[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)

[Corporate Update and Second Quarter 2025 Financial Results](index=1&type=section&id=Corporate%20Update%20and%20Second%20Quarter%202025%20Financial%20Results) [Management Commentary and Strategic Outlook](index=1&type=section&id=Management%20Commentary%20and%20Strategic%20Outlook) The company is leveraging partnership revenue to offset R&D costs and shifting its strategy to focus on long-term cash flow from zanidatamab royalties - Strategic partnerships have validated the Azymetric platform and generated **meaningful revenue**, helping to offset R&D cash burn[3](index=3&type=chunk) - The company expects to have **three product candidates in active Phase 1 trials** in the second half of 2025: ZW171, ZW191, and ZW251[3](index=3&type=chunk) - Zymeworks is shifting its business strategy to focus on anticipated **royalty and milestone streams from zanidatamab (Ziihera®)** as a long-term source of positive cash flow[3](index=3&type=chunk)[5](index=5&type=chunk) - Topline data from the pivotal **HERIZON-GEA-01 study** is expected in the fourth quarter of 2025[3](index=3&type=chunk) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) The quarter featured key regulatory approvals for ZW251 and zanidatamab, strong partnership revenue, and an extended cash runway into late 2027 - The FDA cleared the Investigational New Drug (IND) application for **ZW251**, with first-in-human studies planned to start in 2025[4](index=4&type=chunk) - **Zanidatamab received approval in China and Europe** for 2nd-line HER2-positive biliary tract cancer (BTC), expanding patient access[4](index=4&type=chunk) | Metric | Value (Q2 2025) | | :--- | :--- | | Revenue | $48.7 million | | Ziihera® Net Product Sales (by Jazz) | $5.5 million | | Cash Resources (as of June 30, 2025) | $333.4 million | | Projected Cash Runway | Into 2H-2027 | [Research and Development Progress](index=2&type=section&id=Research%20and%20Development%20Progress) The R&D pipeline advanced with positive preclinical data, ongoing trials, new regulatory clearances, and progress in key partnership programs [Wholly-Owned R&D Programs](index=2&type=section&id=Wholly-Owned%20R%26D%20Programs) The wholly-owned pipeline advanced with promising preclinical data for ZW1528 and FDA clearance for ZW251 to enter clinical trials - Presented new preclinical data for **ZW1528** (IL-4Rα x IL-33 bispecific) showing high-affinity binding, effective signaling blockade, and in vivo efficacy in lung inflammation models[6](index=6&type=chunk)[8](index=8&type=chunk) - Presented trial-in-progress posters for **ZW171** at ASCO and **ZW191** at the ESMO Gynaecological Cancers Congress, detailing their respective Phase 1 studies[6](index=6&type=chunk)[7](index=7&type=chunk) - The FDA cleared the IND application for **ZW251**, a GPC3-targeting antibody-drug conjugate, with Phase 1 clinical studies planned to commence in 2025[8](index=8&type=chunk) [Zanidatamab Program Updates](index=3&type=section&id=Zanidatamab%20Program%20Updates) The zanidatamab program achieved key milestones including positive long-term survival data and regulatory approvals in China and Europe - Long-term data from a Phase 2 trial of zanidatamab in combination with chemotherapy for 1L HER2+ mGEA showed a **median overall survival (OS) of 36.5 months**[10](index=10&type=chunk) - Received conditional approval from the NMPA in China for HER2+ BTC, triggering a **$20.0 million milestone payment** from partner BeOne Medicines[11](index=11&type=chunk) - The European Commission granted conditional marketing authorization for **Ziihera® (zanidatamab)** for HER2+ BTC[12](index=12&type=chunk) - Royalty revenue from partners Jazz and BeOne was **$0.6 million for Q2 2025**, based on $5.5 million in net product sales of Ziihera® by Jazz[13](index=13&type=chunk) [Platform Collaboration Agreements](index=4&type=section&id=Platform%20Collaboration%20Agreements) Collaborations generated significant revenue and yielded positive clinical data, validating the company's technology platforms - Recognized **$7.5 million in revenue** after BMS exercised its commercial license option under a 2014 collaboration agreement[14](index=14&type=chunk) - Partner J&J reported **positive Phase 1 results for pasritamig**, which demonstrated preliminary anti-tumor activity and a favorable safety profile in prostate cancer patients[15](index=15&type=chunk) - Partner Daiichi Sankyo presented a trial-in-progress poster for a Phase 1 study of **DS-2243**, a bispecific T-cell engager[16](index=16&type=chunk) [Financial Performance Analysis](index=4&type=section&id=Financial%20Performance%20Analysis) The company achieved a significant financial turnaround to net income in Q2 2025, driven by increased partnership revenue [Key Financial Results for Q2 2025](index=4&type=section&id=Key%20Financial%20Results%20for%20Q2%202025) The company reported total revenue of $48.7 million and a net income of $2.3 million, a significant turnaround from the prior year | Financial Metric (in millions USD) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $48.7 | $19.2 | +153.4% | | R&D Expenses | $34.4 | $29.2 | +17.8% | | G&A Expenses | $15.0 | $15.7 | -4.5% | | Net Income (Loss) | $2.3 | $(37.7) | Turnaround to Profit | - The revenue increase was primarily driven by a **$20.0 million milestone from BeOne**, recognition of $18.3 million in related deferred revenue, and a **$7.5 million payment from BMS**[17](index=17&type=chunk) - The company's cash resources of **$333.4 million**, combined with anticipated regulatory milestones, are expected to fund planned operations into the second half of 2027[20](index=20&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited condensed interim consolidated statements of income and balance sheet data Condensed Consolidated Statements of Income (Loss) (in thousands USD) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $48,726 | $19,243 | | Total operating expenses | $49,400 | $62,129 | | Loss from operations | $(674) | $(42,886) | | Net income (loss) | $2,317 | $(37,686) | | Basic EPS | $0.03 | $(0.49) | | Diluted EPS | $0.03 | $(0.49) | Selected Condensed Consolidated Balance Sheet Data (in thousands USD) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents and marketable securities | $333,375 | $324,204 | | Total assets | $408,385 | $463,091 | | Total liabilities | $73,879 | $124,323 | | Stockholders' equity | $334,506 | $338,768 | [Corporate Information](index=5&type=section&id=Corporate%20Information) This section provides an overview of the company's business and includes cautionary notes on forward-looking statements [About Zymeworks Inc.](index=5&type=section&id=About%20Zymeworks%20Inc.) Zymeworks is a clinical-stage biotechnology company developing biotherapeutics for cancer and immunological diseases - Zymeworks is a clinical-stage biotech focused on **cancer, inflammation, and autoimmune diseases** using its complementary therapeutic platforms[18](index=18&type=chunk) - Its lead product, **zanidatamab**, is the first dual HER2-targeted bispecific antibody approved for HER2-positive biliary tract cancer (BTC) in the U.S., Europe, and China[18](index=18&type=chunk) - The company's wholly-owned pipeline includes **ZW171 and ZW191 in Phase 1 studies**, with ZW251 expected to enter the clinic in 2025[18](index=18&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section provides a legal disclaimer cautioning investors about the risks and uncertainties of forward-looking statements - The press release includes forward-looking statements regarding **strategic priorities, clinical development timelines, regulatory approvals, and financial projections** like the cash runway[19](index=19&type=chunk)[21](index=21&type=chunk) - Key risks that could cause actual results to differ include **product candidate failure in development**, not achieving milestones, regulatory delays, and unsuccessful commercialization[21](index=21&type=chunk)

