Zymeworks Inc.

Thank you for standing by. This is the conference operator. Welcome to Zyneworks' second quarter 2024 results conference call and webcast. As a reminder, all participants are in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To ask a question, press star 1 1 on your telephone keypad to join the queue. I would now like to turn the conference over to Shurnal Inamdar, Director of Investor Relations. Shurnal, please go ahead.

Thank you, operator. Good afternoon and thank you for joining our second quarter 2024 results conference call. Before we begin, I would like to remind you that we'll be making a number of forward-looking statements during this call, including, without limitation, those forward-looking statements identified in our slides and the accompanying oral commentary. Forward-looking statements are based on 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 SUT filings as found on our website and as filed with the SUT. In a moment, I will hand over to Bijal Desai, our VP of Finance and Strategy, who will be discussing recent corporate updates along with our financial results for the second quarter 2024. Following this, Dr. Paul Moore, our Chief Scientific Officer, will talk about key highlights for our second quarter including the investigational new drug application clearances for ZW171 and ZW191 by the FDA. At the end of the call, Bijal, Paul, and Ken Galbraith, our chair and CEO, will be available for Q&A, as well as Pranshul Chauhan, Associate Medical Director for Early Stage Development for ZW171. As a reminder, the audio and slides from this call will also be available on the DesignWorks website later today. I will now turn the call over to Bijal.

