Q3 2023 Zymeworks Inc Earnings Call
Yeah.
Good day and thank you for standing by welcome to design works third quarter 2023 results conference call.
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First Speaker day Snow and then mountain our director of Investor Relations. Please go ahead.
Yeah.
Thank you operator.
Good afternoon, everyone. My name is for now and I'm, just sort of Investor relations here at nine months.
And I'd like to wake, but can we trust third quarter 2023 results conference call.
Thank you.
To begin I'd like to remind you that we will be making a number of forward looking statements. During this call.
And without limitation those forward looking statements I can just on your presentation slides.
To accompany our commentary.
Forward looking statements are based upon our current expectations and various assumptions.
Subject to the usual risks uncertainties associated with the companies in our industry and developed.
Development.
A discussion of these risks and uncertainties, let's say each of our latest SEC filings found on our website and filed with the.
C C.
In a moment I'll hand over to Christian <unk>, Senior Vice President and Chief Financial Officer, who will be discussing our financial results, including certain non-GAAP measures.
A description of non-GAAP measures and a reconciliation to the most directly comparable financial measures determined in accordance with GAAP.
And teach out in our press release, which is available on our website at Www just sound like Bill Com under the Investor Relations tab.
Following a discussion of our financial results just a pool Moore, our chief Scientific officer, which was early stage pipeline and introduce Andre just R&D candidates that W. 251.
Central first in class ADC molecule designed for the treatment of classic country or G. P. C suite expressing the protection that's in a study of the carcinoma or hate to see.
At the end of the call, Chris and Paul will be joined by Chair and Chief Executive Officer, Ken Galbraith with Q&A.
As a reminder, the audio and slides from this call will also be available on Amazon less upset like state.
Oh, now hand over to Chris <unk>, Senior Vice President and Chief Financial Officer.
Thanks for now and thank you everyone for joining us today Cross third quarter 2023 earnings call.
With that I will begin today's call with an overview of our financial results.
This afternoon I much reported financial results for the three.
And nine months ended September 32023.
For the nine months ended September 32023, <unk> net loss was $104 2 million.
$1 53.
Sure.
Our net loss of $185 1 million for the same period in 2022.
The decrease in net loss of 44% was primarily due to revenue from our collaboration agreement with jazz.
At an increase in interest income as well as a decrease in research and development expense.
This was partially offset by an increase in general and administrative expense and an increase in income tax expense.
Revenue for the nine months ended September 32023 was $59 1 million compared to $10 million at the same period in 2022.
Revenue for the nine months ended September 30 of 2023 included $56 $3 million of development support and drug supply revenue from jazz and.
$2 8 million for research support and other payments from our partners.
Revenue for the same period in 2022 included a $5 million.
Research license fee.
Check out licensing agreement and $5 million from our partners, our research support and other payments.
Research and development expenses for the nine months ended September 32000, 2030, or $118 1 million compared to $155 6 million for the same period in 2022.
Excluding stock based compensation and 2022 restructuring expense research and development expense decreased on a non-GAAP basis by $31 4 million in the nine months ended September 30th 2023.
Impaired to the same period in 2022.
This decrease was primarily due to a decrease in expenses does that and at that time as a result.
This program to jazz during the three months ended June 32023.
Transfer agreements on.
In the amended jazz collaboration agreement.
This decrease compared to the same period in 2022 was partially offset by an increase in preclinical expenses, primarily with respect to preclinical product candidates zew on Sept, mum and CW 191.
In addition, salaries and benefits expense decreased compared to the same period in 2020 due to lower head count in 2023.
For the nine months ended September 32023, general and administrative expenses were $55 6 million.
Compared to $43 2 million for the same period in 2022.
Excluding stock based compensation in 2022 restructuring expenses.
General and administrative expense increased on a non-GAAP basis by $9 9 million in the nine months ended September 30th 2023 compared to the same period in 2022.
This increase was primarily due to an increase in expenses for professional services and other expenses related to higher depreciation on facilities and higher technology expenses in 2023 compared to the same period in 2022.
This was partially offset by a decrease in salaries and benefits expenses compared to the same period in 2022 due to lower head count in 2023.
Overall, our total employee head count has been reduced by approximately 45% over the past 21 months from 455 full time employees as of December 31st 2021 to 252 full time employees as of September 30th 2023.
Our cash resources, consisting of cash cash equivalents and marketable securities.
$390 2 million as of September 32023, and net reduction of $102 million from December 31, 2022.
For the nine months ended September 32023, our cash used in operations was negatively impacted by working capital movements, primarily due to high levels of receivables, which we expect to partially reverse by the end of 2023.
As of September 30 of 2023, we have approximately $64 3 million and receivables from jazz, reflecting reimbursement presented that sum up development costs, which we expect to be reimbursed subsequent to the end of the third quarter.
Moving forward the accounting for our jazz collaboration should be simplified given that the majority of that that's mob development expenses will be incurred directly by Jos.
Any continued on the desktop development expenses incurred by us and reimbursed by jazz will be reflected as a reduction in operating expenses rather than collaboration revenue.
We continue to expect further development support and drug supply payments from jazz, which will continue to be reported as collaboration revenue.
