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spk19: Thank you for standing by. This is the conference operator. Welcome to ZyWorks second quarter 2023 results conference call and webcast. As a reminder, all participants are on a listen-only mode. And the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, to ask a question, press star 11 on your telephone keypad. I would now like to turn the conference over to Diane Papole. Director of Corporate Communications at Zynwerks, Diane. Please go ahead.
spk18: Good afternoon and welcome everyone. My name is Diana Popov, Director of Corporate Communications here at Zynwerks. Today we will discuss our half-year 2023 financial results, as well as provide an update on our ongoing business. Before we begin, I would like to remind you that we will be making a number of forward-looking statements during this call. including without limitation those forward-looking statements identified in our 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 our 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, Chris Assel, our Senior Vice President as Chief Financial Officer, will be discussing our financial results, including certain non-GAAP measures. A description of our non-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.signworks.com under the Investor Relations tab. As a reminder, the audio and slides from this call will also be available on the Vineworks website later today. Now, I will turn the call over to Chris, our Senior Vice President and CFO.
spk16: Thanks, Diana, and thank you everyone for joining us today for our second quarter 2023 earnings call. I'll be presenting prepared remarks and participating in the Q&A today. Our Chair and Chief Executive Officer, Ken Galbraith, and our Chief Scientific Officer, Paul Moore, will also be available for Q&A at the end of the call. With that, I will begin today's call with an overview of our financial results, followed by a review of a few recent developments and updates across our business. This afternoon, SignWorks reported financial results for the second quarter and six-month period ended June 30th, 2023. SignWorks' net loss for the six-month period ended June 30th, 2023 was $75.5 million, or $1.13 per diluted share, compared to a net loss of $137.2 million for the six-month period ended June 30, 2022. The decrease in net loss of 45% was primarily due to revenue from our collaboration agreement with JAS, a decrease in research and development expenses, and an increase in interest income. which were partially offset by an increase in general and administrative expenses. Revenue for the six-month period ended June 30th, 2023, was $42.6 million compared to $7.4 million for the same period in 2022. Revenue during this period included $40.9 million for development support and drug supply revenue from JAS, net of a credit issued to JAS for amendments to our partnership agreement, and $1.7 million for research support and other payments from our other partners. Revenue for the same period in 2022 included $7.4 million in research license fees, research support, and other payments from our other partners. Research and development expenses for the six-month end of June 30th, 2023 were $85.3 million compared to $118.5 million for the six-month end of June 30, 2022. Excluding stock-based compensation and 2022 restructuring expense, research and development expense decreased on a non-GAAP basis by $27.9 million in the first half of 2023 compared to the same period of 2022. This decrease was primarily due to lower manufacturing expenses for Xanadetamab and a reduction in development costs. as a result of the terms of our amended collaboration agreement with JAS, partially offset by an increase in preclinical expenses compared to the same period in 2022. In addition, salaries and benefits expenses decreased compared to the same period in 2022 due to lower headcount in 2023 and lower non-recurring severance expenses. For the six-month end of June 30th, 2023, General and administrative expenses were $38.6 million, compared to $27.3 million for the same period in 2022. General and administrative expenses increased by $11.3 million for the six-month end of June 30, 2023, compared to the same period in 2022, or a $7.8 million increase on a non-GAAP basis, excluding stock-based compensation and non-recurring restructuring expenses. This increase was primarily due to an increase in professional services expenses, partially offset by a decrease in salaries and benefits costs, as a result of lower headcount in 2023 following our prior year restructuring activities. Overall, our total employee headcount has been reduced by almost 50% over the last 18 months, from 455 full-time employees as of December 31, 2021, to 237 full-time employees as of June 30, Our cash resources, consisting of cash, cash equivalents, and marketable securities, were $431.4 million as of June 30, 2023, a net reduction of $60.8 million from December 31, 2022. For the six-month end of June 2023, our cash used in operations was negatively impacted by working capital movements, primarily due to higher levels of receivables which we expect to partially reverse by the end of 2023. During the second quarter, there are a number of financial impacts on our balance sheet due to our amended collaboration agreement with JAS in May 2023. As of June 30th, 2023, we have approximately $46 million in receivables from JAS reflecting reimbursement for Zanadetanab development costs, which we expect to be reimbursed subsequent to the end of the second quarter. In addition, we received $15.4 million from JAS for purchase of prepaid expenses for Zanadetamab development contracts that will be transferred to JAS, which has been deferred on our balance sheet as of June 30th, 2023, and will be offset against the related prepaids when the underlying agreements are legally transferred to JAS. Moving forward, the accounting for our JAS collaboration should be simplified given that the majority of Zanadetamab development expenses will be incurred directly by JAS. Any continued Xanadetimab development expenses incurred by us and reimbursed by JAS will be reflected as a reduction in operating expenses rather than collaboration revenue. We continue to expect further development support and drug supply payments from JAS, which will continue to be reported as collaboration revenue. Due to the transfer of a significant number of our employees dedicated to Xanadetimab development to JAS, We recently decided to vacate our existing Seattle office location and have secured a fit-for-purpose office facility in Bellevue to accommodate our remaining Seattle-based workforce. The majority of the financial impact related to this decision will be reflected in our Q3 financial results. With the continued focus on the balance sheet and the significant transformative impacts of the non-dilutive inflows from our licensing and collaboration agreements with Jazz and Beijing, we continue to expect to have cash resources to fund planned operations through at least the end of 2026 and potentially beyond. As of August 9th, 2023, we had approximately 67.79 million shares of common stock outstanding. During the second quarter, we issued 3.35 million shares of common stock pursuant to our at the market facility for net proceeds of $26.2 million. For additional details on our quarterly and six-month ended results, 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 recent business highlights. The first half of 2023 is highlighted by several important developments, that reflect progress in our product pipeline. Together with JAS, we presented full clinical results from our Phase 2b study of Xenodetabab monotherapy in previously treated HER2-amplified biliary tract cancers at the American Society of Clinical Oncology annual meeting in June in Chicago. We also announced our next expected investigational new drug application candidate, ZW220, and NAPI2B-targeted topoisomerase-1 inhibitor antibody drug conjugate scheduled for IND filing in the first half of 2025. This announcement is the most recent step in our five-by-five goal of having five new INDs for preclinical development candidates from our ADC and MSAT product portfolio filed and approved to commence clinical studies by 2027. Our other preclinical development candidates, ZW171 and ZW191, currently remain on track with expected IND filings in 2024. We were also pleased to announce that industry veteran Carlos Campoy has joined our board of directors. Carlos is a skillful, thoughtful, and performance-driven financial executive with a successful track record in leading culturally diverse pharmaceutical and biotechnology organizations through complex transformational changes in the US and internationally. We look forward to his input as a member of our board. We're also pleased to report that both of our regional hubs in Dublin and Singapore are operational and will be instrumental in clinical study execution for our early stage R&D portfolio over the next several years in Europe and the APAC regions. Our early stage development organization in the United States continues to expand in both Bellevue and our planned new hub in California in light of our planned US clinical studies. Now I'd like to spend a few minutes talking about our R&D portfolio. Our presentations at ASCO represent an important milestone in the development of Xanadetimab and in our partnership with Jazz and Beijing. Multiple abstracts were presented, including data from the Horizon BTC01 Phase 2B Pivotal Study of Xanadetamab Monotherapy in previously treated HER2-amplified BTC patients. The results were published simultaneously in Lancet Oncology. Presentations at ASCO also included updated results from a Phase 1B2 study of Xanadetamab in combination with docetaxel as a first-line therapy for patients with advanced HER2-positive breast cancer. In the ASCO presentation for the Phase IIb Pivotal Study, we announced that data from 80 patients with HER2-amplified BTC, defined as in-situ hybridization-positive immunohistochemistry 2 plus or 3 plus, demonstrated a confirmed objective response rate of 41.3%, with a Kaplan-Meier estimated median duration of response of 12.9 months. The KM estimated median PFS was 5.5 months, with a range of 0.3 to 18.5 months. As our lead investigator, Shubham Pant, MD, Professor of Gastrointestinal Medical Oncology and Investigational Cancer Therapeutics at the University of Texas MD Anderson Cancer Center, noted in our press release announcing the results. A confirmed ORR of 41.3%, median duration of response of 12.9 months, and median PFS of 5.5 months represents a significant step forward for second-line treatment of HER2-amplified BTC. But current chemotherapy treatments have been reported to provide only a 5% to 15% ORR and median PFS of 1.4 to 4 months. Additional presentations on Xanadetimab are planned for the second half of 2023, including two poster presentations recently accepted for presentation at the European Society of Medical Oncology, or ESMO, in Madrid this October. In partnership with JAS, we will be presenting quality of life outcomes from the Phase 2b Horizon BTC01 study evaluating patients with Xanadetimab-treated HER2-positive biliary tract cancer. In partnership with Beijing, updated results from the Phase 1b2 study of Xanadetimab plus chemotherapy and Tislamizumab as first-line therapy for patients with advanced HER2-positive gastric, gastroesophageal junction, and adenocarcinoma will be presented. These results provide data with a longer follow-up period from the original data presented on this clinical