Core Insights - Zymeworks Inc. has appointed Adam Schayowitz, Ph.D., MBA as Acting Chief Development Officer to enhance its R&D and business development efforts [1][2][3] Company Overview - Zymeworks is a clinical-stage biotechnology company focused on developing multifunctional biotherapeutics for challenging diseases such as cancer, inflammation, and autoimmune disorders [1][5] - The company has a diverse pipeline of product candidates, including zanidatamab, which has received multiple regulatory approvals [5][6] Leadership Appointment - Dr. Schayowitz will report to Kenneth Galbraith, the Chair & CEO, and will work closely with R&D and Business Development teams to advance the company's product candidates [2][3] - He brings nearly 20 years of experience in oncology drug development, having held leadership roles at Pfizer Oncology and other biotech firms [3][4] Strategic Focus - The company aims to strengthen partnerships and collaborations while advancing its R&D portfolio [4][5] - Recent milestones include investigational new drug clearance for ZW251 and expanded global approvals for zanidatamab, indicating a focus on execution across the development pipeline [3][5] Product Pipeline - Zymeworks is advancing a robust pipeline, with ZW191 in Phase 1 recruitment and ZW251 expected to enter clinical trials in 2025 [5][6] - Zanidatamab is the first dual HER2-targeted bispecific antibody approved for treating HER2-positive biliary tract cancer in the U.S., Europe, and China [5]

Financial Data and Key Metrics Changes - The company has approximately $500 million left in regulatory milestones and about $860 million in commercial milestones, with royalties ranging from 10% to 20% based on net sales [10][11][12] Business Line Data and Key Metrics Changes - The zanidatamab program is a significant focus, with upcoming Phase 3 study readouts expected in Q4, which could drive value for the company [6][10] - ZW171 has been discontinued due to on-target, off-tumor toxicity, reflecting the company's disciplined approach to capital allocation [14][16][17] Market Data and Key Metrics Changes - The competitive landscape for zanidatamab includes potential opportunities in breast cancer, with Jazz Pharmaceuticals exploring this area [11][12] - ZW191 is positioned as a strong contender in the folate receptor alpha ADC space, with a focus on differentiating its product through superior internalization and potency [20][21][22] Company Strategy and Development Direction - The company emphasizes a disciplined approach to capital allocation and decision-making regarding its pipeline programs, focusing on those with the highest potential for patient benefit [14][16] - The strategy includes exploring partnerships for various programs, particularly ZW191, to enhance development and market reach [30][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming data readouts and the potential for zanidatamab to capture significant market value, estimating a valuation of over $2 billion [12][13][45] - The company is preparing for multiple catalysts over the next 12 to 18 months, including clinical studies for ZW251 and ZW209 [45] Other Important Information - The ZW209 program, utilizing a tri-TCE platform, is expected to enter clinical trials in the first half of 2026, showcasing the company's commitment to advancing its innovative pipeline [34][45] - The company is also exploring early-stage pipeline opportunities, including novel targets and ADCs, to leverage its protein engineering capabilities [33][34] Q&A Session Summary Question: What is the significance of the upcoming zanidatamab readout? - The readout is expected to provide clarity on the differentiation of zanidatamab in the competitive landscape, particularly in gastroesophageal adenocarcinoma [6][7] Question: What are the financial implications of the zanidatamab program? - The company has significant regulatory and commercial milestones associated with zanidatamab, which could lead to substantial revenue through royalties and milestone payments [10][11] Question: What led to the discontinuation of ZW171? - The decision was based on a lack of efficacy and on-target, off-tumor toxicity, demonstrating the company's commitment to prudent capital allocation [14][16][17] Question: How does Zymeworks differentiate its ADCs? - The company focuses on the holistic design of ADCs, ensuring that the antibody is optimized for internalization and payload delivery, which sets it apart from competitors [20][21][22] Question: What are the next steps for ZW191? - The company is considering partnerships for ZW191 and exploring various tumor types for clinical trials, including ovarian and endometrial cancers [30][39]

Group 1 - The article discusses Zymeworks Inc. (NASDAQ: ZYME) and highlights its recent progress, particularly focusing on two key milestones related to its drug Zanidatamab [2] - The author operates the Biotech Analysis Central service, which provides in-depth analysis of various pharmaceutical companies and includes a model portfolio of small and mid-cap stocks [2] - The service offers a subscription model with a promotional two-week free trial and a discounted annual plan [1] Group 2 - The article does not provide specific financial data or performance metrics for Zymeworks Inc. or its products [4] - There are no disclosures regarding stock positions or business relationships with the companies mentioned, indicating an unbiased perspective [3]

Core Points - Zymeworks Inc. has decided to voluntarily discontinue the clinical development of ZW171, a T-cell engager targeting gynecological, thoracic, and digestive system cancers [1] - The decision was made after completing the planned cohorts of the dose escalation portion of the Phase 1 trial in patients with ovarian cancer and non-small cell lung cancer [2] - Zymeworks determined that further dose evaluation would unlikely support a benefit-risk profile consistent with the desired monotherapy target product profile [3] - While cytokine release syndrome was well-managed, dose-limiting toxicities were observed, consistent with mesothelin-related on-target off-tumor toxicity [4] - Ongoing participants in the Phase 1 trial will continue treatment at the discretion of their investigator, and those who have discontinued will continue safety follow-up as per the study protocol [4] - The company continues to advance its broader product pipeline, including ongoing trials for ZW191 and ZW251, with an IND filing for ZW209 planned for the first half of 2026 [5] - Following the announcement, ZYME stock decreased by 5%, trading at $14.07 [5]

Core Viewpoint - Zymeworks Inc. has decided to voluntarily discontinue the clinical development of ZW171, a T cell engager targeting specific cancers, after evaluating the results from the Phase 1 trial, which indicated that further development would not support a favorable benefit-risk profile [1][3][4]. Company Overview - Zymeworks Inc. is a clinical-stage biotechnology company focused on developing novel biotherapeutics for difficult-to-treat diseases, including cancer, inflammation, and autoimmune diseases [1][5]. - The company utilizes proprietary technologies, such as Azymetric™, to engineer and develop differentiated antibody-based therapeutic candidates [5]. Clinical Development Update - The decision to halt ZW171's development was based on the completion of planned cohorts in the Phase 1 trial, where a maximum tolerated dose was established, but dose-limiting toxicities were observed [3]. - Ongoing participants in the trial will continue treatment at the discretion of their investigators, while those who have discontinued will undergo safety follow-up as per the study protocol [3]. Future Pipeline - Despite the setback with ZW171, Zymeworks is advancing its broader product pipeline, including the ongoing Phase 1 trial of ZW191 and the expected initiation of a Phase 1 study for ZW251 in 2025 [4]. - The company is also preparing an IND filing for ZW209, a DLL3-directed trispecific T cell engager, planned for the first half of 2026 [4]. Product Achievements - Zymeworks has developed zanidatamab, a HER2-targeted bispecific antibody, which has received accelerated approval from the U.S. FDA and conditional approvals in China and Europe for treating specific cancer types [5]. - Zanidatamab is being evaluated in multiple global clinical trials as a potential best-in-class treatment for various HER2-expressing cancers [5]. Strategic Partnerships - The company has entered into agreements with BeOne Medicines Ltd. and Jazz Pharmaceuticals, granting them exclusive rights to develop and commercialize zanidatamab in different territories [5].

