Zymeworks Inc.

Thank you for standing by. This is the conference operator. Welcome to DesignWorks' fourth quarter 2025 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. I would now like to turn the conference over to Shernell Elmander, Vice President of Investor Relations. Shernell, please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining our fourth quarter 2025 results conference call. As usual, 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 slides and the accompanying oral commentary. Forward-looking statements are based upon our current expectations and various assumptions and are subject to the risks and uncertainties, including those associated with the companies in our industry and at our stage of development. The discussion of these risks and uncertainties I refer you to the latest SEC findings as found on our website and as filed with the SEC. In a moment, I'll hand over the call to Ken Galbraith, our Chair, CEO, and Interim Chief Financial Officer, who will provide an overview of recent business updates. Ken will then hand the call over to Bijal Desai, our Senior VP of Finance, to discuss our cash position and financial results for the fourth quarter of 2025. Following this, Dr. Sabine Mikan, our SVP and Chief Medical Officer, We provide progress updates on the Phase 1 clinical trial for 251. At the end of the call, Ken, Sabine, and Bijal will be joined for Q&A by Paul Moore, our Chief Scientific Officer, Scott Pashtun, our Acting Chief Investment Officer, and Adam Shaywitz, our Acting Chief Development Officer. As a reminder, the audio and slides from this call will also be available on the ZionWorks website later today. I'll now hand the call over to Ken.