study at ASCO 2022. The future potential milestone royalty payments from our Zanadetimab licensing and collaboration agreement with JAS and our agreement with Beijing remain unchanged and are expected to continue to be a significant source of non-dilutive capital for Zyneworks as Zanadetimab progresses towards the final stages of regulatory review, which would include additional regulatory and commercial milestones, as well as double-digit royalties of up to 20% of sales. We continue to support efforts and regulatory interactions by each of JAS and Beijing for initial regulatory filings for potential accelerated approval of Xanadetamab in second-line BTC. As announced by JAS yesterday, they have alignment with the US FDA on a confirmatory study in first-line metastatic BTC to support JAS's US regulatory efforts. With an initial focus in BTC and gastric, We believe that Xanadetimab has the potential to improve the current standard of care and address a large unmet need in a range of HER2-positive cancers. Horizon GEA01, the pivotal trial evaluating Xanadetimab in first-line GEA, is ongoing and top-line data are expected in 2024. Much of our progress in the first half of 2023 has been a reflection of our goal to have five novel therapeutic candidates in clinical studies by 2027. We are building a very exciting pipeline based on the strength of our technology platform and look forward to our expected IND filings for ZW171 and ZW191 in 2024. We also remain on track to initiate a phase two clinical study of Xanadetamab zovidotin or Xanizo plus Pembrolizumab in HER2 positive non-small cell lung cancer patients. In addition, we continue to explore a pathway for further clinical development of Xanizo in post-TDXD breast cancer patients, likely in collaboration with a strategic partner. As discussed, we have nominated ZW220 as our third preclinical development candidate in our 5x5 objectives and are moving forward with a planned IND filing in the first half of 2025. We believe that NAPI2B represents an excellent target for a toposomerase-1-based antibody drug conjugate and a potential first-in-class opportunity. NAPI2B is highly expressed in 64% of serious ovarian cancer and 68% of lung adenocarcinomas, as well as being a relevant biomarker of interest in other solid tumors. CW220 is another example of therapies that are built on Zymox's drug conjugate platform technology. leveraging cysteine conjugation with a cleavable traceless linker to enable potential optimization of the appropriate drug-to-antibody ratio, or DAR, with our novel topoisomerase-1 inhibitor-based payload technology. The monoclonal antibody incorporated in ZW220 was developed in-house and selected based on its favorable binding profile and efficient internalization and payload delivery. The DEAR in ZW220 was selected to balance efficacy and tolerability by incorporating an average of four topoisomerase-1 inhibitor payloads per antibody. We look forward to the continued development of our early-stage R&D portfolio and to reporting on the continued progress. We do expect to have opportunities throughout the second half of 2023 to provide presentations at medical and scientific meetings on our progress with Zanizo ZW171, ZW191, ZW220, and other product candidates. On the partnering front, we expect to continue to pursue partnerships where advantageous to progress our preclinical development programs and to broaden our clinical development program for Zanizo. As we leverage our focused R&D engine, we intend to continue our work to generate candidates with the potential to be co-developed with partners. For these development programs, we will continue to seek attractive economics with upfront payments that help fund development of our in-house candidates as well as attractive royalty and commercial milestones and or retained commercial rights to such product candidates in the United States. In summary, we remain on track for important achievements and milestone opportunities during the remainder of 2023 and especially 2024 when we expect top line data from the first-line GEA Phase III study of Xanadetimab to be reported. 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?
spk19: Thank you. If you would like to ask a question, as a reminder, please press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. Please wait for your name to be announced before you proceed with your questions. One moment while we prepare for the first question. And our first question will be coming from John Miller of Evercore. Your line is open.
spk08: Thanks so much for taking the question, guys, and congrats on the progress with the financial health funding especially. Maybe two from me. Could you speak a little bit? to the bar in first-line BTC as opposed to second-line BTC. What are you looking for in OS there, and how are you thinking about those two populations differently? And then secondly, on the new announcement, VW220, can you speak a little bit more to the design there? What's driving your excitement for the target, and maybe why you chose a lower DAR versus 191?
spk21: Yeah, thanks, John. I'll take the first question. Obviously, you saw our pivotal data in second-line BTC that we announced late last year and had more detail at ASCO. And again, it was a pretty impressive, compelling response that we saw from Xanadatamab as monotherapy in patients who had to fail a therapeutic regimen that included gemcitabine, which could also have included a PD-1 regimen, which about a quarter of the patients did. The results were in confirmed responses were pretty much the same between folks who've had a prior PD-1 or in those who didn't. Obviously, it's a pretty compelling picture that we saw from the second line BTC patient population. And that's why we're working very hard with Jazz and Beijing right now to complete the regulatory interactions we need to and get those filings in. You know, when we think about a first line BTC, treatment of patient population. We're obviously looking to understand how moving into an earlier line of therapy for patients and working in combination with other standard of care, which in this case, in most parts of the world is a PD-1 plus GEM-SYS, could really improve upon what venadatumab has powerfully done on its own as monotherapy. So I don't think we've talked yet about the nature of that clinical study, and I'm sure we will once it's filed and the confirmatory study is up and running. And I don't think we'll talk much about what we're looking for other than that metadata model therapy is pretty powerful in that second line patient population. And we would expect that moving up into an early line of therapy in combination with other agents could be a pretty interesting opportunity to change the standard of care For that patient population, we know Xanadatamab's got a great tolerability profile to demonstrate that efficacy as model therapy that allows additional agents to be added to a therapeutic regimen and still be tolerable for patients. We know from the detailed subpopulation data that was published out of the TOPAZ study earlier this year that specifically patients with the ERBB2 mutation did not do very well on a survival curve And so we really think the right approach for that patient population is a HER2-targeted therapy in combination with other agents of standard of care. And we're really excited to run that study and see what we can do to improve the standard of care and we'll define it ahead of that. For the ZW220 question, I'm going to let Paul talk a little bit about that ADC and how it was constructed and why we're excited to move that program forward into the 5 plus 5.
spk03: Yeah, well, thanks, Ken.
spk21: Thanks for the question, John.
spk03: Yeah, maybe just pointing out some of the differences or some of the design features of the molecule. So obviously the target is NAPI2B. That is reasonably well validated as a target that's highly expressed in ovarian cancer and non-small cell lung cancer. And our preclinical package really supports the ability to target that molecule with the ADC that we've developed. Some other key features of our molecule is the payload that we've selected there is our topoisomerase inhibitor payload that Zymorx has developed and has features that we feel is important to support an ADC, particularly for cancer types like ovarian and non-small cell lung cancer. We think the topoisomerase inhibitor approach is appropriate for getting good, hopefully favorable responses in the clinic. Then we did a lot of preclinical work to sort of decide on the DAR. You asked the question about the DAR, you know, why did we pick DAR for? And there, what we found was that we really could dose very high safely in non-human primates. We went up to 90 mgs per kg with that dose and repeat dosing and didn't see any evidence of any, you know, toxicity, no evidence of thrombocytopenia, which is So that was favorable. And then what we also observed with that DAR was very nice activity in various tumor models, PDX models of ovarian cancer. So that taken together really supported our decision on that molecule.
spk14: Makes sense. Thank you.
spk19: Thank you for your question. One moment while we prepare for the next question. And our next question will be coming from Yigal Nomogovic of Citigroup. Your line is open.
spk09: Hi, thanks. If you could just spend a little bit more talking about 220. Obviously, there's been some news in the space with NetB2B, a recent high-profile failure. So could you just talk a bit more about your commitment to the target and more specifically how your molecule may differ both in terms of The degree of site-specific conjugation, the payload, obviously it's your own antibody. If you could just comment on that, given the competitive dynamics for that target. Thank you.
spk21: I'll let Paul expand upon that if you can, Paul.
spk14: I'm sorry, Paul, your line's muted, I believe. Sorry about that.
spk03: Yeah, so just getting back to the question, sorry about that. What I mentioned previously, so in our drug compared to the Mursana drug, so there the payload is one key difference. So in our drug, We've used a topoisomerase inhibitor that we had developed internally, and so that's different than what Rosanna had used. They had used an orostatin payload, and previously, Roche or Genentech had also targeted NAPI2B, and they used a mitotic inhibitor. So we feel like using a payload here is a key difference from our molecule and what's been previously attempted. And we think that that topizomerase is favorable for the tumor types that we're going into. And also we see a very favorable balance of safety and efficacy in our preclinical setting. So we think that's very important. We also then did take time to think about the DAR. That I mentioned here, we're going with a little bit of a lower DAR than what Marsana had used. So we feel that that also differentiates from us. The backbone antibody we also mentioned was developed internally by TimeWorks and really selected to support internalization and cable delivery. And so we feel comfortable with the antibody. And I think what I also mentioned was in the preclinical setting, what we observed when we went to high doses, we went to 90 mg per kg, repeat dosing with the DAR-4 ADC, we saw no evidence of thrombocytopenia, which could be sort of a signal that you could potentially have bleeding. toxicity, we did not see that. So we think overall with the safety profile and the design of the molecule with the copo payload, that that really puts us in a good position to tackle patients that overexpress NAPI2B in the clinic.
