Zymeworks' development of its product candidates; the timing and status of ongoing and future studies and the related data; expectations and timing regarding future regulatory filings and approvals; the timing of and results of interactions with regulators; potential safety profile and therapeutic effects of zanidatamab and Zymeworks' other product candidates; the commercial potential of technology platforms and product candidates and other information that is not historical information. When used herein, w ...

VANCOUVER, British Columbia, July 11, 2024 (GLOBE NEWSWIRE) -- Zymeworks Inc. (Nasdaq: ZYME), a clinical-stage biotechnology company developing a diverse pipeline of novel, multifunctional biotherapeutics to improve the standard of care for difficult-to-treat diseases, today announced that management will report its second quarter 2024 financial results after market close on August 1, 2024. Following the announcement, management will host a conference call and webcast to discuss financial results and provid ...

Contacts: Investor Inquiries: Shrinal Inamdar Director, Investor Relations (604) 678-1388 ir@zymeworks.com investors@zymeworks.com Media Inquiries: Diana Papove Senior Director, Corporate Communications (604) 678-1388 ir@zymeworks.com media@zymeworks.com Zymeworks is a global clinical-stage biotechnology company committed to the discovery, development, and commercialization of novel, multifunctional biotherapeutics. Zymeworks' mission is to make a meaningful difference in the lives of people impacted by dif ...

Zymeworks Inc. (NASDAQ:ZYME) Q1 2024 Earnings Call Transcript May 2, 2024 4:30 PM ET Company Participants Shrinal Inamdar - Director, Investor Relations Ken Galbraith - Chair and CEO Paul Moore - Chief Scientific Officer Conference Call Participants Stephen Willey - Stifel Ashiq Mubarack - city Ivy Wang - Jefferies Brian Cheng - JPMorgan Jon Miller - Evercore ISI Operator Thank you for standing by. This is the conference operator. Welcome to Zymeworks First Quarter 2024 Results Conference Call and Webcast. ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________ FORM 10-Q ______________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-41535 _________________________ ...

Zymeworks Provides Corporate Update and Reports First Quarter 2024 Financial Results Vancouver, British Columbia (May 2, 2024) – Zymeworks Inc. (Nasdaq: ZYME), a clinical-stage biotechnology company developing a diverse pipeline of novel, multifunctional biotherapeutics to improve the standard of care for difficult-to-treat diseases, today reported financial results for the three months ended March 31, 2024 and provided a summary of recent business highlights. "We are very pleased to have presented five pos ...

| --- | --- | --- | --- | --- | |-------|-----------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | 4Q & FY 2023 Results | | | | | | Conference Call and Webcast | | | | | | | | | | Forward-Looking Statements This presentation and the accompanying oral commentary include "forward-looking statements" or information within the meaning of the applicable securities legislation, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities E ...

Zymeworks Inc. (NASDAQ:ZYME) Q4 2023 Earnings Conference Call March 6, 2024 4:30 PM ET Company Participants Shrinal Inamdar - Director, Investor Relations Dr. Chris Astle - Senior Vice President and CFO Paul Moore - Chief Scientific Officer Ken Galbraith - Chair and CEO Conference Call Participants Stephen Willey - Stifel Ivy Wang - Jefferies Yigal Nochomovitz - Citigroup Brian Cheng - JPMorgan Jon Miller - Evercore ISI Operator Thank you for standing by. This is the conference operator. Welcome to Zymework ...

