Zymeworks Inc. (NASDAQ:ZYME) Q4 2025 Earnings Call Transcript

Zymeworks Inc. (NASDAQ:ZYME) Q4 2025 Earnings Call Transcript March 2, 2026

Operator: Thank you for standing by. This is the conference operator. Welcome to the Zymeworks Inc. Fourth Quarter 2025 Results Conference Call and Webcast. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be a Q&A session. I would now like to turn the conference over to Sharnell Elander, Vice President of Investor Relations. Sharnell, please go ahead.

Sharnell Elander: Thank you, operator, and good morning, everyone. Thank you for joining our fourth quarter 2025 results conference call. As usual, I would like to remind you that we will be making a number of forward-looking statements during this call, including, without limitation, those forward-looking statements identified in our slides and the accompanying oral commentary. Forward-looking statements are based upon our current expectations and various assumptions, and are subject to the risks and uncertainties, including those associated with the company, our industry, and at our stage of development. For a discussion of these risks and uncertainties, I refer you to the latest SEC filings as found on our website and as filed with the SEC.

In a moment, I will hand over the call to Kenneth H. Galbraith, our Chair, CEO, and interim Chief Financial Officer, who will provide an overview of recent business updates. Kenneth will then hand the call over to Bijal Desai, our Senior Vice President of Finance, to discuss our cash position and financial results for the fourth quarter 2025. Following this, Dr. Sabeen Mekan, our SVP and Chief Medical Officer, will provide progress updates on the Phase I clinical trial for ZW251. At the end of the call, Kenneth, Sabeen, and Bijal will be joined for Q&A by Paul A. Moore, our Chief Scientific Officer, Scott Pashton, our Acting Chief Investment Officer, and Adam Sherwitz, our Acting Chief Development Officer. As a reminder, the audio and slides from this call will also be available on the Zymeworks Inc.

website later. I will now hand the call over to Kenneth.

Kenneth H. Galbraith: Great. Thank you, Sharnell. Good morning, everyone. First, for those on the call, I hope you and your families are all safe and well, wherever you are joining the call from today. I would like to begin by recognizing the results of the Phase III HORIZON-GEA-01 trial as presented at ASCO GI by our partners, Jazz and BeiGene. Zanidatumab in combination with chemotherapy, with or without a checkpoint inhibitor, demonstrated a median PFS exceeding one year with a median overall survival exceeding two years in first-line metastatic or locally advanced HER2-positive GEA patients. This represents a clinically meaningful outcome in a setting where long-term survival has historically been limited and unmet need remains significant.

An additional planned interim analysis for median OS for the zanidatumab plus chemo regimen that just missed the statistical significance at the initial interim analysis is currently expected by mid-2026. Benefit was observed consistently across clinically relevant subgroups, irrespective of PD-L1 expression, which was studied as an exploratory endpoint in the HORIZON-GEA-01 rather than a stratification factor. On these data, we are optimistic that zanidatumab has the potential to redefine the treatment paradigm in first-line HER2-positive metastatic or locally advanced GEA. We received strong positive feedback from key opinion leaders, who recognize both the magnitude and durability of benefits seen in the study against the known and manageable safety profile.

Our partners are now preparing for upcoming global regulatory interactions, potential approvals, and inclusion in physician guidelines. I will highlight now. From a U.S. regulatory perspective, Jazz expects to complete the submission of the supplemental BLA with the FDA in 2026 under the Real-Time Oncology Review program in the U.S. For zanidatumab, zanidatumab has been granted Breakthrough Therapy designation for patients with HER2-positive GEA. We expect these designations will allow for greater speed in regulatory interaction. In addition, the data from HORIZON-GEA-01 has been submitted for inclusion in the National Comprehensive Cancer Network guidelines, as previously disclosed. We therefore share in Jazz’s expectations to have zanidatumab approved and launched for the treatment of GEA in the second half of this year, subject to completion of FDA review and approval.

Concurrently, BeiGene is working towards the supplemental BLA for tislelizumab in the U.S. in 2026 for review by the FDA. We believe these steps reflect the clinical relevance of the results and support the path toward broader patient access. Outside of the United States, we believe Jazz and BeiGene will intend to continue working on plans and timelines for regulatory interactions with respect to zanidatumab and tislelizumab in GEA, and we look forward to reporting such progress as appropriate. Our confidence in zanidatumab’s potential has only increased since we commenced registration studies in 2021 and partnered with Jazz in 2022, in addition to our existing APAC partnership with BeiGene. These partnerships allowed us to accelerate the development of zanidatumab and broaden its therapeutic potential in many other HER2-expressing tumors while sharing development risk and transferring costs to our partners.

We believe zanidatumab’s demonstration of a substantial survival benefit in metastatic or locally advanced GEA, a tumor type where prior HER2-targeted agents have struggled to materially extend outcomes, strengthens confidence in zanidatumab’s differentiated mechanism of action, and meaningfully reduces risk in the broader development program beyond the initial accelerated approvals for second-line biliary tract cancer received previously in the U.S., China, Europe, and now Canada. Building on this foundation, zanidatumab is being evaluated by Jazz across multiple mid- and late-stage studies, including breast cancer and other HER2-expressing solid tumors, including in a pan-tumor study. Breast cancer, in particular, represents a setting where additional novel HER2-targeted therapies, such as zanidatumab, may provide opportunities to continue improving upon the current standard of care for patients in multiple treatment settings.

In January, Jazz updated enrollment guidance for the EMPOWUR-303 trial, in which they expect to complete enrollment in 2027 with top-line data readout expected later in 2027 or in early 2028. Given zanidatumab’s dual epitope binding and differentiated biology, we are optimistic about its potential performance in the treatment of patients with metastatic HER2-positive breast cancer. Jazz is also pursuing collaboration with partners to combine zanidatumab with novel therapies. For example, the Phase I trial in combination with BI’s zanidotinib was recently initiated to explore the combination in metastatic HER2-positive breast cancer along with other potential tumor types. Collectively, these ongoing studies are designed to expand the clinical footprint of zanidatumab into indications where meaningful differentiation may translate into durable clinical and patient benefit.

Consensus estimates for peak sales of zanidatumab have doubled over the last few years, indicating clear potential for zanidatumab to achieve a multibillion-dollar peak sales level. With progress from our partners towards global regulatory approvals in first-line GEA and first-line BTC, and accelerated development goals in metastatic breast cancer and other tumor indications, these advances represent significant opportunities to build on the financial value of zanidatumab for Zymeworks Inc. and our shareholders. This quarter, we reported regulatory approvals for zanidatumab as monotherapy in both Canada and the United Kingdom for the treatment of second-line biliary tract cancer. From a financial perspective, this expansion is expected to translate into regulatory milestone payments for global approvals in GEA of up to $440 million, as well as a further $89 million collectively from Jazz and BeiGene upon approval in a third indication, as highlighted in our press release.

Zymeworks Inc. is also eligible to receive up to $977.5 million in commercial milestone payments tied to the achievement of sales thresholds. Approximately $1.5 billion in milestone payments remain possible under our collaboration agreements with Jazz and BeiGene. As use broadens across indications and geographies, we expect cumulative revenue contributions through both royalties and milestones to scale meaningfully. As disclosed today under the collaboration with Jazz, Zymeworks Inc. is eligible to receive tiered royalties of 10% to the high teens on global annual sales of zanidatumab up to $2 billion and 20% on annual net sales above $2 billion. Jazz holds marketing rights globally to zanidatumab, excluding Asia, but including marketing rights in Japan.

Under the collaboration agreement with BeiGene, Zymeworks Inc. is eligible to receive tiered royalties of mid-single to mid-double digits on annual net sales of zanidatumab up to $1 billion and 19.5% on annual net sales above $1 billion. BeiGene holds marketing rights to zanidatumab in Asia, excluding Japan. The strengthening clinical foundation for zanidatumab provides the basis for executing the royalty-backed note financing announced today. We view this as an opportunity to proactively leverage a validated, scaling asset to secure efficient, nondilutive capital while preserving long-term upside. Our ability to utilize unique and creative financial structures is important to achieving optimal value for shareholders from our collective assets.

