Ladies and gentlemen, thank you for standing by. This is conference operator. Welcome to Zymeworks Third Quarter 2022 Results Conference Call and Webcast. As a reminder, all participants are in a listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Jack Spinks, Head of Investor Relations at Zymeworks. Jack, please go ahead.

Good afternoon, and welcome everyone. My name is Jack Spinks, Head of Investor Relations here at Zymeworks. Today, we will discuss our third quarter 2022 financial results, as well as provide an update to our ongoing business. Before we begin, I would like to remind you that we will be making a number of forward-looking statements during this call, including statements that relate to the implementation of our strategic priorities, development plans and timing, anticipated therapeutic effects and commercial potential of our current and future product candidates, expected regulatory interactions, anticipated data releases and timing thereof, expected financial performance and future financial position, our ability to execute new collaborations and partnerships and receive milestones from existing arrangements and other information that is not historical information. Forward-looking statements are based upon our current expectations and various assumptions and are subject to the usual risks and uncertainties associated with companies in our industry and at our stage of development. For a discussion of these risks and uncertainties, we refer you to our latest SEC filings as found on our website and as filed with the SEC. Later in this call, Neil Klompas, our President and Chief Operating Officer will be discussing our financial results, including certain adjusted non-GAAP measures. A description of our adjusted non GAAP measures and a reconciliation to the most directly comparable financial results as determined in accordance with GAAP are described in detail in our press release, which is available on our website at www.zymeworks.com under the Investor Relations tab. As a reminder, the audio and slides in this call will also be available on the Zymeworks' website later today. Now, I will turn the call over to Neil, our President and COO. Neil?

Thanks, Jack, and thank you everyone for joining us today for our third quarter earnings call. As a reminder, I'd like to note that while I'll be presenting the prepared remarks today, Kenneth Galbraith, our Chair and CEO and members of our executive team will be available for Q&A following this portion of the call. With that, I'd like to begin today's call with an overview of our financial results, followed by a few noteworthy updates on both our clinical and R&D programs, as well as an update on our key strategic priorities as laid out in January before we open the lines for Q&A. This afternoon Zymeworks reported financial results for the quarter ended September 30, 2022. As reported, our revenue for the third quarter of 2022 was $2.6 million compared to $4.4 million in revenue for the same period of 2021. Revenues for the most recent three month period primarily related to a $2.6 million reimbursement from our partners for research support and other payments. Research and development expense for the quarter ended September 30, 2022 was $37.1 million compared to $49.9 million for the quarter ended September 30, 2021. This decrease of $12.8 million from the prior year related primarily to lower employee compensation expenses due to a reduction in headcount from our restructuring earlier this year, a decrease in manufacturing costs and certain clinical expenses for zanidatamab due to a roll off of clinical trial expenses related to HERIZON-GEA-01, as well as a decrease in licensing expenses related to certain preclinical activities. General and administrative expense for the quarter ended September 30, 2022 was $15.9 million compared to $15.5 million for the quarter ended September 2021. Excluding stock based compensation and restructuring expenses, adjusted general and administrative expense decreased by $0.1 million for the quarter ended…

Thank you. [Operator Instructions] And our first question is coming from the line of Stephen Willey with Stifel. Your line is open.

Yeah, good afternoon. Thanks for taking the questions, congrats on the progress. So maybe just to clarify, it now sounds like you're guiding to receiving. I guess, both of the Jazz payments before the end of this year which, I think, is maybe a little bit different than what the prior guide was with respect to getting the 50 and then likely securing the 325 tranche in the event that they up in early 2023, so is that a byproduct of just your ability to kind of pull together the BTC data and to get that communicated in a more timely fashion?

Yes. Steve, it's Kenneth Galbraith. I can take that question. No I think our guidance is consistent with what we provided when we announced the Jazz partnership and so if that wasn't -- if that wasn't clear, we have every expectation to believe that the Hart-Scott Rodino process can be cleared this year and we do believe that we will be able to provide the top-line data from the BTC study this year to enable Jazz to opt-in such a timeframe that both of those payments will be received before December 31 this year and that's always been our guidance. I'm sorry if that was not clear from before.