Due to the transfer of a significant number of our employees dedicated to zone that thats about development to jazz.
We recently decided to vacate our existing long term leased Seattle office location and have secured a fit for purpose office facility on a short term financially attractive lease arrangement and Bellevue. So accommodate all remaining SaaS based workforce <unk>.
A majority of the financial impact related to this decision was reflected in our Q3 financial results.
With the continued focus on the balance sheet and the significant transformative impacts of the non diluted in place from a licensing and collaboration agreements with Janssen Beijing. We continue to expect to have cash resources to fund planned operations through at least the end of 2026 and potentially beyond.
As of November six 2023, we had approximately 17 million shares of common stock outstanding with all previously issued pre funded warrants exercised.
For additional details on our quarterly and nine months ended results and for a description of our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures.
Encourage you to review our earnings release, and other SEC filings available on our website at Www Dot <unk> Dot com.
With that I'd like to hand over to our Chief Scientific Officer, Dr. Paul Moore, Who's going to talk about recent data Readouts are early.
Early stage pipeline and our latest IMD, Canada CWT five one over to you Paul.
Sure.
Thank you Chris.
Before I move on to our early stage programs I'd like to spend a few minutes.
Talking about data highlights from this quarter on our lead candidate and he's done a data shown here on this slide.
Data presented by our partners Jonathan Beijing.
European Society for medical Medical Oncology annual Congress highlight is on a data mobs continued efficacy and tolerability.
Two abstracts were presented.
First describe clinical results from the ongoing global open label Phase <unk> study presented data them up plus chemo.
Look on anti PD, one monoclonal antibody for first line treatment of her two positive gastric or gastroesophageal junction adenocarcinoma.
And overall response rate exceeding 75%. This study resulted in encouraging data for the triplet regimen with a median duration of response of $22 eight months on a median progression free survival of $16 seven months.
The second abstract described quality of life outcomes from the phase <unk> Horizon, PTC, one studies evaluating patients with <unk>.
<unk> treated her two positive biliary tract cancers and patients, but essentially confirmed hurt you amplified tumors.
We previously reported data from this phase <unk> study presented them up as monotherapy in this patient population at a confirmed overall response rate of 41, 3% and 51, 6% in the each HCP plus patients as well as a median progression free survival of five five months.
As we continue to monitor other development stage candidate.
Sure.
We have yet to see data reported enforce late gea patients comparable to the phase III data presented data him up on chemo with or without a PD one inhibitor.
We believe this differentiated mechanism of action from our Bispecific <unk> antibody that it did them up is responsible for the encouraging and durable patient responses. We have seen in our <unk> study conducted to date.
Having reviewed the current results from other development candidates, including those presented at ESMO, We believe that the potential for positive outcomes from horizon, GE or one could dramatically change the standard of care for <unk> patients in first line setting.
In life data seen Crowe.
The element other development candidates, we see the potential for clinically meaningful benefit from both for both PDL, one positive and PD lone negative patients in our study with the potential for additional clinical benefit is seen in our recent phase II study in patients with high PD Lone scores.
We believe that <unk> tolerability profile allows for combination with other regions, including chemotherapy and immuno oncology agents that may help achieve patient responses not achievable with monotherapy approaches.
As I said, both Don and data presentations at ESMO provides continued positive efficacy safety and Tolerability data horizontal data him up Houston, both GE and BTC.
Some of the current randomized study is basically anticipated among kols in the GI community and we look forward to that top line pivotal data in 2024.
I'd like to know turn to the next slide and talk a little bit about our R&D focus for our preclinical programs.
Which you probably heard us refer to other five by five pipeline.
The idea behind US starting in 2022 was the nominee and initiate clinical trials in five new molecules by 2027.
Today I'm pleased to announce the nomination of our fourth candidate.
VW 251, which I will discuss in more detail shortly.
Overall, we are very pleased with the speed at which our team has been able to identify opportunity targets and develop <unk>.
<unk> candidates something achieved thus far ahead of our own expectations for the fourth force laws and we hope to nominate the final ANP candidate or a five by five pipeline during 2024.
To reach this goal we begin.
Using an integrated internal R&D engine for both antibody drug conjugates for Bdcs and multi specifics technologies.
Technologies, we believe we will continue to be extremely valuable for us in the long term.
Let me do this.
With a commercial focus are going what kind of target product profile will support a substantial increase in the standard of care for patients and commercially attractive markets, especially in the U S.
It will become a commercial company.
Essentially our approach is quite straightforward, we select difficult to treat cancers valid.
Validated targets appears of targets, while most cancers, we have a range of technologies available to us internally to decide which product with all of you to pursue and hope this is dangerous.
The result of those platforms as either.
Innovative antibody conjugate as you'll see with our latest AMD candidate that W $2, one or an innovative multi specific antibody.
As I mentioned, our candidates must meet with a very rigorous R&D and commercial business case before we begin development.
Teams look at each aspect of the candidates potential which includes development complexity.
<unk> opportunity.
Competitive landscape problem.
Probability of success as well as investment in partnering with potential.
We have a strong focus on planning opportunities for ABC and multi specific antibodies to be used throughout the continuum of care for patients with difficult to treat cancers.
