Hello. Thank you for standing by. This is the conference operator. Welcome to Zymeworks First Quarter 2024 Results Conference Call and Webcast. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Shrinal Inamdar, Director of Investor Relations. You may begin.

Thank you, operator. Good afternoon, everyone, and thank you for joining our third quarter 2024 results conference call. Before we begin, I would like to remind you that we'll 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 on our current expectations and various assumptions, and are subject to the usual risks and uncertainties associated with companies in our industry and at our stage of development. For a discussion of these risks and uncertainties, we refer you to our latest SEC filings as found on our website and as part of the SEC. In a moment, I will hand over to Leone Patterson, our Executive Vice President and Chief Business and Financial Officer. Leone joined our leadership team in September 2024, and today Leone will be discussing recent corporate updates along with financial results for our third quarter 2024. Following this, Dr. Paul Moore, our Chief Scientific Officer, will talk about key highlights for our third quarter, including the initiation of a first patient dose in the Phase 1 trial of our first bispecific T cell engager, ZW171. At the end of the call, Leone, Paul, and Ken Galbraith, our Chair and CEO, will be available for Q&A. As a reminder, the audio and slides from this call will also be available on the Zymeworks website later today. I will now turn the call over to Leone.

Thank you for the introduction, Shrinal, and thank you all for joining us today. I'm very pleased to have joined the Zymeworks team at such a pivotal time of growth and at a time when we are on the cusp of many exciting developments still to come as we close out the rest of 2024 and a series of new developments anticipated in 2025 that underpin our long-term growth strategy. I look forward to talking more about these milestones as we continue to execute on our R&D pipeline and corporate objectives. If you could now turn your attention to slide five where I will touch on recent key achievements across our development program. Starting first with our wholly owned pipeline, we received FDA clearance for our IND applications for both ZW171 and ZW191 in August this year. Since then, over the past few months, our global clinical development team has been working quickly and efficiently to enable dosing of the first patient with ZW171 as part of our global Phase 1 clinical trials. Later, during today's call, Paul will provide more details on the clinical trial design for ZW191, as well as providing an update on the progress we have made in the clinical development of ZW171 across North America, Europe, and the Asia-Pacific region. We also had the opportunity to present more promising preclinical data on our wholly owned pipeline at the ENA conference earlier this month in Barcelona for both ZW220 and ZW251, which Paul will go through in more detail later in the call. These preclinical data highlight the transformative potential of our novel approach to designing ADCs utilizing our proprietary payload 519 and highly differentiated antibodies, and we look forward to updating on the anticipated IND filings for both ADCs in 2025. Moving on to our partner programs, Jazz Pharmaceuticals provided updates for our internally developed HER2-positive targeting bispecific antibody Zani. Recent presentations at the ESMO Annual Congress in Barcelona continue to highlight Zani's potential for the treatment of multiple HER2-positive indications, including long-term follow-up data in metastatic patients for which a Kaplan-Meier estimated 30-month overall survival of 59% was reported from an ongoing Phase 2 clinical study of Zani in combination with chemotherapy. We're also pleased to recognize in our Q3 revenues a $2.5 million research milestone from our longstanding partner GSK. This milestone provides continued validation of the strength and versatility of our internal platforms and technologies, including asymmetric, where we continue to have a range of legacy licensing arrangements in place. As a reminder, under the terms of this agreement with GSK, we received an upfront technology access fee, and we remain eligible for future research, development, and commercial milestone payments of just over $1 billion. In addition, we are also eligible for 10% royalties on any worldwide sales of the licensed products. While we've had a busy few months on the development of our R&D pipeline, we have also executed on our corporate goals. This includes completing the first $30 million of our share repurchase program, which I will touch on next. On August 1, 2024, we adopted a stock repurchase program to repurchase up to $60 million of the company's outstanding common stock, with an initial authorized price of $30 million. As of October 31, 2024, we have completed the initial $30 million of the repurchase program through the purchase of approximately 2.5 million shares of common stock at an average price per share of $11.79. Now turning to our financial position. This afternoon Zymeworks reported financial results for the third quarter of 2024. Zymeworks net loss for the nine months ended September 30, 2024 was $99.2 million or $1.30 per diluted share compared to a net loss of $104.2 million for the same period in 2023. The decrease in net loss was primarily due to lower research and development and general and administrative expenses, as well as a decrease in income tax expense, which was partially offset by a decrease in revenue and an impairment charge recognized in 2024 related to zanidatamab zovodotin. As reported, our revenue for the nine months ended September 30, 2024 was $45.3 million compared to $59.1 million for the same period in 2023. Revenue for the nine months ended September 30th, 2024 included $32.8 million for development support and drug supply revenue from Jazz, $8 million of milestone revenue from BeiGene in relation to the acceptance by the CDE of the NMPA in China of the BLA for Zani for second line treatment of HER2-positive BTC, $2.5 million of milestone revenue from GSK in relation to the sequence peer nomination by GSK under the 2016 licensing agreement with them, and $2 million from BeiGene and other partners for research support payments. Revenues for the same period in 2023 included $56.3 million for development support and drug supply revenue from Jazz and $2.8 million from BeiGene and other partners for research support and other payments. Overall, operating expenses were $160.2 million for the nine months ended September 30, 2024, compared to $173.7 million for the same period in 2023, representing a decrease of 8% year-over-year. The decreases in overall operating expenses resulted from a decrease in both research and development expenses, as well as general and administrative expenses. The decrease in research and development expense was primarily due to a decrease in expenses for Zani as a result of transfer of responsibility for this program to Jazz and a decrease in expenses for ZW171 and ZW191. This decrease compared to the same period in 2023 was partially offset by an increase in expenses for ZW220 and ZW251 and other preclinical and research activity. Stock-based compensation expense increased primarily due to a lower expense in 2023 as a result of the cancellation and modification of awards in respect of employees transferred to Jazz. Now turning to G&A. The decrease in G&A expense was primarily due to a decrease in external consulting expenses for information technology, legal fees, and other advisory services, insurance, and depreciation and amortization expense compared to the same period of 2023. This was partially offset by costs incurred due to the termination of our long-term facility lease in Seattle in 2024 and an increase in stock-based compensation over 2023 primarily due to reversal of compensation expense for option cancellations and modifications in 2023. During the nine months ended September 30, 2024, we recorded a non-cash impairment charge of $17.3 million as a result of the company's decision to discontinue the zanidatamab zovodotin clinical development program which utilized the technology represented by acquired in-process research and development assets. Other income net was $16.1 million for the nine months ended September 30, 2024 compared to $14.6 million for the same period in 2023. The increase was primarily driven by an increase in the average interest yield of our cash balances and investments during the period. As of October 31, 2024, we had approximately 68.9 million shares of common stock outstanding and approximately 5.1 million shares of common stock issuable under prefunded warrants. As of September 30, 2024, we had $374.9 million of cash resources consisting of cash, cash equivalents, and marketable securities compared to $456.3 million as of December 31, 2023. For additional details on our quarterly and year-end results, I encourage you to review our earnings release and other SEC filings as available on our website at www.zymeworks.com. Now I want to turn to the cash runway. Based on current operating plans, our strong financial position of $374.9 million in cash resources as of September 30, 2024 together with certain anticipated regulatory milestone payments continues to provide an expected cash runway into the second half of 2027. And just as a reminder that we may also be able to extend this runway or fund an expanded R&D scope through potential additional regulatory approval milestone payments in connection with our existing partnerships with Jazz and BeiGene, or new partnerships and collaborations which we may choose to form. In addition, pending regulatory approval, we are eligible to receive commercial milestone payments based on annual sales of Zani and tiered royalties between 10% and 20% on Jazz's annual net sales and between 10% and 19.5% on BeiGene sales. With that, I'd like to hand over to our Chief Scientific Officer, Dr. Paul Moore, who will provide more details regarding the development of our wholly owned pipeline and our highly anticipated R&D Day later this year.

