Zymeworks Inc.

Q4 2022 Earnings Conference Call


spk04: Good day, ladies and gentlemen, and thank you for standing by. Welcome to DesignWorks' fourth quarter and full year 2022 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone keypad. At this time, I would like to turn the conference over to Mr. Jack Spinks of Investor Relations for DesignWorks. Sir, you may begin.
spk02: Good afternoon and welcome everyone. My name is Jack Spinks, Head of Investor Relations here at Zimeworks. Today we will discuss our fourth quarter and full year 2022 financial results, as well as provide an update to our ongoing business. Before we begin, I'd like to remind you that we will be making a number of forward-looking statements during this call, including, without limitation, those forward-looking statements identified in our presentation 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 discussion of those risks and uncertainties, we refer you to our latest SEC filings as found on our website and as filed with the SEC. Later in this call, Chris Astle, our Senior Vice President and Chief Financial Officer, will be discussing our financial results, including certain non-GAAP measures. A description of our GAAP measures and a reconciliation to the most directly comparable financial measures as determined in accordance with GAAP are described in detail in our press release, which is available on our website at www.zineworks.com under the Investor Relations tab. As a reminder, the audio and slides from this call will also be available on the Zineworks website later today. Now, I would turn the call over to Chris, our Senior Vice President and Chief Financial Officer. Chris?
spk01: Thanks, Jack, and thank you everyone for joining us today for our fourth quarter and full year 2022 earnings call. As a reminder, I'd like to note that while I'll be presenting the prepared remarks today, Kenneth Galbraith, our chair and CEO, and other members of our executive team will be available for Q&A following this portion of the call. With that, I'd like to begin today's call with an overview of our financial results, followed by a few recent developments and noteworthy updates across our business before we open the lines for Q&A. This afternoon, SignWorks reported financial results for the fourth quarter and year ended December 31st, 2022. SignWorks' net income for the year ended December 31st, 2022 was $124.3 million, or $1.90 earnings per diluted share, compared to a net loss of $211.8 million for year ended December 31st, 2021. The swing from an annual net loss to net income was primarily related to revenue received from our collaboration agreement with JAS, partially offset by increases in expenses incurred in 2022 relative to 2021. As reported, our revenue for 2022 was $412.5 million, compared to $26.7 million for 2021. Revenues for both the year and most recent three-month period ended December 31, 2022, primarily related to the $375 million in upfront payments received from JAS as a result of the completion of the Xanadetimab licensing agreement, combined with approximately $24 million in reimbursements from JAS for expenses incurred for Xanadetimab between October 19th and December 31st, 2022. Research and development expense for the year ended December 31st, 2022 was $208.6 million, compared to $199.8 million for the year ended December 31st, 2021. This increase of $8.8 million, or 4% from the prior year, related primarily to higher manufacturing and clinical trial expenses for Xanadetamab in 2022, and due to the restructuring exercise undertaken in the first quarter of 2022. These were partially offset by a decrease in expenses related to reduced preclinical Xanadetamab's overdosing-related expenses in 2022. As of October 19, 2022, ZymeWorks is entitled to reimbursement from JAS for all Xanadetimab-related expenses related to ongoing studies under the terms of the collaboration agreement finalized in Q4 2022. General and administrative expense for the year ended December 31, 2022 was $73.4 million compared to $42.6 million for the year ended December 31st, 2021. This year-over-year increase of $30.8 million, or 72%, was driven primarily by severance and other expenses related to our reduction in force and R&D reprioritization program that occurred in early 2022, and an increase in consulting and professional fees primarily related to the company's re-domicile to become a Delaware corporation, the JAWS licensing agreement, and other non-recurring project-based expenses. During 2022, the company's workforce was reduced by more than one-third through the reduction in force and voluntary attrition from 450 full-time employees to less than 300 full-time employees. Our cash resources, consisting of cash, cash equivalents, and short-term investments, were $492.9 million as of December 31, 2022. largely driven by the receipt of the upfront payments from JAS totaling $375 million in the fourth quarter. Our cash resources as of December 31st, 2022 did not include $24 million in reimbursements associated with Xanadetamab related expenses from October 19th through year end 2022. Our licensing and collaboration agreement with JAS completed a series of financially beneficial transformation initiatives in 2022, which we believe will fund our planned operations through at least 2026 and potentially beyond. We completed an equity offering in January 2022 comprised of a combination of common shares and pre-funded warrants for gross proceeds of $115 million, which included the exercise in full of the underwriter's option to purchase additional shares. As of March 3rd, 2023, We had approximately 65.25 million shares of common stock and pre-funded warrants outstanding and shares issuable pursuant to our Canadian exchangeable shares. We did not issue any shares of common stock under our ATM facility either during 2022 or as of March 7th, 2023 for the current year. In January of this year, we also issued financial guidance related to our net operating cash burn for 2023. Given the significant change in our overall net cash burn, we expect to experience this year due in large part to the reimbursement of Zanadetimab-related expenses under our collaboration agreement with JAS. We continue to expect our net operating cash burn for 2023 to be between $90 and $120 million, including planned capital expenditures of $15 million. This cash burn guidance, as well as our cash runway guidance, includes forecasted expenses that are primarily related to our early R&D programmes, as well as incremental expenses to support our planned Phase 2 clinical development programme for Xanadetamab-Zovidotin. For additional details on our quarterly results and for a description of our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, I encourage you to review our earnings release and other SEC filings as available on our website at www.signworks.com. Now, I'd like to spend a few minutes talking about our early R&D portfolio, followed by a brief discussion on Xanadetimab Sovidotin and Xanadetimab, our most advanced clinical product candidate. We reprioritized our R&D strategy early in 2022 and had an exciting and productive year with substantial progress on executing this new R&D strategy. To quickly recap, we recruited Dr. Paul Moore