I would like to spend a few minutes talking through this strategic financing with Royalty Pharma and how it fits within our broader capital strategy, using growing visibility into future royalties to fund the next phase of disciplined, value-accretive capital deployment. As announced with our press release today, the agreement with Royalty Pharma provides us with $250 million of low-cost, nondilutive capital in the form of nonrecourse royalty-backed notes. To be clear, this is not a monetization. The full value of the zanidatumab royalties returns to Zymeworks Inc. after the note is fully repaid. But unlike a traditional royalty-backed loan, there is no stated interest rate, and not all of the zanidatumab royalties are needed as security for repayment of the debt.

Obligation for repayment of the principal and cost of such capital is serviced from a portion of the zanidatumab royalty stream itself—30% rather than 100% with a traditional royalty loan—and provides the framework for a longer duration for the debt on attractive terms on a nonrecourse basis. The structure of the repayment provides an appropriate sharing of duration risk with Royalty Pharma for an appropriate return. We worked very closely with Royalty Pharma to design this unique debt facility, which reflects our optimism in achieving approval of zanidatumab in first-line GEA, as the loan is not conditional on FDA or other regulatory approvals. Our hope is that zanidatumab becomes the clear HER2-targeted agent of choice for GEA over a long time period.

The agreed structure allows us to securitize the note with only 30% of the zanidatumab royalty stream until repaid. Therefore, Zymeworks Inc. retains 70% of the royalty stream throughout the duration of the term, preserving the majority of ongoing cash flows. Royalty proceeds will be utilized to repay the principal, unlike in a traditional royalty loan where 100% of the royalty proceeds could be encumbered. As a result, both the net present value and total royalty retained over the life of the asset, with a much shorter duration, were superior relative to alternative loan structures we evaluated, and the royalty note incorporates a longer duration profile. From our perspective, this approach allows us to preserve a greater portion of near-term royalty cash flow compared to a conventional structure, thus allowing for accelerated reinvestments.

In addition, all earned regulatory and commercial milestones under agreements with Jazz and BeiGene will be retained by Zymeworks Inc., including, as mentioned earlier, $440 million in near-term milestone payments tied to future regulatory approvals of zanidatumab in GEA, $89 million in regulatory milestones for a third indication beyond biliary tract cancer and GEA, and up to $977.5 million of potential commercial milestone payments. Altogether, again, these milestone payments represent $1.5 billion of potential future revenue for Zymeworks Inc. Just as importantly, Royalty Pharma demonstrated strong conviction in the underlying royalty; Royalty Pharma was highly enthusiastic about including this asset in their portfolio, reinforcing external validation of its long-term commercial potential.

We have been very deliberate about protecting the potential long-term upside of zanidatumab royalties. Only a defined portion of royalties are subject to this agreement. Once the cap is reached, the royalty reverts fully to us. We continue to own the long-term upside of additional indications being developed and potentially commercialized by our partners. In addition, no other future royalty streams that may become available to us, like with pasritamig under our license with J&J or others, are encumbered by the royalty note. This transaction ultimately allows us to protect our core zanidatumab royalties and milestones while accelerating access to attractively priced capital and provides us with the ability to reinvest with a disciplined return framework.

This framework uses both continued share repurchases and potential strategic acquisitions to compound predictable revenues into durable, long-term shareholder value. From a use of proceeds standpoint, this capital enhances flexibility across those two primary levers, in addition to providing capital for our cash runway, which already extends beyond 2028. First, we retain the flexibility to continue to repurchase shares opportunistically. Our stock continues to trade below what we believe is the future value of underlying assets. The ability to opportunistically reduce our share count at an attractive discount while the value of future cash flows expand is a very powerful way to drive growth of long-term total shareholder return on a per-share basis.

As of today, we have utilized approximately $62.5 million of the $125 million share repurchase program authorized in November 2025. We will continue to see the ability to drive long-term TSR at a compelling discount, given the current market price of our shares. The proceeds of this financing will provide us the flexibility to continue to invest in our own business’s prospects. Second, we have the ability to deploy capital into the acquisition of high-quality assets and platforms where we see synergy in one of many factors, such as strategic fit, royalty potential, differentiated science, and favorable cash or tax attributes. Because we have internal research and development expertise, we can attribute value to development-stage and partner programs differently than traditional royalty companies or traditional R&D-focused biotechs.

We are not just evaluating assets for an income yield. We are evaluating probability of technical success, regulatory pathways, and commercial positioning. We believe this gives us an informational and analytical edge to pursue multi-asset acquisitions where we can attribute value to assets in a different way. Importantly, as we deploy this capital into additional royalty-bearing assets, we believe scaling and diversifying the portfolio has the effect of reducing the structural discount often applied to smaller, single-asset royalty streams. We intend to deploy the capital dynamically across royalty asset and platform acquisitions, as well as our ongoing share repurchase program, as a flexible allocation framework that can adjust based on opportunity and market conditions.

In addition, we have the continued ability to generate additional royalty and milestone streams from our wholly owned R&D portfolio as an alternative to external acquisition. To summarize, this transaction with Royalty Pharma provides us with additional capital on attractive terms in a unique structure to achieve our strategic and financial objectives, with no equity dilution and optimal strategic flexibility. We would expect to continue to utilize creative structures for capital, partnerships, and acquisitions where we believe they can be useful to building long-term value for our business. As part of our strategy, we see acquisitions as a potential way to add to our existing royalty portfolio, where acquisitions also allow us to feed our R&D engine.

Internal discovery will always be important at Zymeworks Inc.; having the ability to source high-quality external innovation enables us to continuously bring differentiated science into a development infrastructure that we know how to operate efficiently. Our R&D organization is built to advance assets to meaningful value-inflection points. Whether those assets are internally discovered programs or externally acquired ones, the goal is to focus on assets that have the potential for meaningful patient benefit and future partnership. Once we reach that stage for either internally or externally acquired assets, partnerships would allow us to translate scientific progress into long-duration economic participation through royalties and milestones, without assuming the full capital burden of late-stage development and commercialization.

Over time, that is what we expect will build and diversify our emerging royalty portfolio. So in practice, we hope that acquisitions will expand what R&D we work on, should help de-risk and advance those programs, and partnerships have the ability to convert that progress into recurring, capital-efficient future cash flows. That closed loop is central to how we aim to scale innovation into a durable economic engine. We look forward to providing updates against these capital allocation objectives. I will now hand over the call to Bijal to walk through our financial results for the fiscal year 2025 along with our current financial position.

Bijal Desai: Thanks, Ken. Total revenue was $106 million for 2025 compared to $76.3 million for 2024. The increase for the year was driven mainly by achievement of significant clinical and regulatory milestones and exercise of an option under our collaborations with J&J, BeiGene, GSK, Daiichi Sankyo, and BMS. This growth was partially offset by a decrease in development support and drug-related supply-related revenue from Jazz, reflecting the transition of responsibility for certain zanidatumab clinical activities to Jazz under our collaboration agreement. Overall, operating expenses were $198.5 million for the year 2025, compared to $213.4 million for 2024. The decrease is primarily due to a nonrecurring impairment charge recognized in 2024 related to our discontinued program zanidatumab zovodotin, partially offset by a slight increase in research and development expenses.

The increase for research and development expenses for the year was primarily due to an increase in unallocated costs largely related to noncash stock-based compensation expense as well as consulting and rent expenses. The increase was largely offset by a decrease in R&D program costs, as a decrease in expense of late-stage programs, including zanidatumab, zanidatumab zovodotin, and ZW220, more than offset the higher investment in early-stage clinical and preclinical programs, including ZW209, ZW1528, ZW251, ZW191, and ZW171 until ZW171 was discontinued. General and administrative expenses were consistent with the prior year as an increase in noncash stock-based compensation was offset by a decrease in salary and benefits due to reduced headcount, as well as decreases in consulting, rent, and information technology expenses.

