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Presentation

Zymeworks Inc. misses on earnings expectations. Reported EPS is $-0.31 EPS, expectations were $0.01.

Operator: Thank you for standing by. This is the conference operator. Welcome to Zymeworks Fourth Quarter and Year-end 2024 Results Conference Call and Webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Shrinal Inamdar, Senior Director of Investor Relations. Shrinal, please go ahead. Shrinal Inamdar Thank you, operator. Good afternoon, everyone. Thank you for joining our fourth quarter and year-end 2024 results conference call. Before we begin, I would like to remind you that we’ll be making a number of forward-looking statements during this call, including without limitation, those forward-looking statements identified in our slides and the accompanying oral commentary.

Forward-looking statements are based upon our current expectations and various assumptions, and are subject to usual risks and uncertainties associated with companies in our industry and at our stage of development. For a discussion of these risks and uncertainties, we refer you to our latest SEC filings as found on our website and as part of the SEC. In a moment, I will hand over to Leone Patterson, our Executive Vice President and Chief Business and Financial Officer. Leone will just be discussing recent corporate updates along with financial results for our fourth quarter year ended 2024. Following this, Dr. Paul Moore, our Chief Scientific Officer will talk about key highlights from our fourth quarter, including our expanded focus on autoimmune and inflammatory diseases as well as hematological oncology.

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 be available on the Zymeworks website later today. I will now hand the call over to Leonie. Over to you.

Leone Patterson: Thank you, Chanel, and thank you all for joining us today. We are pleased to be reporting on another successful quarter marked by the approval of zanidatamab and continued progress on our clinical development strategy. Our R&D Day in December last year was a great opportunity for us to evaluate just how far we’ve come, not only with the development of our wholly owned pipeline over the past 2 years, but also the larger impact we have been able to make through our global strategic partnerships. Over the last decade, we have built a strong track record of successful partnerships with some of the world’s leading pharmaceutical companies, and this timeline slide highlights this commitment to scientific innovation and collaboration.

During this time, our cutting edge platforms such as EFECT and AZYMETRIC have driven multiple partnerships across oncology and beyond with industry leaders including Bristol Myers Squibb, Daiichi Sankyo, Janssen, Merck, GSK, Jazz and BeiGene. One of the key aspects that we believe makes us a preferred partner is our ability to rapidly evolve our platforms to address emerging therapeutic challenges. Whether it’s Bi-paratopic engineering or the development of our TOPO1i Platform for ADCs, we strive to continuously push the boundaries of biologics and multiple multifunctional therapeutics. Looking ahead, we remain focused on advancing our next-generation of wholly owned therapeutics. Our expansion into autoimmune and inflammatory diseases as well as hematologic indications reflects our commitment to staying at the forefront of innovation and value creation.

For our partners, this means continued access to potential best-in-class biologics, a derisked approach to development and a shared vision for bringing transformative therapies to patients. Over the past year, there has been significant progress in our partner programs, achieving multiple key milestones that reflect the strength of our collaborations and the commercial potential of our pipeline. In total, we have earned over $45 million over the past 12 months from our partnerships, which I will outline in more detail in the following slides. More recently, in January 2025, we achieved a $14 million research milestone from GSK under our 2016 license agreement related to a clinical milestone, which we believe is a testament to the potential long-term value of our innovative approach.

As part of this agreement with GSK, we remain eligible for further research, development and commercialization milestones, underscoring the potential for continued value creation. In relation to our partnership with Jazz, Ziihera achieved net product sales of $1.1 million in Q4 2024, following the product launch in December 2024 and FDA approval in November 2024. Our royalties from net sales by Jazz have been reflected in our income statement in Q4 2024. These recent achievements reflect the strength of our partnerships and the ability of our innovative platforms to drive additional clinical and commercial success. We remain committed to advancing breakthrough therapies, expanding our collaborations and unlocking new opportunities for growth.

With this foundation of trust, proven execution and differentiated technology, we are well-positioned to continue exploring the potential for partnerships and unlocking new opportunities together. Our goal is to advance our broad and diverse pipeline towards clinical trials as we continue to evaluate and pursue synergistic global and regional business development opportunities, leveraging Zymeworks experience as a trusted and preferred strategic partner. Now turning to our financial position. This afternoon, Zymeworks reported financial results for the fourth quarter of 2024. Zymeworks net loss for the year ended December 31, 2024 was $122.7 million or $1.62 per diluted share compared to a net loss of $118.7 million in 2023. The increase in net loss was primarily due to a $17.3 million noncash impairment charge recognized in 2024 related to zanidatamab, zovodotin and an increase in income tax expense, which was partially offset by lower research and development and general administrative expenses.