as our new Chief Scientific Officer in June of last year, and hosted an early research and development day in October, where we previewed preclinical product candidates emerging from both our antibody drug conjugate and multi-specific platform technologies designed to overcome limitations of existing therapies. At that same event, we disclosed our two lead candidates for INDs by 2024, ZW171 and ZW191, both of which are on track to be submitted next year. Additionally, we set an ambitious target of progressing five novel and differentiated preclinical product candidates, including ZW171 and ZW191, into clinical studies by 2027. We believe that our pursuit of this goal, along with our scientific vision and path forward in the ADC and multispecific antibody space, will help generate a diverse and valuable oncology product portfolio of wholly owned product candidates. In addition to developing our own internal oncology pipeline, we anticipate additional preclinical product candidates derived from our ADC and multi-specific technologies to progress with resources available from potential partners and collaborators. We are continuing to evaluate opportunities to form additional collaborations and partnerships around both our publicly disclosed and confidential preclinical product candidates. This partnership strategy is important as it can help us to accelerate development and advance potential opportunities without the use of ZymeWorks' shareholder capital to complement our wholly owned product pipeline. We hope to announce the completion of additional collaborations and partnerships before the end of this year for multiple preclinical product candidates. In helping further this objective, we are excited to announce the acceptance for publication of 11 abstracts of the American Association for Cancer Research or AACR, to be presented in mid-April in Orlando, Florida. These abstracts will be made publicly available by AACR on March 14th. At AACR, we will be able to share with you additional progress and preclinical data on the announced preclinical product candidates that we spoke to at our early R&D day last year, as well as continued progress on our technology platforms for generating additional ADC and multispecific antibody therapeutic candidates to add to our preclinical product pipeline beyond 2024. Subsequent to these presentations in Orlando, we will also plan to host a conference call to discuss the results and strategic impact these new data will have on our path forward. In addition to our in-house development efforts, we continue to have multiple active licensing agreements with key pharmaceutical and biotechnology partners. This portfolio of legacy platform partnerships which consist of partnerships where we are required to expend little, if any, capital to advance the programmes, represent a significant source of past and potential future non-dilutive funding. To date, we have received approximately $180 million in upfront and milestone payments, not including any amounts received for Xanadetimab or Xanadetimab's overdose. Further, throughout 2023 and 2024, we expect to earn additional milestone payments under existing agreements, as product candidates continue to be advanced through development stages by our partners. We also retain the ability to monetize all or a portion of the future cash flows from these agreements, pulling forward the value of future cash payments to provide an additional source of non-dilutive capital should it be needed. Here on slide 6, we can take a moment to touch on Xanadecimab-Zobidotin, or Xanizo for short. As you likely noticed from our earnings release issued earlier this afternoon, we are planning to continue with a data-driven development program for Xanizo and advance into selected patient cohorts in Phase II clinical studies. This will appropriately move this product candidate forward by studying Xanizo in combination with other approved agents, especially checkpoint inhibitors, with incremental clinical investment and predetermined benchmarks. Previously, we had anticipated a protocol expansion of our ongoing phase one clinical study. However, after careful evaluation and a better understanding of both timelines and what we believe will be the most valuable to any potential future partner, thus building potentially meaningful value to our shareholders, we have chosen to proceed with separate phase two studies to be conducted. One evaluating Xanizo in combination with PD-1 inhibitors in non-small cell lung cancer, and another in patients with breast cancer after progression on T, DXD, and HER2 low patients in combination with PD-1 inhibitors. With this design, we believe we can obtain the clinical data necessary to both enter into a registrational path for Xaniso before the end of 2025 and attract an appropriate partner to assist with XUS development and commercialization, which is something we currently expect would be required before moving forward into a registration pathway. We continue to consider other areas of interest for clinical development in evaluating Xanizo with the current standard of care in HER2-amplified colorectal cancer patients, HER2-expressing gynecological cancer patients, and HER2-positive gastroesophageal adenocarcinoma, or GEA. We anticipate that our Phase 2 studies for Xanizo will be implemented using Assignment's two-stage study design. This allows us to clearly designate and define hurdle rates and stage our investment in Xanizo going forward. We expect that the conduct of these phase two studies will be expanded geographically to additional clinical sites in Asia and Europe to both improve the speed of patient recruitment and lower the overall clinical development cost of patient recruitment. Our newly formed regional hubs will help us provide the appropriate support for this geographic expansion of our clinical development program for Janizo. We continue to believe that the phase one clinical data presented last year at ESMO at 2.5 milligrams per kilogram, dosed every three weeks, shows that Xanizo has a differentiated tolerability profile relative to other HER2 ADCs and acceptable single agent activity in a range of HER2 expressing tumors. The keratitis seen in our phase one study is well characterized and primarily low grade, being grade one or two, which is both manageable and reversible. An appropriate dose reduction management strategy was effective in managing any patients affected with keratitis in our Phase 1 study without any significant discontinuation from the clinical study. Importantly, we did not see other tolerability signals of concern common to other HER2 ADC products, and consequently, an attractive part of what we believe Zanizo can offer is the potential ability to combine with other agents currently used as standard of care in areas where we see the patient need and where we may be able to improve upon current efficacy seen with existing standards of care. Incremental investment in these Phase II studies, which are planned to begin enrolling patients in 2023, is warranted based on the clinical data generated to date and our recent interactions with KOLs and potential partners. While the spend represents a small component of our anticipated net cash operating burn guidance of $90 to $120 million for 2023, We think that Xanizo represents an important and investable opportunity worth pursuing as a differentiated HER2 ADC in post-TDXV patient population and could provide the company with the ability to retain development and commercial rights in the U.S. while working with a partner in ex-U.S. markets. Finally, on Xanizo, while we have continued to enroll and follow patients on our Phase 1 study treated at the recommended Phase 2 dose of 2.5 mg per kg, every three weeks with monotherapy, we will be closing the weekly cohort in order to eliminate any future additional costs associated with keeping this portion of the study open. We expect to be able to present further data before the end of this year on that weekly data, as well as additional monotherapy data generated since the data cut off for the 2022 ESMO presentation. However, going forward, we will be focused on opening the initial two Phase II studies and generating combination data as quickly as practicable. Finally, before we open things up for Q&A, I will briefly touch on Xanadetamab, as we still have an exciting year ahead of us and recently presented important data at ASCO-GI this January. At ASCO-GI, we presented updated data from our Phase II trial evaluating Xanadetamab in frontline HER2-positive metastatic GEA. These data included a first look at Xanadetamab's overall survival data, which showed an impressive 84% overall survival at 18 months, with the median overall survival having not been reached. Further, the data included an overall confirmed objective response rate of 79%, including three complete responses, a median progression-free survival of 12.5 months, and a median duration of response of 20.4 months after 26.5 months of patient follow-up. The regimen was manageable, tolerable, and consistent with the observed safety profiles reported for other standard regimens for patients with HER2-positive GEA. We are working closely with JAS and Beijing to continue enrollment of patients in the Phase III randomized clinical trial, Horizon GEA-01, evaluating Xanadetamab in combination with chemotherapy, plus or minus Tuzolizumab, as a first-line treatment for HER2-expressing metastatic or advanced GEA. We continue to expect top-line results from this pivotal study to be available in 2024. Additionally, last quarter, ZynWorks reported positive top-line data from our Phase 2b open-label single-arm clinical trial, Horizon BTC01, studying Xanadetamab as a monotherapy in patients with previously-treated HER2-amplified and expressing biliary tract cancers. With a confirmed objective response rate of 41.3% and a median duration of response of 12.9 months in patients with HER2-amplified and expressing, or IHC2-plus and 3-plus disease, these data represent a potentially important step for HER2-amplified patients with BTC because Zanodetamab has the potential to be the first HER2-targeted therapy in this indication. and represents a chemotherapy-free treatment option for patients who would otherwise receive standard-of-care chemotherapy in second line, which typically elicits overall response rates of between 5% and 15%. Further, we expect the full results from these data to be presented at a major medical meeting in the first half of this year, and look forward to confirming that presentation as soon as practicable. We remain very encouraged by these positive top-line results for Xanadetamab, as well as the recently presented results at ASCO-GI, including the first look at overall survival data for Xanadetimab in our Phase 2. With our partners JAZ and Beijing, we continue to work towards the potential regulatory path forward with the relevant regulatory bodies in various countries where the BTC data may support an accelerated or full approval. We will continue to work with our partners, who will provide guidance at the appropriate time for any regulatory filings. While the initial development path and global regulatory interactions will be focused in BTC and GEA, the two most advanced indications with ongoing pivotal trials, we and our partners continue to evaluate the development path in other indications beyond BTC and GEA. We have ongoing clinical development in additional indications and remain excited about the broad potential of Xanadetamab in indications outside GI cancers. To this point, Xanadetimab is currently being used in the iSpy platform trials for patients with HER2-expressing tumours in the neoadjuvant treatment of locally advanced breast cancer. This and other ongoing development efforts for Xanadetimab will help determine the path forward in these indications. Last year was an important year for the company, with numerous ambitious goals that were set in January of 2022 to reset the company's strategy. As we reflect on the past year, We were able to make significant progress across multiple aspects of our business, including on the non-scientific front, where we successfully completed a redomital to Delaware, resulting in positive inflows due to index inclusion in U.S.-based indices, as well as a stock exchange listing change from the New York Stock Exchange to the NASDAQ stock market, where we better aligned with peers in the biotechnology sector. As we look towards 2023, we have identified five important pillars of value, our enterprise value framework, that we will look to advance in order to continue generating value. These five pillars are two Xanadetimab collaborations with Beijing and Jazz, our early research and development programs, Xanadetimab's Ovidotum, and our legacy platform licensing portfolio. From a business and financial standpoint, we believe we are well positioned for success with our new strategy. We have sufficient cash to pursue our planned development activities with a significantly reduced net cash burn, a focused clinical program with planned phase two studies for Zanodecimab-Zovidotin, and a number of exciting preclinical product candidates that we are working to progress to clinical studies with a specific focus on development of a mix of antibody drug conjugates and multi-specific antibodies. We believe this focused investment and moderated future spending, when combined with the scientific expertise and people working hard behind the scenes, makes for a very compelling opportunity going forward. As we remain focused on our operational goals, we will also stay true to our vision to discover, develop, and commercialize novel medicines that can make a meaningful difference in the lives of patients around the world impacted by difficult to treat cancers and other serious diseases. To all of those who have been with us through what was a challenging 2022 for everyone investing and working in biotech, Zyneworks now looks forward to the future from a strong financial and scientific footing, and we expect to continue delivering upon these results, generating long-term value for our shareholders and ultimately improving the lives of patients by generating antibody-based therapeutics with the potential to dramatically improve on current standards of care in difficult-to-treat cancers. With that, I'd like to thank everyone for listening to our prepared remarks. And I'll turn the call over to the operator to begin the question and answer session. Operator?