Core Viewpoint - Zymeworks Inc. (ZYME) has experienced a bearish trend with a 7.6% loss over the past two weeks, but the formation of a hammer chart pattern suggests a potential trend reversal as buying interest may be increasing [1][2]. Technical Analysis - The hammer chart pattern indicates a potential bottom in the stock price, suggesting that selling pressure may be exhausting [2][5]. - A hammer pattern forms when there is a small candle body with a long lower wick, indicating that the stock opened lower, made a new low, but closed near its opening price, reflecting some buying interest [4][5]. - This pattern is significant when it occurs at the bottom of a downtrend, signaling that bears may have lost control [5]. Fundamental Analysis - There is rising optimism among Wall Street analysts regarding ZYME's future earnings, which supports the potential for a trend reversal [2][7]. - The consensus EPS estimate for ZYME has increased by 14.7% over the last 30 days, indicating analysts' agreement on the company's improved earnings potential [8]. - Zymeworks currently holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks, which typically outperform the market [9][10].

Company Performance - Zymeworks Inc. reported quarterly earnings of $0.03 per share, exceeding the Zacks Consensus Estimate of a loss of $0.52 per share, and showing improvement from a loss of $0.26 per share a year ago, resulting in an earnings surprise of +105.77% [1] - The company achieved revenues of $48.73 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 256.65%, compared to revenues of $19.24 million in the same quarter last year [2] - Over the last four quarters, Zymeworks has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance - Zymeworks shares have declined approximately 15.2% since the beginning of the year, while the S&P 500 has gained 7.9% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.39 on revenues of $27.89 million, and for the current fiscal year, it is -$1.64 on revenues of $100.05 million [7] Industry Outlook - The Medical - Biomedical and Genetics industry, to which Zymeworks belongs, is currently ranked in the top 41% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Zymeworks' stock performance [5]

Financial Data and Key Metrics Changes - Total revenue increased to $48.7 million in Q2 2025 from $19.2 million in Q2 2024, primarily due to a $20 million milestone from B1 and recognition of $80.3 million in deferred revenue [15][16] - Operating expenses decreased by 20% to $49.4 million in Q2 2025 from $62.1 million in Q2 2024, mainly due to a prior year impairment charge [17] - Net income was $2.3 million for Q2 2025, compared to a net loss of $37.7 million in Q2 2024 [17][18] - Cash resources increased to $333.4 million as of June 30, 2025, from $124.2 million at the end of 2024 [18] Business Line Data and Key Metrics Changes - The company has three product candidates in active Phase I trials in 2025, with two additional candidates expected to enter the clinic in 2026 [7][8] - Zanadatumab showed a median progression-free survival of 15.2 months and overall survival of 36.5 months in a study involving HER2 positive tumors [9][10] - The company recognized a $7.5 million option exercise payment related to a licensing agreement with BMS [14] Market Data and Key Metrics Changes - Conditional regulatory approvals for zanadatumab in China and Europe are expected to increase international patient access and potential future royalties [10][13] - The company anticipates an increase in royalty revenues from zanadatumab's international approvals for biliary tract cancer [13] Company Strategy and Development Direction - The company aims to leverage its proprietary technology platforms and strategic partnerships to enhance asset value and deliver long-term returns for shareholders [44][46] - The focus is on advancing a wholly owned pipeline of differentiated antibody drug conjugates and multi-specific antibodies across various therapeutic areas [46][48] - The company is committed to maintaining a science-first approach while exploring partnerships to share risk and resources [48][49] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of capital discipline and clarity in strategy to drive long-term value [44][51] - The company is focused on maximizing cash flow streams from royalties and other healthcare assets while maintaining flexibility in operations [51][52] - Anticipated growth in royalty and milestone income is not expected to trigger an automatic increase in operational expenditures [51] Other Important Information - The company presented data on its novel IL-4, IL-33 bispecific antibody for COPD at a recent conference, highlighting its potential in treating respiratory diseases [36][38] - The IND clearance for ZW251, targeting hepatocellular carcinoma, is seen as a significant advancement in the company's pipeline [28][29] Q&A Session Summary Question: Will PDL1 status be broken out for the triplet for arm C in the top line? - The inclusion of data in a top line press release will be determined by Jazz and B1, the sponsors of the studies [56][57] Question: How much of the ZANI $525 million regulatory milestone is weighted towards GEA versus other indications? - There is $500 million left in development milestones with Jazz, but no specific guidance on allocation has been provided [57] Question: How does ZW191 compare to other topoisomerase-based ADCs? - The company aims to create a differentiated asset with a novel mechanism and tolerability profile, which could allow for combinations with other treatments [60][63] Question: What is the approach for evaluating ZW251 in liver cancer patients? - The company will systematically study the tolerability and efficacy of ZW251 in appropriate patient subsets, considering liver impairment [68][69] Question: When can data from the Phase I trial of ZW191 be expected? - Initial data is anticipated to be shared at peer-reviewed meetings in 2025 or 2026, depending on abstract acceptance [74] Question: What is known about the expression of alpha in non-small cell lung cancer? - Analysis shows a subset of non-small cell lung cancer patients with BOLT receptor expression, encouraging further evaluation in this indication [78]

Financial Performance & Partnerships - Recognized approximately $75 million in 2025, including around $45 million from partnership-related cash milestones and option exercise fees, which significantly reduced net operating cash burn in the first half of 2025 compared to the first half of 2024[12] - Milestone, option exercise, and related deferred revenue of $45.8 million recognized in 2Q 2025 from BeOne and BMS[16, 17] - Potential future milestone payments from existing partnerships could reach up to $6.1278 billion, with royalty rates varying from low single-digit percentages to 20% depending on the partner and therapeutic indication[13] - Cash, cash equivalents, and marketable securities totaled $324.2 million in 2Q 2025, an increase of $9.2 million year-to-date, benefiting from milestone revenues and favorable working capital movements[16, 17] Clinical Development Updates - Investigational New Drug (IND) application cleared for ZW251, with first-in-human studies planned to start in 2025[11, 12, 47] - Phase 2 trial initiated to evaluate zanidatamab in HER2+ neoadjuvant and adjuvant breast cancer[12] - Bristol Myers Squibb collaboration progresses with a $7.5 million option exercise payment to Zymeworks[12] - ZW171: Global Phase 1 study in MSLN-Expressing Solid Tumors (NCT06523803) is an open-label, FIH, dose-escalation study (N~160)[19] - ZW191: Global Phase 1 Study in FRα-Expressing Solid Tumors (NCT06555744) is an open-label, FIH, dose-escalation study (N~145)[24] Zanidatamab Regulatory & Clinical Progress - NMPA granted BeOne conditional approval of zanidatamab in China for BTC, resulting in a $20 million payment to Zymeworks[12] - EMA granted conditional marketing approval of zanidatamab in Europe for BTC, expanding patient access and potential future royalties payable to Zymeworks[12, 47] - Jazz presented encouraging overall survival (OS) data for zanidatamab in 1L HER2+ GEA at the ASCO Annual Congress, showing a median OS of 36.5 months[12]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) This document is a Quarterly Report on Form 10-Q for Zymeworks Inc., covering the period ended June 30, 2025, as a non-accelerated and smaller reporting company [Filing Details](index=1&type=section&id=Filing%20Details) This document is a Quarterly Report on Form 10-Q for Zymeworks Inc., covering the period ended June 30, 2025, as a non-accelerated filer and a smaller reporting company - The report is a **Quarterly Report on Form 10-Q** for the period ended June 30, 2025[2](index=2&type=chunk) - Zymeworks Inc. is a **non-accelerated filer** and a **smaller reporting company**[4](index=4&type=chunk)[5](index=5&type=chunk) Key Filing Details | Indicator | Value | | :--- | :--- | | Common Stock Par Value | $0.00001 per share | | Outstanding Common Stock (as of Aug 5, 2025) | 75,166,196 shares | [Table of Contents](index=2&type=section&id=Table%20of%20Contents) This section provides an organized list of all chapters and sub-sections within the report for easy navigation [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section advises readers that the report contains forward-looking statements subject to inherent uncertainties and risks, which may cause actual results to differ materially [Forward-Looking Statements Disclosure](index=3&type=section&id=Forward-Looking%20Statements%20Disclosure) This section highlights that the report contains forward-looking statements, which are based on current expectations and assumptions but are inherently uncertain - The report includes forward-looking statements related to plans, objectives, goals, strategies, future events, revenue, performance, capital expenditures, and financing needs[9](index=9&type=chunk) - Actual results could differ materially due to uncertainties and factors such as market size, platform advancements, clinical trial progression, partnership evolution, and government regulation[10](index=10&type=chunk)[11](index=11&type=chunk) - The company does not undertake any obligation to update or revise forward-looking statements, except as required by law[14](index=14&type=chunk) [Trademarks and Currency](index=7&type=section&id=Trademarks%20and%20Currency) Zymeworks Inc. owns or has rights to several trademarks, and all financial amounts in the report are expressed in U.S. dollars unless otherwise indicated - Zymeworks owns trademarks such as Azymetric, Zymeworks, ZymeCAD, EFECT, ZymeLink, and 'Building Better Biologics'[16](index=16&type=chunk) - All amounts in the report are expressed in U.S. dollars, with references to '$' and 'US$' for U.S. dollars and 'C$' for Canadian dollars[17](index=17&type=chunk) [PART I. FINANCIAL INFORMATION](index=8&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited interim condensed consolidated financial statements and management's discussion and analysis of Zymeworks Inc.'s financial condition and results of operations [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited interim condensed consolidated financial statements of Zymeworks Inc. for the period ended June 30, 2025, including the Balance Sheets, Statements of Income (Loss) and Comprehensive Income (Loss), Statements of Changes in Stockholders' Equity, Statements of Cash Flows, and accompanying notes Condensed Consolidated Balance Sheets (Selected Data, in thousands) | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $98,253 | $66,103 | | Short-term marketable securities | $183,126 | $159,673 | | Accounts receivable | $2,631 | $55,815 | | Total current assets | $296,130 | $300,451 | | Total assets | $408,385 | $463,091 | | Total current liabilities | $38,502 | $88,294 | | Total liabilities | $73,879 | $124,323 | | Total stockholders' equity | $334,506 | $338,768 | Condensed Consolidated Statements of Income (Loss) (Selected Data, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $48,726 | $19,243 | $75,836 | $29,273 | | Research and development expense | $34,449 | $29,163 | $70,187 | $61,205 | | General and administrative expense | $14,951 | $15,679 | $31,936 | $31,469 | | Impairment on acquired IPR&D | $0 | $17,287 | $0 | $17,287 | | Net income (loss) | $2,317 | $(37,686) | $(20,319) | $(69,339) | | Basic EPS | $0.03 | $(0.49) | $(0.27) | $(0.91) | | Diluted EPS | $0.03 | $(0.49) | $(0.27) | $(0.91) | Condensed Consolidated Statements of Cash Flows (Selected Data, in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $8,666 | $(62,668) | | Net cash provided by financing activities | $2,635 | $3,180 | | Net cash provided by (used in) investing activities | $20,927 | $(27,287) | | Net change in cash and cash equivalents | $32,150 | $(86,594) | | Cash and cash equivalents, end of period | $98,253 | $70,963 | [Nature of Operations](index=14&type=section&id=Nature%20of%20Operations) Zymeworks Inc. is a clinical-stage biopharmaceutical company focused on developing next-generation multifunctional biotherapeutics, primarily for cancer and autoimmune/inflammatory diseases - Zymeworks Inc. is a **clinical-stage biopharmaceutical company** developing next-generation multifunctional biotherapeutics[27](index=27&type=chunk) - The company has primarily focused resources on research and development activities, including therapeutic platforms and product candidates[28](index=28&type=chunk) - An internal reorganization (Redomicile Transactions) in October 2022 resulted in a Delaware-incorporated entity becoming the listed company[29](index=29&type=chunk)[30](index=30&type=chunk) [Summary of Significant Accounting Policies](index=14&type=section&id=Summary%20of%20Significant%20Accounting%20Policies) The interim condensed consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim financial information, reflecting normal recurring adjustments - Financial statements are prepared in accordance with **U.S. GAAP** and **SEC rules** for interim financial information[31](index=31&type=chunk) - Management makes estimates and judgments for revenue recognition, expense accruals, stock-based compensation, deferred taxes, and contingent liabilities[34](index=34&type=chunk) - All amounts are expressed in **thousands of U.S. dollars**, except for share and per share data[33](index=33&type=chunk) [Recent Accounting Pronouncements](index=15&type=section&id=Recent%20Accounting%20Pronouncements) The company is evaluating the impact of recently issued ASUs, including ASU No. 2023-09 on Income Tax Disclosures and ASU 2024-03 on Disaggregation of Income Statement Expenses - ASU No. 2023-09 (Income Taxes) requires specific categories in rate reconciliation and disaggregation of income taxes paid, effective for fiscal years beginning after December 15, 2024[35](index=35&type=chunk) - ASU 2024-03 (Expense Disaggregation Disclosures) requires more detailed information about expense types, effective for annual periods beginning after December 15, 2026[36](index=36&type=chunk) [Net Earnings (Loss) Per Share](index=16&type=section&id=Net%20Earnings%20(Loss)%20Per%20Share) For the three months ended June 30, 2025, basic and diluted net earnings per common share were $0.03, a significant improvement from a loss of $0.49 in the prior year Net Earnings (Loss) Per Common Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) attributable to common stockholders (Basic) | $2,317 | $(37,686) | $(20,319) | $(69,339) | | Basic EPS | $0.03 | $(0.49) | $(0.27) | $(0.91) | | Diluted