Core Insights - Zymeworks Inc. reported financial results for Q2 2025, highlighting significant revenue growth and advancements in its clinical pipeline, particularly with its lead product zanidatamab [1][16]. Financial Performance - Total revenue for Q2 2025 was $48.7 million, a substantial increase from $19.2 million in Q2 2024, driven by milestone payments and deferred revenue recognition [16]. - Research and Development (R&D) expenses rose to $34.4 million in Q2 2025 from $29.2 million in Q2 2024, reflecting increased investment in various clinical programs [16]. - The company achieved a net income of $2.3 million in Q2 2025, a significant turnaround from a net loss of $37.7 million in Q2 2024 [16][21]. Clinical Developments - Zymeworks has three product candidates expected to enter active Phase 1 trials in the second half of 2025, with two additional candidates on track for 2026 [2]. - The IND application for ZW251 was cleared by the FDA, with first-in-human studies planned for 2025 [3][7]. - Zanidatamab has shown promising results in clinical trials, with a median progression-free survival of 15.2 months and overall survival of 36.5 months in patients with HER2-positive gastroesophageal adenocarcinoma [9][10]. Strategic Partnerships - The company has established strategic partnerships that have validated its Azymetric platform, generating meaningful revenue and supporting clinical development [2]. - Zymeworks recognized $20 million in milestone revenue from BeOne Medicines related to the conditional approval of zanidatamab in China [10]. - The collaboration with Jazz Pharmaceuticals for zanidatamab is expected to enhance future royalties, with the European Commission granting conditional marketing authorization for the treatment of HER2-positive biliary tract cancer [11]. Cash Position - As of June 30, 2025, Zymeworks had cash resources of $333.4 million, providing a projected cash runway into the second half of 2027 [3][16].