spk09: Okay. Thank you very much. And then just one specific question as you look with your partnership with Beijing. assuming XANA gets commercialized in China, how will that work from the manufacturing perspective? Will that be produced by Beijing and their biologics facility, or will it be done on your side?
spk21: No, XANA Daymap is manufactured by Wuxi and has been supplying ourselves and Beijing with clinical material. And in a commercial setting, Wuxi will supply both Beijing and JAS for the initial launch quantities. And obviously, if you've read our collaboration with Jazz, you'll see they have the ability to set up their own manufacturing at some point, and we'll do a tech transfer to them. And obviously, Beijing would have the same ability to do that. So right now, we've controlled that process all the way along for the benefit of our partners. And so we'll be setting up commercial arrangements that allow Wuxi to supply Beijing and Jazz directly. So I think we're very comfortable in a on a supply basis. And for the initial filings that are being made by Beijing and Jazz, the CMC module was prepared by us because we did all the work and that's already been prepared. So it's not a rate limiting factor to an initial filing by Beijing or an initial filing by Jazz, which we hope are not that far away.
spk07: Okay, thanks Ken.
spk21: Yeah.
spk19: Thank you for your question. One moment while we prepare for the next question. And our next question will be coming from Charles Zhu of Guggenheim. Your line is open.
spk20: Hey, guys. Thanks for taking the question, and congratulations on all the progress. Fully appreciate that this is in partnership with Beijing, but regarding Xanidatomib and gastric cancer, Can you help us set expectations for the upcoming Phase 1b2 data at ESMO, as well as how you think the recent update from the Keynote 811 study may frame the competitive landscape for Horizon GEA? Thanks.
spk21: Yeah, great question, Charles. I just don't know if I can answer it. So for the second part, you know, we obviously had a top-line data release on Keynote 811. That data, I understand, is going to be at ESMO, although some of it's being discussed with regulators now. from the top-line data release, it appears that that regimen was only statistically significant or clinically meaningful, depending upon what we read in the PD-L1 positive patient population in HER2. So, obviously, we, you know, we'll await to see that data at ESMO and see what it means for us. I think, you know, they aren't exactly comparable studies. They're not head-to-head, but also not comparable. The patient populations are different. Don't forget, we have esophageal cancer patients in our study, in addition to gastric and gastric esophageal junction. So it'll be hard to make a direct comparison between those two. But obviously, we'll take a look at what that data looks like. Obviously, in all the work we've done in GA with Zetadatamab, we find it works effectively so far in our early clinical studies, regardless of PD-L1 status, which I think would be an advantage for to be used. We obviously added an arm of our Phase III Horizon GA01 study to include TSLA in a randomized fashion so that we could clearly understand what adding a PD-L1 to Xani in chemo might mean and for which group of patients. And I think the randomized data will tell us that. I'm glad we added that arm. I think, as you'll remember from last year, we had an early data release on the small phase two study that Beijing had initiated looking at ZANI plus chemo plus TSLA. It was very immature data, so it was hard to interpret anything out of it. This is, again, a year later. So I think, you know, even though it's a small study and you need to be careful with that, I think you'll start to be able to tease out what adding a PD-1 to ZANI plus chemo could mean for a patient population whose PD-L1 And we'll just have to wait for that abstract to be presented or poster presented also at ESMO in October in Madrid. And we wouldn't want to say anything before that data has a chance to be presented. And so we'll just have to wait that October in Madrid.
spk20: Got it. Great. Sounds great. And thanks again for taking the questions.
spk02: You're welcome. Thank you.
spk19: Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. One moment for the next question. Our next question is coming from Derek Archulia of Wells Fargo. Your line is open.
spk06: Thank you. Hey, guys. Congratulations on the quarter. This is Adam on for Derek. Just a couple of questions from us today. Maybe if we can get An update on the plans for Zangzovo's phase two combo trials in non-small cell lung cancer and breast cancer. Has an anti-PD-1 been chosen yet? And if not, does it make sense to move forward with the same checkpoint inhibitor for both indications, or would you expect to proceed with different CPIs for that study? Thank you.
spk21: No, good question. Thanks, Adam. As we said in the script, we're We're moving forward to initiate our study of Xanadu plus PD-1 in the non-small cell lung cancer space. And I don't think we'll talk more about which PD-1 or the design of the study until it's up and running. But we're doing everything necessary now to get that initiated this year and to start recruiting patients on that study. For the breast cancer study, which we're still interested in looking at, we're still working out the right combination agent and the right pathway and our ability to get access to the right patient population. So until we do that, we won't broaden out that study. It's also obviously a more complicated and longer term study than the non-small cell lung cancer study. So we're going to continue to be active in conversations with potential partners who might be able to come on and support that in a way that we can't because we need to balance capital allocation between not just Anizo, but the other five new medicines that are coming into the clinic. in the next period of time. So we'll update that as we go forward. But I think once the study's up on CLID trials and once we've initiated the first patient, then we'll have more to say about that study. We do still plan to and have an abstract accepted to discuss phase one data from Zanizo because now we've closed that trial off. And so we did have an abstract accepted at a medical meeting before the end of this year. And once those titles are made public, we'll talk a little bit more about which conference and what that data set will look like.
spk06: Great. Makes sense. And then maybe on ZW191, given its potential to target tumors pretty much independent of FR-alpha receptors expression levels, can you maybe walk us through your current thinking on the trial design, like in particular how it may compare to other FR-alpha programs like MIRVS or Salvo? Thank you.
spk21: Yeah, thanks very much. Again, I don't, you know, I think we've worked out what we think is an appropriate initial clinical plan of dose escalation and dose expansion cohorts of where we'd like to study that ADC. And, you know, you'll recall that this ADC was designed to try and take advantage of the multiple tumor types where this is a target of interest and take advantage of the fact that there are, you know, different expression levels in this patient population that you might want to target. not just high expressors. And so we'd like to, as early as we can in phase one, understand our ability to work across multiple tumor types to be effective, to work across high expressors in all of those tumor types, and to work towards how we see we might impact medium and low expressors across those tumor types. So I think once this study is up on clinical trials, we'd be happy to talk more about the design of how this study is going. I mean, obviously there is a current product commercially available in a certain patient population here. So, how we go about testing that patient population is a little more complicated. And so, we have some thoughts on how to do that, and that'll be a part of the clinical study. You know, it's unfortunate what's happened to the MRSANA molecule so late in clinical development. But, you know, having studied ZW, you know, NAPI For a long time as a biological target, we did have the same complication that there might be a competitive product there ahead of us, which does make the clinical development and regulatory pathway more complicated. Unfortunate clinical study outcome for that agent and that company, but certainly makes the opportunity attractive from being a cleaner and more simple clinical development and regulatory pathway and the ability for us to if we go quickly with the right molecule, be in a position where we could be first in class in that indication. So it's actually a more exciting thing for us to pursue and one of the reasons we're trying to accelerate this to move as quickly as we can with our total payload and the antibody redesign, the DAR we selected, and our understanding of the target and our preclinical package date, which looks excellent.
spk10: Great.
spk21: Thank you. You're welcome.
spk19: Thank you for your question. One moment while we get ready for the next question. And our next question will be coming from Brian Jing of JPMorgan.
spk05: Hey guys, thanks for taking my questions today. As you get closer to the IMD next year, can you provide a little bit more granularity on your preparation work and site selection for 191 and 191. What else is left to do in the next couple of months? And as we think about the cadence of trial initiation, which program is expected to reach the clinic first? And is there any rationale whether which one should go first or not? Thanks.
spk21: Yeah, thanks, Brian. I think we've given all the guidance we can on timing Um, right now it's about, these will be up and running in 2024 and recruiting patients and ZW220 and NAPI will be up and running in the first half of 2025. So I don't want to get more specific than that until we feel comfortable that we can be so that, you know, that'll probably be later this little later this year to give more updated guidance on timing. Um, you know, what we have done, uh, I think has hopefully put us ours, put ourselves in a position. to run a very efficient translation from preclinical into clinical studies. So we have a great preferred provider relationship with Wuxi to make all of these molecules, which means I think as we go forward with CW220, you'll probably see that go faster from translating from selection into clinical studies. So that's one thing we're counting on and working in one supplier on the CDMO side. I think on the CRO side, we have the same idea to work with a preferred provider one group as a preferred provider and take advantage of multiple clinical studies coming on track at the same time. We've definitely positioned ourselves with some clinical and regulatory expertise in both Singapore for Asia Pacific and in Dublin for Europe to be able to start these studies with a global thought process in mind from the very beginning. We obviously have a strong US group as well, but I think you We'll hopefully see us take advantage of global access to patient populations of interest, given the multiple tumor types that exist that we'd like to study in 171 and 191. And I think by setting that up early, you can go much more efficiently in phase one to find all those patient populations in multiple dose expansion cohorts. And you can go much faster from going from phase one into a phase two process by already having a global footprint established with KOLs and all the major reasons. So we've been planning very carefully around speed and quality and efficiency of development for all five of these molecules that we intend to bring into the clinic. And 171 and 191 are hopefully just the first two to be able to prove that we did the right planning and execute those in a quality and efficient manner. And I'm sorry not to be able to give more specific guides about which one's filed first and which one's recruiting first and when that is in 2024, but we'll give that guidance as soon as we feel comfortable that we can be as accurate as possible at that, and that's probably later this year.
