Zymeworks (ZYME) Investor Update summary

Strategic business update and growth strategy

• Announced a major strategic shift to a hybrid model focused on royalty aggregation, selective R&D, and disciplined capital allocation, leveraging positive late-stage clinical data and strong partnerships to drive long-term, non-dilutive cash flows.

• Emphasized three growth engines: internal R&D innovation, strategic partnerships, and a royalty aggregation platform, aiming for scalable, durable revenue and reduced reliance on high-risk, late-stage development.

• Transitioning from high-risk biotech to a revenue-generating organization with in-house R&D and royalty-driven model, focusing on compounding royalty streams and optimizing capital allocation for shareholder returns.

• Board and management conducted a strategic review and appointed a new Acting Chief Investment Officer to accelerate execution and support long-term value creation.

• Focus on building a diversified portfolio of revenue-generating healthcare assets with predictable cash flows.

Royalty and partnership portfolio

• Achieved $500 million in upfront and milestone payments from partnerships, with $1.5 billion in potential future milestones and growing royalty streams from late-stage assets like Ziihera and pasritamig.

• Royalty base expected to expand as partnered assets advance, with 10%-20% tiered royalties on Ziihera and mid-single-digit to 19.5% royalties on pasritamig and BeOne, both with multi-billion dollar peak sales potential.

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

• Strategic focus on acquiring and creating new royalty streams, including external royalty acquisitions and internal R&D partnerships, to diversify and compound high-margin revenue.

• Will consider both internal and external opportunities, including potential spinoffs and company acquisitions, to enhance the royalty portfolio and overall value.

R&D, pipeline, and portfolio management

• Internal R&D will focus on early-stage, differentiated programs with clear clinical paths, leveraging partnerships to share costs and accelerate development.

• Advanced multiple ADC and multispecific antibody programs, with Phase 1 trials initiated for ZW191 and ZW251.

• Maintains a lean, capital-efficient operating model, discontinuing programs lacking external demand or differentiation, and prioritizing assets that attract high-quality partners.

• Current pipeline includes two TOPO1 ADCs in Phase 1 and a diverse preclinical portfolio, with ongoing efforts to balance internal discovery and external business development.

• Partnership discussions are underway for key assets like ZW191, with a focus on securing resources and maximizing value through collaborations.