Zymeworks Inc.

Good day and thank you for standing by. Welcome to the DesignWorks third quarter 2023 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would now like to hand your conference to your first speaker today, Sonal Imandar, Director of Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, everyone. My name is Sonal Imandar, Director of Investor Relations here at Zineworks. And I'd like to welcome you to our third quarter 2023 results conference call. On slide two, before we begin, I'd like to remind you that we will be making a number of forward-looking statements during this call. including, without limitation, those forward-looking statements identified in our presentation slides and the accompanying oral commentary. Forward-looking statements are based upon our current expectations and various assumptions and are subject to the usual risks and uncertainties associated with companies in our industry and at our stage of development. For discussion of these risks and uncertainties, we refer you to our latest SEC filings as found on our website and as followed with the SEC. In a moment, I will hand over to Chris Astle, our Senior Vice President and Chief Financial Officer, who 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.zineworks.com under the Investor Relations tab. Following a discussion of our financial results, Dr. Paul Moore, our Chief Scientific Officer, will talk about our early-stage pipeline and introduce our latest IND candidate, ZW251, a potential first-in-class ADC molecule designed for the treatment of glyphosate 3, or TPC3, expressing hepatocellular carcinoma, or H2C. At the end of the call, Chris and Paul will be joined by our Chair and Chief Executive Officer, Ken Galbraith, for Q&A. As a reminder, the audio and slides from this call will also be available on the ZionWorks website later today. I will now hand over to Chris, our Senior Vice President and Chief Financial Officer.

Thanks, Rinal, and thank you, everyone, for joining us today for our third quarter 2023 earnings call. With that, I will begin today's call with an overview of our financial results. This afternoon, SignWorks reported financial results for the three and nine months ended September 30, 2023. The nine months ended September 30, 2023. SignWorks' net loss was $104.2 million, or $1.53 per diluted share, compared to a net loss of $185.1 million for the same period in 2022. The decrease in net loss of 44% was primarily due to revenue from our collaboration agreement with JAS and an increase in interest income, as well as a decrease in research and development expense. This was partially offset by an increase in general and administrative expense and an increase in income tax expense. Revenue for the nine months ended September 30th, 2023 was $59.1 million compared to $10 million for the same period in 2022. Revenue for the nine months ended September 30th, 2023 included $56.3 million for development support and drug supply revenue from JAS and $2.8 million for research support and other payments from our partners. Revenue for the same period in 2022 included a $5 million research license fee from our ATTRACA licensing agreement and $5 million from our partners for research support and other payments. Research and development expenses for the nine months ended September 30th, 2023, were $118.1 million compared to $155.6 million for the same period in 2022. Excluding stock-based compensation and 2022 restructuring expense, research and development expense decreased on an on-gap basis by $31.4 million in the nine months ended September 30th, 2023, compared to the same period in 2022. This decrease was primarily due to a decrease in expenses for Xanadetamab as a result of our transfer of this program to JAS during the three-month end of June 30th, 2023, for our transfer agreement and the amended JAS collaboration agreement. This decrease, compared to the same period in 2022, was partially offset by an increase in preclinical expenses primarily with respect to preclinical product candidates of ZW171 and ZW191. In addition, salaries and benefits expenses decreased compared to the same period in 2022 due to lower headcount in 2023. For the nine months ended September 30th, 2023, general and administrative expenses were $55.6 million compared to $43.2 million for the same period in 2022. Excluding stock-based compensation and 2022 restructuring expenses, general and administrative expense increased on a non-GAAP basis by $9.9 million in the nine months ended September 30th, 2023, compared to the same period in 2022. This increase was primarily due to an increase in expenses for professional services and other expenses related to higher depreciation on facilities and higher technology expenses in 2023, compared to the same period in 2022. This was partially offset by a decrease in salaries and benefits expenses compared to the same period in 2022 due to lower headcount in 2023. Overall, our total employee headcount has been reduced by approximately 45% over the past 21 months, from 455 full-time employees as of December 31st, 2021, to 252 full-time employees as of September 30th, Our cash resources consisting of cash, cash equivalents and marketable securities were $390.2 million as of September 30th, 2023, a net reduction of $102 million from December 31st, 2022. For the nine months ended September 30th, 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. As of September 30th, 2023, we have approximately $64.3 million in receivables from JAS reflecting reimbursement for Xanadetamab development costs, which we expect to be reimbursed subsequent to the end of the third quarter. Moving forward, The accounting for our JAS collaboration should be simplified, given that the majority of Xanadetimab 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 Zanadetabab development to Jazz, we recently decided to vacate our existing long-term leased Seattle office location and have secured a fit-for-purpose office facility on a short-term, financially attractive lease arrangement in Bellevue to accommodate our remaining Seattle-based workforce. The majority of the financial impact related to this decision was reflected in our Q3 financial results. 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 november 6 2023 we had approximately 70 million shares of common stock outstanding with all previously issued pre-funded warrants exercised For additional details on our quarterly and nine-month-ended results and for a description of our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, I encourage you to review our earnings release and other SEC filings as available on our website at www.zymeworks.com. With that, I'd like to hand over to our Chief Scientific Officer, Dr. Paul Moore, who is going to talk about recent data readouts our early stage pipeline, and our latest IND candidate, CW251. Over to you, Paul.