Net loss was $81.1 million for the year 2025 compared to a net loss of $122.7 million in 2024. The change for the year was primarily due to an increase in revenue and decrease in total operating expenses and in income tax expense, partially offset by a decrease in interest income. As of 12/31/2025, we had $270.6 million of cash resources consisting of cash, cash equivalents, and marketable securities, compared to $324.2 million as of 12/31/2024. Based on current operating plans, and assuming full execution of the $125 million share repurchase plan, we expect our existing cash resources as of 12/31/2025, when combined with anticipated regulatory milestone payments of $440 million related to the potential approvals of zanidatumab in GEA in the United States, Europe, Japan, and China, as well as the net proceeds from our nonrecourse royalty-backed note, to fund our planned operations beyond 2028.

This anticipated cash runway does not take into account any contribution from additional future milestone payments or royalties related to zanidatumab, other current licensed product candidates, or contributions from future partnerships and collaborations. For additional details on our quarterly results, I encourage you to review our earnings release and other SEC filings as available on our website at www.zymeworks.com. In January 2026, the company announced an adjusted gross operating expense framework (non-GAAP), reflecting disciplined capital allocation across research and development, and general and administrative activities of approximately $300 million over a three-year period ending 12/31/2028. Despite the royalty-backed note financing announced today, we expect continued discipline in our approach to general corporate operating expenses with no change in our prior guidance for the three years ending 2028.

The company currently expects adjusted gross operating expenses in 2026 to be approximately 20% lower than in 2025, excluding the impact of any acquisition-related expenses or new partnerships and collaborations. A reconciliation of historical non-GAAP adjusted gross operating expenses to the nearest GAAP metrics can be found in our earnings release and on our Investor Relations website. I will now pass the call over to Sabeen, who will provide a brief update on our clinical development program ZW251.

Sabeen Mekan: Thank you, Bijal. Following my update last quarter, I am pleased to report that the Phase I study of ZW251 in GPC3-expressing tumors including hepatocellular carcinoma is progressing as planned. The trial is actively enrolling and is expected to include approximately 100 patients through dose escalation and optimization, with sites currently open across North America, Europe, and the Asia Pacific region. At ASCO GI in January, we presented a trial-in-progress poster outlining the study design, including a starting dose of 3.2 mg/kg in the dose-escalation portion. This starting dose reflects a data-driven decision informed by our prior experience with ZW191. In that program, where we utilized the same linker–payload technology and a drug-to-antibody ratio of eight, we began to observe early signs of activity at the 3.2 mg/kg dose level after starting at 1.6 mg/kg.

ZW251 incorporates a lower drug-to-antibody ratio of four, which supported our confidence in initiating dose escalation at 3.2 mg/kg. We look forward to providing further updates on ZW251 as dose escalation advances. In parallel, we expect to share additional clinical data from ZW191 as the data set from our dose-escalation study matures and the program progresses through dose optimization. I will now hand the call back to Ken to provide closing remarks.

Kenneth H. Galbraith: Thank you, Sabeen. As you can see on this slide, we have an eventful year ahead of us with multiple value-generating catalysts. This year, we hope to execute across each element of our novel strategy and illustrate the integration of the various development strategic initiatives. This means delivering clinical progress on our wholly owned R&D portfolio, continued progress on development and commercialization of zanidatumab and pasritamig by our partners, expanding new partnerships and collaborations, and demonstrating tangible outcomes, including the potential for critically aligned acquisitions by year-end. In January 2026, we announced our R&D priorities for 2026 and beyond, including our intention to continue conducting Phase I clinical studies for ZW191 and ZW251 in 2026.

In addition, we announced that beyond 2026, we expect to advance our advanced research efforts on multispecific antibody and engineered cytokine platforms, funded partially with early-stage partnerships and collaborations. INDs for our currently wholly owned multispecific programs ZW209 and ZW1528 remain on track for submission in 2026. As usual, we expect to have representation of our platform and pipeline throughout scientific conferences in 2026, including at AACR in San Diego in April. A significant priority for Zymeworks Inc. in 2026 is to integrate new partnerships and collaborations into our existing wholly owned portfolio to share funding and risk with partners. We look forward to providing progress updates throughout the year on these expected catalysts and on the continued execution of our evolving strategy.

I would like to end the call with this thought: one of the clearest illustrations of our model today is the journey of a single drug, zanidatumab, during my tenure as CEO since 2022. Zanidatumab was designed and developed in-house by our team. We advanced it through rigorous science and validated our asymmetric platform. Early in my tenure, we made the decision to partner strategically rather than sell it outright, generating meaningful upfront payments, structured with milestones and royalties, to ensure we captured potential upside as a shareholder value driver for our shareholders. The upfront proceeds funded the expansion of our wholly owned R&D portfolio over the past three years, strengthened our balance sheet, and contributed to the value creation reflected in our share price over time.

Now we find that zanidatumab may be a more successful new medicine than we anticipated back in 2022, with the ability to generate a much higher level of peak sales, and the structure of our partnership provides a meaningful value of future cash flows over a long time period. Today, that same asset is again serving as a catalyst—this time, through the royalty note financing announced today—to unlock additional nondilutive capital. We are able to accelerate the reinvestment of that capital into new value-generating assets, including potentially externally sourced innovations that meet our strategic and return thresholds. In many ways, it is a full-circle moment. One internally generated medicine helped build the portfolio we have today and is now providing the capital to expand our business further with the ability to generate additional sources of royalties and milestones, both internally and externally.

What is more, we may have the ability to do this again with pasritamig, which continues to demonstrate a highly encouraging safety and efficacy profile in Phase I combination regimens, including with docetaxel, as presented last week at ASCO GU, as well as assets from our existing platform partnerships, or other royalty-generating assets that we may choose to bring in or that result from new partnerships from our wholly owned pipeline. This transaction with Royalty Pharma underscores something fundamental about our model. We understand how to develop differentiated medicines, and we also understand how to underwrite cash-producing assets. Very few biotech companies can do both well over the long term. The ability to originate innovation internally and allocate capital externally allows us to compound value in a disciplined way, using science to create high-quality assets, partnerships that generate capital, and utilizing that capital to acquire and scale the next wave of royalty-generating opportunities for long-term shareholder returns.

With that closing comment, I would like to thank everyone for listening, and I will turn the call over to the operator to begin the question-and-answer session. Operator?

Q&A Session

Operator: Certainly. As a reminder, to ask a question, please press 1-1. To withdraw your question, please press 1-1 again. Our first question will come from the line of Charles Zhu of LifeSci Capital. Your line is open, Charles.

Charles Yue-Wen Zhu: Hello. Good morning, everybody. Thank you for taking our questions and congratulations on all the progress and the updates that you presented today. My question here is regarding your GPC3 ADC ZW251. It sounds like you will have about 100 patients through dose escalation and optimization. Any qualitative comments around how the enrollment data collection is going and, also, at what point might you make an internal decision whether or not to bring this forward in-house and how far, versus partnering development for this particular asset? Thank you.

Kenneth H. Galbraith: Yeah. Thanks, Charles. I will start with that, and I will see if Sabeen has anything to add later. But, you know, I would expect this would follow along very similar fashion to our Phase I program for ZW191, which is still obviously playing out. So I think, obviously, with 191, we had a very quick operational execution on the clinical study. We went from first patient in to first data presentation in about ten and a half months, which I think is related to the structure of how we think about clinical execution in early-stage studies and the geographic footprint we have. If you look on ClinicalTrials, you see we have a very similar clinical trial footprint for ZW251. You know, it is a different tumor type, different treating physician group.