Thank you, Leone. I'd like to begin by discussing some preclinical work that Leone referred to earlier in the call, which we presented last week at the ENA conference in Barcelona. Regarding ZW220, we were pleased to share data demonstrating that it exhibits strong activity across various NaPi2b expression levels in vitro, showing significant antitumor efficacy in patient-derived xenograft models of ovarian, endometrial, and non-small cell lung cancer. In these preclinical models, 220 was highly active at a single dose of 6 mg per kg across the tested models. We evaluated between four and eight models per indication, and based on tolerability data, the 6 mg per kg is considered a conservative dose for 220, indicating room for dose optimization in future studies. Importantly, 220 also displays bystander-mediated killing activity, which we've observed in two different in vitro models. In one model, we see bystander activity against a NaPi2b negative cell line in a traditional 2D culture model system using our proprietary Topo1 payload at DAR4, demonstrating bystander activity comparable to a version of 220 with DXd at DAR8. Additionally, 220 effectively inhibits the growth of heterogeneous NaPi2b expressing 3D spheroid models formed from both NaPi2b positive and negative tumor cells. The confirmation of strong bystander killing in vitro is an essential feature of 220 when targeting tumors with variable NaPi2b expression. Our ADC also shows a well-differentiated safety profile. In comparison to higher potency Topo1 inhibitor ADCs such as those incorporating Exatecan, 220 has demonstrated a more favorable safety profile in preclinical toxicology studies with a maximum tolerated dose exceeding 90 mg per kg in non-human primates and at least 200 mg per kg in rats. This suggests the possibility of high dosing in humans, which could enhance its therapeutic effect. Overall, we've integrated several key features to optimize both the efficacy and safety of 220. The low drug to antibody ratio and moderate stability of the antibody linker strike a good balance between tolerability and antitumor activity, reducing potential on-target or off-tumor toxicities. Our strong internalizing antibody guarantees effective tissue penetration and cellular trafficking, improving tumor activity, especially in those with lower NaPi expression. Lastly, the Fc gamma receptor silenced antibody design reduces the risk of off-target toxicities, particularly from uptake by normal macrophages, contributing to a well-tolerated safety profile of 220 in both non-human primates and rats. All the design features discussed differentiate 220 from other NaPi2b ADCs in early development, giving us confidence in its potential to be best-in-class as we transition from preclinical to early clinical studies next year. We remain on track with our preclinical development of 220 to support an IND filing and applications in the first half of 2025. Moving on to the other data presented at the Triple meeting at the ENA on ZW251, another ADC with our 519 payload, the data continue to show significant promise for 251 in addressing unmet needs in hepatocellular carcinoma and other GPC3 expressing tumors. 251 is designed to specifically bind, internalize, and kill GPC3 expressing tumor cells. This precise mechanism of action, alongside the observed antitumor efficacy, reinforces its potential as a targeted therapy for glypican-3 expressing cancers. Among the most promising aspects of 251 are its strong antitumor activity across a wide range of hepatocellular carcinoma xenograft models, including both cell line derived and patient derived xenograft models. Notably, 251 exhibits a dose-responsive antitumor effect, with a single 8 mg per kg dose showing effectiveness in five out of six cell line derived models and nine out of twelve PDX hepatocellular cancer models, including those with lower or heterogeneous glypican-3 expression, highlighting its therapeutic potential in targeting tumors with variable antigen presentation. We have selected a drug to antibody ratio of DAR4, which provides an optimal balance between safety and therapeutic impact. Indeed, the DAR4 molecule has shown a compelling range of antitumor activity in vivo, essential for maximizing efficacy across diverse tumor types. This broad activity in a range of hepatocellular cancer models continues to validate the strength of our ADC platform. 251 has demonstrated a positive safety profile in repeat dose toxicology studies in non-human primates, displaying dose proportional pharmacokinetics. This strong safety profile, combined with robust preclinical efficacy, positions 251 well for clinical advancement. Looking ahead, we anticipate our preclinical development will support an IND submission in the second half of 2025, believing that 251 holds great promise as a therapeutic option for patients with hepatocellular carcinoma and other GPC3 expressing tumors. We are excited to continue developing this candidate to make a significant impact in oncology. By the end of 2025, we expect to have our three 519 payload ADCs in early clinical development. We look forward to exploring how our optimized antibody design and proprietary payload can translate these encouraging preclinical findings into clinical efficacy. At Zymeworks, our deep understanding of target biology allows us to innovate on ADC elements to meaningfully enhance both efficacy and tolerability. We believe these design features could enable us to optimize higher protein doses than other ADCs, maximizing their therapeutic potential to improve the standard of care for patients. Enhanced tolerability will also open avenues for combination regimens with the aim of reaching first-line patients, aiming to extend progression-free and overall survival for them. Notably, we’ve consciously chosen not to repurpose existing molecules like Exatecan for our ADCs, focusing instead on creating a proprietary Topo1 payload with characteristics ideally suited for an ADC, which could enable our candidates to outperform current efficacy observed with repurposed payloads. These characteristics include moderate potency, which could both empower protein dosing and bystander activity to improve efficacy while also limiting damage where conjugated drugs accumulate in normal tissues, enhancing tolerability. Based on a review of ADCs explored in the past, our design philosophy aligns with prior clinical data learnings. We have noticed that increased potency in repurposed payloads such as Exatecan tends to restrict their