Thanks, Chanel, and thank you, everyone, for joining us today for our second quarter 2024 earnings call. I will begin today's call with an overview of key achievements from our development program as well as our financial results. In the second quarter, we achieved key milestones regarding the global regulatory review of our late-stage asset Xanadatamab, including being granted priority review of the Biologics License Application, or BLA, for Xanadatamab as second-line treatment for biliary tract cancers, or BTC, in the United States, with a target action date of November 29, 2024. Similarly, the European Medicines Agency has validated the marketing authorization application for Xanadatamab in second-line BTC, and regulatory reviews for Xanadatamab in BTC remain underway in China. We are pleased to have received a milestone payment of $8 million USD in July under the terms of Zymer's Asia-Pacific License and Collaboration Agreement with Beijing in conjunction with Xanadatamab's BLA acceptance in China. Our partner, Jazz, has confirmed that the Pivotal Horizon GEA-01 trial evaluating Xanadatamab in first-line gastroesophageal adenocarcinoma, or GEA, is ongoing and enrollment remains on track. Based on a blinded assessment of progression events, JAWS estimates top-line progression-free survival, or PFS, data will be available in second quarter 2025. JAWS continues to track events in the trial relative to the initial protocol assumptions. Near term, we look forward to a potential approval for Xanadatamab in second-line BTC in the United States. And based on the expected timeline and subject to approval, Jazz is aiming to launch Xanadatamab in the United States for a second-line BTC in the fourth quarter of 2024. Together with our partners, we look forward to opportunities where we can continue presenting promising data that support deep and durable responses, further highlighting Xanadatamab's potential to provide meaningful benefits for patients. This includes the first-ever overall survival findings from the Phase 2B Horizon BTC-01 clinical trial for Xanadatamab presented at the American Society of Clinical Oncology annual meeting by our partner, JAS. Results from this long-term analysis of the trial indicate that Xanadatamab as monotherapy demonstrated sustained and durable antitumor responses in previously treated patients with HER2-positive BTC-01 and support the clinically meaningful benefit of continued treatment with Zanidatimab. The safety profile in all enrolled patients remained manageable with favorable tolerability compared with the initial analysis. In addition, we are pleased to report significant progress for our wholly owned pipeline, which transitions two of Zymerc's early stage programs into clinical candidates. We have successfully cleared IND applications by the FDA for ZW191 and ZW171 with first-in-human studies planned to initiate in the second half of 2024 in the United States, and we are actively progressing applications seeking regulatory permission to commence clinical studies for ZW191 and ZW171 in other non-U.S. jurisdictions in the second half of 2024. With these advancements in mind, following a strategic review of our emerging wholly-owned pipeline, we made the decision to formally discontinue the clinical development program of our HER2-targeted antibody drug conjugate zanidatamab zovodotin, also known as ZW49 or Zanizo. This decision aligns with our commitment to focus on the development of our early-stage programs which we believe have the potential to be best-in-class and or first-in-class therapeutics. By reallocating our resources, we can focus on accelerating the progression of ZW171 and ZW191 into the dose escalation stage of the respective Phase I clinical trials, as well as the planned IND filings for ZW220 and ZW251 in 2025. We believe Xanizzo remains a promising phase two ready asset, and we continue to explore partnering discussions where Xanizzo may provide complimentary coverage to a pipeline for non-small cell lung cancer, breast cancer, and other indications. Our team extends heartfelt gratitude to the patients, families, and healthcare professionals involved in the Xanizzo development program. We remain committed to the highest degree of scientific rigor in our development processes with the goal of focusing on candidates with the potential to deliver the greatest benefit to patients. Our broader oncology development program continues to be a priority with two phase one trials anticipated to commence in 2024, including enrollment of patients with non-small cell lung cancer. Turning to our financial position, this afternoon, Zymerx reported financial results for the second quarter of year 2024. Zymerx's net loss for the six months ended June 30, 2024, with $69.3 million, or $0.91 loss per diluted share, compared to a net loss of $75.5 million for the same period in 2023. The decrease in net loss is primarily due to lower research and development and general and administrative expenses, which is partially offset by a decrease in revenue and an impairment charge recognized in 2024 related to Xanadadamab-zovidotin. As reported, our revenue for the six months ended June 30th, 2024 was $29.3 million compared to $42.6 million for the same period in 2023. Revenue for the six months ended June 30, 2024, included $20.7 million for development support and drug supply revenue from JAS, $8 million of milestone revenue from Beijing in relation to the acceptance by the CDE of the NMPA in China of the BLA for Xanadatamab for second-line treatment of HER2-positive DTC, $0.4 million from Beijing for research support payments and $0.2 million from our partners for research support and other payments. Revenue for the same period in 2023 included $61 million for development support and drug supply revenue from JAS, which was partially offset by a $20.1 million credit issued to JAS for contractual amendments to our partnership arrangement and $1.7 million from our partners for research support and other payments. Overall operating expenses were $110 million for the six months ended June 30th, 2024, compared to $124 million for the same period in 2023, representing a decrease of 11% year over year. The decrease in overall operating expenses resulted from a decrease in both research and development expense, as well as a decrease in general and administrative expense. The decrease in research and development expense was primarily due to a decrease in expenses for Xanadatamab as a result of transfer of responsibility for this program to JAS. This decrease, compared to the same period in 2023, was partially offset by an increase in expenses of other development programs, primarily with respect to product candidates ZW171 and ZW251, costs incurred for manufacturing activities to support the IND for ZW220, and other preclinical and research programs. Salaries and benefits expenses decreased compared to the same period in 2023 due to non-recurring severance expenses in 2023, which was partially offset by an increase in stock-based compensation expense in 2024. The decrease in general and administrative expense was primarily due to a decrease in external consulting expenses for information technology, legal fees, and other expenses for advisory services a reduction in insurance costs and a decrease in depreciation and amortization expenses compared to the same period in 2023. This was partially offset by costs due to the termination of our long-term facility lease in Seattle in 2024. During the six months ended June 30th, 2024, we recorded a non-cash impairment charge of $17.3 million as a result of the company's decision to discontinue the Xanadatamab-Zovodatin Clinical Development Program, which utilized the technology represented by acquired in-process research and development assets. As of July 31st, 2024, we had approximately 71 million shares of common stock outstanding and approximately 5.1 million shares of common stock issuable under pre-funded warrants. As of June 30th, 2024, we had $395.9 million of cash resources consisting of cash equivalents and marketable securities as compared to $456.3 million as of December 31, 2023. For additional details on our quarterly and year-end results, I encourage you to review our earnings release and other SEC filings as available on our website at www.zimerx.com. Our strategy of refocusing the business and building a diverse clinical stage product pipeline of antibody drug conjugates, or ADCs, and multi-specific antibody therapeutics continues to provide a solid foundation which we believe will help to achieve our long-term goal of identifying additional product candidates and seeking valuable partnership options where appropriate to assist in global development and commercialization. Based on current operating plans, Our strong financial position of $395.9 million in cash resources as of June 30, 2024, together with certain anticipated regulatory milestone payments, gives us an expected runway into the second half of 2027. We may also be able to extend this runway or fund an expanded R&D scope through potential regulatory approval milestone payments in connection with our existing partnerships with Jazz in Beijing or new partnerships and collaborations which we may choose to form. In addition, pending regulatory approval, we are eligible to receive commercial milestone payments based on annual sales of Xanadatamab and tiered royalties between 10% and 20% on Jazz's annual net sales and between 10% and 19.5% on Beijing's net sales. With that, I'd like to hand over to our Chief Scientific Officer, Dr. Paul Moore, who will provide more details regarding our wholly owned pipeline, and specifically on ZW191 and ZW171 moving into the clinic. Over to you, Paul.