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Zymeworks Provides Corporate Update And Reports Second Quarter 2023 Financial Results
Tuesday, August 22, 2023Company Profile | Follow Company
Vancouver, BC, August 22, 2023--(T-Net)--Zymeworks Inc. (Nasdaq: ZYME), a clinical-stage biotechnology company developing novel multifunctional biotherapeutics, today reported financial results for the three and six months ended June 30, 2023 and provided a summary of recent business highlights.
Kenneth Galbraith, Chair, President and Chief Executive Officer, Zymeworks
"During the second quarter of 2023, we made excellent progress in advancing several of our key planned corporate goals for the year," said Kenneth Galbraith, Chair, President and Chief Executive Officer of Zymeworks. "We continue to provide support to our partners, Jazz Pharmaceuticals Ltd. (Jazz) and BeiGene, Ltd. (BeiGene) for their regulatory interactions and initial regulatory submissions of zanidatamab in second-line biliary tract cancer. We look forward to the top-line data readout from the zanidatamab Phase 3 gastroesophageal adenocarcinoma (GEA) pivotal trial (HERIZON-GEA-01) expected in 2024."
"As we move into the second half of the year, we are rapidly progressing our '5 by 5' goal of having five novel therapeutic candidates in clinical studies by 2027. ZW171 and ZW191 currently remain on track for anticipated IND filings in 2024, and we have nominated an additional preclinical development candidate, ZW220, with an expected IND filing in the first half of 2025. We strongly believe that zanidatamab and our early-stage product candidates have the potential to address large unmet needs and potentially improve the standard of care for certain difficult-to-treat cancers."
Recent Highlights and Current Developments
Positive Zanidatamab Clinical Data from HERIZON-BTC-01 presented at ASCO
At the 2023 ASCO Annual Meeting in June, the company highlighted the latest progress in our collaboration with Jazz in the development of zanidatamab in HER2-amplified biliary tract cancers. These pivotal HERIZON-BTC-01 study results demonstrated zanidatamab's meaningful clinical benefit, including confirmed objective response rate (cORR) of 41.3%, median duration of response (DOR) of 12.9 months, and median PFS of 5.5 months (median study follow-up time of 12.4 months).
Jazz will continue to lead the development and commercialization programs for zanidatamab in the United States, Europe, Japan and all other territories except for Asia/Pacific territories that Zymeworks previously licensed to BeiGene. With an initial focus in BTC and GEA, zanidatamab has the potential to improve the standard of care in multiple HER2-positive cancers.
Paul Moore, Ph.D., Chief Scientific Officer, Zymeworks
'5 by 5' Strategy Strengthened with Nomination of Next IND Candidate
"We announced the nomination of ZW220, a potential first-in-class ADC targeting NaPi2b-expressing non-small cell lung cancer and ovarian cancer," said Paul Moore, Ph.D., Chief Scientific Officer of Zymeworks. "This marks an important step as we continue progress towards our '5 by 5' strategy and focus on bringing novel medicines into clinical studies starting with ZW191 and ZW171, both on track for regulatory filings to commence initial clinical studies in 2024, and ZW220 anticipated in the first half of 2025."
ZW220 is built on Zymeworks' drug conjugate platform technology, and delivers a potent, bystander-active TOPOli-based payload via a cleavable traceless linker. The monoclonal antibody in ZW220 targeting NaPi2b, a sodium-dependent transporter, was developed in-house and selected based on its favorable binding profile and efficient internalization and payload delivery. The drug-antibody-ratio in ZW220 was selected to balance efficacy and tolerability by incorporating an average of four TOPO1i payloads per antibody.
Financial Results for the Six Months Ended June 30, 2023
Revenue for the six months ended June 30, 2023 was $42.6 million compared to $7.4 million for the same period of 2022. Revenue for the six months ended June 30, 2023 included $40.9 million, net of a credit issued to Jazz for amendments to our partnership agreement, for development support and drug supply revenue from Jazz and $1.7 million for research support and other payments from our other partners. Revenue for the same period in 2022 included a $5.0 million research license fee from our Atreca licensing agreement and $2.4 million in research support and other payments from our other partners.
Research and development expense decreased by $33.2 million, or 28%, for the six months ended June 30, 2023, compared to the same period in 2022. For the six months ended June 30, 2023, research and development expense included non-cash stock-based compensation recovery of $0.7 million, comprised of a $0.7 million recovery from equity classified awards (six months ended June 30, 2022 - $0.8 million recovery) and a nominal expense related to the non-cash, mark-to-market revaluation of certain historical liability classified awards (six months ended June 30, 2022 - $0.8 million recovery). Excluding stock-based compensation and 2022 restructuring expense, research and development expense decreased on a non-GAAP basis by $27.9 million in the six months ended June 30, 2023 compared to the same period of 2022. The decrease was related primarily due to lower manufacturing expenses and a reduction in development costs as a result of the terms of our amended collaboration agreement with Jazz, partially offset by an increase in preclinical expenses compared to the same period in 2022. In addition, salaries and benefits expenses decreased compared to the same period in 2022, due to lower headcount in 2023 and lower non-recurring severance expenses.