Core Insights - Zymeworks Inc. has received FDA clearance for its investigational new drug application for ZW251, a novel glypican-3 (GPC3)-targeted antibody-drug conjugate (ADC) aimed at treating hepatocellular carcinoma (HCC) [1][2] Company Overview - Zymeworks is a clinical-stage biotechnology company focused on developing multifunctional biotherapeutics for challenging diseases such as cancer, inflammation, and autoimmune disorders [4] - The company has a robust pipeline, including zanidatamab, a HER2-targeted bispecific antibody, which has received various regulatory approvals in the U.S., Europe, and China [4] Product Development - ZW251 is engineered to selectively target GPC3, which is expressed in over 75% of HCC cases, and is designed with a drug-antibody ratio (DAR) of four to enhance dosing flexibility [2] - Preclinical studies of ZW251 have shown strong anti-tumor activity and favorable tolerability in various HCC models, with a notable safety profile in non-human primate studies at doses up to 120 mg/kg [2][3] - The company plans to initiate Phase 1 clinical trials for ZW251 in 2025, marking the second ADC from its pipeline to enter clinical development [3][5]

Company Overview - Zymeworks Inc. (ZYME) shares increased by 7.1% in the last trading session, closing at $14.48, with trading volume significantly higher than usual [1] - The stock has also gained 7.1% over the past four weeks [1] Stock Performance Drivers - The rise in stock price is linked to positive investor sentiment regarding Zymeworks' early-stage pipeline candidates, ZW171 and ZW191, aimed at treating advanced mesothelin-expressing cancers and advanced solid tumors [2] Financial Expectations - The company is projected to report a quarterly loss of $0.52 per share, reflecting a year-over-year change of -100% [3] - Expected revenues are $13.66 million, which is a 29% decrease from the same quarter last year [3] Earnings Estimate Trends - The consensus EPS estimate for Zymeworks has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] - Monitoring ZYME is advised to determine if the recent stock price increase can lead to further strength [4] Industry Context - Zymeworks holds a Zacks Rank of 2 (Buy) within the Zacks Medical - Biomedical and Genetics industry [5] - Another company in the same industry, Cytokinetics (CYTK), closed 0.5% higher at $38.89, with an 18.2% return over the past month [5]

Core Viewpoint - Zymeworks Inc. is set to report its second quarter 2025 financial results on August 7, 2025, and will participate in several investor conferences during July and August, highlighting its commitment to advancing its biotherapeutics pipeline for difficult-to-treat diseases [1][2]. Company Overview - Zymeworks Inc. is a clinical-stage biotechnology company focused on developing novel, multifunctional biotherapeutics aimed at improving care for conditions such as cancer, inflammation, and autoimmune diseases [2]. - The company has developed zanidatamab, a HER2-targeted bispecific antibody, which has received accelerated approval from the U.S. FDA and conditional approvals from China's NMPA and the European Commission for treating adults with unresectable or metastatic HER2-positive biliary tract cancer [2]. - Zanidatamab is the first dual HER2-targeted bispecific antibody approved for this indication in the U.S., Europe, and China, and is being evaluated in global clinical trials for multiple HER2-expressing cancers [2]. Upcoming Events - Zymeworks will host a conference call and webcast on August 7, 2025, at 4:30 pm ET to discuss its financial results and provide a corporate update [1]. - The company will participate in the BTIG Virtual Biotechnology Conference on July 29, 2025, and the Stifel Biotech Summer Summit from August 11-13, 2025, including a fireside chat on August 13 at 9:00 am ET [3]. Pipeline Development - Zymeworks is advancing a robust pipeline of wholly-owned product candidates, with Phase 1 studies for ZW171 and ZW191 actively recruiting, and an investigational new drug application for ZW251 planned for mid-2025 [2]. - The company leverages its therapeutic platforms through strategic partnerships with global biopharmaceutical companies to enhance its drug development capabilities [2].

