Q3 2024 Zymeworks Inc Earnings Call
The
Speaker Change: Hello, thank you for standing by. This is the conference operator. Welcome to Xiam Work's first quarter 2024 results conference call and webcast.
As a reminder, all participants on a listen-only mode, and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
So ask the question, is for a star then one one on your telephone keypad?
I would now like to turn the conference over to Shrinal and Amdar directed of investor relations. You may begin.
Thank you, Oprah.
Shrinal: Good afternoon everyone, thank you for joining our third quarter 2024 results conference call.
Before we begin, I would like to remind you that we will be making a number of forward looking statements during this call, including without limitation those forward looking statements identified in our slides and in the accompanying oral commentary.
Forward-looking statements are based upon our current expectations and various assumptions and are subject to the usual risks and uncertainties associated with companies in our industry and at our stage of development.
Shrinal: For a discussion of these risks and uncertainties, we refer you to our latest SEC filings as found on our website and associated with the SEC.
Shrinal: Subs by www.zeoranger.co.uk
In a moment, I'll hand over to Leonie Patterson, our Executive Vice President and Chief Business and Financial Officer.
Leonie joined our leadership team in September 2024 and today Leonie will be discussing recent corporate updates along with financial results for our third quarter 2024.
Shrinal: Following this, Dr. Paul Moore, our Chief Scientific Officer, will talk about key highlights for our third quarter, including the initiation of a first patient dose in the Phase 1 trial of our first bi-specific 2 plus 1 metazelin T cell engager, CW171.
At the end of the call, Leonie, Paul, and Ken Galbraith, our Chair and CEO, will be available for Q&A. As a reminder, the audio and slides from this call will also be available on the Poseidon Works website later today. I will now hand you over to Leonie.
Leonie: Thank you for the introduction, Shrinal, and thank you all for joining us today. I'm very pleased to have joined ZyneWeek's team at such a pivotal time of growth.
Leonie: and a time when we are on the cusp of many exciting developments still to come as we close out the rest of 2024 and a series of new developments anticipated in 2025 which underpin our long-term growth strategy.
Leonie: I look forward to talking more about these milestones as we continue to execute on our R&D pipeline and corporate objectives.
If you could now turn your attention to slide 5, where I will touch on recent key achievements across our development programs.
Starting first with our whole neon pipeline, we received FDA clearance for our IND applications for both DW-171 and DW-191 in August this year.
Since then, over the past few months, our global clinical development team has been working very quickly and efficiently to enable dosing of the first patient with ZW171 as part of our global Phase I clinical trials.
Shrinal: Later today...
Shrinal: Latest during today's call, Paul will provide more details on the clinical trial design for ZW191, as well as providing an update on the progress we have made in the clinical development of ZW171 across North America, Europe, and the Asia-Pacific region.
Shrinal: We also had the opportunity to present more promising pre-clinical data on our homeological pipeline at the ENA conference earlier this month in Barcelona for both DW220 and DW251.
Shrinal: which Paul will go through in more detail later in the call.
Shrinal: These preclinical data highlight the transformative potential of our novel approach to designing ADCs utilizing our proprietary payload 519 and highly differentiated antibodies.
And we look forward to updating you on the anticipated IED filings for both ADCs in 2025.
Shrinal: Moving on to our partner program, Jazz Pharmaceuticals provided updates for our internally developed HER2-positive targeting-based specific antibody Xanny.
Recent presentations at the ESMO Annual Conference in Barcelona continue to highlight Sandy's potential for the treatment of multiple tertiary positive indications.
including long-term follow-up data in metastatic DEA patients for which a Kaplan-Meier estimated 30 months overall survival of 59% was reported from an ongoing phase 2 clinical study of ZANI in combination with chemotherapy.
Thank you. Please see the complete disclaimer at https://sites.google.com If you have any questions or other problems, please post them in the comments.
Speaker Change: We're also pleased to recognize in our Q3 revenues a $2.5 million research milestone from our long-standing partner GSK. This milestone provides continued validation of the strength and versatility of our internal platforms and technologies, including Asimetric, where we continue to have a range of legacy licensing arrangements in place.
As a reminder, under the terms of this agreement with the GSK, we receive an upfront technology access fee and will remain eligible for future research development and commercial milestone payments of just over $1 billion. In addition, we are also eligible for tiered royalties on any WorldWideSafe sales of the licensed products.
While we have had a busy few months on the development of our R&D pipeline, we have also been executing on our corporate goals. This includes completing the first $30 million of our share repurchase program, which I will touch on next.
On August 1, 2024, we adopted a stock repurchase program to repurchase up to $60 million of the company's outstanding common stock, with an initial authorized base of $30 million.
Speaker Change: Zunwick's net loss for the nine months ended September 30, 2024 was $99.2 million, or $1.30 per diluted share, compared to a net loss of $104.2 million for the same period in 2023.
The decrease in net loss was primarily due to lower research and development and general and administrative expenses, as well as a decrease in income tax expenses.
which was partially offset by the decrease in revenue and an impairment charge recognized in 2024 related to Thalidomide Subanogen.
As reported, our revenue for the nine months ended September 30, 2024, was $45.3 million compared to $59.1 million for the same period in 2023.
Speaker Change: Revenue for the nine months ended September 30, 2024 included $32.8 million for development support and drug supply revenue from Jazz.
$8 million of milestone revenue from Beijing in relation to the acceptance by the CDA of the NMPA in China of a BLA for Zany for second-line treatment of HER2 positive BTC
$2.5 million of milestone revenue from GSK in relation to the Sequence Peer nomination by GSK under the 2016 licensing agreement with them and $2 million from Beijing and other partners for research support payments.
Thank you.
Revenues for the same period in 2023 included $56.3 million for development support and drug supply revenue from JADD, and $2.8 million from Beijing and other partners for research support and other payments.