That's great. Thank you, Chanel. Good morning, everyone. First, for those on the call, I hope you and your families are all safe and well, wherever you are joining the call from today. I'd like to begin by recognizing the results of the Phase C Horizon GA01 trial, as presented by ASCO GI, by our partners Jazz and B1. Xanadatamab, in combination with chemotherapy, with or without a checkpoint inhibitor, demonstrated a median PFS exceeding one year, with a median overall survival exceeding two years, In the first line, metastatic or locally advanced HER2-positive GEA patients. This represents a clinically meaningful outcome in a setting where long-term survival has historically been limited and unmet need remains significant. An additional planned interim analysis for median OS for the xenodatamab plus chemo regimen that just missed the statistical significance of the initial interim analysis is currently expected by mid-2026. The benefit was observed consistently across clinically relevant subgroups. irrespective of PD-L1 expression, which was studied as an exploratory endpoint in the Horizon G01 rather than a stratification factor. Based on these data, we're optimistic that Xenodatamab has the potential to redefine the treatment paradigm and first find HER2-positive metastatic or locally advanced GEA. We received strong positive feedback from key opinion leaders who recognized both the magnitude and durability of benefits seen in the study against the known and manageable safety profile. Our partners are now preparing for upcoming global regulatory interactions, potential approvals, and inclusion in physician guidelines, as I'll highlight now. From a U.S. regulatory perspective, JAS expects to complete the submission of the supplemental BLA with the FDA in the first quarter of 2026 under the real-time oncology review program in the U.S. Xanadamab has been granted breakthrough therapy designation for patients with HER2-positive GEA. We expect these designations will allow for greater speed in regulatory interactions. In addition, the data from Horizon G01 study has been submitted for inclusion in the National Comprehensive Cancer Network Guidelines as previously disclosed. We therefore share in Jazz's expectations to have Xanadatamab approved and launched for the treatment of GEA in the second half of this year, subject to completion of FDA review and approval. Concurrently, B1 is working towards the supplemental BLA for TISLI in the U.S. in the first half of 2026 for review by the FDA. We believe these steps reflect the clinical relevance of the results and support the path toward broader patient access. Outside of the United States, we believe JAS and B1 will intend to continue working on plans and timelines for regulatory interactions with respect to Xanadidimab and Tisley in GEA, and we look forward to reporting such progress as appropriate. Our confidence in Xanadidimab's potential has only increased since we commenced registration studies in 2021 and partnered with JAS in 2022 as an addition to our existing APAC partnership with BayOne. These partnerships allowed us to accelerate the development of Xanadatamab and broaden its therapeutic potential in many other HER2-expressing tumors while sharing development risk and transferring costs to our partners. We believe Xanadatamab's demonstration of a substantial survival benefit in metastatic or locally advanced GEA, a tumor type where prior HER2-targeted agents have struggled to materially extend outcomes, strengthens confidence in Xanadatamab's differentiated mechanism of action, and meaningfully reduces risk in the broader development program beyond the initial accelerant approvals for second-line biliary tract cancer received previously in the U.S., China, Europe, and now Canada. Building on this foundation, Xanadamab is being evaluated by JAS across multiple mid- and late-stage studies, including breast cancer and other HER2-expressing solid tumors, including in a pan-tumor study. Breast cancer in particular represents a setting where additional novel HER2-targeted therapies, such as Xanadamab, may provide opportunities to continue improving upon the current standard of care for patients in multiple treatment settings. In January, JAS updated enrollment guidance for the EMPOWER 303 trial, in which they expect to complete enrollment in the first half of 2027, with top-line data reader expected later in 2027 or in early 2028. Given Xanadatamab's dual epitope binding and differentiated biology, we're optimistic about its potential performance for the treatment of patients with metastatic HER2-positive breast cancer. Jazz is also pursuing collaborations with partners to combine Xanadimab with novel therapies. For example, the Phase I trial in combination with BI's Zoncurdinib was recently initiated to explore the combination in metastatic HER2-positive breast cancer along with other potential tumor types. Collectively, these ongoing studies are designed to expand the clinical footprint of Xanadimab into indications where meaningful differentiation may translate into durable clinical and patient benefit. Consensus estimates for peak sales of Xanadatamab have doubled over the last few years, indicating a clear potential for Xanadatamab to achieve a multibillion-dollar peak sales level. With progress from our partners towards global regulatory approvals in first-line GEA and first-line BTC, and accelerated development goals in metastatic breast cancer and other tumor indications, these advances represent significant opportunities to build on the financial value of Zahira for Zymorx and our shareholders. This quarter, we reported regulatory approvals for Xanadatamab as monotherapy in both Canada and the United Kingdom for the treatment of second-line biliary tract cancer. From a financial perspective, this expansion is expected to translate into regulatory milestone payments for global approvals in GEA of up to $440 million, as well as further $89 million collectively from JASM-B1 upon approval in a third indication, as highlighted in our press release. Zymerx is also eligible to receive up to $977.5 million in commercial milestone payments tied to the achievement of sales thresholds. So approximately $1.5 billion in milestone payments remain possible under our collaboration agreements with JAZ and B1. As use broadens across indications and geographies, we expect cumulative revenue contributions through both royalties and milestones to scale meaningfully. As disclosed today under the collaboration agreement with JAZ, Zymerx is eligible to receive tiered royalties of 10% to the high teens on global annual sales of Zahira up to $2 billion and 20% on annual net sales above $2 billion. Jazz holds marketing rights globally to Zahira, excluding Asia, but including marketing rights in Japan. Under the collaboration agreement with B1, Zymerx is eligible to receive tiered royalties of mid-single to mid-double digits on global annual net sales of Zahira up to $1 billion and and 19.5% on annual net sales above $1 billion. B1 holds marketing rights to Zahira in Asia, excluding Japan. The Strengthening Clinical Foundation Presented Data Map provides the basis for executing the royalty-backed note financing announced today. We view this as an opportunity to proactively leverage a validated scaling asset to secure efficient, non-dilutive capital while preserving long-term upside. Our ability to utilize unique and creative financial structures is important to achieving optimal value for shareholders from our collective assets. I'd like to spend a few minutes talking through this strategic financing with Royalty Pharma and how it fits in within our broader capital strategy, using growing visibility into future royalties to fund the next phase of disciplined, value-accretive capital deployment. As announced with our press release today, the agreement with Royalty Pharma provides us with $250 million of low-cost, non-dilutive capital in the form of a non-recourse, royalty-backed note. To be clear, this is not a monetization. The full value of Zahira royalties returns to Zymerx after the note is fully repaid. But unlike a traditional royalty-backed loan, there's no stated interest rate, and not all the Zahira royalties are needed as security for repayment of the debt. The obligation for repayment of the principal and cost of such capital is serviced from a portion of the Zahira royalty stream itself, 30% rather than 100% with a traditional royalty loan. and provides the framework for a longer duration for the debt on attractive terms on a non-recourse basis. The structure of the repayment provides an appropriate sharing of duration risk with Royalty Pharma for an appropriate return. We worked very closely with Royalty Pharma to design this unique debt facility, which reflects our optimism in achieving approval of Zenedatamab and first-line GEA as loans not conditional on FDA or other regulatory approvals, and our hope that Zena Data Map becomes the clear HER2-targeted agent of choice for GEA over a long time period. The agreed structure allows us to securitize the note with only 30% of the Zahira royalty stream until repaid. Therefore, Zymerx retains 70% of the royalty stream throughout the duration of the term, preserving the majority of ongoing cash flows reinvestment, unlike in a traditional royalty loan where 100% of the royalties will be utilized to repay the interest of principal and be of a much shorter duration. As a result, both the net present value and total royalty retained over the life of the asset were superior relative to alternative loan structures we evaluated, and the royalty note incorporates a longer duration profile. From our perspective, this approach allows us to preserve a greater portion of near-term royalty cash flow compared to a conventional structure, thus allowing for accelerated reinvestment. In addition, all earned regulatory and commercial milestones under agreements with JAS and B1 will be retained by Zymworks, including, as mentioned earlier, $440 million in near-term milestone payments tied to future regulatory approvals of Zaheer and GEA, $89 million in regulatory milestones for a third indication beyond biliary tract cancer and GEA, and up to $977.5 million in potential commercial milestone payments. Altogether, again, these milestone payments represent $1.5 billion in potential future revenue for Zymworks. Just as importantly, Royalty Pharma demonstrated strong conviction in the underlying Royalty Presenter data map and was highly enthusiastic about including this asset in their portfolio, reinforcing external validation of its long-term commercial potential. We've been very deliberate about protecting the potential long-term upside of Zahira Royalties. Only a defined portion of the royalty is subject to disagreement. Once the cap is reached, the royalty reverts fully to us. We continue to own the long-term upside of additional indications being developed and potentially commercialized by our partners. In addition, no other future royalty streams that may become available to us, like with Pazritamig under our license with J&J or others, are encumbered by the royalty note. This transaction ultimately allows us to protect our core Zahira royalties and milestones while accelerating access to attractively priced capital and provides us with the ability to reinvest with a disciplined return framework. This framework uses both continued share repurchases and potential strategic acquisitions to compound predictable revenues into durable long-term shareholder value. From a use of proceeds standpoint, this capital enhances flexibility across those two primary levers, in addition to providing capital for our cash runway, which already extends beyond 2028. First, we retain the flexibility to continue to repurchase shares opportunistically. If our stock continues to trade below what we believe is the future value of underlying assets, the ability to opportunistically reduce our share count at an attractive discount while the value of future cash flows expand is a very powerful way to drive growth of long-term total shareholder return on a per-share basis. As of today, we've utilized approximately $62.5 million of the $125 million share repurchase program authorized in November 2025. as we continue to see the ability to drive long-term TSR at a compelling discount, given the current market price of our shares. The proceeds of this financing will provide us the flexibility to continue to invest in our own business's prospects. Second, we have the ability to deploy capital into the acquisition of high-quality assets and platforms, where we see synergy in one of many factors, such as strategic fit, royalty potential, differentiated science, and favorable cash or tax attributes. Because we have internal research and development expertise, we can attribute value to development stage and partner programs differently than traditional royalty companies or traditional R&D-focused biotechs. We're not just evaluating assets for an income yield. We're evaluating probability of technical success, regulatory pathways, and commercial positioning. We believe this gives us an informational and analytical edge to pursue multi-asset acquisitions where we can attribute value to assets in a different way. Importantly, as we deploy this capital into additional royalty-bearing assets, we believe scaling and diversifying the portfolio has the effect of reducing the structural discount often applied to smaller or single asset royalty streams. We intend to deploy the capital dynamically across royalty asset and platform acquisitions, as well as our ongoing share repurchase program as a flexible allocation framework that can adjust based on opportunity and market conditions. In addition, we have the continued ability to generate additional royalty milestone streams from our wholly owned R&D portfolio as an alternative to external acquisitions. To summarize, this transaction with Royalty Farmer provides us with additional capital on attractive terms in a unique structure to achieve our strategic and financial objectives, with no equity dilution and optimal strategic flexibility. We would expect to continue to utilize creative structures for capital, partnerships, and acquisitions where we believe they can be useful to building long-term value for our business. Part of our strategy, we see acquisitions as a potential way to add to our existing royalty portfolio, where acquisitions also allow us to feed our R&D engine. Internal discovery will always be important at Zymerx, but having the ability to source high-quality external innovation can enable us to continuously bring differentiated science into a development infrastructure that we know how to operate efficiently. Our R&D organization is built to advance assets to meaningful value inflection points. Whether those assets are internally discovered programs or externally acquired ones, the goal is to focus on assets that have the potential for meaningful patient benefit and future partnerships. Once we reach that stage for either internally or externally acquired assets, partnerships would allow us to translate scientific progress into long-duration economic participation through royalties and milestones without assuming the full capital burden of late-stage development and commercialization. Over time, that's what we expect we'll build and diversify our emerging royalty portfolio. So in practice, we hope that acquisitions will expand what R&D we work on, should help de-risk and advance those programs, and partnerships have the ability to convert that progress into recurring capital efficient future cash flows. That closed loop is central to how we aim to scale innovation into a durable economic engine. We look forward to providing updates against these capital allocation objectives. I'll now hand over the call to Bijal to walk through our financial results for the fiscal year 2025, along with our current financial position.