It is a little early to make predictions about that, but I think you will see the same cadence of we are not going to give guidance about when an initial data disclosure will be made. It will probably be exactly like it was last year for ZW191: when we think we have something interesting to provide, we will do that in a peer-reviewed setting, and we will likely not give guidance around that until right before it is necessary to in terms of a public abstract or a public oral presentation. I think once we get through an initial presentation, it is a little bit easier with the cadence. So, you know, we have indicated we are going to have some ZW191 data update coming soon from the full dose-escalation data for that. But I think for the initial data presentation for ZW251, we will let our clinical folks do their work.

I think it is recruiting nicely, the way that we expected. And I think once we have something that we want to say, we will submit an abstract to a peer-reviewed medical meeting and are happy to present the data there for all to see. And I will just see if Sabeen has anything else she wants to add on that in terms of guidance.

Sabeen Mekan: I think the only thing I would say is that the enrollment for ZW251 is exceeding very nicely according to our plan. As Ken mentioned, it is a different patient population, but we are very excited with this molecule. As you know, in dose escalation, the timeframe often depends upon the number of dose-escalation cycles and follow-up and how quickly you see responses. I mean, with ADCs, it is generally very quick. But with a Phase I program, we generally want to wait until we have a wholesome dataset to present, and as Ken mentioned, we will do so at a peer-reviewed conference when we get to that point.

Charles Yue-Wen Zhu: Understood. Thank you very much for taking the questions, and congrats again on the progress.

Kenneth H. Galbraith: No. Thanks, Charles.

Operator: Our next question will be coming from Brian Cheng of J.P. Morgan. Your line is open, Brian.

Brian Cheng: Hi, Ken. Hi, team. Thanks for taking our questions this morning. First, just curious on the timing of the royalty-backed financing. Is that driven by something that you already found on the BD side that accelerated that need to secure the royalty-based deal? Can you help us define the accelerated timeframe on an acquisition here? And then we have a quick follow-up. Thank you.

Kenneth H. Galbraith: Yes. Thanks, Brian. Thanks for the question. I think the timing for the royalty note has as much to do with completion with Royalty Pharma, you know, and the current commercialization cycle of zanidatumab and the cost of capital that is available to us right now, as much as it does to where we see near-term use of proceeds. I would not read too much into that. You know, we obviously see a compelling opportunity to continue to buy our own shares and reduce share count over a period of time. We think it is a really good investment for our current shareholders, and we are halfway through the current authorized plan, and we will continue on that at the current share price. So this provides a little bit more balance sheet to do that.

We did want to add to the balance sheet also just to make sure that we were able to take advantage of opportunities for acquisitions we see in the marketplace, whether that is licensed assets that bear royalties, whether it is development assets, or whether that is platforms that are available to us. So, you know, we did want to have some capital available for that. We know we are active obviously in looking at those opportunities and assessing them, but we have a very disciplined approach, a very high standard for using that capital to bring other assets inside the company, and we will just let that play out without getting too far in front of ourselves in terms of guiding around timeframe or anything else. But I think it is just as much about looking at where zanidatumab is in the development cycle and the cost of capital that is available to us right now, and so we decided that we would complete that exercise now, and we will just let the transactions that follow—whether it is additional share repurchases or potential acquisitions—just let that follow, and then explain those as they are completed.

Brian Cheng: Got it. And looking ahead into April, can you give us a sneak peek of what to expect at AACR from your internal R&D side? What could really move the needle there for the entire portfolio?

Kenneth H. Galbraith: Yeah. I think on the scientific side, I will just let Paul maybe give you a little bit of foreshadowing. Obviously, you know, none of the abstracts are public yet, so we will have to wait till that standpoint. But maybe Paul can talk a little bit about what we have been working on that we are excited about to talk about in April without getting too definitive.

Paul A. Moore: Yep. Thanks, Ken. Yeah. Brian, as you know, we have both multispecifics and ADC capability in-house, and we have been applying that to oncology. So that is the AACR. That is where we have been, you know, traditionally over the last few years having a pretty high presence. We intend to have a high presence again this year. You know, on the ADC front, we did allude to a new payload technology that we have been developing. So we cannot speak specifically too much about that, but that technology is built on a similar philosophy and design that we used to develop the TOPO payload that was a clinical validation with ZW191, the folate receptor, and what the ZW251 program is built on. So you can expect to see progress and updates on that technology. Again, we are also pushing forward on our multispecifics, so you can also anticipate potential news on that front as well. Other than that, I cannot really say too much on the specifics.

Brian Cheng: Alright. Thank you. No worries. Thank you.

Kenneth H. Galbraith: Thanks, Brian.

Operator: And our next question will be coming from Yigal Nochomovitz of Citigroup. Your line is open, Yigal.

Yigal Dov Nochomovitz: Yes. Hi. Great. Thank you very much for taking the questions. Pasritamig is an asset you have been talking about more frequently recently. Would love to get your thoughts on the recent data and wondering whether the profile that is emerging in the Phase I is exceeding your expectations. And then on PTK7, the biparatopic ADC, just broadly, can you talk about the learnings from zanidatumab and how much of that was translated into the design of PTK7, please? Thank you.

Kenneth H. Galbraith: No. Thanks very much. I think I will let Paul answer the second question on PTK7, and then maybe let Adam answer the question on pasritamig because he was at ASCO GU over this past week. So maybe Paul, can you take the second question first and then Adam follow-up?

Paul A. Moore: Yeah. No. Thanks, Yigal. Yeah. No. So PTK7 is a target that we have been very interested in. We see it pairing nicely with both TOPO and also with the RAS payload technology. PTK7 has an attractive tumor expression profile. Lung cancer in particular is attractive, but there are other indications as well. So our effort on that, though, has been really to, you know, as part of our philosophy on ADCs, we think about the payload, but we also think about the front end of the antibody and so really how do you best deliver payload with an antibody-based modality. And for PTK7, what we thought, or what we felt from our data, was that a biparatopic actually gives better delivery than just a monospecific antibody. So there, we did deploy the same technology that is used in zanidatumab, our Azymetric technology, which allows us to pair different binding specificities, different epitopes that are targeting PTK7.

And what is very important is that when you do build those, you screen multiple different specificities to get the right pair that actually gives you the biparatopic effect that you want, which is the enhancement of internalization. But you also have to think about other features as well, such as the CMC properties and the PK properties of that pair. And that learning that we got from zanidatumab did put us in good position to understand then how to develop that for PTK7 biparatopic. So that is an overview of that, Yigal.

Adam Sherwitz: And then maybe on the pasritamig, this is Adam, if you want me to pass through. Certainly, lots of enthusiasm and excitement coming out of ASCO GU this past weekend from J&J. You know, physicians largely agree that this is a very well-tolerated drug that has a lot of potential. J&J’s enthusiasm is obviously clear with multiple registration trials that they have publicly stated and disclosed at least some of the details around them. So we are certainly enthusiastic about it. We think that the safety is a key aspect of the differentiation. And, of course, the efficacy is very impressive so far, but obviously still early days. So a lot of enthusiasm on that front, both from us and from J&J and the physicians in the space.

Yigal Dov Nochomovitz: Thank you.

Kenneth H. Galbraith: Thanks, Yigal.

Operator: And our next question will be coming from Eva Fortea-Verdejo of Wells Fargo. Your line is open, Eva.

Eva Fortea-Verdejo: Good morning. Thanks for taking our questions, and congrats on the progress. Thank you. Stepping back to your broader strategy, what types of assets are you looking to bring in through acquisitions? Any specific therapeutic areas or development stage you are looking for? And how should we be thinking about the cadence of these deals? And just as a follow-up, you mentioned cash runway extends beyond 2028. Are any potential acquisitions accounted for in the cash runway? Thanks.

