On August 4, 2022 Zymeworks Inc. (NYSE: ZYME), a clinical-stage biopharmaceutical company developing multifunctional biotherapeutics, reported financial results for the second quarter ended June 30, 2022 (Press release, Zymeworks, AUG 4, 2022, View Source [SID1234617559]).
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"As we enter the second half of this year, we continue to advance towards delivering upon our stated goals for 2022 and look forward to reporting on progress during the remainder of this year," said Kenneth Galbraith, Chair & CEO of Zymeworks. "Most importantly, we now expect top-line data from our HERIZON-BTC-01 pivotal clinical study of zanidatamab in the treatment of biliary tract cancers (BTC) to be available before the end of 2022. We will continue discussions relating to potential partnerships, collaborations and monetization opportunities that may be able to help accelerate our key strategic priorities and improve our financial position over the long term."
Second Quarter 2022 Business Highlights and Recent Developments
Zanidatamab Zovodotin (ZW49) Accepted for Oral Presentation at the ESMO (Free ESMO Whitepaper) Congress
Zymeworks will present interim results from the Phase 1 study of its second clinical-stage asset, and first biparatopic HER2-targeting antibody-drug conjugate, zanidatamab zovodotin, in solid tumors in September of this year at ESMO (Free ESMO Whitepaper) in Paris. Our Phase 1 clinical development program covers a basket cohort of HER2+ cancers, including gastroesophageal adenocarcinoma, breast cancer, and other solid tumors, with multiple dosing regimens.
Strengthened Executive Leadership Team
With the appointment in July of Dr. Paul Moore, Chief Scientific Officer, the company continues to enhance and strengthen efforts towards achieving its stated goal of two investigational new drug (IND) applications by 2024. Dr. Moore’s significant leadership experience in early drug discovery and development will be instrumental in driving Zymeworks’ strategic vision forward and completing its stated objectives. Similarly, we announced the appointment of Neil Klompas to the role of President of the Company in addition to continuing in his current position as Chief Operating Officer to reflect his increased leadership responsibilities at the Company.
Presented Promising First-Line Data for Zanidatamab in Breast Cancer and GEA at ASCO (Free ASCO Whitepaper)
The first-line data, which were presented at ASCO (Free ASCO Whitepaper) in two separate poster sessions, highlighted the potential for developing zanidatamab in two key indications, breast cancer and gastroesophageal adenocarcinoma. The data presented exhibited promising anti-tumor activity and a manageable safety profile in both indications furthering our belief that zanidatamab has the potential to be an effective and safe front-line therapy for multiple HER2-expressing cancers.
Announced Plan to Become a Delaware Domiciled Corporation
The proposed tax-efficient redomicile is an important step in helping us to complete our key strategic priorities, as laid out in January, and continues the consistent efforts towards increasing long-term shareholder value. We view the proposed redomicile as the logical next step in our corporate development. We anticipate that this beneficial strategic move could be completed in the fourth quarter of 2022, pending necessary security holder, stock exchange, and court approvals.
Early Research & Development Program Update
Zymeworks will present an update on its preclinical programs at an Early R&D day in New York City on October 20th, 2022. At this event, we plan to present data from multiple preclinical product candidates, including two or more antibody-drug conjugates (ADCs), and at least one multi-specific candidate. These programs, built upon our industry-leading multispecific and next-generation TOPO1i based ADC platforms, will help drive us towards achieving our goal of filing two IND applications before the end of 2024 and will also provide diversification beyond the HER2-targeted therapeutic space with our current clinical-stage product candidates.
"I am incredibly excited to be leading this talented R&D team who have developed multiple novel preclinical product candidates over the past year focused on difficult-to-treat cancer indications," said Paul Moore, Ph.D., Chief Scientific Officer at Zymeworks. "With our existing industry-leading platforms, and the team’s novel approach to product development, I believe we have a promising future ahead of us at Zymeworks as we spearhead the next wave of therapeutic antibody development."
Our lead ADC preclinical product candidate, ZW191, is an antibody-drug conjugate (target undisclosed) with a novel TOPO1i based payload that we believe may be competitive in areas with high unmet clinical need, such as ovarian cancer and other gynecological cancers. Similarly, our lead multispecific preclinical product candidate, ZW171, a novel and differentiated bispecific T-cell engaging antibody (target undisclosed) generated utilizing our Azymetric bispecific platform, targets the potential treatment of patients in multiple solid tumor indications. Both programs will be further detailed at our Early R&D day on October 20th of this year where we will highlight our preclinical product candidates, and present preclinical data supporting the potential advancement of these novel therapeutics, and discuss our future scientific vision.
Financial Results for the Quarter Ended June 30, 2022
Zymeworks’ revenue relates primarily to non-recurring upfront fees, expansion payments or milestone payments from collaboration and license agreements, which can vary in timing and amount from period to period, as well as payments for research and development support. Revenue for the three months ended June 30, 2022 was $5.4 million compared to $1.8 million for the same period of 2021. Revenue for 2022 included a $5.0 million research license fee from the Atreca licensing agreement and $0.4 million from our partners for research support and other payments related to research support and other payments. Revenue for the same period in 2021 was related to research support and other payments from our partners.
Research and development expense increased by $5.3 million in the three months ended June 30, 2022 compared to the same period in 2021. Research and development expense in 2022 included non-cash stock-based compensation expense of $1.7 million, comprised of a $2.0 million expense from equity classified awards and a $0.3 million recovery related to the non-cash, mark-to-market revaluation of certain historical liability classified awards, as well as a $0.7 million from restructuring expenses. Excluding stock-based compensation expense and restructuring expenses, research and development expense increased on a Non-GAAP basis by $9.0 million in 2022 compared to 2021. The increase related primarily to higher clinical trial expenses for zanidatamab and increased drug manufacturing expenses, partly offset by lower clinical trial expense for zanidatamab zovodotin.
"We continue to make steady progress towards reducing future operating costs and strengthening our balance sheet," said Chris Astle, Ph.D., SVP and Chief Financial Officer. "With the restructuring program complete, we anticipate our future operating costs will continue to decrease as we realize the benefits of headcount reduction and a focusing of our clinical and preclinical development programs. We expect these reductions to continue into 2023, and we look forward to providing further updates on our cash runway guidance in the near future."
We expect research and development expenditures to fluctuate over time in line with the advancement, expansion and completion of the clinical development of our product candidates, as well as our ongoing preclinical research activities.
Excluding the impact of stock-based compensation and restructuring expenses, general and administrative expense increased on a Non-GAAP basis by $1.3 million during three months ended June 30, 2022 compared to same period in 2021. This increase was primarily due to professional fees and other expenses in 2022 which was partially offset by a decrease in salaries and benefits expense as a result of decrease in headcount due to the Company’s Restructuring program.
Net loss for the three months ended June 30, 2022 was $64.6 million compared to $67.5 million for the same period of 2021.
As of June 30, 2022, Zymeworks had $241.8 million in cash resources consisting of cash, cash equivalents and short-term investments. Based on our current operating plan, we believe that our current cash resources, and proceeds from certain existing collaboration payments we anticipate receiving, will enable us to fund our planned operations into the second half of 2023 and potentially beyond. Further, we continue to make progress towards our previously announced goal of delivering upon new partnerships, collaborations and monetization opportunities in order to provide additional non-dilutive sources of funding for our operations beyond 2023.