General and administrative expense increased by $11.3 million, or 41%, for the six months ended June 30, 2023 compared to the same period in 2022. For the six months ended June 30, 2023, general and administrative expense included non-cash stock-based compensation expense of $3.1 million, comprised of a $4.1 million expense from equity-classified equity awards (six months ended June 30, 2022 - $1.0 million recovery) and a $1.0 million recovery related to the non-cash mark-to-market revaluation of certain historical liability-classified equity awards (six months ended June 30, 2022 - $3.0 million recovery). Excluding stock-based compensation and 2022 restructuring expense, general and administrative expense increased on a non-GAAP basis by $7.8 million during the six months ended June 30, 2023, compared to same period in 2022. This increase was primarily due to an increase in expenses for professional services in 2023 compared to the same period in 2022. This was partially offset by a decrease in salaries and benefits expenses compared to the same period in 2022 due to lower headcount in 2023 and due to lower non-recurring severance expenses.
Other income, net increased by $7.7 million for the six months ended June 30, 2023 compared to the same period in 2022. Other income, net for 2023 included $9.6 million in interest income and $0.7 million in net foreign exchange loss and other miscellaneous amounts. Other income, net for the six months ended June 30, 2022, included $0.7 million in interest income and a $0.4 million net foreign exchange gain and other miscellaneous amounts. This increase was due to an increase in interest income earned on higher cash resources and at higher rates of return.
Net loss for the six months ended June 30, 2023 was $75.5 million compared to $137.2 million for the same period of 2022, representing a 45% decrease in net loss. The decrease in net loss was primarily due to revenue from our collaboration agreement with Jazz and an increase in interest income as well as a decrease in research and development expense. This was partially offset by an increase in general and administrative expense and an increase in income tax expense.
Chris Astle, Senior Vice President and Chief Financial Officer, Zymeworks
"We reported a continued reduction of our operating cash burn and operating losses during 2023 compared to 2022," said Chris Astle, Ph.D., Senior Vice President and Chief Financial Officer of Zymeworks. "Our strategy of building a diverse clinical-stage product pipeline of ADCs and multispecific antibody therapeutics continues to provide a strong foundation for both achieving our net operating cash burn guidance for this year as well as our long-term goal of identifying additional opportunities to develop additional product candidates and seeking valuable partnership options."
As of June 30, 2023, Zymeworks had $431.4 million of cash, cash equivalents, and marketable securities, comprised of $142.1 million in cash and cash equivalents and $289.3 million in marketable securities.
Based on current operating plans, we expect to have cash resources to fund planned operations through at least the end of 2026, and potentially beyond. For the calendar year 2023, we now expect a non-GAAP net operating cash burn of between $110 million and $130 million, including planned capital expenditures of approximately $10 million. As we are focused on the long-term cash resource plan to fund our operations, and due to available GAAP measures that convey similar information, we intend to discontinue reporting of our non-GAAP net operating cash burn in future periods.
About Zymeworks Inc.
Zymeworks Inc. (Nasdaq: ZYME) is a global biotechnology company committed to the discovery, development, and commercialization of novel, multifunctional biotherapeutics. Zymeworks' mission is to make a meaningful difference for people impacted by difficult-to-treat cancers and other serious diseases. Zymeworks' complementary therapeutic platforms and fully integrated drug development engine provide the flexibility and compatibility to precisely engineer and develop highly differentiated antibody-based therapeutic candidates.
Zymeworks engineered and developed zanidatamab, a HER2-targeted bispecific antibody using Zymeworks' proprietary Azymetric technology. Zymeworks has entered into separate agreements with BeiGene, Ltd. (BeiGene) and Jazz Pharmaceuticals Ireland Limited (Jazz), granting each of BeiGene and Jazz with exclusive rights to develop and commercialize zanidatamab in different territories. Zanidatamab is currently being evaluated in global Phase 1, Phase 2, and Phase 3 clinical trials, including certain ongoing pivotal clinical trials as a treatment for patients with HER2-expressing cancers. Zymeworks' next clinical candidate, zanidatamab zovodotin (ZW49), is a HER2-targeted bispecific antibody-drug conjugate (ADC) developed using Zymeworks' proprietary Azymetric™ and ZymeLink™ Auristatin technologies. Zanidatamab zovodotin is currently being evaluated in a Phase 1 clinical trial for patients with a variety of HER2-expressing, HER2-amplified or HER2-mutant cancers.
