Zymeworks Inc.

Hello, thank you for standing by. This is the conference operator. Welcome to ZionWorks first quarter 2024 results conference call and webcast. As a reminder, all participants are on a listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To ask the question, please press star then one one on your telephone keypad. I would now like to turn the conference over to Srinath Nandamdar, 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 forward-looking statements identified in our slides and in 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 a discussion of these risks and uncertainties, we refer you to our latest SET filings as found on our website and as filed with the SET. In a moment, I'll hand over to Leonie Pattinson, 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 bispecific 2 plus 1 mesothelin T cell engager, CW171. 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 SignWorks website later today. I will now hand you over to Leonie.

Thank you for the introduction, Chanel, and thank you all for joining us today. I'm very pleased to have joined the SignWorks 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 programs. Starting first with our whole-neon pipeline, we received FDA clearance for our IMD applications for both GW171 and GW191 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 GW171 as part of our global phase one clinical trials. Later today, Later during today's call, Paul will provide more details on the clinical trial design for ZW191, as well as providing an update on the progress we have made in the clinical development of ZW171 across North America, Europe, and the Asia Pacific region. We also had the opportunity to present more promising preclinical data on our Holy Land pipeline at the ENA conference earlier this month in Barcelona for both ZW220 and CW251, 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 payload 519 and highly differentiated antibodies. And we look forward to updating on the anticipated I&D filings for both ADCs in 2025. Moving on to our partner programs, Jazz Pharmaceuticals provided updates for our internally developed HER2-positive targeting by specific antibody ZANI. Recent presentations at the ESMO Annual Congress in Barcelona continue to highlight ZANI's potential for the treatment of multiple HER2-positive indications, including long-term follow-up data in metastatic GEA patients for which A Kaplan-Meier estimated 30-month overall survival of 59% was reported from an ongoing phase two clinical study of ZANI in combination with chemotherapy. We're also pleased to recognize in our Q3 revenues a $2.5 million research milestone from our long-standing partner GSK. This milestone provides continued validation of the strength and versatility of our internal platforms and technologies including Azimetric, 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 10 royalties 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 1st, 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 31st, 2024, we had 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. Zywec's net loss for the nine months ended 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 Sanitator MAG sub-inducing. As reported, our revenue for the nine months ended September 30, 2024 was $45.3 million compared to $59.1 million for the same period in 2023. Revenue for the nine months ended September 30, 2024 included $32.8 million for development support and drug supply revenue from JAS, $8 million of milestone revenue from Beijing in relation to the acceptance by the CDA of the NMPA in China of a BLA for Xani 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 JAS. 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 months ended September 30, 2024, compared to $173.7 million for the same period in 2023, representing a decrease of 8% year-over-year. The decrease is and 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 expense was primarily due to a decrease in expenses for ZANI as a result of the transfer of responsibility for this program to JAN and a decrease in expenses for DW171 and DW191. This decrease compared to the same period in 2023 was partially offset by an increase in expenses for ZW220 and ZW251 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' transfers to JAS. Now, turning to G&A. The decrease in G&A 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 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 Zanadatamab-Zovidotin 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 31st, 2024, we had approximately 68.9 million shares of common stock outstanding and approximately 5.1 million shares of common stock issuable 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 www.zineworks.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 and expand an R&D scope through potential additional regulatory approval milestone payments in connection with our existing partnerships with JAS 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 JAS's annual net sales, and between 10 and 19.5% 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 wholly owned pipeline and our highly anticipated R&D day later this year.