Title

Presentation

Zymeworks Inc. beats earnings expectations. Reported EPS is $-0.3, expectations were $-0.45.

Operator: Thank you for standing by. This is the conference operator. Welcome to Zymeworks First Quarter 2025 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 and good afternoon everyone. Thank you for joining our first quarter 2025 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 the 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 filed with the SEC.

In a moment, I will be handing over to Leone Patterson, our Executive Vice President and Chief Business and Financial Officer. He will be discussing recent business updates along with financial results for our first quarter 2025. Following this, Dr. Paul Moore, our Chief Scientific Officer, will give an overview of our recent R&D developments, including highlights from our poster presentations at the American Association for Cancer Research. At the end of the call, Leone, Paul and Ken Galbraith, our Chair and CEO, will be available for Q&A along with Dr. Sabeen Mekan, our recently appointed Senior Vice President of Clinical Development. As a reminder, the audio and slides for this call will also be available on the Zymeworks website later today.

I will now turn the call over to Leone.

Leone Patterson: Thank you, Shrinal, and thank you all for joining us today. I’m pleased to walk you through our corporate and operational highlights for the first quarter of 2025. I’d like to begin by emphasizing that our performance this quarter reflects the discipline, focus and resilience of business model. In the dynamic environment for innovative biotech companies, we continue to execute against our long-term strategy and deliver meaningful progress across our portfolio. Our programs are moving towards clear, measurable clinical milestones with near-term opportunities to validate our technology platforms and meaningful patient populations globally. Throughout this period of continued progress, we have demonstrated our ability to operate at a high standard and provide value to shareholders while prudently managing our cash burn.

We are also able to manage our cash burn going forward through active review and evaluation of our portfolio and development priorities. With this in mind and as previously highlighted by our management team, we are committed to an evidence based approach to pipeline management where decisions on investment in clinical development are tied to clear, clinical and scientific validation. On the research and development front, we are honored to have our wholly-owned pipeline represented at AACR Annual Meeting with six posters on preclinical data presented across our antibody drug conjugate and T-cell engager pipeline. Paul will be taking us through key highlights from these posters later on today’s call. We are also looking forward to presenting more preclinical data on our wholly-owned pipeline at several upcoming medical conferences in the second quarter, including the American Thoracic Society Annual Meeting where an abstract has been accepted for ZW1528, our novel IL-4 IL-33 bispecific molecule.

We will also be attending ASCO and ESMO Gynecological Cancer Annual Meetings, where we will be presenting trial and progress posters on ZW171 and ZW191 respectively. Similarly, our partner Jazz is also planning to present on these accepted abstracts at ASCO on zanidatamab including a four year follow up of the five Phase 2 of zanidatamab and metastatic GEA, which will provide further understanding of the long-term outcomes and overall survival for zanidatamab plus chemotherapy in HER2 positive advanced patients with metastatic GEA. This progress is further reflected in the announcement from Jazz in April 2025 that the EMA Committee for Medicinal Products for Human Use, or CHMP, has adopted a positive opinion recommending the approval of zanidatamab for treatment of advanced HER2+ biliary tract cancer patients.

A final decision is expected in the coming months. Importantly, if approved, this could also represent an opportunity for an increase in royalty revenue for Zymeworks in the near future. We are also looking forward to the upcoming presentation by JNJ at ASCO highlighting their Phase 1 data for a bispecific T-cell engager engineered utilizing our Azymetric platform targeting a novel target KLK2 in metastatic castration-resistant prostate cancer. Some of you might have seen the preliminary data at AACR last week and we’re encouraged by the early clinical activity and safety profile observed to date. It’s rewarding to see this program move forward, especially in such a difficult to treat patient population and need of novel targets. As a reminder, under the terms of the agreement in place with JNJ for this product, the company remains eligible to receive development milestones of up to $86 million, commercial milestone payments of up to $373 million and mid single digit royalties on commercial sales.

Turning to our financial position this afternoon, Zymeworks reported financial results for the first quarter of 2025. Zymeworks net loss for the three months ended March 31, 2025 was $22.6 million, compared to a net loss of $31.7 million for the same period in 2024. The decrease in net loss was primarily due to an increase in revenue, which was partially offset by an increase in operating expenses, an increase in income tax expense and a decrease in interest income. As reported, our revenue for the three months ended March 31, 2025 was $27.1 million compared to $10 million for the same period in 2024. Revenue for the three months ended March 31, 2025 included $14 million of milestone revenue from GSK in relation to a clinical milestone and our 2016 platform technology transfer and license agreement.

$3.1 million of milestone revenue from Daiichi Sankyo following the first patient dose and a clinical trial related to our 2018 license agreement. $9.6 million for the development support and drug supply revenue in addition to the $0.2 million of royalty income from Jazz and $0.2 million of drug supply revenue from BeiGene. These achievements underscore the strength of our foundational partnerships and the relevance of our platform across multiple products moving into clinical development by our partners. We are also hopeful that continued development by our collaboration partners will provide a future source of revenues for us. These revenues also reflect growing momentum for Ziihera and demonstrate the value of our partnership strategy in expanding patient reach while helping us improve our financial efficiency.

Overall operating expenses were $52.7 million for the three months ended March 31, 2025, compared to $47.3 million for the same period in 2024, representing increase of 10%. Research and development expense was $35.7 million for the three months Ended March 31, 2025, compared to $32 million for the same period in 2024, primarily driven by an increase in ZW251 and other preclinical research expenses, partially offset by reductions in costs on zanidatamab, zanidatamab zovodotin, and ZW191 and ZW220. General and administrative expenses was $17 million for the three months ended March 31, 2025, compared to $15.8 million for the same period in 2024, primarily due to an increase in stock-based compensation expense. As of March 31, 2025, we had $321.6 million of cash resources consisting of cash, cash equivalents and marketable securities as compared to $324.2 million as of December 31, 2024.

