Core Insights - Zymeworks has experienced a transformative year, highlighted by the readout of the HERIZON-GEA-01 study for zanidatamab, which occurred last week [2]. Company Developments - The company has evolved its strategy to build on its recent successes and ensure continued shareholder value [2]. - A thin slide deck was presented to highlight the transformations and strategic evolution of the company over the past year [2].

Summary of Zymeworks Conference Call Company Overview - **Company**: Zymeworks - **Event**: 44th JPMorgan Healthcare Conference - **CEO**: Ken Galbraith Key Points Company Transformation and Strategy - Zymeworks experienced a transformative year, highlighted by the readout of the Horizon-GEA-01 study for zanidatamab, which is expected to become the new standard of care in HER2-overexpressing gastric and esophageal adenocarcinoma (GEA) [2][4] - The company is evolving its strategy to leverage the success of zanidatamab and create shareholder value through innovative approaches beyond traditional R&D [4][6] - Leadership changes have been made to align the team with the new strategic direction [5] Financial Position and Future Outlook - Zymeworks has a strong financial foundation, with expectations of excess cash flow rather than cash flow issues, allowing for a long-term focus on shareholder value [12][22] - The company anticipates significant appreciation in stock value as zanidatamab continues to succeed and other agents progress [12][14] - The partnership with Jazz Pharmaceuticals and B1 is crucial for capital and development capabilities, enhancing the potential for zanidatamab's success [11][22] Product Development and Competitive Landscape - Zanidatamab is positioned as a superior HER2-targeted agent compared to trastuzumab, with promising clinical data supporting its efficacy [32][34] - The competitive landscape has shifted favorably for zanidatamab, as competitors have faced challenges in their clinical trials [33][36] - Zymeworks is exploring additional indications for zanidatamab and other products, including JNJ-64264681, which is expected to be a significant revenue generator [15][36] Royalty and Partnership Strategy - The company is focused on holding onto royalty streams from zanidatamab and other products, believing this approach will maximize long-term value for shareholders [29][50] - Zymeworks is open to monetizing royalties but seeks fair value, indicating a strategic approach to partnerships and asset management [49][51] - The company aims to build a portfolio of high-quality royalty streams, enhancing its financial stability and growth potential [50][53] Research and Development Focus - Zymeworks continues to invest in R&D, with a focus on innovative biologics and antibody-drug conjugates [23][24] - The company is exploring new product opportunities, including bispecific antibodies and ADCs, while maintaining a unique position in the market [65] Future Expectations - Zymeworks plans to present further data and updates on its pipeline in the coming year, aiming to exceed current expectations [25][26] - The company is committed to innovation and leveraging its scientific expertise to drive future successes [23][24] Additional Insights - The CEO emphasized the importance of adapting strategies to ensure continued success in a competitive biotech landscape, highlighting the need for flexibility in product development and partnerships [18][20] - Zymeworks is positioned to capitalize on its unique offerings in the HER2 space, with a differentiated approach that sets it apart from competitors [24][25]

Financial Highlights - The company anticipates near-term milestones of up to $440 million for global GEA approvals[12] - The company has received $400 million in upfront and milestone payments to date[12] - Future potential regulatory and commercial milestones are valued at $13 billion[12] - Ziihera has a peak sales potential of over $20 billion[12] - The company reported revenues of $103 million for 2025[27] Pipeline and Partnerships - The company has potential future milestone payments of up to $434 million with Phase 3 partners[16] - The company has potential future milestone payments of up to $11 billion with Phase 1 partners[16] - The company has potential future milestone payments of up to $313 million with Phase 1 partners[16] - The company has potential future milestone payments of up to $230 million with Preclinical partners[16] Strategic Outlook - The company's cash resources of over $270 million provide a runway beyond 2028[27]

