Zymeworks Inc.

Hello, thank you for standing by. This is the conference operator. Welcome to ZineWorks First Quarter 2024 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 ask the question, please press star, then 1-1 on your telephone keypad. I would now like to turn the conference over to Shrina and Amdar, Director of Investor Relations. You may begin.

Thank you, operator. Good afternoon, everyone. Thank you for joining our third 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 four different statements identified in our slides and in the accompanying oral commentary. Four different 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 findings as found on our website and as filed with the SEC. In a moment, I'll hand over to Leonie Patterson, our Executive Vice President and Chief Business and Financial Officer. Leonie joined our leadership team in September 2024, and today Leonie will be discussing recent corporate updates along with financial results for our third quarter 2024. Following this, Dr. Paul Moore, our Chief Scientific Officer, will talk about key highlights for our third quarter, including the initiation of a first patient dose in the phase one trial of our first bicepcific 2 plus 1 mesotheliom T-cell engager, CW 171. At the end of the call, Leonie, Paul, and Ken Galbraith, our Chair and CEO, will be available for Q&A. As a reminder, the audio and slides from this call will also be available on the DesignWorks website later today. I will now hand you over to Leonie.

Thank you for the introduction, Tronell, and thank you all for joining us today. I'm very pleased to have joined the DesignWorks team at such a pivotal time of growth, and at a time when we are on the cusp of many exciting developments still to come as we close out the rest of 2024, and a series of new developments anticipated in 2025 which underpin our long-term growth strategy. I look forward to talking more about these milestones as we continue to execute on our R&D pipeline and corporate objectives. If you could now turn your attention to slide five, where I will touch on recent key achievements across our development program. Starting first with our whole new pipeline, we received FDA clearance for our IND applications for both DW-171 and DW-191 in August this year. Since then over the past few months, our global clinical development team has been working very quickly and efficiently to enable dosing of the first patient with DW-171 as part of our global Phase I clinical trials. Later today, during today's call, Paul will provide more details on the clinical trial design for DW-191 as well as providing an update on the progress we have made in the clinical development of DW-171 across North America, Europe, and the Asia Pacific region. We also had the opportunity to present more promising preclinical data on our whole new pipeline at the ENA conference earlier this month in Barcelona for both DW-220 and DW-251, which Paul will go through in more detail later in the call. These preclinical data highlight the transformative potential of our novel approach to designing ADCs utilizing our proprietary payloads 519 and highly differentiated AD bodies. And we look forward to updating on the anticipated IND filings for both ADCs in 2025. Moving on to our partner program, Jazz Pharmaceuticals provided updates for our internally developed HER2-positive targeting by specific antibody ZANY. Recent presentations at the ESMO annual conference in Barcelona continue to highlight ZANY's potential within treatment of multiple HER2-positive indications, including long-term follow-up data in metastatic DEA patients for which a Kaplan-Meier estimated 30 months overall survival of 59% was reported from an ongoing phase II clinical study of ZANY in combination with chemotherapy. We're also pleased to recognize in our Q3 revenues a $2.5 million research milestone from our longstanding partner, GSK. This milestone provides continued validation of the strength and versatility of our internal platforms and technologies, including Asymetric, where we continue to have a range of legacy licensing arrangements in place. As a reminder, under the terms of this agreement with GSK, we received an upfront technology access fee and remain eligible for future research development and commercial milestone payments of just over $1 billion. In addition, we are also eligible for technologies on any worldwide sales of a licensed product. While we've had a busy few months on the development of our R&D pipeline, we have also been executing on our corporate goals. This includes completing the first $30 million of our share repurchase program, which I will touch on next. On August 1, 2024, we adopted a stock repurchase program to repurchase up to $60 million of the company's outstanding common stock with an initial authorized phase of $30 million. As of October 31, 2024, we have completed the initial $30 million of the repurchase program through the purchase of approximately 2.5 million shares of common stock at an average price per share of $11.79. Now turning to our financial position, this afternoon, ZineWorks reported financial results for the third quarter of 2024. ZineWorks net loss for the nine-month end of September 30, 2024, was $99.2 million, or $1.30 per diluted share, compared to a net loss of $104.2 million for the same period in 2023. The decrease in net loss was primarily due to lower research and development and general and administrative expenses, as well as a decrease in income tax expense, which was partially offset by the decrease in revenue and an impairment charge recognized in 2024 related to data mags overnoughten. As reported, our revenue for the nine-month end of September 30, 2024, was $45.3 million, compared to $59.1 million for the same period in 2023. Revenue for the nine-month end of September 30, 2024, included $32.8 million for development support and drug supply revenue from Jazz, $8 million of milestone revenue from Beijing in relation to the acceptance by the CDA of the NNPA in China of a BLA for Zany for second-line treatment of HER2-positive BTC, $2.5 million of milestone revenue from GSK in relation to the sequence peer nomination by GSK under the 2016 licensing agreement with them, and $2 million from Beijing and other partners for research support payments. Revenues for the same period in 2023 included $56.3 million for development support and drug supply revenue from Jazz, and $2.8 million from Beijing and other partners for research support and other payments. Overall operating expenses were $160.2 million for the nine-month end of September 30, 2024, compared to $173.7 million for the same period in 2023, representing a decrease of 8% -over-year. The decreases in overall operating expenses resulted from a decrease in both research and development expenses as well as general administrative expenses. The decrease in research and development expenses was primarily due to a decrease in expenses with Zany as a result of the transfer of responsibility for this program to Jazz, and a decrease in expenses for DW-171 and DW-191. This decrease, compared to the same period in 2023, was partially offset by an increase in expenses for DW-220 and DW-251 and other preclinical and research activities. Stock-based compensation expense increased primarily due to a lower expense in 2023 as a result of the cancellation and modification of rewards in respect of employees transferred to Jazz. Now turning to GNA, the decrease in GNA expense was primarily due to a decrease in external consulting expenses for information technology, legal fees, and other expenses for advisory services, insurance, and depreciation and amortization expense, compared to the same period of 2023. This was partially offset by costs incurred due to the termination of our long-term facility lease in Seattle in 2024 and an increase in stock-based compensation over 2023 primarily due to a reversal of compensation expense for option cancellations and modifications in 2023. During the nine months ended September 30, 2024, we recorded a non-cash impairment charge of $17.3 million as a result of the company's decision to discontinue the Xanadata MAMS Overdose and Clinical Development Program, which utilized the technology represented by acquired and processed research and development assets. Other income net was $16.1 million for the nine months ended September 30, 2024, compared to $14.6 million for the same period in 2023. The increase was primarily driven by an increase in the average interest yield of our cash balances and investments during the period. As of October 31, 2024, we had approximately 68.9 million shares of common stock outstanding and approximately 5.1 million shares of common stock issueable under pre-funded warrants. As of September 30, 2024, we had $374.9 million of cash resources consisting of cash, 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 funds as available on our website at .zymeworks.com. Now I would want to turn to the cash runway. Based on current operating plans, our strong financial position of $374.9 million in cash resources as of September 30, 2024, together with certain anticipated regulatory milestone payments, continues to provide an expected cash runway into the second half of 2027. And just as a reminder that we may also be able to extend this runway or fund an expanded R&D scope through potential additional regulatory approval milestone payments in connection with our existing partnerships with JAZ and 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 ZANI and tiered royalties between 10 and 20% on JAZ's annual net sales and between 10 and .5% on Beijing's sales. With that, I'd like to hand over to our Chief Scientific Officer, Dr. Paul Moore, who will provide more details regarding the development of our Holyown pipeline and our highly anticipated R&D day later this year.