We remain well capitalized and based on our current operating plans, we expect our existing cash resources as of March 31, 2025 when combined with the assumed receipt of certain anticipated regulatory milestones, will enable us to fund planned operations into the second half of 2027, which should take us through multiple catalysts in our pipeline. For additional details on our quarterly results, I encourage you to review our earnings release and other SEC filings as available on our website at www.zymeworks.com. With that, I’d like to hand over to our Chief Scientific Officer, Dr. Paul Moore.

Paul Moore: Thanks, Leone, and good afternoon everyone. As previously mentioned, we are pleased to have attended yet another productive AACR for Zymeworks this year with six posters presented by our team. The breadth of preclinical data presented across both our innovative multi-specific antibodies and ADC programs highlights not just scientific progress, but the thoughtful diversification of our R&D strategy. Among the highlights, we are especially encouraged by the preclinical data presented on ZW209, our most recent IND nominated oncology candidate with a planned IND submission in the first half of 2026. ZW209 is a trispecific T cell engager targeting DLL3, a protein expressed on the cell surface of small cell lung cancer and other aggressive neuroendocrine tumors.

This trispecific T cell engager incorporates CD28 co-stimulation and has shown potent antitumor activity in preclinical models including small cell lung cancer. These cancers are notoriously hard to treat and while there’s been some success with the approval of tarlatamab in small cell lung cancer, ensuring the benefit of a bispecific approach for solid tumors, there is a clear need for next generation molecules that can improve the standard of care with broader and more durable responses. That’s where we believe ZW209 stands out. We’ve designed 209 using our TriTCE Co-Stim platform combined with our proprietary Azymetric and EFECT technologies to activate T cells in a more controlled and effective way. A key feature of our design is the obligate nature of CD28 engagement.

CD28 binding by 209 occurs only in the presence of simultaneous CD3 binding. This is shown clearly in the top left panel where control molecules with either CD3 or CD28 binding knocked out demonstrate that CD28’s contribution is conditional on CD3 engagement. This obligate co-stimulation limits potential for unwanted T cell cross linking, or Fratricide, an important safety and specificity advantage of our TriTCE platform. Furthermore, the obligate nature of tumor engagement via DLL3 ensures that 209’s activity is precisely focused where it’s needed. Additional data in our poster further supports this specificity. What’s particularly encouraging is the strength and durability of the response we’re seeing in preclinical models. As shown in the middle top panel, the addition of CD28 enhances T cell fitness and robustness in the presence of DLL3 positive tumor cells.

Compared to control molecules lacking CD28 engagement and versus the clinical benchmark AMG757 or tarlatamab 209 provides more sustained tumor cytotoxicity across repeated rounds of stimulation, which is accompanied by expansion of T cells with memory phenotype.

, : Beyond the data shown here, our AACR poster further characterizes safety profile of 209 incorporating results from a dedicated mouse model of cytokine release syndrome complementary in vitro cytokine release assays studies conducted in non-human primates. In the non-human primate studies, repeat dosing at 10 mgs/kg was well tolerated and 209 demonstrated an antibody like pharmacokinetic profile, a characteristics that can be associated with more predictable behavior in clinical settings. Taken together, these data reinforce the significance of the CD28 arm in driving deeper and more durable T cell responses while maintaining stringent control and safety through obligate engagement of both T cells and DLL3 expressing tumor cells.

We’re excited about the trajectory of 209 as we work towards IND submission in the first half of 2026. In our earlier R&D programs, we continue to focus on novel targets and customized modalities that we believe offer meaningful opportunities for therapeutic innovation. Two of these ADC programs revealed at AACR focus on Ly6E and PTK7, both tumor associated antigens with limited expression in normal tissues and broad relevance across difficult to treat solid tumors. While we haven’t provided guidance on IND timelines for these programs, we continue to explore opportunities on how and when to advance these programs either internally or through thoughtful collaborations. For those of you less familiar Ly6E is overexpressed in multiple indications of high unmet needed including non-small cell lung cancer, triple-negative breast cancer, head and neck cancer and GI cancers.

Notably, Ly6E is expressed in the majority of patient samples across these indications suggesting a potential for broad applicability while maintaining target specificity. Clinical validation of Ly6E as an ADC target has been reported by clinical stage benchmark DLYE5953A and MMAE DAR4 based ADC from Genentech in breast cancer and non-small cell lung cancer. 327, which targets Ly6E, utilizes Zymeworks’s novel 6519 payload with a drug antibody ratio of 8, which enables strong cytotoxicity across a range of solid tumor indications. Consistent with our general approach to ADC design and care also in selection of the antibody targeting arm, 327 utilizes a novel humanized IgG1 antibody, which exhibits markedly superior Ly6E binding internalization and spheroid penetration relative to the Ly6E antibody incorporated in the prior clinical stage program.

As shown on the right, 327 has demonstrated consistent in vitro target specific cytotoxicity across multiple cancer types, this activity is observed in these broad range of indications and is consistently superior to the benchmark with a likewise improvement also observed in xenograft models in vivo. These findings underscore the potential of 327 to deliver more consistent and deeper response in Ly6E expressing cancers regardless of baseline expression levels, an important consideration given the heterogeneity often seen in tumors. On the safety side, 327 was well tolerated in a non-GLP tox study in non-human primates exposure levels exceeded dose projected to be efficacious and the maximum tolerated dose was established at or above 60 mgs/kg.