spk04: Ladies and gentlemen, if you have a question or comment at this time, please press star 1-1 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star 1-1 again. Once more, if you have a question or comment at this time, please press star 1-1 on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Yigal Nakamovitz from Citi. Your line is open.
spk07: Hi. Thanks for taking the question. So on the ZW-49 now called Zanizo, you mentioned that you're going to stop the Phase 1, I believe, except for one of the cohorts. So can you just go into a little bit more detail as to the thinking behind that to why you're moving into those two Phase IIs, one in the non-small cell, one in the metastatic breast cancer? Great to get a better understanding of the shift in strategy there. Thank you.
spk09: Yeah, sure. And I don't think it's as much a shift in strategy as more of form over substance. So I think it was a clear preference from a regular perspective to initiate new cohorts, combination cohorts in a Phase II format. So again, with W49, we're trying to do a few things here. One is we're trying to reduce the per patient clinical development cost because our prior costs were too high. We're trying to improve the speed of patient recruitment because I think we've been too slow. I think we need to improve the access to quality patients that we can screen for these clinical studies. And there's a number of things we've been doing about that to put ourselves in that position. The number one thing is to try and expand sites globally because the phase ones were done in the US, Canada, and Korea, but not beyond. And I think going internationally get to some of those points I talked about. Clearly, if we're doing filings in new countries, starting fresh with a Phase 2 study as opposed to amending a Phase 1 study is preferable. I think some of the things we did over the early stage development group, which we reorganized, definitely bring down the internal costs for for these clinical development costs and the same people in that group are preparing for 171 and 191 IMDs to be filed next year and clinical trials to be commenced. And also we're reviewing the CRO which we have for the phase one to decide if we want to move forward in phase two and I think we could definitely accomplish some of the costs of these objectives by potentially reviewing that contract deciding if we switch. So with all that being said, I think there's a clear preference from a regulatory perspective that we do this as phase two. It's not going to make a difference to the size of the studies or to the timing of execution. There's also some benefits of moving forward. If we're able to generate some great data in combination with DW49 in these multiple HER2 indications that we've already identified, I mean, that's our target product profile. That's our value proposition. We can prove that. We can move much more quickly forward to a registration pathway in conjunction with a partner, as we've mentioned before, in XUS markets by starting in Phase 2 now. So I think there's some forward thinking that if we are successful in being able to move COVID-19 forward after these Phase 2 forwards, then we'll be in a better position to do that even more quickly. Beyond that, we're comfortable with the advisory board and other work that we've done around non-small cell lung cancer to move forward. I think with the Press Kendrick cohort, that makes sense. Our target product profile is to show that the W49 in combination with standard of care can provide some meaningful clinical benefit in, you know, several indications with a specific focus on those patients who have progressed after GDSC. So those cohorts and those indications get us that. I think we're still going to continue to collect some additional data in phase one in our GEA cohort, which will be monotherapy, which I think will be useful. I think in the ovarian and endometrial cancer medication that we mentioned before, you know, we did mention, I think when we talked about this last year and earlier this year, that, you know, we were awaiting some view on the clinical data from the PAN-GEM or O2, especially in ovarian and endometrial, to understand if the standard of care that we're looking at is going to evolve or not. And obviously that data, you understand, will be forthcoming, which will be great. I think in the colorectal, the HER2 amplified population, that's a really interesting patient population for us with CW49. I think right now we're continuing to confirm the epi data around the size of that patient population because the published data has a pretty wide standard deviation. And also, I think we're trying to make sure we understand the clear combination standard of care that we would move ahead with so we could execute a clinical development plan and get some clarity with data. So I think we're continuing to evaluate some of those areas, but feel comfortable moving forward with the non-small-cell lung cancer cohorts and the breast cancer cohorts in both the HER2-low and in the TSD progressed or failed population. And phase two, I think, gives us a better basis to do that in the international expansion and could provide some benefits moving much more quickly later, and it does impact the timing right now.
spk07: Okay, got it. Thanks, Ken. Just on Horizon GEA01, how much have you said there in terms of the powering for the trial? And also, what is the primary comparison? Is it the doublet versus receptin chemo or the triplet versus receptin chemo? You could just comment there. Thanks.