Kenneth H. Galbraith: Yeah. I will just answer your second part of your question first, and I will pass over to Scott to talk a little bit about the first part, if he wants to do that. So, no. There are no acquisitions included in our cash runway forecast. There are also no new partnerships or collaborations, which could be inflows, as a part of that. So, as we complete transactions, whether they are acquisition-related or partnership or collaboration-related, or if it is progress of existing collaborations, we will update that cash runway. Obviously, we are, you know, well beyond 2028 when you look at the milestones coming in from just GEA and the reduction we have taken in R&D spend this year over last year, which will continue.

So I think we feel very comfortable with the runway that we have and the proceeds that we have available to allocate, whether it is continuing share repurchases or exploring some of the acquisitions that we will talk about. And I will let Scott provide some more guidance around that, if he would like.

Scott Pashton: Yeah. Thanks. Look. I think there are two questions embedded in that, which is sort of therapeutic areas for deal making and sort of the timing and cadence of deals. We think a lot about the world-class production engineering team we have in Vancouver. It is the team that made zanidatumab, that developed the Azymetric that led to pasritamig, and has an amazing ADC platform and innovative immunology assets. So we really have incredibly high conviction that that team will be developing the next zanidatumab. And what I mean by that is an innovative medicine that drives really dramatic patient benefit. So given that expertise in-house, we think a lot about that as a resource and how it impacts our right to win when we are looking at deal making.

So we feel like we have an advantage there, but we are certainly not going to restrict ourselves to the areas of oncology and immunology, but it does factor into sort of the hurdle rate on return that we might expect when looking at deal making. Your second question was sort of when will we do deals? And we are just not in a position to give explicit guidance on deal timing. I think I can tell you sort of our core values around deal making, which is, one, as I mentioned earlier, opportunities that we understand well. I would say number two is that we have a real clear reason to be the right buyer and a right to win that deal. And then we overlay that with a very strict return threshold, that the deal making externally is always done and weighed against the opportunity to own more of our existing portfolio, which we have a very, very good sense of its value at all times, and any capital deployment externally is going to be weighed against the IRR achieved from those share repurchases.

Kenneth H. Galbraith: Yeah. Thanks, Scott. And, Eva, obviously, you know, the arrangement that we put with Royalty Pharma today is a part of that strategy. You know, it is a longer-term duration which I think lets us have a little bit more strategic flexibility about the types of assets we might look at and the payback we need to have from those assets. And, obviously, accessing this capital from Royalty Pharma in this structure gives us something, you know, low, low, low, low, low double-digit cost of capital, which I think just allows us to think about target returns in a different way than maybe traditional biotechs might think about.

Eva Fortea-Verdejo: Got it. Thanks.

Kenneth H. Galbraith: Yep.

Operator: And our next question will come from Yaron Benjamin Werber of TD Securities. Your line is open.

Steven (for Yaron Benjamin Werber): Hi. This is Steven on for Yaron. One question about the 20% plan for lower OpEx, maybe a little bit more color on how that is going to look. And then in terms of fulfilling that, I mean, $125 million share repurchases—any sense of the cadence on that? Thank you very much.

Kenneth H. Galbraith: Yes. Thank you. I will take those two questions. Second, on the cadence of share repurchases. Obviously, we did a $60 million share repurchase starting in 2024, which took about twelve months, and that was really, you know, funded entirely by milestones that were received from Jazz and BeiGene for the BTC indication approval. Right now, we authorized another $125 million in November. We are obviously, you know, halfway through that pretty quickly. And in addition to the, you know, the balance sheet we have now and the Royalty Pharma financing of $150 million, we obviously have expectations of another $150 million in capital being available to us upon GEA approval in the U.S., based on our next Jazz milestone.

So we feel fully resourced to move as quickly as opportunities allow ourselves to move on the remainder of that $62.5 million, as well as consider authorizing further before then. Right now, given the underlying value we see in our assets in the future, it is a very compelling discount for us to think about reducing share count for our shareholders through investing in our business and returning capital through share acquisitions. So we will continue to pursue that as long as that compelling discount continues to be available to us. I think if you look on the spending side, if you look over the last three years, we took the upfront payment from Jazz, which was about $375 million back in 2022. We put that to work over a three-year time period to build the current wholly owned portfolio that we have right now.

I think given that we have now established a pretty reasonable portfolio, the cadence of continuing to do that is going to slow down a little bit, and that will result in some reduction from last year to this year’s spending. In addition, we have said now is the time to start to integrate partnerships and collaborations into that wholly owned, unencumbered portfolio that we have built to both clinical and preclinical assets, which is quite broad, obviously, between the multispecifics, the dual engineered cytokines, and our next-generation ADCs. So I feel quite comfortable that we still have a robust R&D operation inside the company even at a slightly reduced spend level. And as we manage that ourselves and bring in partnerships and collaborations, which will bring in funding towards that, the direction of R&D spending will be downward, but we will still have a very viable R&D operation that will continue to build unencumbered assets in combination with potentially earlier-stage partnerships, unlike what we have done in the past three years in building a wholly owned portfolio.

So different strategy, different purpose, but we still think we have a very robust and innovative R&D operation that integrates well with the thoughts around the royalty assets that we have in zanidatumab and eventually pasritamig and things that we can add from outside the company inside, whether they are unpartnered assets, additional novel platforms like Azymetric, or assets that are already licensed, which will carry royalty or milestones in the future. Thank you.

Operator: And our next question will be coming from the line of Stephen Douglas Willey of Stifel. Your line is open, Stephen.

Stephen Douglas Willey: Yeah. Good morning. Thanks for taking the questions. Just a couple on the IND submissions for this year. So I know that development of DLL3-targeting therapies has grown increasingly crowded. There is a number of different modalities out there, and the target is only really relevant to a couple of indications. So can you just speak to the target product profile you are hoping to see with ZW209 in Phase I and just how you are currently thinking about strategic interest here? Then also just curious why you are targeting an ex-U.S. regulatory submission for ZW1528. Just wondering if that is predicated on enrollment kinetics, is that due to the ability to move faster through dose escalation? Thanks.

Kenneth H. Galbraith: Yeah. I can answer the second question. Maybe I will pass over to Paul to talk a bit more about DLL3 and what we are trying to accomplish, not just with ZW209, but in the broader sense in the TriTCE platform. But, no, I think, you know, both these assets are quite interesting from our standpoint. We are obviously interested in considering strategic interest and potential partners who want to move along with us into the clinic at this stage. That is something that we are continuing to have discussions about. ZW1528, we just see the ability to move much more quickly in early clinical studies in an ex-U.S. environment. I think it is not unusual if you look at respiratory expertise in clinical studies. There is quite a bit of it in both the EU and the UK—separately, because that is not in the EU—but there is a lot of respiratory expertise in Europe, and in some cases, abilities to go faster than the U.S. in early clinical studies.

So the same way we have gone faster with ZW191 by having integrated sites in Asia Pacific and Europe to go along with the U.S., we are doing the same thing with ZW251 with a pretty big ex-U.S. footprint. I think with ZW1528, we have the ability to access the expertise that is necessary and go quickly in early clinical studies outside the U.S. rather than in the U.S. And so that is what we are looking at doing for that. And I will pass the DLL3 question on to Paul.

Paul A. Moore: Yeah. Thanks, Ken. Thanks, Stephen, for the question. Yeah. I mean, just as a reminder, the way we designed ZW209 is that it incorporates costimulation directly in the BiTE—in the trispecific. So it is a trispecific binding DLL3, CD3, and CD28. So although the DLL3 space has gained a lot of traction because it is a very viable target, we feel that we have a truly differentiated molecule. We would be the first with that type of design all in one molecule. And the thinking and the design of that molecule took a lot of work to get that balance of CD3 and CD28 so that we only engage CD28 after we have targeted CD3. So we think that will then drive the benefit—that it then drives a deeper T cell response. T cells are more sustained in their ability to maintain activity over a period of dosing.