Observed clinical effects were limited to transient reductions in body weight and food intake post-dosing with no serious adverse events. Altogether, these data built a compelling case for 327 as a differentiated therapeutic candidate targeting Ly6E and a first in class opportunity for Zymeworks. Moving on to Slide 12, PTK7 is a transmembrane protein that is overexpressed in a range of solid tumors including non-small cell lung, triple-negative breast, ovarian, esophageal, colorectal, head and neck and cervical cancers. Previous clinical data with PTK7 targeting ADCs have demonstrated evidence of anti-tumor activity, albeit limited in several of these indications, reinforcing PTK7 as a validated ADC target. Structurally, PTK7 offers a large multi-domain extracellular region that enables the development of antibodies against distinct non-overlapping epitopes and the opportunity to develop biparatopic ADCs as a solution to enhance payload delivery.

Depending on the target antigen, monoparatopic ADCs may not deliver as much payload into cancer cells as biparatopic ADCs and this may have contributed to the modest activity seen with previous PTK7 targeting ADCs, thus opening the door to biparatopic formats and other modular based approaches including next generation ADCs targeting PTK7. Biparatopic antibodies offer several advantages over traditional monoparatopic designs. By binding two distinct sites in the same antigen, they can enhance receptor clustering, increase cell surface retention, improve internalization factors that are particularly important in ADC design. These properties could translate to more efficient payload delivery, increased cytotoxicity and increased cytotoxicity in tumor cells.

Importantly, we bring deep experience in designing, developing and advancing biparatopic antibodies through our work with zanidatamab. Zanidatamab, a biparatopic HER2 target antibody, has demonstrated meaningful clinical activity and validated the potential of biparatopic approaches as well as providing clinical validation for our proprietary Azymetric platform not just from a biological standpoint but also in the terms of manufacturability. This gives us confidence that our biparatopic PTK7 ADC program can benefit from both proven mechanistic advantages and our deep experience in utilizing our established scalable platform. In preclinical studies, we’ve observed improved antibody binding and higher internalization in PTK7 expressing cell lines compared to conventional formats.

This enhanced uptake has resulted in greater payload delivery and corresponding cytotoxicity activity, supporting the value of biparatopic targeting in this context. From a pharmacokinetic and tolerability standpoint, the data are also compelling. In non-human primates, our PTK7 biparatopic ADC was well tolerated at doses up to 60 mgs/kg no mortality or adverse clinical signs were observed and any change in hematology or chemistry were minor and transient. Our mixed effects were consistent with expected class effects and not considered dose limiting. These findings suggest that our biparatopic ADC may offer a differentiated profile, particularly in tumors where PTK7 is broadly expressed or where internalization has historically been a limiting factor.

We look forward to continued optimization work in evaluating this approach across relevant clinical model, preclinical models. Lastly, moving on to our poster presentation on ZW171, a mesothelin targeting T cell engager demonstrating enhanced safety and antitumor activity in a range of mesothelin expressing cancers. As you know, we have reported the first patient dosed in October 2024 for our first in human Phase 1 trial, which continues across sites in the U.S., UK and South Korea and I’ll touch on the ongoing trial in a couple of slides. 171 is engineered with a lower affinity CD3 binding arm, which is designed to reduce the likelihood of indiscriminate T cell activation and cytokine release especially in the absence of high mesothelin expression.

Many T cell engagers with high CD3 affinity like earlier generation one plus one formats have triggered systemic CRS because they activate T cells even when target engagement is weak or off tumor. In head to head preclinical comparisons, 171 has demonstrated superior cytotoxicity versus other next generation mesothelin targeting bispecifics. Importantly, this enhanced tumor cell killing comes with improved cell activity. We’ve observed reduced non-specific T cell binding relative to other programs in this space, a feature that may contribute to a more favorable safety profile. In the middle column, you can see that 171 exhibits selective and high affinity binding to tumor cells expressing high levels of mesothelin while showing minimal binding to cells with low mesothelin expression.

Importantly, 171 maintains low affinity for CD3, which is a deliberate design choice to reduce off target T cell activation and improve safety. This profile underscores its ability to preferentially target tumors, while sparing normal tissues with minimal mesothelin expression. Moving to the cytotoxicity data on the right, 171 continues to demonstrate potent and selective tumor cell killing in high mesothelin high settings, but not in low mesothelin expressing cells compared to benchmark molecules including AMG305, CT95 and the JNJ bispecific comparator. ZW171 consistently shows equal or superior cytotoxicity across a panel of tumor cell lines with varying levels of mesothelin expression, particularly at low effector to target ratios, which more closely reflects conditions in the tumor microenvironment.

As you can see on the left hand side of this slide, in a large panel of tumor cell lines including those that shed soluble mesothelin, 171 maintained strong antitumor potency. Notably, no correlation was observed between the amount of shed mesothelin and 171’s efficacy, underscoring the robustness of its mechanism of action. These findings support our hypothesis that our two plus one design sustains activity in the presence of shed mesothelin through avidity dependent mesothelin binding on high-mid expressing tumor cells. What also stands out, as depicted in the graphs on the right hand side of the slide, is that 171 also demonstrated cytotoxicity, T cell activation and cytokine release in more complex translationally relevant patient derived xenograft models containing endogenous tumor infiltrating lymphocytes as well as in vivo xenograft models.

These data support further the potential of 171 to drive meaningful responses in mesothelin expressing tumors, particularly in challenging tumor microenvironments. Together, these data reinforce our confidence in 171’s potential to deliver meaningful therapeutic benefit while demonstrating a favorable tolerability profile. With our Phase 1 clinical trials in mind, both studies for 171 and 191 remain on track and are recruiting well across sites. This slide highlights the breakdown of currently activated clinical sites by geographic region. Our global clinical trial footprint is a key component of our strategy to move efficiently through early development. By engaging sites across multiple geographies within and outside the United States, we’re able to maintain momentum in enrollment while optimizing the use of clinical supply and supporting streamlined operational execution.