Thank you, Leonie. So I'd like to start off by talking about some of the preclinical work Leonie mentioned earlier in the call, which we presented last week at the ENA conference in Barcelona. For ZW220, we were pleased to share data which demonstrates that 220 exhibits robust activity across a wide range of NAPI2B expression levels in vitro and then showing also significant antitumor efficacy in patient-derived xenograft models of ovarian, endometrial, and non-small cell lung cancer. In these preclinical models, 220 was highly active at a single dose of 6 mcg per kg across the models tested. In these studies, we evaluated between 4 and 8 models per indication, and based on tolerability data, the 6 mcg per kg is actually considered a conservative dose for 220, suggesting room for dose optimization in future preclinical studies. Importantly, 220 also displays bystander-mediated killing activity, as shown in this slide, in two different in vitro models. First, on the bottom left of the slide, we observe bystander activity against the NAPI2B negative cell line in a classic 2D culture model system, with 220, which incorporates our proprietary TOPO-1 payload at DAR-4, demonstrating bystander activity comparable to that observed with a version of 220 incorporating DXP at DAR-8. Furthermore, 220 also effectively inhibits the growth of heterogeneous NAPI2B-expressing 3D spheroid models comprising a mix of NAPI2B positive and NAPI2B negative tumor cells. This demonstration of strong bystander killing in vitro, we believe, is a critical attribute of 220 when targeting tumors with potentially non-uniform expression of NAPI2B. Our ADC also demonstrates a well-differentiated safety profile. Compared to higher-potency TOPO-1 inhibitor ADCs, such as those incorporating -T-CAN, 220 has shown a more favorable safety profile in pre-clinical toxicology studies with a maximum tolerated dose of greater than 90 mgs per keg in non-human primates and greater than or equal to 200 mgs per keg in rats. This indicates the potential for high dosing in humans, which could further enhance its therapeutic impact. Taken together, we've incorporated several key features to optimize the efficacy and safety of 220. The low -to-antibody ratio and moderate stability of the antibody linker provide a good balance between tolerability and antitumor activity, minimizing potential on-target or off-tumor toxicities. The strong internalizing antibody we've developed ensures efficient tissue penetration and cellular trafficking, improving our antibody tumor activity, especially in tumors with lower NAPI expression. Lastly, the FC-GAMMA receptor-silenced antibody design minimizes the risk of off-target toxicities, particularly from uptake by normal macrophages. This design contributes to the overall safety profile of 220, which as I showed has been well tolerated in both non-human primates and rats. All of the features discussed above related to the design of 220 provide a clear differentiation from other NAPI-2b ADCs in early development and gives us confidence in the potential of 220 to be best in class as we transition 220 from pre-clinical development into early-stage clinical studies next year. We remain on schedule with our pre-clinical development of 220 to support an IND filing and form applications in the first half of 2025. Moving on to other data presented at the triple meeting, the ENA on CW251, another ADC incorporating our 519 payload. That data continues to demonstrate significant potential for 251 addressing unmet needs in hepatocelular carcinoma and other GPC3 expressing tumors. 251 is designed to selectively bind, internalize, and kill GPC3 expressing tumor cells or Glyphocon3 expressing tumor cells. This precise mechanism of action coupled with the antitumor efficacy we've observed reinforces its potential as a targeted therapy for Glyphocon3 expressing cancers. One of the most promising aspects of 251 is its robust antitumor activity observed across a broad panel of hepatocelular carcinoma xenograft models, including both cell-line derived xenografts and patient-derived xenograft models. Importantly, 251 demonstrates a dose-responsive antitumor effect with a single 8 mc per kig dose showing activity in 5 out of 6 cell-line derived models and now out of 12 PDX hepatocelular cancer models. This includes models with lower or heterogeneous Glyphocon3 expression, underscoring the breadth of its therapeutic potential in targeting tumors with variable antigen presentation. Our team selected the drugs to antibody ratio or DAR of 4, but this ratio provides an optimal balance between safety and therapeutic impact. In fact, the DAR4 molecule has demonstrated a compelling breadth of antitumor activity in vivo, which is crucial for maximizing its efficacy across diverse tumor types. This broad target mediated activity across this range of hepatocelular cancer models continues to validate the strength of our ADC platform. In terms of safety, 251 has been well tolerated in repeat dose toxicology studies in non-human primates, exhibiting dose proportional PK. This positive safety profile, along with this robust preclinical efficacy, positions 251 well for clinical advancement. Looking ahead, we expect our preclinical development to support a 9D submission in the second half of 2025, and we believe 251 has the potential to provide a much needed therapeutic option for patients with hepatocelular carcinoma and other GPC3 expressing tumors. We're excited to continue developing this promising candidate and help make a meaningful impact in oncology. By the end of 2025, we expect to have all three of our 519 payload ADCs in early clinical development. We look forward to understanding how the design of our optimized antibody and proprietary payload might translate these promising preclinical findings into clinical efficacy for our ADC candidates. At Zymarx, the time in care to ensure we have a deep understanding of chartobiology allows us to innovate on elements of our ADC which we think could make a meaningful difference for efficacy, but importantly also for tolerability. Together, we believe that these design features could allow us to optimize at higher protein doses than other ADCs, ultimately maximizing the potential of these therapies to improve the standard of care for patients. Increased tolerability would also allow us to explore combination regimens for our candidates with the hope that we can reach first-line patients to really make a difference and extend progression-free survival and overall survival for these patients. Notably, we made a conscious decision not to repurpose existing molecules like exotecant for our ADCs. Instead, we aim to create a proprietary TOPA1 payload with characteristics ideally suited for an ADC, potentially allowing our candidates to outperform efficacy seen today with drugs that utilize a repurposed payload. These characteristics include moderate potency, which we believe could have a two-pronged effect of, one, enabling protein dose and bystander activity to enhance potential efficacy, while, two, also limiting damage where conjugated drug accumulates in some normal tissues and therefore increasing also tolerability. By reviewing ADCs that have been explored in the past, we believe our design philosophy is consistent with learnings from prior clinical data. We have observed that increased potency for other repurposed payloads, such as exotecant, seems to limit its maximum tolerated dose relative to moderate potency TOPA1 inhibitor payloads, which may limit the potential of the higher potency payloads