spk09: Yeah, so we did publish the physical design and other features of the study in August of last year, and that's available on our website if you'd like to take a look at this. Sorry, it was in a more obscure publication, so we just put it on our website. It's available. So there are more details which are available there. But each of the two arms are independently compared to TRAS plus chemo. So that's the way it works. We did describe that in the publication, so I encourage you to read that. We did also disclose there that at the point where we're going to get a PFS, that we'll do an interim OS readout at the same time and then decide what to do with that data. And we still believe we're on track that the top line data for that study will be available in 2024. And the extent that we can sharpen that guidance, we'll do that in conjunction with both JADS and Beijing as we move forward. Okay, thank you. And sorry, just to add that, we are continuing to follow the patients in the study that Beijing had presented some initial data on last year on the triplet. So this is a phase two study that Beijing is running. And first line GA patients was at Datamab, Chemo, and TSLA, their PD-1. So we did have some data last year. We've obviously recruited more patients in that study, and there's a much more mature, much longer follow-up, which means the data is much more mature. So obviously at some point we hope we'll see an update on that data set, which will hopefully give some further guidance as to how that triplet might be useful in patient populations. But we'll await guidance from Beijing on when that data set might be available and they're also still continuing to enroll, sorry, we're still going to follow the study, phase two study in first line breast cancer with vanadatumab and doxotaxel, which we also presented last year. And obviously, we have more patients enrolled, that's probably a longer follow-up. So, you know, we'll be looking for Beijing to guide on when those two data sets might be available, but specifically the triplet in phase two with more mature data, longer follow-up, maybe a better understanding or guidance of where that might be useful in this patient population. So, we'll wait the guidance of Beijing on that.
spk07: Okay, great. Thank you, Ken.
spk04: Thank you. Our next question or comment comes from the line of James Shin from Wells Fargo. Mr. Shin, your line is now open. Hey, guys.
spk06: Oh, sorry. Hey, guys. Quick question on the Horizon GEA study. I'm looking at a comparator, Keynote 811, where it looks like they really enriched for PD-L1 high and HER2 3-plus patients. Can you say anything on whether Horizon GEA will have a more even mix of PD-1 and HER2-positive patients? And then I got a follow-up.
spk09: Yeah, again, for PD-L1 status, we're not enriching for PD-L1 status, so it will hopefully be a more recruitment, more of a perspective of real-world how these patients show up for gastric, gastric junction, and esophageal patients that are in our study. And we'll obviously break that out as a pre-specified subpopulation to understand what the impact is on patient populations on PD-1 status with a PD-1 involved. We haven't seen that on the K-11 data, but eventually we'll hopefully see that so we can, you know, if K-11 docs can understand the impact of that in that patient population. you know, it does look like it is skewed a little bit, a little bit away with, you know, one status and IC3+, you say, I'm not sure how that happened or whether that'll be the case when you see the full patient population versus the cohort of patients that was published to support the accelerated approval.
spk06: Got it. And then for ZW49's breast indications, What are the potential combo partners that you would explore with 49, or is that still sort of under wraps?
spk09: It's still under wraps. I think we're, you know, we've said probably all we can about those, the non-small cell lung cancer and breast cancer indications. You know, we'll, we want to get those things up and running and get the more details up on clinical.gov as soon as we can. I think once it's up there, then we'll be able to answer additional questions. You know, we're obviously looking To use the 49, uh, in combination wherever we can. So, um, and that will be, you know, beyond where we can. So I think we'll just have to wait until. Uh, we think that's the value proposition though, is that, you know, can be 49 BD or two ADC. of choice to use in combination potentially after progression on TDXD in multiple indications in a meaningful way in a number of those indications. And that's what we're targeting. That's the value proposition. That's our target product profile. So we need to find ways to test that hypothesis. And, you know, test it quickly, test it as, you know, efficiently from a cost perspective we can. And if we see something that's going to be meaningful there, then be able to partner quickly and move forward with the registration strategy as quickly as we can.
spk06: Got it. Can I ask just one question on the iSPY edition of Xanadetamab? It's a really interesting study design where treatments get added and removed based on their efficacy. And it's in neoadjuvant. Um, is this something that's being handled by jazz and partners, or is that something that you guys were working on prior to handing the data map over?
spk09: So this is a separate study group testing, you know, obviously multiple different agents. You know, it's a really, you know, it's a really interesting thing. We were having some discussions last year about doing that. We obviously waited until we completed the JAS collaboration to allow JAS to opine on that decision. And, you know, it's the first thing they The first thing they did after the collaboration, so it probably tells you a little bit about maybe some interest, but I think it's a really, I think we've always hypothesized that Denonatumab's best application was in the earliest treatment cycle that we can find. in specific populations, and I think, you know, you've seen that in our, the data we put out with Beijing last year, and there's antipost-optotaxel in first-line breast cancer with the, you know, over 90% for more R, so it's pretty interesting, and I think we're interested to see what comes out of this neoadjuvant study. I think this platform that they have in iSpy2 is iSpy2 now. It was a pretty instant way to test multiple agents in a way that they can provide some instant data back to the sponsor to then decide what to do with that data from a registration staff.
spk04: Got it. Thank you so much.
spk06: You're welcome.
spk04: Thank you. Our next question or comment comes from the line of Steven Willey from Stifel. Mr. Willey, your line is now open. Yeah, thanks for taking the questions.