Looking ahead, we do plan to present trial and progress posters for both 171 and 191 at upcoming peer-reviewed medical conferences in the second quarter, as Leone mentioned earlier. And with that I will hand over to Ken to conclude today’s call and open up the call for Q&A.

Ken Galbraith: Thank you, Paul, and good afternoon everyone. We hope that from the remarks made on today’s call, it’s very clear that our R&D organization continues to deliver on its core mandate, advancing a pipeline rooted in translational science and focused on meaningful clinical outcomes while providing multiple near-term catalysts for potential shareholder value creation. The six poster presentations at AACR this year reflect the depth of that work spanning early and mid-stage candidates across multiple modalities. This includes our multi-specific and ADC platforms, which are enabling us to target a diverse set of tumor antigens with increasingly refined approaches. We remain on track to submit our IND for ZW251 by mid-2025, an important milestone for that program and for our broader strategy of building a portfolio with the potential to address unmet needs across oncology and immunology.

Our focus on execution also extends to leadership. In April, we welcomed Dr. Sabeen Mekan as our Senior Vice President of Clinical Development. Her experience across hematology and oncology in both academic and industry settings with Gilead, Daiichi Sankyo and Bristol-Myers Squibb will support our clinical stage candidates that help to shape our global development and regulatory strategy. Dr. Jeff Smith, who joined Zymeworks in 2023, will continue to serve as Executive VP and CMO, where he leads our emerging R&D portfolio in autoimmune and inflammatory diseases as well as our global clinical development operations. In addition, Barbara Schaeffler, who joined Zymeworks in 2024, has been promoted to Senior Vice President of Clinical Development Operations.

Together they will play a pivotal role in shaping the clinical development strategy for our portfolio to support our advancing pipeline. Financially, we remain well capitalized with $321.6 million in cash and equivalents at the end of the first quarter and projected runway into the second half of 2027 when our existing cash resources are combined with assumed receipt of certain anticipated regulatory milestones. Our lower cash operating burn for the first quarter was aided by clinical progress made by our partners. These platform partnerships are a core part of our strategy to broaden patient impact while maintaining capital efficiency, and we’re encouraged by the momentum our partners are generating. Overall, we’ve executed steadily on our long-term strategy, advancing a diverse pipeline of ADCs and T cell engagers, staying disciplined financially and positioning the organization for meaningful progress in the years ahead.

On this slide, we piloted multiple near-term catalyst events in 2025, most notably with the Phase 3 top-line data readout for zanidatamab in the HERIZON-GEA-01 study. As you know, an eventual approval and authentication would trigger a significant cash milestone payment for Zymeworks as well as contribution to an increase in ongoing royalty revenue, which is tiered up to 20% of net sales from Jazz. Before we conclude, I want to leave you with a few final thoughts. In today’s environment, where the biotech industry is undergoing a healthy reset, we believe that companies will create long-term value for shareholders are those that deliver real clinical progress on meaningfully new medicines, make disciplined capital decisions and maintain a focus on operational execution.

That is the approach we’ve taken since 2022 when I took over as Chair and CEO and implemented fundamental strategic changes at Zymeworks. During the remainder of 2025 and into 2026, we look forward to seeing the results of our chosen strategic direction and updating you on our progress along the way. We are advancing multiple differentiated programs based on strong biology and meaningful patient needs and we have clear near-term milestones that we believe will continue to validate both our scientific platforms and our operating strategy. Based on our current operating plans, we remain funded through key catalysts on our wholly-owned pipeline as well as partnerships with leading pharmaceutical organizations and we are prioritizing investments towards programs that have the highest potential to drive value creation and impact patients’ lives.

Governance and operational discipline remain central to everything we do. Our board brings diverse independent perspectives with deep expertise in drug development and biotech value creation. Together we hold ourselves accountable to delivering against clear data driven goals and to making difficult decisions when necessary. As we move forward, our focus is on execution, efficiency and clinical validation and we look forward to sharing continued progress in the quarters ahead. Thank you and I’d now like to turn the call over to the operator to begin the question-and-answer session. Operator?

Q – Charles Zhu: Hello everyone. Thanks for the call, the updates and for the questions. Great to hear the emphasis, the continued emphasis on cash burden discipline, maybe my first question here. As you look towards prioritizing assets and indications for development across your broad preclinical and early clinical pipeline perhaps what are some of your base case assumptions with respect to back end milestone royalty revenues that you may receive from assets with, let’s call it a possible wide range of outcomes like zanidatamab across some of these indications over at your partners? And how do they factor into your prioritizations in terms of like scenario analysis? Thank you.

Ken Galbraith: Yes, thank you for the question, Charles. And I guess, as I said in my closing remarks, I think capital allocation is an important biotech skill to have going along with clinical execution and great science. And we will practice appropriate capital allocation with our board as we put ourselves in position to receive additional capital and whether it’s milestones or from any other source. Obviously, zanidatamab, we’re quite excited about the progress being made by Jazz and BeiGene. We’re as anxious and excited to see the HERIZON-GEA-01 data results later this year as well as continuing to see the progress on the additional clinical studies that Jazz and BeiGene have underway. And certainly, there’ll be a financial important — an important financial piece for us in that progress.