As reported, our revenue for the year ended December 31, 2024, was $76.3 million compared to $76 million for the same period in 2023. Revenue for 2024 included $25 million of milestone revenue from Jazz in relation to the FDA approval of Ziihera for the treatment of HER2 positive BTC. $37.5 million for development support and drug supply revenue from Jazz, $8 million of milestone revenue from BeiGene in relation to the acceptance by the CDE of the MPA in China of the BLA for zanidatamab for second line treatment of HER2 positive BTC. $2.5 million of milestone revenue from GSK in relation to the sequence peer nomination under the 2016 license agreement, $3 million from BeiGene for drug supply and research support payments and $0.2 million from other partners for research support and other payments.

Revenue in 2023 included $71.5 million for development support and drug supply from Jazz, $1.6 million from BeiGene for drug supply and other research support payments and $2.9 million from our other partners for research support and other payments. Overall, operating expenses were $213.4 million for the year ended December 31, 2024, compared to $214.1 million in 2023, representing a slight increase of 0.3% year-over-year. This slight increase is overall and overall operating expense has resulted in from a decrease in both research and development expenses and general administrative expenses. This was offset by a noncash impairment charge of $17.3 million as a result of the company’s decision to discontinue the zanidatamab zovodotin clinical development program, which utilized the technology represented by acquired and processed research and development assets.

The decrease in research and development expenses year-over-year was primarily due to a decrease in expenses from zanidatamab as a result of the transfer of responsibility for this program to Jazz and a decrease in expenses for ZW171 and ZW191 as the majority of manufacturing and IND enabling studies were completed in 2023 prior to filing of the IND applications in 2024. This decrease was partially offset by an increase in manufacturing and IND enabling supporting activities for ZW220 and ZW251 along with other preclinical and research activities. Stock-based compensation expense increased primarily due to new grants during 2024 and a lower expense in 2023 as a result of the cancellations and modifications of awards in respect of employees transferred to Jazz.

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, insurance and depreciation and amortization expenses compared to 2023. This was partially offset by costs incurred due to the termination of our long-term facility lease in Seattle in 2024 and an increase in stock-based compensation expense over 2023, primarily due to new grants during 2024 and reversal of compensation expense for auction cancellations and modifications in 2023. Other income net was $20.5 million for the year ended December 31, 2024 compared to $18.8 million for the same period in 2023. Other income net for 2024 included $19.9 million of interest income and $0.8 million of foreign exchange gains, partially offset by other miscellaneous charges.

Other income net for 2023 included $19.7 million of interest income and $0.3 million of miscellaneous income, partially offset by $1.2 million of foreign exchange losses. Currently, we have approximately 69.6 million shares of common stock outstanding and approximately 5.1 million shares of common stock distributable under pre funded warrants. As of December 31, 2024, we had $324.2 million of cash, resources consisting of cash, cash equivalents and marketable securities as compared to $456.3 million as of December 31, 2023. For additional details on our quarterly and year end results, I encourage you to review our earnings release and other SEC filings as available on our website at www.zyeworks.com. Based on current operating plans, our strong financial position of $324.2 million in cash resources as of December 31, 2024, together with certain anticipated regulatory milestone payments, continues to provide an expected cash runway into the second half of 2027.

Just a reminder that we may also be able to extend this runway or fund an expanded R&D scope through potential additional regulatory approval milestone payments in connection with our existing partnerships, most notably with Jazz and BeiGene, and potentially new partnerships and collaborations, which we may choose to form. In addition, pending applicable regulatory approvals, we are eligible to receive commercial milestone payments based on annual sales of Ziihera and also tiered royalties between 10% and 20% on Jazz’s annual net sales and between 10% and 19.5% on BeiGene sales. We began earning royalty revenue from our Jazz partnership associated with BTC approval in Q4 2024. With that, I’d like to hand over to our Chief Scientific Officer, Dr. Paul Moore, who will provide an overview of key highlights from our R&D Day, which took place in December 2024, as well as provide updates on our Phase 1 clinical trials for ZW171 and ZW191.

Paul Moore: Thanks, Leone, and good afternoon, everyone, and thank you to those of you who joined us in New York for our R&D Day back in December. We hope you found it to be an informative event. As a refresher for those who attended and also for those of you who were not able to attend, I wanted to spend a few minutes now to briefly provide an overview of the progress we reported. First of all, this slide provides a visual remainder of the tumor types we are prioritizing that all fall within the blue sphere and comprise cancers with poor survival rates, those where 3 or 5-year survival remains unacceptably low together with a threshold level of incidence. In blue font are the molecules we’ve already developed, Xani or are developing the 5×5 and the tumor types they cover within this framework.