[PART I](index=7&type=section&id=PART%20I) [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Zymeworks is a clinical-stage biotechnology company developing novel biotherapeutics for difficult diseases, leveraging proprietary platforms and strategic partnerships for its pipeline - Zymeworks is a clinical-stage biotechnology company developing novel, multifunctional biotherapeutics for difficult-to-treat diseases, utilizing complementary therapeutic platforms and an integrated drug development engine[27](index=27&type=chunk)[28](index=28&type=chunk) - The company's lead product candidate, **zanidatamab**, is a novel bispecific antibody targeting HER2, with partners Jazz Pharmaceuticals and BeiGene holding exclusive development and commercialization rights in different territories[29](index=29&type=chunk)[41](index=41&type=chunk) - Jazz Pharmaceuticals has initiated a rolling Biologics License Application (BLA) submission for **zanidatamab** in second-line biliary tract cancers (BTC) in the United States, aiming for completion in the first half of **2024** and potential launch in **2025** or earlier[29](index=29&type=chunk)[53](index=53&type=chunk) - BeiGene intends to submit a BLA for **zanidatamab** with the NMPA in China for HER2-amplified inoperable and advanced or metastatic BTC in the second half of **2024**[29](index=29&type=chunk)[53](index=53&type=chunk) - **Zanidatamab zovodotin**, the second clinical-stage candidate, is a HER2-targeting ADC; its planned Phase 2 study in NSCLC has been deprioritized, with the company exploring potential development and commercial collaborations[30](index=30&type=chunk)[37](index=37&type=chunk)[59](index=59&type=chunk) - Zymeworks' preclinical pipeline includes four nominated candidates (**ZW191, ZW171, ZW220, ZW251**) and aims for **five new IND applications by 2027**, focusing on ADCs with proprietary TOPO1i payload and multispecific T-cell engagers[31](index=31&type=chunk)[60](index=60&type=chunk)[64](index=64&type=chunk) - The company's therapeutic platforms (**Azymetric, Drug Conjugate Platforms, EFECT, ProTECT**) are modular and can be combined to engineer next-generation biotherapeutics with synergistic activity[28](index=28&type=chunk)[66](index=66&type=chunk) - Strategic partnerships with Jazz and BeiGene for **zanidatamab** and **zanidatamab zovodotin** have provided over **$435 million** in non-refundable upfront and milestone payments through December 31, 2023, with potential for up to **$1.56 billion** in future milestones and tiered royalties[75](index=75&type=chunk) - Platform partnerships with companies like BMS, GSK, Daiichi Sankyo, Janssen, Iconic, and Merck have generated approximately **$180 million** in non-refundable upfront and milestone payments, with potential for up to **$1.91 billion** in preclinical/development milestones and **$3.52 billion** in commercial milestones[38](index=38&type=chunk)[92](index=92&type=chunk) - The company's patent portfolio consists of **75 active families**, with **32 related to key product candidates and therapeutic platforms**, including **237 issued patents** (**56 U.S. patents**) as of December 31, 2023[110](index=110&type=chunk) - Zymeworks relies on third-party contract manufacturing organizations for all therapeutic antibody supply for clinical studies and research, and plans to continue this for commercial manufacturing[122](index=122&type=chunk) - The biopharmaceutical industry is highly competitive, with Zymeworks facing competition from major pharmaceutical and biotechnology companies with greater resources and established products, including existing HER2-targeted therapies[124](index=124&type=chunk)[126](index=126&type=chunk)[129](index=129&type=chunk) - Product candidates are subject to extensive government regulation in the U.S., Canada, and other countries, including rigorous development, testing, manufacturing, and approval processes, with **zanidatamab** having received Breakthrough Therapy and Fast Track designations[131](index=131&type=chunk)[135](index=135&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The company faces multiple risks in product development, regulatory approval, competition, financial stability, intellectual property, cybersecurity, and healthcare compliance - The company has a limited number of product candidates, all in preclinical or clinical development, with no products approved for commercial sale, leading to significant uncertainty regarding regulatory approval and commercial viability[191](index=191&type=chunk)[193](index=193&type=chunk) - Clinical trials are expensive, time-consuming, and have uncertain outcomes; positive early-stage results do not guarantee success in later stages, and unforeseen safety or efficacy issues could delay or prevent approval[191](index=191&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[204](index=204&type=chunk) - Zymeworks faces significant competition from major pharmaceutical and biotechnology companies with greater resources, which could negatively impact commercial opportunities if competitors develop more effective, safer, or less expensive products[191](index=191&type=chunk)[237](index=237&type=chunk)[239](index=239&type=chunk) - The company relies heavily on strategic partnerships (e.g., Jazz, BeiGene) for development and commercialization, and the failure or termination of