Zymeworks Inc.

Thank you for signing by. This is the conference operator. Welcome to ZymeWorks' fourth quarter and year-end 2023 results conference call and webcast. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, to ask a question, please press star, then 1-1 on your telephone keypad. I would now like to turn the conference over to Srinath Inamda. Director of Investor Relations, Trinnell, please go ahead.

Thank you, operator. Good afternoon. I'd like to welcome you all to our fourth quarter and year end 2023 results conference call. Before we begin, I'd like to remind you that we'll be making a number of forward looking statements during this call, including without limitation those forward looking statements identified in our presentation slides and the accompanying oral commentary. These 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 filed with the SEC. In a moment, I'll hand over to Dr. Chris Assel, our Senior Vice President and Chief Financial Officer, who will be discussing recent scientific and corporate updates along with our financial results for the fourth quarter 2023, 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 our press release, which is available on our website at www.zionworks.com under the Investor Relations tab. Following this, Paul Moore, our Chief Scientific Officer, will talk about key expected milestones that underpin another potentially transformative year for Zyworks, both through expected upcoming regulatory approvals and launches, and more broadly through executing on our development strategy for our early stage project candidates. 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 Zyworks website later today. I'll now turn the call over to Chris, our Senior Vice President and Chief Financial Officer. Over to you, Chris.