And you can even see that reflected—that desire to have that component—reflected in other people’s T cell engager designs where they add in CD28 as a separate molecule. We think by putting it into a single molecule, it can really give you a lot of benefit out of the gate. So there, we pushed that forward with DLL3. There was also a lot of learnings that we made from our ZW171 program in the delivery, the sub-Q, the step-up. So we think we can accelerate quite quickly based on those learnings. We have Sabeen’s team well positioned to execute on that based on the efficient execution of the ZW171. So we are well positioned, and we think we can, you know, execute and get to inflection data quite quickly overall. Behind that, of course, that same mechanism design, we also are very excited about applying it to other targets.

We did have a nice presentation at SITC where we talked about how we can expand target base both in solid tumors, heme-onc, as well as sort of more gated strategies as well. So there is a lot behind that platform and other molecules that we are also developing. But we are very excited about ZW209 as a proof-of-concept molecule as well as really providing benefit that we think you can get beyond existing T cell engagers by having that beneficial costimulation in the design.

Stephen Douglas Willey: Maybe just a follow-up. So if the advantage of costim then is to improve durability of response—at least that is what I am intimating from your comments—does that then inherently require you to take that through a later stage of development to be able to prove out that durability beyond the Phase I all-comers trial?

Paul A. Moore: Yeah. Yeah. I think I should state the durability of response, but also the breadth of response. So we also feel like there are certain patients with T cells in solid tumors that maybe do not have enough punch from just a CD3 engagement. We think both the breadth and the durability of response, you know, we hope to enhance. So we think we should see signals during the dose escalation if our projections are in line with what we actually execute and see. But you are right. There may also then take time for longer benefit to see the duration of response, like, as you say, as we get into expansion phases or part of the study.

Sabeen Mekan: I would like to add in this setting that, as Paul mentioned, given the additional mechanism of action, we are expecting an improvement in response rate as well as the duration of response, which would translate into progression-free survival in this setting, and there may be additional patients who respond but typically do not respond to tarlatamab or other DLL3 agents that are in development. Our goal is, given the fact that we already have agents approved in this setting, we could easily compare our efficacy based on existing molecules, which may help us in evaluating our efficacy at an earlier stage without even taking it into a later stage of development. I mean, we could choose to take it later if we would like to.

Stephen Douglas Willey: Thanks for taking the questions.

Kenneth H. Galbraith: Yeah. Thanks, Steve.

Operator: And our next question will be coming from the line of Mayank Mamtani of B. Riley Securities. Your line is open, Mayank.

Mayank Mamtani: Yes. Good morning, team. Thanks for taking our questions, and congrats on progress on several fronts, including the Royalty Pharma note and the continued repurchase. If I may ask a HORIZON-GEA question quickly, clarification of this next OS analysis that is coming up. Are you aware that that data could constitute a major BLA amendment once, you know, you have that available? And, also, was curious if you could touch on the rationale of the zanidotinib combination with zanidatumab study. Looks like a multi-indication study, you know, that could also have head-to-head data versus T-DXd or T-DM1? Then I have a quick follow-up.

Kenneth H. Galbraith: Yeah. I think on the question related to the median OS readout, I do not think we want to comment about any regulatory strategy related to that. Obviously, Jazz has stated very clearly in their call last week that they believe that they have sufficient data from the current HORIZON-GEA-01 study to file in the U.S., and, obviously, they have initiated that process. The timing of the outcome from the second analysis of median OS, and the ability to add that to an existing filing versus file that later to add to an approved label is something I think Jazz will talk about at the time when that data is available and not ahead of that from a regulatory strategy perspective, if that is okay. Sorry. Can you repeat your second question again, sir? I did not hear quite clearly.

Mayank Mamtani: Sorry. Yeah. The zanidotinib, the study of the HER2 TKI with zanidatumab. Looks like a multi-indication study and just breast cancer, and some head-to-head data versus T-DXd might be generated there. So just curious on the vision there of that study.

Kenneth H. Galbraith: Yeah. As I said, I do not think we want to go much beyond what is available on ClinicalTrials, but, obviously, that is an approved TKI now, and zanidatumab is as well. So the ability to look at combinations of two approved agents in indications they have not yet been labeled for is a pretty standard practice. And I think we have always known that the combination of zanidatumab and a TKI could be very interesting in multiple indications. I think we were just waiting for the next generation of TKIs to be approved. This one is pretty interesting from our perspective, having followed all of them for some time period. So it would not be surprising to look at a range of indications in that combination. And then after understanding the data that come out of the combination studies, deciding what the next steps are from there. I am most happy to let Jazz and BI and data drive those future decisions.

Mayank Mamtani: Okay. Thank you. And on the GPC3 liver cancer program, could you just confirm if, you know, patients there are enriched for high GPC3 expression or not? And if you are able to comment on how much validation and even differentiation you could show versus, you know, the GPC3 CAR-T data that we have seen? Thank you.

Kenneth H. Galbraith: Yeah. I will let Sabeen answer the first part of that question, and then second part, maybe Paul could comment if he feels the need.

Sabeen Mekan: As for the ZW251 GPC3 program, we are enrolling all levels of GPC3 expression. The target tumor type that we are enrolling in this patient population is hepatocellular carcinoma mainly, which has very high levels of GPC3 expression. According to the literature available, more than 90% of patients have some level of expression, so we are fairly confident that most of the patients enrolled are going to have expression levels. The other thing is we will be evaluating GPC3 levels during the course of our study for all of our patients, and in the end, do a comparison for the efficacy with regards to expression levels once we have enough data.

Paul A. Moore: Yeah. And I would just think your second part of your question was how does it compare to other modalities? And I think, you know, certainly GPC3 has been a target of high interest in liver cancer. There has been some success with CAR-Ts, but, you know, they have their own challenges, CAR-Ts, but certainly that does bode well for the value of the target. We think we are really quite competitive and really one of the first to really think about using ADCs, and the data that we have from the ZW191 program using the same TOPO payload really gives us a lot of conviction that we are on the right track with the tolerability and the profile that that showed there. Of course, we will wait for the data.

Sabeen Mekan: Thank you.

Kenneth H. Galbraith: Thanks for the question.

Operator: And our next question will be coming from the line of Jonathan Miller of Evercore ISI. Your line is open, Jonathan.

Jonathan Miller: Hi, thanks so much for taking my questions and sneaking me in here. And congrats on the financing. One more on the strategy side and the financing side. Obviously, between this financing and the expected milestone that is coming from Jazz this year, you have got a lot more flexibility. Ken, I know you spoke about balancing capital allocation across a number of different things. But is it fair to assume that this—that today’s financing—opens up larger potential BD opportunities to you guys? And can you give a little bit of commentary on maybe what size of targets you are looking at given the cash position, the expected cash position once all of this is cleared out? And then sort of relatedly, you talked a lot about keeping OpEx even though you have gotten the new capital.

Is it fair to assume that if you do bring in development-stage assets as part of your BD activity, that is going to come with additional OpEx liability, and you are going to have to spend against those assets to generate value off of them? Can you give me a little bit of, you know, bookends about how I should be thinking about what that liability could be?

Kenneth H. Galbraith: Yeah. No. Great questions, as always, Jonathan. You know, I think the way we feel about the current financing is, again, we have, you know, the right amount of R&D spend that we want to have right now. I think we have, you know, made a really great investment the last three years in the wholly owned portfolio, and that cadence is slowing down a little bit. And I think integrating the partnership collaboration is the right thing to do with how all of those programs that deserve to go forward will get funded. I think that is great. We have obviously been able to continue to invest in ourselves by continuing our share repurchases at even a much more accelerated rate than when we started this in 2024, and it is allowing us to, you know, return capital to shareholders from, you know, milestones and commercial revenue from zanidatumab, usually as we started in 2024, a little bit in advance of maybe receiving all of those milestones.