maximum tolerated dose, potentially limiting the capacity of those higher potency payloads to reach effective dose ranges. Linker stability is another factor we've considered in our design to maximize tolerability and efficacy. Higher stability has historically improved preclinical therapeutic indices, yet this hasn't always translated to the clinic. We believe moderate linker stability, as used in most clinically approved ADCs, will reduce normal tissue exposure to conjugated drugs, further enhancing tolerability. In terms of DAR and drug-antibody ratios, we examined both DAR4 and DAR8 versions of our 519 payloads before selecting the most fitting DAR for each molecule based on our understanding of target biology, the patient population, and results from preclinical studies. Lastly, we have concentrated on optimizing antibody properties, especially internalization and tumor penetration. We are confident that ensuring a suitable protein dose is key to the effectiveness and tolerability of ADCs. We have also carefully contemplated the benefits of incorporating HepC mutations in our antibodies according to the target population, supported by data from preclinical studies. Our preclinical work and an empirical review of clinical data over the past 40 years affirm that our approach is distinctive from other ADCs in development, focusing on ensuring an adequate protein dose within the optimal range. We believe these design features will enable us to optimize at higher protein doses than other ADCs, maximizing the potential to improve the standard-of-care for patients, both in monotherapy and combination therapy, as well as in earlier treatment lines. We are eager to evaluate the impact of these novel design features on tolerability and efficacy compared to established benchmarks and validated targets. The first of these will be our Phase 1 clinical trial of our ADC ZW191. Based on encouraging preclinical findings, we are advancing to validate these results in a clinical context. We expect to dose the first patient this year in our Phase 1 open-label multicenter study of 191, which is registered under NCT06555744 on clinicaltrials.gov. This study is actively recruiting and aims to enroll 145 participants with advanced solid tumors, including ovarian, endometrial, and non-small cell lung cancers across North America, Europe, and the Asia-Pacific region. The study will assess the safety, tolerability, pharmacokinetics, and preliminary antitumor activity of ascending doses of 191. Part 1 will evaluate safety and tolerability, while Part 2 will focus on safety and explore the potential antitumor activity of ZW191 following RECIST evaluation criteria, while continuing to monitor safety and tolerability. Criteria include pathologically confirmed ovarian cancer, endometrial cancer, non-small cell lung cancer or progressive disease refractory to all standard-of-care that indicates measurable clinical benefit. We look forward to reporting on the first patient dose soon and discussing further progress in upcoming earnings calls. Regarding 171 or ZW171, as Leone indicated earlier, we announced FDA clearance in August to proceed with Phase 1 clinical trials for 171. The speed at which our team has moved to initiate dosing of 171 in such a short time reflects our global hubs' dedication and collaboration. Since our last earnings presentation, we have been activating sites in North America, Europe, and the Asia-Pacific region for the Phase 1 trial of 171. We have made progress with clinical sites activated in North America. As a reminder, we expect to recruit 160 patients globally, presenting an opportunity to achieve high diversity in patient characteristics, including expression levels across tumor types. This diversity should provide high-quality datasets enabling more conclusive results to determine expression cutoffs retrospectively. We are looking forward to discussing the team's work in supporting the selection of the starting dose for 171 at SITC next week. We have a clear internal target product profile for our candidates, which allows us to initiate dosing closer to the expected efficacious dose, providing potential insights into signs of efficacy and tolerability early in the study. This is particularly important as we maintain financial and scientific discipline within the organization, focusing on candidates with the best chance of success as meaningful treatment options for patients. Our R&D engine continues working on the next wave of innovative therapies in areas where patients with significant unmet needs lack effective treatments. We will continue to advance assets with the highest potential to change the standard of care or move onto other promising candidates for further innovation, aiming for better therapies for patients. Lastly, I'm happy to share an update about our upcoming R&D Day where we will provide in-depth updates on our expanding portfolio of solid tumor targeting antibody drug conjugates and T-cell engager molecules. This event will allow us to showcase our progress in advancing our innovative pipeline, and we are excited to be joined by key opinion leaders from the oncology field. They, alongside our management team, will discuss the latest advancements in our ongoing R&D and clinical activities, underscoring our commitment to delivering transformative therapies for patients. One highlight will be the formal nomination of our latest product candidate from the 5 by 5 portfolio, a trispecific T-cell engager. This will complete our ambitious 5 by 5 R&D strategy, with a projected IND filing in the first half of 2026. This nomination marks a significant milestone for us, confirming the strength of our T-cell engager platform. We will also outline our strategy for continued focus on solid tumors while expanding into new therapeutic areas, especially hematological cancers and autoimmune inflammatory diseases, representing a natural extension of our core strengths, showing substantial potential for applying our technology platforms to these new indications. Finally, we will provide updates on our preclinical development progress, including potential IND filings for new product candidates in 2026 and beyond. This progress demonstrates the innovation occurring in our labs and positions us well for ongoing growth of an exciting R&D portfolio in the coming years. We are eager to share these updates at our R&D Day and highlight developments that will shape the next chapter of our company's growth. Now, I'll hand it over to Ken for closing remarks.