Overall operating expenses were $160.2 million for the nine months ended September 30, 2024.
compared to $173.7 million for the same period in 2023, representing a decrease of 8% year-over-year.
Speaker Change: The decreases in overall operating expenses resulted from a decrease in both research and development expenses as well as general administrative expenses.
The decrease in research and development expense was primarily due to a decrease in expenses for Zannie as a result of transfer of responsibility for this program to Jazz, and a decrease in expenses for DW-171 and DW-191.
This decrease, compared to the same period in 2023, was partially offset by an increase in expenses for ZW220 and ZW251 and other preclinical and research activities.
Shrinal: Stock-based compensation expense increased primarily due to a lower expense in 2023 as a result of the cancellation and modification of rewards in respect of employees' transfers to JAS.
Now turning to G&A, the decrease in G&A expense was primarily due to a decrease in external consulting expenses for information technology, legal fees and other expenses for advisory services.
Shrinal: insurance and depreciation and amortization expense compared to the same period of 2023
and an increase in stock-based competition over 2023.
primarily due to reversal of compensation expense for option cancellations and modifications in 2023.
During the nine months ended September 30, 2024, we recorded a non-cash impairment charge of $17.3 million as a result of the company's decision
Shrinal: to discontinue the Zanadatamab Zovidocin Clinical Development Program which utilizes the technology represented by Acquired In-Process Recognition Development Assets.
Shrinal: Other income, net was $16.1 million for the nine months ended, September 30, 2024, compared to $14.6 million for the same period in 2023.
The increase was primarily driven by an increase in the average interest yield of our cash balances and investments during the period.
As of October 31st, 2024, we had approximately 68.9 million shares of common stock outstanding and approximately 5.1 million shares of common stock issuable under pre-funded warrants.
As of September 30, 2024, we had $374.9 million of cash resources consisting of cash, cash equivalents and marketable securities as compared to $456.3 million as of December 31, 2023.
Shrinal: Now I want to turn to the Cache Runway.
Based on current operating plans, our strong financial position of $374.9 million in cash resources as of September 30, 2024, together with certain anticipated regulatory milestone payments,
continues to provide an expected cash runway into the second half of 2027.
And just as a reminder, that we may also be able to extend this runway or fund and expand an R&D scope through potential additional regulatory approval milestone payments.
in connection with our existing partnerships.
Shrinal: with Jazz and Beijing, or new partnerships and collaborations which we may choose to form.
In addition, pending regulatory approval, we are eligible to receive commercial milestone payments based on annual sales of Xandi.
Shrinal: and tiered royalties between 10% and 20% on Jed's annual net sales and between 10% and 19.5% on Beijing's sales.
Speaker Change: With that, I'd like to hand over to our Chief Scientific Officer, Dr. Paul Moore, who will provide more details regarding the development of our wholly owned pipeline and our highly anticipated R&D day later this year.
Thank you. Thank you. Thank you.
Speaker Change: Thank you, Leonie. So I'd like to start off by talking about some of the preclinical work Leonie mentioned earlier in the call, which we presented last week at the ENA conference in Barcelona.
for ZW220.
Speaker Change: We were pleased to share data which demonstrates that 220 exhibits robust activity across a wide range of NAPI2b expression levels in vitro, and then showing also significant anti-tumor efficacy in patient-derived xenograft models of ovarian, endometrial, and non-small cell lung cancer.
In these preclinical models, 220 was highly active at a single dose of six minks per keg across the models tested.
In these studies, we evaluated between 4 and 8 models per indication, and based on tolerability data, the 6 mg per kg is actually considered a conservative dose for 220, suggesting room for dose optimization in future preclinical studies.
Importantly, 220 also displays
Bystander-mediated killing activity, as shown in this slide, in two different in vitro models. First, on the bottom left.
Of the slide, we observe bystander activity against the NAPI 2B negative cell line in a classic 2D culture model system with 220.
which incorporates a proprietary TOPO1 payload at DAR-4 demonstrating bystander activity comparable to that observed with a version of 220 incorporating DEXP at DAR-8.
Furthermore, 220 also effectively inhibits the growth of heterogeneous NAPI2B-expressing 3D spheroid models comprising a mix of NAPI2B-positive and NAPI2B-negative tumor cells.
Speaker Change: This demonstration of strong bystander killing in vitro we believe is a critical attribute of 220 when targeting tumors with potentially non-uniform expression of NAPI 2D.
Our ADC also demonstrates a well-differentiated safety profile.
compared to higher potency topo-1 inhibitor ABCs
Speaker Change: such as dozing.
Corporadine-X-Tcan, 220 has shown a more favorable safety profile in preclinical toxicology studies with a maximum tolerated dose of greater than 90 mg per kg in non-human primates.
Speaker Change: and Greta Laird are equal to 200 mix per gig in wraps.
This indicates the potential for high dosing in humans, which could further enhance its therapeutic impact.
For more information, visit www.fema.gov
Speaker Change: Taking together, we've incorporated several key features to optimize the efficacy and safety of 220, the low drug-to-antibody ratio, and moderate stability of the antibody linker provide a good balance between tolerability and anti-tumor activity, minimizing potential on-target or off-tumor toxicities.
The strong internalizing antibody we've developed ensures efficient tissue penetration and cellular trafficking, improving our antibody tumor activity, especially in tumors with lower NAPI expression.
Lastly, the FC-gamma receptor silenced antibody design minimizes the risk of off-target toxicities, particularly from uptake by normal macrophages.
Speaker Change: This design contributes to the overall safety profile of 220, which as I showed has been well tolerated in both non-human primates and rats.