As monotherapy and in combination with other regions currently approved.
Yeah.
This requires a strong focus on both efficacy and tolerability to ensure the potential for combination therapy and as important consideration in the selection of targets of interest and product formats.
So anyway for Adcs and multi specific antibodies to be used in earlier stages of therapy in combination with standard of care view, the best approach to make breakthroughs and patient outcomes in these difficult to treat cancer indications.
And the last point, we recently have seen the benefits of partnerships with significant transactions in the DTC space validating <unk> focus on developing candidates in the growing area of total <unk> one inhibitor abcs.
These candidates to provide us with multiple opportunities beyond zone, Indeed about advanced compelling therapeutics focusing on targets of interest into clinical studies as soon as next year.
Now I'd like to move and introduce that W. 251, our latest AMD candidate, which is a potential first in class <unk> targeting.
Targeting topoisomerase inhibitor ADC for the treatment of hepatic cellular carcinoma.
Okay.
Liver cancer, both in the U S and worldwide presents a substantial health burden.
Globally HCC is the third most common cause of death from cancer.
This burden has been on the rise due to factors such as the increasing prevalence of alcohol consumption obesity and lifestyle induced HCC.
Despite progress in improving the prognosis of many cancer liver cancer continues to have a dismal survival rate.
This unmet need fits with our strategy to develop therapies in such areas.
The limited treatment options available for ACC, although reinforce our commitment to this disease.
Historically mainline treatments, primarily relied on multi kinase inhibitors, but more recently there has been a shift to focus on anti angiogenic agents and checkpoint inhibitor combination therapies liberum.
Liver cancer is challenging to treat various modality showing only partial effectiveness.
While cytotoxic chemotherapy demonstrate some responds better outcomes are achieved with local regional therapy, such as trans arterial chemo and globalization Ortiz.
Systemic therapies.
<unk> recent approval of these agents, we've only seen a modest overall.
Increase in survival for HCC patients.
Systemic chemotherapy has been investigated Fitch treat HCC in the past and all the trials investing investigating chemotherapy showed objective responses in the achieved by multi targeted tyrosine kinase inhibitors and immuno oncology combinations.
Moreover, <unk> is used to treat intermediate stage, HCC and often employs DNA damaging chemotherapy doxorubicin.
<unk>.
We interpret this as demonstrating HCC isn't the chemo sensitive provided enough drug can be delivered and we can reasonably expect to reach.
The same doses.
Things such as the <unk> conjugate based on our preclinical toxicology studies.
We reached the same doses <unk> being five milligrams.
Per kg or more we believe that we can deliver sufficient people as to potentially shrink the tumors.
So.
Our approach leveraging EDC modality to Hans.
The efficacy of set of topics and liver Congress offers a new dimension to treatment to enable the delivery of such cytotoxic.
Potential to improve efficacy with an ADC and expand unlimited targets.
Targeted therapies in HCC provide an opportunity for us to develop a potential first in class candidate for this patient population.
The focus of interest on <unk>.
As being.
Due to the notable clinical success of topo, one inhibitor bearing adcs against solid tumors.
Other <unk> inhibitors are systemic treatment systemic treatments agency up going to be active but youll mixed responses and the remaining to improve important.
Meanwhile, novel therapies like car T cells, while promising faced challenges as we must overcome with strong immunosuppressive environment of HCC.
Moreover, engineered cell therapies for more costly than the off shelf off.
Both the shelf options like Adcs are not suitable for patients who cannot tolerate high intensity conditioning regimens.
The range of available treatments yield really responses.
And median progression free survival rates as shown on the right hand side of the slide.
With later length of treatments being an exercise and combining limited approved regimens aiming the needs and opportunities for new treatments.
But the lack of competition for EDC in this area.
Developing effective and tolerable ADC to be used as both monotherapy and in combination with other approved agents you may be able to provide a new treatment option for patients throughout the continuum of care of HCC.
Including an early lines of treatment, which may provide the ability to transfer our transformed survival outcomes for these patients.
Next slide I'd like to talk a little bit more about <unk>.
<unk>.
So what is.
The target that we're targeting GPC, we are glad to compete.
It makes it a good target.
So the GPC three it's considered an uncle fetal glycoprotein, which is important in field development, but don't regulated adult tissues.
This is key.
Attribute of minimal expression in normal healthy tissues of show infrequent and high expression.
Expression and ACC has been corroborated by multiple groups.
This profile mix GPC three are validated and highly selective approach to treat HCC.
Which is also being seen in the clinic for example studies with video legal burdens.
<unk> demonstrated rapid and selective uptake into liver cancer lesions in a study of HCC patients.
Forcing our hypothesis the antibody targeting with GPC three is a good way of specifically targeting PCC.
We believe this level of cell activity mixed GPC, III, a really exciting target and a potential turning point for treating liver cancer.
Yes.
The next slide what.
What we have laid out here are some of the key characteristics of that W 251, which we believe.
Make it a fitting candidate for targeting TPC III in HCC.
The antibody itself with selected for strong binding specificity and internalization.
<unk> features for all our <unk> ADC programs.