That's great. Thank you, Paul. I'm very pleased with all the progress we've made so far this year, and we're only just getting started on the clinical development for some very interesting targets in patient populations with significant unmet need. With that being said, there's still plenty more time left in 2024, and we plan to make full use of this time to continue building on our momentum so far this year and complete a few more significant pipeline events before the end of the year. First, I also share in Paul's enthusiasm for updates we plan to make during our upcoming R&D Day in December, where we'll officially nominate our new Trispecific T-cell engager product candidate. This nomination is a significant milestone for us to complete the 5 by 5 portfolio almost two years ahead of the initial schedule and certainly highlights the continued growth and diversification of our pipeline as we expand our new modalities and novel treatment approaches. In addition to some of these updates, I also want to highlight that our partner Jazz has initiated a pivotal Phase 3 trial named EmpowHER, evaluating zanidatamab in patients with HER2-positive breast cancer whose diseases progressed on previous T-DXd treatment. This is a major step forward in potentially bringing new treatment options to patients with metastatic breast cancer. Internally, we're extremely proud of the potential impact zanidatamab could have for patients across multiple tumor types in oncology based on the breadth of clinical activity seen today, which really showcases how this targeted therapy is able to bind to HER2 and kill tumors with a very unique mechanism of action. Having discovered and developed zanidatamab at our labs in Zymeworks, our teams have been taking some learnings from the screening, optimization, and clinical development of this unique bispecific antibody, and we look forward to continue reporting on progress of how we hope to replicate this level of optimization efficacy with our wholly owned pipeline. The success of Zani as a targeted HER2 agent also gives us reassurance that highly expressed targets are where we want to focus on developing future therapeutics. We believe that high and clear levels of expression are important when developing highly targeted candidates and moving away from previously used chemo-like treatments. The decision to develop candidates for these highly expressed and validated targets such as folate receptor alpha, NaPi2b, and GPC3 means that we can quickly and effectively understand if there's a correlation between efficacy and expression levels across tumor types, as well as benchmark our data against previously developed candidates. Looking ahead, Jazz has estimated that top-line progression-free survival data for the ongoing Phase 3 HERIZON-GEA-01 study will be available in the second quarter of 2025. Finally, we're eagerly anticipating the PDUFA date of November 29, 2024, for zanidatamab in second-line HER2-positive biliary tract cancer in the U.S. This potential approval in the United States would be one of the most substantial achievements for Zymeworks history and in collaboration with our partners Jazz Pharmaceuticals and BeiGene, a critical step forward for biliary tract cancer patients who currently have limited treatment options. Jazz is scheduled to hold their Q3 earnings call within the next week, and we encourage you to follow that for any further developments or guidance related to zanidatamab. Before we move on to Q&A, I'd like to acknowledge this is the first earnings call since Leone has joined us at Zymeworks in September. She's a very experienced executive leader in biotech and has already had a positive impact in many aspects of our operations, working in collaboration with our management team. We're very fortunate to have attracted her design, and I look forward to working closely with her alongside the wider leadership team on building Zymeworks further. I'd also like to take a moment to thank Mr. Hollings Renton, who will be stepping down from the Board in December, for his significant contributions to our company over the past eight years and also being a great advisor for me during my tenure as CEO. Hollings' guidance has been invaluable in shaping the direction and growth of our business. He's had an amazing and successful career in our sector, and we're very grateful for his dedication to our mission at Zymeworks. As we continue to evolve as a company, I'd like to highlight that over the past 18 months we have welcomed six new members to our Board of Directors as part of a strategic forward refresh process. This initiative is a reflection of our commitment to ensuring we have the right mix of experience and expertise to guide our next phase of development and growth. The Board remains diverse, strong, and well-positioned to support our long-term objectives as we continue building on our momentum. With those closing remarks, I'd like to thank everyone for listening, and I'll turn the call over to the operator to begin the question-and-answer period.