Thanks, Ken. Total revenue was $106 million for 2025 compared to $76.3 million for 2024. The increase for the year was driven mainly by achievement of significant clinical and regulatory milestones and exercise of an option under our collaborations with J&J, B1, GSK, Daichi Senko, and BMS. This growth was partially offset by a decline in development support and drug related drug supply related revenue from jazz reflecting the transition of responsibility for certain XANA data map clinical activities to jazz under our collaboration agreement. Overall operating expenses were $198.5 million for the year 2025 compared to $213.4 million for 2024. The decrease is primarily due to a non-recurring impairment charge recognized in 2024 related to our discontinued program, Xanadatimab-Zovidotin, partially offset by a slight increase in research and development expenses. The increase for research and development expenses for the year was primarily due to an increase in unallocated costs, largely related to non-cash stock-based compensation expense, as well as consulting and rent expenses. The increase was largely offset by a decrease in R&D program costs as a decrease in expense of late-stage and discontinued programs, including Xanadatamab, Xanadatamab-Zovodotin, and ZW220, more than offset the higher investment in early-stage clinical and preclinical programs, including ZW209, ZW1528, ZW251, ZW191, and ZW171, until ZW171 was discontinued. General and administrative expenses were consistent with prior year as an increase in non-cash stock-based compensation was offset by a decrease in salary and benefits due to reduced headcount, as well as decrease in consulting, rent, and information technology expenses. Net loss was $81.1 million for the year 2025 compared to a net loss of $122.7 million in 2024. The change for the year was primarily due to an increase in revenue and decrease in total operating expenses and in income tax expense, partially offset by a decrease in interest income. As of December 31st, 2025, we had $270.6 million of cash resources consisting of cash, cash equivalents, and marketable securities compared to $324.2 million as of December 31st, 2024. Based on current operating plans and assuming full execution of the $125 million share repurchase plan, we expect our existing cash resources as of December 31st, 2025, when combined with anticipated regulatory milestone payments of $440 million related to the potential approvals of Zahara in GEA in the United States, Europe, Japan, and China, as well as the net proceeds from our non-recourse royalty-backed note to fund our planned operations beyond 2028. This anticipated cash runway does not take into account any contribution from additional future milestone payments or royalties related to Zahara, other current licensed product candidates, or contributions from future partnerships and collaborations. For additional details on our quarterly results, I encourage you to review our earnings release and other SEC filings as available on our website at www.synmercs.com. In January 2026, the company announced an adjusted gross operating expense framework, non-GAAP, reflecting disciplined capital allocation across research and development and general and administrative activities of approximately $300 million over a three-year period ending December 31, 2028. Despite the royalty-backed note financing announced today, We expect continued discipline in our approach to general corporate operating expenses with no change in our prior guidance for the three years ending 2028. The company currently expects adjusted gross operating expenses in 2026 to be approximately 20% lower than in 2025, excluding the impact of any acquisition related expenses or new partnerships and collaborations. A reconciliation of historical non-GAAP adjusted gross operating expenses to the nearest GAAP metrics can be found in our earnings release and on our investor relations website. I will now pass the call over to Sabine, who will provide a brief update on our clinical development program for ZW251.

Thank you Bijal. Following my update last quarter, I'm pleased to report that the phase 1 study of CW251 in GLPCAN3-expressing tumors, including hepatocellular carcinoma, is progressing as planned. The trial is actively enrolling and is expected to include approximately 100 patients through dose escalation and optimization, with sites currently open across North America, Europe, and the Asia Pacific region. At ASCO GI in January, we presented a trial-in-progress poster outlining the study design, including a starting dose of 3.2 milligram per kilogram in the dose escalation portion. This starting dose reflects a data-driven decision informed by our prior experience with DW191. In that program, which utilizes the same linker payload technology and a drug-to-antibody ratio of eight, we began to observe early signs of activity at the 3.2 milligram per kilogram dose level after starting at 1.6 milligram per kilogram. ZW251 incorporates a lower drug-to-antibody ratio of 4, which supported our confidence in initiating dose escalation at 3.2 milligram per kilogram. We look forward to providing further updates on ZW251 as dose escalation advances. In parallel, we expect to share additional clinical data from ZW191 as the data set from our dose escalation study matures and the program progresses through those optimizations. I will now hand the call back to Ken to provide for closing remarks.

Thank you, Sabine. As you can see on this slide, we have an eventful year ahead of us with multiple value generating catalysts. This year we hope to execute across each element of our novel strategy and illustrate the integration of the various development strategic initiatives. This means delivering clinical progress on our wholly owned R&D portfolio, continued progress on development and commercialization of Zahira and Pazritamig by our partners, expanding new partnerships and collaborations, and demonstrating tangible outcomes, including the potential for critically aligned acquisitions by year-end. In January 2026, we announced our R&D priorities for 2026 and beyond, including our intention to continue conducting Phase I clinical studies for ZW191 and ZW251 in 2026. In addition, we announced that beyond 2026, we expect to advance our advanced research efforts on multi-specific antibody and engineered cytokine platforms, funded partially with early-stage partnerships and collaborations. INDs for our currently wholly-owned multi-specific programs, DB209 and DB1528, remain on track for submission in 2026. As usual, we expect to have representation of our platform and pipeline throughout scientific conferences in 2026, including at AACR in San Diego in April. A significant priority for Zynmerx in 2026 is to integrate new partnerships and collaborations into our existing wholly owned portfolio to share funding and risk with partners. Look forward to providing progress updates throughout the year on these expected catalysts and on the continued execution of our evolving strategy. I'd like to end the call with this thought. One of the clearest illustrations of our model today is the journey of a single drug, Xanadatamab, during my tenure as CEO since 2022. Zany was designed and developed in-house by our team We advanced it through rigorous science and validated our asymmetric platform. Early in my tenure, we made the decision to partner it strategically rather than sell it outright, generating meaningful upfront payments structured with milestones and royalties to ensure we captured potential upside as a hero for our shareholders. The upfront proceeds funded the expansion of our wholly owned R&D portfolio over the past three years strengthened our balance sheet and contributed to the value creation reflected in our share price over time. Now we find that Zenedatamab may be a more successful new medicine than we anticipated back in 2022, with the ability to generate a much higher level of peak sales. And the structure of our partnership provides a meaningful value of future cash flows over a long time period. Today, that same asset is again serving as a catalyst, this time through the royalty note financing announced today to unlock additional non-dilutive capital. We're able to accelerate the reinvestment of that capital into new value generating assets, including potentially externally sourced innovations that meet our strategic and return thresholds. In many ways, it's a full circle moment. One internally generated medicine helped build the portfolio we have today and is now providing the capital to expand our business further with the ability to generate additional sources of royalties and milestones, both internally and externally. What's more is we may have the ability to do this again with PASRETA-MIG, which continues to demonstrate a highly encouraging safety and efficacy profile in Phase I accommodation regimen, including with docetaxel, as presented last week at ASCO-GU, as well as assets from our existing platform partnerships or other royalty-generating assets that we may choose to bring in or that result from new partnerships from our wholly-owned pipeline. This transaction with Royalty Pharma underscores something fundamental about our model. We understand how to develop differentiated medicines. We also understand how to underwrite cash-producing assets. Very few biotech companies can do both well over the long term. The ability to originate innovation internally and allocate capital externally allows us to compound value in a disciplined way, using science to create high-quality assets, partnerships that generate capital, and utilize that capital to acquire and scale the next wave of royalty-generating opportunities for long-term shareholder returns. With that closing comment, I'd like to thank everyone for listening, and I'll turn the call over to the operator to begin the question-and-answer session. Operator?

Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile our Q&A roster. Our first question will come from the line of Charles Zhu of LifeSci Capital. Your line is open, Charles.

Hello. Good morning, everybody. Thank you for taking our questions and congratulations on all the progress and the updates that you presented to today. My question here is regarding your GPC380CZW251. It sounds like you'll have about 100 patients through dose escalation and optimization. Any qualitative comments around how the enrollment data collection is going and also at what point might you make an internal decision whether or not to bring this forward in-house and how far? versus partnering development for this particular asset? Thank you.