As you can see, our work to date aligns closely with our strategic focus on solid tumors, specifically thoracic, gynecological and digestive tract cancers, which reinforce our commitment to tackling the most challenging cancers, while also identifying opportunities for additional development. In purple font are the oncology as we are pursuing with our advanced portfolio. These are areas where we believe our next-generation molecules can make the biggest impact. In addition to thoracic and digestive tract cancers where we already have planted a foothold, we see opportunity also for hematological malignancies such as multiple myeloma, DLBCL and acute myeloid leukemia. As you can see here, Zymeworks current oncology pipeline is designed to address unmet needs across lung, gynecological and digestive tract cancers, leveraging either multi specific T cell engagers or ADC therapeutic modalities to build a diverse and derisk portfolio.

At R&D Day, we were excited to announce the nomination of ZW209, a next-generation T cell engager incorporating conditional CD28 co-stimulation and potentially first-in-class molecules designed to enhance the precision and durability of T cell responses against DLL3 expressing cancers. This nomination highlights the continued innovation and our approach of developing next-generation T cell engagers beyond CD3 activation. Our evolution from designing ZW171, where we will leverage a trivalent binding approach to our current leading preclinical candidate ZW209 at tri specific, reflects our commitment to driving innovation. With ZW209, we have refined our platform to help optimize T cell activation through addition co-stimulatory mechanisms with the goal of enhanced specificity and potent anti tumor responses.

We believe that innovative strategy not only maximizes the therapeutic potential of T cells, but also aims to deliver durable target efficacy against cancer. By leveraging obligate T cell binding and conditional CD28 engagement in the design of 209, this novel approach is specifically designed to prevent potential unintended T cell activation, while enabling targeted tumor cytotoxicity. In preclinical studies, this candidate has demonstrated differentiated long-term cytotoxicity in vitro even at low effective to target ratios. We’ve also observed enhanced T cell proliferation and survival, which could significantly improve the durability of responses for patients. Together, our T cell engager programs such as 171 targeting mesothelin and 209 targeting DLL3 with a novel CD28 co-stimulant mechanism aim to enhance immune activation and tumor selectivity, potentially improving response durability and safety.

Our antibody drug conjugate or ADC candidates, including 191, 220 and 251 utilize our innovative linker payload to optimize tumor penetrant and therapeutic index. These assets target well validated tumor antigens such as folate receptor alpha, NaPi2b and GPC3, positioning them for potential best-in-class differentiation. As outlined with our press release this afternoon, we have prioritized resources to advance 251 with an IND application now planned for mid-2025. Hepatocellular carcinoma remains an area of high unmet medical need and we believe 251 represents a compelling opportunity to help hepatocellular carcinoma patients. By accelerating this program, we are positioning ourselves to potentially bring that transformative therapy to patients sooner.

Encouraging preclinical results and well defined clinical and regulatory path for 251 made it our clear choice for prioritization. As part of this strategic prioritization, we have paused preparations for the commencement of Phase 1 studies for ZW220 at this time. However, it is important to note that 220 remains a highly differentiated IND ready ADC with strong potential in ovarian cancer and non small cell lung cancer. We remain confident in the assets potential and we’ll continue to evaluate the optimal timing for its clinical development, including potential partnership opportunities. We look forward to providing future updates on the development for 220 in the near future. Our decision to focus on 251 aligns with our broader strategy of advancing programs with the highest near-term impact, while ensuring prudent financial management.

We continue to study advanced ovarian and non small cell lung cancer patients with our ongoing ZW171 and ZW191 Phase 1 studies, which may provide valuable insights applicable to ZW220s future development. Together — taken together our balanced portfolio employing diverse modalities and select design criteria, we believe will also enable the potential for multiple combination strategies, whether with standard of care therapies or within our own portfolio and both for induction and maintenance settings. As we continue advancing our pipeline, the strategic approach provides multiple shots enrolled, helping to mitigate risk while maximizing potential value creation in our solid tumor oncology portfolio. During our R&D Day, we also unveiled our ability to utilize Zymeworks technology and experience for autoimmune and inflammatory disease with the nomination of ZW1528.

As you know, often in oncology, the immune system is underactive and the goal is to amplify immune responses to fight cancer, such as we do through employment of T cell engager approaches or through checkpoint inhibition. In autoimmunity, it’s the opposite. You essentially have a hyperactive immune system that needs to be controlled. This contrast opens up overlapping pathways for the same molecular mechanisms that activate the immune system in cancer can be reprogrammed to suppress it in autoimmune disease. Many of the tools and models that we use in the development of our oncology pipeline can therefore be adapted to autoimmune and inflammatory disease, which we believe allows for a seamless transition of expertise. At Zymeworks, we are well-positioned to take advantage of this overlap.

