On August 5, 2020 Zymeworks Inc. (NYSE: ZYME), a clinical-stage biopharmaceutical company developing multifunctional biotherapeutics, reported financial results for the quarter ended June 30, 2020 (Press release, Zymeworks, AUG 5, 2020, View Source [SID1234562927]).
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"Among many notable accomplishments in the past quarter, I am particularly excited about the transition of our lead therapeutic program, zanidatamab, into late stage clinical development, providing a clear path for Zymeworks to seek its first potential approval in biliary tract cancer in 2022," said Ali Tehrani, Ph.D., Zymeworks’ President & CEO. "Looking ahead, with zanidatamab in five active Phase 2 programs and ZW49 advancing in its dose-escalation study, we anticipate a number of important data readouts over the next six to twelve months. We are proud of everything that we have accomplished and are well positioned to strategically execute on our mission of sending patients home to their loved ones, disease free."
Second Quarter 2020 Business Highlights and Recent Developments
•Zanidatamab (ZW25) Advances into Global Registration-Enabling Study
Zymeworks initiated a global Phase 2 registration-enabling study of single agent zanidatamab in patients with previously-treated HER2 gene amplified biliary tract cancer (BTC). This study is designed to support accelerated approval based on a primary endpoint of objective response rate, and secondary endpoints of duration of response and safety and may enable filing of a Biologics License Application (BLA) as early as 2022.
•Zanidatamab Data Updates Support Advancement in First Line Gastric Cancer
In addition to BTC, updated data were also presented from single agent zanidatamab and zanidatamab in combination with chemotherapy in patients with refractory HER2-expressing gastroesophageal adenocarcinomas (GEA). Zanidatamab continues to demonstrate promising single agent anti-tumor activity with response rates and durability that further improved when zanidatamab was combined with either paclitaxel or capecitabine. Zymeworks plans to initiate its second registration-enabling study for zanidatamab as first line treatment for advanced HER2+ GEA.
•ZW49 Continues Dose Escalation
Zymeworks’ second clinical candidate, ZW49, a bispecific antibody-drug conjugate targeting HER2, continues to be evaluated across multiple dosing regimens in the dose-escalation portion of a Phase 1 clinical trial. In the first half of the year, Zymeworks initiated recruitment at five additional clinical sites bringing the total to 11 across North America.
Merck Signs New Partnership to Develop Additional Azymetric Multispecific Antibodies
Long-term partner Merck signed a new licensing agreement to develop and commercialize up to three new multispecific antibodies toward Merck’s therapeutic targets in human health. Zymeworks is eligible to receive up to $411.0 million in option exercise fees and clinical development and regulatory approval milestone payments and up to $480.0 million in commercial milestone payments, as well as tiered royalties on worldwide sales.
•Bristol-Myers Squibb Expands Partnership and Adds EFECT Platform
BMS (formerly Celgene) expanded its Azymetric collaboration with Zymeworks, gaining access to the EFECT platform and extending its research term, resulting in a $12.0 million upfront payment to Zymeworks. Milestones remain at up to $1.7 billion plus tiered royalties on global sales.
•Strengthens Clinical Drug Development Expertise
Pamela Farmer, MD, joins Zymeworks as Vice President, Pharmacovigilance to provide medical oversight and ensure comprehensive and timely risk-benefit assessments of Zymeworks safety data. Dr. Farmer has held various leadership roles in drug safety and pharmacovigilance at major pharmaceutical companies including Prothena, Amgen, Genentech, and BioMarin, working on multiple regulatory submissions including Rituxan, Actemra and Vimizim.
Financial Results for the Quarter Ended June 30, 2020
Revenue for the three months ended June 30, 2020 was $12.4 million as compared to $7.9 million in the same period of 2019. Revenue for the three months ended June 30, 2020 included recognition of a $12.0 million expansion fee resulting from the BMS collaboration agreement expansion, as well as $0.4 million in research support and other payments from our partners. Revenue for the same period in 2019 included a $3.5 million commercial license option exercise fee from Daiichi Sankyo, $3.0 million in development milestone payments from our partners, as well as $1.4 million in research support and other payments from our partners.
For the three months ended June 30, 2020, research and development expenses were $39.2 million as compared to $23.8 million in the same period of 2019. The change was primarily due to an increase in clinical trial activity and associated drug manufacturing costs for zanidatamab, an increase in development activity for ZW49, an increase in licensing fee expenses as well as an increase in salaries and benefits expense from additional research and development headcount in 2020 as compared to the same period in 2019. Research and development expenses also included non-cash stock-based compensation expense of $3.2 million comprised of $3.3 million from equity classified equity awards and a $0.1 million recovery related to the non-cash mark-to-market revaluation of certain historical liability classified equity awards.
For the three months ended June 30, 2020, general and administrative expenses were $13.5 million as compared to $12.8 million in the same period in 2019. The change was primarily due to an increase in salaries and benefits expense resulting from an increase in headcount to support our expanding research and development activities and higher insurance expenses offset by lower non-cash stock-based compensation expense in 2020, compared to 2019. General and administrative expenses included non-cash stock-based compensation expense of $3.7 million comprised of $4.0 million from equity classified equity awards and a $0.3 million recovery related to the non-cash mark-to-market revaluation of certain historical liability classified equity awards.
Net loss for the three months ended June 30, 2020 was $39.0 million as compared to $29.1 million in the same period of 2019. This was primarily due to the increases in research and development expenses and general and administrative expenses referred to above, partially offset by an increase in revenue.
Zymeworks expects research and development expenditures to increase over time in line with the advancement and expansion of the Company’s clinical development of its product candidates, as well as its ongoing preclinical research 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 June 30, 2020, Zymeworks had $512.0 million in cash resources consisting of cash, cash equivalents, short-term investments and certain long-term investments.