Yeah, thanks, Charles. I'll start with that, and I'll see if Sabine has anything to add later. But, you know, I would expect this would follow along in a very similar fashion to our Phase 1 program for ZWA 191, which is still obviously playing out. So I think obviously in 191 we had a very quick – operational execution on the clinical study. We went from first patient in to first data presentation in about 10 and a half months, which I think is related to the structure of how we think about clinical execution in early stage studies and the geographic footprint we have. If you look on clinical trials, you see we've got a very similar clinical trial footprint for ZLB251. You know, it is a different tumor type, different different treating physician group. It's a little early to make predictions about that, but I think you'll see the same cadence of, you know, we're not going to give guidance about when an initial data disclosure will be made. It'll probably be exactly like it was last year for ZW191. When we think we have something interesting to provide, we'll do that in a peer-reviewed setting, and we'll likely not give guidance around that until right before it's necessary to in terms of a public abstract or a public oral presentation. I think once we get through an initial presentation. It's a little bit easier with the cadence. So, you know, we've indicated we're going to have some ZW191 data update coming soon from the full dose escalation data for that. But I think for the initial data presentation for ZW251, we'll let our clinical folks do their work. I think it's recruiting nicely the way that we expected. And I think once we have something that we want to say, we'll submit an abstract to a peer reviewed medical meeting and happy to present the data there for all to see. And I'll just See if Sabine has anything else she wants to add on that in terms of guidance.

I think the only thing I would say is that the enrollment for the W251 is proceeding very nicely according to our plan. As Ken mentioned, it is a different patient population, but we are very excited with this molecule. As you know, in dose escalation, The timeframe often depends upon the number of those escalation cycles and follow-up and how quickly you see responses. I mean, with ABC, it's generally very quick. But with a phase one program, we generally want to wait until we have a wholesome data set to present. And as Ken mentioned, we will do so at a peer-reviewed conference when we get to that point.

Understood. Thank you very much for taking the questions and congrats again on the progress.

Well, thanks, Charles.

Our next question will be coming from Brian Chang of JPMorgan. Your line is open, Brian.

Hi, Kim, my team. Thanks for taking our questions this morning. First, I'm just curious on the timing of the royalty-backed financing. Is that driven by something that you already found on the PD side, the accelerator that need to secure royalty-based deal? Can you help us define the accelerator timeframe on an acquisition here? And then we'll have a quick follow-up. Thank you.

Yeah, thanks, Brian. Thanks for the question. I think the timing for the royalty note completion with Royalty Pharma had as much to do with the you know, current commercialization cycle of Zannie and the cost of capital that's available to us right now as much as it does to where we see near-term use of proceeds. I wouldn't read too much into that. You know, we're obviously see, you know, a compelling opportunity to continue to buy our own shares and reduce share count over a period of time. We think it's a really good investment for our current shareholders and we're halfway through the current authorized plan and we'll continue on that. at the current share price. So this provides a little bit more balance sheet to do that. We did want to add to the balance sheet also just to make sure that we were able to take advantage of opportunities for acquisitions we see in the marketplace and whether that's, you know, licensed assets that bear royalties, whether it's development assets or whether that's other platforms that are available to us. So, you know, we did want to have some capital available for that. we're active, obviously, in looking at those opportunities and assessing them. But we have a very disciplined approach, a very high standard for using that capital to bring other assets inside the company. And we'll just let that play out without getting too far in front of ourselves with respect to guiding around timeframe or anything else. But I think it's just as much about looking at where Zanny is in the development cycle, the cost of capital is available to us right now. And so we decided that we would complete that that exercise now. And we'll just let the transactions that follow, whether it's additional share repurchases or potential acquisitions, just let that follow and then explain those as they're completed.

Got it. And looking ahead into April, can you give us a sneak peek of what to expect at ACR from your internal R&D side? What could really move the needle there for the entire portfolio? Thank you.

Yeah, I think on the scientific side, I'll just let Paul maybe give you a little bit of foreshadowing. Obviously, you know, none of the abstracts are public yet, so we'll have to wait till that standpoint, but maybe Paul can talk a little bit about what we've been working on that we're excited about to talk about in April without getting too definitive.

Yeah, thanks, Ken. Yeah, Brian, as you know, we have both multi-specifics and EDC capability in-house, and We've been applying that to oncology, so that's the AACR. That's where we've been traditionally over the last few years having a pretty high presence, and we intend to have a high presence again this year. On the ADC front, we did allude to a new payload technology that we've been developing, so we can't speak specifically too much about that, but that technology is built on a similar philosophy and design that we used to develop the topo payload that was clinical validation with the 191, the folate receptor, and what the 251 program is built on. So you can expect to see, you know, progress and updates on that technology. Again, we're also moving forward on our multi-specifics, so you can also anticipate potential, you know, news on that front as well. Other than that, I can't really say too much on the specifics.

Thank you. No worries. Thank you. Thanks, Paul. Thanks, Brent.

And our next question will be coming from Yagao Nochomovitz of Citigroup. Your line is open, Yagao.

Yeah, hi. Great. Thank you very much for taking the questions. Paracinemag is an asset you've been talking about more frequently recently. I'd just love to get your thoughts on the recent data and wondering whether the profile that's emerging in the phase one is exceeding your expectations. And then on PTK7, the bipartotopic ADC, just broadly, could you talk about the learnings from Zannie and how much of that was translated into the design of PTK7, please? Thank you.

No, thanks very much. I think I'll let Paul answer the second question on PTK7 and then maybe let Adam answer the question on PIS ready to make, because he was at ASCO GU over this past week. So maybe, Paul, can you do the second question first and then Adam follow up?

Yeah, no, thanks, Yigal. Yeah, no, so... PTK7 is a target that we've been very interested in. We see it pairing nicely with both topo and also with the RAS payload technology. There, PTK7 has an attractive tumor expression profile. Lung cancer in particular is attractive, but there are other indications as well. So our effort on that, though, has been really to As part of our philosophy on ADCs, we think about the payload, but we also think about the front end of the antibody. And so really, how do you best deliver payload with an antibody-based modality? And for PTK7, here what we thought or what we felt from our data was that a bi-paratopic actually gives better delivery than just a mono-specific antibody model. So there we did deploy the same technology that's used in XANA Datamab, our asymmetric technology, which allows us to pair different binding specificities, different epitopes that are targeting PTK7. And what's very important is that when you do build those, you screen multiple different specificities to get the right pair that actually gives you the bi-paratopic effect that you want, which is the enhancement of internalization. But you also have to think about other features as well, such as the CMC properties, the PK properties of that pair. And that learning that we got from XANA DataMap did put us in good position to understand then how to develop that for PTK7 bi-paratopic. So that's... an overview of that, Yagal.

And then maybe on the, as is Adam, certainly lots of enthusiasm and excitement coming from ASCO-GU this past weekend from J&J. You know, physicians largely agree that this is a very well-tolerated drug that has a lot of potential. J&J's enthusiasm is obviously clear with multiple registration trials that they've publicly stated and disclosed at least some of the details around them. We're certainly enthusiastic about it. We think that the safety is a key aspect of the differentiation. And of course, the efficacy is very impressive so far, but obviously still early days. So a lot of enthusiasm on that front, both from us and J&J and the physicians in the space. Thank you.

Thanks, y'all.

And our next question will be coming from Eva Forte of Wells Fargo. Your line is open, Eva.

Good morning. Thanks for taking our questions and congrats on the progress. A few from us. Stepping back to your brother's strategy, what types of assets are you looking to bring in through acquisitions? Any specific therapeutic areas or development stage you're looking for? And how should we be thinking about the cadence of these deals? And just as a follow-up, you mentioned cash runway extends beyond 2028. Are any potential acquisitions accounted for in the cash runway? Thanks.