We then combine this quality antibody with our own proprietary tool for one payload with.
With the desired an appropriate balance of stability potency tolerability and bystander activity.
Total one base technology show meaningful clinical benefit in a wide range of solid tumors, including hard to treat solid tumors and a bit of a validated targets. We are therefore optimistic that the combination of the GPC three targeting antibody.
Total platform for the treatment of HCC.
After our standards of element.
Process at our four and <unk> ADC were evaluated to let us make data driven decisions on the next steps in.
And it was determined that we will be taking forward a dark molecule in line with our philosophy about efficacy and tolerability.
Altogether, we see Wi Fi one is a unique asset and to Airbus and to the best of our knowledge no other liver cancer <unk> been actively developed against UPC III.
The slate.
Switch to a data slide.
Which highlights two key features of <unk> one.
Laughter examples of antitumor activity against.
Patient derived xenograft model.
We demonstrated this in multiple models of conferences.
And equally important on the right hand side demonstrates the Tolerability of said WT one in non human primates, we've put up.
Up to 60 mix per kg under 20 mix per kg on repeat doses for Rytary are four respectively.
So turning to the next slide.
See the expected then.
The progression of <unk>.
From the bye bye bye.
We expect to see were on track to submit.
Submissions for 171, and one <unk>, one and 2024, followed by <unk> 20 in the first half of 2025.
W 251 in the second half of 2025.
More than hopeful to be able to nominate our first protocol ended in 2024 with a fund IV Anda filing in 2026.
Given our improved R&D productivity over the course of 2022 and 2023. This will accomplish our five by five portfolio nomination, but one year ahead of schedule. So we are beginning to strategize and plan on our longer term R&D strategy beyond the five by five development pipeline.
Yes.
On this next slide.
Done is to provide our perspective on the coverage the tumor coverage over nominated five by five programs overlays together with our clinical stage development programs on a data mob and designing zsolt.
Reiterate again, our focus on consultation with the poorest overall five year survival.
This tumor landscape. This focus will form the basis also of new programs move forward.
Thinking about the mix and we're already thinking about the mix what the mix advance pipeline could look like and we'll share that vision in subsequent slides.
Together, we believe this portfolio construction gives us a diverse range of targets with multiple opportunities for success in the coming years.
I'd like to know.
Switch to <unk>.
Our longer our thinking beyond the bye bye bye.
We believe still that the antibody based platform technologies at <unk> disposal, both in drug conjugates, and putting engineering has us well positioned to continue pursuing the development of cutting edge multifunctional biologics, where we can weave into a single molecule multiple mechanisms of actions to overcome complex disease states that Murray.
<unk>, a multi targeted approach to provide patient benefit.
With our infrastructure and talent in place combined with the diversity and purchased our platform technologies afford we believe we are well positioned to deliver to these.
<unk> ready molecules annually.
Well there is.
Obviously clear need to improve the outcome oncology patients.
Particularly in the cost it takes to peruse survival such as liver cancer has described it we also see opportunity in other disease states to leverage our technology.
Particular, we see opportunity in autoimmune and inflammatory disease, where multi specific technology lends itself to more blocking fuel cost waves or <unk>.
Leveraging key signal pathways.
Importantly, we also have the internal personnel with experience in developing such molecules from concept to clinic and the infrastructure in place from preclinical through manufacturing and clinical development that can be leveraged to.
And actually we believe this goal will be sustainable through a combination of internal funding and external partnerships to take molecules forward into the clinical and preclinical development.
Next slide.
Sure I'll give you a flavor of this.
What we're calling our advance.
And some additional details on that which we see taking shape beyond our $5 five.
Again, where we see the adcs and multi specific molecules as the platform technologies, we leverage and evolve to meet the challenging of addressing complex disease states and really making impact impactful change to patients.
Within the Adcs, we see great opportunity in combining same works by specific technology with drug conjugates, something we have deep experience within the field.
As an example, a byproduct topic EDC and.
In particular, we see opportunity through both by Pirates Opex, our jewel epitope binding.
<unk> and bi specific or fuel antigen targeting molecules to broadened responses and consultation to enable broader and deeper responses. That's on the antibody targeting side of the molecule on the paywall drug linker side, we also see need for alternative payloads on our canvas through generated our novel.
Aurora already at work on additional payroll with strategies to complement Tupac and MTI payloads already in our toolbox.
Within the immune cell engaged we have our first and host T cell engagement.
For which we expect to 590 in 2024, employing a novel low affinity <unk> targeting music using.
Is it going to optimize two plus one structure, enabling antitumor activity models not observed with other designs of formats, including prior clinical stage programs, we will be building on that and if you've been following our recent presentations at ACR and <unk>, you'll be aware, we are advancing tri specific T cell engagements and one version we incorporate into the T cell engagement.
A conditional CD 28 co stimulatory arm.
Importantly, CD 28 engagement has been engineered to bind and figure signal only upon sign ups formation between the tumor cell and the T cells, resulting in a more productive T cell response, and observe with CDP engagement alone.
Moving forward, we see potential utility of <unk> 28, based price specifics across multiple cancer types to prove the breadth depth and length of responses T cell.