Yeah, I'm sure it's a mistake on my part. And then just with respect to the San Antonio presentation. I know clinical trials.gov. I think had a target enrollment of 86, you guys are saying 50, is the difference there just a function of accelerated dose-escalation. Just kind of curious as to the disconnect between those numbers? And then, are there any notable differences just between that study and the [indiscernible] study that was previously conducted looking at Herceptin, Abemaciclib and fulvestrant. Thanks.

I'll let Dr. Josephson answer both of those.

Yeah. Hi, this is Neil Josephson. Yes, your assessment about the study numbers is right. We always put in the number of patients that there have to be dose modifications as part of the dose-finding as part of the study, so that's why the number was higher, it was always meant to have 50 patients in the evaluable population at the dose level that was deemed safe. And then your question about the [indiscernible] study. So the [indiscernible] study was a three-arm study, this is this is a one arm study. The essential feature of the [indiscernible] study in terms of what was evaluated was a combination of a different CDK46 inhibitor, Abemaciclib in combination with Trastuzumab and fulvestrant. So we are using it different so this has a different CDK46 inhibitor and it has a different HER2 targeted agent, obviously, zanidatamab. The patient population in general is similar. I would say that the patient population that we're treating is more heavily pretreated than the -- than what was seen in the [indiscernible] study is mainly because of the availability of additional HER2 targeted agents. So, those are then the similarities and the differences between the studies.

Great. Thanks for taking the questions.

Thank you. One moment for next question. And our next question coming from the line of Charles Zhu with Guggenheim. Your line is open.

Hey good evening everyone and congrats on the progress and thanks for taking my questions. Maybe first one on ZW49, it sounds like you guys are really progressing forward or at least have really made a lot of progress on the Q weekly dosing schedule. How should we think about the positioning of Q weekly relative to the Q3 weekly that you guys had recently presented at ESMO and how should we also think about potential pushes and pulls between convenience versus possibly or potentially improved clinical profile, both as a single-agent and as well as with combination partners that could have varying infusion schedules? Thank you.

Hi, this is Neil Josephson. Yes, so a couple of points, one is that, the data that we presented at ESMO focused on the Q3 week dosing schedule and as we said then, we -- the activity and the tolerability profile of the Q3 week dosing regimen was something that we felt hit the goal criteria for us to take forward. But we still had more weekly patients that needed to be -- need to let that weekly dosing data pan-out to see if that was a preferred schedule. So we haven't made any public announcements about what we would be going-forward with, we will be going-forward with one of the two dosing regimens. I think that your point about weighing convenience versus the activity and safety of profile of the different dosing regimens is an important one. We're very well aware of the fact that a Q3 week dosing schedule from the standpoint efficient convenience as much easier to implement and so from that standpoint we are not looking for something to be just the same or even maybe perhaps even marginally better where we want to see something that significantly better to go-forward with the Q weekly, but we haven't completely analyzed all the data and we haven't made an announcement yet about what we're taking forward. And I don't know if you had another question that I missed.

Well. I think that largely covers that question. Thank you. Yes, and maybe just one more from me perhaps regarding ZW49. I know you guys have spoken about this before, but I guess how should we think about the potential value you could potentially extract in a hypothetical partnership as a function of additional in-house data that you might generate and where return on investment might be the greatest for Zymeworks? Thank you.