Yeah, I'll just answer your second part of your question first, and I'll pass over to Scott to talk a little bit about the first part, the extent he wants to do that. So there's no acquisitions included in our cash runway forecast. There's also no new partnerships or collaborations, which could be inflows as a part of that. So as we complete transactions, whether they're acquisition-related or partnership or collaboration-related, or if there's progress with existing collaborations, we'll update that. cash runway. Obviously, we're well beyond 2028 when you look at the milestones coming in from just GEA and the reduction we've taken in R&D spend this year over last year, which will continue. So I think we feel very comfortable with the runway that we have and the proceeds that we have available to allocate, whether it's continuing share repurchases or exploring some of the acquisitions that we'll talk about. And I'll let Scott provide some more guidance around that if you'd like.

Yeah, thanks. Look, I think there's two questions embedded in that, which is sort of therapeutic areas for deal-making and sort of the timing and cadence of deals. We think a lot about the world-class protein engineering team we have in Vancouver. It's the team that made Zany, that developed Azimetric, that led Capacitredimig, and has an amazing ADC platform and innovative immunology assets. So we really have an incredibly high conviction that that team will be developing the next Xanny. And what I mean by that is an innovative medicine that drives really dramatic patient benefit. So given that expertise in-house, we think a lot about that as a resource and how it impacts our right to win when we're looking at dealmaking. So we feel like we have an advantage in there, but we're certainly not going to restrict ourselves to the areas of that oncology and immunology, but it does factor into sort of the hurdle rate on return that we might expect when looking at deal-making. Your second question was sort of when will we do deals, and we're just not in a position to give explicit guidance on deal timing. I think I can tell you sort of our core values around deal-making, which is one, as I mentioned earlier, opportunities that we understand well. I would say number two is that we have a real clear reason to be the right buyer and a right to win that deal. And then we overlay that with a very strict return threshold. The deal making externally is always done and weighed against the opportunity to own more of our existing portfolio, which we have a very, very good sense of its value. at all times. And any capital deployment externally is going to be weighed against the IRR achieved from those share repurchases.

Yeah, thanks, Scott. And Eva, obviously, the arrangement that we can put as Royalty Pharma today is a part of that strategy. It's a longer-term duration, which I think lets us have a little bit more strategic flexibility about the types of assets we might look at and the payback we need to have from those assets and obviously accessing this capital from royalty farming, this structure gives us something that's low, low, low, low, low double digit cost of capital, which I think just allows us to think about target returns in a different way than maybe traditional biotechs might think about.

And our next question will come from Yaron Werber of TD Securities. Your line is open.

Hi, this is Steven on for your own. One question about the 20% plan for lower OPEX, maybe a little bit more color on how that's going to look. And then in terms of fulfilling that 125 million share repurchases, any sense of a cadence on that? Thank you very much.

Yeah, thank you. I'll take those two questions. Second, on the cadence of share repurchases, obviously we did a $60 million share repurchase starting in 2024, which took about 12 months And that was really funded entirely by milestones that were received from Jazz and B1 for the BTC indication approval. Right now, we authorize another $125 million in November. We're obviously halfway through that pretty quickly. And in addition to the balance sheet we have now and the Royalty Pharma financing of $250 million, we obviously have expectations of another $250 million in capital being available to us. upon GA approval in the US based on our next jazz milestone. So we're fully, feel fully resourced to move as quickly as opportunities allow ourselves to move on the remainder of that $62.5 million, as well as consider authorizing further before then. Right now, given the underlying value we see in our assets in the future, it's a very compelling discount for us to think about reducing share count for our shareholders through investing in our business and returning capital through share acquisition. So we'll continue to pursue that as long as that compelling discount continues to be available to us. I think if you look on a spending side, if you look over the last three years, we took the upfront payment from Jazz, which is about $375 million back in the end of 2022. We put that to work over a three-year time period to build the current wholly owned portfolio that we have right now. I think given that we've now established a pretty reasonable portfolio, the cadence of continuing to do that is going to slow down a little bit, and that will result in some reduction from last year to this year's spending. In addition, we've said we think now is the time to start to integrate partnerships and collaborations into that wholly owned, unencumbered portfolio that we've built of both clinical and preclinical assets, which is quite broad, obviously, between the multi-specific the dual-engineered cytokines, and our next-generation ADCs. So I feel quite comfortable that we still have a robust R&D operation inside the company, even at a slightly reduced spend level. And as we manage that ourselves and bring in partnerships and collaborations, which will bring in funding towards that, that the direction of R&D spending will be downward. But we'll still have a very viable R&D operation that will continue to build unencumbered assets in combination with potentially earlier stage partnerships, unlike what we've done in the past three years in building a holding-owned portfolio. So different strategy, different purpose, but we still think we have a very robust and innovative R&D operation that integrates well with the thoughts around the royalty assets that we have in Zahira and eventually PazRitaMig and things that we can add from outside the company inside, whether they're unpartnered assets, additional novel platforms like Asymetric, or assets that are already licensed, which will carry some royalty or milestones in the future.

Thank you.

And our next question will be coming from the line of Stephen Wiley of Stifel. Your line is open, Stephen.

Yeah, good morning. Thanks for taking the questions. Just a couple on the IND submissions for this year. I know the development of DLL-3 targeting therapies has grown increasingly crowded. There's a number of different modalities out there, and the target's only really relevant to a couple of indications. So can you just speak to the target product profile you're hoping to see with 209 and Phase 1 and just how you're currently thinking about strategic interest here? And then also just curious why you're targeting an XUS regulatory submission for the ZW1528. Just wondering if that's predicated on enrollment kinetics, or is that due to the ability to move faster through dose escalation? Thanks.

Yeah, I can answer the second question. Maybe I'll pass over to Paul to talk a little bit more about DLL3 and what we're trying to accomplish, not just with 209, but on the broader sense in the Tri-TCE platform. But no, I think both these assets are quite interesting from our standpoint. We're obviously interested in considering strategic interest in potential partners who want to move along with us into the clinic at this stage. That's something that we're continuing to have discussions about. 1528, we just see the ability to move much more quickly in early clinical studies in an ex-US environment. I think it's not unusual if you look at respiratory expertise in clinical studies, there's quite a bit of it in both the EU and the UK separately, because that's not in the EU, but there is a lot of respiratory expertise in Europe, and in some cases, the ability to go faster than the U.S. in early clinical studies. So the same way we've gone faster with CW191 by having integrated sites in Asia Pacific and Europe to go along with the U.S., and we're doing the same thing with 251 with a pretty big ex-U.S. footprint, I think with 1528, may have the ability to access the expertise that's necessary and go quickly in early clinical studies outside the U.S. rather than U.S., and so that's what we're That's what we're looking at doing for that. And I'll pass the DLL3 question on to Paul.