So those are all great. I think, obviously, a part of this financing strategy now is to find an appropriate cost of capital with a long-term duration that allows us to think about the types of things that we will invest in. I do not think it makes us think about larger transactions necessarily. It does expand the amount of capital that might be available so that, you know, as we find those that achieve our target hurdles for IRR, we can hopefully be able to finance those and do those quickly, which is a part of having that capital available right now. And I think from our standpoint, we are also trying to match the types of assets we are looking at and when those might appreciate in value versus the duration of liability that we now have to be paid back out of royalties.

So we, you know, chose intentionally to pick a long-term duration liability, and that was created by, you know, only securitizing 30% of the royalty against the loan. That makes it a longer-term duration liability and just gives a little bit more thought that we can look at assets that do not have to have an immediate payback or income associated with them immediately to cover the financing cost. I think we feel comfortable that we have done that. So I think we have used the liabilities on our balance sheet to give us a little bit more strategic optionality and flexibility in the type of assets that we are looking at. We are obviously anxious to execute against this part of the element of our strategy so we can show our shareholders what we meant by our strategy and what types of things we should expect.

That might take, you know, multiple transactions to understand how we are trying to accumulate assets externally inside the company. One aspect of that with respect to capital discipline is if we are to bring in an asset which has some R&D investment required as a part of that, that is going to have to come from the same capital allocation pool as the acquisition. So that will be one of the defining factors—looking at what additional R&D investment is required to move something forward to get appreciation versus acquiring something that is already licensed and someone else is covering the development cost as a part of it. But I would expect the capital allocation to acquisitions also have to cover any incremental spend in R&D over and above the current base that we are establishing this year versus last year, if that makes sense.

Jonathan Miller: Does make sense. And then I guess if I can sneak in one more to dovetail with that, I know you have the potential to do more with the internal pipeline, the wholly owned pipeline, as it reaches the appropriate stage of development. And acknowledging that you are not going to give guidance on any particular asset, can you talk about, broadly across the wholly owned portfolio, at what stage of development, what are the key data readouts that you think unlock the ability to do partnerships with them or monetize those assets in this sort of way that you have been pioneering?

Kenneth H. Galbraith: Yeah. Well, I mean, it is always, you know, when you talk about this, it is always, you know, most obvious to look at, you know, the asset that is in the lead or has the most clinical data around it, but that is not necessarily where you might see the first collaboration or, you know, as much interest from our side on collaboration. We have as much interest in understanding how we can move some of the early-stage programs forward. You know, we have a really interesting construct in ZW209 looking at DLL3 in a trispecific format. We have an incredible portfolio of targets behind that that are really interesting in other solid tumors and heme-onc, even thinking about autoimmune. So trying to move those earlier programs forward with partnerships is as relevant for us in discussions as getting clinical data and trying to expect a partnership post clinical data or trying to bring on a partner to start funding at IND because it reduces our risk or shares cost.

So we are interested in all aspects of that. So it would be fair to say that we are open now—maybe that we were not in the past three years—but open now to looking up and down the portfolio in different therapeutic categories, in different product formats, whether it is ADCs, our dual engineered cytokine or cytokine program, of which we have more than ZW1528 available to us. So it might be the early collaborations are things that get done before looking at later-stage partnerships based on clinical data. And we are just being open to understand how we integrate it in with our wholly owned portfolio right now and still have some unencumbered, independent assets of our own as a result of looking at different types of partnerships and collaborations that we can integrate into that portfolio.

Jonathan Miller: Great. Thanks so much.

Kenneth H. Galbraith: Yep. No. Thanks, Jonathan. Our next question will be coming from Ethika Goonewardene of Truist. Your line is open.

Ethika Goonewardene: Hey guys, good morning and thanks for taking the questions. I have got two quick ones for you and then a big-picture one. I will start with the two quick ones. Just quickly on ZW191, by the time you present the data, can you tell us how much of that six and nine milligram, the dose levels, will be backfilled to about ten to twelve patients? About what amount of follow-up you anticipate having on hand when you present that data? And then the other quick question was just building on Stephen’s previous question. Given the toxicities—and this is for specifically ZW209—given the toxicities that we have seen with CD28 engagement, would not improved safety of ZW209 be a near-term signal that the mechanism is working and perhaps be an inflection point for you to consider strategic optionality? I will give you my longer question afterwards.

Kenneth H. Galbraith: You have a longer question than that? Okay. Maybe I will let Paul answer the second part of your question about DLL3, and then I will give Sabeen a little bit of a chance to think about how much of the first part of your question we want to talk about because, you know, hopefully, if this stuff is going to be coming up, we may not want to get too far ahead of that. But I will let Paul answer your DLL3 or CD28 costim question first.

Paul A. Moore: Yeah. That is a great question, and I am glad you brought that point up because I think that is very—that could well be a very important inflection point—is, you know, understanding the profile of the molecule. We, again, have emphasized that the CD28 should only engage upon CD3 engagement, and trigger signaling also is still contingent on engagement on DLL3. So it has the same classic pattern or design as a T cell engager, and we think that that careful design should be reflected in the tolerability of the molecule, maintaining that localized activity in the tumor microenvironment where DLL3 is very selectively expressed in tumors. So it is such an attractive target for this approach. So I completely agree with your sentiment, and I think that was an important point to bring up.

Ethika Goonewardene: Thanks. Is this Sabeen?

Sabeen Mekan: Yeah. So I will start with the ZW191. When we presented the data at the meeting, we had mentioned that we completed dose escalation at that point in time, and we were planning to start dose optimization. Dose optimization is proceeding very well. And so we are very clear with the number of patients that we have in Part 1 since it is already completed. Since we completed that in Q4 of last year, we think that by the time we present the updated data, we are going to have reasonable follow-up to present both the safety and efficacy of those patients. I would also say that the Part 2 dose optimization enrollment is proceeding very well as well, and it is according to our plan. We are hoping that we will provide an update to you about the completion of enrollment sometime in the near future. Alright, Ken. Brace yourself for the long one.

Kenneth H. Galbraith: Is it multipart?

Ethika Goonewardene: No. No. It is okay. It is just a long one. So let us get to it. So payload resistance continues to emerge as an issue for ADCs. So, big picture, how are you guys thinking about this very real problem that the field is going to have as ADCs become even more commonplace? How are you planning on deploying capital to bring in new assets and build your own capabilities to address it? Thanks.

Kenneth H. Galbraith: Yeah. I will just start briefly and then let Paul comment, because we have been thinking about this a lot. I mean, we really like the 519 payload that we developed back in 2022–2023 that we now have on ZW191 and ZW251 and also ZW220, which is IND-ready. So I think we really selected, you know, a great payload in the camptothecin analog class, and we are very proud of data we are seeing right now because I think it is showing that there is some benefit from the work that we did to select a proprietary payload with very specific characteristics, and it is providing some differentiation from clinical data you are seeing from exatecan or other generic payloads; that is great. There has obviously been a tremendous amount of crowding in that class in multiple targets, especially some of the therapeutic areas that we started out.

We were looking at gynecological cancers, thoracic—both non-small cell and small cell—and head and neck as well as GI indications for our ADCs and T cell engagers. And it is safe to say that in the gynecological cancer side, some of the initial indications, especially PROC, are quite crowded with different targets and different payloads approaching. There are still opportunities, I think, in some earlier settings, but we have been thinking really about, you know, the next payload. We have been working for some time period to try and find another class of toxins that might be interesting. I know it has been reported that Daiichi Sankyo has been doing the same thing. You know, it is hard to find a payload that is as effective that comes from that camptothecin analog class.

And that drove some of our efforts to think more about, you know, small-molecule approaches that might be better targeted with ADC constructs or a dual-payload strategy to maybe do something a little bit differently. And I think Paul can talk a little bit about our work, and that will be the focus of some of our presentations at AACR coming up in April. Paul, do you want to add to that?