We have additional design potent T cell engages to enhance response by incorporating additional functionality beyond co stimulation.
Such as checkpoint inhibition. In addition to the dual tumor antigen targeting to enhance potential therapeutic window.
Beyond immune cell engaging it is a metric platform also affords opportunities in immuno oncology outside of immune cell engagement, including cytokine engineering combined with masking something we have presented on previously.
As an example on the affinity modulate mast IL 12 design so <unk>.
A nice immune system enhanced tumor responses.
In addition to opportunities such as simultaneous blockade of multiple checkpoint inhibitors.
Finally, as alluded to on an earlier slide outside of oncology, we're excited with the opportunities and the autoimmune and inflammatory disease disease space, where we can leverage our multi specific platform.
Multiple drivers of disease, including multiple <unk> for.
For the past five years, we have been at an ongoing co development collaboration with legal pharma and the easier. It has provided us an opportunity to gain experience and insight regarding the potential utilization of.
Of our technology platforms outside of oncology with the recently announced change in this collaboration we now have sold unencumbered rights to a number of preclinical products.
Hi.
Actually we are actively evaluating incorporating several of these preclinical product candidates into our advanced R&D strategy.
So to wrap up.
In just over two years from now we're anticipating to have five IND submissions with early clinical data being generated from a number of these product candidates and potential additional quality AMD candidates coming out of our R&D organization from 2027 and beyond.
We're already working on the future beyond the 505, while not losing focus.
Making sure we translate these five preclinical programs into the clinic in a way that's quick with valuable and that's meaningful in terms of the data. That's created while also starting to work on our longer term R&D strategy.
We look forward to updating you on these developments in the coming months.
Expect the schedule another R&D day in the fourth quarter of 2024 to reflect in the progress with the $5 four portfolio and to discuss our longer term R&D strategy for the company in more detail.
We believe a lot of hard work.
Being done in 2022, and 2023 to craft and execute our focused and cohesive R&D strategy around two key areas of interest BBC and multi specific antibody therapeutics.
Ported by an appropriate financial and partnering strategy.
We're ahead of our schedule with bye bye bye portfolio construction.
Maintaining financial discipline on R&D investments with an expected cash runway to fund our planned operations through at least the end of 2026 and potentially beyond.
In addition, we believe the company is well positioned for a series of important milestones achieved in 2024.
In 2025, especially.
The potential initially initial regulatory approvals presented data them up in DTC and a top line data from the Horizon GAA, one study with <unk>, which will be available next year.
These are expected to be significant advanced in the company's history, and we're really looking forward to reporting on this progress.
As we continue to develop unencumbered protoconid from our focused R&D engine will continue to evaluate the potential to be co developed with partners in order to broaden and accelerate respective development programs.
Ever increasingly competitive environment for.
The deep development programs, we will continue.
To seek attractive economics with upfront payments in committed development payments to help fund development of our in house candidates as well as attractive royalty commercial milestones.
<unk> retained commercial rights for such product candidates in the United States.
With that I'd like to thank everyone for listening to our prepared remarks, and I'll turn the call to the operator to begin with an emphasis.
Operator.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you need to press star one on your telephone and wait for your name to be announced.
To withdraw your question please.
And please standby, while we compile the Q&A roster.
Yes.
Okay.
Okay.
Our first question comes from Jonathan Miller from Evercore.
Hey, guys. Thanks, so much for taking my question.
I'm going to start on the new GBT three.
I guess, we're seeing some interest there from other car T, especially but also implied radio ligand approach is the TCR is et cetera.
But also Roche failed in the indications. So can you give us a little bit more color on what the opportunities are specifically for an ADC for your version of an ADC here relative to other modalities against this same target.
Then maybe secondly, I noticed that you said this quarter that your runway could extend beyond 2016 I was just wondering what levers are on that potential for going beyond 26 does that require additional partnerships or milestones that you're not baking in.
What's new this quarter, that's leading you to think you could push it even further.
Yes. This is Paul I can take the first question. So regarding how do we see our opportunity differentiated from what others are doing so.
First of all I would say that there are multiple programs being developed against GPC three new speaks to the attractiveness of a target at ECC.
We are certainly to our knowledge really beliefs are.
Focusing on.
The use of ADC target.
GPC three.
And so we feel like we have a differentiated strategy based on using an ADC. We think the EDC rationale is strong there from our package of data that we've looked at from a preclinical study.
From the tumor efficacy, we've seen across a lot of models.
The safety profile, we've seen.
Nonhuman primates, the payloads that we're employing here is our own proprietary payload and we've designed it with a lot of care to hub features that we think will support that.
Product profile.
Certainly other approaches are also being used are also being explored.
Car Ts that you mentioned.
Others have tried antibodies in the past movement is really try to tuple payload ADC.
Also when we develop our antibodies. We're also very careful about developing an antibody that we think has the key features to support the delivery of appeal. Our payload. So I think not from a preclinical data does give us confidence that we've done something that others haven't tried before.
Yes.
Good good opportunity for us to develop and the profile supports development.
And just a second question Jonathan I can take that I think we've consistently stated since the Jan.
The partnership closed in the fourth quarter last year that our runway it took us till at least 2026 and potentially beyond.