spk05: Okay. Maybe just building on what you said earlier on 220, you provided some comments on how 220 could potentially be differentiated than other companies out there evaluating Navi2B. Is there any specific learnings that you received from your competitor failing earlier last month? Is there any insights that you gained that could allow you to make some tweaks heading into the study in 2025? Thank you.
spk21: Yeah, I think we've been studying the biology of this target for a long time period to get to this stage. We've obviously followed any programs which have been in the clinic in this area, besides the MRSANA that was the Genentech compound. And I think, you know, we had a very set mindset of what we thought would make a great ADC against this target. And I think, you know, you try to learn along the way, but I think some of the elements that are designed into this were specific to how we thought this target should be approached in the first place. I don't think we changed anything specifically in response to what we saw. We did benchmarks. obviously against the two compounds wherever we could understand the differentiation that we're able to tease out preclinically. But I'll ask Paul if he wants to expand upon that statement at all.
spk03: No, I think you're right, Ken. I think a lot of design features in our molecule we feel addresses some of the previous limitations, but we certainly will bear in mind and take stock of you know, what others have learned and back to that and maybe in the design of the study. But really in the design of the molecule, we feel very comfortable where we've landed with the molecule and it addresses, you know, prior limitations and hopefully can, you know, provide, you know, good patient outcome. Great. Thanks, guys.
spk21: Yeah, and we have spent, you know, we have spent time trying to understand, you know, co-expression. uh in in patient populations between folate receptor and and nappy to understand that because it's not very well understood and the extent that there is whether it's you know high and low or low and high or what it is so i i think something got to work in in progress for us um i think you know one of the most complicated things we had in our business case to push this forward was you know facing the same you know development and regulatory pathway where someone's already ahead of you in this commercially available product and you can't test that population the same way you would all of the others. And unfortunately for this other agent, that's gone away, but it definitely makes the business case for moving forward in a clinical development regulatory pathway easy for us to explore the full breadth of ovarian cancer and non-small cell lung cancer without a commercial product being available in a quick fashion. So it actually looks like a more promising opportunity program for us, and we think how we've selected the antibody, the linker strategy, the payload, and understanding the target, we think we're on the right track.
spk04: Great. That was very helpful. Thank you.
spk19: Thank you. One moment. We have a follow-up question. And we have a follow-up question coming from the line. Avigal, no covertures. Up City, your line is open.
spk09: Oh, thanks for taking the follow-up. Just two quick follow-ups on NAPI2B. Any early work on a biomarker enrichment strategy for this target? And then second, you mentioned ovarian and non-small cell lung. I think in the past, your competitor, Mursana, had indicated that non-small cell lung, the expression of NAPI2B may be a bit too variable I'm just curious what your thoughts are on that and which of those tumor types you would want to prioritize in an early phase one. Thanks.
spk21: Yeah, I think our, you know, we won't talk too much about our phase one strategy until, you know, the study's up on clinical trials, which will be in a little bit. But we're obviously very interested in, this is a target of interest in both ovarian and non-small cell lung cancer. We'd like the opportunity with the right ADC, which we think we have, to understand what the impact might be in an actual patient population. These are obviously both targets of interest because the expression levels in ovarian and non-small cell lung cancer are about 60% in both. So it gives you a different pathway to think about how you would approach this patient population and whether you enrich for enrollment or not. And I think as you see our clinical study, you'll get a better understanding of what our approach is. But we think we like the breadth of potential indications here. It's obviously not as broad as 171 and 191, which is probably okay. And if you think about GPC3 as an ADC, it's a straight HCC target of interest. So there is some diversity and variability in the targets that we're trying to approach. And even now with NAPI, we're approaching a target where we could be the first in class if we move quickly with the right approach, as opposed to folate receptor where there's somebody there ahead of us and others are pursuing it with a topo payload. So different characteristics of each of these programs that we have. So we like the fact that they're a little bit different, but I think as you see our clinical plan, formulate in clinical trials, you'll see what our approach will be. But we would like to study our particular ADC in both of these patient populations in ovarian and non-small cell lung cancer to understand what might be possible.
spk14: Thanks. One moment, please.
spk19: One moment for the next question. And our next question will be coming from the line of Stephen Wiley of SIFO. Your line is open.
spk17: Hi, guys. This is Tulian for Stephen Wiley. I have two quick questions. So the first one is, if I understood correctly, it sounds like you guys are still planning to present data from CW49 by end of this year. Would it be possible to give us just a big picture color on what this data presentation would entail? And second, so ZW49 in breast cancer, HER2, low breast cancer, or post-inheritance. You mentioned that you guys would likely conduct this trial with a strategic partner. And what would actually define it as like a
spk21: ideal strategic partner and what would you be looking for in order to make your uh decision thanks yeah thank you for the question so we do have an abstract accepted at a medical meeting uh before the end of 2023 uh to present some additional zanizo data from the phase one study uh again we won't talk about what that is until the abstract title uh is made public So you'll just have to wait for that to occur on the timetable, but we're happy that we have an abstract accepted and an opportunity to present some additional data from Xanizo in our single agent study phase one. I think as we've talked about with Xanizo going forward in development, we see this as a combination ADC that can be used in combination with a multitude of agents to generate efficacy. and targeted in a patient population, which is the post-TDXD patient population or space. It's what everyone is trying to find a space to fill for physicians and patients in what happens when people progress or fail or are intolerant to TDXD. And so, obviously, it's why we're interested in non-small cell lung cancer. There, the combination was easier to determine. In breast cancer, we definitely would like to do some additional single-age activity in in HER2 low as well as in 2DXD failures, but we thought it was very important to figure out then what is our combination strategy? What is the agent we would combine with and what patient population would that be targeted at and how would we get access to that patient population? And some parts of those answers would be helpful to have a partner execute that program. But until we answer the question about what agent might be looked at in combination and what the specific setting will be, it's hard to conclude those discussions with partners. Like we're still working on defining the pathway and hopefully we can do that and broaden out this program. But we do want to go forward with the non-small cell lung cancer in combination with PD-1. And that's what we're doing now. And that will get initiated this year and data will come out of that on the timelines. And we'll give guidance about that once we get the study up on clinical trials and once we get our first patient in. And until then, we really can't say more about that.
spk17: Thank you.
spk21: Well, thank you.
spk19: Thank you for your questions today. This concludes today's Q&A session. I would now like to turn the call back over to Ken for closing remarks. Please go ahead.
spk21: Yeah, thank you very much for attending our call and asking questions. I know it's late in the earnings season, but we really appreciate your interest. Hopefully your takeaways from this call is that we remain right on track with where we thought we would be with an exciting 2024. We've confirmed the guidance of reporting top-line data from the RISE and GEA-01 study with Xanadatamab plus chemo and also plus TSLA. And we look forward to reporting that data next year. I think it really, really is important for Xanadatamab. We're really excited with Jazz's optimism about the potential reach for Xanadatamab, not just in BTC, but GEA breast cancer and beyond that they expressed on their call yesterday, which is great. We're right on track with the two new INDs, the first ones for ZW171 and 191 next year in starting those clinical studies, which is great. We're right on track with nominating our third compound, which we want to really aggressively pursue with timing. And we're working very diligently on the fourth and fifth selection of our portfolio. And we're hoping that we can round that out more quickly than maybe we anticipated. And beyond that, we're still remaining financially disciplined and keeping our cash runway to at least 2026 and beyond so we can pursue this five by five strategy in a way that allows us to move in an unencumbered fashion and still have discussions around new partnerships to help us with those five molecules potentially or to work with us on things beyond those five molecules. But we feel really comfortable with our position right now. And we have a lot of opportunities in the remainder of 2023 to share ongoing data and results up and down the portfolio from Zanydata and Mavidesmo to ZanyZote and other conference with other products in the portfolio. And we look forward to the opportunity to sharing that additional progress and data and results at conferences through the remainder of 2023. And thank you for paying attention and look forward to the next update.
