Zymeworks Inc. (NYSE: ZYME), a clinical-stage biopharmaceutical
company developing multifunctional biotherapeutics, today reported
financial results for the year ended December 31, 2019.
“We’ve started the year off strong thanks to significant
clinical progress in the second half of 2019 and a recent financing
that has provided expanded resources to further advance global
development of our clinical candidates, ZW25 and ZW49,” said Ali
Tehrani, Ph.D., Zymeworks’ President & CEO. “We plan to
initiate registration-enabling studies for ZW25 in both biliary
tract and gastric cancer, as well as explore additional
indications, with a vision toward establishing ZW25 as the new
foundational HER2 therapy. We also remain confident in the
potential of ZW49 to be transformative in refractory and low
HER2-expressing cancers and expect to begin expansion cohorts later
this year.”
2019 Business Highlights and Recent Developments
- Strengthened Balance Sheet In January 2020, Zymeworks
completed an upsized US$320.8 million public financing to
accelerate and expand global development of its lead clinical
candidates, ZW25 and ZW49, and support further advancement of its
novel preclinical programs.
- Robust ZW25 Clinical Data and Initiation of Two Phase 2
Clinical Trials Pave the Way for Upcoming Registration-Enabling
Studies ZW25 has been well tolerated and has demonstrated
promising anti-tumor activity both as a single agent and in
combination with chemotherapy, supporting the planned initiation of
two registration-enabling trials in refractory HER2-positive
biliary tract cancer and first-line HER2-positive gastroesophageal
adenocarcinomas. In addition, Zymeworks recently initiated a Phase
2 trial and collaboration with Pfizer to evaluate ZW25 in
combination with palbociclib and fulvestrant in HER2-positive,
hormone receptor-positive breast cancer.
- ZW49 Advancing Phase 1 Dose-Escalation and Interim Clinical
Update Zymeworks’ second product candidate, ZW49, began a Phase
1 clinical trial to evaluate safety and anti-tumor activity, and to
establish a recommended dose and schedule for expansion cohorts. A
recent update highlighted that there had been no dose-limiting
toxicities observed and the maximum tolerated dose had not been
reached. The majority of treatment-related adverse events were
grade 1 or 2, and were reversible and manageable on an outpatient
basis. Preliminary results from these initial dose cohorts included
anti-tumor activity.
- Partner Programs Progress into the Clinic In 2019, Eli
Lilly entered the clinic with a novel bispecific; Merck, Celgene
(now BMS), and Daiichi Sankyo advanced bispecific candidates toward
clinical testing; GSK expanded its Azymetric™ partnership; and the
first ZymeLink ADC collaboration was signed with Iconic
Therapeutics. Zymeworks currently has nine active collaborations
that offer up to US$7.9 billion in potential milestone payments as
well as royalties on potential product sales.
Financial Results for the Year Ended December 31,
2019
Revenue in 2019 was $29.5 million as compared to $53.0 million
in 2018. Revenue for both years was primarily comprised of
non-recurring upfront fees, expansion payments and milestone
payments from Zymeworks’ licensing and collaboration agreements.
Revenue for 2019 included $8.0 million received from Eli Lilly for
achievement of a development milestone upon their submission of an
IND application, $7.5 million received upon BMS’s exercise of its
commercial license option, $3.5 million received upon Daiichi
Sankyo’s exercise of a commercial license option, and $7.0 million
received in other development milestones and research support and
other payments from our partners. Revenue in 2019 also included
recognition of $3.5 million from deferred revenue relating to the
upfront payment received in the prior year from BeiGene under the
2018 licensing and collaboration agreement for development of
ZW25.
Revenue for 2018 included recognition of $23.5 million 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 BMS and $2.5
million in other milestones and research support payments from our
partners.
For the year ended December 31, 2019, research and development
expenses were $115.9 million as compared to $56.9 million in the
prior year. The change was primarily due to an increase in
activities related to the progression and expansion of ZW25
clinical studies and the associated manufacturing costs, as well as
development activities for ZW49 in 2019, and an increase in other
research and development activities, which include an increase in
salaries and benefits expense as a result of an increase in
headcount and non-cash stock-based compensation expense compared to
the same period in 2018. Research and development expense included
non-cash stock-based compensation expense of $14.3 million,
including expense of $8.4 million related to the mark-to-market
revaluation of certain historical liability classified equity
awards.