to get into the efficacious dose range. Another feature we have factored into our design to potentially maximize tolerability and efficacy of our ADCs is linker stability. Historically, increased antibody linker stability has demonstrated improvements in preclinical therapeutic index, but these findings have not translated into the clinic. We believe that moderate linker stability, as employed in most clinically approved ADCs, will limit normal tissue exposure to conjugated drug, also contributing to improved tolerability. Regarding DAR and drug antibody ratio, we study both DAR4 and DAR8 versions of all three of our 519 payloads before carefully selecting the most appropriate DAR for each molecule based on our understanding of target biology, the targeted patient population, and the results of our preclinical studies. Lastly, and importantly, our efforts have been concentrated in optimizing antibody properties, particularly internalization and tumor penetration. We firmly believe that the key to ADCs being effective and tolerable and ultimately reaching those early lines of therapy is ensuring an appropriate protein dose. We have also carefully considered the potential benefit of incorporating FC mutations on our antibodies based on the target population and data supported by preclinical studies. From our preclinical work and empirical review of clinical data over the past 40 years, we believe that our approach is differentiated from other ADCs currently under development. We believe the primary factor is ensuring an appropriate protein dose within the optimal range. Together, we believe that these design features could allow us to optimize at higher protein doses than other ADCs, ultimately maximize the potential of these therapies to improve the standard of care for patients in both monotherapy settings and for combination therapy, as well as in earlier lines of treatment. We are very much looking forward to evaluating these novel design features and their effect on tolerability and efficacy. We are also looking forward to evaluating the potential benefits of using the With using again relative to clear benchmarks from peers and highly validated targets. The first of which will be our phase one clinical trial of our ADCs. ZW191. Based on the encouraging preclinical findings, we are moving forward to validate these results in the clinical setting. We anticipate dosing the first patient this year in our phase one open label multi-center study of 191 registered under NCT06555744 on clinicaltrials.gov. The study is actively recruiting and aims to enroll 145 participants with advanced solid tumors, including ovarian, endometrial and non-small cell lung cancers across North America, Europe and the Asia Pacific region. The study is designed to evaluate the safety, tolerability, pharmacokinetics and preliminary anti-tumor activity of ascending doses of 191. Part one of the study will evaluate the safety and tolerability of 191. Part two of the study will evaluate safety and explore the potential of anti-tumor activity of ZW191 according to the resist evaluation criteria, while continuing to evaluate the safety and tolerability. Inclusion criteria includes pathologically confirmed ovarian cancer, endometrial cancer, non-small cell lung cancer and or progressive disease refractory to all standard of care that confer clinical benefit measurable disease per resist. We look forward to reporting first patient dose in the near future and discussing progress in the coming earnings calls. In regards to 171 or ZW171, as Leonie mentioned earlier in the call, it was only in August that we were announcing the FDA clearance to move forward with phase one clinical trials for 171. The speed of efficacy and our team's ability to move 171 forward to first patient being dosed in such a short time as a credit to the dedication and collaboration of our global hubs. Since we last presented our earnings, we have been working towards activating sites in North America, Europe and the Asia Pacific region in our phase one trial for 171. In this slide, you will see that we have made progress here with clinical sites activated in North America. As a reminder, for our clinical trials for 171, we expect to recruit 160 patients globally, which we anticipate will present us with a high level of diversity in patient characteristics, including expression levels across tumor types. We believe this diversity should result in higher quality data sets and hopefully more conclusive results for retrospectively determined expression cutoffs. We look forward to talking more about the work our team conducted to support selection of the starting dose for 171 at SITC next week. As we have previously communicated internally, we have a very clear target product profile for our candidates. And so the ability to initiate those in closer to the expected efficacious dose means that it provides the potential to understand things of efficacy as well as tolerability more clearly early on in the study. This is especially important as we continue to keep financial and scientific discipline within the organization in order to focus on the candidates that have the best chance of success in being meaningful treatment options for patients. Our R&D engine has continued to work in the background on the next wave of innovative modalities in therapeutic areas where patients with significant unmet needs are lacking effective treatment options. With this in mind, we will continue to advance assets that have the highest potential to change the standard of care or to move on to other promising candidates where we can innovate further with the hope for better therapies for patients. Finally, I'm also pleased to share an update about our upcoming R&D day. We will provide in-depth updates on our growing portfolio of solid tumor targeting antibody drug conjugates and T cell-engager molecules. This will be a unique opportunity for us to showcase the progress we've made in advancing our innovative pipeline. And we are thrilled to be joined there with several key opinion leaders from the oncology field. Together with our management team, these experts will discuss the latest developments in our ongoing R&D and clinical activities, underscoring our commitment to delivering transformative therapies for patients. One of the highlights of the day will be the formal nomination of the latest product candidate from our 5x5 portfolio, our Tri-Specific T cell-engager. This will mark the final nomination in our ambitious 5x5 R&D strategy with the projected IND filing in the first half of 2026. This nomination is a major milestone for us, reinforcing the strength of our T cell-engager platform. We'll also discuss our strategy for our continued focus on solid tumors while also expanding into new therapeutic areas, particularly in hematological cancers and autoimmune inflammatory diseases. These areas represent a natural extension of our core strengths, and we see tremendous potential to apply our technology platforms to these new indications. Lastly, we'll provide updates on our pre-clinical development progress, which includes potential IND filings for new product candidates in 2026 and beyond. This progress is a testament to the innovation happening within our labs and positioned as well for continued growth of an exciting R&D portfolio in the years ahead. We're excited to share these developments that are R&D day and look forward to highlighting the advancements that will drive the next chapter of our company's growth. And with that, I'll hand it to Ken for closing remarks.