Thanks, Fennell, and thank you, everyone, for joining us today for our fourth quarter and full year 2023 earnings call. With that, I will begin today's call with an overview of key achievements from our development programmes over the course of 2023, as well as our financial results. Throughout 2023, we successfully positioned ZymWorks as a thought leader in the development of antibody drug conduits, or ADCs, and multispecific antibody therapeutics. We have done so through multiple data catalysts from our phase two clinical trials of zamodetamab in both gastroesophageal adenocarcinoma, or GEA, and biliary tract cancers, or BTC, which validate our protein engineering expertise and antibody screening capabilities. We're very pleased to see positive results for these patient populations and look forward to further advancements of Zanadecimab's developments in multiple indications led by our partners, Jazz Pharmaceuticals and Beijing. These developments, coupled with our work on demystifying the ADC dogma by reviewing 40 years of clinical data and taking these learnings to redefine our own approach to develop the next generation of ADCs, are key differentiators for Zyneworks as we aim to develop practice-changing therapeutics and indications with high unmet medical needs. We have significantly accelerated the development timeline for our early stage 5x5 programs, with the majority of our product candidates having now been nominated. Most recently, ZW251, our GPC3-targeting ADC, being developed for the treatment of hepatocellular carcinomas. We remain on track to accomplish our goal of submitting two INDs or foreign equivalent submissions in 2024 for ZW191 and ZW171 and to nominate our fifth candidate with a planned IND submission in the first half of 2026. We also remain on track for two further IND or foreign equivalent submissions in 2025 for ZW220 and ZW251. We have strategically expanded the global footprint of our early-stage development team by establishing a presence in the key locations of Ireland, California, and Singapore in preparation for our clinical development plans. This has allowed us to retain top talent and establish fit-for-purpose facilities, which will enable us to accelerate pipeline development as we move forward with our 555 program. Execution on our strategy throughout 2023 has allowed us, together with our partners, to target late 2024 for the pivotal phase three top line readout from Horizon GA01, where we will see progression-free survival data. Our partners, Jazz and Beijing, also remain on track to complete the biologics license application, or BLA, submission for Xanadetimab in second line BTC by the first half of 2024 in the United States. And in the second half of 2024 in China, with the goal of potentially launching Zanadecimab in the United States and China in 2025 or sooner. We would also like to highlight that, as per recent guidance provided by our partner, JAS, the phase III confirmatory trial to evaluate Zanadecimab as first-line treatment for patients with metastatic BTC has now been initiated. We see the anticipated commercialization of Xanadetimab as a near-term opportunity with more than $2 billion in revenue potential, starting with potential approval in BTC, which remains an area of particular unmet patient need. We agree with the thoughtful approach taken by our partners to seek to take Xanadetimab to market initially in BTC, as it may enable a faster go-to-market strategy and potentially expedite the regulatory review process for other indications where Xanadecimab can leverage SPLA filings. GEA would be the second indication which has a much larger patient population, estimated to be 63,000 HER2-positive cases annually in the United States, Europe, and Japan. JAS has expanded their clinical efforts for Xanadecimab in breast cancer, where there remain many opportunities in both the early stages and late stages of disease. We're also very excited about the potential for Xanadecimab to provide a chemo-free regimen, which we know would be of great value to patients. And we look forward to data from the iSpy program and Jazz's collaboration with MD Anderson. As you can see from this slide, there are many opportunities beyond these indications in other HER2-expressing tumors, which makes Xanadecimab a potentially very rewarding financial investment, both for our partners and for shareholders of ZymeWorks. while also supporting our goal to improve the standard of care for difficult-to-treat diseases for patients with high and met needs. Beyond Xanadetamab, we are pleased to be starting the year having nominated four of the five product candidates that we set out to define a year ago. Today, we have a broad and differentiated pipeline with novel candidates focused on validated targets in areas of significant interest, which continue to provide multiple opportunities for business development and collaborations. We remain committed to advancing the development strategy for our pipeline of unencumbered product candidates, all of which have the potential to increase the standard of care for patients in disease areas with high unmet need and with commercially attractive targets. We believe the next six to 18 months are set to be transformational for Zyneworks as our partners approach potential regulatory approvals and launches and more broadly through the advancement of our differentiated early stage product candidates. Our Chief Scientific Officer, Dr. Paul Moore, will talk more about the future of our pipeline, but first I would like to spend some time on our financial results. This afternoon, SignWorks reported financial results for the fourth quarter and year ended December 31st, 2023. SignWorks' net loss for the year ended December 31st, 2023 was $118.7 million, or $1.72 loss per diluted share, compared to a net income of $124.3 million for the year ended December 31st, 2022. Net loss in 2023, as opposed to net income in 2022, was primarily due to non-recurring upfront fee revenue from our collaboration agreement with JAS in 2022. which was partially offset by higher collaboration revenue, lower operating expenses, higher interest income, and lower income tax expenses in 2023. As reported, our revenue for 2023 was $76 million compared to $412.5 million in 2022. 2023 revenues included $71.5 million for development support and drug supply revenue from JAS, and $4.5 million from our other partners for research support and other payments. Revenue for 2022 included $375 million in upfront fees from JAS, $24.3 million in development support payments from JAS, and a $5 million upfront fee from a tracker, as well as an $8.2 million in research support and other payments from our other partners. Research and development expense was $143.6 million in 2023, compared to $208.6 million in 2022. The decrease was primarily due to a decrease in expenses for Xanadetamab at our transfer agreement and amended and restated collaboration agreement with JAS. This was partially offset by an increase in preclinical expenses, primarily with respect to preclinical product candidates ZW171 and ZW191, and higher Xanadetamab's overdosing program costs. Salaries and benefit expenses decreased due to lower headcount in 2023 and non-recurring severance expenses. General and administrative expenses were $70.4 million compared to $73.4 million in 2022. The decrease was primarily due to a decrease in salaries and benefits expenses due to lower headcount, lower non-recurring severance expenses in 2023, and a decrease in expenses for professional services. This is partially offset by an increase in other expenses related to higher depreciation on facilities and higher technology spending in 2023. Other income net increased by $14.1 million in 2023 compared to 2022 due to income earned on higher cash resources and the higher rates of return in 2023. Income tax expense decreased by $11.5 million in 2023 compared to 2022, primarily due to a reduction in United States taxes under the Global Intangible Low-Taxed Income Rules in 2023. In 2023, we incurred a net loss compared to a net income in 2022, primarily due to the income from the Jazz Partnership in 2022. As of March 4th, 2024, we have approximately 70.6 million shares of common stock outstanding and 5.1 million pre-funded warrants issued in December 2023. As of December 31st, 2023, we had 456.3 million of cash resources consisting of cash, cash equivalents and marketable securities, comprised of 157.6 million in cash and cash equivalents and $298.7 million in marketable security. Based on current operating plans, we expect our existing cash resources as of December 31st, 2023, when combined with receipt of certain anticipated regulatory milestone payments, will enable us to fund planned operations into the second half of 2027. For additional details on our quarterly and year-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.signworks.com. Our strategy of refocusing the business and building our diverse clinical stage product pipeline of ADCs and multi-specific antibody therapeutics continues to provide a solid foundation, helping to achieve our long-term goal of identifying additional product candidates and seeking valuable partnership options with a strong financial position of $456.3 million as of the end of December 31st, 2023. And this, together with certain anticipated regulatory milestones, gives us an expected runway into the second half of 2027. We may also be able to extend this runway through potential additional regulatory and commercial milestone payments in connection with our partnerships with JAS and Beijing. And in addition, pending regulatory approval, we are eligible to receive tiered royalties between 10 and 20% on JASA's annual net sales of Xanadetimab, and between 10 and 19.5% on Beijing's sales. No development or commercial milestone payments or royalties have been received today. With that, I'd like to hand over to our Chief Scientific Officer, Dr. Paul Moore, who will talk about our novel topoisomerase inhibitor, or Topo-1 payload, which is the foundation for three of our ADC candidates and speak more broadly about the key milestones for our early stage pipeline. Over to you, Paul.