And I think we’ll have to act with capital allocation properly along the way with our board as I said. In addition to that we’re now seeing some of the technology partnerships that we started many years ago starting to push forward really interesting clinical stage assets. Obviously, we’re really looking forward to the ASCO presentation by Johnson & Johnson of their KLK2 CD3 T cell engager in prostate cancer, which again was made in collaboration with us with our Azymetric platform. And so therefore we have a financial interest in the ultimate success of that product as well as hoping it makes a big leap forward for patients. And so I think as we continue to think about that funding that may come in at a later stage, we’ll make the appropriate decisions to allocate capital to continue to build our R&D portfolio where it deserves it and clinical data usually sorts that out as well as make the right decisions as we did last year about returning capital to shareholders where we found ourselves in a position to do that and believe that that would boost total shareholder return.

So I think we’re well situated right now with the board that I have and internal discipline inside the company to make those appropriate capital allocation decisions as they’re necessary. And I think we’ve already shown the ability to do that with our capital allocation last year back to shareholders as well as some of the changes we’ve made in R&D priorities even last quarter. So I feel very comfortable we’ll make those appropriate decisions for shareholders as they’re necessary.

Charles Zhu: Got it. Great to hear. Thanks for that. And my second question on much, much narrower in scope. But Paul, thank you very much for walking us through each of those preclinical assets. Maybe very quickly on ZW209, the DLL3 T cell engager that you guys have, especially as — like tarlatamab continue to move into earlier and earlier lines of small cell lung cancer. And we all know the profile of tarlatamab. Could you also remind us about some of the cytokine induction data that you’ve, I guess, produced with your DLL3? And what are some of the implications there with things like cytokine release syndrome? Thank you.

Ken Galbraith: Yes, thanks, Charles. Yes, so what we’ve done, just as a reminder, is we’ve designed a molecule that can engage CD3 and CD28 and DLL3. And the engagement of CD28 only happens when you’ve engaged CD3. So we think that profile is a very favorable profile compared to other approaches where you would combine a CD28 bispecific, say with a CD3 bispecific, where there you may have to be more broad in your CD28 activation, hit more T cells, which can actually then trigger more broad cytokine profile, okay, across a broader number of T cells. What we are doing is really only engaging the CD3, the CD28 when you’ve engaged CD3. So a more limited T cell will be activated when you’ve engaged DLL3. And we think that — while that generates a cytokine response that will incorporate co-stimulation which will be addition to what you get with just simply CD3 activation that will be a more localized activation of T cells.

And we think the benefit of — the therapeutic benefit will actually really play out well in increasing the therapeutic index that we see with the balanced limited localized impact on T cells. And that’s going to reflect then in our non-human primate studies where we’ve done various studies and we’ve also done studies in fully humanized mice that are used as models for CD28 activation. And we really see a limited off target profile there. So that’s kind of an important thing to bear in mind when you think about our molecule that’s quite different than say other approaches others have used. And we definitely are thinking about limiting that cytokine release to where it’s needed. And yes.

Charles Zhu: Great. Thanks for taking the questions and congrats again on all the progress.

Ken Galbraith: Thanks.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Brian Cheng of JPM. Your line is now open.

Brian Cheng: Hi, guys. Thanks for taking our questions this afternoon. Maybe first, just quickly on zanidatamab, as we glean from the subset analysis of KEYNOTE-811 that focused on Asian versus non-Asian efficacy, we’re just curious what your thoughts are on how ex-US patients in the Phase 3 HERIZON-GEA could impact the powering and the outcome on PFS and OS? Do you think the trial is derisk on both endpoints? And I have a quick follow up. Thank you.

Ken Galbraith: Yes, thanks Brian. I think one of our KOLs addressed this even at our R&D Day in December. And we continued to explore this with KOLs from the time that we started that study. And I think in general what they’ve seen across multiple studies is in the main — not really a significant difference in efficacy across ethnicities of patients overall. I know as we’re starting to see additional sub-analysis from the KEYNOTE-811 study now that they do have to produce some of that data for various pricing and reimbursement purposes. There is a slight difference in that study between Asian and non-Asian subjects. If you look at it, I think on the Asian subject components of the ITT, which is about 200 patients, we saw Asian subjects on that study do better on both arms of the study than non-Asian subjects.

I’m not sure we know what to make of that. Whether that’s the smaller size of that subpopulation at 200 or other anomalies, I’m not sure, but it is a little unusual to see that. I think if you look at all the other studies and look at them on a combined basis, our KOL suggested there not — there shouldn’t really be much difference in the end in efficacy across a wide set of patients. Obviously HERIZON-GEA-01 has well more than 300 clinical trial sites, very diverse globally, very diverse from an ethnicity standpoint. Although prevalence of GEA, as you know, is much higher in Asian markets, we will have inclusion in those markets as well. But I’m not sure what to make of the subpopulation — we didn’t execute that study and we don’t have enough details to really understand why Asian subjects did better on both arms of that study compared to non-Asian subjects.

So we’ll have to let the KOL to publish that study, explain maybe some of that data.

Brian Cheng: Got it. And maybe just one quick follow up. Just going back to the JNJ assets, the KLK2 bispecific with CD3, what’s the expectation on the prostate update at ASCO? And I recall that there is a plan to move forward into a later stage study. Can you maybe remind us how the partnership works from a dialogue perspective? Thank you.

Ken Galbraith: Yes. Our technology partnership with JNJ I think is outlined publicly. It wasn’t our target, but they brought that to our Azymetric platform because they didn’t have a way to build a bispecific against KLK2. So we did that using Azymetric, which is obviously the same platform we use the zanidatamab and some of our other T cell engagers. And from what I saw as a teaser at AACR, it looks quite interesting and we’re looking forward to that data. Our further financial interest in this program is we are entitled to other milestones based on progression of development stage. So we’re interested to see what happens beyond the Phase 1 data they’ll publish at ASCO and what their intentions are and we’ll listen to that.