Yeah, thanks, Ken. Thanks, Stephen, for the question. Yeah, I mean, just as a reminder, the way we've designed 209 is that it incorporates co-stimulation directly in in the bi in the tri-specific so it's a tri-specific binding dll3 cd3 and cd28 so although the dll3 spaces you know gained a lot of attraction because it is a very viable target uh we feel that uh we have a i mean a truly differentiated molecule and would be the first with that type of design all in all in one uh molecule and the the thinking and the design of that molecule took a lot of work to get that balance of CD3, CD28 so that we only engage CD28 after we've targeted CD3. So we think that will then drive, that the benefit of that is that it then drives a deeper T cell response. T cells are are more sustained in their ability to maintain activity over a period of dosing. And you can even see that reflected, that desire to have that component reflected in other people's T-cell engager designs where they add in CD20 as a separate molecule. We think by putting it into a single molecule, it can really give you a lot of benefit out of the gate. So there, we pushed that forward with DLL3. There was also a lot of learnings that we made from our 171 program in the delivery, the sub queue, the step up. So we think we can accelerate quite quickly based on those learnings. We have Sabine's team well positioned to execute on that based on the efficient execution of the 171. So we're well positioned. So we think we can execute and get to inflection data quite quickly overall. Behind that, of course, that same mechanism design, we also are very excited about applying it to other targets. We did have a nice presentation at CITC where we talked about how we can expand the target base, both in solid tumors, hemol, as well as sort of more gated strategies as well. So there's a lot behind that platform and other molecules that we're also developing. But we're very excited about 209 as a proof-of-concept molecule as well as really providing benefit that we think you can get beyond existing T cell engagers by having that beneficial co-stimulation in design.

Maybe just to follow up, so if the advantage of co-stim then is to improve durability of response, at least that's what I'm intimating from your comments, does that then inherently require you to take that through a later stage of development to be able to prove out that durability beyond a phase one all comers trial.

Yeah, yeah. I think I should state the durability of response, but also the breadth of response. So we also feel like there are certain patients with T cells and solid tumors that maybe don't have enough punch from just a CD3 engagement. So we think both the breadth and the durability of response, you know, we hope to enhance. So we think we should see signals during the dose escalation if our projections are are on you know in line with what we actually execute and see um but you're right there may also then take time for no longer benefit to see that the duration of response like as you said as we get into expansion uh phases or uh that part of the study

I would like to add in the setting that, as Paul mentioned, we are, given the additional mechanism of action, we are expecting an improvement in response rate as well as the duration of response, which would translate into progression-free survival in this setting, and then maybe additional patients who respond that typically don't respond to teladimab or other DLL3 agents that are in development. Our goal is, I mean, given the fact that we already have agents approved in this setting, we could easily compare our efficacy based on existing molecules, which may help us in evaluating our efficacy and our safety at an earlier stage without even taking it into a later stage of development. I mean, we could choose to take it later if we would like, if we wanted to.

Thanks for taking the questions. Yeah, thanks, Steve.

And our next question will be coming from the line of Mayank Memtani of B. Riley Securities. Your line is open, Mayank.

Yes, good morning, team. Thanks for taking our questions and congrats on progress on several fronts, including the Royalty Pharma node and the continued repurchase. If I may ask a Horizon DA question quickly, clarification of this next OS analysis that's coming up. Are you aware if that data could constitute as a major BLA amendment once you have that available and also was curious if you could touch on the rationale of the Zongertunib combination with ZANI study looks like a multi-indication study you know that could also have head-to-head data versus TDX or TDM1 and then I have a quick follow-up yeah I think on the I think on the question related to the median OS readout I don't think we want to comment about any regulatory strategy related to that obviously

Jazz has stated very clearly in their call last week that they believe that they have sufficient data from the current Horizon GA1 study to file in the U.S., and obviously they've initiated that process. The timing of the outcome from the second analysis of median OS and the ability to add that to an existing filing versus file that later to add to an approved label is something I think Jazz will talk about at the time when when that data is available and not ahead of that from a regulatory strategy perspective, if that's okay. Sorry, can you repeat your second question again? Sorry, I didn't hear it quite clearly.

Yeah, the study of the HER2 TKI with Zani looks like a multi-indication study on just breast cancer and some head-to-head data versus TDX1 might be generated there. So just curious on the vision there of that study.

Yeah, I don't think we want to go much beyond what's available on CLIMB trials, but obviously that's an approved TKI now, and ZANI as well. So the ability to look at combinations of two approved agents and indications that they've not yet been labeled for is a pretty standard practice. And I think we've always known that the combination of ZANI and TKI could be very interesting in multiple indications. I think we're just waiting for the next, I think Jazz is waiting for the next generation of TKIs to be approved. This one is pretty interesting from our perspective, having followed all of them for some time period. So it wouldn't be surprising to look at a range of indications in that combination. And then after understanding the data that could come out of the combination studies and deciding what the next steps are from there, we'll just have to let jazz and BI and data drive those future decisions.

Okay, thank you. And on the GPC3 liver cancer program, could you just confirm if, you know, patients here are enriched for high GPC3 expression or not? And if you are able to comment on how much validation and even differentiation we could show versus, you know, the GPC3 CAR T data that we've seen. Thank you.

Yeah, I'll let Sabine answer that first part of that question, and then the second part, maybe Paul can comment if he feels the need.

For 251GPC3 programs, we are enrolling all levels of GPC3 expressions. The target tumor types that we're enrolling in this patient population, which is hepatocellular carcinoma mainly, have very high levels of GPC3 expression. According to the literature available, more than 90% of patients have some level of expression, so we're fairly confident that most of the patients we enroll are going to have expression levels. The other thing is we will be evaluating GPC3 levels during the course of our study for all of our patients, and in the end, do a comparison for the efficacy with regards to expression level once we have enough data.

Yeah, and I would just, I think your second part of your question was how does it compare to other modalities, and I think, you know, certainly GPC3 has been a target of high interest in liver cancer. There has been some success with CAR-Ts, but, you know, they have their own challenges CAR T's, but certainly that does bode well for the value of the target. We think we are really quite competitive and really one of the first to really think about using ADCs. And the data that we have from the 191 program using the same total payload really gives us a lot of conviction that we're on the right track with the tolerability and the efficacy profile that that showed there. But of course, we'll wait for the data.

Thank you. Thanks for the question.

And our next question will be coming from the line of John Miller of Evercore ISI. Your line is open, John.

Hi, guys. Thanks so much for taking my question and sneaking me in here. And congrats on the financing. One more on the strategy side and the financing side. Obviously, between this financing and the expected royalty, expected milestone that's coming from Jazz this year, you've got a lot more flexibility. Ken, I know you spoke about balancing capital allocation across a number of different things, but is it fair to assume that today's financing opens up larger potential BD opportunities to you guys? And can you give a little bit of commentary on maybe what size of targets you're looking at given the cash position, the expected cash position once all of this is cleared out? And then sort of relatedly, You talked a lot about keeping OpEx discipline, even though you've gotten the new capital. Is it fair to assume that if you do bring in development stage assets as part of your BD activity, that's going to come with additional OpEx liability and you're going to have to spend against those assets to generate value off of them? Can you give me a little bit of bookends about how I should be thinking about what that liability could be?