Thank you. Our first question comes from Stephen Willey with Stifel. Your line is open.

Yeah. Good afternoon. Thanks for taking the questions. Maybe a couple for Paul and/or Ken. With respect to the ongoing Phase 1 trials for 171 and 191, just curious how you're thinking about dose optimization? Are you going to be backfilling specific dose levels in the escalation phase to generate the exposure data you need to select a Phase 2 dose for expansion, or do you think it's more likely you'll be carrying two doses forward into the expansion phase? And then I just have a follow-up.

Yeah. Good question, Steve. I think the way we think about it is in the dose escalation phase, we hope to really have a chance to have a good high-quality set of patients with diversity around tumor types, diversity around expression levels that really lets us understand the tolerability profile. And that's both for 171 and 191. I think our expectation is that in addition to backfilling and having a chance to explore some alternative doses in dose escalation, we're likely going to have to move forward into the expansion cohorts and optimize more than one dose in specific cohorts, maybe one or maybe two of those cohorts. But I think it's really necessary to do that so that by the time we leave a Phase 1 study, we have a very clear understanding of the tolerability profile and a very clear understanding of the optimum dose to take forward. I think we've seen examples of other companies who have tried to accelerate or maybe go a little too fast in that process, and again, that doesn't help you accelerate to a registration study or accelerate to a potential filing or approval pathways. I think we've given ourselves a pretty big clinical footprint in Phase 1, as you've seen from 171, 191 geographically, and a number of sites that should allow us to quickly recruit and study a pretty broad range of patients. If you look at the target patient populations we have for both 191 and 171 in Phase 1. So, I think we can move very quickly at the same time, make sure we collect enough patient data to be very clear about the tolerability profile, very clear about signs of activity, and very clear about the optimum dose that we want to take forward and not leave Phase 1 with any of those questions unanswered.

Okay. That's helpful. And then I know Paul touched on this a bit in the prepared remarks, but obviously the preclinical data you have for all the ADCs and in your preclinical toxicology models would suggest that you've got a much wider therapeutic index versus some of the other ADCs that we've seen with Topo payloads using equivalent DARs. So, just wondering how that informs your development strategy specifically in terms of how you're prioritizing combinations for each of these three assets. And I guess, is there any one of these ADCs in particular that you think might warrant a more accelerated path to a combination-based development strategy? Thanks.

Thank you, Stephen, for highlighting the careful design in our preclinical data, which supports our flexibility and potential for a broader therapeutic index compared to others with different designs. We're considering combination strategies for all three programs as we aim to advance into earlier treatment lines. We have a broad perspective on this and do not favor one option over another. The specific combination partners will be determined by the treatment paradigms for each disease indication. For example, we are looking at combinations such as VEGF inhibitors or PARP inhibitors in ovarian cancer and PD1 inhibitors in non-small cell lung cancer, which we believe align well with our design strategy.