Yeah. I can take that. I think you saw at ESMO we have an agent that we feel has sufficient single agent activity to move forward. We think the well-characterized tolerability profile of the agent and in fact form when stack-up against all the other HER2 ADCs in development. I think we've thought very thoughtfully and carefully about indications where ZW49 in combination with other agents, whether they'd be PD1 or chemotherapy standard of care could provide encouraging efficacy and tolerable safety profile. And so we'd like to go-forward and generate some additional data in those indications of interest. I think we've laid out a pretty clear list of developments that we have. And I think as we've stated before our goal would be to move ZW49 continues to show the encouraging data that we've seen so far into a registration pathway by 2025. And at the same time, seek some kind of partnership before moving into registration studies that could be ex-US in nature to allow us to retain an opportunity for future commercialization opportunity for ZW49 in the US. And so, I think we have a well cut out investment strategy around the molecule. We think additional clinical investment is justified from the return on investment that we've calculated inside the company. And we're going to move forward and execute a very rapid and complete and high-quality development program and continue to share that data with potential partners as we move towards that registration pathway by 2025. When we think -- I think people underestimate, I think, the value of zanidatamab in a potential partnership opportunity, even though around investors and analysts. And I think we've showed that we can do good work with agents that we have designed and developed ourselves. And that we have the ability to strike what I think are good business development partnerships to allow us to continue development and commercialization and I think with ZW49 we're looking-forward to conducting the right development going-forward and at the right time hopefully enter into a business development partnership for that that allows us to move forward [indiscernible] opportunity to see the encouraging data with ZW49 that we've seen so-far.

Got it. Great, thanks for taking the questions.

Yes. Thanks, Charles.

Thank you. One moment please for our next question. And our next question coming from the line of Yigal Nochomovitz with Citi. Your line is open.

Hi, team. This is Hosni Mubarak on for Yigal. Thanks for taking my questions. Just going back to the timeline updates related to the Jazz deal. It sounds like Jazz will be required to make an opt-in decision based on your timelines this calendar year. And that they'll have to potentially [indiscernible] $325 million before year end. I'm just wondering when the reimbursement portion of that might kick-in? Will that also be before year end or some timeline in 2023?

No, provided Jazz opt-in to the partnership then the R&D reimbursement starts from the date that we signed the agreement back, which was back on October 19. We haven't tried to quantify that kind of reimbursement in Q4, but obviously when we report our results for 2022 in the event that Jazz opt-in, then you'll be able to see the benefits of that. And the reduction of our cash burn rate in Q4.

Okay, great. That makes sense. Maybe going back to the CDK46 combo data you'll be sharing later this year. Can you give us a sense of what you view as compelling for the combo versus historical standards.

So this is Neil Josephson. I would say that this is -- as I pointed out, really heavily pre-treated patient population that generally doesn't have a lot of good options. So what we're looking at is a chemo-free regimen that has -- that's well-tolerated, that has activity and that gives durability of responses. And so, I think that I don't want to get ahead of myself and start talking about what data is going to be presented at [SABCS] (ph) but those are all the things that we were looking at and you'll be able to evaluate how this regimen performance in this population. And is one of the other questions that was asked before about [indiscernible]. I think that this is a similar patient population but even more heavily pre-treated. And so, if you want, I mean, you can get a sense of how -- a good result would be based on looking at what you would expect for standard-of-care therapy in that late-line which would be chemo plus trials.

Okay, great. Thanks for taking my questions.

Thank you. One moment please for our next question. And our next question coming from the line of Gena Wang with Barclays. Your line is open.

Hey, thanks for taking our questions. So for the Jazz there were lot of questions being asked around the criteria to exercise that option after the BTC pivotal readout but thinking that BTC is a relatively small market and the bigger proportion of economics would likely be from like the rest of portfolio. And just wondering is there anything you would like to highlight in terms of read-through from BTC pivotal data to the rest if indication GA and breast cancer that Jazz might be interested in.