All of the features discussed above related to the design of 220 provide a clear differentiation from other NAPI 2B ADCs in early development and gives us confidence in the potential of 220 to be best in class as we transition 220 from preclinical development into early stage clinical studies next year.
Speaker Change: We remain on schedule with our preclinical development of 2020 to support an IND filing and form applications in the first half of 2025.
[inaudible]
Moving on to other data presented at the TRIPLE meeting of the ENA on
Speaker Change: CW251, another ADC incorporating our 519 payload, that data continues to demonstrate significant potential for CW251 addressing unmet needs in hepatocellular carcinoma and other TPC3-expressing tumors.
251 is designed to selectively bind, internalize, and kill GPC3-expressing tumor cells, or Glycocon-3,
expressing tumor cells. This precise mechanism of action coupled with the anti-tumor efficacy we've observed reinforces its potential as a targeted therapy for glycogen-3 expressing cancers.
One of the most promising aspects of 251 is its robust anti-tumor activity observed across a broad panel of hepatocellular carcinoma xenograft models, including both cell-line derived xenografts.
and patient-derived xenograft models.
Speaker Change: Importantly, 2,5,1 demonstrates a dose-responsive anti-tumor effect, with a single 8 mg per kg dose showing activity in 5 out of 6.
cell line derived models and 9 out of 12 PDX hepatocellular cancer models.
Speaker Change: This includes models with lower or heterogeneous glycogen-3 expression, underscoring the breadth of its therapeutic potential in targeting tumors with variable antigen presentation.
Speaker Change: Our team selected the drug-to-antibody ratio, or DAR, of 4. This ratio provides an optimal balance between safety and therapeutic impact.
Speaker Change: In fact, the Dar4 molecule has demonstrated a compelling breadth of anti-tumor activity in vivo, which is crucial for maximizing its efficacy across diverse tumor types.
this broad target media activity across this range of
Speaker Change: The Paracellular Cancer Models continues to validate the strength of our ADC platform.
Speaker Change: In terms of safety, 2-5-1 has been well tolerated in repeat dose toxicology studies in non-human primates exhibiting dose proportional PK.
This positive safety profile, along with this robust preclinical efficacy, positions 2-by-1 well for clinical advancement.
Looking ahead, we expect our preclinical development to support an IND submission in the second half of 2025, and we believe 2.5.1 has the potential to provide a much-needed therapeutic option for patients with hepatocellular carcinoma and other GPC3-expressing tumors.
Speaker Change: Please see the complete disclaimer at https://sites.google.com getshp.com
We're excited to continue developing this promising candidate and help make a meaningful impact in oncology.
Thank you.
Speaker Change: By the end of 2025, we expect to have all three of our 519 payload ADCs in early clinical development.
Speaker Change: We look forward to understanding how the design of our optimized antibody and proprietary payload might translate these promising preclinical findings into clinical efficacy for our ADC candidates.
At Ximarx, the time and care to ensure we have a deep understanding of target biology allows us to innovate on elements of our ADC which we think could make a meaningful difference for efficacy, but importantly also for tolerability.
Together, we believe that these design features could allow us to optimize at higher protein doses than other ADCs, ultimately maximizing the potential of these therapies to improve the standard of care for patients.
Increased tolerability would also allow us to explore combination regimens for our candidates.
with the hope that we can reach first-line patients to really make a difference and extend progression-free survival and overall survival for these patients.
Notably, we made a conscious decision not to repurpose existing molecules like hexatecan for our ADCs.
Instead, we aim to create a proprietary Topo1 payload with characteristics ideally suited for an ADC, potentially allowing our candidates to outperform efficacy seen to date with drugs that utilize a repurposed payload.
Speaker Change: These characteristics include moderate potency, which we believe could have a two-pronged effect of 1. Enabling protein dose in bystander activity
to enhance potential efficacy, while two, also limiting damage where conjugated drug accumulates in some normal tissues and therefore increasing also tolerability.
By reviewing BDCs that have been explored in the past, we believe our design philosophy is consistent with learnings from prior clinical data.
We have observed that increased potency of other repurposed payloads, such as ExoTecan, seems to limit its maximum tolerated dose relative to moderate potency TOPO1 inhibitor payloads.
which may limit the potential of the higher potency payloads to get into the efficacious dose range.
Another feature we have factored into our design to potentially maximize tolerability and efficacy of ADCs is linker stability.
Speaker Change: Historically, increased antibody linker stability has demonstrated improvements in preclinical therapeutic index, but these findings have not translated into the clinic.
Speaker Change: We believe that moderate linker stability, as employed in most clinically approved ABCs, will limit normal tissue exposure to conjugated drugs, also contributing to improved tolerability.
Speaker Change: Thank you. Thank you.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: regarding
Dar, in Drug Antibody Ratio.
Speaker Change: We studied both DAR 4 and DAR 8 versions of all three of our 519 payloads before carefully selecting the most appropriate DAR for each base.
each molecule based on our understanding of target biology, the targeted patient population, and the results of our preclinical studies.
Lastly, and importantly, our efforts have been concentrated in optimizing antibody properties, particularly internalization and tumor penetration.
Speaker Change: We firmly believe that the key to ADCs being effective and tolerable and ultimately reaching those early lines of therapy is ensuring an appropriate protein dose.
Speaker Change: We have also carefully considered the potential benefit of incorporating FC mutations on our antibodies based on the target population and data supported by preclinical studies.
Speaker Change: From our preclinical work and empirical review of clinical data over the past 40 years, we believe that our approach is differentiated from other ADCs currently under development. We believe the primary factor is ensuring an appropriate protein dose within the optimal range.
Together we believe that these design features could allow us to optimize at higher protein doses than other ADCs, ultimately maximizing the potential of these therapies to improve the standard of care for patients in both monotherapy settings and for combination therapy, as well as in earlier lines of treatment.