EPS | $0.03 | $(0.49) | $(0.27) | $(0.91) | | Weighted-average common stock outstanding (Basic) | 75,337,168 | 76,392,593 | 75,254,553 | 76,303,713 | | Weighted-average common stock outstanding (Diluted) | 77,378,449 | 76,396,217 | 75,302,357 | 76,321,941 | - Potentially dilutive securities (stock options and RSUs) were excluded from diluted net earnings (loss) per share computation for periods with net losses, as their effect would be anti-dilutive[37](index=37&type=chunk) [Cash, Cash Equivalents and Marketable Securities](index=16&type=section&id=Cash,%20Cash%20Equivalents%20and%20Marketable%20Securities) As of June 30, 2025, Zymeworks held **$98.3 million** in cash and cash equivalents and **$235.1 million** in marketable securities, primarily U.S. Treasury notes and corporate debt securities Marketable Securities (in thousands) | Category | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :--- | :--- | :--- | | Short-term marketable securities | $183,126 | $159,673 | | Long-term marketable securities | $51,996 | $98,428 | | Total marketable securities | $235,122 | $258,101 | Cash and Cash Equivalents (in thousands) | Category | June 30, 2025 Total | December 31, 2024 Total | | :--- | :--- | :--- | | Cash | $79,317 | $34,620 | | Money market funds | $18,936 | $16,398 | | GICs | $0 | $15,085 | | Total Cash and Cash Equivalents | $98,253 | $66,103 | [IPR&D and Goodwill](index=18&type=section&id=IPR%26D%20and%20Goodwill) In Q2 2024, Zymeworks recorded a **$17.3 million impairment charge** on acquired In-Process Research and Development (IPR&D) assets due to the discontinuation of the zanidatamab zovodotin clinical development program - An impairment charge of **$17,287 thousand** was recorded in Q2 2024 due to the discontinuation of the zanidatamab zovodotin clinical development program[40](index=40&type=chunk) - Goodwill was last tested for impairment on December 31, 2024, with no impairment indicators as of June 30, 2025[41](index=41&type=chunk) [Liabilities](index=18&type=section&id=Liabilities) Total current liabilities significantly decreased from **$88.3 million** at December 31, 2024, to **$38.5 million** at June 30, 2025, primarily driven by a reduction in accounts payable and accrued R&D expenses, and deferred revenue Accounts Payable and Accrued Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade payables | $32 | $3,903 | | Accrued research and development expenses | $22,790 | $43,114 | | Employee compensation and related accruals | $4,376 | $6,222 | | Total Accounts payable and accrued liabilities | $31,003 | $59,838 | Other Long-Term Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Liability from in-licensing agreements | $447 | $447 | | Finance lease liability | $0 | $28 | | Other | $381 | $448 | | Total Other long-term liabilities | $828 | $923 | [Stockholders' Equity](index=18&type=section&id=Stockholders'%20Equity) Stockholders' equity decreased slightly from **$338.8 million** at December 31, 2024, to **$334.5 million** at June 30, 2025, influenced by a net loss offset by stock-based compensation and common stock issuances Stockholders' Equity (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Common stock | $1,074,079 | $1,015,618 | | Exchangeable shares | $8,178 | $8,188 | | Additional paid-in capital | $109,243 | $152,249 | | Accumulated deficit | $(850,654) | $(830,335) | | Total stockholders' equity | $334,506 | $338,768 | - The company's authorized share capital consists of **900,000,000 common shares** and **100,000,000 preferred shares**[43](index=43&type=chunk) - A stock repurchase program authorized up to **$60.0 million**, with **$30.0 million** remaining as of June 30, 2025[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) - Pre-funded warrants were net exercised in full on June 26, 2025, resulting in the issuance of **5,086,480 common shares**[49](index=49&type=chunk)[50](index=50&type=chunk) Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $2,891 | $2,381 | $6,052 | $4,306 | | General and administrative | $2,832 | $2,107 | $5,945 | $3,641 | | Total Stock-Based Compensation | $5,723 | $4,488 | $11,997 | $7,947 | [Research, Collaboration and Licensing Agreements](index=22&type=section&id=Research,%20Collaboration%20and%20Licensing%20Agreements) Revenue from research and development collaborations significantly increased to **$48.7 million** for the three months ended June 30, 2025, from **$19.2 million** in the prior year, driven by milestone and option exercise fees Revenue from Research and Development Collaborations (in thousands) | Partner/Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Jazz (Development support, drug supply, royalties) | $2,866 | $10,838 | $10,518 | $20,700 | | BeOne (Milestone, deferred revenue, drug supply, royalties) | $38,360 | $8,405 | $38,568 | $8,405 | | BMS (Option exercise fee) | $7,500 | $0 | $7,500 | $0 | | GSK (Milestone revenue) | $0 | $0 | $14,000 | $0 | | Daiichi Sankyo (Milestone revenue) | $0 | $0 | $3,100 | $0 | | Total Revenue | $48,726 | $19,243 | $75,836 | $29,273 | - In May 2025, the Company recognized **$7.5 million** from BMS's exercise of its commercial license option[63](index=63&type=chunk) - In May 2025, the Company recognized **$20.0 million** milestone revenue from BeOne upon NMPA approval of zanidatamab for HER2+ BTC in China, plus **$18.3 million** of deferred revenue[64](index=64&type=chunk) - In January 2025, the Company recognized **$14.0 million** milestone revenue from GSK[64](index=64&type=chunk) - In March 2025, the Company recognized **$3.1 million** milestone revenue from Daiichi Sankyo[65](index=65&type=chunk) [Other income, net](index=23&type=section&id=Other%20income,%20net) Other income, net, decreased significantly to **$(0.6) million** for the three months ended June 30, 2025, from **$0.1 million** in the prior year, primarily due to net foreign exchange losses Other Income, Net (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Foreign exchange (loss) gain, net | $(613) | $61 | $(615) | $346 | | Other | $(8) | $53 | $43 | $72 | | Total Other income, net | $(621) | $114 | $(572) | $418 | [Leases](index=23&type=section&id=Leases) The company leases office and laboratory spaces in Vancouver, Bellevue, and Redwood City, with total operating lease liabilities of **$18.7 million** as of June 30, 2025 - The company leases office and laboratory spaces in Vancouver, Bellevue, and Redwood City, with lease terms expiring between June 2026 and February 2032[68](index=68&type=chunk) Operating Lease Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current portion | $3,586 | $2,740 | | Long-term portion | $15,092 | $15,738 | | Total operating lease liabilities | $18,678 | $18,478 | Operating Lease Expenses (in thousands) | Expense Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Operating lease expense | $797 | $552 | $1,573 | $974 | | Variable lease expense | $526 | $603 | $1,142 | $1,021 | | Termination of long-term facility lease in Seattle, net | $0 | $1,033 | $0 | $1,033 | | Total Lease Expenses | $1,323 | $2,188 | $2,715 | $3,028 | [Financial Instruments](index=24&type=section&id=Financial%20Instruments) The company's financial instruments include cash, marketable securities, accounts receivable, and liabilities, with fair values approximating carrying values for short-term items - Financial instruments include cash, marketable securities, accounts receivable, and various liabilities[73](index=73&type=chunk) - Marketable securities are classified as **available-for-sale** and recorded at fair value[75](index=75&type=chunk) - The company limits credit risk by investing with high credit quality financial institutions and does not use derivative instruments to hedge foreign exchange risk[76](index=76&type=chunk)[79](index=79&type=chunk) - The