Our Chief Medical Officer, Dr. Jeffrey Smith and myself have worked on the development of autoimmune therapies in the past, giving us the knowledge and experience to advance our molecules through preclinical development IND and into the clinic. We see an opportunity to be selected in how we apply our technology focusing on autoimmune inflammatory diseases where we can make meaningful impact. Regarding application of Zymeworks expertise in antibody engineering and particular bispecific antibodies to autoimmune and inflammatory disease or AIID, we see two initial categories of opportunity. First in the context of inflammatory disorders from multiple cytokine derived disease progression and blocking a single pathway may not be enough for benefit by developing bispecific antibodies that can block multiple cytokines, we have the potential to improve outcomes beyond traditional therapies.

In this context, our previous work with LEO Pharma helped establish a panel panels of antibody specificities, which we leverage to evaluate preclinically a series of therapeutic candidates. Our first candidate nominated for AIID is ZW1528, which is an IL4 receptor alpha by IL33 bispecific, which we believe to be beneficial for the treatment of respiratory inflammation such as mixed type chronic obstructive pulmonary disease or COPD by blocking multiple cytokines in a single module, which is supported by our preclinical studies. Second, within autoimmune diseases for self reactive or auto reactive [indiscernible] disease targeting, modulating or even depleting these populations can lead to therapeutic benefit. This applies to diseases like lupus, rheumatoid arthritis, Type 1 diabetes, where approaches such as immune cell depletion or immune cell reprogram can be highly effective.

With our understanding of immune modulation experimental systems together with proven expertise in biologics and platform technologies such as our next-generation multi specific T cell engagers, we are well-positioned to apply these capabilities to select autoimmune diseases. Moving on now to our candidates in clinical development. As you know, we have initiated two global Phase 1 clinical trials in 2024 for both 171 and 191, which are currently enrolling participants in North America, Asia Pacific and Europe and are both in the dose escalation phase. Since our last earnings call, we have continued to advance the clinical development of 171 from North America to having clinical sites activated and patient recruitment ongoing across multiple regions, including Germany, South Korea and the U.K. These updates reflect steady progress in our global development strategy with continued focus on advancing 1701 across key markets.

Similarly, since our last earnings call, we have continued to advance the global clinical development of 191, including the important milestone of dosing our first patient in November 2024. Since then, we have broadened development beyond the United States with clinical sites activated and patient recruitment ongoing in Japan, South Korea, Australia and Singapore. These developments reflect solid progress in expanding 191s clinical footprint across key regions, positioning us for continued momentum in the coming quarters. For both of these products, we have the advantage of very tolerable molecules based on preclinical data, which allows us to implement a higher starting dose than you may have seen with other agents in similar classes. This of course provides an advantage to try to go more quickly to an active range while studying the tolerability profile.

We look forward to sharing trial and progress posters for these Phase 1 clinical trials at an upcoming medical conference. We also expect to have strong presence at the AACR Annual Meeting in Chicago in April and look forward to our scientific presentations at that key event. I’d like to now hand over to Ken for some closing remarks.

Kenneth Galbraith: Thank you, Paul. We hope the continued progress we’ve made with our Phase 1 trials demonstrates our ability to translate innovation into clinical progress. And this year, we are continuing to make significant strides in advancing another promising ADC, ZW251 toward IND submission and Phase 1 clinical trials. The prioritization acceleration of the IND for ZW251 reflects our disciplined approach to pipeline resource allocation, ensuring we focus on the programs with the highest potential impact. We do look forward to providing an update on the continued development of ZW220 as we continue to have a strong belief in this differentiated ADC with our 519 payload. As we advance our R&D portfolio, we intend to actively manage our emerging portfolio by continuing to evaluate our development priorities based on emerging data, the competitive landscape and strategic opportunities to maximize near-term value creation.

We are very excited about exploring the potential of ZW251 in clinical studies. Targeting GPC3 with an ADC introduces an innovative approach for hepatocellular carcinoma, an area where new treatment options are urgently needed. With potentially best-in-class designs and differentiated mechanisms of action, our pipeline offers meaningful opportunities for strategic partnerships and long-term value creation. Before I move on to Q&A, I’d like to acknowledge the appointment of Mr. Oleg Nodelman as the seventh new addition to the Board over the past 2 years, bringing the total number of representative Board seats for EcoR1 to 2 out of the current 11 Board members. Oleg’s appointment reflects the continued growth of EcoR1’s shareholding, underscoring their confidence in the potential of Zymeworks and this decision follows years of constructive and ongoing discussions with EcoR1.

The Board remains well governed and this balanced structure ensures robust and independent oversight, while also benefiting from Oleg’s years of experience in the biotech sector. We are very confident that Oleg’s experience and insights in driving value creation across the global biotech sector will be invaluable as we continue to execute on our strategic priorities and have a positive contribution to long-term value for all shareholders. So in conclusion today’s update, I believe we are well-positioned to deliver growth and meaningful shareholder value starting with commercial activities from our partner Jazz and the resulting initial royalties from Ziihera in BTC. Along with our wholly owned pipeline catalyst, this is going to be an exciting year for us with top line PFS data from the HERIZON-GEA-01 study of zanidatamab in combination with chemotherapy now expected in the second half of 2025, as well as continued progress by Jazz and BeiGene in broadening the commercial reach for Ziihera and in evaluating other indications through ongoing investigational trials for zanidatamab.