No, good question. Again, the structure of the arrangement with Jazz and the opt-in was around allowing them to at least see the data from a pivotal data readout that was going to occur pretty soon after signing the agreement. And so, I think that was a pretty reasonable crest and we found a way to have a pretty clear and quick process for that to occur. And as you say, there is obviously value -- potential value in zanidatamab from the BTC indication, GA indication and future indications of which I'm sure Jazz had their own considerations and information of value on each as we did. So, I can't really comment more on that. I think the BTC pivotal data that is coming up is really exciting for us, this is our first opportunity for clinical data readout that could be a part of our future regulatory filing. And so we're very excited about the indication for BTC patients as you know with this patient population as a considerable unmet need, especially in the HER2 targeted therapy piece of it where zanidatamab could be the first HER2 targeted therapy for this patient population and also being given in a chemotherapy-free regimen, which is extremely important. So I think we're really excited about the readout itself with this pivotal data and look forward to having the topline data reporting that -- reporting the full data at a major medical meeting in the first-half and then obviously going-forward with consultations with regulatory agencies in the US and around the world on the pathway to make this accessible to patients. Beyond that, we've been working, as you know, on a number of other clinical studies, both in our pivotal study with first-line GEA in combination with chemo and also [indiscernible] with chemo and BeiGene’s PD1 and we've also been continuing to enroll in a number of breast cancer patients, we continue to enroll in our Phase 2 first-line GEA [indiscernible] chemotherapy which we'll report out additional data in the first-half of next year and we also enroll right now in our Phase 2 first-line BTC study with zanidatamab plus [indiscernible] which we continue to accrue patients in. So I think we're really excited about the BTC readout itself. It's a really exciting time for us to be at Zymeworks and I think we think it's another part in all the data we've been able to generate to show the potential broad applicability of zanidatamab in multiple HER2 expressing tumors.

And, if I may have another one, how much reduction in R&D expenses would you expect from the reimbursement agreements.

[indiscernible] zanidatamab has been a very substantial part of our cost structure, including in 2022 where we're running two pivotal studies and a very significant CMC campaign to prepare for the first BLA filing. And obviously with the structure of the agreement on zanidatamab with Jazz, that cash burn will fall to Jazz in terms of reimbursing all the work we're doing ongoing studies and then funding themselves any new studies related to zanidatamab. We're not going to provide any guidance at this point. I thing after completion of the deal by the end of this year which we expect will provide some financial guidance as well as key goals for 2023 early in January and you'll just have to wait for that guidance to get a good understanding of how our cash structure and cash runway will change during 2023, other than our previous guidance that we do expect our cash runway to last through at least 2026 with the completion of this deal.

Got it. Thank you.

You are welcome.

Thank you. One moment please for our next question. And our next question coming from the line of James Shin with Wells Fargo. Your line is open.

Hi guys. Thanks for taking my question. I was going to the presentation today and I noticed that the Jazz milestone payments, they seem to be based on various BTC and GEA indications. Are any milestones related to HER2 breast? And will be breast expenses be reimbursed by Jazz? And then I have a follow-up.

Yeah. With the second part of your question. So any ongoing clinical studies that we had underway as of October 19, we will continue managing those and we're obliged managing those and Jazz will fund those. So obviously that includes not just BTC and GEA, but studies beyond that which we're undertaking in breast cancer and even colorectal cancer. So all of those studies will be -- will continue to be ongoing to the conclusion and funded by Jazz. New studies which we decided to go-forward with will we funded 100% by Jazz and managed by them. As you'll note in the deal we have $525 million in regulatory approval milestones, which we have not identified what indications or what geographies those should relate to, obviously, with BTC and GEA being very advanced in both in pivotal studies. It's a safe assumption that that a considerable amount of those regulatory milestones would apply two indications that we've taken much further along. But there are also regulatory approval milestones there for indications beyond BTC and GEA. So I think you should expect that once Hart-Scott Rodino is cleared and we can then start to work jointly with Jazz to make some of these decisions about new indications that we'll make public statements at the right time about additional studies that will be undertaken with zanidatamab beyond the ones that are currently ongoing.

Thanks Ken. And then is there any steps you updated. Neil, really appreciate the color on 50 patients. I'm not sure how much you can say, but can you give us a ballpark on how much follow-up we will have and whether we'll be able to assess a stable DOR?

Yeah. Again, I don't really want to get into the specific of the data presentations. The -- I can say that that what we are presenting at SABCS is an interim data cut, you will have -- you'll be able to see some patients who have been following for quite a period of time. But there'll be others that will have just recently come on study, so it's not a final data cut, it's an interim data cut and there will be some patients that you can look at and get an idea of some durability based on the fact that they've been followed for a long-time but others are going to be just on for a short period of time. So you have to take the interim data cut and realized that it doesn't give you the full picture, but I think you'll be able to see some of what you're getting at.

Thank you. That's it from my end.

Thank you. One moment please for our next question. And our next question coming from the line of Akash Tewari with Jefferies. Your line is open.