these relationships could materially adversely affect its business[194](index=194&type=chunk)[329](index=329&type=chunk)[336](index=336&type=chunk) - Zymeworks has incurred significant losses since inception and anticipates continued losses, requiring substantial additional funding which may not be available on acceptable terms, potentially leading to delays or cessation of development programs[191](index=191&type=chunk)[319](index=319&type=chunk)[323](index=323&type=chunk) - The company's ability to obtain, maintain, and enforce patent and trade secret protection for its product candidates and technology is critical, and challenges to intellectual property rights could materially harm the business[194](index=194&type=chunk)[360](index=360&type=chunk)[364](index=364&type=chunk) - Security breaches, data loss, and other disruptions could compromise sensitive information, expose the company to liability under privacy laws (e.g., HIPAA, GDPR), and adversely affect its business and reputation[191](index=191&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk)[286](index=286&type=chunk) - Compliance with complex and evolving healthcare laws and regulations (e.g., anti-kickback, false claims, transparency laws) in the U.S. and internationally is critical, and violations could lead to significant penalties and harm to the business[191](index=191&type=chunk)[311](index=311&type=chunk)[315](index=315&type=chunk) [Item 1B. Unresolved Staff Comments](index=85&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) This item indicates no unresolved staff comments from the SEC regarding the company's previous filings - No unresolved staff comments are applicable to the company[451](index=451&type=chunk) [Item 1C. Cybersecurity](index=85&type=section&id=Item%201C.%20Cybersecurity) Zymeworks' board oversees its cybersecurity risk management program, integrated into the overall risk framework, focusing on identification, safeguards, incident response, third-party risk, and employee education, with no material incidents reported - The board of directors, in coordination with the audit committee, oversees the company's cybersecurity risk management program, which is integrated into the overall risk management framework[452](index=452&type=chunk)[455](index=455&type=chunk) - The cybersecurity strategy includes implementing controls, technologies, and processes for assessing, identifying, and managing risks, informed by industry standards and regularly assessed by independent third-party auditors[453](index=453&type=chunk)[454](index=454&type=chunk) - Key areas of the cybersecurity risk management strategy include identification and escalation of threats, technical safeguards, incident response and recovery planning, third-party risk management, and employee education and awareness[454](index=454&type=chunk) - The company has experienced cybersecurity incidents in the past but has not determined any to be material[454](index=454&type=chunk) [Item 2. Properties](index=86&type=section&id=Item%202.%20Properties) Zymeworks maintains principal executive offices in Middletown, Delaware, with operations in Canada, the U.S., Ireland, and Singapore, and is transitioning its primary U.S. office to Bellevue, with existing facilities deemed adequate for immediate needs - Zymeworks' principal executive offices are in Middletown, Delaware[457](index=457&type=chunk) - The company maintains physical operations and personnel in Canada (Vancouver), the United States (Bellevue, Seattle, Redwood City), Ireland (Dublin), and Singapore[457](index=457&type=chunk)[458](index=458&type=chunk)[460](index=460&type=chunk)[461](index=461&type=chunk)[462](index=462&type=chunk)[463](index=463&type=chunk) - The former U.S. office in Seattle is being terminated, with the primary U.S. office now in Bellevue, Washington[459](index=459&type=chunk)[460](index=460&type=chunk) - Existing facilities are deemed adequate for immediate needs, with options for leasing additional space for future growth[464](index=464&type=chunk) [Item 3. Legal Proceedings](index=87&type=section&id=Item%203.%20Legal%20Proceedings) As of December 31, 2023, Zymeworks is not a party to any legal proceedings expected to have a material adverse effect on its business, though litigation can still negatively impact operations - As of December 31, 2023, Zymeworks is not involved in any legal proceedings expected to have a material adverse effect on its business[465](index=465&type=chunk) - Litigation, even if successfully defended, can adversely impact the company due to defense and settlement costs and diversion of management resources[465](index=465&type=chunk) [Item 4. Mine Safety Disclosures](index=87&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Zymeworks - Mine Safety Disclosures are not applicable to Zymeworks[466](index=466&type=chunk) [PART II](index=88&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=88&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Zymeworks' common stock trades on Nasdaq under 'ZYME,' with 82 stockholders of record as of March 4, 2024; the company has never paid dividends and will no longer qualify as a 'smaller reporting company' after this 10-K filing - Zymeworks' common stock is traded on Nasdaq under the symbol "**ZYME**," having moved from the NYSE on December 16, 2022[469](index=469&type=chunk) - As of