In addition, we have a mid single digit royalty on sales of KLK2 to CD3. And I think with positive data, I think that they seem very encouraged from the public comments I’ve seen from JNJ and this could be a very significant product for them and a significant improvement in standard of care for patients. And so we’ll follow that very closely. Obviously, the value of the remaining royalties and milestones would be very interesting for us as this program progresses beyond the Phase 1 stage.

Brian Cheng: Great. Thank you, Ken.

Ken Galbraith: Yes.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Stephen Willey of Stifel. Your line is now open.

Stephen Willey: Yes, good afternoon. Thanks for taking the questions. I know you’ve been a little bit hesitant to give guidance around when we might see 171 and 191 data. I know it’s not included in the list of catalyst that you guys have itemized in the slide and I understand that you guys have kind of pointed to a desire to present more fulsome data at peer-reviewed settings. But just curious if you’re intending to provide some level of communication with respect to reaching certain dose escalation or dose expansion milestones. And I guess I asked the question because there’s a lot of interest around the progress being made on 191. Just giving the same novel linker payload is being leveraged across a variety of different wholly-owned programs.

Ken Galbraith: Yes, thank you. It’s not that we’re hesitant to provide guidance. We just don’t think it’s appropriate at this stage. Obviously, these programs are still early. We’re very encouraged so far by the speed of our Phase 1 studies. We had this idea of building up a larger, globally diversified footprint of clinical sites, so that we could find quality patients quickly in the dose estimation stage. And so far that’s working as well as we could have ever hoped to do. I think we’re encouraged by the early data. We’ve seen it’s early. So, so far we’ve had no surprises in translation from our preclinical hypothesis and clinical studies. That being said, it’s still early in that process. I think we do want to make sure that when, as we prepare for some peer-reviewed — some data to be presented at peer-reviewed forum, that’s the appropriate time and we can make some conclusions that are important to share.

And I think the guidance we gave before is still what holds. I think as soon as we think that’s appropriate, we’ll file for an abstract to be presented at a meeting. And once that abstract title made public that will be the guidance. And I’m sorry we won’t give more than that, but I think that’s the appropriate thing to do. We don’t want to do that at an IR event or a corporate event. We think the peer-reviewed section is the way to do that. But again, don’t let that think that we’re not really encouraged by our progress today, excited that it’s going apace. Again as there are changes to be made on ClinicalTrials.gov in those process, you’ll be able to see those as they’re made in clinical trials. And the guidance we’ll give is just to look forward to an abstract title with the appropriate timeframe when it’s accepted and then we’re happy to talk about it at that point.

But until then, I just — we just don’t. Inside the company think it’s appropriate to get too far ahead of yourself in early Phase 1 studies. And so you’ll just have to wait for any time of guidance or timing for that.

Stephen Willey: Okay, that’s fair. And then just — I know you’ve talked about having a finite amount of clinical development capacity in house for the wholly-owned programs, and that kind of forces you to make certain capital allocation and strategic decisions with respect to each of these programs. But is the clinical development infrastructure or capacity, is that something that you’re willing to flex outwards depending upon the success of zani and the triggering of specific milestones from Jazz? Is there a situation where you are enamored with your wholly-owned portfolio beyond the capacity that you have, and some of those additional funds can trigger an expansion of that infrastructure to accommodate the growing pipeline. Thanks.

Ken Galbraith: Yes, good question. I mean, right now we’re really happy with what we rebuilt at Zymeworks to execute these Phase 1 programs. And so far they’re going as quickly as they possibly could, really encouraged with the way that we decided to do this. We built that, as you saw on our slide deck, a pretty large number of clinical sites in a significant number of countries or a dose escalation, but that’s just to allow us then to move quickly and follow data to the next step. And I think for ZW171, ZW191, those programs are moving very quickly. And we want to make sure that we have resources available to move quickly to follow data where it tells us to go. And I think we’re well situated to do that. We’re obviously putting ZW251 into the clinic coming up here pretty shortly.

And I feel comfortable with our ability to execute that program in the same fast way with good quality investigators in a large footprint the way we have with ZW171 and ZW191. So, far that’s not an issue. I think our execution has been really good operationally. And that clinical excuse is an important skill a biotech has to have, and I think we have that right now. Don’t want to mess too much with that in terms of diluting talent or changing the way that we’re doing that. But I think as we have other agents which are able to move into clinic, I don’t think it’ll be a limiting factor right now the way that we’ve designed it. So I feel really comfortable with the capital putting against it, the resource we have against the speed we have, the clarity, and our ability to move quickly to the next stage in clinical development for those programs when the data suggests to us that it’s time to do that.

So, so far, I don’t need more capital to do that. If we needed that, then we’ll make the appropriate capital allocation decision around the investment criteria we have inside the company about where to allocate that. So far, I feel really happy about where we are and our execution and we’ll continue to be able to do that without putting additional capital at risk to build a bigger infrastructure.

Stephen Willey: All right, thanks for taking the questions.

Ken Galbraith: Thank you.

Operator: Thank you. One minute for our next question. And our next question comes from the line of Jonathan Miller of Evercore ISI. Your line is now open.

Jonathan Miller: Great. Thanks so much for taking the question, guys. And congrats on the progress, May be just building on that previous question a little bit, obviously you’ve got a large internal pipeline and as we heard more about at AACR and again today, a lot of potential programs that you could add to either development collaborations or your internal pipeline if and when the time comes. How many — I know we’ve discussed this obliquely in the past, but how many programs can you support early development for internally and what is the gating factor on external collaborations? I know those take work for Zymeworks as well. How many molecules could you have across the portfolio, whether they are internal and external? Trying to get a sense for when those things we heard about at AACR could become more relevant to the story.