spk19: This concludes today's conference call. Thank you all for participating. You may now disconnect. And everyone, have a great evening. Thank you. Thank you. Thank you. Thank you. Bye. Thank you for standing by. This is the conference operator. Welcome to ZyWorks second quarter 2023 results conference call and webcast. As a reminder, all participants are on a listen-only mode. And the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, to ask a question, press star 11 on your telephone keypad. I would now like to turn the conference over to Diane Papole. Director Corporate Communications at Zymergs, Diane. Please go ahead.
spk18: Good afternoon and welcome everyone. My name is Diana Popov, Director of Corporate Communications here at Zymergs. Today we will discuss our half year 2023 financial results, as well as provide an update on our ongoing business. Before we begin, I would like to remind you that we will be making a number of forward-looking statements during this call. including without limitation those forward-looking statements identified in our 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 our 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, Chris Assel, our Senior Vice President and Chief Financial Officer, will be discussing our financial results, including certain non-GAAP measures. A description of our non-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.signworks.com under the Investor Relations tab. As a reminder, the audio and slides from this call will also be available on the Vineworks website later today. Now, I will turn the call over to Chris, our Senior Vice President and CFO.
spk16: Thanks, Diana, and thank you, everyone, for joining us today for our second quarter 2023 earnings call. I'll be presenting prepared remarks and participating in the Q&A today. Our Chair and Chief Executive Officer, Ken Galbraith, and our Chief Scientific Officer, Paul Moore, will also be available for Q&A at the end of the call. With that, I will begin today's call with an overview of our financial results, followed by a review of a few recent developments and updates across our business. This afternoon, SignWorks reported financial results for the second quarter and six-month period ended June 30th, 2023. SignWorks' net loss for the six-month period ended June 30th, 2023 was $75.5 million, or $1.13 per diluted share, compared to a net loss of $137.2 million for the six-month period ended June 30, 2022. The decrease in net loss of 45% was primarily due to revenue from our collaboration agreement with JAS, a decrease in research and development expenses, and an increase in interest income. which were partially offset by an increase in general and administrative expenses. Revenue for the six-month period ended June 30th, 2023 was $42.6 million compared to $7.4 million for the same period in 2022. Revenue during this period included $40.9 million for development support and drug supply revenue from JAS. net of a credit issued to JAS for amendments to our partnership agreement, and $1.7 million for research support and other payments from our other partners. Revenue for the same period in 2022 included $7.4 million in research license fees, research support, and other payments from our other partners. Research and development expenses for the six-month end of June 30th, 2023 were $85.3 million compared to $118.5 million for the six-month end of June 30th, 2022. Excluding stock-based compensation and 2022 restructuring expense, research and development expense decreased on a non-GAAP basis by $27.9 million in the first half of 2023 compared to the same period of 2022. This decrease was primarily due to lower manufacturing expenses for Xanodetamab and a reduction in development costs as a result of the terms of our amended collaboration agreement with JAS, partially offset by an increase in preclinical expenses compared to the same period in 2022. In addition, salaries and benefits expenses decreased compared to the same period in 2022 due to lower headcount in 2023 and lower non-recurring severance expenses. For the six-month end of June 30, 2023, general and administrative expenses were $38.6 million compared to $27.3 million for the same period in 2022. General and administrative expenses increased by $11.3 million for the six-month end of June 30, 2023, compared to the same period in 2022, or a $7.8 million increase on a non-GAAP basis, excluding stock-based compensation and non-recurring restructuring expenses. This increase was primarily due to an increase in professional services expenses, partially offset by a decrease in salaries and benefits costs. as a result of lower headcount in 2023 following our prior year restructuring activities. Overall, our total employee headcount has been reduced by almost 50% over the last 18 months, from 455 full-time employees as of December 31st, 2021, to 237 full-time employees as of June 30th, 2023. Our cash resources, consisting of cash, cash equivalents, and marketable securities, were $431.4 million as of June 30, 2023, a net reduction of $60.8 million from December 31, 2022. For the six-month end of June 2023, our cash used in operations was negatively impacted by working capital movements, primarily due to higher levels of receivables, which we expect to partially reverse by the end of 2023. During the second quarter, there are a number of financial impacts on our balance sheet due to our amended collaboration agreement with JAS in May 2023. As of June 30th, 2023, we have approximately $46 million in receivables from JAS reflecting reimbursement for Zanadetanab development costs, which we expect to be reimbursed subsequent to the end of the second quarter. In addition, we received $15.4 million from JAS for purchase of prepaid expenses for Zanadetamab development contracts that will be transferred to JAS, which has been deferred on our balance sheet as of June 30th, 2023, and will be offset against the related prepaids when the underlying agreements are legally transferred to JAS. Moving forward, the accounting for our JAS collaboration should be simplified, given that the majority of Zanadetamab development expenses will be incurred directly by JAS. Any continued Xanadetimab development expenses incurred by us and reimbursed by JAS will be reflected as a reduction in operating expenses rather than collaboration revenue. We continue to expect further development support and drug supply payments from JAS, which will continue to be reported as collaboration revenue. Due to the transfer of a significant number of our employees dedicated to Xanadetimab development to JAS, We recently decided to vacate our existing Seattle office location and have secured a fit-for-purpose office facility in Bellevue to accommodate our remaining Seattle-based workforce. The majority of the financial impact related to this decision will be reflected in our Q3 financial results. With the continued focus on the balance sheet and the significant transformative impacts of the non-dilutive inflows from our licensing and collaboration agreements with Jazz and Beijing, we continue to expect to have cash resources to fund planned operations to at least the end of 2026 and potentially beyond. As of August 9th, 2023, we had approximately 67.79 million shares of common stock outstanding. During the second quarter, we issued 3.35 million shares of common stock pursuant to our at the market facility for net proceeds of $26.2 million. For additional details on our quarterly and six-month ended results, 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 recent business highlights. The first half of 2023 is highlighted by several important developments, that reflect progress in our product pipeline. Together with JAS, we presented full clinical results from our Phase 2b study of Xenodetabab monotherapy in previously treated HER2-amplified biliary tract cancers at the American Society of Clinical Oncology annual meeting in June in Chicago. We also announced our next expected investigational new drug application candidate, ZW220, and NAPI2B-targeted topoisomerase-1 inhibitor antibody drug conjugate scheduled for IMD filing in the first half of 2025. This announcement is the most recent step in our five-by-five goal of having five new IMDs for preclinical development candidates from our ADC and MSAT product portfolio filed and approved to commence clinical studies by 2027. Our other preclinical development candidates, ZW171 and ZW191, currently remain on track with expected IND filings in 2024. We were also pleased to announce that industry veteran Carlos Campoy has joined our board of directors. Carlos is a skillful, thoughtful, and performance-driven financial executive with a successful track record in leading culturally diverse pharmaceutical and biotechnology organizations through complex transformational changes in the US and internationally. We look forward to his input as a member of our board. We're also pleased to report that both of our regional hubs in Dublin and Singapore are operational and will be instrumental in clinical study execution for our early stage R&D portfolio over the next several years in Europe and the APAC regions. Our early stage development organization in the United States continues to expand in both Bellevue and our planned new hub in California in light of our planned US clinical studies. Now I'd like to spend a few minutes talking about our R&D portfolio. Our presentations at ASCO represent an important milestone in the development of Xanadetimab and in our partnership with Jazz and Beijing. Multiple abstracts were presented, including data from the Horizon BTC01 Phase 2b Pivotal Study of Xanadetamab Monotherapy in previously treated HER2-amplified BTC patients. The results were published simultaneously in Lancet Oncology. Presentations at ASCO also included updated results from a Phase 1b2 study of Xanadetamab in combination with docetaxel as a first-line therapy for patients with advanced HER2-positive breast cancer. In the ASCO presentation for the Phase IIb Pivotal Study, we announced that data from 80 patients with HER2-amplified BTC, defined as in-situ hybridization-positive immunohistochemistry 2-plus or 3-plus, demonstrated a confirmed objective response rate of 41.3%, with a Kaplan-Mehr estimated median duration of response of 12.9 months. The KM estimated median PFS was 5.5 months, with a range of 0.3 to 18.5 months. As our lead investigator, Shubham Pant, MD, Professor of Gastrointestinal Medical Oncology and Investigational Cancer Therapeutics at the University of Texas MD Anderson Cancer Center, noted in our press release announcing the results. A confirmed ORR of 41.3%, median duration of response of 12.9 months, and median PFS of 5.5 months represents a significant step forward for second-line treatment of HER2-amplified BTC. But current chemotherapy treatments have been reported to provide only a 5% to 15% ORR and median PFS of 1.4 to 4 months. Additional presentations on Xanadetimab are planned for the second half of 2023, including two poster presentations recently accepted for presentation at the European Society of Medical Oncology, or ESMO, in Madrid this October. In partnership with JAS, we will be presenting quality of life outcomes from the Phase 2b Horizon BTC-01 study evaluating patients with Xanadetimab-treated HER2-positive biliary tract cancer. In partnership with Beijing, updated results from the Phase 1b2 study of Xanadetimab plus chemotherapy and Tislamizumab as first-line therapy for patients with advanced HER2-positive gastroesophageal junction and adenocarcinoma will be presented. These results provide data with a longer