For the year ended December 31, 2019, general and administrative
expenses were $64.2 million as compared to $29.5 million in the
prior year. The change was due to an increase in headcount to
support our expanding research and development activities and
non-cash stock-based compensation expense. General and
administrative expense included non-cash stock-based compensation
expense of $34.2 million including $27.5 million expense related to
the mark-to-market revaluation of certain historical liability
classified equity awards.
Net loss for the year ended December 31, 2019 was $145.4 million
as compared to $36.6 million in 2018. This increase in net loss was
primarily due to the variances in revenue, research and development
expenses and general and administration expenses noted above.
Zymeworks expects research and development expenditures to
increase over time due to the ongoing development of our 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, milestones and
research support 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, 2019, Zymeworks had $298.9 million in cash
and cash equivalents and short-term investments.
About Zymeworks Inc.
Zymeworks is a clinical-stage biopharmaceutical company
dedicated to the development of next-generation multifunctional
biotherapeutics. Zymeworks’ suite of therapeutic platforms and its
fully integrated drug development engine enable precise engineering
of highly differentiated product candidates. Zymeworks’ lead
clinical candidate, ZW25, is a novel Azymetric™ bispecific antibody
currently in Phase 2 clinical development. Zymeworks’ second
clinical candidate, ZW49, is a bispecific antibody-drug conjugate
currently in Phase 1 clinical development and combines the unique
design and antibody framework of ZW25 with Zymeworks’ proprietary
ZymeLink™ cytotoxic payload. Zymeworks is also advancing a deep
preclinical pipeline in oncology (including immuno-oncology agents)
and other therapeutic areas. In addition, its therapeutic platforms
are being leveraged through strategic partnerships with nine
biopharmaceutical companies. For more information, visit
www.zymeworks.com.
Cautionary Note Regarding Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995 and “forward-looking information” within the meaning of
Canadian securities laws, or collectively, forward-looking
statements. Forward-looking statements in this press release
include, but are not limited to, statements that relate to
Zymeworks’ clinical and preclinical development of its product
candidates, future revenue payments, potential milestones, expected
research and development expenditures, and other information that
is not historical information. When used herein, words such as
“anticipate”, “expect”, “plan”, “continue”, and similar expressions
are intended to identify forward-looking statements. In addition,
any statements or information that refer to expectations, beliefs,
plans, projections, objectives, performance or other
characterizations of future events or circumstances, including any
underlying assumptions, are forward-looking. All forward-looking
statements are based upon Zymeworks’ current expectations and
various assumptions. Zymeworks believes there is a reasonable basis
for its expectations and beliefs, but they are inherently
uncertain. Zymeworks may not realize its expectations, and its
beliefs may not prove correct. Actual results could differ
materially from those described or implied by such forward-looking
statements as a result of various factors, including, without
limitation, market conditions and the factors described under “Risk
Factors” in Zymeworks’ Annual Report on Form 10-K for its fiscal
year ended December 31, 2019 (a copy of which may be obtained at
www.sec.gov and www.sedar.com). Consequently, forward-looking
statements should be regarded solely as Zymeworks’ current plans,
estimates and beliefs. Investors should not place undue reliance on
forward-looking statements. Zymeworks cannot guarantee future
results, events, levels of activity, performance or achievements.
Zymeworks does not undertake and specifically declines any
obligation to update, republish, or revise any forward-looking
statements to reflect new information, future events or
circumstances or to reflect the occurrences of unanticipated
events, except as may be required by law.
ZYMEWORKS INC.