company believes its principal sources of liquidity are sufficient to fund operations for at least the next 12 months[78](index=78&type=chunk) [Commitments and Contingencies](index=26&type=section&id=Commitments%20and%20Contingencies) Zymeworks has research collaboration agreements with strategic partners that include potential milestone and royalty payments, and holds commercial and product liability insurance to limit potential indemnification liabilities - The company has research collaboration agreements with strategic partners that may include contractual milestone and royalty payments[81](index=81&type=chunk) - Commercial and product liability insurance is held to limit potential indemnification liabilities, which are considered minimal[81](index=81&type=chunk) - The company does not believe it is currently subject to any material legal proceedings or claims[82](index=82&type=chunk) [Business Segments](index=26&type=section&id=Business%20Segments) Zymeworks operates as a single reportable segment focused on the discovery, development, and commercialization of next-generation multifunctional biotherapeutics - The company operates and manages its business in a single reportable segment: biotherapeutics[83](index=83&type=chunk) - The CODM (Chair of the board and CEO) assesses segment performance and allocates resources based on strategic planning[84](index=84&type=chunk) Segment Income (Loss) (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue from research and development collaborations | $48,726 | $19,243 | $75,836 | $29,273 | | Total segment expenses | $41,038 | $39,558 | $84,761 | $82,775 | | Segment income (loss) | $7,688 | $(20,315) | $(8,925) | $(53,502) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Zymeworks' financial condition and results of operations for the three and six months ended June 30, 2025, highlighting key developments, financial performance, and liquidity - Zymeworks is a clinical-stage biotechnology company developing novel, multifunctional biotherapeutics for cancer and autoimmune and inflammatory diseases (AIID)[87](index=87&type=chunk) - Ziihera® (zanidatamab-hrii) received accelerated FDA approval in 2024 for HER2+ BTC, conditional NMPA approval in China in May 2025, and conditional European Commission marketing authorization in July 2025[89](index=89&type=chunk) - The company reported a **net income of $2.3 million** for the three months ended June 30, 2025, and a **net loss of $20.3 million** for the six months ended June 30, 2025[22](index=22&type=chunk)[94](index=94&type=chunk) - As of June 30, 2025, cash resources (cash, cash equivalents, and marketable securities) totaled **$333.4 million**, expected to fund operations for at least the next twelve months[92](index=92&type=chunk)[93](index=93&type=chunk)[153](index=153&type=chunk) [Overview](index=28&type=section&id=Overview) Zymeworks is a clinical-stage biotechnology company focused on developing multifunctional biotherapeutics for cancer and AIID, with its lead product zanidatamab (Ziihera®) receiving multiple approvals - Zymeworks is a clinical-stage biotechnology company developing novel, multifunctional biotherapeutics for cancer and AIID[87](index=87&type=chunk) - Zanidatamab (Ziihera®) received accelerated FDA approval in 2024 for HER2+ BTC, conditional NMPA approval in China in May 2025, and conditional European Commission marketing authorization in July 2025[89](index=89&type=chunk) - The company has funded operations primarily through public offerings and payments from license and collaboration agreements, with an accumulated deficit of **$850.7 million** as of June 30, 2025[91](index=91&type=chunk)[92](index=92&type=chunk)[94](index=94&type=chunk) [Wholly-Owned Pipeline](index=29&type=section&id=Wholly-Owned%20Pipeline) Zymeworks is advancing a wholly-owned pipeline of novel Antibody Drug Conjugates (ADCs) and Multispecific Antibody Therapeutics (MSATs) for solid tumors, and a bispecific molecule for Autoimmune and Inflammatory Diseases (AIID) - ZW191 is a clinical-stage ADC targeting FRα-expressing tumors (ovarian, endometrial, NSCLC) using ZD06519 payload, currently recruiting patients in a global Phase 1 study[96](index=96&type=chunk) - ZW251 is a potential first-in-class clinical-stage GPC3-targeting ADC for hepatocellular carcinoma (HCC); IND cleared by FDA in July 2025, with Phase 1 studies planned for 2025[97](index=97&type=chunk)[98](index=98&type=chunk) - ZW220, a NaPi2b-targeting ADC, has paused preparations for Phase 1 study to facilitate ZW251's accelerated development, but remains an IND-ready asset[99](index=99&type=chunk) - ZW171 is a clinical-stage 2+1 format T cell engager (TCE) targeting MSLN-expressing cancers, actively recruiting patients in a global Phase 1 study[100](index=100&type=chunk) - ZW209 is a novel trispecific T cell engager (TriTCE) targeting DLL3-expressing tumor cells; IND submission expected in 1H-2026[101](index=101&type=chunk)[102](index=102&type=chunk) - ZW1528 is a novel IL-4Rα x IL-33 bispecific molecule for AIID (respiratory inflammation); non-U.S. regulatory filing for Phase 1 expected in 2H-2026[103](index=103&type=chunk) [Our Proprietary Therapeutic Platforms](index=31&type=section&id=Our%20Proprietary%20Therapeutic%20Platforms) Zymeworks leverages modular and complementary therapeutic platforms, including Azymetric, Drug Conjugate Platforms, EFECT, and ProTECT, to develop multifunctional biotherapeutics - Proprietary therapeutic platforms include Azymetric (multispecific antibodies), Drug Conjugate Platforms (ADCs), EFECT (immune cell modulation), and ProTECT (tumor-specific activity)[105](index=105&type=chunk)[108](index=108&type=chunk) - These platforms allow for engineering next-generation biotherapeutics with multifunctional activity, aiming for improved patient outcomes[105](index=105&type=chunk) [Recent Developments](index=31&type=section&id=Recent%20Developments) Recent developments include preclinical data for ZW1528, trial-in-progress posters for ZW171 and ZW191, FDA clearance for ZW251, and conditional approvals for zanidatamab in China and Europe - New preclinical data for ZW1528 (IL-4Rα x IL-33 bispecific) presented in May 2025 showed high-affinity binding, effective blockade of IL-4, IL-13, and IL-33 signaling, and extended pharmacokinetics[107](index=107&type=chunk)[116](index=116&type=chunk) - Trial-in-progress posters for ZW171 (MSLN TCE) and ZW191 (FRα ADC) were presented in June 2025 at ASCO and ESMO Gynaecological Cancers Congress, respectively, detailing Phase 1 study designs[109](index=109&type=chunk)[110](index=110&type=chunk) - FDA cleared the IND application for ZW251 (GPC3-targeting ADC) in July 2025, with Phase 1 clinical studies planned for 2025[111](index=111&type=chunk) - Long-term Phase 2 data for zanidatamab in first-line HER2+ mGEA showed a median OS of **36.5 months**, presented in May 2025[112](index=112&type=chunk) - NMPA in China granted conditional approval for zanidatamab for HER2+ BTC in May 2025, and the European Commission granted conditional marketing authorization in July 2025[113](index=113&type=chunk)[114](index=114&type=chunk) - The company recognized **$7.5 million** from BMS's commercial license option exercise and **$20.0 million** milestone revenue from BeOne for zanidatamab approval in China[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - Zymeworks is evolving its business strategy to anchor future growth around anticipated royalty and milestone revenues from Ziihera® and existing/new partnerships[121](index=121&type=chunk) [Strategic Partnerships and Collaborations](index=34&type=section&id=Strategic%20Partnerships%20and%20Collaborations) Zymeworks has strategic partnerships with companies like Jazz, BeOne, BMS, GSK, Daiichi Sankyo, J&J, and