On November 5, 2019 Zymeworks Inc. (NYSE: ZYME), a clinical-stage biopharmaceutical company developing multifunctional therapeutics, reported financial results for the third quarter ended September 30, 2019 (Press release, Zymeworks, NOV 5, 2019, View Source [SID1234550374]).
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"We recently presented data on our lead asset, ZW25, at two major medical conferences that pave the way for registration-enabling trials in second-line biliary tract cancer (BTC) with single agent ZW25 and in first-line gastroesophageal adenocarcinoma (GEA) with ZW25 in combination with chemotherapy," said Ali Tehrani, Ph.D., Zymeworks’ President & CEO. "These clinical plans support our evaluation of ZW25’s broad potential in earlier lines of therapy with the goal of establishing ZW25 as a therapeutic option for a greater number of people with HER2‑expressing cancers."
Third Quarter 2019 Business Highlights and Recent Developments
Single Agent Data for ZW25 Presented at European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Congress
Updated Phase 1 clinical data continued to show that ZW25 monotherapy provides anti-tumor activity and durable disease control across multiple tumor types in heavily pretreated patients. Encouraging response rates in BTC support the initiation of a registration-enabling Phase 2 trial evaluating single agent ZW25 as a second-line treatment for patients with HER2‑expressing BTC.
ZW25 Chemotherapy Combination Data Presented at AACR (Free AACR Whitepaper)-NCI-EORTC AACR-NCI-EORTC (Free AACR-NCI-EORTC Whitepaper) International Conference on Molecular Targets and Cancer Therapeutics (EORTC-NCI-AACR) (Free ASGCT Whitepaper) (Free EORTC-NCI-AACR Whitepaper)
Phase 1 clinical data demonstrated that the addition of chemotherapy to ZW25 treatment may enhance anti-tumor activity vs. ZW25 alone, and the combination therapy was tolerated in heavily pretreated HER2‑expressing GEA patients. These data further support the ongoing Phase 2 trial of ZW25 in combination with standard of care chemotherapy in first-line GEA.
Celgene Advances First Azymetric Bispecific Towards the Clinic
Celgene selected its first lead bispecific antibody candidate built using Zymeworks’ Azymetric platform and exercised its option to a commercial license for which Zymeworks received a US$7.5 million payment.
Financial Results for the Quarter Ended September 30, 2019
Revenue for the three months ended September 30, 2019 was $7.9 million as compared to $2.1 million in the same period of 2018. Revenue for the third quarter of 2019 includes $7.5 million recognized upon Celgene’s exercise of its commercial license option and $0.4 million in research and support payments from our partners. Revenue in the same period in 2018 was primarily due to a $2.0 million development milestone upon Lilly’s submission of an IND application under a licensing agreement with Lilly.
For the three months ended September 30, 2019, research and development expenses were $29.3 million as compared to $14.2 million in the same period of the prior year. The change was primarily due to an increase in clinical trial activity and associated manufacturing costs for ZW25, as well as an increase in other research and discovery activities compared to the same period in 2018. Research and development expenses included non-cash stock-based compensation expense of $1.7 million from equity-classified stock options and a $0.9 million expense related to the non-cash mark-to-market revaluation of certain historical liability-classified stock options.
For the three months ended September 30, 2019, general and administrative expenses were $12.2 million as compared to $7.5 million in the same period in 2018, primarily due to an increase in employee compensation expenses relating to non-cash stock-based compensation, as well as increased head count in 2019 over 2018. General and administrative expenses in 2019 included non-cash stock-based compensation expense of $1.7 million from equity-classified stock options and $2.8 million related to the non-cash mark-to-market revaluation of certain historical liability-classified stock options.
The net loss for the three months ended September 30, 2019, was $30.5 million as compared to $18.8 million in the same period of 2018. This was primarily due to an increase in research and development expenses associated with our lead therapeutic candidates and other programs, as well as an increase in general and administrative expenses in 2019. This increase was partially offset by increased revenue from research and development collaborations, interest and other income in 2019.
Zymeworks expects research and development expenditures to increase over time in line with the advancement and expansion of clinical development of our product candidates, as well as our ongoing preclinical research activities. Additionally, Zymeworks anticipates continuing to receive revenue from our existing and future strategic partnerships, including technology access fees, milestone-based payments and research support payments. However, Zymeworks’ ability to receive these payments is dependent upon either Zymeworks or our collaborators successfully completing specified research and development activities.
As of September 30, 2019, Zymeworks had $335.1 million in cash and cash equivalents and short-term investments.