spk08: Maybe just another quick one on the projected Horizon GEA disclosure in 24. Are you still planning on completing enrollment before the end of 23? And I think in the European Trial Register, there's a suggestion that the primary PFS analysis is expected to occur within a month of the last patient being randomized. I guess, is that description something that you would characterized as still being accurate.
spk09: Yeah, I think you see the change in our guidance since the JAS collaboration was finished, which is not unusual. And JAS does like to guide on availability of top-line data versus patient enrollment. So our guidance will be the top-line data will be available in 2024, and the extent that we can sharpen that guidance with JAS in Beijing, then we'll do that to be more specific than the calendar year, but that's the guidance right now. We won't give anything beyond that. I think you will be in control European registry you know a number of different other data points around uh PFS or or completion study and we just won't comment on that further than just sticking to the you know we're on track right now to get top line data in 2024 from that study and that's really great and we're working to do that as quickly as we can okay and then maybe just a question for
spk08: Chris, with respect to just clarity on Zany related R&D spend in 23. I know the quarterly numbers here have been fairly lumpy. I guess if you look at the last three quarters specifically, is that lumpiness something that we should expect to continue into 2023? Or have you guys done some of the necessary manufacturing work such that that should kind of smooth out a little bit as we get into 23 with respect to just thinking about how the R&D reimbursement flows to the top line.
spk01: Yeah, thanks for the question. So, yeah, we did have some lumpiness through 2022 as we were undertaking some of the manufacturing run. A lot of that kind of expense is behind us now. As we go into 2023, there will still be some ebbs and flows. We won't be guiding on specific numbers for each individual quarter. But it's worth noting that as we incur expenses within a quarter, the reimbursement from JAS will actually come back in the following quarter. So there'll be a mismatch between the P&L and the cash flow from quarter to quarter as we advance through 2023. So there will still be some quarter to quarter shifting that we can anticipate as we go forward.
spk08: Okay, so that JAS reimbursement comes a quarter in arrears, then? That's correct, yeah. Okay, and then maybe just lastly, I guess, does the disclosure of HER2 CLIMO2 data, which is looking at decatinib, catxila in, I guess, mostly second-line patients, but I think A lot of the KOL conversations we've had would suggest that that's maybe a regimen that gets institutionalized post in HER2 if that data looks good. Does that data set at all kind of change your thoughts around ZW49 in breast cancer?
spk09: I'm not sure entirely it does yet. I mean, we obviously look at all data and evolving data and what impact it might have on commercial opportunities or development pathways or regular pathways for the programs. That's true with Annie and DW49. And I think you need to pay attention to that and try to react. You know, I think from our perspective, you know, our value proposition and our product profile on ZOB 49 I don't think is any different, which is, you know, we need to show the ability to combine with standard of care and show, you know, meaningful, you know, clinical meaningful benefits in, you know, more than one indication, some multiple indications, several in this case. And I think in breast cancer, we still need to see what that data looks like. We need to see what it looks like in the HER2 low population. And we need to look at what it looks like specifically in the patients who progress post-TDXD. And hopefully in a quality of patient that doesn't have 11 or 12 or 13 prior therapies as we did in some of our phase one data. So I still think it's a pretty interesting indication for us in breast cancer, even with some evolving data. I think we've done enough advisory board work with KOLs that we understand where the fit could be for CB49 as an agent. I think we've done enough potential partnering discussions. to know what value will be paid for for data that's generated. So I think for both non-small cell lung cancer and breast cancer, those are the two core patients that we think we can prove our target product profile to be 49. And if we have the opportunity to do that with additional indications inside the envelope of how much, if that's what we want to make and the time frame we have to make that under, then we'll do that.
spk04: All right. Thanks. Take care. Thank you. Our next question or comment comes from the line of Brian Ching from J.P. Morgan. Mr. Ching, your line is now open.
spk05: Hey, guys. Thanks for taking my question. It seems that you have a couple of presentations coming up at AACR next month. So what should our focus be there from your presentation and your call? If you can give us some broader review on just expectation, that would be great.
spk09: I think everything. That's the policy as well. You know, I think from our perspective, there's, you know, there's some, you know, I think we're trying to showcase both the next product that's coming to the clinic next year, which I think are really important for us, as well as continue to show, you know, what the platform is capable of doing for products. Beyond that because you know we're going to pick our target and our products that we're going to file in 2025 this year. So we want people to understand both the next product coming in and the block of itself. We've got additional new data we've generated since our R&D day presentations in October. So we'll try and highlight the new and additional data which has been developed which I think adds hopefully to folks understanding of what we're doing that's differentiated and why we're doing it and why we think we'll be successful with the product formats and the targets that we've selected, as well as the platform's ability to continue to generate these five new INDs in the next five years, including 171 and 191 next year, that will all be novel, diversified on both sides of the R&D portfolio in both Multi-Civic Antibody Therapeutics and ADCs. as well as all the differentiated and meaningful assets that we can keep unencumbered to ourselves as long as possible. So I think there will be a whole host of things there between products and the two platforms that we're working right now. There's also one on ZOB 49 and there's one that's unrelated to that. And those will be as abstracts in a little over a week or so, I think, by AACR. So, you know, we'll be able to answer more of that question as those abstracts are released in the next week or so. And then beyond that, obviously, we'll have more substantive information available on the posters for all of those.