Ken Galbraith: Yes. No, great question, Jon. I think in building out our clinical infrastructure we built it in a way that we believe we could handle with the existing build out. We have now probably around five internal programs ourselves through Phase 1, so that we’re kind of within that bandwidth now with the currently declared candidates. I think on a preclinical basis if you look at us translating molecules to the clinic, we could probably handle about ten at any one time, including the clinical candidates. So that’s pretty reasonable bandwidth to handle the portfolio. We obviously have a substantial amount of substrates in our preclinical programs of really interesting molecules that we think are all different. We make the choices which we hope improves the quality of the clinical portfolio that we have.

To date we’ve been doing this all on our own and keeping all of those assets unencumbered. We do evaluate partnerships on a regular basis and look at where collaborations might allow us to go more quickly, provide some funding, provide some clinical resources, which means we don’t have to utilize the original resources and we’ll keep making those decisions. So I think for some of those newer disclosures you can make, we’re evaluating whether we could do that internally, we’re evaluating whether a collaborative approach might allow us to do that. So far we’ve not had a cushion in our portfolio that we paused [indiscernible] IND just to make sure we weren’t taking on too much. So I think right now feel comfortable with the pace of our clinical development nominations to be something that we can execute on in a proper way.

And we’re doing that now for ZW171 and ZW171, expect ZW251 to go as quickly when it transitions to the clinic and we’ll evaluate some collaborative opportunities that might put us in a position to be able to advance some of those other programs without requiring capital investment for ourselves and without acquiring, taking up some of the time of our internal resources to move things forward either through IND or in early clinical studies. That’s the thing we evaluate on a regular basis and as we make decisions about collaborations that became public, then I think we’ll be able to discuss more about that. Hope that answers your question, Jon.

Jonathan Miller: Yes, sure. Absolutely. Thanks so much.

Ken Galbraith: Yes, you are welcome.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Andrew Berens of Leerink Partners. Your line is now open.

Amanda Acosta-Ruiz: Hi, everyone. This is Amanda on Andy Berens. Thanks for taking our question. May be just one from us at AACR. You had a poster on a relatively new ADC target, the Ly6E. And it looks like at least one other ADC with this target has had initial Phase 1 data publicly disclosed. I just wanted to get a little bit more color on what gives you confidence in this target and in your asset over the others out there. Thanks.

Ken Galbraith: Welcome. Yes, no, thanks for asking that question. Yes, you’re absolutely right, there had been a priority program against that target, and that clinical data had been reported against Ly6E. There the payload was different and the antibody was very different. So, one of the things that we realized, or our team realized with that target was the opportunity to really optimize both antibody and the payload. And so what we’re deploying on the payload side is a different payload, it’s a TOPO payload in the field that has kind of gained a lot of momentum. And we think that is this target and the expression profile of that target we think there’s room there for a TOPO payload module. And of course, we have our payload that we’ve got that’s been selected for optimal properties that we believe are needed.

And then equally important for this target, the antibody selectivity and getting an antibody, we spent a lot of time, our team was focused on getting an antibody that’s really significantly better at payload delivery and internalization. And that was kind of described in the poster. And that’s benchmarked against that prior molecule. So we think that will give us an advantage on this performance. And what was encouraging, though, from the original pre-clinical data was there was evidence of clinical responses. They weren’t optimal. But also the target seemed to be relatively safe target for an ADC. And with our enhanced antibody and with our preferred payload, when we’ve modeled that in cynomolgus monkeys, we also see a very favorable tolerability profile.

So that kind of, together with the efficacy that’s significantly better and the tolerability we just think is a nice recipe for a real game-changer, best-in-class molecule against this target.

Amanda Acosta-Ruiz: Got it. Thanks so much.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Akash Tewari of Jefferies. Your line is now open.

Unidentified Analyst: Hi, this is TV [ph] on for Akash. In your preclinical models with [indiscernible] ADCs you’re able to get to max doses which are meaningfully higher than what you’ve seen with HER2. Is there any concern that your toxins could potentially not be potent enough? And additionally if you could provide any color on what your go-forward doses are for ZW191 and ZW251, that’d be great?

Ken Galbraith: Sure. Yes, no, good question. And we’ve actually done a lot of benchmarking of our payload within HER2 payload or [indiscernible] and we see actually in preclinical models very comparable efficacy profile both along a lot of in vitro data and then also in in vivo xenograft models. So I think we’re very confident based on the pre-clinical models that we have the necessary efficacy that’s in the same range as the based payloads. What was the second question?

Unidentified Analyst: Any color on go-forward doses for ZW191 and ZW251?

Ken Galbraith: Yes. No, we can’t at least specify those. But as you alluded to the fact that we have this very high tolerability dose in non-human primates that enables us to guide or start with a higher starting dose in patients. And that would be the typical approach anyone developing ADC would do and we can assume that we would be consistent with that.

Unidentified Analyst: Got it, thank you.

Ken Galbraith: Thanks.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Yigal Nochomovitz of Citigroup. Your line is not open.

Yigal Nochomovitz: Yes, hi, thank you. Paul I see you did the comp analysis versus the Amgen molecule for your DLL3. Did you also look at how ZW209 performs against some of the DLL3 ADCs out there of which there are a few.