Speaker Change: We are very much looking forward to evaluating these novel design features and their effect on tolerability and efficacy.
with using again relative to clear benchmarks from peers and highly validated targets.
Speaker Change: The first of which will be our Phase I clinical trial of our ADCs.
Speaker Change: ZW191
Speaker Change: [inaudible]
Based on the encouraging preclinical findings we are moving forward to validate these results in the clinical setting.
We anticipate dosing the first patient this year in our Phase 1 Open Label Multi-Center Study of 191 registered under NCT 06555744 on clinicaltrials.gov.
Speaker Change: This study is actively recruiting and aims to enroll 145 participants with advanced solid tumors including ovarian, endometrial and non-small cell lung cancers across North America, Europe and the Asia-Pacific region.
Part 1 of the study will evaluate the safety and tolerability of 191. Part 2 of the study will evaluate safety and explore the potential of anti-tumor activity of ZW191 according to the resist evaluation criteria. We'll continue to evaluate the safety and tolerability.
Speaker Change: Inclusion criteria includes pathologically confirmed ovarian cancer, endometrial cancer, non-small cell lung cancer, and or progressive disease refractory to all standards of care that confer clinical benefit, measurable disease, pair resist.
Speaker Change: We look forward to reporting first patient dose in the near future and discussing progress in the coming variance calls.
In regards to 171 or ZW171, as Leonie mentioned earlier in the call, it was only in August that we were announcing the FDA clearance to move forward with Phase 1 clinical trials for 171.
The speed of efficacy and our team's ability to move 117.1 forward to first patient being dosed in such a short time is a credit to the dedication and collaboration of our global hubs.
Since we last presented our earnings, we have been working towards activating sites in North America, Europe, and the Asia-Pacific region in our Phase 1 trial for 171.
Thank you. Thank you.
In this slide, you will see that we have made progress here with clinical sites activated in North America.
As a reminder, for our clinical trials for 171, we expect to recruit 160 patients globally, which we anticipate will present us with a high level of diversity in patient characteristics, including expression levels across tumor types.
We believe this diversity should result in higher quality datasets and hopefully more conclusive results for retrospectively determining expression cutoffs.
Speaker Change: We look forward to talking more about the work our team conducted to support selection of the starting dose for 171 at SITC next week.
Speaker Change: as we have previously communicated.
Internally, we have a very clear target product profile for our candidates, and so the ability to initiate dosing closer to the expected efficacious dose means that it provides the potential to understand signs of efficacy as well as tolerability more clearly early on in the study.
This is especially important as we continue to keep financial and scientific discipline within the organization in order to focus on the candidates that have the best chance of success in being meaningful treatment options for patients.
Our R&D engine has continued to work in the background on the next wave of innovative modalities in therapeutic areas where patients with significant unmet needs are lacking effective treatment options.
With this in mind, we will continue to advance assets that have the highest potential to change the standard of care or to move on to other promising candidates where we can innovate further with the hope for better therapies for patients.
Thank you for watching. Please subscribe to my channel.
Finally, I'm also pleased to share an update about our upcoming R&D day, where we'll provide in-depth updates on our growing portfolio of solid tumor targeting
antibody drug conjugates, and T cell engager molecules.
This will be a unique opportunity for us to showcase the progress we've made in advancing our innovative pipeline, and we are thrilled to be joined there with several key opinion leaders from the oncology field.
Together with our management team, these experts will discuss the latest developments in our ongoing R&D and clinical activities.
Underscoring our commitment to delivering transformative therapies for patients.
Speaker Change: One of the highlights of the day will be the formal nomination of the latest product candidate from our 5x5 portfolio.
Speaker Change: I try T-cell engager, try specific T-cell engager.
This will mark the final nomination in our ambitious 5x5 R&D strategy, with a projected IMD filing in the first half of 2026.
This nomination is a major milestone for us reinforcing the strength of our T-Cell Engager platform.
We'll also discuss our strategy for our continued focus on solid tumors while also expanding into new therapeutic areas, particularly in hematological cancers and autoimmune inflammatory diseases.
These areas represent a natural extension of our core strengths, and we see tremendous potential to apply our technology platforms to these new indications.
Lastly, we'll provide updates on our preclinical development progress, which includes potential IND filings for new product candidates in 2026 and beyond.
Speaker Change: This progress is a testament to the innovation happening within our labs and position as well for continued growth of an exciting R&D portfolio in the years ahead.
We were excited to share these developments at our R&D day and look forward to highlighting the advancements that will drive the next chapter of our company's growth.
And with that, I'll hand it to Ken for closing remarks.
Ken: It's great. Thank you, Paul. I'm very pleased with all the progress we've made so far this year, and we're only just getting started on the clinical development for some very interesting targets in patient populations with significant unmet need.
Ken: With that being said, there's still plenty more time left in 2024, and we plan to make full use of this time to continue building on our momentum so far this year and complete a few more significant pipeline events before the end of the year.
Ken: First, I also share in Paul's enthusiasm for updates we plan to make during our upcoming R&D day in December, where we'll officially nominate our new Tri-Specific T-Cell Engager product candidate. It's a nomination that's a significant milestone for us to complete the 5x5 portfolio almost two years ahead of the initial schedule.
and certainly highlights the continued growth and diversification of our pipeline as expanded new modalities and novel treatment approaches.
In addition to some of these updates, I also want to highlight that our partner Jazz has initiated a pivotal phase 3 trial named Empower, evaluating xenodetamab in patients with RRTU positive breast cancer whose disease has progressed on previous TDSD treatments.
This is a major step forward in potentially bringing new potential treatment options to patients with metastatic breast cancer.
Internally, we're extremely proud of the potential impact that DataMap could have for patients across multiple tumor types in oncology, based on the breadth of clinical activities seen to date, which really showcases how this targeted therapy is able to bind to HER2 and kill tumors with a very unique mechanism of action.