Consolidated Statements of Loss and
Comprehensive Loss
(Expressed in thousands of U.S. dollars
except share and per share data)
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
(unaudited)
(unaudited)
Revenue
Research and development
collaborations
$
1,877
$
28,925
$
29,544
$
53,019
Operating expenses:
Research and development
45,389
14,278
115,900
56,926
General and administrative
30,240
6,296
64,177
29,457
Impairment on acquired IPR&D
—
—
768
—
Total operating expenses
75,629
20,574
180,845
86,383
(Loss) income from operations
(73,752)
8,351
(151,301)
(33,364)
Other income (expense), net
1,006
1,267
5,282
(1,021)
(Loss) income before income taxes
(72,746)
9,618
(146,019)
(34,385)
Net income tax recovery (expense)
502
(345)
582
(2,171)
Net (loss) income
$
(72,244)
$
9,273
$
(145,437)
$
(36,556)
Net (loss) income per common share:
Basic
$
(1.66)
$
0.29
$
(3.83)
$
(1.26)
Diluted
$
(1.66)
$
0.29
$
(3.83)
$
(1.26)
Weighted-average common shares
outstanding:
Basic
43,597,446
31,968,339
38,022,014
29,089,896
Diluted
43,597,446
31,988,216
38,022,014
29,089,896
ZYMEWORKS INC.
Selected Consolidated Balance Sheet
Data
(Expressed in thousands of U.S.
dollars)
December 31,
2019
2018
Cash, cash equivalents and short-term
investments
$
298,904
$
200,164
Working capital
229,278
174,383
Total assets
368,205
244,477
Accumulated deficit
(290,709)
(145,272)
Total shareholders’ equity
245,681
180,490
NON-GAAP FINANCIAL MEASURES
In addition to reporting financial information in accordance
with U.S. generally accepted accounting principles (“GAAP”) in this
press release, Zymeworks is also reporting normalized expenses and
normalized loss per share, which are non-GAAP financial measures.
Normalized expenses and normalized loss per share 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, Zymeworks’
definitions of normalized expenses and normalized loss per share
may not be comparable to similarly titled non-GAAP measures
presented by other companies. 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,
normalized 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.
Normalized expenses are a non-GAAP measure that Zymeworks
believes is useful because it excludes those items that Zymeworks
believes are not representative of Zymeworks’ operating
expenses.
GAAP to Non-GAAP
Reconciliations
(Expressed in thousands of U.S. dollars
except share and per share data)
(unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2019
2018
2019
2018
Research and development expenses
$
45,389
$
14,278
$
115,900
$
56,926
Stock based compensation for equity
classified instruments
(1,615)
(479)
(5,939)
(2,203)
Stock based compensation for liability
classified instruments
(5,502)
(67)
(8,358)
(2,032)
Normalized research and development
expenses (Non-GAAP basis)
38,272
13,732
101,603
52,691
General and administrative expenses
30,240
6,296
64,177
29,457
Stock based compensation for equity
classified instruments
(1,946)
(935)
(6,737)
(3,693)
Stock based compensation for liability
classified instruments
(18,562)
(20)
(27,470)
(5,362)
Normalized general and administrative
expenses (Non-GAAP basis)
$
9,732
$
5,341
$
29,970
$
20,402
Three Months Ended
December 31,
Year Ended
December 31,
2019
2018
2019
2018
Net (loss) income per common share –
Basic
$
(1.66)
$
0.29
$
(3.83)
$
(1.26)
Stock based compensation for equity
classified instruments
0.08
0.04
0.33
0.20
Stock based compensation for liability
classified instruments
0.52
—
0.91
0.25
Normalized net (loss) income per common
share – Basic (Non-GAAP basis)
$
(1.06)
$
0.33
$
(2.59)
$
(0.81)
Net (loss) income per common share –
Diluted
$
(1.66)
$
0.29
$
(3.83)
$
(1.26)
Stock based compensation for equity
classified instruments
0.08
0.04
0.33
0.20
Stock based compensation for liability
classified instruments
0.52
—
0.91
0.25
Normalized net (loss) income per common
share – Diluted (Non-GAAP basis)
$
(1.06)
$
0.33
$
(2.59)
$
(0.81)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200302005811/en/
Investor Inquiries: Ryan Dercho, Ph.D. (604) 678-1388
ir@zymeworks.com Tiffany Tolmie (604) 678-1388
ir@zymeworks.com Media Inquiries: Kavita Shah, Ph.D. (604)
678-1388 media@zymeworks.com
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