March 4, 2024, the company had **82 stockholders of record**[470](index=470&type=chunk) - Zymeworks has never paid cash dividends on its common stock and does not anticipate doing so in the foreseeable future, prioritizing reinvestment of future earnings into business growth[471](index=471&type=chunk)[431](index=431&type=chunk) - The company will no longer qualify for reduced disclosure requirements as a "**smaller reporting company**" after filing this Annual Report on Form 10-K for the year ended December 31, 2023[472](index=472&type=chunk) - No sales of unregistered securities occurred during FY2023, except as disclosed in a December 26, 2023 Form 8-K, and there were no issuer repurchases of equity securities[473](index=473&type=chunk)[474](index=474&type=chunk) [Item 6. Reserved](index=88&type=section&id=Item%206.%20Reserved) This item is intentionally left blank - Item 6 is reserved and contains no information[475](index=475&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation](index=89&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operation) This section reviews Zymeworks' 2023 financial condition and operations, highlighting a **$118.7 million net loss**, decreased revenue, reduced R&D expenses, and the need for substantial future funding - Zymeworks is a clinical-stage biopharmaceutical company that has not generated revenue from approved product sales as of December 31, 2023, and expects to continue incurring losses[477](index=477&type=chunk)[479](index=479&type=chunk)[482](index=482&type=chunk) Net Loss and Accumulated Deficit | Metric | 2023 (in millions) | 2022 (in millions) | 2021 (in millions) | |:---|:---|:---|:---| | Net (loss) income | $(118.7) | $124.3 | $(211.8) | | Accumulated deficit (as of Dec 31) | $(677.4) | $(558.8) | $(683.1) | - The company's cash resources, including cash, cash equivalents, and marketable securities, totaled **$456.3 million** as of December 31, 2023, which is anticipated to fund operating and capital expenditures for at least the next twelve months[480](index=480&type=chunk)[481](index=481&type=chunk)[550](index=550&type=chunk)[557](index=557&type=chunk) - Recent developments include Jazz initiating a rolling BLA submission for **zanidatamab** in second-line BTC and a Phase 3 confirmatory trial for first-line BTC, with BeiGene also updating its BLA filing timing for **zanidatamab** in China[487](index=487&type=chunk)[488](index=488&type=chunk) - The Phase 2 study for **zanidatamab zovodotin** in NSCLC has been deprioritized, with the company exploring collaborations[489](index=489&type=chunk) - Preclinical programs are advancing, with **ZW251** selected as the next IND candidate for GPC3-expressing HCC, and additional preclinical data presented for **ZW251, ZW220**, and TriTCE programs[490](index=490&type=chunk)[491](index=491&type=chunk) - The BeiGene License and Collaboration Agreement for **zanidatamab zovodotin** was terminated, and the **zanidatamab** agreement was amended to adjust royalty rates[494](index=494&type=chunk)[496](index=496&type=chunk)[498](index=498&type=chunk) - The Research and License Agreement with LEO Pharma A/S was terminated, with LEO reimbursing non-cancellable costs and assigning intellectual property rights to Zymeworks BC[499](index=499&type=chunk)[502](index=502&type=chunk) Revenue from Research and Development Collaborations (in millions USD) | Year | 2023 | 2022 | 2021 | |:---|:---|:---|:---| | Revenue | $76.0 | $412.5 | $26.7 | | Change 2023-2022 | $(336.5) | - | - | | % Change 2023-2022 | (82)% | - | - | - The significant decrease in revenue in 2023 was primarily due to a non-recurring **$375.0 million** upfront payment from Jazz in 2022, partially offset by higher development support and drug supply revenue from Jazz in 2023[536](index=536&type=chunk)[537](index=537&type=chunk) Research and Development Expense (in millions USD) | Category | 2023 | 2022 | 2021 | Change 2023-2022 | % Change 2023-2022 | |:---|:---|:---|:---|:---|:---| | Zanidatamab | $44.8 | $117.4 | $86.8 | $(72.6) | (62)% | | Zanidatamab zovodotin | $8.0 | $4.8 | $12.7 | $3.2 | 67% | | ZW171 | $10.7 | $1.9 | — | $8.8 | 463% | | ZW191 | $11.7 | $0.9 | — | $10.8 | 1,200% | | Other preclinical and research programs | $10.1 | $7.5 | $13.9 | $2.6 | 35% | | **Total Third-party R&D** | **$85.3** | **$132.5** | **$113.4** | **$(47.2)** | **(36)%** | | Salaries and benefits | $33.3 | $53.0 | $50.3 | $(19.7) | (37)% | | Stock-based compensation expense | $2.4 | $2.4 | $15.5 | — | —% | | Other unallocated expenses | $22.6 | $20.7 | $20.6 | $1.9 | 9% | | **Total R&D Expense** | **$143.6** | **$208.6** | **$199.8** | **$(65.0)** | **(31)%** | - Research and development expenses decreased by **$65.0 million** in 2023, primarily due to the transfer of the **zanidatamab** program to Jazz, partially offset by increased preclinical expenses for **ZW171** and **ZW191**, and higher **zanidatamab zovodotin** program costs[540](index=540&type=chunk) General and Administrative Expense (in millions USD) | Category | 2023 | 2022 | 2021 | Change 2023-2022 | % Change 2023-2022 | |:---|:---|:---|:---|:---|:---| | Salaries and benefits | $17.0 | $22.6 | $23.5 | $(5.6) | (25)% | | Stock-based compensation expense (recovery) | $5.3 | $1.2 | $(5.6) | $4.1 | 342% | | Professional fees, consulting and business insurance | $29.1 | $35.6 | $15.2 | $(6.5) | (18)% | | Other general and administrative expenses | $19.0 | $14.0 | $9.5 | $5.0 | 36% | | **Total G&A Expense** | **$70.4** | **$73.4** | **$42.6** | **$(3.0)** | **(4)%** | - General and administrative expenses decreased by **$3.0 million** in 2023, mainly due to lower headcount and professional service fees, partially offset by increased depreciation and technology spending[543](index=543&type=chunk) Other Income, net (in millions USD) | Year | 2023 | 2022 | 2021 | Change 2023-2022 | % Change 2023-2022 | |:---|:---|:---|:---|:---|:---| | Other income, net | $18.8 | $4.7 | $3.3 | $14.1 | 300% | - Other income, net, increased by **$14.1 million** in 2023, primarily driven by higher interest income from increased cash resources and higher rates of return[544](index=544&type=chunk) Income Tax Recovery (Expense) (in millions USD) | Category | 2023 | 2022 | 2021 | Change 2023-2022 | % Change 2023-2022 | |:---|:---|:---|:---|:---|:---| | Current income tax expense | $(0.2) | $(9.0) | $(0.4) | $8.8 | (98)% | | Deferred income tax recovery (expense) | $0.8 | $(1.9) | $1.0 | $2.7 | (142)% | | **Total Income tax recovery (expense)** | **$0.6** | **$(10.9)** | **$0.5** | **$11.5** | **(106)%** | - Income tax expense decreased by **$11.5 million** in 2023, mainly due to a reduction in U.S. taxes under global intangible low-taxed income rules, coinciding with a net loss in 2023 compared to net income in 2022[545](index=545&type=chunk) Net Cash Flows (in millions USD) | Activity | 2023 | 2022 | 2021 | |:---|:---|:---|:---| | Operating activities | $(118.3) | $144.1 | $(192.5) | | Investing activities | $(207.3) | $(53.8) | $144.6 | | Financing activities | $81.8 | $108.6 | $8.0 | | Effect of exchange rate changes | $0.4 | $0.2 | $(0.3) | | **Net change in cash and cash equivalents** | **$(243.4)** | **$199.0** | **$(40.2)** | - Cash used in operating activities in 2023 was **$118.3 million**, a significant change from **$144.1 million** provided in 2022, primarily due to the non-recurring Jazz upfront payment in 2022 and negative working capital movements in 2023[552](index=552&type=chunk) - Net cash used in investing activities increased to **$207.3 million** in 2023, mainly due to net purchases of marketable securities[553](index=553&type=chunk) - Net cash provided by financing activities in 2023 included **$49.9 million** from a private placement of pre-funded warrants and **$26.2 million** from an at-the-market equity offering[555](index=555&type=chunk) - The company's future funding requirements are uncertain and depend on clinical trial progress, regulatory approvals, commercialization costs, and the success of strategic collaborations[556](index=556&type=chunk)[557](index=557&type=chunk) - As of March 4, 2024, Zymeworks had **70,568,222 common shares** issued and outstanding, along with **5,086,521 pre-funded warrants** and various stock options and RSUs[561](index=561&type=chunk)[563](index=563&type=chunk) [Item 7A. Quantitative and Qualitative Disclosure About Market Risk](index=103&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section is not applicable as the company previously qualified as a 'smaller reporting company,' an exemption that will cease after this 10-K filing - The company previously qualified as a "**smaller reporting company**" and was exempt from providing quantitative and qualitative disclosures about market risk, an exemption that will cease after this 10-K filing[564](index=564&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=104&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Zymeworks' audited consolidated financial statements for 2023-2021, prepared under U.S. GAAP, with KPMG LLP providing an unqualified opinion, highlighting a **$118.7 million net loss** in 2023 and decreased revenue - The consolidated financial statements for the years ended December 31, 2023, 2022, and 2021 are presented in accordance with U.S. GAAP[567](index=567&type=chunk)[593](index=593&type=chunk) - KPMG LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2023[569](index=569&type=chunk)[570](index=570&type=chunk)[578](index=578&type=chunk)[579](index=579&type=chunk) Consolidated Balance Sheet Highlights (in thousands USD) | Asset/Liability | Dec 31, 2023 | Dec 31, 2022 | |:---|:---|:---|\ | Cash and cash equivalents | $157,557 | $400,912 | | Short-term investments | $216,770 | $91,320 | | Total current assets | $412,926 | $544,706 | | Total assets | $580,880 | $648,725 | | Accounts payable and accrued liabilities | $45,032 | $87,468 | | Total current liabilities | $55,763 | $95,625 | | Total liabilities | $116,074 | $155,769 | | Total stockholders' equity | $464,806 | $492,956 | Consolidated Statements of (Loss) Income Highlights (in thousands USD) | Metric | 2023 | 2022 | 2021 | |:---|:---|:---|:---| | Revenue from R&D collaborations | $76,012 | $412,482 | $26,680 | | Total operating expenses | $214,065 | $281,954 | $242,313 | | Net (loss) income | $(118,674) | $124,341 | $(211,843) | | Basic EPS | $(1.72) | $1.91 | $(4.11) | | Diluted EPS | $(1.72) | $1.90 | $(4.61) | Consolidated Statements of Cash Flows Highlights (in thousands USD) | Activity | 2023 | 2022 | 2021 | |:---|:---|:---|:---| | Net cash (used in) provided by operating activities | $(118,303) | $144,109 | $(192,451) | | Net cash (used in) provided by investing activities | $(207,253) | $(53,849) | $144,596 | | Net cash provided by financing activities | $81,847 | $108,582 | $8,011 | | Net change in cash and cash equivalents | $(243,355) | $199,045 | $(40,169) | - The company's revenue recognition policy involves significant judgment in evaluating distinct performance obligations, determining transaction price, and allocating it to performance obligations, especially for non-refundable upfront fees and milestone payments[603](index=603&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk) - Research and development costs are expensed as incurred, with a significant portion outsourced to third-party CROs, and clinical trial expense accruals are estimated based on operational and contractual information[642](index=642&type=chunk)[643](index=643&type=chunk) - Goodwill and IPR&D assets are evaluated for impairment annually; no impairment was recorded for IPR&D or goodwill in 2023, 2022, or 2021[650](index=650&type=chunk)[651](index=651&type=chunk)[662](index=662&type=chunk)[663](index=663&type=chunk) - Stock-based compensation expense is recognized based on estimated fair values using the Black-Scholes model for options and grant date fair value for RSUs, with liability-classified awards remeasured quarterly[645](index=645&type=chunk)[646](index=646&type=chunk) - The company completed a private placement in December 2023, selling **5,086,521 pre-funded warrants** for **$49.9 million** net proceeds, and an at-the-market offering in June 2023, selling **3,350,000 shares** for **$26.2 million** net proceeds[669](index=669&type=chunk)[670](index=670&type=chunk) - As of December 31, 2023, the company had **$36.6 million** in contract liabilities (deferred revenue) from BeiGene and Jazz agreements[700](index=700&type=chunk) - The Jazz Collaboration Agreement, amended in April 2023, resulted in a **$20.1 million credit note** to Jazz, reducing 2023 revenue, and transferred **zanidatamab** program responsibility to Jazz, impacting future development support revenue[706](index=706&type=chunk)[707](index=707&type=chunk) - The company has net operating losses carried forward of approximately **$597.2 million** in Canada and research tax credits of **$0.4 million** in the U.S. as of December 31, 2023[759](index=759&type=chunk)[760](index=760&type=chunk) - The company's operating lease liabilities totaled **$26.6 million** as of December 31, 2023, with a weighted average remaining lease term of **6.7 years**[766](index=766&type=chunk) - Contingent consideration liability related to the 2016 Kairos acquisition was **$1.878 million** as of December 31, 2023, subject to future development milestones[770](index=770&type=chunk)[771](index=771&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=146&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item states there have been no changes in or disagreements with accountants on accounting and financial disclosure matters - There have been no changes in or disagreements with accountants on accounting and financial disclosure[776](index=776&type=chunk) [Item 9A. Controls and Procedures](index=146&type=section&id=Item%209A.%20Controls%20and%20Procedures) Zymeworks' management, including the CEO and CFO, concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with KPMG LLP attesting to the latter, and no material changes occurred during the quarter - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of December 31, 2023[777](index=777&type=chunk)[778](index=778&type=chunk) - Internal control over financial reporting was assessed as effective as of December 31, 2023, based on the 2013 COSO framework[779](index=779&type=chunk)[780](index=780&type=chunk) - KPMG LLP, the independent registered public accounting firm, audited and attested to the effectiveness of internal control over financial reporting[781](index=781&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended December 31, 2023[782](index=782&type=chunk) [Item 9B. Other Information](index=146&type=section&id=Item%209B.%20Other%20Information) This item states no other information is required to be disclosed - No other information is required to be disclosed under this item[783](index=783&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=146&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to Zymeworks - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable to Zymeworks[784](index=784&type=chunk) [PART III](index=147&type=section&id=PART%20III) [Item 10. Directors, Executive Officers and Corporate Governance](index=147&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) This section details Zymeworks' board of directors and executive officers as of February 29, 2024, including the ten-member board led by CEO Kenneth Galbraith, corporate governance guidelines, and the independent Audit Committee, noting no family relationships among leadership - As of February 29, 2024, Zymeworks' board of directors consists of **ten members**, with **Kenneth Galbraith** serving as Chief Executive Officer, President, and Chair[786](index=786&type=chunk)[787](index=787&type=chunk)[790](index=790&type=chunk) - Key executive officers include **Christopher Astle** (SVP & CFO), **Paul A. Moore** (CSO), and **Jeffrey Smith** (EVP & CMO)[810](index=810&type=chunk)[811](index=811&type=chunk) - The company has adopted corporate governance guidelines and a Code of Business Conduct and Ethics, available on its website[818](index=818&type=chunk) - The Audit Committee, comprising **Mr. Campoy** (Chair), **Mr. Cox**, and **Mr. Miller**, all of whom are independent and financially expert, oversees financial statements, external auditor performance, internal controls, and risk management[819](index=819&type=chunk)[820](index=820&type=chunk) - All directors, except **Mr. Galbraith**, meet the independence requirements under Nasdaq listing standards[960](index=960&type=chunk) - There are no family relationships among any of the directors or executive officers[789](index=789&type=chunk)[811](index=811&type=chunk)[961](index=961&type=chunk) [Item 11. Executive Compensation](index=153&type=section&id=Item%2011.