It's

great.

Thank you, Paul. I'm very pleased with all the progress we've made so far this year, and we're only just getting started on the clinical development for some very interesting targets in patient populations with significant unmet need. With that being said, there's still plenty more time left in 2024, and we plan to make full use of this time to continue building on our momentum so far this year and complete a few more significant pipeline events before the end of the year. First, I also share in Paul's enthusiasm for updates we plan to make during our upcoming R&D day in December, where we'll officially nominate our new tri-specific -cell-engager product candidate. This nomination is a significant milestone for us to complete the 5x5 portfolio almost two years ahead of the initial schedule and certainly highlights the continued growth and diversification of our pipeline as we expand on new modalities and novel treatment approaches. In addition to some of these updates, I also want to highlight that our partner, Jazz, has initiated a pivotal phase three trial named Empower, evaluating Xanadamab in patients with HER2-positive breast cancer whose diseases progressed on previous T-DXD treatment. This is a major step forward in potentially bringing new potential treatment options to patients with metastatic breast cancer. Internally, we're extremely proud of the potential impact Xanadamab could have for patients across multiple tumor types and oncology, based on the breadth of clinical activity seen today, which really showcases how this targeted therapy is able to bind the HER2 and kill tumors with a very unique mechanism of action. Having discovered and developed Xanadamab at our labs in DesignWorks, our teams have been taking some learnings from the screening, optimization, and clinical development of this unique bi-specific Xani body, and we look forward to continue reporting on progress of how we hope to replicate this level of optimization and efficacy with our whole Eone pipeline. The success of Xani as a targeted HER2 agent also gives us reassurance that highly expressed targets are where we want to focus on developing future therapeutics. We believe that high and clear levels of expression are important when developing highly targeted candidates and moving away from previously used chemo-like treatments. The decision to develop candidates for these highly expressed and validated targets, such as Fuller receptor alpha, and Zetelin, and ALP-TB, and GPC3, mean that we can quickly and effectively understand if there's a correlation between efficacy and expression levels across tumor types, as well as benchmark our data against previously developed candidates. Looking ahead, Jazz has estimated that top-line progression-free survival data for the ongoing Phase III Horizon GEO1 study will be available in the second quarter of 2025. Finally, we're eagerly anticipating the PDUFA date of November 29, 2024 for Xanadamab in second-line HER2-positive bilirotric cancer in the U.S. This potential approval in the United States would be one of the most substantial achievements for Xanam in its history, and in collaboration with our partners, Jazz Pharmaceuticals in Beijing, a critical step forward for bilirotric cancer patients who currently have limited treatment options. Jazz is scheduled to hold their Q3 or ANS call within the next week, and we encourage you to follow that for any further developments or guidance related to Xanadamab. Before we move on to Q&A, I'd like to acknowledge this is the first earnings call since Leonie's joined us at Xymerx in September. She's a very experienced executive leader in biotech and has already had a positive impact in many aspects of our operations, working in collaboration with our management team. We're very fortunate to have tracked her design, and I look forward to working closely with her alongside the wider leadership team on building Xymerx further. I'd also like to take a moment to thank Mr. Hollings-Renton, who will be stepping down from the board in December. For his significant contributions to our company over the past eight years, and also for being a great advisor for me during my tenure as CEO, Hollings' guidance has been invaluable in shaping the direction and growth of our business. He's had an amazing and successful career in our sector, and we're very grateful for his dedication to our mission and son. As we continue to evolve as a company, I'd like to highlight that over the past 18 months, we have welcomed six new members to our board of directors as part of a strategic board refresh process. This initiative is a reflection of our commitment to ensuring we have the right mix of experience and expertise to guide our next phase of development and growth. The board remains diverse, strong, and well positioned to support our long-term objectives as we continue building on our momentum. With those closing remarks, I'd like to thank everyone for listening, and I'll turn the call over to the operator to begin the question and answer period.