Core Viewpoint - Zymeworks Inc. (ZYME) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Company Performance and Outlook - The recent upgrade for Zymeworks reflects an improvement in the company's underlying business, suggesting that investors may push the stock price higher [5]. - For the fiscal year ending December 2025, Zymeworks is expected to earn -$1.64 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 5.8% over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zymeworks now positioned in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns [10]. - The Zacks Rank 2 rating places Zymeworks among stocks with superior earnings estimate revisions, suggesting a likelihood of upward price movement in the near term [10].

Core Viewpoint - The article provides insights into the investment landscape, emphasizing the importance of thorough research and independent verification of information before making investment decisions [2][3]. Group 1: Company Analysis - The article does not provide specific company analysis or financial data related to any particular company [1][2][3]. Group 2: Industry Insights - The article highlights the inherent volatility and risks associated with investing in stocks, suggesting that market conditions can change rapidly and unpredictably [2][3]. - It stresses that past performance is not indicative of future results, which is a critical consideration for investors in the current market environment [3].

Financial Data and Key Metrics Changes - The company has maintained a 100% success rate in clinical studies, with the recent approval of zanadatumab for second-line biliary tract cancer, indicating strong validation of its scientific approach [4][10][12] - Future cash flow projections are expected to be healthy due to structured arrangements with partners Jazz and Beijing, which include milestone payments and royalties [18][19] Business Line Data and Key Metrics Changes - The company has focused on developing bispecific antibodies and antibody-drug conjugates (ADCs), with two programs entering clinical studies in the past year [20][22] - The five by five strategy aims to build a diverse portfolio of agents, including three ADCs and T cell engagers, to enhance clinical data and create partnering opportunities [21][22] Market Data and Key Metrics Changes - The company is exploring the potential of its products in various markets, including solid tumors and autoimmune diseases, with a focus on innovative therapeutic approaches [24][48] - The upcoming Phase III study for gastric esophageal adenocarcinoma (GEA) is seen as a significant opportunity for both patients and financial returns [6][12] Company Strategy and Development Direction - The company has adopted a partnership model for commercialization, allowing it to share in the success of its innovations without bearing the full risk and cost of commercialization [5][17] - The focus remains on maintaining a strong R&D portfolio while ensuring that innovations translate into shareholder value on a per-share basis [52][54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming clinical readouts and the potential for significant financial impact from successful trials [12][19] - The company is committed to a capital strategy that emphasizes partnerships and innovative R&D to ensure sustainable growth and shareholder returns [56][57] Other Important Information - The company is exploring the development of a bispecific therapeutic for COPD, which combines mechanisms from existing therapies to address a broader patient population [45][48] - The company has a strong focus on engineering multifunctional therapeutics, which is expected to differentiate its products in crowded markets [34][60] Q&A Session Summary Question: Can you discuss the long-term outcomes from the phase two study of zanadatumab? - Management highlighted impressive median overall survival (OS) data from the study, indicating strong clinical responses and quality of life improvements for patients [9][11] Question: How does the company prioritize resources across its various programs? - Management emphasized the importance of reallocating resources based on clinical responses and potential returns, ensuring a focus on high-quality innovations [51][53] Question: What are the expectations for the upcoming GEA readout? - The company is optimistic that the GEA readout will provide significant revenue potential and validate its innovative approaches in the HER2 space [12][19]

Core Viewpoint - Zymeworks Inc. (ZYME) shows potential for significant upside, with a mean price target of $21.35 indicating a 76.7% increase from its current price of $12.08 [1] Price Targets and Estimates - The mean estimate consists of 10 short-term price targets with a standard deviation of $7.45, indicating variability among analysts [2] - The lowest estimate is $12, suggesting a slight decline of 0.7%, while the highest estimate predicts a surge of 148.3% to $30 [2] - Analysts' price targets are often questioned for their reliability, as they may mislead investors rather than provide accurate guidance [3][7] Earnings Estimates and Analyst Agreement - Analysts are optimistic about ZYME's earnings, with a consensus indicating better-than-previously estimated earnings [4] - The Zacks Consensus Estimate for the current year has risen by 6.2% over the past month, with four estimates increasing and no negative revisions [12] - A strong correlation exists between earnings estimate revisions and near-term stock price movements, suggesting potential upside for ZYME [11] Zacks Rank and Investment Potential - ZYME holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors [13] - While the consensus price target may not be a reliable indicator of the stock's potential gain, it does provide a directional guide for price movement [13]