Financial Position - As of December 31, 2025, Zymeworks Inc. reported cash resources of approximately $270.6 million, which includes cash, cash equivalents, and marketable securities[4] - The company anticipates receiving regulatory milestone payments of $440.0 million related to potential approvals of Ziihera in multiple regions, positioning it to fund operations beyond 2028[4] - The company expects to execute a $125.0 million share repurchase plan as part of its financial strategy[4] - The company is positioned to achieve its operational goals based on current cash resources and anticipated regulatory approvals[4] Executive Appointments - Mr. Kenneth Galbraith has been appointed as the interim Chief Financial Officer, effective January 9, 2026, while continuing his roles as Chair of the Board and CEO[12] - Mr. Mark Hollywood has been appointed as Chief Operating Officer, effective January 9, 2026, with an annual base salary increased from $475,000 to $525,000[19] - Dr. Jeffrey Smith, the Chief Medical Officer, will retire on January 31, 2026, with Dr. Sabeen Mekan appointed as his successor effective February 1, 2026[30] Compensation and Benefits - Mr. Hollywood is eligible for a discretionary bonus of up to 45% of his base salary and has been granted equity awards including 70,000 stock options and 47,000 restricted stock units[19] - Mr. Hollywood's employment agreement includes severance benefits of up to eighteen months of base salary if terminated without cause[23] - The Board approved an amended non-employee director compensation policy effective January 1, 2026, adjusting cash and equity compensation based on peer group practices[22] - The annual cash retainer fee for Board service increased from $40,000 to $45,000, effective January 1, 2026[24] - The initial equity award for new non-employee directors now consists of an option to purchase 23,000 shares and 15,400 RSUs, with specific vesting schedules[27] - Continuing non-employee directors will receive an annual equity grant of an option to purchase 11,500 shares and 7,700 RSUs, both vesting on the one-year anniversary of the grant date[28] - The post-termination exercise period for vested options held by departing directors remains three years following cessation of service[29] Corporate Updates - The company has initiated a search for a new Chief Financial Officer following the termination of Ms. Leone Patterson, effective January 9, 2026[10] - The Company issued a corporate update on January 11, 2026, outlining strategic priorities and operational guidance[31] - Forward-looking statements indicate that the Company is finalizing its financial results for the fourth quarter and fiscal year ended December 31, 2025, with preliminary estimates of cash resources being subject to management review[32]

Core Insights - Zymeworks Inc. is enhancing its leadership team to align with its corporate strategy announced in November 2025, focusing on strengthening capabilities and experience within the organization [1][2] Leadership Changes - Brian Cherry has been appointed to the Board of Directors, increasing the board size to nine members. He brings over 25 years of experience in various industries, including healthcare, and has led investments totaling over $25 billion in enterprise value [3][4] - Mark Hollywood has been promoted to Executive Vice President and Chief Operating Officer, expanding his responsibilities beyond Technology and Manufacturing Operations [5] - Dr. Sabeen Mekan will transition to Chief Medical Officer effective February 1, 2026, taking over from retiring CMO Dr. Jeff Smith [6] - Chief Financial and Business Officer Leone Patterson and General Counsel Daniel Dex will depart in the first quarter of 2026, with the company searching for a permanent Chief Financial Officer [7] - Additional leadership appointments include Laura O'Connor as Senior Vice President and Chief Human Resources Officer [8] Strategic Focus - The leadership changes are aimed at aligning management resources with the company's strategic objectives to drive long-term shareholder value [10] - The board has been streamlined from twelve to nine directors to ensure effective oversight of the new corporate strategy, with a focus on capital allocation and strategic acquisitions [4]

Group 1 - Zymeworks Inc. announced positive data from the Phase 3 HERIZON-GEA-01 trial for Ziihera, a treatment for HER2-positive gastroesophageal adenocarcinoma, achieving an overall survival of longer than two years [1] - The company focuses on innovative biotechnology solutions, emphasizing unique mechanisms of action and first-in-class therapies [1] - The analysis aims to evaluate the science behind drug candidates, the competitive landscape, clinical trial design, and potential market opportunities while balancing financial fundamentals and valuation [1]

Group 1 - Zymeworks Inc. announced positive data from the Phase 3 HERIZON-GEA-01 trial for Ziihera, a treatment for HER2-positive gastroesophageal adenocarcinoma, achieving an overall survival of longer than two years [1] - The company focuses on identifying promising biotechnology innovations, including novel mechanisms of action and first-in-class therapies, to reshape treatment paradigms [1] - The analysis emphasizes the importance of evaluating the science behind drug candidates, the competitive landscape, clinical trial design, and potential market opportunities while balancing financial fundamentals and valuation [1] Group 2 - The article aims to provide insights that help investors understand both opportunities and risks in the biotech sector, where breakthrough science can lead to significant returns [1] - The author has a background in cell biology and drug discovery, which informs their investment analysis in the biotech field [1] - The focus is on companies at various stages of development, from early clinical pipelines to commercial-stage biotechs [1]