Thank you. As a reminder to ask the question, please press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised, and then wait for your name to be announced. To withdraw your question, please press star 1-1 again. If you're using a speakerphone, please pick up your handset. Please stand by while we compile the Q&A roster. Our first question comes from the line of Stephen Willey with Stiefel. Your line is open.

Yeah, good afternoon. Thanks for taking the questions. Maybe a couple for Paul and or Ken. With respect to the ongoing Phase 1 trials for 171 and 191, just curious how you're thinking about dose optimization. Are you going to be backfilling specific dose levels in the escalation phase to generate the exposure data you need to select the phase 2 dose for expansion, or do you think it's more likely you'll be carrying two doses forward into the expansion phase and then just have a follow-up?

Yeah, good question, Steve. I think the way we think about it in the dose escalation phase, we hope to really have a chance to have a good high quality set of patients with diversity around tumor types, diversity around expression levels that really let us understand the tolerability profile, and that's both for 171 and 191. I think our expectation is that in addition to backfilling and having a chance to explore some alternative doses in dose escalation, we're likely going to have to move forward into the expansion cohorts and optimize more than one dose in specific cohorts, maybe one or maybe two of those cohorts. But I think it's really necessary to do that so that by the time we leave a Phase 1 study, we have a very clear understanding of the tolerability profile and a very clear understanding of the optimum dose to take forward. I think we've seen examples of other companies who have tried to accelerate or maybe go a little too fast in that process. And then again, that doesn't help you accelerate to a registration study or accelerate to a potential filing or approval pathway. So I think we've given ourselves a pretty big clinical footprint in Phase 1, as you've seen from 171 and 191 geographically, a number of sites that should allow us to quickly recruit and study a pretty broad range of patients if you look at the target patient populations we have for both 191 and 171 in Phase 1. So I think we can move very quickly and at the same time make sure we collect enough patient data to be very clear about the tolerability profile, very clear about signs of activity and very clear about the optimum dose that we want to take forward and not leave Phase 1 with any of those questions that answer.

Okay, that's helpful. And then I know Paul touched on this a bit in the prepared remarks, but you know, obviously the preclinical data you have for all the ADCs in your preclinical tox models would suggest that you've got a much wider TI versus some of the other ADCs that we've seen with topopayloads using equivalent DARs. So

just

wondering how that informs your development strategy specifically in terms of how you're prioritizing combinations for each of these three assets. And I guess is there any one of these ADCs in particular that you think might warrant a more accelerated path to a combination based development strategy? Thanks.

Yeah, no, thanks, Stephen. Thanks for pointing that out about the careful design that we've incorporated in the preclinical data that supports that we have this flexibility to hopefully have a little bit more therapeutic index than potentially others with different design. I think regarding combination strategies, we're pretty much thinking about that for all three programs because we do hope that we will be able to move up in earlier lines. So I think we're thinking quite broadly there. We don't particularly specify one over the other. I think for all three we're thinking that way. Obviously in the treatment paradigm of the disease indication that you're going against, that will drive the specific combination partner molecules. So whether that's VEGF inhibitors or PARP inhibitors in the context of ovarian cancer or PD-1 inhibitors in the context of non-small cell lung cancer, those are the types of combinations that we're thinking about and we think are compatible with the design strategy that we have.

All right. Thanks for taking the questions.

Thank you. Please stand by for our next question. Our next question comes from the line of Akash Tawuri with Jefferies. Your line is open.

Hi. Thank you for taking my question. This is Phoebe on for Akash. Just one on Zani. The Destiny gastric O3 study in HER2-positive gastric cancer is reading out in July of 2026, but it's being studied with chemo and or immunotherapy. I'm just wondering how you view this regimen as benefits or threats for Zani at all. Thank you.