follow-up period from the original data presented on this clinical study at ASCO 2022. The future potential milestone royalty payments from our Zanadetimab licensing and collaboration agreement with JAS and our agreement with Beijing remain unchanged and are expected to continue to be a significant source of non-dilutive capital for Zyneworks as Zanadetimab progresses towards the final stages of regulatory review, which would include additional regulatory and commercial milestones, as well as double digit royalties of up to 20% of sales. We continue to support efforts and regulatory interactions by each of JAS and Beijing for initial regulatory filings for potential accelerated approval of Xanadetamab in second-line BTC. As announced by JAS yesterday, they have alignment with the US FDA on a confirmatory study in first-line metastatic BTC to support JAS's US regulatory efforts. With an initial focus in BTC and gastric, We believe that Xanadetamab has the potential to improve the current standard of care and address a large unmet need in a range of HER2-positive cancers. Horizon GEA01, the pivotal trial evaluating Xanadetamab in first-line GEA, is ongoing, and top-line data are expected in 2024. Much of our progress in the first half of 2023 has been a reflection of our goal to have five novel therapeutic candidates in clinical studies by 2027. We are building a very exciting pipeline based on the strength of our technology platform and look forward to our expected IND filings for ZW171 and ZW191 in 2024. We also remain on track to initiate a phase two clinical study of Xanadetamab zovidotin or Xanizo plus pembrolizumab in HER2 positive non-small cell lung cancer patients. In addition, we continue to explore a pathway for further clinical development of Xanizo in post-TDXD breast cancer patients, likely in collaboration with a strategic partner. As discussed, we have nominated ZW220 as our third preclinical development candidate in our 5x5 objectives and are moving forward with a planned IMD filing in the first half of 2025. We believe that NAPI2B represents an excellent target for a toposomerase-1-based antibody drug conjugate and a potential first-in-class opportunity. NAPI2B is highly expressed in 64% of serious ovarian cancer and 68% of lung adenocarcinomas, as well as being a relevant biomarker of interest in other solid tumors. CW220 is another example of therapies that are built on Xymox's drug conjugate platform technology. leveraging cysteine conjugation with a cleavable traceless linker to enable potential optimization of the appropriate drug-to-antibody ratio, or DAR, with our novel topoisomerase-1 inhibitor-based payload technology. The monoclonal antibody incorporated in ZW220 was developed in-house and selected based on its favorable binding profile and efficient internalization and payload delivery. The DAR in ZW220 was selected to balance efficacy and tolerability by incorporating an average of four topoisomerase-1 inhibitor payloads per antibody. We look forward to the continued development of our early-stage R&D portfolio and to reporting on the continued progress. We do expect to have opportunities throughout the second half of 2023 to provide presentations at medical and scientific meetings on our progress with Zanizo, ZW171, ZW191, ZW220, and other product candidates. On the partnering front, we expect to continue to pursue partnerships where advantageous to progress our preclinical development programs and to broaden our clinical development program for Zanizo. As we leverage our focused R&D engine, we intend to continue our work to generate candidates with the potential to be co-developed with partners. For these development programs, we will continue to seek attractive economics with upfront payments that help fund development of our in-house candidates as well as attractive royalty and commercial milestones and or retained commercial rights to such product candidates in the United States. In summary, we remain on track for important achievements and milestone opportunities during the remainder of 2023 and especially 2024 when we expect top line data from the first-line GEA Phase III study of Xanadetimab to be reported. 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?
spk19: Thank you. If you would like to ask a question, as a reminder, please press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. Please wait for your name to be announced before you proceed with your questions. One moment while we prepare for the first question. And our first question will be coming from John Miller of Evercore. Your line is open.
spk08: Thanks so much for taking the question, guys, and congrats on the progress with the financial health tightening especially. Maybe two from me. Could you speak a little bit? to the bar in first-line BTC as opposed to second-line BTC? What are you looking for in OS there, and how are you thinking about those two populations differently? And then secondly, on the new announcement, VW220, can you speak a little bit more to the design there? What's driving your excitement for the target, and maybe why you chose a lower DAR versus 191?
spk21: Yeah, thanks, John. I'll take the first question. Obviously, you saw our pivotal data in second-line BTC that we announced late last year and had more detail at ASCO. And again, it was a pretty impressive, compelling response that we saw from Xanadatamab as monotherapy in patients who had to fail a therapeutic regimen that included gemcitabine, which could also have included a PD-1 regimen, which about a quarter of the patients did. The results were in confirmed responses were pretty much the same between folks who've had a prior PD-1 or in those who didn't. Obviously, it's a pretty compelling picture that we saw from the second line BTC patient population. And that's why we're working very hard with Jazz and Beijing right now to complete the regulatory interactions we need to and get those filings in. You know, when we think about a first line BTC, treatment of patient population. We're obviously looking to understand how moving into an earlier line of therapy for patients and working in combination with other standard of care, which in this case in most parts of the world is a PD-1 plus GEM-SYS, could really improve upon what vanadatumab has powerfully done on its own as monotherapy. So I don't think we've talked yet about the nature of that clinical study. I'm sure we will once it's filed and the confirmatory study is up and running. And I don't think we'll talk much about what we're looking for other than that metadata monotherapy is pretty powerful in that second-line patient population. And we would expect that moving up into an early line of therapy in combination with other agents could be a pretty interesting opportunity to change the standard of care For that patient population, we know Xanadatamab's got a great tolerability profile to demonstrate that efficacy as model therapy that allows additional agents to be added to a therapeutic regimen and still be tolerable for patients. We know from the detailed subpopulation data that was published out of the TOPAZ study earlier this year that specifically patients with the ERBB2 mutation did not do very well on a survival curve And so we really think the right approach for that patient population is a HER2-targeted therapy in combination with other agents of standard of care. And we're really excited to run that study and see what we can do to improve the standard of care and we'll define it ahead of that. For the ZW220 question, I'm going to let Paul talk a little bit about that ADC and how it was constructed and why we're excited to move that program forward into the 5 plus 5.
spk13: Yeah, well, thanks, Ken.
spk03: Thanks for the question, John. Yeah, maybe just pointing out some of the differences or some of the design features of the molecules. So obviously the targets, NAPI2B, that is reasonably well validated as a target that's highly expressed in ovarian cancer and non-small cell lung cancer. And our preclinical package really supports the ability to target that molecule with the ADC that we've developed. Some other key features of our molecule is the payload that we've selected there is our topoisomerase inhibitor payload that Zymorx has developed and has features that we feel is important to support an ADC, particularly for cancer types like ovarian and non-small cell lung cancer. We think the topoisomerase inhibitor approach is appropriate for getting good, hopefully favorable responses in the clinic. Then we did a lot of pre-clinical work to sort of decide on the DAR. You asked the question about the DAR, you know, why did we pick DAR for? And there, what we found was that we really could dose very high safely in non-human primates. We went up to 90 mgs per kg with that dose and repeat dosing and didn't see any evidence of any, you know, toxicity, no evidence of thrombocytopenia, which is So that was favorable. And then what we also observed with that DAR was very nice activity in various tumor models, PDX models of ovarian cancer. So that taken together really supported our decision on that molecule.
spk14: Makes sense. Thank you.
spk19: Thank you for your question. One moment while we prepare for the next question. And our next question will be coming from Yigal Nomogovic of Citigroup. Your line is open.
spk09: Hi, thanks. If you could just spend a little bit more talking about 220. Obviously, there's been some news in the space with NetE2B, a recent high-profile failure. So can you just talk a bit more about your commitment to the target and more specifically how your molecule may differ both in terms of The degree of site-specific conjugation, the payload, obviously it's your own antibody. If you could just comment on that, given the competitive dynamics for that target. Thank you.
spk21: I'll let Paul expand upon that if you can, Paul.
spk14: I'm sorry, Paul, your line's muted, I believe. Sorry about that.
spk03: Yeah, so just getting back to the question, sorry about that. What I mentioned previously, so in our drug compared to the Mursana drug, so there the payload is one key difference. So in our drug, we've used the topoisomerase inhibitor that we had developed internally and so that's different than what persanna had used they had used the orostatin payload and previously uh roche or genentech had also targeted um nappy 2b and they used the mitotic inhibitor so we feel like using a payload here is a key difference from our molecule and what's been previously attempted And we think that that topizomerase is favorable for the tumor types that we're going into. And also we see a very favorable balance of safety and efficacy in our preclinical setting. So we think that's very important. We also then did take time to think about the DAR. That I mentioned here, we're going with a little bit of a lower DAR than what Marsana had used. So we feel that that also differentiates from us. The backbone antibody we also mentioned was developed internally by TimeWorks and really selected to support internalization and payload delivery. And so we feel comfortable with the antibody. And I think what I also mentioned was in the preclinical setting, what we observed when we went to high doses, we went to 90 mg per kg, repeat dosing with the DAR-4 ADC. We saw no evidence of thrombocytopenia, which could be sort of a signal that you could potentially have bleeding. toxicity, we did not see that. So we think overall with the safety profile and the design of the molecule with the copo payload, that that really puts us in a good position to tackle patients that overexpress NAPI2B in the clinic.
