On May 2, 2019 Zymeworks Inc. (NYSE/TSX: ZYME), a clinical-stage biopharmaceutical company developing multifunctional therapeutics, reported financial results for the first quarter ended March 31, 2019 (Press release, Zymeworks, MAY 2, 2019, View Source [SID1234535590]).
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"We are pleased to have advanced both of our lead assets to the next stages of clinical development; recently commencing a Phase 2 study for ZW25 and starting enrollment in the Phase 1 clinical trial for our antibody-drug conjugate, ZW49," said Ali Tehrani, Ph.D., Zymeworks’ President & CEO. "Accordingly, we have also expanded our leadership team, adding experienced executives with critical competencies needed to facilitate the development and approval of our clinical-stage assets. We believe we are now well-positioned to deliver on our ambitious clinical goals throughout 2019 and beyond."
First Quarter 2019 Business Highlights and Recent Developments
Phase 2 Clinical Trial Begins for ZW25 in First-Line HER2-Expressing Metastatic Gastroesophageal Cancers
The Phase 2 trial is evaluating ZW25 in combination with standard of care (SOC) chemotherapy for the first-line treatment of HER2-positive metastatic gastroesophageal cancers. This trial is intended to support a potential first-line registrational trial and could position ZW25 as a new SOC.
Phase 1 ZW49 Clinical Study Open and Enrolling Patients
Enrollment is underway in the United States for the Phase 1 clinical trial of ZW49, Zymeworks’ novel bispecific HER2-targeted antibody-drug conjugate. The objectives of this study are to evaluate safety and early anti-tumor activity as well as establish a recommended dose for future clinical trials.
Three Experienced Development Executives Added to Management Team
Zymeworks expanded its leadership team and added key functional expertise to support the development of its maturing clinical pipeline. The newly created positions include Neil Josephson, M.D., Vice President, Clinical Research; Bruce Hart, Ph.D., Vice President, Regulatory Affairs; and Mark Hollywood, Senior Vice President, Technical and Manufacturing Operations.
Eli Lilly and Daiichi Sankyo Programs Advance Toward Clinical Testing
Zymeworks’ partner, Eli Lilly, filed an Investigational New Drug Application for its second Azymetric program, triggering a US$8.0 million payment to Zymeworks. In addition, Daiichi Sankyo recently exercised its option for a commercial license to an immuno-oncology bispecific built using Zymeworks’ Azymetric and EFECT platforms. Zymeworks will receive a US$3.5 million payment.
Financial Results for the Quarter Ended March 31, 2019
Revenue for the three months ended March 31, 2019 was $11.9 million as compared to $0.04 million in the same period of 2018. Revenue for 2019 includes an $8.0 million development milestone payment upon Lilly’s submission of an investigational new drug application, $3.5 million of recognized deferred revenue from our licensing and collaboration agreement with BeiGene, as well as $0.4 million in other research support payments. Revenue for the same period in 2018 was $0.04 million, consisting of research support payments.
For the three months ended March 31, 2019, research and development expenses were $17.5 million as compared to $13.1 million in the first three months of the prior year. The change was primarily due to an increase in clinical trial activity and associated drug manufacturing costs for ZW25, as well as an increase in other research and discovery activities as compared to the same period in 2018. Research and development expenses also included non-cash stock-based compensation expense of $1.1 million from equity classified equity awards and $0.4 million expense related to the non-cash mark-to-market revaluation of certain historical liability classified equity awards.
For the three months ended March 31, 2019, general and administrative expenses were $9.0 million as compared to $7.1 million in the first quarter of 2018. The change was primarily due to an increase in employee compensation expenses from increased head count in 2019 over 2018, including non-cash stock-based compensation, as well as other increases in professional fees associated with year-over-year corporate growth. General and administrative expenses included non-cash stock-based compensation expense of $1.5 million from equity classified equity awards and $1.3 million expense related to the non-cash mark-to-market revaluation of certain historical liability classified equity awards.
The net loss for the three months ended March 31, 2019, was $13.6 million as compared to $21.2 million in the same period of 2018. This was primarily due to increased revenue, interest income and 2018 warrant valuation expense, which was not relevant for 2019, that offset an increase in research and development expenses associated with our lead therapeutic candidates and other programs as well as general and administrative expenses.
Zymeworks expects research and development expenditures to increase over time in line with the advancement and expansion of the Company’s clinical development of its product candidates, as well as its ongoing preclinical research activities. Additionally, Zymeworks anticipates continuing to receive revenue from its existing and future strategic partnerships, including technology access fees and milestone-based payments. However, Zymeworks’ ability to receive these payments is dependent upon either Zymeworks or its collaborators successfully completing specified research and development activities.
As of March 31, 2019, Zymeworks had $180.3 million in cash and cash equivalents and short-term investments.