Zymeworks is also advancing a deep pipeline of product candidates based on its experience and capabilities in both ADC and multispecific antibodies (MSAT). In addition to Zymeworks' wholly owned pipeline, its therapeutic platforms have been further leveraged through strategic partnerships with global biopharmaceutical companies. For information about Zymeworks, visit www.zymeworks.com
ZYMEWORKS INC.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(Expressed in thousands of U.S. dollars except share and per share data) (unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | |||||||||||||||
Research and development collaborations | $ | 7,002 | $ | 5,442 | $ | 42,580 | $ | 7,358 | |||||||
Operating expenses: | |||||||||||||||
Research and development | 39,408 | 56,022 | 85,320 | 118,532 | |||||||||||
General and administrative | 21,708 | 15,243 | 38,655 | 27,335 | |||||||||||
Total operating expenses | 61,116 | 71,265 | 123,975 | 145,867 | |||||||||||
Loss from operations | (54,114 | ) | (65,823 | ) | (81,395 | ) | (138,509 | ) | |||||||
Other income, net | 4,616 | 1,195 | 8,934 | 1,182 | |||||||||||
Loss before income taxes | (49,498 | ) | (64,628 | ) | (72,461 | ) | (137,327 | ) | |||||||
Income tax (expense) recovery | (1,654 | ) | 9 | (3,044 | ) | 83 | |||||||||
Net loss | $ | (51,152 | ) | $ | (64,619 | ) | $ | (75,505 | ) | $ | (137,244 | ) | |||
Other comprehensive loss: | |||||||||||||||
Unrealized loss on available for sale securities, net of tax of $0 | (1,874 | ) | — | (1,154 | ) | — | |||||||||
Total other comprehensive loss | (1,874 | ) | — | (1,154 | ) | — | |||||||||
Comprehensive loss | $ | (53,026 | ) | $ | (64,619 | ) | $ | (76,659 | ) | $ | (137,244 | ) | |||
Net loss per common share: | |||||||||||||||
Basic | $ | (0.76 | ) | $ | (0.97 | ) | $ | (1.13 | ) | $ | (2.15 | ) | |||
Diluted | $ | (0.76 | ) | $ | (0.97 | ) | $ | (1.13 | ) | $ | (2.15 | ) | |||
Weighted-average common stock outstanding: | |||||||||||||||
Basic | 67,281,028 | 66,353,279 | 67,011,664 | 63,874,097 | |||||||||||
Diluted | 67,284,511 | 66,354,784 | 67,014,794 | 63,880,076 |
ZYMEWORKS INC.
Selected Condensed Consolidated Balance Sheet Data
(Expressed in thousands of U.S. dollars)
June 30, 2023 |
December 31, 2022 |
||||||
(unaudited) | |||||||
Cash, cash equivalents and marketable securities | $ | 431,438 | $ | 492,232 | |||
Working capital | 326,790 | 449,081 | |||||
Total assets | 602,054 | 648,725 | |||||
Accumulated deficit | (634,268 | ) | (558,763 | ) | |||
Total stockholders' equity | 448,919 | 492,956 |
NON-GAAP FINANCIAL MEASURES
In addition to reporting financial information in accordance with GAAP in this press release, Zymeworks is also reporting selected non-GAAP, or adjusted, financial measures, including adjusted research and development expenses, adjusted general and administrative expenses, adjusted net loss per share (basic and diluted) and net operating cash burn. These non-GAAP financial measures are not defined by GAAP and should not be considered as alternatives to net loss, net loss per share or any other indicator of Zymeworks' performance required to be reported under GAAP. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP or adjusted measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our adjusted measures as tools for comparison. Investors and others are encouraged to review Zymeworks' financial information in its entirety and not rely on a single financial measure. As defined by Zymeworks, adjusted expenses represent total research and development expenses and general and administrative expenses adjusted for non-cash stock-based compensation expenses for equity and liability classified equity instruments as well as expenses incurred in relation to the restructuring program implemented in 2022. As defined by Zymeworks, adjusted net loss per share - Basic represents net loss per share - Basic adjusted for non-cash stock-based compensation expenses for equity and liability classified equity instruments on a per share basis as well as restructuring expenses incurred in relation to the restructuring program implemented in 2022 on a per share basis, and adjusted net loss per share - Diluted represents net loss per share - Diluted adjusted for non-cash stock-based compensation expenses for equity and liability classified equity instruments on a per share basis as well as restructuring expenses incurred in relation to the restructuring program implemented in 2022 on a per share basis. As defined by Zymeworks, net operating cash burn represents net operating loss less cash used in the acquisition of property, equipment and intangible assets.