Speaker Change: Having discovered and developed Xenodatamab at our labs at DesignWorks, our teams have been taking some learnings from the screening, optimization, and clinical development of this unique biosynthetic antibody, and we look forward to continue reporting on progress of how we hope to replicate this level of optimization and efficacy with our wholly owned pipeline.
Speaker Change: The success of Zannie as a targeted virtue agent also gives us reassurance that highly expressed targets are where we want to focus on developing future therapeutics.
We believe that high and clear levels of expression are important when developing highly targeted candidates and moving away from previously used chemo-like treatments.
The decision to develop candidates for these highly expressed but validated targets, such as foliar preceptor alpha, mesothelin, alpha-TB, and GPC3, means that we can quickly and effectively understand if there's a correlation between efficacy and expression levels across tumor types, as well as benchmark our data against previously developed candidates.
Speaker Change: Looking ahead, JASC has estimated that top-line progression-free survival data for the ongoing Phase III Horizon GEO-1 study will be available in the second quarter of 2025.
Speaker Change: Finally, we're eagerly anticipating the PDUFA date of November 29, 2024 for xenodatamab in second-line HER2-positive biliary tract cancer in the U.S.
This potential approval in the United States would be one of the most substantial achievements for Zyme in its history, and in collaboration with our partners, Jazz Pharmaceuticals in Beijing, a critical step forward for biliary tract cancer patients who currently have limited treatment options.
Speaker Change: JAS is scheduled to hold their Q3 or NCCOL within the next week, and we encourage you to follow that for any further developments or guidance related to Center Data Map.
Before we move on to Q&A, I'd like to acknowledge this is the first Earnings Call since Leonis joined us at Zymerx in September.
She's a very experienced executive leader in biotech and has already had a positive impact in many aspects of our operations, working in collaboration with our management team. We're very fortunate to have tracked her design, and I look forward to working closely with her, alongside the wider leadership team, on building Xamarin further.
Speaker Change: I'd also like to take a moment to thank Mr. Hollings-Renton, who will be stepping down from the board in December, for his significant contributions to our company over the past eight years, and also for being a great advisor for me during my tenure as CEO. Hollings' guidance has been invaluable in shaping the direction of growth of our business.
He's had an amazing and successful career in the sector, and we're very grateful for his dedication to our mission and song.
As we continue to evolve as a company, I would like to highlight that over the past 18 months, we have welcomed six new members to our Board of Directors as part of a strategic forward-refresh process.
Speaker Change: This initiative is a reflection of our commitment to ensuring we have the right mix of experience and expertise to guide our next phase of development and growth. The Board remains diverse, strong, and well positioned to support our long-term objectives as we continue building on our momentum.
With those closing remarks, I'd like to thank everyone for listening, and I'll turn the call over to the operator to begin the question and answer period.
Thank you.
As a reminder, to ask a question, please press star 11 on your telephone. You will then hear an automated message advising your hand is raised. And then wait for your name to be announced.
To withdraw your question, please press star 11 again.
Speaker Change: If you're using a speakerphone, please pick up your handset.
Our first question comes from the line of Stephen Willey with Stifel. Your line is open.
Yeah, good afternoon. Thanks for taking the questions. Maybe a couple for Paul and or Ken.
Curious how you're thinking about dose optimization.
Are you going to be back-filling specific dose levels in the escalation phase to generate the exposure data you need to select a Phase II dose for expansion, or do you think it's more likely you'll be carrying two doses forward into the expansion phase? And then I just have a follow-up.
Thank you. I'm going to go ahead and get started. I'm going to go ahead and get started.
For more information, visit www.fema.gov
Yeah, good question, Steve. I think the way we think about it in the dose escalation phase, we hope to really have a chance to have, you know, good high-quality set of patients with diversity around tumor types, diversity around expression levels.
that really let us understand the tolerability profile and that's both for 171 and 191. I think our expectation is that in addition to backfilling and having a chance to explore some alternative doses,
in dose escalation, you know, we're likely going to have to move forward into the expansion cohorts and optimize, you know, more than one dose.
in specific cohorts.
maybe one or maybe two of those cohorts, but I think it's really
necessary to do that so that by the time we leave phase one study we have a very clear understanding of the tolerability profile and a very clear understanding of the optimum dose to take forward. I think we've seen examples of
Speaker Change: of other companies who have tried to accelerate or maybe go a little too fast in that process.
And then again, that doesn't help you accelerate to a registration study or accelerate to a potential filing or approval pathway, so I think we've given ourselves a pretty big clinical footprint in Phase I, as you've seen from 171, 191, geographically a number of sites.
that should allow us to quickly recruit.
and study a pretty broad range of patients. If you look at the...
I think we can move very quickly and at the same time make sure we collect enough patient data to be very clear about the tolerability profile, very clear about signs of activity, and very clear about the optimum dose that we want to take forward and not leave Phase 1 with any of those questions unanswered.
Speaker Change: Okay that's helpful and then I know Paul touched on this a bit in the prepared remarks but you know obviously the preclinical data you have for all the ADCs and in your preclinical tox models would suggest that you've got a much wider TI versus
Speaker Change: and some of the other ADCs that we've seen with TOPO payloads using equivalent DARS.
Speaker Change: Just wondering
how that informs your development strategy, specifically in terms of how you're prioritizing combinations for each of these three assets. And I guess, is there any one of these ADCs in particular that you think might warrant a more accelerated path to a combination-based development strategy? Thanks.
Speaker Change: Thank you.
Yeah no thanks Stephen and thanks for pointing that out about the
The careful design that we've incorporated in the preclinical data that supports that we have this flexibility to hopefully have a little bit more therapeutic index than
We're pretty much thinking about that for all three programs because we do hope that we will be able to move up in the earlier lines. So I think we're thinking quite broadly there. We don't particularly specify one over the other. I think for all three, we're thinking that way.