Core Insights - Zymeworks Inc. has outlined its strategic priorities and key milestones for 2026, focusing on maximizing value creation for patients, partners, and shareholders following significant progress in 2025 [1][2] 2025 Accomplishments - The company achieved positive Phase 3 results for Ziihera in treating HER2-positive gastroesophageal adenocarcinoma, with potential milestone payments of up to $440 million related to regulatory approvals in multiple regions [3][4] - Zymeworks reported cash resources of approximately $270.6 million as of December 31, 2025, which, along with anticipated milestone payments, is expected to provide a cash runway beyond 2028 [3][16][17] - A share repurchase plan of $125 million was announced to reduce share count and enhance shareholder value [3][12] Strategic Focus for 2026 - The company aims to integrate royalty growth, strategic acquisitions, and internal R&D innovation to drive long-term value creation [5][6] - Zymeworks plans to pursue partnerships and acquisitions based on strategic fit rather than immediate cash needs, emphasizing a disciplined approach to capital allocation [5][6] Clinical Development and Pipeline - Ongoing clinical studies for ZW191 and ZW251 are set to continue in 2026, with plans for future IND filings for multispecific programs [9][10] - The company anticipates presenting additional data from its clinical trials at major medical meetings in 2026 [13] Leadership and Governance - Zymeworks strengthened its leadership team and board of directors by adding experienced biotech executives [2][8] Financial Guidance - The company has outlined a disciplined framework for adjusted gross operating expenditures of approximately $300 million over three years, with a focus on cost discipline and capital allocation [15]

Core Insights - Zymeworks Inc. announced positive efficacy and safety results from the Phase 3 HERIZON-GEA-01 trial for Ziihera® (zanidatamab-hrii) in combination with chemotherapy for HER2-positive gastroesophageal adenocarcinoma [1][3] Efficacy Summary - Ziihera plus chemotherapy, with or without the PD-1 inhibitor tislelizumab, showed a statistically significant and clinically meaningful prolongation of progression-free survival (PFS) with a 35% reduction in the risk of disease progression or death compared to trastuzumab plus chemotherapy, resulting in a median PFS of over one year, which is more than a four-month improvement [5][6] - The overall survival (OS) benefit for Ziihera plus tislelizumab and chemotherapy was significant, with a median OS of 26.4 months, representing a greater than seven-month improvement compared to trastuzumab plus chemotherapy [5][6] - The study demonstrated consistent PFS and OS benefits across major prespecified subgroups, including geographic region and PD-L1 status [5][6] Safety Profile - The safety profile of Ziihera in combination with chemotherapy was consistent with known effects of HER2-directed therapy, with no new safety signals identified [7] - Grade ≥3 treatment-related adverse events (TRAEs) were reported at 71.8% for Ziihera plus tislelizumab and chemotherapy, 59.0% for Ziihera plus chemotherapy, and 59.6% for trastuzumab plus chemotherapy [7] - The most common Grade ≥3 TRAE was diarrhea, with rates of 24.5% for Ziihera plus tislelizumab and chemotherapy [7] Financial Implications - Zymeworks is eligible to receive up to $440 million in milestone payments related to regulatory approvals of Ziihera in gastroesophageal adenocarcinoma across various regions, including $250 million from the United States [4][8] - The company anticipates increased royalty revenue from Ziihera sales as regulatory approvals are obtained in global markets [8] Trial Overview - The HERIZON-GEA-01 trial is a global, randomized, open-label Phase 3 study evaluating Ziihera plus chemotherapy, with or without tislelizumab, against trastuzumab plus chemotherapy for adult patients with advanced HER2-positive gastroesophageal adenocarcinoma [9] - The trial involved 914 patients from approximately 300 sites in over 30 countries [9] Industry Context - Gastroesophageal adenocarcinoma (GEA) is the fifth most common cancer globally, with a poor prognosis and a five-year survival rate of less than 30% for gastric cancer [10]

Core Insights - The company is evolving its strategy to a royalty-based model, which is a significant shift in its operational approach [2] Group 1: Strategic Evolution - The decision to move to a royalty-based model is driven by the need for financial advantages and better prioritization of the pipeline and portfolio [2] - The company aims to leverage this new model to enhance its financial stability and optimize its resource allocation [2]