We look forward to presenting multiple poster presentations at upcoming medical meetings, including the American Association for Cancer Research Annual Meeting in Chicago, the American Thoracic Society International Conference in San Francisco and others during 2025. With that, I’d like to thank everyone for listening to our call and I’d like to turn the call over to the operator to begin the question-and-answer session. Operator?

Operator: [Operator Instructions] Our first question comes from the line of Stephen Willey with Stifel.

Stephen Willey: Yes, good afternoon. Thanks for taking the questions. On 251, I think you’ve made some commentary in the past, maybe you have even reiterated today a desire to get into combination cohorts as quickly as possible. So should we think about the way that you will evaluate this drug in dose expansion as being any different from either 171 or 191? And should we expect that there will be an urgency to initiate combination cohorts here maybe a bit quicker than for the other compounds?

Kenneth Galbraith: Yes. Thanks, Steve. I think we have the same strategy for the entire portfolio. I think we are interested early on to seeing some interesting signs of tumor activity. But we firmly believe that both ADCs and T cell engagers being used in combination with standard of care in the earliest patient setting possible might be the greatest possibility or probability of creating a sustainable response. And so we are extremely interested in that — in the entire portfolio, specifically with ZW251 in HCC. Obviously, we all know the poor prognosis for patients and the lack of a long-term overall survival for that patient population. So we’ll study it in a dose escalation, understand the drug, make sure we see a differentiated tolerability — acceptable tolerability profile, some differentiated mechanism and some initial activity.

And then we will be interested in studying the drug beyond that in expansion cohorts, both on its own, but also with the greatest possibility of a stronger outcome in an earlier treatment setting in combination as you suggested. So I think we think this way throughout the portfolio for 251 itself given the patient population, that’s something that we are going to look forward to as quickly as we can.

Stephen Willey: Okay. And then maybe just on NaPi2b, I think you certainly characterize this as being IND ready for the middle part of this year. You guys were fairly optimistic about the target, the biology, the commercial rationale. Can you maybe just expand a little bit on perhaps what either internally or externally kind of prompted this prioritization 251 over 220? Thanks.

Kenneth Galbraith: Yes, I think we’ve as we said, we’ve talked before that we do intend to actively manage our emerging and developing portfolio and that means making very specific decisions about resource allocation because every biotech has a limited amount of time focus and resources. We are very excited about the ZW251 and we’ve been able to find a way to accelerate the timing to get into clinical studies and we would like to continue that momentum to make sure that we can accelerate that program as quickly as possible in Phase 1 studies without losing also the momentum we currently have in our dose escalation recruitment in ZW171 and 191, which is going very well and we want to make sure we don’t lose momentum there as well.

So given our excitement about 251 and our ability to accelerate that in the clinic, we decided to make that decision. ZW220 remains a very interesting ADC for us. It is highly differentiated based on the data we presented. We’ve taken it right up to IND ready state. It would not take us long to initiate that program when we decide to do that. But this is primarily about our excitement about prioritizing 251 given the excitement we have around looking what impact this agent could have on that patient population, which again is a little different patient population than the gynecological and thoracic indications, which were mostly in ZW171, 191 and 220 clinical study plans. So I think we are still very interested in ZW220, but I think our excitement for 251 the ability to accelerate in the clinical studies and make sure we can do that continuing in Phase 1 just made us make that resource allocation decision.

And we are going to actively manage the portfolio, so it’s not the last resource allocation decision we’ll make to move things around when we see an opportunity and a real unmet need and we think that we can go quickly to pursue that opportunity and something that could have a very high impact on that patient population and a very high impact on our portfolio as well.

Stephen Willey: All right. Thanks for taking the questions.

Kenneth Galbraith: Thank you.

Operator: Our next question comes from the line of Akash Tewari with Jefferies.

Unidentified Analyst: Hey, this is Manoj on for Akash. Thanks for taking our questions. On the HERIZON-GEA trial, we are seeing from the original 2022 [ph] trial design paper that you assume the relatively aggressive enrollment compared to the historical trials like [indiscernible] or KEYNOTE-811 . Do you attribute the current delay in readout timing to slower than initially expected enrollment? Or can we actually say it’s more related to slower event rate accumulation in drug or control arms? And just one more, what are your expectations on the percentage patients in the PD-1 high status in the HERIZON-GEA trial? Given this is an open-label trial, is there a risk in geographies where a KEYNOTE-811 is approved that PD-1 high patients and patients are randomized to the clinical dropout? So the overall trial is more tilted towards PD-1 low population. Just wondering how you consider that possibility? Thanks.