Speaker Change: So...
Obviously in the, you know, in the treatment paradigm of the disease indication that you're going against, that will drive the specific combination partner molecules, so
Speaker Change: With what else?
VEGF inhibitors or PARP inhibitors in the context of ovarian cancer, or PD-1 inhibitors in the context of non-small cell lung cancer, those are the types of combinations that we're thinking about and we think are compatible with the design strategy that we have.
Thank you for watching.
All right, thanks for taking the questions.
Thank you.
Please stand by for our next question.
Speaker Change: https://www.kenhub.com
Our next question comes from the line of Akash Tewari with Jeffries. Your line is open.
reading out in July of 2026, but it's being studied with chemo and or immunotherapy. I'm just wondering how you view this regimen and if it's a threat for Vanny at all. Thank you.
Yeah, thank you for the question. I think we've been obviously carefully following potential competitive programs to Zannie and all the indications of interest.
for us from some time period now. And I know our partners, Jazz and Beijing, are doing the same thing. I think, you know, I think with respect to any of you, ourselves, we feel very strongly about the clinical data that we've generated to date.
on ZanaDataMap and its potential, you know, as monotherapy, as we have in our PPC filing and also sort of in gastric cancer. It's our ability to combine with other product modalities and really seem to generate much higher levels of response.
Very good compared to some of those other
and the other agents which might be under development. So, we feel very confident in the data center round.
Speaker Change: that data map with respect to where we are and obviously
Our upcoming clinical data readouts will...
We'll hopefully confirm some of that confidence we feel behind XANA DataMap, and beyond that don't really feel in a position to comment about other companies' data sets where we may not have access to all the data, but with respect to the data we have on XANA, we feel very comfortable and confident
with Data to Maps ability, based on the clinical data set to date, to really make a difference in this patient population in a significant way, and we're looking forward to having that readout next year, obviously.
Speaker Change: Thank you. Thank you.
Speaker Change: Please stand by for our next question.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Yugaot Nochemovitz with Citi. Your line is open.
Hi guys, this is Ashik Mubarak on FECAL. Thanks for taking my questions and I appreciate the update today.
I had one on how we should be thinking about timelines to data or maybe more generally your philosophy about data sharing related to the Holyoan pipeline, especially the the lead Mesothelian and FR-alpha programs. I'm just I'm just wondering we should be expecting maybe an early look at the dose escalation cohorts or if your philosophy is more going to be along the lines of
generating a robust dose escalation package or maybe even expansion package before sharing that data with us.
Yeah, thanks for the question. I think we do have a very specific philosophy.
Speaker Change: You know, undertaking these first two Phase I studies for 171191, you can see that we do have the advantage of
very tolerable molecules with some preclinical data, which allows us to have
What you might think is a higher starting dose than you might have seen with other agents in similar classes, and that's...
And I think it's an obvious advantage to try to go more quickly to an active range while studying the...
Speaker Change: The Tolerability Profile. We also have a very broad global footprint with many active sites that we're bringing online now, which again allows us to hopefully not only collect a quality and diverse data set of patients across the population we want to study, but also do that in a very timely basis.
Speaker Change: We'll be given
Speaker Change: And I don't think we'll do that until we're comfortable that we have.
a large enough data set to make some conclusions.
about the data set and the product that we'd like to share.
in a peer-reviewed scientific or medical meeting, which is where you'll see it all, not by a foreign press release or investor call. So once we feel comfortable, we've got a data set that we'd like to share. Unlikely that we've had an abstract accepted.
then I think we're quite comfortable sharing publicly that we're going to share that in a scientific medical meeting. Obviously, we've seen recent examples of companies who can do that quite quickly. And again, it depends on how quickly we can recruit patients, what that data tells us.
and what conclusions we'd like to share with the scientific and medical community.
Speaker Change: in a peer-reviewed manner, and so I think we won't provide guidance until we're
Speaker Change: I'm a little more certain about the timeframe to do that, but please be assured we're trying to collect a quality, diverse, substantial data set in Phase I, including dose escalation, and if we do that well and timely,
There might be a lot that we can understand from the drug at a very early stage.
And then we're happy to share that with the scientific medical community.
That understanding is as quickly as we can.
Got it. That's very helpful. Now if I could ask one more. Apologies if I missed this, but...
As I recall, the stock repurchase program allows for up to $60 million, unless I'm mistaken, and with the sort of first $30 million tranche already done, I'm just wondering how you're thinking about deploying the second $30 million, if that should be expected maybe over the near term, or if that'll be more over a multi-year horizon, depending on market conditions and so on.
Speaker Change: Yeah, there was an authorized $60 million share purchase program. We did activate $30 million of that, which again gave us a little bit of optionality and flexibility to complete that first and then decide what to do with the rest. There's no strict deadline or necessity for completing the second phase.
So, I think we will continue to evaluate market conditions and our financial position and other factors and working with the board to decide when it may be the right time to initiate the second.
a part of that. It's a very carefully evaluated decision.
Obviously we did this in...
in early August, and we felt very strongly that there was a strong rationale for doing it.
including the fact that we felt that our share price was undervalued compared to what we saw in the company as important factors in enterprise value. We still feel that way today even though the shares have appreciated substantially since.
Speaker Change: Since August
Speaker Change: We do have the ability to complete the entire full 60 million share purchase program.
and maintain our projected cash flow money into second half of 2027.
But I think for now, we'll do what we did last time, which is to carefully assess our financial position.
Look at a number of factors before we make that
decision, and as we did last time, we'll be very definitive when we start.