spk09: Okay, thank you very much. And then just one specific question as you look with your partnership with Beijing. assuming XANA gets commercialized in China, how will that work from the manufacturing perspective? Will that be produced by Beijing and their biologics facility, or will it be done on your side?
spk21: No, XANA Daymap is manufactured by Wuxi and has been supplying ourselves and Beijing with clinical material. And in a commercial setting, Wuxi will supply both Beijing and JAS for the initial launch quantities. And obviously, if you've read our collaboration with Jazz, you'll see they have the ability to set up their own manufacturing at some point, and we'll do a tech transfer to them. And obviously, Beijing would have the same ability to do that. So right now, we've controlled that process all the way along for the benefit of our partners. And so we'll be setting up commercial arrangements that allow Wuxi to supply Beijing and Jazz directly. So I think we're very comfortable in a on a supply basis. And for the initial filings that are being made by Beijing and Jazz, the CMC module was prepared by us because we did all the work and that's already been prepared. So it's not a rate limiting factor to an initial filing by Beijing or an initial filing by Jazz, which we hope are not that far away.
spk07: Okay, thanks Ken.
spk21: Yeah.
spk19: Thank you for your question. One moment while we prepare for the next question. And our next question will be coming from Charles Zhu of Guggenheim. Your line is open.
spk20: Hey, guys. Thanks for taking the question, and congratulations on all the progress. Fully appreciate that this is in partnership with Beijing, but regarding Xanidatomib and gastric cancer, Can you help us set expectations for the upcoming Phase 1b2 data at ESMO, as well as how you think the recent update from the Keynote 811 study may frame the competitive landscape for Horizon GEA? Thanks.
spk21: Yeah, great question, Charles. I just don't know if I can answer it. So for the second part, you know, we obviously had a top-line data release on Keynote 811. That data, I understand, is going to be at ESMO, although some of it's being discussed with regulators now. from the top-line data release, it appears that that regimen was only statistically significant or clinically meaningful, depending upon what we read in the PD-L1 positive patient population in HER2. So, obviously, we, you know, we'll await to see that data at ESMO and see what it means for us. I think, you know, they aren't exactly comparable studies. They're not head-to-head, but also not comparable. The patient populations are different. Don't forget, we have esophageal cancer patients in our study, in addition to gastric and gastric esophageal junction. So it'll be hard to make a direct comparison between those two. But obviously, we'll take a look at what that data looks like. Obviously, in all the work we've done in GA with Zetadatamab, we find it works effectively so far in our early clinical studies, regardless of PD-L1 status, which I think would be an advantage for to be used. We obviously added an arm of our Phase III Horizon GA01 study to include TSLA in a randomized fashion so that we could clearly understand what adding a PD-L1 to Xani in chemo might mean and for which group of patients. And I think the randomized data will tell us that. I'm glad we added that arm. I think, as you'll remember from last year, we had an early data release on the small phase two study that Beijing had initiated looking at ZANI plus chemo plus TSLA. It was very immature data, so it was hard to interpret anything out of it. This is, again, a year later. So I think, you know, even though it's a small study and you need to be careful with that, I think you'll start to be able to tease out what adding a PD-1 to ZANI plus chemo could mean for a patient population whose PD-L1 And we'll just have to wait for that abstract to be presented or poster presented also at ESMO in October in Madrid. And we wouldn't want to say anything before that data has a chance to be presented. And so we'll just have to wait that October in Madrid.
spk20: Got it. Great. Sounds great. And thanks again for taking the questions.
spk02: You're welcome. Thank you.
spk19: Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. One moment for the next question. Our next question is coming from Derek Archulia of Wells Fargo. Your line is open.
spk06: Thank you. Hey, guys. Congratulations on the quarter. This is Adam on for Derek. Just a couple of questions from us today. Maybe if we can get An update on the plans for Zangizobo's phase two combo trials in non-small cell lung cancer and breast cancer. Has an anti-PD-1 been chosen yet? And if not, does it make sense to move forward with the same checkpoint inhibitor for both indications, or would you expect to proceed with different CPIs for that study? Thank you.
spk21: No, good question. Thanks, Adam. As we said in the script, we're We're moving forward to initiate our study of Xanadu plus PD-1 in the non-small cell lung cancer space. And I don't think we'll talk more about which PD-1 or the design of the study until it's up and running. But we're doing everything necessary now to get that initiated this year and to start recruiting patients on that study. For the breast cancer study, which we're still interested in looking at, we're still working out the right combination agent and the right pathway and our ability to get access to the right patient population. So until we do that, we won't broaden out that study. It's also obviously a more complicated and longer term study than the non-small cell lung cancer study. So we're going to continue to be active in conversations with potential partners who might be able to come on and support that in a way that we can't because we need to balance capital allocation between not just Anizo, but the other five new medicines that are coming into the clinic. in the next period of time. So we'll update that as we go forward. But I think once the study's up on CLIN trials and once we've initiated the first patient, then we'll have more to say about that study. We do still plan to and have an abstract accepted to discuss phase one data from Zanizo because now we've closed that trial off. And so we did have an abstract accepted at a medical meeting before the end of this year. And once those titles are made public, we'll talk a little bit more about which conference and what that data set will look like.
spk06: Perfect. Great. Makes sense. And then maybe on ZW191, given its potential to target tumors pretty much independent of FR-alpha receptor expression levels, can you maybe walk us through your current thinking on the trial design, like in particular how it may compare to other FR-alpha programs like MIRVS or Salvo? Thank you.
spk21: Yeah, thanks very much. Again, I don't, you know, I think we've worked out what we think is an appropriate initial clinical plan of dose escalation and dose expansion cohorts where we'd like to study that ADC. And, you know, you'll recall that this ADC was designed to try and take advantage of the multiple tumor types where this is a target of interest and take advantage of the fact that there are, you know, different expression levels in this patient population that you might want to target. not just high expressors. And so we'd like to, as early as we can in phase one, understand our ability to work across multiple tumor types to be effective, to work across high expressors in all of those tumor types, and to work towards how we see we might impact medium and low expressors across those tumor types. So I think once this study is up on CLIN trials, we'd be happy to talk more about the design of how this study is going. I mean, obviously there is a current product commercially available in a certain patient population here. So how we go about testing that patient population is a little more complicated. And so we have some thoughts on how to do that. And that'll be a part of the clinical study. You know, it's unfortunate what's happened to the MRSANA molecule so late in clinical development. But, you know, having studied ZW, the NAPI for a long time as a biological target, you know, we did have the same complication that there might be a competitive product there ahead of us, which, you know, does make the clinical development of regulatory pathway, you know, more complicated, you know, unfortunate clinical study outcome for that agent and that company, but certainly makes the opportunity attractive from being a cleaner and more simple clinical development and regulatory pathway and the ability for us to if we go quickly with the right molecule, be in a position where we could be first in class in that indication. So it's actually a more exciting thing for us to pursue and one of the reasons we're trying to accelerate this to move as quickly as we can with our total payload and the antibody redesign, the DAR we selected, and our understanding of the target and our preclinical package date, which looks excellent.
spk02: Great. Thank you. You're welcome.
spk19: Thank you for your question. One moment while we get ready for the next question. And our next question will be coming from Brian Jing of JPMorgan.
spk05: Hey guys, thanks for taking my questions today. As you get closer to the IMD next year, can you provide a little bit more granularity on your preparation work and site selection for 191 and 191. What else is left to do in the next couple of months? And as we think about the cadence of trial initiation, which program is expected to reach the clinic first? And is there any rationale whether which one should go first or not? Thanks.
spk21: Yeah, thanks, Brian. I think we've given all the guidance we can on timing Um, right now is that both these will be up and running in 2024 and recruiting patients and ZW220 and NAPI will be up and running in the first half of 2025. So I don't want to get more specific than that until we feel comfortable that we can be so that, you know, that'll probably be later this little later this year to give more updated guidance on timing. Um, you know, what we have done, uh, I think has hopefully put us, put ourselves in a position. to run a very efficient translation from preclinical into clinical studies. So we have a great preferred provider relationship with Wuxi to make all of these molecules, which means I think as we go forward with CW220, you'll probably see that go faster from translating from selection into clinical studies. So that's one thing we're counting on and working in one supplier on the CDMO side. I think on the CRO side, we have the same idea to work with a preferred provider one group as a preferred provider and take advantage of multiple clinical studies coming on track at the same time. We've definitely positioned ourselves with some clinical and regulatory expertise in both Singapore for Asia Pacific and in Dublin for Europe to be able to start these studies with a global thought process in mind from the very beginning. We obviously have a strong US group as well, but I think you will hopefully see us take advantage of global access to patient populations of interest, given the multiple tumor types that exist that we'd like to study in 171 and 191. And I think by setting that up early, you can go much more efficiently in phase one to find all those patient populations in multiple dose expansion cohorts. And you can go much faster from going from phase one into a phase two process by already having a global footprint established with KOLs and all the major reasons. So we've been planning very carefully around speed and quality and efficiency of development for all five of these molecules that we intend to bring into the clinic. And 171 and 191 are hopefully just the first two to be able to prove that we did the right planning and execute those in a quality and efficient manner. And I'm sorry not to be able to give more specific guides about which one's filed first and which one's recruiting first and when that is in 2024, but we'll give that guidance as soon as we feel comfortable that we can be as accurate as possible at that, and that's probably later this year.