Yeah, thank you for the question. I think we've been obviously carefully following potential competitive programs to Zani and all the indications of interest for us from some time period now. And I know our partners, JAZ and Beijing, are doing the same thing. I think we've upset to any view ourselves. We feel very strongly about the clinical data that we've generated to date on Xana data map and its potential as monoclonal data. And we've seen that in our immunotherapy, as we have in our PCC filing and also sort of in gastric cancer. But it's our ability to combine with other product modalities and really seem to generate much higher levels of response in that patient population and generate much more durable responses that have been seen by either approved therapies or some of those underdevelopment like you mentioned with the tolerability profile, which is very good compared to some of those other agents which might be underdeveloped. So we feel very confident in the data set around Xana data map with respect to where we are. And obviously our upcoming clinical data readouts will hopefully confirm some of that confidence we feel behind Xana data map and beyond that don't really feel in a position to comment about other company's data sets where we may not have access to all the data. So we're very confident about with respect to the data we have on Xana. We feel very comfortable and confident with Xana data maps ability based on the clinical data set to date to really make a difference in this patient population in a significant way. And we're looking forward to having that readout next

year obviously. Thank you. Thank you.

Please

stand by

for our next question. Our next question comes from the line of you got no Chamovitz with city, your line is open.

Okay, this is Ashok Mubarak on fake out. Thanks for taking my questions and appreciate the update today. I had one on how we should be thinking about timelines to data, or maybe more generally your philosophy about data sharing related to the wholly owned pilot pipeline, especially the the lead mesothelin and for alpha programs. I'm just I'm just wondering we should be expecting maybe an early look at the dose escalation cohorts or your philosophy is more going to be along the lines of generating a robust dose escalation package or maybe even expansion package before before sharing that data with us.

Yeah, thanks for the question. I think we do have a very specific philosophy. Obviously, we've, you know, we've undertaken these first two phase one studies for one seven one one nine one. You can see that we do have the advantage of very tolerable molecules based on preclinical data, which allows us to have what you might think is a higher starting dose than you might have seen with other agents in similar classes. And that's obviously an advantage to try to go more quickly to an active range while setting the the tolerability profile. We also have very broad global footprint with many active sites that we're bringing online now, which again allows us hopefully not only collect a quality and diverse data set of patients across the population want to study, but also do that on a very timely basis. That being said, we've not given any guidance to where early data will will be given. And I don't think we'll do that until we're comfortable that we have a large enough data set to make some conclusions about the data set and the product that we'd like to share in a peer reviewed scientific or medical meeting, which is where you'll see it all not by a former press release or investor call. Once you feel comfortable, we've got a data set that we'd like to share, unlikely that we've had an abstract accepted, then I think we're quite comfortable sharing publicly that we're going to share that in a scientific medical meeting. Obviously seen recent examples of companies who can do that quite quickly. And again, it depends on how quickly we can recruit patients, what that data tells us, and what conclusions we'd like to share with the scientific and medical community in a peer reviewed manner. And so I think we won't provide guidance until we're a little more certain about the time frame to do that. But please be assured we're trying to collect a quality, diverse, substantial data set in phase one, including those escalation. And if we do that well and timely, there might be a lot that we can understand from the drug at a very early stage. And then we're happy to share that with the scientific medical community. That understanding is as quickly as we can.

Got it. That's very helpful. And if I could ask one more, apologies if I missed this, but as I recall, the stock repurchase program allows for up to $60 million, unless I'm mistaken. And then with the sort of $30 million, first $30 million trunche already done, I'm just wondering how you're thinking about deploying the second $30 million, if that should be expected maybe over the near term or if that'll be more over a multi-orizon, depending on market conditions and so on.

Yeah, there wasn't authorized $60 million share purchase program. We did activate 30 million of that, which again gave us a little bit of optionality and flexibility to complete that first and then decide what to do with the rest. There's no strict deadline or necessity for completing the second phase. So I think we will continue to evaluate market conditions and our financial position and other factors and working with the board decide when it may be the right time to initiate the second part of that. It's a very carefully evaluated decision. Obviously we did this in early August and we felt very strongly that there was a strong rationale for doing it, including the fact that we felt that our share price was undervalued compared to what we saw in the company as important factors in enterprise value. We still feel that way today, even though the shares have appreciated substantially since August. We do have the ability to complete the entire full $60 million share purchase program and maintain our projected cash normally in the second half of 2027. But I think for now we'll do what we did last time, which is carefully assess our financial position, look at a number of factors before we make that decision. And as we did last time, we'll be very definitive when we start. And again, you won't hear much about it until we complete that. So if there's an update, we hear about that publicly as required. But it's right now we feel comfortable what we did. We think it was an appropriate thing to do with the cash we had available. And we think there was a strong rationale for improving total share returns with the action we took. Still feel we're in a very undervalued position compared to what we see inside the company. But we'll just take a moment to reflect before we think about initiating the second try. And there's no timeline or requirement or necessity for us to continue on that. We will always have the ability to initiate that whenever we and working with our board decide that's an appropriate thing to do for shareholders.

Thanks very much.

Thank you. Please stand by for our next question. Our next question comes from Alana Branchen with JP Morgan. Your line is open.