Yeah, no, great question, as always, John. You know, I think the way we feel about the current financing is, again, we've got, you know, the right amount of R&D spend that we want to have right now. I think we've made a really great investment the last three years in the holding-owned portfolio, and that cadence is slowing down a little bit. And I think integrating the partnerships and collaborations is the right thing to do with how all of those programs that deserve to go forward will get funded. I think that's great. We've obviously been able to continue to invest in ourselves by continuing our share repurchase at even a much more accelerated rate than we did when we started this in 2024. And it's allowing us to, you know, return capital to shareholders from, you know, milestones and commercial revenue from Zahira, you know, usually as we started in 2024, a little bit in advance of maybe receiving all of those milestones. So those are all great. I think obviously a part of this financing strategy now is to find, you know, an appropriate cost of capital with a long-term duration and that allows us to think about the types of things that we'll invest in. I don't think it makes us think about larger transactions necessarily. It does expand the amount of capital that might be available so that as we find those that achieve our target hurdles for IRR, we can hopefully be able to finance those and do those quickly, which is a part of having that capital. But I don't think it really makes us think about expanding necessarily to larger It could be more transactions. It could be able to get them done more quickly because the capital is available right now. And I think from our standpoint, we're also trying to match the types of assets we're looking at and when those might appreciate in value versus the duration of liability that we now have to be paid back out of royalties. So we chose intentionally to pick a long-term duration liability, and that was created by only securitizing 30% of the royalty against The loan makes it a longer-term duration liability. It just gives a little bit more thought that we can look at assets that don't have to have an immediate payback or income associated with them immediately to cover the financing costs. I think we feel comfortable the way we've done that. I think we've used the liability side of our balance sheet to give us a little bit more strategic optionality and flexibility in the type of assets that we're looking at. We're obviously anxious to execute against this part of the element of our strategy so we can show our shareholders what we meant by our strategy and what types of things we should expect. It might take you multiple transactions to understand how we're trying to accumulate assets externally inside the company. One aspect of that with respect to capital discipline is if we are to bring in an asset which has some R&D investment required as a part of that, that's going to have to come from the same capital allocation pool as the acquisition. So that will be one of the defining factors is looking at what additional R&D investment is required to move something forward to get appreciation versus acquiring something that is already licensed and someone else is covering the development costs. That's a part of it, but I would expect the capital allocation to acquisitions would also have to cover any incremental spend in R&D over and above the current base that we're establishing this year versus last year, if that makes sense.

It does make sense. And then I guess if I can sneak in one more, to dovetail with that, I know you discussed the potential to do more with the internal pipeline, the wholly owned pipeline, as it reaches the appropriate stage of development, and acknowledging that you're not going to give guidance on any particular asset. Can you talk about broadly across the wholly owned portfolio at what stage of development? What are the key data readouts that you think unlock the ability to do partnerships with them or monetize those assets in this sort of way that you've been pioneering?

Yeah, well, I mean, it's always, you know, when you talk about this, it's always, you know, most obvious to look at, you know, the asset that's in the lead or has the most clinical data around it, but that's not necessarily where you might see the first collaboration, um, or, you know, as much, you know, the interest from our side on the collaboration. We have as much interest in understanding how we can move some of the early stage programs forward. You know, we have a really interesting construct in ZW209, looking at DLL3 in a tri-specific format. We have an incredible portfolio of targets behind that that are really interesting in other solid tumors, in Hemonc, even thinking about autoimmune. So trying to move those earlier programs forwards with partnerships is as relevant for us in discussions as getting clinical data and trying to strike a partnership post-clinical data or trying to bring on a partner to start funding at IND because it reduces our risk or shares costs. We're interested in all aspects of that. So it'd be fair to say that we're open now, maybe that we weren't in the past three years, but open now to looking up and down the portfolio in different therapeutic categories, in different product formats, whether it's ADCs, tri-specifics, our dual-engineered cytokine program, which we have more than ZW1528 available to us. So it might be the early collaborations are things that get done before looking at later stage partnerships based on clinical data. We're just being open to understand how we integrate it in with our holding-owned portfolio right now and still have some unencumbered independent assets of our own as a result of looking at different types of partnerships and collaborations we can integrate into that portfolio.

Great, thanks so much.

Yeah, no, thanks, John.

Our next question will be coming from . Your line is open.

Hey, guys, good morning, and thanks for taking the questions. I got two quick ones for you and then a big picture one. I'll start with the two quick ones. Just quickly on ZW191, By the time we present the data, can you tell us how much of that 6 and 9 milligram dose levels will be backfilled to about 10 to 12 patients, and about what amount of follow-up you anticipate having on hand when you present that data? And then the other quick question was just building on Stephen's previous question. Given the toxicities, and this is for specifically ZWA209, given the toxicities that we've seen with CD28 engagement, Wouldn't improved safety of GW209 be a near-term signal that the COSTI mechanism is working and perhaps be an inflection point for you to consider strategic optionality? And I'll give you my longer question afterwards.

You have a longer question than that? Okay, thanks. Maybe I'll let Paul answer the second part of your question about the all three, and then I'll give Sabine a little bit of a chance to think about how much of that

part of your question we want to talk about because you know hopefully it's a subject of an abstract coming up so may not want to get too far ahead of that but i'll let paul answer your dl3 or cd28 coast m question first yeah that's a great question and i'm glad you brought that point up because i think that is very that is that could well be a very important inflection point is you know understanding the profile of the of the molecule we've again i've emphasized that the cd28 should only engage upon CD3 engagement and trigger signaling. And that all is still contingent on engagement on DLL3. So it has the same classic pattern of design as a T cell engager. And we think that careful design should be reflecting the tolerability of the molecule, maintaining that localized activity in the tumor microenvironment where DLL3 is very selectively expressed in tumors. So it's such an attractive target for this approach. So I completely agree with your sentiment. And I think that was an important point to bring up.

Thanks. Sabine?

Yes. So, I will start with VW191. When we presented the data at the triple meeting, we had mentioned that we completed dose 1 escalation at that point in time, and we're planning to start dose optimization. Dose optimization is proceeding very well. And so we are very clear with the number of patients that we have in Part 1 of our study since it's already completed. And since we completed that in Q4 of last year, we think that by the time we present updated data, we're going to have reasonable follow-up to present both the I would also say that the part two dose optimization enrollment is proceeding very well as well, and it's according to our plan. We are hoping that we will provide an update to you about the completion of enrollment sometime in the near future.

All right, Ken. Brace yourself for the long fun. It's a multi-part. No, no. Okay. It's just a long one. Let's get to it. So, payload resistance continues to emerge as an issue for ADCs. So, big picture, how are you guys thinking about this very real problem that the field is going to have as ADCs become even more commonplace? And how are you planning on deploying capital to bring in new assets and build young capabilities to address it? Thanks.

Yeah, I'll start physically and then let Paul comment. We've been thinking about this a lot. I mean, we... you know, really like the 519 payload that we developed back in 2022, 2023 that we now have on ZBA 191 and 251 and also ZBA 220, which is IND ready. So I think we really selected, you know, a great payload in the campus season analog class. And we're very proud of the data we're seeing right now because I think it's showing that there's some benefit from the work that we did to select a proprietary payload with very specific characteristics and is providing some Differentiation from clinical data you're seeing from ExaTcan or other generic payloads, that's great. There's obviously been a tremendous amount of overcrowding in that class in multiple targets, especially some of the therapeutic areas when we started out. We were looking at gynecological cancers, thoracic, both non-small cells, small cell and head and neck, as well as GI indications for our ADCs and T-cell engagers. And it's safe to say that in the On the gynecological cancer side, some of the initial indications, especially P-ROC, are quite crowded with different targets and different payloads approaching. There's still opportunities, I think, in some earlier settings, but we've been thinking really about, you know, the next payload. We have been working for some time period to try and find another class of toxins that might be interesting. I know it's been reported that Daiichi Sank has been in the same thing. You know, it is hard to find, you know, a payload that's as effective that comes from that camp disease and analog class. And that drove some of our efforts to think more about small molecule approaches that might be better targeted with ADC constructs or a dual payload strategy to maybe do something a little bit differently. And I think Paul can talk a little bit about our work and that'll be the focus of some of our presentations at AACR coming up in April. Paul, do you want to add to that?