%20Executive%20Compensation) This section details Zymeworks' 2023 executive compensation, designed to attract and retain talent while aligning with stockholder interests, comprising base salary, performance-based cash bonuses (**87.25% achievement**), and long-term equity incentives, with new anti-hedging and clawback policies, and director compensation also adjusted to peer practices - Zymeworks' executive compensation program aims to attract, retain, and motivate highly qualified executives, aligning their interests with stockholders and business strategy through competitive pay, performance-based incentives, and long-term value creation[827](index=827&type=chunk)[828](index=828&type=chunk) - The compensation committee, with input from independent consultant Aon plc, reviews and approves executive compensation, considering peer group data, individual performance, and company objectives[832](index=832&type=chunk)[833](index=833&type=chunk)[837](index=837&type=chunk)[839](index=839&type=chunk) - The 2023 executive compensation package included base salary, annual cash bonuses, and long-term incentives (stock options and restricted stock units) with a **50/50 value mix**[840](index=840&type=chunk)[841](index=841&type=chunk)[846](index=846&type=chunk)[855](index=855&type=chunk) 2023 Named Executive Officer Base Salaries (USD) | Name | 2023 Base Salary ($) | |:---|:---|\ | Kenneth Galbraith | 625,000 | | Christopher Astle | 410,000 | | Paul Moore | 465,000 | | Neil Klompas (Former) | 500,000 | - For 2023, corporate goals were achieved at an **87.25% level**, resulting in corresponding cash bonuses for named executive officers[850](index=850&type=chunk)[851](index=851&type=chunk)[852](index=852&type=chunk) 2023 Named Executive Officer Bonuses (USD) | Name | 2023 Bonus ($) | |:---|:---|\ | Kenneth Galbraith | 327,188 | | Christopher Astle | 125,204 | | Paul Moore | 182,571 | | Neil Klompas (Former) | — | - Certain executives (**Mr. Galbraith, Dr. Astle, Dr. Moore**) received perquisites such as accommodation, relocation expenses, and tax equalization benefits to support their duties and facilitate efficiency[861](index=861&type=chunk)[862](index=862&type=chunk)[863](index=863&type=chunk)[864](index=864&type=chunk) - The company adopted an anti-hedging policy and a clawback policy in November 2023, in accordance with SEC and Nasdaq requirements, allowing for recovery of excess incentive-based compensation in case of accounting restatements[866](index=866&type=chunk)[867](index=867&type=chunk) - Executive employment agreements include provisions for severance and change-in-control payments, designed to incentivize retention and focus on stockholder value[869](index=869&type=chunk) - Director compensation includes annual cash retainer fees and equity grants (stock options), with recent adjustments in December 2023 to increase committee chair/member retainers and initial/annual option grants to align with peer group practices[916](index=916&type=chunk)[918](index=918&type=chunk)[920](index=920&type=chunk)[921](index=921&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=173&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details beneficial ownership of Zymeworks' common stock by principal stockholders, directors, and executive officers as of February 29, 2024, along with information on equity compensation plans and highlights significant voting influence by major stockholders Equity Compensation Plan Information (as of Dec 31, 2023) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights | Weighted average exercise price of outstanding options, warrants, and rights ($) | Number of securities remaining available for future issuance under equity compensation plans | |:---|:---|:---|:---|\ | Equity Compensation Plan | 7,136,255 | 12.99 | 4,594,639 | | ESPP | — | — | 2,029,328 | | Original Plan | 493,878 | 12.65 | — | | Inducement Plan | 700,000 | 12.36 | 50,000 | - The Inducement Plan, adopted without stockholder approval, allows for grants to employees as a material inducement to employment, with terms similar to the Equity Compensation Plan[929](index=929&type=chunk) Beneficial Ownership of Common Stock (as of Feb 29, 2024) | Name | Common Stock Beneficially Owned | Percentage of Shares Beneficially Owned | |:---|:---|:---|\ | EcoR1 Capital, LLC | 14,262,473 | 19.99% | | BVF Partners L.P. | 5,870,000 | 8.32% | | Redmile Group, LLC | 5,790,230 | 8.21% | | Morgan Stanley | 4,842,464 | 6.87% | | BlackRock, Inc. | 3,923,328 | 5.56% | | All current executive officers and directors as a group (13 persons) | 962,331 | 1.35% | - As of February 29, 2024, **70,532,213 shares of common stock** were issued and outstanding[930](index=930&type=chunk) - Principal stockholders, including **EcoR1 Capital, BVF Partners L.P.