And again, you won't hear much about it until we complete that. So if there's an update, you'll obviously hear about that publicly as required. But as of right now, we feel comfortable with what we did. We think it was an appropriate thing to do with the cash we had available. And we think there was a strong rationale for improving total share of returns with the action we took.
Speaker Change: still feel we're in a very undervalued position compared to what we see inside the company.
But we'll just take a moment to reflect before we think about initiating the second transaction. Again, there's no timeline or requirement or necessity for us to continue on that. We will always have the ability to initiate that whenever we and working with our board decide that it's an appropriate thing to do for shareholders.
Speaker Change: Got it. Thanks very much.
Thank you.
Please stand by for our next question.
Our next question comes from Alana Bryan-Chen with JP Morgan. Your line is open.
Alana Bryan-Chen: Hi, team. Thanks for taking our question this afternoon and the onates. Congrats on joining the team.
Maybe just one related to the ongoing phase one for 171 and 191.
Can you talk about some of the criteria that you'll be looking for in terms of efficacy before moving into a larger expansion stage?
Speaker Change: And, you know, I might be, you know, asking this question a little bit earlier, but could we be expecting some clinical data at your R&D day in December and have a follow-up? Thank you.
Thanks for the question. We haven't given any guidance as to when to expect clinical data for 1.7 and 1.9.1. We are interested, because these are Phase I studies, in understanding the tolerability and adverse event profile. And that obviously takes time.
Some work in moving up in doses to understand
You know adverse events as relate to the dose response You know, I doubt that's going to be in place by the time we get to our R&D day that was not the intention of the
Speaker Change: CR&D Data Share Initial Data 171191.
These are adverse tolerability studies, so that's the most important factor for us to understand that. Obviously, we look for signs of clinical activity, especially at doses that we think are more optimal for activity. We think a very important factor, especially for T-cell engagers, is the ability to drive a much more durable response.
that maybe you see with chemo and also with some ADCs. So, you know, understanding not only, you know, the ORR, but also DOR is extremely an important factor. And we have seen instances of where a very high initial response doesn't end up being durable for the patient population. So.
I don't think you'll see anything at our R&D day, but I think once we have enough data to tell us something and inform us about
make it public when we think we're in a position to share that data. But I don't think you should come to R&D Day in December 12th expecting to see initial clinical data in 171 and 191.
Speaker Change: Okay, and then maybe just one more. Heading into the PTC's Batuva date next month and GEA's top line next year, just from a modeling perspective, how should we think of your partnership revenue near term?
Speaker Change: Yeah, I think we've already publicly disclosed as much as we're able in our agreements with Jazz. I can't really say much more about that until, you know, until we start to get paid milestones and receive them or get paid or receive royalties.
We can't really say much more about that. I think on timelines and guidance, with respect to top line on Zany, I would refer you back to Jazz, and again, also Beijing, but especially Jazz for next week. They've already made some guidance around potential peak sales.
Speaker Change: But I would look for updates from them on development timelines, approval timelines, future filing timelines, and any revenue guidance they want to provide. That's where they have to jazz. And they have their call next week, so I would just pay attention to that.
Speaker Change: Great, thank you.
Thank you.
Please stand by for our next question.
Our next question comes from the line of John Miller with Evercore ISI. Your line is open.
Hi guys, thanks so much for taking the question. I guess I'll just first build on the earlier question on ShareRepo. I know it seems like you're not in any rush to get started with the second half, but did the first half of ShareRepo achieve the goals that you hope to achieve with those purchases?
Speaker Change: And then beyond that, it seems like you're suggesting a strong potential for more BD or all other sources of funds in the upcoming years. And I'd love to get a little bit more color on that. What kinds of deals are you interested in, discovery collabs, licenses on the 5x5, or collaborations and development there, on the legacy tech? What are the things that you're looking at when you talk about the potential?
future deals, and I do have a follow-up.
Speaker Change: No, no, thanks for the good question. I'll...
So I think with respect to the charitable repurchase program, I think we carefully considered this before we initiated the first $30 million in August, and I think we've been able to
retire a little more than two and a half million shares out of the cap table, which I think
You know, I think it can provide a total share return, not just immediately, but over time.
undervalues compared to what we believe the long-term value for the company is and what we see inside. This reflects our confidence in the future outlook of our business.
Speaker Change: potential of not just Danny, but our wholly owned product candidate portfolio and I think the long term value of even our further preclinical development pipeline, which we'll hear more about.
at R&D Day. I think the repurchase program is just obviously one component of the overall capital allocation strategy we need to think about. I mean, ideally, first we need to make sure that we sufficiently fund the core business that we have of all the exciting R&D opportunities that we have inside the company.
our first priority. I think if we do see opportunities to also provide some upset of total short-term return, we are required to look at that and consider it. But I think we've accomplished the objectives we had. I think we obviously have the ability at any time to go ahead with
Speaker Change: with a further share purchaser program, when we consult with our board and make that known. Right now, we're just taking a little pause to consider that with a number of other factors.
Speaker Change: In consideration, I think
You know, with respect to partnership collaboration strategy, I think we tried to be very clear. I think, you know, with the 555 program, and you'll hear the last nomination at R&D Day, we've obviously got a really exciting portfolio of agents that we that we like a lot, and we're moving into clinical data.
You know, we're almost two years early in formulating that portfolio into clinical studies. It's our nomination in clinical studies, which is great.
opportunities in the preclinical pipeline and we've also been working on advancing much closer to IND.
Speaker Change: So, we can see a very broad and exciting portfolio in front of this. We realize that not all of those are going to work out the way that we might have expected. So, there will be some attrition rate.
In that portfolio, that's the natural part of our business, you can't be 100%.
I think the other thing we realized is that, you know, the more exciting that portfolio looks,
You know, we can't possibly do all of that ourselves, so though it's wholly owned today, we do expect that we will have to bring in partners and collaborators to help us.