Kenneth Galbraith: No, thanks. On the second question, we just can’t speculate. The clinical data will be here this year and so we’ll wait to see that clinical data. I think Jazz gave a pretty good update last week on their earnings call about the guidance, the changing guidance for the outcome and the rationale for that. I think they addressed that in their press release and remarks plus their Q&A. So I don’t want to go beyond the guidance they’ve already provided. So I’ll just refer you back to that guidance or refer you back to Jazz for that question.

Stephen Willey: Thanks.

Operator: Our next question comes from Yigal Nochomovitz with Citigroup.

Yigal Nochomovitz: Yes. Hi. Thanks. Just to follow on Steve’s question around the 251. Was there something specific that you saw that was really sort of as a standout experiment or standout results in preclinical work with 251 that made you take this decision? And was this a fairly recent decision or was this something that has been brewing for some time? Thanks.

Kenneth Galbraith: No, thanks. I can get Paul to answer the first part of your question. I think the second part, we are always looking for ways to accelerate getting our programs into clinical studies and ensure we’ve got really good momentum in Phase 1 clinical studies. And we did that last year with ZW171 and 191. Those are going well. And with 251, we have been looking for opportunities to accelerate the timing to get into the clinic and we’ve been able to find that. And I think we have a really good pathway to generating clinical data for that agent. And so that’s why we are excited and that’s why we prioritize it with some resource allocation. But Paul, I don’t know if you want to mention anything else about preclinical data of interest around the decision.

Paul Moore: Yes, absolutely. I mean, I think we’ve signaled some of the exciting data that we’ve had on 251 in prior presentations, but the data has continued to look very exciting. I think our profile in therapeutic control of HCC models, PDX models that data has continued to mature and support our decision. So with that — from that aspect, we always felt that the opportunity to break into a new therapeutic area was exciting. There’s such an unmet medical need there. So I think the rationale for moving that forward as quickly as we can is solid. Obviously, as we are doing our IND enabling studies as well, but those go to a certain pace and we can interpret that data as it comes out. It’s something so you need to navigate that and that’s all been navigated so far as best as we can see.

So it gives us the sort of confidence and to accelerate the timeline on that one. So it’s really — just it’s always been an exciting molecule and we’ve been able to as Ken and we’ve noted, been able to accelerate it. So we want to get that back to patients as soon as possible.

Yigal Nochomovitz: Okay. And then for 220 for the NaPi2b, is the base case assumption that if you were to bring that one back online that it would be through a partnership or through your own efforts or is that unclear or to be determined?

Kenneth Galbraith: Yes, we haven’t given any guidance on where we might initiate that because I think we need to make — wait to make that decision. But obviously, we continued to invest in it to get it to an IND ready state. So we’ve completed everything that we believe we need to take that in clinical studies, including the pre-IND consultation, GLP talks and the clinical supply. So that program could be initiated pretty quickly in the clinical studies. And I think as soon as we have guidance on being able to do that, we will provide that guidance to you.

Yigal Nochomovitz: Okay. Thanks, Ken and Paul.

Kenneth Galbraith: No, thank you.

Operator: Our next question comes from Brian Cheng with JPMorgan.

Brian Cheng: Hey guys, thanks for taking our questions this afternoon. Maybe just going back to the path on 220, was the decision driven by what you saw in part based on the preclinical work or the perception of NaPi2b in general among investors? And then as we think about the rest of the portfolio, is there any ability for you to now pull forward asset like 209?

Kenneth Galbraith: Yes. Thanks, Brian. We haven’t changed our guidance on ZW209, but obviously we’ve shown with ZW251 we can find ways to accelerate those programs. I think the decision we took to prioritize resource allocation on 251 was simply because of the excitement we have for that. Nothing else about ZW220 at all. I think we want to accelerate 251 into clinic. We want to make sure we have good momentum in Phase 1 studies and we don’t want to lose momentum that we have currently now in our ongoing dose escalation studies for ZW171 and 191. And I think we are just trying to be very careful not to take on too much to make sure we focus and allocate our resources where we think can have the highest impact. And so I think that’s the decision that we took and I think it’s a very disciplined approach.

And we look forward to moving 251 into the clinic and starting those Phase 1 studies and continue to prosecute the dose escalation studies that are ongoing for 171 and 191 and the good momentum we have there.

Brian Cheng: Okay. Thank you, Ken.

Kenneth Galbraith: Yes. Thank you, Brian.

Operator: Our next question comes from Jonathan Miller with Evercore ISI.

