Zymeworks (ZYME) investor relations material

Strategic business update and evolution

• Announced a shift to a hybrid model focused on royalty aggregation, selective R&D, and strategic partnerships, leveraging positive HERIZON-GEA-01 data and a growing royalty base from partnered assets like Ziihera and pasritamig.

• Transitioning from high-risk biotech to a revenue-generating organization with in-house R&D and a royalty-driven model, emphasizing disciplined capital allocation and shareholder returns.

• Board and management conducted a strategic review, resulting in leadership enhancements including a new Acting Chief Investment Officer to support execution of the new strategy.

• Focused on building a diversified portfolio of revenue-generating healthcare assets with predictable cash flows and optimizing value from licensed products through innovation, licensing, and acquisitions.

• Outlined a plan to reinvest milestone and royalty income into royalty acquisitions, portfolio expansion, and opportunistic share buybacks, aiming for recurring high-margin revenue and reduced reliance on high-risk late-stage R&D.

Royalty and partnership strategy

• Royalty and milestone income from Ziihera and pasritamig expected to provide substantial, predictable cash flows, with up to $1.5 billion in potential milestones and 10%-20% tiered royalties on Ziihera sales.

• Strategy includes acquiring external royalty streams, creating new ones through internal R&D and early partnerships, and considering company acquisitions or spinoffs to diversify the portfolio.

• Partnerships with Jazz, BeOne, J&J, GSK, Daiichi Sankyo, and others provide significant milestone and royalty revenue potential.

• Financial discipline and strict criteria will guide capital allocation between royalty acquisitions, R&D investment, and share repurchases, with flexibility to adapt as opportunities arise.

• No set format for R&D investment or partnership timing; decisions will be based on asset potential, market dynamics, and portfolio needs.

Financial outlook and capital allocation

• Strong financial position with $103 million in 2025 revenues already reported and cash resources of $299 million as of September 30, 2025, providing a runway beyond 2028.

• Capital allocation will balance between expanding the royalty portfolio, advancing R&D, and returning capital to shareholders, including a $125 million share repurchase plan and $60 million in prior buybacks.

• Up to $440 million in potential near-term milestones for global GEA approvals and over $1.3 billion in future regulatory and commercial milestones.

• Share buybacks are seen as an attractive use of excess cash, with 6% of shares repurchased in 2024-2025 and $30 million completed of the $125 million program.

• Implemented cost reductions, including pausing certain clinical programs and reducing headcount, to maintain a lean operating model.