Hi, team. Thanks for taking our question this afternoon. And Leonid, congrats on joining the team. Maybe just one related to the ongoing Phase 1 for 171 and 191. Can you talk about some of the criteria that you'll be looking for in terms of advocacy before moving into a larger expansion stage? And, you know, I might be, you know, I might be, you know, you know, asking this question a little bit earlier, but could we be expecting some clinical data at your R&D day in December and have a follow up? Thank you.

Thanks for the question. We haven't given any guidance as to when to expect clinical data for 171 and 191. You know, we are interested because these are Phase 1 studies and understanding the tolerability and adverse event profile. And that obviously takes some work in moving up in doses to understand, you know, adverse events as relate to the dose response. You know, I doubt that's going to be in place by the time we get to our R&D day. That was not the intention of the R&D day to share initial data on 171, 191. You know, these are adverse of, you know, tolerability studies. That's the most important factor for us to understand that. Obviously, we look for signs of clinical activity, especially at doses that we think are more optimal for activity. You know, we think a very important factor, especially with T cell engagers, is the ability to drive a much more durable response than maybe you see with chemo and also with some ADCs. So, you know, understanding not only the ORR, but also DOR is extremely an important factor. We have seen instances of where a very high initial response doesn't end up being durable for the patient population. So having an understanding of that takes a little bit more time potentially. So I doubt you'll see anything at our R&D day. But I think once we have enough data to tell us something and inform us about tolerability adverse event profile, initial activity, and at least some idea of durability, which requires a little bit more follow-up than maybe you see from some early dose escalation interim disclosures, then we're happy to share that in a peer-reviewed meeting. And when that happens, we'll follow our data and obviously make it public when we think we're in a position to share that data. But I don't think you should come to R&D day in December 12, expecting to see initial clinical data in .7.1 and .9.1.

Okay. And then maybe just one more. Heading into the BTC's Batuba date next month and GEA's top line next year, just from a modeling perspective, how should we think of your partnership revenue in the near term?

Yeah, I think, Brian, we've already publicly disclosed as much as we're able in our agreements with Jazz. I can't really say much more about that until we start to get paid milestones and receive them or get paid or receive royalties. We can't really say much more about that. I think on timelines and guidance, with respect to top line on Xanny, I would refer you back to Jazz and again also Beijing, but especially Jazz for next week. They've already made some guidance around potential peak sales, but I would look for updates from them on development timelines, approval timelines, future filing timelines, and any revenue guidance they want to provide. That's where they have to jazz and they have their call next week. So I would just pay attention to that. Great. Thank you. Yeah. Thank you.

Please stand by for our next question. Our next question comes from the line of John Miller with Evercore ISI. Yolana Sosin.

Hi, guys. Thanks so much for taking the question. I guess I'll just first build on the earlier question, Ms. Urizguales, on Share Repo. I know it seems like you're not in any rush to get started with the second half, but did the first half of Share Repo achieve the goals that you hope to achieve with those purchases? And then beyond that, it seems like you're suggesting a strong potential for more BD or other sources of funds in the upcoming years, and I'd love to get a little bit more caught on that. What kinds of deals are you interested in? Discovery collabs, licenses on the 5x5 or collaborations in development there, on the legacy tech? What are the things that you're looking at when you talk about the potential for future deals? And I do have a follow-up.

No, thanks for the question. I'll kick them both. So I think, especially with the share repurchase program, I think we carefully considered this before we initiated the first 30 million in August. I think we've been able to retire a little more than two and a half million shares out of the cap table, which I think can provide a total share return, not just immediately, but over time. So I think we still feel very strongly that we were able to achieve that objective, despite the obviously increase in our price during that time frame. I think we still feel that some of the elements related to our decisions in that still exist. We still believe that, although we've had some appreciation since August in the share price, that we still feel very undervalued compared to what we believe the long-term value for the company is and what we see inside. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think that's a really important point. I think we tried to be very clear. I think with the 555 program, I know you'll hear the last nomination at R&D day, we've obviously got a really exciting portfolio of agents that we like a lot and we're moving into clinical data. We're almost two years early in formulating that portfolio into clinical studies. It's our nomination in clinical studies, which is great. I think you'll hear at R&D day, we have a whole host of other opportunities in the preclinical pipeline and then we've also been working on advancing much closer to IND. So we can see a very broad and exciting portfolio in front of this. We realize that not all of those are going to work out the way that we might have expected. So there will be some attrition rate in that portfolio. That's the natural part of our business. You can't be 100%. I think the other thing we realized is that the more exciting that portfolio looks, we can't possibly do all of that ourselves. So though it's wholly owned today, we do expect that we will have to bring in partners and collaborators to help us move that forward, either accelerate some of the timeframes, use some of their capital or clinical resources to move this along. And we're carefully considering how we overlay the continued growth of the R&D portfolio, not just the 5x5 but beyond that, with potential partnerships and collaborations to get the right mix of capital we can allocate to the program of our own capital versus sharing risk and capital with others versus retaining commercial rights for ourselves. I think very clearly with data MAP, we decided to outlicense that program outright to Beijing and Jazz and not have a commercial role. I think in the future we're looking to retain some additional rights longer in development and potentially give us a commercialization option later. And so doing that on a portfolio basis, is something that we're really thinking about very carefully. And so I expect as you learn more about the portfolio and look at how it might even grow beyond the 5x5, there are some natural points in time for us to think about adding some partners to help us move that portfolio forward. And those are things we've been thinking about all year, things we'll continue to think about. I think once we find the right partner who's interested in moving those assets forward with us in the way that we think they should be moved forward, and we can get paid appropriately for our efforts to date and continue to have upside as we work with partners to move those forward, then I think we're quite happy to look at partnership possibilities at that time. The nice thing about having a strong financial position is that we can do that within a timeframe that generally we can set ourselves. And I think there's some advantage in making sure you can find the right partner for the right set of products at the right time in the right field structure that works for our shareholders. That's one of the reasons that we try to put ourselves in a strong financial position and continue to be in a strong financial position going forward into those discussions.