Merck, providing non-dilutive funding and accelerating product development - Strategic partnerships provide non-dilutive funding and accelerate clinical development[122](index=122&type=chunk) Collaboration and Licensing Agreements Summary (as of June 30, 2025) | Partner | Program & Platform | Current Stage | Potential Future Milestone Payments | Royalty Rate | | :--- | :--- | :--- | :--- | :--- | | Jazz Pharmaceuticals | Ziihera® (zanidatamab-hrii) Azymetric EFECT | Marketed in first indication (BTC) | Up to $1.36 billion | Tiered worldwide royalties between 10% to 20% other than in BeOne territories | | BeOne | Zanidatamab Azymetric EFECT | Marketed in first indication (BTC) | Up to $144 million | Tiered royalties up to 19.5% of net sales in BeOne territories | | J&J | JNJ-78278343 CD3 x KLK2 Bispecific Azymetric EFECT | Phase 1 | Up to $459 million | Tiered worldwide royalties in the mid-single digit percentages | | BMS | Bispecific Antibody Azymetric EFECT | Oncology Phase 1 | Up to $313 million | Tiered worldwide royalties on sales | | GSK | Bispecific Antibody Immuno-Oncology Clinical Stage | Clinical Stage | Up to $230 million | Tiered worldwide royalties from low single digit percentages up to 10% | | Daiichi Sankyo | Bispecific Antibody Azymetric EFECT | Undisclosed Preclinical | Up to $1.1 billion | Tiered worldwide royalties in the low single digit percentages | | Merck | Bispecific Antibody Azymetric EFECT | Undisclosed Preclinical | Up to $921.8 million | Tiered worldwide royalties on sales | - Received **$491.0 million** from zanidatamab collaborations and **$208.1 million** from platform partnerships through June 30, 2025[124](index=124&type=chunk)[125](index=125&type=chunk) - Eligible to receive up to **$1.51 billion** in potential regulatory, development, and commercial milestone payments for zanidatamab, and up to **$4.09 billion** from platform partnerships[124](index=124&type=chunk)[125](index=125&type=chunk) [Financial Operations Overview](index=35&type=section&id=Financial%20Operations%20Overview) Zymeworks' revenue primarily stems from collaboration agreements, while operating expenses consist mainly of research and development (R&D) and general and administrative (G&A) costs, with R&D expenses expected to increase - Revenue primarily consists of collaboration revenue, including upfront fees, milestone payments, and royalties[126](index=126&type=chunk) - Operating expenses are mainly R&D and G&A, with personnel costs being a significant component[128](index=128&type=chunk) - R&D expenses are expected to increase with the advancement of product candidates and ongoing preclinical activities[130](index=130&type=chunk) - Critical accounting policies involve significant judgments and estimates, especially for revenue recognition and expense accruals[133](index=133&type=chunk)[135](index=135&type=chunk) [Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024](index=37&type=section&id=Results%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) For the three months ended June 30, 2025, total revenue increased by **$29.5 million (154%)** to **$48.7 million**, driven by milestone and deferred revenue recognition, while R&D expense increased and G&A expense decreased Revenue from Research and Collaborations (in millions) | Period | 2025 | 2024 | Increase/(Decrease) | Change % | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30, | $48.7 | $19.2 | $29.5 | 154% | | Six Months Ended June 30, | $75.8 | $29.3 | $46.5 | 159% | Research and Development Expense (in millions) | Period | 2025 | 2024 | Increase/(Decrease) | Change % | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30, | $34.4 | $29.2 | $5.2 | 18% | | Six Months Ended June 30, | $70.2 | $61.2 | $9.0 | 15% | General and Administrative Expense (in millions) | Period | 2025 | 2024 | Increase/(Decrease) | Change % | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30, | $15.0 | $15.7 | $(0.7) | (4)% | | Six Months Ended June 30, | $31.9 | $31.5 | $0.4 | 1% | Impairment on Acquired IPR&D (in millions) | Period | 2025 | 2024 | Increase/(Decrease) | Change % | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30, | $0 | $17.3 | $(17.3) | (100)% | | Six Months Ended June 30, | $0 | $17.3 | $(17.3) | (100)% | Other Income, net (in millions) | Period | 2025 | 2024 | Increase/(Decrease) | Change % | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30, | $2.8 | $5.3 | $(2.5) | (47)% | | Six Months Ended June 30, | $6.3 | $11.5 | $(5.2) | (45)% | [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) Zymeworks' liquidity is primarily from public offerings and collaboration agreements, with **$333.4 million** in cash resources as of June 30, 2025, anticipated to fund operations for at least the next 12 months - Sources of liquidity include public offerings and upfront fees, milestone payments, and research support from strategic collaborations[151](index=151&type=chunk) - As of June 30, 2025, cash, cash equivalents, and marketable securities totaled **$333.4 million**[153](index=153&type=chunk) - Cash provided by operating activities was **$8.7 million** for the six months ended June 30, 2025, compared to **$62.7 million** cash used in the prior year[155](index=155&type=chunk) - The company anticipates existing cash resources will fund operating and capital expenditures for at least the next 12 months[159](index=159&type=chunk) - Substantial additional funding will be required for continuing operations and long-term business plans, potentially through equity, debt, asset monetization, or strategic partnerships[160](index=160&type=chunk)[161](index=161&type=chunk) [Segment Reporting](index=43&type=section&id=Segment%20Reporting) Zymeworks operates as a single reportable segment focused on the development of next-generation multifunctional biotherapeutics - The company views its operations and manages its business in one segment: the development of next-generation multifunctional biotherapeutics[162](index=162&type=chunk) [Outstanding Share Data](index=43&type=section&id=Outstanding%20Share%20Data) As of August 5, 2025, Zymeworks had **75,166,196 shares** of common stock outstanding, along with various stock options, restricted stock units, and exchangeable shares Outstanding Share Data (as of August 5, 2025) | Category | Number of Shares | | :--- | :--- | | Common Stock Issued and Outstanding | 75,166,196 | | Exercisable Outstanding Stock Options | 4,738,673 | | Unexercisable Outstanding Stock Options | 4,504,648 | | Outstanding Restricted Stock Units | 1,842,218 | | Exchangeable Shares | 569,189 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Zymeworks Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a 'smaller reporting company,' Zymeworks Inc. is not required to provide quantitative and qualitative disclosures about market risk[167](index=167&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of Zymeworks' disclosure controls and procedures as of June 30, 2025, and concluded they were effective at a reasonable assurance level - Management concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[168](index=168&type=chunk)[169](index=169&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[170](index=170&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity security sales, and other disclosures [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) Zymeworks is not currently a party to any legal proceedings expected to have a material adverse effect on its business, financial condition, operating results, or cash flows - As of June 30, 2025, Zymeworks is not a party to any legal proceedings expected to have a material adverse effect on its business[172](index=172&type=chunk) - Litigation can have an adverse impact due to defense and settlement costs and diversion of management