Maybe it wasn't in bold print the way. This is the slide as in our SEC filings, but I think we've always felt.
Comfortable that our cash runway will take us beyond 2026.
We still feel that way, we continue to say that I think it doesn't include any new partnerships or collaboration reform, which obviously gives us a much bigger runway to fund things like advance or get us beyond.
2026, so we do have a little bit of.
Unallocated R&D investment capital that we have not put on on to the fiber phy portfolio. So it gets a little bit of flexibility.
To deal with the situation, we have now which is the fiber phy portfolio is 12 to 18 months ahead of schedule. So now we're starting to think about what we do next and how we start to.
But some seed money to work on that advanced portfolio and we can certainly accommodate that within that cash runway and still be beyond 2026, I think thats, a pretty consistent stable and we continue to say how do we get more confidence as we say it is a contributor to work our way through 2023.
Yes.
Got it it makes sense. Thanks, so much guys.
Please standby for your next question.
Our next question comes from Eagle from Citi.
Hi, Tim This is Chris.
This is Oscar Mubarak on for Yigal, Thanks for taking my questions.
One might be a little premature but for your GBC three ADC you alluded to this.
Asset potentially combinable with other agents.
Wondering what types of combos might make the most sense given a target and the mechanism of action.
There's a few different potential.
Options at times above two guys chemo and so on or are you thinking about something potentially even more novel vaccines.
Yes, maybe I can try and answer that in general at the whole portfolio and UPC III is a good example of that we've thought very carefully and intentionally about that portfolio. We're constructing with both adcs on the T cell engages at designing.
Designing molecules that are against targets and indications, where we believe being able to use those agents as monotherapy or in combination with standard of care. It just gives you access to the patient population the entire continuum of care for these patients. So it's really been something we thought about as we've picked these molecules and design and engineered them on <unk>.
Q3, specifically, we firmly believe that an ADC approach can be very effective.
We think being effective in the earliest line of therapy for these patients gives you probably the best chance.
Getting a response rate that's better than we've seen now in turning that response rate into something durable where he can stock start to talk about reasonable long term survival for this patient population in designing the GTC three ADC, we took into account that.
Current standard of care as we identified as a party in other combinations and we would look very early on after our monotherapy phase one to look at the ability to combine in a tolerable way.
With these other standards of care to hopefully intervene in a patient's disease at the earliest lineup there and the earliest monotherapy.
Possible throughout the strap, it's a deliberate strategy throughout the entire portfolio, that's where you should expect us to go with our folate receptor ADC Napa ADC, our T cell engages and specifically GPS III Adcs are what we're looking for is really making the most out of ADC technologies, which means earlier lines of therapy, which means in combination with standard of care.
That means the design and select service agents.
Have to hopefully allow for that to happen and we'll know that pretty quickly out of phase one with understand the tolerability of these agents on their own and then look to move very quickly to combinations in every one of these programs.
Got it that's very helpful color on this if I could squeeze in one more I guess what are the gating factors for filing the IND for your leading preclinical assets I guess, where are you in R&D, enabling studies, especially for 191 and 171 I'm. Just wondering if you can give us a sense of how much work is left before you can out of the clinic.
Yes, those are both on target.
2024, as we stated we haven't given more guidance on that yet we may give us some more guidance as we move into 2024.
But you are more likely to see.
Clinical study up on controls and an indication that we are recruiting patients along the way. So I think we're in really good shape with where we're at and I think you'll have to wait for more guidance next year early next year or just wait for some events, which shows we're actually recruiting patients on both of those studies.
Got it thanks very much.
Thank you please standby for our next question.
Our next question comes from Charles <unk> from Guggenheim Securities.
Hey, good evening, guys or good afternoon, guys and thanks for taking the question maybe one for me with a bit more of a near term focus.
Regarding zain as any debt to match some of those milestones coming up next year, a couple of ones here.
Any reactions to the keynote 11 data from ESMO as well as from believers the European review and.
And how that sets a bar for horizon, GTA and as well as similar to that.
So we do have the I guess the headline figures on some of those near term milestones from jazz as well as Beijing related to Zale.
We need to add about milestones from 2024, but could you also perhaps quickly remind us.
How much of that could be accounted for with PTC and GE.
Thanks for the question a couple of questions that you sneak in here one question. Thank you.
No I think for for guidance on those two programs will.
Deferred to both jazz and Beijing, Jonathan Green call Tomorrow in terms of.
What guidance I'd like to provide we'll let them.
That obviously in the range that we have which as we have $525 million in development milestones remaining on that.
Deal based on approvals that are data mab in different geographies and different indications.
I don't think we can say any more than that other than that.
A pretty reasonable a milestone payment in a time period, where I think would be really helpful. For us to continue to fund both the fiber phy portfolio further in the clinic as.
As well as see the additional R&D, we'd like to do.
With the advance.
I think beyond that we'd been following 11 since the study started.
And we've been 12 or so months behind.
That study.
I think it's safe to say from the data that was available.
Now and before that in the European review.
Is that I think the commercial opportunity presented data map to be the standard of care in the first line patients regardless of PD lone status, but also with the possibility of being used in combination with chemo and potentially PD one is.