spk05: And maybe just one follow-up on the SAMI SO side. You talked about how the importance of partnership is to this program. And it seems that you're already in discussion with a couple of potential partners. When do you think that it will be a good time to bring in a partner for SaniSo? And is there a bar that you need to hit for the phase two that you're doing in NSCLC and also metastatic breast that you need to hit for before these partners jumping in? Thanks.
spk09: Yes, good question. I mean, you know, obviously we don't, we do not have, you know, clinical data in combination with other standard of care. So that's a big part of the value proposition for ourselves and partners that we'd like to generate that data. Obviously having early partner discussions is great because it helps design your clinical program. So we like doing that. I think our current investment thesis around CMB49 is it's a strategic asset. It's not core to the five and five strategy, but we think it's a strategically valuable asset that we'd like to invest incrementally in at this phase two clinical development stage. The goal after that is to get an ex-US partner to work with us if we get clinical data which shows that that agent should go forward. We'd like the terms of that deal to be valuable enough to fund the potential for us to retain the U.S. commercial rights and develop that further to market off of the partnering deal and not off our balance sheet. So we have to have data that supports a partner being able to have a transaction which is viable enough to be able to undertake that. as well as uh have fungo data convinces ourselves that it's a reasonable undertaking um to retain the u.s rights for further development and commercialization standing though ourselves and so you know we also have to convince ourselves you know there is the potential that we could do a global licensing deal with one party if that was attractive to us uh because again deniso doesn't affect the five and five strategy we have or the non-her2 assets that we're generating behind danny and And Xanadu. So, I mean, to get that, I believe we need some indication, as I've mentioned, that DLB 49 can be effectively combined with standard of care in indications that matter and show some interesting signals of efficacy to show there's a registration pathway for that agent to be a second-line agent or be a second-choice HER2-ADC behind GDIC, which is very partially attractive especially non-fossil lung cancer and the breast cancer medications, as well as some of the other ones that we're still evaluating. So I think some of that combination data is going to be necessary to convince a partner on the value that we'd be looking for, but also convince ourselves it's a worthwhile asset to retain the U.S. rights.
spk05: Great. Thanks for taking my question.
spk04: Thank you. Our next question or comment comes from the line of Charles Zhu from Guggenheim Partners. Mr. Zhu, your line is now open.
spk03: Hey, guys. Thanks for taking the questions. My first one, perhaps, on Xanadumab in frontline gastric cancer. I'm kind of wondering, given that you've had that recent Xanadu plus chemo data earlier this year, as well as you know, what we saw from ASCO of 22 last year from Beijing. I guess, you know, with a potential update from the single-arm phase two later this year, you know, any color around, you know, like how much more confidence we could obtain around the potential additive clinical benefit of a layering on a PD-1 on top of your regimen? Thanks.
spk09: Yeah, I mean, the easiest way to answer that question would be to, you know, complete the phase three study that's going on now, which, you know, is fully randomized to, you know, one-to-one-to-one, to trans chemo, to Xanadu chemo doublet, and the triplet, including Beijing's TSLA. So, you know, the best way for us to answer that question is to recruit all the patients, finish the study, read out the TFS, and then from OS. Look at the subpopulation analysis that exists in the study that's pre-specified to be able to answer that question. That's what we're working towards as expeditiously as we can. Obviously the data we put out in January is pretty encouraging to KOLs and ourselves and Jazz in Beijing on the doublet. Hopefully we'll get a chance for an update on additional data from the triplet that Beijing put out last year and get some more understanding of what that looks like. Again, there's going to be more patient numbers in that, there's a longer follow-up, so it might be something more to read into that. But obviously the reason we're doing a large, multinational, randomized study is to try and provide clarity on the answer to that question that you have.
spk03: Got it. Great. And maybe one more question on Xanizzo. It's perhaps a bit of a follow-up as to something that's already been kind of asked a bit. But, you know, during your prepared remarks, I think you had mentioned something about predetermined benchmarks that could justify further development beyond the Phase IIs and lung as well as post-inherited breast cancer benchmarks. Any additional color around what those could possibly be or what your thinking was in generating some of those benchmarks? Thank you.
spk09: Yeah, I mean, we've obviously, you know, like to start with some predetermination of what, you know, what does clinically meaningful, you know, data look like in combination in the indications that we're going to study. So we have some, you know, some data that we've predetermined that we think would be meaningful and would be encouraging to attract an ex-US partner and would be encouraging for us to think about retaining the U.S. rights as any, though, to further develop it with the proceeds from an ex-U.S. partnership and use that as our first commercial entrée in the U.S. So we've pre-determined that ahead of time, which is a really good process to work through. It's obviously totality of data matters and quality of patients and quality of data matters. But those are all predetermined in the same way that others will do. And I think, you know, once we generate that data, we'll have some idea of what we think about moving forward or which indications make the most sense to move forward.
spk03: Got it. Great. Thanks for taking the questions.
spk09: Yeah, no, and we've done a lot of work since I got here a year ago on, you know, looking at the indications, the commercial market research, the ad boards we've done. We just did one recently. In Japan in January, which we were unable to do earlier because of COVID, I think we have a pretty good sense from potential partner discussions and our KOL interactions of, you know, where UW 49 would have to generate data to be a fit for moving forward past that.