**, and **Redmile Group, LLC**, collectively hold substantial voting influence[933](index=933&type=chunk)[934](index=934&type=chunk) [Item 13. Certain Relationships and Related Transactions and Director Independence](index=176&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) This section outlines Zymeworks' policies for related person transactions, requiring audit committee review for those exceeding **$120,000**, and confirms that all directors, except the CEO, are independent under Nasdaq standards, with no family relationships among leadership - Zymeworks has a formal written policy for reviewing and approving related person transactions exceeding **$120,000**, with the audit committee holding primary responsibility[953](index=953&type=chunk)[954](index=954&type=chunk) - The policy includes standing pre-approvals for certain transactions, such as compensation arrangements, transactions with companies where a related person has a minor role, and charitable contributions within specified limits[955](index=955&type=chunk) - All directors, except **Kenneth Galbraith** (CEO), are considered independent under Nasdaq listing standards[960](index=960&type=chunk) - All members of the audit, compensation, and nominating and corporate governance committees satisfy the additional independence criteria set by SEC rules and Nasdaq listing standards[959](index=959&type=chunk)[960](index=960&type=chunk) - The board considered a consulting agreement with a director's LLC (Derek J Miller Consulting LLC) and determined it did not impair his independence[960](index=960&type=chunk) - **EcoR1 Capital**, a significant stockholder, purchased pre-funded warrants in a private placement in December 2023 and has the right to nominate a board member, leading to **Scott Platshon's** appointment in February 2024[951](index=951&type=chunk) [Item 14. Principal Accounting Fees and Services](index=179&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) KPMG LLP has been Zymeworks' independent auditor since June 2015, with aggregate fees totaling **$1,282,396** in 2023, and the audit committee maintains a policy to pre-approve all audit and permissible non-audit services to ensure auditor independence - KPMG LLP has been Zymeworks' independent registered public accounting firm since June 24, 2015[962](index=962&type=chunk) Aggregate Fees Billed by KPMG LLP (in USD) | Fee Type | 2023 ($) | 2022 ($) | |:---|:---|:---|\ | Audit Fees | 775,096 | 752,300 | | Audit Related Fees | — | — | | Tax Fees | 507,300 | 385,600 | | All Other Fees | — | — | | **Total Fees Paid** | **1,282,396** | **1,137,900** | - The audit committee has a policy to pre-approve all audit, audit-related, tax, and other non-audit services provided by KPMG, ensuring auditor independence[965](index=965&type=chunk)[966](index=966&type=chunk) [PART IV](index=179&type=section&id=PART%20IV) [Item 15. Exhibits, Financial Statement Schedules](index=180&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K, confirming the inclusion of required financial statements and omission of inapplicable schedules, and provides a comprehensive index of exhibits - Financial statements are included as part of this Annual Report on Form 10-K[969](index=969&type=chunk) - All financial statement schedules are omitted because they are not applicable or their required information is included in the consolidated financial statements or notes[969](index=969&type=chunk) - A detailed index of exhibits, including transaction agreements, corporate governance documents, employment agreements, and financial certifications, is provided[970](index=970&type=chunk)[971](index=971&type=chunk)[972](index=972&type=chunk)[973](index=973&type=chunk)[974](index=974&type=chunk)[975](index=975&type=chunk) [Item 16. Form 10-K Summary](index=184&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that a Form 10-K Summary is not applicable - Form 10-K Summary is not applicable[976](index=976&type=chunk) [SIGNATURES](index=185&type=section&id=SIGNATURES) [SIGNATURES](index=185&type=section&id=SIGNATURES) This section contains the required signatures for the Annual Report on Form 10-K, including those of Kenneth Galbraith (CEO) and Christopher Astle (CFO), along with other directors, affirming the report's submission to the SEC as of March 6, 2024 - The report is duly signed on behalf of Zymeworks Inc. by **Kenneth Galbraith**, Chair of the Board of Directors and Chief Executive Officer, and **Christopher Astle**, Senior Vice President and Chief Financial Officer, as of March 6, 2024[979](index=979&type=chunk)[980](index=980&type=chunk)[983](index=983&type=chunk) - All listed directors have also signed the report[983](index=983&type=chunk)

| --- | --- | --- | --- | --- | |-------|-----------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | Third Quarter 2023 Results | | | | | | Conference Call and Webcast | | | | | | | | | | Forward-Looking Statements This presentation and the accompanying oral commentary include "forward-looking statements" or information within the meaning of the applicable securities legislation, including Section 27A of the Securities Act of 1933, as amended, and Section 21E o ...