similar. But I think we know that already. So I think what we're hoping to find from 251 that's different is that, that payload in a different tumor type can be effective and no ADC has been effective in HCC so far. So that's important for us. We obviously think first-line setting is the best way to help patients. So obviously, future combinations with A+B as standard of care is what we look to do is, add the ability for a TOPO payload to be applied in those patient populations. So Hopefully, we'll see that data. Whether we see it this year or not, we won't guide. If we see it, we'll share it. Certainly, I think for the IL-4 receptor, IL-33, This, again, is a first-in-class opportunity for us to find something that builds on what Dupixent has already brought to things like COPD and asthma by being approved. So that's a really interesting thing for us to think about whether you see in the power of a bispecific something more than the additive nature of putting those 2 things together. Certainly, what we saw in zani, it's not tras and and PERJETA in a single instrument. It's a unique biology, unique mechanism. We'd like to try to prove that in another indication, another setting. And so that that's really interesting for us to think that, that could be another opportunity for maybe the first bispecific in that space now that we have biologics available in COPD and asthma. see any data for that in 2026, and we just have to wait to see what the time line is to guide that. Again, that's a quicker Phase I using an oncology, too. So that's something where being an autoimmune has some advantages.

Great. Any questions from the audience?

Do you see any ADC development from zani?

Yes. The Question was, will we see an ADC format of zani? We did have 1 in development a few years ago. Unfortunately, we were using an older payload, an auristatin payload and that really held us back. So we've never constructed a TOPO payload version of zani. It's something that we can talk and think about with our partners, obviously, if we wanted to do that. I think one of the things that led us back to zanidatamab even back then was that we felt that being different by being the only bispecific antibody in the space had some uniqueness rather than doing whatever else did, which was -- and we tried to do, which is build an ADC to try to compete with in HER2 or be the second ADC of choice. Being quite different and unique as a product modality in this space where everything looks like an ADC in development but we don't, and there's not any others of us, that's a really interesting proposition for us. So we do look for those opportunities. It's like in HCC, where there aren't any ADCs used. So we think maybe developing ADCC might be more beneficial than CAR-T, radioligand, T cell engager because I think in combination with A+B or PD-1 VEGF, that's really interesting, and that's what's needed. So if we're the only ADC being developed in that space, that's different and you have to have the idea that maybe you're right and hold on to be right. We certainly feel like we're right with developing zani as a bispecific antibody rather than turning it into a payload and an ADC.

Well, that's all the time we have. Thank you so much for your time and looking forward to hopefully seeing you on Tuesday next year.

Thank you, everyone.