Is better than we.
We've seen.
I think better than we thought it might have been 12 months ago.
So I think Theres, obviously, a stronger commercial opportunity I think.
We and our partners are anxious to.
Get to that point, so we're really looking forward to.
Getting the top line data from our study next year.
Which is still on target and then sharing that data with regulators.
To understand the earliest opportunity that we could make this therapy available for patients based on that data outcome. So.
It's always hard to have substantial competitor 12 or more months ahead of you in this marketplace, but I think.
Given the data we've seen so far and what we continue to see from us.
We're very optimistic and more optimistic about.
The potential uses of as any in this patient population of potential benefit we can provide to these patients.
And therefore, the commercial opportunity being a pretty exciting for ourselves and our and our partners as well as for patients.
Great. Thank you.
Yes.
Thank you please standby for our next question.
And our next question comes from your costs from Jefferies.
Hi, This is Larry Albert Thanks.
Thanks for taking our question. We just have one quick question. So how does the merchandise with data in Gvhd change your appetite to go up for Fr Alpha Al Rankin, Sir Thanks.
Yes no.
We saw that data and.
It looks very encouraging for a total base payloads.
Theta and for ovarian cancer.
We have looked at the expression profile that target and we feel both the fully receptor alpha <unk> expression and <unk>.
We are in cancer and other cancers noise supportable.
Also pursuing those.
Antibody based drug conjugates, we think.
That doesn't it doesn't deflect from our our motivation in excel.
Or are those targets, we think that the profile of supported especially when you compare it to the profile of <unk>.
Okay. Please standby for your next question.
Our next question comes to Steven from Stifel.
Yes.
Yes. Good afternoon, thanks for taking the questions maybe two quick ones. So.
Updated frontline data as any chemo dissolute amount that was presented at ESMO.
Can you say if PDL one status was centrally determined and I guess do you know.
Gene has made any attempt to go back and see if any of those sub 5%.
PD lone scores actually fell below that 1% threshold.
And then I guess also pertaining to that data update it looks like there were a bunch of.
Patients who upon central her to reading were scored negative.
And just wondering if there's kind of any explanation for the disconnect. There I think there is actually maybe five or six patients.
That ended up being determined negative when assessed.
Centurylink.
Thanks for the question.
So thats probably by Beijing inclusion was was based on local casting confirmed centrally later.
Again small small data set so it's too hard to call.
The numbers I think the.
The most important thing for us in our phase two that we did in the doublet, which was centrally confirmed talk a little bit different.
But between both of those studies collectively now we still feel very confident that.
<unk> plus chemo.
I'm going to provide.
Very consistent durable.
And quick response, regardless of PD lone status Thats, what our data shows US right now we can certainly see how PD one inhibitor on top of it as any plus chemo for certain patients.
They provide an additional benefit.
To justify the immune related adverse events that come along with using a PD one inhibitor.
I think we'll have to wait for the randomized phase III study to understand exactly what back.
That group is and I think that'll be important information for clinicians to understand.
The additional benefit you may see in some ways you can see on the small phase II we have.
But also understand how that corresponds with the adverse event profile that goes with.
With adding a PD one so.
We still feel very confident in the collective ness of the phase III that we conducted so far that we obviously hope to confirm and need to confirm in the phase III study the readout that readout next year and I think these little.
I don't think you talked about I think is.
And we're better off waiting for the phase III data available next year to get a full understanding of it.
Of that dataset.
Okay, and then maybe just one quick one on horizon I think.
One of the.
Narratives around the keynote at 11 data was that the control arm outperformed what was observed in toga and I guess, that's a byproduct of improved her two scoring et cetera.
But just wondering how you feel about the statistical powering when you go back to the underlying plan and kind of plug in a higher than anticipated.
PFS and OS in the control arm.
Yes, I mean, obviously, we haven't seen all the data from keynote 11, we've seen as much as they can on the European review and I imagine there's going to be more disclosed next year either through the FDA process or.
By the sponsor of the study.
I think it is a hard little hard to know what to make of that study because there are some disclosures on ITT at some of those cases on only the labeled indication which is different so it's hard to understand that.
The recruitment of that study was <unk>.
Skewed a little bit differently than we might have thought a real world population would be we're not sure what to.
To make about that.
As well I think from our standpoint, if we look at the control arm in the ITT population and look what you saw from not really nor our perspective, but you're looking at PFS perspective for medium PFS was around seven months, so a little bit better than koga.
But very consistent with the assumptions that we used in our physical design. If you look through what we disclosed previously around this fiscal <unk>. So we didn't see anything in the active control arm of 11 that makes us think that we are.
Our design was not consistent with.
With what we expected so I think that part of it that study gave us.
Increased confidence as to the design.
So that's great and obviously.
The comparison from the triple in that study.
And its limited ability to drive OS so far.
And its limited ability to really show benefit.
In the PD lone negative population gives us more confidence obviously in our ability to have a successful study.
And really be the choice of therapy in the first line patient population.
Does the PD lone status.
Still be our goal.
Very good. Thank you for taking the question take the questions.
Thank you please standby for our next question.