Paul A. Moore: Yeah. No. Totally, Ken. I think the challenge about the space and the busyness in the TOPO space—I think there we really thought carefully about how we designed ours. So, as Ken alluded to and as has been reported in the ZW191 data, we feel like our care in design and tolerability as well as efficacy does put us in a good position so that we can get out front with those molecules. We can combine hopefully, in the future, and sort of differentiate on the clinical strategy. Behind that, though, I think we for sure are looking at next-generation payloads. Where else do you go to broaden out the opportunities for ADCs? We are really empowered with the success we have seen in our ability to deliver payloads and small molecules, and we want to then just translate that into other payloads.

So one, as we talked about, will be the pan-RAS. We think we can do it also for other small molecules as well, or toxins—pancos. So that work is also proceeding. I think really thinking about the tolerability profile, the linker stability, the potency of the payload, the balance there—also when you start thinking about dual payloads—how those toxicities interplay and, again, thinking about the combination and the bystander and the overlap of toxicities is very important. And, you know, we are thinking about that. So I think there is a lot of opportunity still in the ADC space. You know, it really depends on careful design and really balancing, pragmatically, what should work—thinking about PK, thinking about bystander activity, as well as very importantly, also how you deliver—the modality that you use to deliver it.

Is it a monoclonal antibody? Is it a bispecific? Is it a biparatopic? At Zymeworks Inc., we are really well positioned to also think about that end of the ADC as well with our protein engineering capability. So thanks for the question.

Operator: And our next question will be coming from Rene Benjamin of Citizens. Your line is now open.

Rene Benjamin: Thank you. Good morning, and congratulations on all the progress. Ken, maybe I would love to kind of get an idea as to thinking about future—yes. Can you hear me?

Kenneth H. Galbraith: I hear you now. Go ahead. Yep. Yep.

Rene Benjamin: Thanks for taking the questions. As you think about future buybacks, can you maybe take us through the criteria of these future buybacks and your thoughts on kind of when enough is enough? As we are thinking about modeling this out, you know, to the future. And then maybe one for Sabeen. As you think about, you know, the HCC indication, what other additional indications may show promise given GPC3 expression, and what kind of efficacy criteria would you want to see that would guide you into either expansion cohorts or expanding into these other indications? Thanks.

Kenneth H. Galbraith: No. That is great. Sabeen, do you want to take the GPC3 question first?

Sabeen Mekan: Yes. I can take that. So HCC is a tumor that we have highlighted for GPC3 expression, although there are other tumors that express very high levels of GPC3 expression. We have evaluated those pretty well and are going to be including some of those patients into our study. And as we move forward from signal, we may potentially include others into our development plan. Some of these tumors include some rare germ cell tumors. There are certain lung cancer patients who express GPC3. We are evaluating them very carefully with regards to including them into our development plan. There are certain pediatric tumors and sarcomas, so we have our eye on that. We just wanted to start our development plan with tumors that have highest expression, which is HCC, and also HCC is an area of very high unmet medical need, particularly after first line.

The patients relapse after first line, and we think that given the wide therapeutic window that we have observed with our ZW191, we wanted to apply that in the HCC population as well. As you know, there is evidence to indicate that cytotoxics work in HCC. The main concern there is having the therapeutic window, and what we have seen with ZW191 gives us a lot of confidence that we should be able to have that both in terms of safety, which is critical in this patient population, because, as you know, a lot of the HCC population have abnormalities in their liver function and cytopenias. But given the safety that we observed with ZW191, we are fairly confident that this ADC should be well tolerated in this patient population. And also from an efficacy perspective, the current standard of care treatment in the already treated HCC population, the response rates would be lower than 15%.

We are expecting that we should be doing much better than the current standard of care in this patient population.

Kenneth H. Galbraith: That is great, Sabeen. Thank you. And, Rene, just going back to your question about share repurchases, you know, we really see that as a return of capital. So I think, you know, we started this back in 2024 with the idea that we were going to start to see commercial revenues from our investment in zanidatumab, and that started with approval milestones in 2024 in the U.S., another one in 2025 in China. And, you know, we were very clear that we felt it was important to return that capital to shareholders, and we have chosen to do that through repurchasing shares just because it does provide a, you know, there is a compelling discount for us right now between the underlying share price and what we see as the, you know, the future cash flows that can be derived just from zanidatumab on its own, not counting pasritamig or other parts of the business.

And that compelling discount shows us that, you know, reacquiring those shares at those prices and retiring them can really be an effective way to boost total shareholder return over the long term. Now that always has to go along with continued investments in the numerator part of that equation, which is continue to build value in the business, which we have been doing through our significant R&D investment in our portfolio behind zanidatumab. So we are doing both of those at the same time. And I think that will always be the case. I think in November when we saw the top-line data from HORIZON-GEA-01, we felt very comfortable this was going to be something that should be approved based on the current dataset, and approved in a timeframe that would bring in the additional milestone that we expect later this year from Jazz for GEA.

The royalty transaction we did with Royalty Pharma today is a way of just bringing forward some of the commercial royalties from further in the future to today to just give us optionality to continue to buy back shares. So we are halfway through the current $125 million authorized share program. We think that is a compelling discount, which we think provides a good investment for our shareholders to buy back a number of shares. And over time, as the business continues to build and become more valuable, that will be valuable on a per-share basis. So we have done that more aggressively starting this November. I think a part of that was just what we felt was a disconnect between, you know, a great outcome for HORIZON-GEA-01 and getting more optimism and confidence of our next randomized study, the EMPOWUR-303, in metastatic breast cancer.

I know it is a different study. It is a different tumor type. We have got a lot of confidence out of the large randomized HORIZON-GEA-01 study outcome—understanding that zanidatumab could be a more powerful HER2-targeted agent than trastuzumab in combination in GEA—and that that could read over into metastatic breast and other indications eventually. So we probably had a higher confidence level on the cash flows related to the outcome of that study than maybe we felt was embedded in the market price. And so it just gave us an even more compelling discount to acquire shares, which is why we have been doing it very aggressively. We will continue to do that. And when we reach the end of the $125 million authorized plan, then we will speak with our Board and decide again the size and cadence of the next share buyback.

But as of right now, I think it is a very compelling investment, and in the years to come I think our investors will benefit by this aggressive share purchasing by looking at the compelling discount against what we view as the future cash flows from not just zanidatumab, and as we add additional assets—whether royalties or partnerships—around the portfolio, that is going to drive that even further. And reducing that share count is a way that has been proven to generate outsized returns. We obviously have capital limitations. We need to make sure we fund our R&D efforts. We need to make sure we have a strong balance sheet, which we do right now. But as more royalties and milestones come in, that is just generating additional free cash flow for us that we need to figure out how to allocate.

And right now, allocating it to share repurchases has been a pretty, hopefully, thoughtful capital allocation, but a pretty compelling thing to do. If we can add some strategic acquisition to the internal R&D we are funding, then I think the mix of all three of those will evolve over time. And right now, we will just continue to return that capital from commercialization of zanidatumab back to shareholders through those share repurchases.

Rene Benjamin: Thanks for taking the questions, and congrats again.

Kenneth H. Galbraith: No. Thanks very much, Rene. Appreciate that.

Operator: And I would now like to hand the call back to Ken for closing remarks.

Kenneth H. Galbraith: That is great. Yes. Thank you, everyone. I appreciate your time in listening to us today. We obviously had a very eventful 2025 at Zymeworks Inc. here. At the end of last year, finally reading out the HORIZON-GEA-01 study after four years from starting that study back in 2021. We were so pleased with the results for patients, and it really energized our business. We have had a great start to 2026, and I am expecting a very eventful and full year for us. I think the Royalty Pharma transaction we have announced today, with $250 million in note financing, is a very unique and creative financing structure which I think can be a catalyst for us for additional strategic change, and we look forward to reporting on our progress against that and the other events we laid out today in the weeks and months ahead.

We look forward to giving those updates to you along the way. Thank you very much for your time, and please be safe, wherever you are in the world. Thank you.

Operator: And this concludes today’s conference. Thank you for participating. You may now disconnect.