Great. Thank you. It makes sense. And then maybe more on the science side. In the prepared remarks, you spoke both about your interest in focusing on targets where there's strong antigen expression on the tumor cells, good activity there where there's previous validation of the target, but then you also talked a little bit about your ability to be tolerable enough, reflective enough to get good effect even in targets where there's maybe more modest antigen expression. I know some of the ADC targets you're looking at do have some variable antigen expression between, certainly between indications, but even between patients within indications that do express those targets. So can you talk a little bit more about the pushers and pulls there, how you expect to be able to identify patients? Do you expect to have to be stratified by expression? How do you expect your advances in the ADC field to enable those broader populations compared to focusing on those patients where there's really strong expression?

Yeah, thanks, Jonathan. Thanks for the opportunity to clarify. So I think in our design and our thinking, we really do value the importance of the front end of the antibody and its ability to recognize, target, and internalize. So we do take quite a lot of care and we really value that aspect of the ADC, but we also appreciate that within the tumor microenvironment, not all the tumor cells are going to necessarily have high expression. And so that's where things such as bystander activity are also a very important contribution to the mechanism. And then beyond that, within the ADC field, there's also the chemo effect that you can also get from the design of your ADC and getting that balance between the potency of that ADC, that payload, as well as the release of that payload at a tolerable pace is very much also baked into the design of our features. So we can get the on-target effect, we can get bystander effect, and then we can potentially get some chemo effect as well. And that's how we try and factor that all into the design. And then it's also balanced by the DAR and then the tolerability profile, you know, very, you're getting, you don't want to run into issues of intolerability that others have seen with higher potency payloads.

Thank you. Please stand by for our next question.

As a reminder, ladies and gentlemen, that's star 11 to ask the question. Our next question comes from the line of Derek Achula with Wells Fargo. Your line is open.

Hey, guys. Thanks for taking the questions and congrats on the progress. Just two quick ones from us. I guess first, you know, what do you plan to cover at the R&D day in terms of potential expansion into autoimmune disease? I guess, is there going to be a discussion around certain targets of interest? And then second question, just in terms of your target selection process for the Tri T cell Engager, I guess maybe just run us through that. And what type of preclinical data might you highlight at the R&D day for the development candidate you plan to nominate?

Thanks. Yeah, maybe I'll let

Paul

answer both of those if he wants,

whatever order you want. Yeah, yeah, yeah, sure. Yeah, so I think, Derek, the first question was the scope of what we'll present on the autoimmune programs. And, you know, they are, you know, as we mentioned before, we see great opportunity for bi-specifics, our technology in the autoimmune space. And we do have certain specific programs that we're pursuing. So we will be talking, our plan, our anticipation is that we will talk about specific programs in addition to where we can take the technology and moving forward even beyond that. So that will cover the autoimmune space. And then on the Tri specific T cell Engagers, there, you know, we have different toggles that we can pull on the design. Sort of the most, in the Tri specific space, I think the one that we've been talking about most and you're most familiar with is the CD28, CD3 Tri specific platform or Tri TCE costum. And there, when we're thinking about the target there, you know, we do appreciate that we want targets that have a profile that is more biased towards tumor expression and less normal expression. So we do appreciate there you have to take care. But the way that we've designed that molecule differently than others have thought about with deploying CD28 is that our CD28 engagement is only occurs when you have the CD3 engagement and you have engagement of the tumor target. So in some ways, we're not really that different, even though we've got that extra punch on the CD28, we're not really any different than how others think about target pairing with T cell Engagers. Of course, we have advances and we have things we think we can improve the therapeutic window moving forward. But for initial targets, we like very much the targets that we've already shared, the DLL3 and the CLAWD in 18.2. We think the tolerability profile has been very, very encouraging to us as we've progressed those through preclinical development. So hopefully that answers it. We certainly are thinking about targets beyond those applications beyond those as well. But again, it really depends on the on the platform that we're leveraging and somewhat the profile of the target antigen as it fits into that platform. Thank you so much.

Thank you. Ladies and gentlemen, I'm sure no further questions in the queue. I would now like to turn the call back over to Ken for closing remarks.

That's great. Thank you, Operator. So thank you everyone for listening to our call today. As always, we're extremely excited about the future for Zineworks. We still think there's a lot of time left in 2024 for us to get some additional milestones and events behind us. So look forward to doing that. And again, we look very much forward to seeing all of you either in person or virtually for December 12th R&D day, where we'll be able to give a really great update of the five by five programs with some KOLs providing some landscape analysis and also a good overview where our long term R&D strategies beyond the five by five. And we really need to accelerate that view just because we're almost two years ahead of schedule in constructing the five by five portfolio. So we've been thinking about this for some time and happy to share our vision for Zineworks on a longer term basis from an R&D perspective and look forward to seeing all of you there in December 12th again in person or virtually. So thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.