Yes.
Our next.
It comes from Brian <unk> from Jpmorgan.
Sure.
Hey, guys. Thanks for taking my call. This afternoon.
We spoke a lot about your thoughts around the strategy with your ADC is in the pipeline.
Path.
When you think about $2 51, I'm just curious.
See this asset.
An asset that you can posted translate ticket all the way to the finish line.
As this asset something that you wanted to see proof of concept for us and then engage a partner.
Parnella off given the indication our targets.
And then on top of that just housekeeping question.
Looking at.
Are these that are in the plan of care programs Rolling out next year and also two after.
In 2025, how should we think about.
<unk> trajectory and any color on that would be super helpful for us from the modeling perspective. Thank you.
No no two good questions I think strategically on the portfolio and we've tried to be very transparent.
So that investors can understand the rationale and obviously the prospects of <unk>.
The entire 505 and it also makes it easier for us that very open and active discussions.
With potential collaborators. So you can see that at least with the four agents. We've nominated now there is a bit of a therapeutic concentration around.
Both on the ADC and multi service side around.
Focus on kind of quantum of cancer patients and also in lung cancer patients and thats not unintentional those are two areas, where we think.
We could make some strides with the agents we have both on T cell and gateways and our Acs.
In those areas I think when you look at other areas that we have that we have experienced in with that data map definitely on the Gi side between GM BTC. It made sense for us to look for an opportunity that was.
Consistent with some of our experience or ACC was a natural thing for us to look at we obviously, obviously look for.
Less unencumbered and proven space. So I think GPC three as a target is well understood, but I think we have the first chance to take an ADC approach.
HCC with a telco payload and we're excited about that for GPC. Three so I think there was some sense that we have some experience in the GI space HCC is something that we can broaden into a little bit, but we definitely have.
Centralia, and gynecological cancer and lung cancer that when we talk to potential partners about multi product collaborations thats, obviously around those therapeutic categories.
HCC is probably the one opportunity in GPC three that we have them.
Very active interest in collaborating but probably more of a.
Compelling reasons to hopefully hold on to that one four.
For longer can we see clinical data.
Both agencies amongst others as you know our.
Areas of interest that we see continue growing.
We continue to see value attributed in transactions to quality assets of preclinical or early clinical stage, but those values continue to go up and we think thats going to continue so we have the capital and talent.
And infrastructure to be able to execute these programs.
On our own but it doesn't mean, we don't have discussions about putting ourselves in a better position with a strong collaboration either on a product basis, the multi product basis or around that therapeutic concentration in gynecological cancers lung cancer or <unk>.
<unk> moving forward, obviously, moving things from preclinical into clinical studies.
It takes on some additional cost I think we've worked really.
Hard this year and last year to build an infrastructure that is a little more nimble and a little more cost effective than maybe we had.
When we were adult developing data map, so I feel very comfortable with the cost efficiency, we've done and that infrastructure to be able to move quickly in a very cost effective way and in a way that's much more recruiting patients outside of the United States than inside the United States, not just for cost purposes, but to try and get.
Access to patients more quickly.
Also the patients.
Who might be of a higher quality because they have fewer I appreciate what's available to them. So that's the strategy been working on since last year. If we're right we'll be able to execute all five of these clinical program is going very fast nimble way.
Very cost effective manner and generate meaningful data from the very first dose escalation patient that we represent.
Each of those.
Now the strategy that we're working on hard.
And we will get a chance over 'twenty four 'twenty five to see us put that into action.
And does any.
Thoughts are.
Early color on how we should think about the expense transaction given that <unk>.
And the tool is in place.
For 2025, respectively.
Yes, I think right now obviously, we're we're.
For this year, we're looking at.
Spending.
29% of the cash balance we started the year with obviously is going to go up with more programs.
But some of these preclinical program in terms of going deal CMP in GOP talks are a sizable investment as well so I think youll see.
The cost structure go up just because the number of programs that are either in preclinical or clinical is getting higher and if we assume there is no new collaborations or partnerships.
That will be the case, we felt very comfortable right now with moving all five of those had absent collaborations and partnerships.
Obviously partnerships and collaborations and milestones from center data map.
Approval will be things that will rely upon to think about beyond 2020. So I think youll see will give some financial guidance early in 2020 or about 2024, so you'll likely see.
An increase from our cost structure because of the level of activity and size of the product portfolio, but not to a degree that we can.
So we can handle that with our current cash runway.
Great. That's super helpful. Thanks, Ken. Thank you welcome. Thank you Brian.
Okay. Okay.
I am showing no further questions at this time I would like to turn it back to Ken for closing remarks.
That's great. Thank you. Thank you everyone for listening today, obviously, we feel very encouraged by our progress to date three.
Through 2022 and year to date in 'twenty, three and inside the company, we're as excited as ever about the future Zimmer.
And what 2024 and 35 all throughout.
We're very much looking forward to reporting our continued progress against our key priorities during the remainder of 2043 because on the year yet.
And into what we think will be a really exciting 2024 for us throughout the entire product portfolio and with that I want to thank you again for joining us I appreciate your support and have a wonderful rest of your day. Thank you.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Okay.
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