On March 6, 2019 Zymeworks Inc. (NYSE/TSX: ZYME), a clinical-stage biopharmaceutical company developing multifunctional therapeutics, reported financial results for the year ended December 31, 2018 (Press release, Zymeworks, MAR 6, 2019, View Source [SID1234534014]).
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"Over the past year, we have made significant progress advancing our own pipeline while our partners continued developing their assets using our technology," said Ali Tehrani, Ph.D., Zymeworks’ President & CEO. "Our lead program, ZW25, continued to generate impressive clinical data and our second product candidate, ZW49, recently began a Phase 1 clinical trial. We also established our seventh and eighth pharmaceutical partnerships while our long-term partner, Eli Lilly, advanced two of their Azymetric bispecifics into the clinic."
Dr. Tehrani continued, "We entered 2019 with $200 million on our balance sheet, which will enable us to aggressively expand our clinical activities, and we look forward to providing updates throughout the year."
2018 Business Highlights and Recent Developments
ZW49 Investigational New Drug Application Accepted; Phase 1 Trial Underway
Zymeworks’ second product candidate, ZW49, a novel biparatopic HER2-targeted antibody drug conjugate (ADC), received clearance for a Phase 1 first-in-human clinical trial, which has begun enrollment in the United States.
Expanded Global Clinical Development for ZW25 and ZW49
Zymeworks expanded the ZW25 clinical trial into South Korea and also entered into a licensing agreement and collaboration with BeiGene to leverage their resources and expertise to accelerate the development of ZW25 and ZW49 in the Asia Pacific region (Zymeworks continues to own all rights in Japan).
Partner’s Programs Progress into the Clinic
Eli Lilly advanced two Azymetric immune-oncology bispecifics into the clinic triggering milestone payments to Zymeworks. Zymeworks currently has eight active collaborations that offer up to US$7.6 billion in potential milestone payments plus royalties.
Financial Results for the Year Ended December 31, 2018
Revenue in 2018 was $53.0 million as compared to $51.8 million in 2017. Revenue for both years was primarily comprised of non-recurring upfront fees, expansion payments and milestone payments from the Company’s licensing and collaboration agreements. Revenue for 2018 included: recognition of $23.5 million out of the $60.0 million upfront fee from BeiGene associated with a new licensing agreement; an $18.0 million upfront fee related to a second licensing agreement with Daiichi Sankyo; a $5.0 million upfront fee related to a new licensing agreement with LEO Pharma; a $4.0 million research program expansion fee from Celgene; a $2.0 million development milestone payment from Eli Lilly, and $0.5 million in research support payments from various collaborators. Revenue for 2017 included a $50.0 million upfront fee from Janssen and a $1.0 million milestone payment from Daiichi Sankyo, as well as $0.8 million in research support payments.
For the year ended December 31, 2018, research and development expenses were $56.7 million as compared to $41.7 million in the prior year. The change was primarily due to an increase in activities related to ZW25 clinical studies and associated manufacturing costs, as well as development activities for ZW49. There were also additional research and development activities, resulting in incremental headcount-related expense and non-cash stock-based compensation expense. Research and development expenses included non-cash stock-based compensation expense of $2.2 million from equity classified equity awards and a $2.0 million expense related to the non-cash mark-to-market revaluation of certain historical liability classified equity awards.
For the year ended December 31, 2018, general and administrative expenses were $29.5 million as compared to $18.6 million in the prior year. The change was primarily due to an increase in non-cash liability classified equity adjustments and stock-based compensation, as well as other increases in compensation and professional fees associated with year-on-year corporate growth. General and administrative expense included non-cash stock-based compensation expense of $3.7 million from equity classified equity awards and $5.4 million expense related to the non-cash mark-to-market revaluation of certain historical liability classified equity awards.
The net loss for the year ended December 31, 2018, was $36.6 million as compared to $10.4 million in 2017, primarily due to an increase in research and development expenses associated with our lead therapeutic candidates and other programs, general and administrative expenses, and the accounting impact of an increase of $6.9 million related to the non-cash mark-to-market revaluation of certain historical liability classified equity awards.
Zymeworks expects research and development expenditures to increase over time due to the ongoing development of product candidates and other clinical, preclinical, and regulatory 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 December 31, 2018, Zymeworks had $200.2 million in cash and cash equivalents and short-term investments.