Paul Moore: Yes, we haven’t done that. I mean the models are a little bit different for that. So, in this case for that we tend to compare against similar modalities. We certainly are aware of the attraction of ADC approaches also for tumors. So that’s why we’re doing ADCs and there, we are aware of what the competitive space is there. In this case for small cell lung cancer we felt on the backs of — the encourage the data from Amgen and the ability to get these more durable responses. That really was an attraction here for us focusing on the T cell engager approach. But we certainly keep ourselves aware of the ADC approaches there too. But doing the head-to-head comparisons, is not so easy to do those in the same models. It’s different kind of models.

Yigal Nochomovitz: Okay, what’s your sort of more general view though, in terms of the strategy of the T cell engager versus the ADC for this particular target?

Paul Moore: Yes, I think here in this particular target, we really like this as a target to evaluate with our co-stim platform. And so we have the tarlatamab proof-of-concept for T cell engager. So that was partly why we went there with a T cell approach. We certainly have — we could have done ADC, but in this case we felt this type of tumor type and this target, the weighted data made more sense to go with a T cell approach. And then of course we tried, we did our preclinical studies and the data that we’ve seen with the preclinical data studies just really encourages us to continue on that path towards the clinic. So that was a driver there. Certainly when we think about a therapeutic indication, we will evaluate both an ADC and the T cell engager and we will — we do see benefit perhaps sometimes in having both approaches available. But we think in this case for DLL3, this is a very obvious target to do the T cell engager with the CD28 co-stimulation.

Yigal Nochomovitz: Okay, thank you. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Derek Achila of Wells Fargo. Your line is now open.

Eva Fortea-Verdejo: Hi, this is Eva on for Derek. Thanks for taking our question. A quick one from us. So are there any learnings from ZW171 or ZW191 development that could be applied to optimize or expedite the development of your other ADC or T cell engager candidates? Thanks.

Ken Galbraith: Yes, go ahead, Paul.

Paul Moore: Yes. No, definitely, for sure. I mean, I think, we put a lot of learnings into the clinical design. We are able to leverage learnings from other ADCs and other T cell engagers. And certainly as we move forward, other ADCs and T cell engagers will learn from what we’ve done ourselves. So we’re always layering in that kind of knowledge base. We’ll start to reveal more in the trials in progress posters this year that are already scheduled to be presented. And you’ll see there we can give you a little more color on that and you can then maybe see from that how we might also continue these types of strategies in other programs, but can’t really see much more than that just now.

Eva Fortea-Verdejo: Great, thanks.

Operator: Thank you. One moment for our next question. [Operator Instructions] And our next question comes from the line of Robert Burns of H.C. Wainwright. Your line is now open.

Robert Burns: Hey guys, thanks for taking my questions and congrats on the data that you presented at AACR. Just two for me, if I may. Given the repeat challenge assay data for ZW209 as well as the in vivo data and factoring in IMDELLTRA’s move into the frontline — frontline setting for SCLC in combination with AstraZeneca and IMFINZI. I was curious to get your thoughts as to how you see the impact of earlier utilization of IMDELLTRA on the efficacy of ZW209 in the later phase scenario.

Ken Galbraith: Go ahead Paul.

Paul Moore: Yes. I think definitely when we’ve been thinking about the design of our molecules, obviously we need to stage our clinical testing. But we do see the ability of a T cell engager strategy to really move the needle in small cell lung cancer. And we think that the Amgen data, the tarlatamab data bodes well. But I think then in the design of your molecule, if you can enhance the efficacy, enhance the durability of response, potentially broaden the response rate, that’s what you’re trying to do with this next generation molecule that we’ve developed. And I think that, as well as the efficacy, we are very careful on tolerability, you’ve seen that in our ADC approach, I think, you’ve seen that in our ZW171 approach and that’s also reflected in ZW209, where we really think about tolerability so that we can ultimately combine it with potentially standard-of-care once you’ve established monotherapy data.

So heading towards that getting the best benefit for patients is kind of wired into our thinking on the design of all our molecules.

Robert Burns: Awesome. Thank you for that. And one more question. So the PTK7 targeted agent, obviously we saw the comparator in vivo data that you presented was one of those compounds, one of the comparative pre-clinical compounds, one of the ones that Whitehawk Therapeutics is advancing. And if not, how do you view that competitive agent, that competitor agent relative to your PTK7 targeted ADC. Thank you.

Paul Moore: Yes, we use cofetuzumab as the comparator, that was the prior clinical benchmark. And there what we were really trying to demonstrate was the improvement you could get with a biparatopic, we also had our own lead monoclonal antibody or monoparatopic antibody, we also benchmarked. But whatever we’ve seen for this particular target, we really think biparatopic can push things for other targets, it’s not always the case. But in this case, whatever monoparatopic antibody we’ve looked at, either we’ve developed or the sort of benchmark clinical that we had available, we outperformed. So, that to us bodes well. We think we’re really doing something different with the biparatopic that can’t be achieved. We will continue to monitor that as other competitor molecules come across.

But our real drive here was really to see what we could do with the biparatopic and we can leverage that capability. Obviously we did it for zani and it really move the needle there. In this case, we’re applying it to see what we can do on PTK7, a target that seems applicable for this type of approach and we’ll continue to monitor that as we’re doing our pre-clinical work and consider benchmarks as appropriate.

Robert Burns: Awesome. Thank you guys.

Ken Galbraith: Thank you, Robert.

Operator: Thank you. I’m showing all further questions at this time. I’ll now turn it back to Ken Galbraith for closing remarks.

Ken Galbraith: Yes, thank you, operator. Thank you everyone for your time listening to us. We’re always available for questions afterwards if you didn’t get a chance to ask additional questions or something else. And in the meantime, please stay tuned for further developments and we thank our shareholders for their continued support. Thank you.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.