Move that forward, either accelerate some of the time frames, use some of their capital or clinical resources to move this along, and we're carefully considering how we overlay the continued growth of the R&D portfolio, not just the 5x5, but beyond that.
with Potential Partnerships and Collaborations to get the right mix of capital we can allocate to the program of our own capital versus sharing risk and capital with others.
versus retaining, you know, commercial rights for ourselves. I think very clearly within a data map, we decided to outlicense that program outright to Beijing and Jazz and not have a commercial role. I think in the future, we're looking to retain some additional rights.
Speaker Change: longer in development and potentially give us the commercialization option later.
And so doing that on a portfolio basis is something that we're really...
thinking about very carefully.
And so I expect as you learn more about the portfolio and look at how it might even grow beyond the 5x5, there are some natural points in time for us to think about adding some partners to help us move that portfolio.
Speaker Change: Yeah. Forward.
And those are things we've been thinking about all year, things we'll continue to think about.
Once we find the right partner who is interested in moving those assets forward with us in the way that we think they should be moved forward.
And we can get, you know, paid appropriately for our efforts to date and continue to have upside as we work with partners to move those forward, then I think we're quite happy to look at partnership possibilities at that time. The nice thing about having a strong financial position is that we can do that within a timeframe that generally we can set ourselves.
And I think there's some advantage in making sure you can find the right partner for the right set of products at the right time in the right deal structure that works for our shareholders. That's one of the reasons that we try to put ourselves in a strong financial position and continue to be in a strong financial position going forward into those discussions.
Great, thank you. Makes sense. And then maybe one more on the science side.
Speaker Change: So...
Can you talk a little bit more about the pushes and pulls there, how you expect to be able to identify patients, do you expect to have to be stratifying by expression, how do you expect your advances in the ADC field to enable those broader populations compared to focusing on those patients where there's really strong expression?
Speaker Change: Yeah, thanks Jonathan. Yeah, no, thanks for the opportunity to clarify. So I think, you know, in our design and our thinking, we really do value the importance of the front end of the antibody and its ability to recognize, target, and internalize.
So we do take quite a lot of care and we really value that aspect of the ADC.
But we also appreciate that within the tumor microenvironment, not all the tumor cells are going to necessarily have high expression.
And so that's where things such as bystander activity are also a very important contribution to the mechanism.
Speaker Change: The potency of that AEC, that payload
as well as the release of that payload at a tolerable pace is very much also baked into the design of our features. So we can get the on-target effect, we can get bystander effect, and then we can potentially get some chemo effect as well. And that's how we try and.
factor that all into the design. And then it's also balanced by the DAR and then the tolerability profile where you're getting you don't want to run into issues of intolerability that others have seen with higher potency payloads.
Thank you.
Speaker Change: Please stand by for our next question.
Speaker Change: As a reminder, ladies and gentlemen, that's star 11 to ask the question.
Our next question comes from the line of Derek Achula with Wells Fargo. Your line is open.
Derek Achula: Hey, guys. Thanks for taking the questions and congrats on the progress. Just two quick ones from us. I guess first, you know, what do you plan to cover at the R&D day in terms of potential expansion into autoimmune disease? I guess is there going to be a discussion around certain targets of interest? And then second question, just in terms of your target selection process for the Tri-T cell engager, I guess maybe just run us through that and what type of preclinical data might you, you know, highlight at the R&D day for the development candidate you plan to nominate. Thanks.
Thank you for watching. Please subscribe to my channel.
Yeah, maybe I'll let Paul answer both of those if he wants. Yeah, yeah, yeah, sure. Yeah, so I think, Derek, the first question was...
Derek Achula: The Scope of Thought will present on the autoimmune programs.
moving forward even beyond that. So that will cover the autoimmune space.
In the trispecific space, I think the one that we've been talking about most and you're most familiar with is the CD28, CD3.
try specific platform or try TCE CoStim.
And there, when we're thinking about the target there, you know, we do appreciate that we want targets that have a profile that, you know, is more biased towards tumor expression and less normal expression. So we do appreciate there you have to take care. But the way that we've designed that molecule differently than others have thought about with deploying CD28 is that our CD28...
engagement only occurs when you have the CD3 engagement and you have engagement of the tumor target. So in some ways we're not really that different, even though we've got that extra punch on the CD28, we're not really any different than how others think about target pairing with T cell engagers.
Of course, we have advances and we have things where we think we can improve the therapeutic window moving forward. But for initial targets, we like very much the targets that we've already shared, the DLL3 and the CLOD and 18.2. We think the tolerability profile has been very, very good.
encourage it to us as we've progressed those through preclinical development.
Hopefully that answers it. We certainly are thinking about targets beyond those, applications beyond those as well, but again it really depends on the platform that we're leveraging and somewhat the profile of the target antigen as it fits into that platform.
Got it, thank you so much.
Thank you.
Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Kim for closing remarks.
That's great. Thank you, Operator. So, thank you, everyone, for listening to our call today. As always, we're extremely excited about the future for DesignWorks. We still think there's a lot of time left in 2024 for us to get some additional milestones and events behind us.
Derek Achula: So we look forward to doing that. And again, we look very much forward to seeing all of you, either in person or virtually, for December 12th R&D Day, where we'll be able to give a really great update of the 5x5 programs.
with some KOLs providing some landscape analysis, and also a good overview of where our long-term R&D strategy is beyond the 5-5-5, and we really need to accelerate that view just because we're almost...
Two years ahead of schedule in constructing the 5x5 portfolio, so we've been thinking about this for some time and happy to share our vision for ZymeWorks on a longer-term basis from an R&D perspective, and look forward to seeing all of you there in December 12, again, in person or virtually, so thank you very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.