Jonathan Miller: Hey, guys. Thanks for the question. I will pile on NaPi2b while we are on the topic. Obviously, you haven’t made final decisions here, but I noticed it’s still in your pipeline slides. You are still talking about NaPi2b as a target, but obviously it seems a little bit in limbo. Should I still think of this as part of the initial slate of targets that really matter to you, that 5×5 slate? Or should I be thinking more about promoting some of those autoimmune or inflammatory programs into those “5×5” slots, Just in terms of the whole pipeline development, where is NaPi2b ranking now compared to the 6 or 7 programs that you’ve talked about explicitly?

Kenneth Galbraith: Yes. ZW220 is still a very high interest molecule to us. And I think you saw from the preclinical data we presented before — on last year, it is highly differentiated and we are interested in exploring that. I think this decision is more about our excitement for 251 being able to accelerate that into the clinic and get good momentum in the Phase 1 studies as well as not lose momentum from the dose escalations we have going on now from 171 and 191. So you’ll see it’s in our pipeline, it’s of high interest. We’ve taken it right up to the point of IND filing and it would not take us much time or effort to initiate those clinical studies, but we’ll just decide to do that at the right time just to make sure that for the portfolio itself, we can follow the areas of high impact and 251 is definitely that and make sure we can move momentum throughout the entire portfolio as it grows and it’s nothing other than that.

Jonathan Miller: Okay. I won’t call it attrition.

Kenneth Galbraith: No, no.

Jonathan Miller: Can I then ask on Xani, obviously you still got material regulatory milestones left that it was very exciting about and I’m sure you can’t speak with any detail on what is going to enable those, although I think we can all sort of guess? Can you just say how many indications and geographies are the remaining milestones split between? Is there one — is there an expectation that one is really driving the bulk of that remaining $500 million or should I expect that to be more split?

Kenneth Galbraith: Yes, we are not — we are unfortunately not able to guide on the future milestones. You obviously saw the milestone we got for the BTC approval and you obviously saw the milestones we received from BeiGene in their territory. And as those events continue to happen, we will report what those milestones are and you just have to wait until that occurs. We are really excited that Ziihera is launched. And the U. S. and BTC, we are really excited about the potential for that to be broadened to both China and Europe where there’s regulatory matters pending and obviously really excited to see the results of the top line HERIZON-GEA-01 study in the second half, as well as excited by the progress that Jazz and BeiGene are making on the other registration studies for expansion purposes that they have ongoing.

And I think we are extremely excited about the partnerships and I think our share of royalties and milestones will report as they come along and then we will be able to add it up after the fact.

Jonathan Miller: All right. Makes sense. I guess then finally, can you give us an update on your current expectations for data disclosure on the internal programs? I mean, obviously, you’re still relatively early for 171, 191 in the escalation phase, but how are you thinking about when you might disclose data? How much data you’d want to have in hand before you start sharing that publicly?

Kenneth Galbraith: Yes. We will continue to evaluate that as data comes in. I think those studies are progressing very nicely for us. And I think we want to make sure that continues even though we are accelerating 251 into clinical studies and have that go as well as the first two have. I think we’ve been very clear that we intend to provide updates on our clinical programs on a regular basis. We will do that at a peer reviewed medical or scientific meeting. And I think we have said before, we won’t give any guidance until we’ve decided we have an update of this meaningful to present in that peer reviewed format. And once we’ve done that and submitted it and have an abstract accepted and talk about the title, then we’ll guide that you’ll see data at that point.

And we just don’t want to get ahead of ourselves with that guidance at all. The studies are progressing well, but as you say relatively early and we want to make sure that we have something meaningful to put in front of that peer reviewed audience about the status of the work that we are doing and what’s going to come next. So you just have to wait for that guidance to occur.

Jonathan Miller: Thanks so much.

Kenneth Galbraith: Yes. Thanks, Jon.

Operator: Our next question comes from Jay Olson with Oppenheimer.

Jay Olson: Hey, congrats on the progress, including the addition of Oleg to your Board. And thanks for providing this update. We have two questions. First on autoimmune and inflammatory diseases. Can you talk about the gating factors for filing the IND for 1528 and could that be accelerated based on read across from competitors programs like Regeneron’s IL-33 readout and COPD?

Kenneth Galbraith: Yes, thanks. I can let Paul talk about work that will take us up to IND. And obviously from our experience of 171, 191 last year and now at 251, we always look for opportunities for programs of the highest possible impact in our portfolio to find ways to accelerate those. So we will continue to do that for this program as well. But Paul, do you — is there anything you want to talk about Paul about what work we need to get done to get to IND of the nature of that work? I know go ahead.

