On August 1, 2018 Zymeworks Inc. (NYSE/TSX: ZYME), a clinical-stage biopharmaceutical company developing multifunctional therapeutics, reported financial results for the second quarter ended June 30, 2018 (Press release, Zymeworks, AUG 1, 2018, View Source [SID1234528299]).
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"This was a pivotal quarter for Zymeworks highlighted by the oral presentation of ZW25 clinical data at the ASCO (Free ASCO Whitepaper) annual meeting," said Ali Tehrani, Ph.D., Zymeworks’ President & CEO. "With the completion of our subsequent financing, we are well capitalized to accelerate the clinical development of ZW25 into registrational studies."
Dr. Tehrani continued, "We also have a number of important near-term catalysts including providing the refined regulatory strategy for ZW25, supported by a clinical update; filing an Investigational New Drug application for our novel bispecific antibody-drug conjugate, ZW49; and the initiation of clinical development by our partners for their Azymetric bispecific candidates as well as the establishment of new revenue-generating partnerships."
Second Quarter 2018 Business Highlights and Recent Developments
Oral Presentation for ZW25 at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting
Updated clinical data continued to demonstrate robust single agent anti-tumor activity and tolerability across a range of HER2-expressing cancers including breast and gastric. Currently Zymeworks is evaluating ZW25 as a single agent and in combination with other cancer therapeutics.
Completed $97.8 Million Public Offering
Zymeworks closed a public offering of 6,210,000 common shares, including the full over-allotment of 810,000 additional shares, for gross proceeds of approximately $97.8 million.
Expanded Daiichi Sankyo Immuno-Oncology Collaboration Focused on Bispecific Antibodies
Zymeworks granted additional licenses enabling Daiichi Sankyo to develop two bispecific antibody therapeutics utilizing the Zymeworks’ Azymetric and EFECT technology platforms. Zymeworks received an upfront technology access fee of $18.0 million and may receive up to $466.7 million in milestone payments and up to double-digit tiered royalties on global product sales.
Expanded Corporate Collaboration with Celgene
Zymeworks expanded its relationship with Celgene. The research program term has been extended by two years and additional licenses for two products have been added for a total of 10 potential products under the collaboration. Zymeworks received an expansion fee of $4.0 million and may receive up to $328 million in additional milestone payments resulting in total potential milestones of $1.64 billion, plus royalties on worldwide sales.
Financial Results for the Three Months Ended June 30, 2018
Revenue for the three months ended June 30, 2018 was $22.0 million as compared to $1.3 million in the same period in 2017. The change between the two periods was primarily due to an $18.0 million upfront technology access fee related to a second licensing agreement with Daiichi Sankyo and a $4.0 million research program expansion fee from Celgene.
For the three months ended June 30, 2018, research and development expenditures were $15.4 million as compared to $8.3 million for the same period in the prior year. The change between the two periods was primarily due to increases in clinical costs for ZW25 as well as increased development costs for ZW49, investments in earlier stage R&D activities and platform technologies, and non-cash liability classified equity adjustments.
General and administrative expenses were $8.6 million for the three months ended June 30, 2018, and $2.3 million for the same period in 2017, primarily due increases in non-cash liability classified equity adjustments and stock-based compensation, as well as changes in compensation and professional fees associated with year-over-year corporate growth following the company’s initial public offering in 2017.
Non-cash charges for the three months ended June 30, 2018 included $3.1 million ($2.4 million in G&A and $0.7 million in R&D) related to the quarterly mark-to-market revaluation of liability classified equity adjustments (attributed to the accounting treatment of historical stock-based compensation in both Canadian and US dollars) and stock-based compensation.
The net loss for the three months ended June 30, 2018 was $5.9 million as compared to $11.0 million for the same period in 2017. Zymeworks expects R&D expenditures to increase over time due to the ongoing development of product candidates and other clinical, preclinical, and regulatory activities. Additionally, Zymeworks expects to continue receiving 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 June 30, 2018, Zymeworks had $166.2 million in cash and cash equivalents and short-term investments.