Adjusted expenses and adjusted net loss per share (basic and diluted) are non-GAAP measures that Zymeworks believes may be helpful to investors because they provide consistency and comparability with past financial performance. Net operating cash burn is a non-GAAP measure that Zymeworks believes may be helpful to investors because it provides information about the cash resources used in funding our operations.
GAAP to Non-GAAP Reconciliations
(Expressed in thousands of U.S. dollars except per share data)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Research and development expenses | $ | 39,408 | $ | 56,022 | $ | 85,320 | $ | 118,532 | |||||||
Stock-based compensation (expense) / recovery for equity classified instruments (*) | 1,081 | (1,971 | ) | 640 | 776 | ||||||||||
Stock-based compensation (expense) / recovery for liability classified instruments (*) | 4 | 300 | — | 774 | |||||||||||
Restructuring expense | — | (707 | ) | — | (6,249 | ) | |||||||||
Adjusted research and development expenses (Non-GAAP basis) | $ | 40,493 | $ | 53,644 | $ | 85,960 | $ | 113,833 | |||||||
General and administrative expenses | $ | 21,708 | $ | 15,243 | $ | 38,655 | $ | 27,335 | |||||||
Stock-based compensation (expense) / recovery for equity classified instruments (*) | (1,725 | ) | (1,281 | ) | (4,111 | ) | 951 | ||||||||
Stock-based compensation (expense) / recovery for liability classified instruments (*) | 314 | 163 | 968 | 3,039 | |||||||||||
Restructuring recovery / (expense) | — | 315 | — | (3,620 | ) | ||||||||||
Adjusted general and administrative expenses (Non-GAAP basis) | $ | 20,297 | $ | 14,440 | $ | 35,512 | $ | 27,705 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net loss per common share - Basic | $ | (0.76 | ) | $ | (0.97 | ) | $ | (1.13 | ) | $ | (2.15 | ) | |||
Stock-based compensation expense per common share | 0.01 | 0.04 | 0.04 | (0.09 | ) | ||||||||||
Restructuring expenses per common share | — | 0.01 | — | 0.15 | |||||||||||
Adjusted net loss per common share - Basic (Non-GAAP basis) | $ | (0.75 | ) | $ | (0.92 | ) | $ | (1.09 | ) | $ | (2.09 | ) | |||
Net loss per common share - Diluted | $ | (0.76 | ) | $ | (0.97 | ) | $ | (1.13 | ) | $ | (2.15 | ) | |||
Stock-based compensation expense per common share | 0.01 | 0.04 | 0.04 | (0.09 | ) | ||||||||||
Restructuring expenses per common share | — | 0.01 | — | 0.15 | |||||||||||
Adjusted net loss per common share - Diluted (Non-GAAP basis) | $ | (0.75 | ) | $ | (0.92 | ) | $ | (1.09 | ) | $ | (2.09 | ) |
(*): Research and development expenses and general and administrative expenses include $nil stock-based compensation expense related to the 2022 restructuring for the three and six months ended June 30, 2023 ($0 for the three months ended June 30, 2022; recovery of $5,516 and $4,865 for the six months ended June 30, 2022, in research and development expenses and general and administrative expenses, respectively).
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net loss | $ | (51,152 | ) | $ | (64,619 | ) | $ | (75,505 | ) | $ | (137,244 | ) | |||
Acquisition of property, equipment and intangible assets | (802 | ) | (3,746 | ) | (1,188 | ) | (8,450 | ) | |||||||
Net operating cash burn (Non-GAAP basis) | $ | (51,954 | ) | $ | (68,365 | ) | $ | (76,693 | ) | $ | (145,694 | ) |
Non-GAAP Financial Information
In addition to reporting financial information in accordance with U.S. generally accepted accounting principles ("GAAP") in this press release, we have elected to present selected non-GAAP, or adjusted, financial measures. Reconciliations between historical GAAP and non-GAAP information are contained at the end of this press release following the accompanying financial data. A reconciliation of anticipated net operating cash burn to the most directly comparable GAAP measure is not available without unreasonable effort due to the uncertainty of expenses that may be incurred in the future, and we are also unable to predict the probable significance of such adjusted measures. Accordingly, in reliance on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K, we have not provided a reconciliation for the net operating cash burn guidance measure provided in this press release.
Cautionary Note Regarding Forward-Looking Statements This press release includes "forward-looking statements" or information within the meaning of the applicable securities legislation, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. [ MORE ] |
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