resources[172](index=172&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks that could materially and adversely affect Zymeworks' business, financial condition, and operating results, spanning product development, regulatory approval, competition, financial needs, and intellectual property - The company faces risks related to its limited number of product candidates, which are still in preclinical or clinical development, and the uncertainty of obtaining regulatory approval[175](index=175&type=chunk)[177](index=177&type=chunk) - Clinical trials are expensive, time-consuming, and involve uncertain outcomes, with previous results not necessarily predictive of future success[175](index=175&type=chunk)[179](index=179&type=chunk) - Significant competition from other pharmaceutical and biotechnology companies, many with greater resources, could negatively impact commercial opportunities[175](index=175&type=chunk)[222](index=222&type=chunk) - Dependence on collaborative relationships with partners like Jazz and BeOne for development and commercialization of zanidatamab poses risks if these relationships are unsuccessful or terminated[175](index=175&type=chunk)[312](index=312&type=chunk) - The company has incurred significant losses since inception and will require substantial additional funding, which may not be available on acceptable terms, leading to potential delays or scaling back of programs[175](index=175&type=chunk)[302](index=302&type=chunk)[304](index=304&type=chunk) - Ability to obtain, maintain, and enforce patent and trade secret protection for product candidates and technology is critical, with risks of infringement, invalidation, or unenforceability[175](index=175&type=chunk)[344](index=344&type=chunk) - The company's stock price is likely to be volatile, and provisions in its corporate documents could delay or prevent a change in control[180](index=180&type=chunk)[402](index=402&type=chunk)[418](index=418&type=chunk) [Summary of Risk Factors](index=44&type=section&id=Summary%20of%20Risk%20Factors) This section provides a high-level overview of the principal risks associated with investing in Zymeworks' common stock, including product development, clinical trials, competition, market acceptance, and intellectual property - Investment in common stock is speculative due to risks in product development, clinical trials, regulatory approval, competition, and market acceptance[175](index=175&type=chunk)[228](index=228&type=chunk) - Key risks include potential for undesirable side effects, product liability lawsuits, security breaches, and the need for substantial additional funding[175](index=175&type=chunk)[219](index=219&type=chunk)[255](index=255&type=chunk)[262](index=262&type=chunk)[304](index=304&type=chunk) - Dependence on strategic partners and the ability to protect intellectual property are critical for business success[175](index=175&type=chunk)[312](index=312&type=chunk)[344](index=344&type=chunk) [Risks Related to Our Business and the Development and Commercialization of Our Product Candidates](index=47&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20the%20Development%20and%20Commercialization%20of%20Our%20Product%20Candidates) Zymeworks faces significant risks in developing and commercializing its product candidates, including the uncertainty of regulatory approval, high costs and uncertain outcomes of clinical trials, and intense competition - Failure to obtain regulatory approval or significant delays in doing so for product candidates would materially adversely affect the business[177](index=177&type=chunk) - Clinical trials are expensive, time-consuming, and have uncertain outcomes; previous preclinical/clinical results may not predict future success[179](index=179&type=chunk)[183](index=183&type=chunk) - Product candidates may have undesirable side effects, leading to delays, failure to obtain approval, or market withdrawal[219](index=219&type=chunk)[221](index=221&type=chunk) - Significant competition from more effective, safer, or less expensive products could negatively impact commercial opportunities[222](index=222&type=chunk)[223](index=223&type=chunk) - Market acceptance of approved products by physicians, patients, and payors is crucial for revenue generation and profitability[228](index=228&type=chunk)[229](index=229&type=chunk) - Disruptions at the FDA or other government agencies could hinder timely development, approval, or commercialization of products[216](index=216&type=chunk) - Manufacturing difficulties, including contamination or supply chain disruptions, could delay or prevent product supply for clinical trials or commercialization[259](index=259&type=chunk) [Risks Related to Additional Legal and Compliance Matters](index=65&type=section&id=Risks%20Related%20to%20Additional%20Legal%20and%20Compliance%20Matters) Zymeworks is exposed to legal and compliance risks, including security breaches, data loss, stringent privacy regulations, employee misconduct, and geopolitical events that could disrupt international operations - Security breaches, data loss, or other disruptions could compromise sensitive business or health information, leading to liability and reputational harm[262](index=262&type=chunk)[263](index=263&type=chunk) - The company is subject to stringent and changing privacy and security obligations, including HIPAA, HITECH, GDPR, and CCPA, with potential for significant fines and penalties for non-compliance[267](index=267&type=chunk)[269](index=269&type=chunk)[271](index=271&type=chunk) - Employee misconduct, including noncompliance with regulatory standards, insider trading, or fraud and abuse laws, could lead to criminal sanctions, civil penalties, and reputational damage[386](index=386&type=chunk)[387](index=387&type=chunk) - Compliance with export/import controls, sanctions, embargoes, and anti-corruption laws is critical, with violations potentially leading to criminal liability and harm to business[298](index=298&type=chunk)[300](index=300&type=chunk) - Economic, political, and regulatory risks associated with international operations, including trade policies and currency fluctuations, could adversely affect the business[285](index=285&type=chunk)[286](index=286&type=chunk) [Risks Related to Our Financial Position and Need for Additional Capital](index=76&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Need%20for%20Additional%20Capital) Zymeworks has incurred significant losses since inception, with an accumulated deficit of **$850.7 million** as of June 30, 2025, and anticipates continued losses, requiring substantial additional funding that may not be available on acceptable terms - The company has incurred significant losses since inception, with an accumulated deficit of **$850.7 million** as of June 30, 2025, and anticipates continued losses[302](index=302&type=chunk) - Substantial additional funding will be required to advance product candidates, and such funding may not be available on acceptable terms or at all[304](index=304&type=chunk)[307](index=307&type=chunk) - Raising additional capital through equity or convertible debt securities will dilute stockholders' ownership interest[309](index=309&type=chunk) - Debt financing may involve agreements with covenants limiting specific actions, such as incurring additional debt or declaring dividends[310](index=310&type=chunk) - Tax law changes, such as the OBBB Act, could adversely affect the company's effective tax rate and financial condition[311](index=311&type=chunk) [Risks Related to Our Dependence on Third Parties](index=78&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) Zymeworks heavily relies on strategic partners for product development and commercialization, and on other third parties for manufacturing, clinical trials, and operational