Paul Moore: Yes, sure. Yes, I know. I mean, obviously, we shared some data at the R&D Day on that. So we are very excited about the preclinical profile. We have some pilot NHP study, some pilot PK. So that’s checking a lot of boxes for us. So now we have to do the IND enabling activities, think about the top study plan, have the materials for that, have the materials to support filing. So that pretty much takes a standard amount of time. And as Ken alluded to and we’ve shown with the other programs, there are some places where we can contract on that, but we prefer to give realistic guidance as best we can to satisfy we are seeing second half of 2026. I mean, I think you mentioned that there are other readouts coming from Regeneron and we know also AstraZeneca and other companies have IL-33 readouts.

Certainly, that will we will be keeping an eye on that, but we are very confident in the design of our molecule and how we’ve designed that and how it adds benefit to blocking both of those pathways that we will be focused on our molecule. But certainly, we realize that that could add additional clinical validation to our strategy.

Kenneth Galbraith: And we do expect to continue to report on some of that preclinical data as we progress towards IND the same way we did for our other agents 171 and 191 and others. So expect to see additional data as we make our way towards IND.

Jay Olson: Okay, great. Thank you. That’s super helpful. And then secondly, in cancer, can you just share your thoughts on multi payload ADCs and is that something that you might be interested in?

Kenneth Galbraith: Go ahead, Paul.

Paul Moore: Well, absolutely. Certainly, we think a lot about payloads. We are investigating additional payloads. We could build multi payload molecules even with the capabilities we have in house just now. I think there it’s really important to think about the challenge or the therapeutic rationale for making such molecules. We see –so we do think about that, but it has to really provide a benefit in design for us and thinking about that. So certainly we are aware that we’ve really invested significantly on generating what we believe will be a best-in-class TOPO1i Platform. But behind that, we thought about other payloads and then how you could combine that either with TOPO1i with themselves is certainly on our radar. But a lot of it will come down to the biology of the target indication and the need for do you need that or is that the right solution for what you develop.

Jay Olson: Great. Thank you so much for taking the questions.

Kenneth Galbraith: Thanks, Jay.

Operator: Our next question comes from Justin Zelin with BTIG.

Justin Zelin: Thanks for taking my questions and congrats on the progress. For 251, can you speak to your desired target product profile from an efficacy, safety and or dosing differentiated profile from the competitive landscape? And I have a follow-up on 191.

Kenneth Galbraith: Yes. Paul, do you have any comments you want to make about 251? I don’t think we are so specific about our target product profile, but Paul, is there anything you would like to add about 251 from what we see in preclinical data that we think we would like to try and accomplish?

Paul Moore: Yes. No, I think there we know what the benchmarks are in those therapeutic areas and we feel that we’ve been striving for to demonstrate in the clinical studies, certainly from preclinical data, the efficacy that we see across a broad range of I mean, I mentioned a broad range of hepatocellular PDX models is you’ll get [indiscernible], the glypican-3 target. We are big believers in the importance of the target when we are designing our molecules. The penetrants of GPC3 looks broad. What we need to enrich, we will find out. So that may also be a factor in our final target product profile. But as of now, based on the data that we see from the preclinical studies, we seem to be able to have broad range of the population and that translates into the clinic. We feel this could be really impactful for patients that are in big need for additional options of [indiscernible] of therapy.

Justin Zelin: Makes sense to me. And regarding 191, can you talk to how stable your linker is relative to competitor technologies? And that is to say, do you expect the toxicity profile for 191 to be similar to free [indiscernible] for instance?

Paul Moore: I will take that. I can take the first half. I mean, our linker stability is what we would consider a traditional linker stability. What we have avoided here is using highly stable linkers. We are more in the realm of what others have used for approved ADCs. So that more traditional linker stability. Regarding the profile of the safety profile, I think the tolerability that’s been something that we’ve really focused in on when we’ve been developing our ADC, our TOPO1i. I think one of the earlier questions was on combination strategies and we really that was really cornerstone that we had a tolerable profile. A, so that we could get the dose up in patients, so that we could get to a certain threshold level that we think is important that you get to get anti — maximal antitumor activity as well as the ability then to do combinations where you’ve got a more tolerable profile.

So obviously we need the efficacy, we can’t lose that, but by being able to dose higher, we think we can get a more efficacious response as well having a more drug profile that’s more compatible with other standard of cures. So that’s really our thinking there. And our preclinical data supports that in the tolerability that we’ve seen for 191, where we’ve been able to dose up to 60 mgs per kg with a DAR8 TOPO1i and have [indiscernible]. So that’s really our philosophy and thinking on the design.

Justin Zelin: Excellent. Well, thanks again for taking my questions.

Kenneth Galbraith: No, thank you.

Operator: [Operator Instructions] We are showing no further questions in queue at this time. I’d like to turn the call back to Ken Galbraith for closing remarks.

Kenneth Galbraith: That’s great. Thank you, operator. Well, thank you everyone for listening to our progress on the call today and look forward to reporting continued progress at Zymeworks on the portfolio in the months ahead. So thank you very much.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.