Yeah, no, totally can. I think The challenge about the space and the busyness in the topo space, I think there we really thought carefully about how we designed ours. So as Ken alluded to and has been reported in the 191 data, we feel like our care and design and tolerability as well as efficacy does put us in a good position so that we can get out front with those molecules. We can combine hopefully in the future and sort of differentiate on the clinical strategy. Behind that, though, I think we for sure are looking at next generation payloads. Where else do you go to broaden the opportunities for ADCs? We are really empowered with the success we've seen in our ability to deliver payloads and small molecules, and we want to then just translate that into other fields. So, one that we talked about will be the Pan-RAS. We think we can do it also for other small molecules as well, or toxins, Pan-toxins. So, that work is also proceeding. I think really thinking about the tolerability profile, the linker stability, the potency of the payload, the balance there, how also when you start thinking about dual payloads, how those toxicities interplay and again thinking about the combination and the bystander and the overlap of toxicities is very important and you know we are thinking about that so I think there's a lot of opportunities still in the ADC space to you know but it really depends on careful design and really balancing you know pragmatically what should work you know, thinking about PK, thinking about bystander activity, as well as, very importantly, is also how you deliver, the modality that you use to deliver. Is it a monoclonal antibody? Is it a bispecific? Is it a bipartotopic? And at Zymorx, we're really well positioned to also think about that end of the ADC as well with our protein engineering capability. So, thanks for the question.

And our next question will be coming from Rennie Benjamin of Citizens.

your line perfect thanks thank you good morning and congratulations on all the progress um can maybe you know love to kind of get an idea is that are you there in about future yes can you hear me yeah yeah okay thanks for taking the questions um as you think about future buybacks can you maybe take us through the criteria of these future buybacks and your thoughts on kind of when enough is enough as we're thinking about modeling this out, you know, to the future. And then maybe one for Sabine, as you think about, you know, the HCC indication, what other additional indications may show promise given GPC3 expression and what kind of efficacy criteria would you want to see that would guide you into either expansion cohorts or expanding into these other indications?

No, that's great. Sabine, do you want to take the GPC3 question first?

Yes, I can take that. HCC is the tumor that we've highlighted for GPC3 expression. Although there are other tumors that express pretty high levels of GPC3 expression. We have evaluated those pretty well and are going to be including some of those patients into our study. And as we move forward from species signal, we may potentially include others into our development plan. Some of these tumors include some rare germ cell tumors. There are certain lung cancer patients who express those patients, we're evaluating them very carefully with regards to including them into our development plan. There are certain pediatric tumors and sarcomas, so we have our eye on that. We just wanted to start our development plan with the tumors that have highest expression. which is HCC. And also, HCC is an area of very high unmet medical need, particularly after first-line, patients relapse after first-line. And we think that given the wide therapeutic window that we observed with RZW191, we wanted to apply that in the HCC population as well. As you know, there is evidence to indicate that cytotoxics work in The main concern there is having the therapeutic window, and what we've seen with 191 gives us a lot of confidence that we should be able to have that both in terms of safety, which is critical in this patient population, because as you know, a lot of the HCC population have abnormalities in their liver function and cytopenias, but given the safety that we observe with BW191, we are fairly confident that this ADC should be well-tolerated in this patient population. And also from an efficacy perspective, the current standard of care treatment in already treated HGC population, the response rates are pretty low. They are lower than 15%. We're expecting that we should be doing much better than current standard of care in this patient population.

That's great, Sabine. Thank you. And Renny, just to come back to your question about shareholder purchases, which we really see as a return of capital. So I think we started this back in 2024 with the idea that we were going to start to see commercial revenues from our investment in Sahara, and that started with approval milestones in 2024 in the U.S. and another one in 2025 in China. And we were very clear that we felt it was important to return that capital to shareholders, and we've chosen to have done that through repurchasing shares just because it does provide a compelling discount for us right now between the underlying share price and what we see as the future cash flows that can be derived just from Zahira on its own, not counting Pasadena or other parts of the business. And that compelling discount shows us that reacquiring those shares at those prices and retiring them can really be an effective way to boost a total shareholder return over the long term. that always has to go along with continued investments in the numerator part of that equation, which is continue to build value in the business, which we have been doing through our significant R&D investment in our portfolio behind Zahira. So we're doing both of those at the same time, and I think that will always be the case. I think in November last year, when we saw the Top line data from Horizon GA1, we felt very comfortable this was going to be something that should be approved based on the current data set and approved in a timeframe that would bring in the additional milestone that we expect later this year. From Jazz for GEA, the royalty transaction we did with Royalty Pharma today is a way of just bringing forward some of the commercial royalties from further in the future to today just to give us optionality to continue to buy back shares. So we're halfway through the current $125 million authorized share program. We think that's a compelling discount, which we think provides a good investment for our shareholders to buy back the number of shares. And over time, as the business continues to build and become more valuable, that will be valuable on a per share basis. So we've done that more aggressively starting this November. I think a part of that was just what we felt was a disconnect between a great outcome from Verizon GA1 and getting more optimism and confidence of our next randomized study, the Empower 303, in metastatic breast cancer. I know it's a different study. It's a different tumor type. We've got a lot of confidence out of the large randomized Horizon G01 study outcome to understand that Xanadatamab could be a more powerful HER2-targeted agent than Xanadatamab in combination with GEA, and that could read over into metastatic breast cancer and other indications eventually. So we probably had a higher confidence level on the cash flows related to the outcome of that study than maybe we felt was embedded in the market price. And so it just gave us and even more compelling discount to acquire shares, which is why I've been doing it very aggressively. You know, we'll continue to do that. And when we reach the end of the 125 million authorized plan, then we'll speak with our board and decide again, the size and cadence of the next share buyback. But as of right now, I think it's a very compelling investment in the years to come. I think our investors will benefit by this aggressive share purchasing, by looking at the compelling discount against what we view as the the future cash flows from not just to here. And as we add additional assets, whether royalties or partnerships around the portfolio, that's going to drive that even further. And reducing that share count is just a way that's been proven to generate outsized returns. We obviously have capital limitations. We need to make sure we fund our R&D efforts. We need to make sure we have a strong balance sheet, which we do right now. But as more royalties and milestones come in, that's just generating additional free cash flow for us that we need to figure out how to allocate And right now, allocating it to share repurchases has been, you know, a pretty hopefully thoughtful capital allocation, but a pretty compelling thing to do. And if we can add some strategic acquisition to the internal R&D refunding, then I think the mix of all three of those will evolve over time. And right now, we'll just continue to return that capital from commercialization of the HERA back to shareholders through those share repurchases.

Thanks for taking the questions, and congrats again.

No, thanks very much, Rene. Appreciate that.

And I would now like to hand the call back to Ken for closing remarks.

That's great. Yes, thank you, everyone. I appreciate your time and listening to us today. We obviously had a very eventful 2025 at Zymerx here at the end of last year, finally reading out the Horizon GO1 study after four years from starting that study back in 2021. We were so pleased with the results for patients, and we felt energized our business. We've had a great start to 2026 right now, and I'm expecting a very eventful and full year for us. I think the Royalty Pharma transaction we've announced today with the $250 million in note financing is a very unique and creative financing structure, which I think can be a catalyst for us for additional strategic change. And we look forward to reporting on our progress against that and the other events we lay out today in the weeks and months ahead and look forward to giving those updates to you along the way. So thank you very much for your time and please be safe wherever you are in the world. Thank you.

And this concludes today's conference. Thank you for participating. You may now disconnect.