services, exposing it to risks of non-performance or termination - Dependence on Jazz and BeOne for zanidatamab development and commercialization means success is largely beyond Zymeworks' control[312](index=312&type=chunk)[316](index=316&type=chunk) - Strategic partners may not commit sufficient resources, pursue development, or may terminate agreements, requiring Zymeworks to raise additional capital[318](index=318&type=chunk)[320](index=320&type=chunk) - Reliance on third-party manufacturers for product candidates carries risks of production difficulties, quality control issues, and regulatory non-compliance[323](index=323&type=chunk)[324](index=324&type=chunk)[326](index=326&type=chunk) - Reliance on third parties to monitor and conduct clinical trials means less control over timing, cost, and patient recruitment, with risks of delays or data rejection[329](index=329&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk) - Dependence on third-party operational and administrative services, including cloud-based software, exposes the company to risks of service failures or disruptions[337](index=337&type=chunk)[339](index=339&type=chunk) [Risks Related to Our Intellectual Property](index=84&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) Zymeworks' commercial success hinges on its ability to operate without infringing third-party patents and to obtain, maintain, and enforce its own intellectual property (IP) rights, facing risks of infringement claims, patent invalidation, and competitive challenges - Commercial success depends on operating without infringing third-party patents, with risks of litigation and inability to obtain necessary licenses[340](index=340&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk) - Failure to obtain, maintain, and enforce patent and trade secret protection for product candidates and technology could materially harm the business[344](index=344&type=chunk) - Issued patents could be found invalid or unenforceable if challenged, potentially leading to loss of patent protection[348](index=348&type=chunk)[349](index=349&type=chunk) - Intellectual property rights may not provide sufficient competitive advantages due to various limitations, including design-arounds or independent development by competitors[352](index=352&type=chunk)[355](index=355&type=chunk) - Changes in patent laws or jurisprudence could diminish the value of patents, impairing the ability to protect products[372](index=372&type=chunk)[374](index=374&type=chunk) - Protecting intellectual property rights globally is challenging due to varying laws and enforcement, potentially limiting market potential[375](index=375&type=chunk)[378](index=378&type=chunk) - Use of open source software in R&D programs could lead to unanticipated conditions, litigation, or requirements to release proprietary source code[380](index=380&type=chunk)[381](index=381&type=chunk) [Risks Related to Employee Matters and Managing Growth](index=94&type=section&id=Risks%20Related%20to%20Employee%20Matters%20and%20Managing%20Growth) Zymeworks' success is highly dependent on retaining key executives and attracting qualified personnel, and the company may face difficulties in managing organizational growth or modifications as its product candidates advance - Future success depends on retaining key executives and attracting, retaining, and motivating qualified personnel[399](index=399&type=chunk)[400](index=400&type=chunk) - Organizational growth or modifications may be necessary as product candidates advance, imposing significant responsibilities on management[401](index=401&type=chunk) - Ineffective management of growth could lead to increased expenses, operational errors, loss of business opportunities, and reduced productivity[401](index=401&type=chunk) [Risks Related to Our Common Stock](index=95&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) The market price of Zymeworks' common stock is likely to be volatile due to various factors, and the company does not anticipate paying cash dividends in the foreseeable future - The stock price is likely to be volatile due to factors like clinical trial results, regulatory developments, competition, and market conditions[402](index=402&type=chunk)[407](index=407&type=chunk) - An active trading market for common stock may not be sustained, potentially making it difficult for stockholders to sell shares[404](index=404&type=chunk) - The company does not anticipate paying cash dividends for the foreseeable future; stockholders must rely on stock appreciation for returns[406](index=406&type=chunk) - Principal stockholders could exert substantial influence over the company, potentially delaying or preventing a change in corporate control[410](index=410&type=chunk) - As a smaller reporting company, compliance with reduced reporting requirements may make common stock less attractive to investors[411](index=411&type=chunk)[412](index=412&type=chunk) - Bylaws designate Delaware courts as the exclusive forum for certain disputes and federal district courts for Securities Act claims, potentially limiting stockholders' choice of forum[423](index=423&type=chunk)[424](index=424&type=chunk)[425](index=425&type=chunk) - The stock repurchase program may be suspended or discontinued at any time, and there's no assurance of additional repurchases at favorable prices[428](index=428&type=chunk)[429](index=429&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=101&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Zymeworks' board authorized a stock repurchase program of up to **$60.0 million** in August 2024, with **$30.0 million** remaining authorized for future repurchases as of June 30, 2025 - A stock repurchase program authorized up to **$60.0 million** of common stock in August 2024[432](index=432&type=chunk) - No shares were repurchased under this program during the three months ended June 30, 2025[432](index=432&type=chunk) - **$30.0 million** remained authorized for repurchase under the program as of June 30, 2025[432](index=432&type=chunk) [Item 3. Defaults upon Senior Securities](index=101&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) Zymeworks Inc. reported no defaults upon senior securities - There were no defaults upon senior securities[433](index=433&type=chunk) [Item 4. Mine Safety Disclosures](index=101&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Zymeworks Inc - This item is not applicable[434](index=434&type=chunk) [Item 5. Other Information](index=101&type=section&id=Item%205.%20Other%20Information) During the last fiscal quarter, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the last fiscal quarter[435](index=435&type=chunk) [Item 6. Exhibits](index=102&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including corporate organizational documents, an amendment to pre-funded warrants, a research license and commercial option agreement amendment, and certifications from the CEO and CFO - Exhibits include corporate organizational documents (Amended and Restated Certificate of Incorporation, Bylaws), an amendment to pre-funded warrants, and certifications from the CEO and CFO[436](index=436&type=chunk) [SIGNATURES](index=103&type=section&id=SIGNATURES) This section contains the official signatures of the company's principal executive and financial officers, certifying the accuracy and completeness of the report [Signatures](index=103&type=section&id=Signatures) The report is signed by Kenneth Galbraith, Chair of the Board of Directors, President and Chief Executive Officer, and Leone Patterson, Executive Vice President, Chief Business Officer and Chief Financial Officer, both dated August 7, 2025 - The report is signed by Kenneth Galbraith, CEO, and Leone Patterson, CFO, on August 7, 2025[439](index=439&type=chunk)