This is Amy, on for Akash. Thanks for taking our questions. We have two if we may. So the first one is on ZW191. We know that this is not -- ZW191 show better antitumor activity of preclinically versus [indiscernible] mirvetuximab. So why do you think that's the case? Could it be due to the difference in potency with [indiscernible] eight versus around three to four. Additionally Merk show some initial responders with medium or lower for receptor alpha levels but that tumor reduction in fact was now sustained, so do you have confidence that the efficacy we have seen with ZW191 in folate receptor alpha meet exceptional levels could be sustained? And also my second question is on [indiscernible] can you give us an update on filing timelines in the US and also ex-US? In the US can you file for accelerated approval and what type of data will be included in the following package? Thank you.

Thanks for the question. I'll just take the second one, then I'll see how much Dr. Paul Moore wants to answer of the multipart first question, but with respect to GEA, the only guidance we've provided so-far is to complete the enrollment in our pivotal study by the end of 2023. We've made no guidance with respect to the filing timelines. The nature of the study is – has been published. So, I think as you're aware if we're able to recruit the patients by the end of 2023, then there will be a PFS and interim OS readout likely sometime in 2024 and depending upon that data that would give us the ability to consult with regulatory agencies about an accelerated approval pathway and the fall OS readout them would be approximately one year later in 2025 which will give us another opportunity for potential full approval in certain regulatory authorities. So we haven’t provided any guidance about that and we won't until we have the opportunity obviously to see the data and likely make some regulatory consultation but I think the pathways for both accelerated approval and full approval were discuss broadly on a global basis with regulatory agencies. I think we're pretty clear on that and right now we're just focused on recruiting a high-quality study on-time and then looking at the data and deciding on what the next step is in conjunction with regulatory agencies and our partners BeiGene and Jazz. And I'll let Paul decide about the first question.

Yeah. Thanks Ken. This is Paul Moore. Yes, thanks for the question. I think something that we try to communicate at the R&D Day was our strategy to the design of our BDCs is really to think about the totality of the molecule, so the antibody, the keloids the linker and the features of all the molecule. And so when we developed that, we spent a lot of time actually selecting the antibody itself. We had a really good internalization so that's a key feature that we think is very important feature of the molecule of the final product. And then of course what we've designed in here is that, we have a choice of different payloads at Zymeworks, we've got our own proprietary kilos, but in this case we have decided to work with the [indiscernible] and that I think also differentiates us from the molecule you mentioned, ImmunoGen molecule. So from an efficacy standpoint, we've been very pleased with what we've seen from the efficacy and you mentioned that we see that so-far in the different tumor types at different levels of fully receptor. We feel we can work in the medium expressing folate receptor tumors. And then from the other component of that is the tolerability and the selection of [indiscernible], we felt we could go to the diary and then based on the safety profile that we saw in non-clinical and putting on two studies, so that complete package we feel gives us a very -- a great opportunity to have a best-in class molecule.

Got it. Thanks.

Thank you. There appear to be no further questions. I'd like to turn the conference back over to Zymeworks for closing remarks.

Well, that's great. Thank you operator and thanks everyone for spending some time with us and for your questions. As you're aware, we've had a pretty exciting few months at Zymeworks on many different levels and I'm so pleased that our hard work has allowed us to be able to achieve many of the key milestones that I laid out hopefully very clearly on January 15th when I took over as CEO. And for us, 2022 is not done yet, we have a number of data announcements coming out at SITC and San Antonio and then we're very much looking-forward to reporting our top-line data from our BTC study before the end of 2022 and then look-forward to discussing with you in early January of 2023 and talk clearly about our key goals and milestones for 2023 and provide some financial guidance given the fact that our financial position is expected to be transformed by the opt-in of Jazz in our partnership after the BTC data is delivered to them. So we're really excited about the position of the company right now and how hard we worked to put ourselves in this position and we're very excited about the next couple of months and 2022 and very much looking-forward to having continued performance with our team during 2023 and look-forward very much to the laying that out for you in early-January next year. So thank you very much and have a nice day.

Ladies and gentlemen this concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.