spk05: Okay. Maybe just building on what you said earlier on 220, you provide some comments on how 220 could potentially be differentiated than other companies out there evaluating Navi2B. Is there any specific learnings that you received from your competitor failing earlier last month? Is there any insights that you gained that could allow you to make some tweaks heading into the study in 2025? Thank you.
spk21: Yeah, I think we've been studying the biology of this target for a long time period to get to this stage. We've obviously followed any programs which have been in the clinic in this area, besides the MRSANA that was the Genentech compound. And I think, you know, we had a very set mindset of what we thought would make a great ADC against this target. And I think, you know, you try to learn along the way, but I think some of the elements that are designed into this were specific to how we thought this target should be approached in the first place. I don't think we changed anything specifically in response to what we saw. We did benchmarks. obviously against the two compounds wherever we could understand the differentiation that we're able to tease out pre-clinically. But I'll ask Paul if he wants to expand upon that statement at all.
spk03: No, I think you're right, Ken. I think a lot of design features in our molecule we feel addresses some of the previous limitations, but we certainly will bear in mind and take stock of you know, what others have learned and factor that in maybe in the design of the study. But really in the design of the molecule, we feel very comfortable where we've landed with the molecule and it addresses, you know, prior limitations and hopefully can, you know, provide, you know, good patient outcome.
spk10: Great.
spk03: Thanks, guys.
spk21: Yeah. And we have spent, you know, we have spent time trying to understand, you know, co-expression uh in in patient populations between folate receptor and and nappy to understand that because it's not very well understood in the extent that there is whether it's you know high and low or low and high or what it is so i i think something got to work in in progress for us um i think you know one of the most complicated things we had in our business case to push this forward was you know facing the same you know development and regulatory pathway where someone's already ahead of you in this commercially available product and you can't test that population the same way you would all of the others. And unfortunately for this other agent, that's gone away, but it definitely makes the business case for moving forward in a clinical development regulatory pathway easy for us to explore the full breadth of ovarian cancer and non-small cell lung cancer without a commercial product being available in a quick fashion. So it actually looks like a more promising opportunity program for us, and we think how we've selected the antibody, the linker strategy, the payload, and understanding the target, we think we're on the right track.
spk04: Great. That was very helpful. Thank you.
spk19: Thank you. One moment. We have a follow-up question. And we have a follow-up question coming from the line of EGAL. No COVID chips. Up City, your line is open.
spk09: Oh, thanks for taking the follow-up. Just two quick follow-ups on NAPI2B. Any early work on a biomarker enrichment strategy for this target? And then second, you mentioned ovarian and non-small cell lung. I think in the past, your competitor, Mursana, had indicated that non-small cell lung, the expression of NAPI2B may be a bit too variable I'm just curious what your thoughts are on that and which of those tumor types you would want to prioritize in an early phase one. Thanks.
spk21: Yeah, I think our, you know, we won't talk too much about our phase one strategy until, you know, the study's up on clinical trials, which will be in a little bit. But we're obviously very interested in, this is a target of interest in both ovarian and non-small cell lung cancer. We'd like the opportunity with the right ADC, which we think we have, to understand what the impact might be in an actual patient population. These are obviously both targets of interest because the expression levels in ovarian and non-small cell lung cancer are about 60% in both. So it gives you a different pathway to think about how you would approach this patient population and whether you enrich for enrollment or not. And I think as you see our clinical study, you'll get a better understanding of what our approach is. But we think, you know, we like the breadth of potential indications here. It's obviously not as broad as 171 and 191, which is probably okay. And if you think about GPC3 as an ADC, it's, you know, it's a straight HCC target of interest. So there is some diversity and variability in in the targets that we're trying to approach. And even now with NAPI, we're approaching a target where we could be the first in class if we move quickly with the right approach, as opposed to folate receptor where there's somebody there ahead of us and others are pursuing it with a topo payload. So different characteristics of each of these programs that we have. So we like the fact that they're a little bit different. But I think as you see our clinical plan, formulate in clinical trials, you'll see what our approach will be. But we would like to study our particular ADC in both of these patient populations of ovarian and non-small cell lung cancer to understand what might be possible.
spk14: Thanks. One moment, please.
spk19: One moment for the next question. And our next question We'll be coming from the line of Stephen Wiley of FIFO. Your line is open.
spk17: Hi, guys. This is Tulian for Stephen Wiley. I have two quick questions. So the first one is, if I understood correctly, it sounds like you guys are still planning to present data from CW49 by end of this year. would it be possible to give us just a big picture color on what this data presentation would entail? And second, so ZW49 in breast cancer, HER2 low breast cancer, or post in HER2, you mentioned that you guys would likely conduct this trial with a strategic partner, and what would actually define it as like a ideal strategic partner and what would you be looking for in order to make your decision? Thanks.
spk21: Yeah, thank you for the question. So we do have an abstract accepted at a medical meeting before the end of 2023 to present some additional Xanizodata from the phase one study. Again, we won't talk about what that is until the abstract title is made public. So you'll just have to wait for that to occur on the timetable, but we're happy that we have an abstract accepted and an opportunity to present some additional data from Xanizo in our single agent study phase one. I think as we've talked about with Xanizo going forward in development, we see this as a combination ADC that can be used in combination with a multitude of agents to generate efficacy. and targeted in a patient population, which is the post-TDXD patient population or space. It's what everyone is trying to find a space to fill for physicians and patients in what happens when people progress or fail or are intolerant to TDXD. And so obviously it's why we're interested in non-small cell lung cancer. There the combination was easier to determine. In breast cancer, we definitely would like to do some additional single-age activity in in HER2 low as well as in 2DXD failures, but we thought it was very important to figure out then what is our combination strategy? What is the agent we would combine with and what patient population would that be targeted at and how would we get access to that patient population? And some parts of those answers would be helpful to have a partner execute that program. But until we answer the question about what agent might be looked at in combination and what the specific setting will be, it's hard to conclude those discussions with partners. I think we're still working on defining the pathway, and hopefully we can do that and broaden out this program. But we do want to go forward with the non-small cell lung cancer in combination with PD-1, and that's what we're doing now, and that will get initiated this year, and data will come out of that on the timelines, and we'll give guidance about that once we get the study up on CLIN trials and once we get our first patient in. And until then, we really can't say more about that.
spk17: Thank you.
spk02: Well, thank you.
spk19: Thank you for your questions today. This concludes today's Q&A session. I would now like to turn the call back over to Ken for closing remarks. Please go ahead.
spk21: Yeah, thank you very much for attending our call and asking questions. I know it's late in the earnings season, but we really appreciate your interest. Hopefully your takeaways from this call is that we remain right on track with where we thought we would be with an exciting 2024. We've confirmed the guidance of reporting top-line data from the RISE and GEA-01 study with Xanadatamab plus chemo and also plus TSLA. And we look forward to reporting that data next year. I think it really, really is important for Xanadatamab. We're really excited with Jazz's optimism about the potential reach for Xanadatamab, not just in BDC, but GEA breast cancer and beyond that they expressed on their call yesterday, which is great. We're right on track with the two new INDs, the first ones for ZW171 and 191 next year in starting those clinical studies, which is great. We're right on track with nominating our third compound, which we want to really aggressively pursue with timing. And we're working very diligently on the fourth and fifth selection of our portfolio. And we're hoping that we can round that out more quickly than maybe we anticipated. And beyond that, we're still remaining financially disciplined and keeping our cash runway to at least 2026 and beyond so we can pursue this five by five strategy in a way that allows us to move in an unencumbered fashion and still have discussions around new partnerships to help us with those five molecules potentially or to work with us on things beyond those five molecules. But we feel really comfortable with our position right now. And we have a lot of opportunities in the remainder of 2023 to share ongoing data and results up and down the portfolio from Xanadata and Mavidesmo to Xanizote and other conference with other products in the portfolio. And we look forward to the opportunity to sharing that additional progress and data and results at conferences through the remainder of 2023. And thank you for paying attention and look forward to the next update.
spk19: This concludes today's conference call. Thank you all for participating. You may now disconnect. And everyone, have a great evening.
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