spk04: Thank you. Again, ladies and gentlemen, if you have a question or comment at this time, please press star 11 on your telephone keypad. Our next question or comment comes from the line of Andrew Behrens from SVB Lyric. Mr. Behrens, your line is open.
spk10: Hi, thanks. A couple questions for me on the W9 combination strategy or checkpoint. Can you share any preclinical data that you have to support a combination strategy? Do you have any concerns that keratitis could be exacerbated by immunotherapy as oculotox is a known side effect with checkpoint inhibitors. And then what do you think the regulatory strategy will eventually be to demonstrate? The GW board now will be adding to the background efficacy you would see with checkpoint inhibitor alone.
spk09: Yeah, good question. I don't think we've disclosed any of the preclinical data we would have on the combination. We don't believe there will be any, as you said, any further impact on the keratitis, but it's one of the reasons you run combination studies in cohorts and studies in paraplegics, so we'll do that to be able to confirm that. Obviously, one of the benefits of BW49 is the per 280C is that the tolerability issues that we have to deal with are limited to grade 1 and grade 2 keratitis, which don't cause a significant discontinuation of patients under clinical study and don't provide a substantial amount of dose reduction. Beyond that, we don't have neutropenias, we don't have neuropathies, we don't have pneumonitis, or ILD, we haven't seen any signals of that. So obviously, we think the tolerability profile means that you can provide an effective combination without overlapping toxicities. And we think there may be some synergies between PD-1 and PDP-49 with the Orastatin payload, and that might be from a mechanism standpoint. We will have one abstract at AACR around some initial thoughts around the mechanism of CW49 that might provide some additional information to that. Obviously, moving forward in non-surgical lung cancer, PD-1 is used there in a variety of different indications, including where there's no known alterable mutation. So there's some good data already existing around the use of those ages in that indication, we obviously have to show that adding GW49 to that PD1 specifically in the HER2 population provides a benefit for its partners. So that's a part of what we're doing in the design of the cohort that we have in both the HER2 overexpressing, the HER2 amplified, and the HER2 mutant population in non-small cell lung cancer. In addition, on the breast cancer side, you know, PD-1 has not been very effective in its use in indications studies in breast cancer, but, you know, we're going to see if there is a potential for W49 and PD-1 And if you want to be more useful in indication because of this synergistic effect that might occur with your fat palers and PD-1s, we'd like to explore that clinically and look at that data to see if that's accurate or not.
spk10: Okay. Thank you.
spk04: Thank you. Our next question or comment comes from the line of David Martin from Bloom Burton. Mr. Martin, your line is now open.
spk11: Thanks for taking my questions. First question, regarding the Phase 2 indications for CW49, when you presented Phase 1 data at ESMO last year, I think there was one lung cancer patient. There were relatively few in HER2 failures and few HER2 low patients. Post that presentation, did you then kind of focus your recruitment on patients that fit the phase two characteristics? And will we see larger cohort or larger groups of those patients in the updated data later this year?
spk09: Yes, that's accurate. So, you know, obviously after the cut-off for ESBO, we continue to recruit the phase one study in monotherapy, both to test the weekly dosing, which we were doing, which we were reported on, but also to continue to recruit additional patients on monotherapy. at the recommended phase two dose of 2.5 mgs per keg every three weeks. And we focused on enrolling patients that were closer to our strategy going forward in combination. So hopefully out of that data set, which which we'll put out. We haven't given guidance yet for this year, but we'll do that as soon as we're able to be specific. You should see additional monotherapy data and signal activity was going to be 49 in some of those patient populations where it would have been nice to see more before the ESMO cut off. And obviously, you know, that leaves a little bit of our thinking behind. going forward into looking at, you know, the combination of strategies, just making sure that we've got a reasonable contribution of single agent activity in the highest quality patients we can attract in the system.
spk11: Yeah, great. And will the phase twos be randomized? Like, I assume they'll do a dose escalation single arm initially, but then will they each turn into randomized trials?
spk09: Yeah, we haven't given any specifics out yet about the cohort design. We won't do that until it's up on control.gov. So obviously we're trying to go quickly, recruit the right patients in the right cohorts, to answer the question as to whether we have a value proposition here with Danny Doe or not. And if we do, then be able to move really quickly into a registration pathway. And so there's a lot of factors we're considering in how we're designing and executing these studies. So I think once it's up on controls.gov, we're happy to answer those questions about why we designed it the way we did.
spk11: Okay, thanks. That's it for me.
spk09: Thank you.
spk04: Thank you. I'm sure no additional questions in the queue at this time. I'd like to turn the conference back over to management for any closing remarks.
spk09: That's great. Well, thank you for your attention today and for your questions. We had a lot of progress last year in ZymeWorks, and I think for 2023, we've got really good momentum across the business. We're really looking forward to having a great double ACR coming up in April, and those abstracts will be available publicly soon. We're very encouraged to have 11 different abstracts accepted. For this meeting last year, we had zero. So we're really looking forward to having a fulsome disclosure of the products and platforms of the early R&D group in the five-by-five strategy that we have and talking more about that. We look forward to doing that very quickly. So thank you for your time and attention. Look forward to reporting more progress as we move forward through the year.
spk04: Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.