Thank you. Please stand by for our next question. Our next question comes from the line of Akash Tewari with Jefferies. Your line is open.

Hi, thank you for taking my question. This is Phoebe on for Akash. Just one on Xani. The DESTINY-Gastric03 study in HER2-positive gastric cancer is reading out in July of 2026, but it's being studied with chemo and/or immunotherapy, and just wondering how you view this regimen and if it's a threat to Xani at all. Thank you.

Yeah. Thank you for the question. I think we've been obviously carefully following potential competitive programs to Zani and all the indications of interest for us for some time period now. And I know our partners, Jazz and BeiGene, are doing the same thing. I think, with respect to any view ourselves, we feel very strongly about the clinical data that we've generated to date on zanidatamab and its potential as a monotherapy as we have in our PTC filing and also sort of in gastric cancer. But it's our ability to combine with other product modalities and really generate much higher levels of response in that patient population and generate much more durable responses than have been seen by either approved therapies or some of those under development, like you mentioned, with a tolerability profile, which is very good compared to some of those other agents which might be under development. So, we feel very confident in the data surrounding zanidatamab with respect to where we are and obviously our upcoming clinical data readouts will hopefully confirm some of that confidence we feel behind zanidatamab, and beyond that, don't really feel in a position to comment about other companies' datasets where we may not have access to all the data. But with respect to the data we have on Xani, we feel very comfortable and confident in zanidatamab's ability based on the clinical dataset to date to really make a difference in this patient population in a significant way. And we're looking forward to having that readout next year, obviously.

Thank you. Please stand by for our next question. Our next question comes from the line of Yigal Nochomovitz with Citi. Your line is open.

Hi, guys. This is Ashiq Mubarack on Yigal. Thanks for taking my questions and appreciate the update today. I had one on how we should be thinking about timelines to data or maybe more generally your philosophy about data sharing related to the wholly owned pipeline, especially the lead mesothelin and FR alpha programs. I'm just wondering if we should be expecting maybe an early look at the dose escalation cohorts or if your philosophy is more going to be along the lines of generating a robust dose escalation package or maybe even expansion package before sharing that data with us.

Thank you for the question. We have a clear philosophy regarding our approach. With the first two Phase 1 studies for 171 and 191, we see an advantage in using very tolerable molecules based on preclinical data, which allows us to start with a higher dose than what is typically seen with similar agents. This is beneficial for evaluating tolerability while moving quickly into an effective range. Our extensive global reach with many active sites is helping us collect a diverse dataset of patients efficiently. However, we have not provided any guidance on when early data will be released, as we want to ensure we have a sufficient dataset to draw meaningful conclusions before sharing in a peer-reviewed setting, like a scientific or medical meeting, rather than through a press release or investor call. Once we feel confident about the data we've gathered and if we have an abstract accepted, we will share that information publicly at a scientific meeting as soon as possible. The timeline for this will depend on our patient recruitment speed and the insights we gain from the data. We are focused on collecting a quality and diverse dataset in Phase 1, including during dose escalation. If we manage this well, we can gain meaningful insights into the drug early on and will be eager to share that with the scientific and medical community.

Got it. That's very helpful. If I could ask one more thing, I apologize if I missed this. As I recall, the stock repurchase program allows for up to $60 million, unless I'm mistaken. With the first $30 million already completed, I'm curious about your plans for deploying the second $30 million. Should we expect that to happen in the near term, or will it be more of a multiyear approach depending on market conditions and so on?

Yeah. There was an authorized $60 million share purchase program. We did activate $30 million of that, which again gave us a little bit of optionality and flexibility to complete that first and then decide what to do with the rest. There's no strict deadline or necessity for completing the second phase. So, I think we will continue to evaluate market conditions and our financial position and other factors and working with the Board, decide when it may be the right time to initiate the second part of that. It's a very carefully evaluated decision. Obviously, we did this in early August, and we felt very strongly that there was a strong rationale for doing it, including the fact that we felt that our share price was undervalued compared to what we saw in the company as important factors in enterprise value. We still feel that way today, even though the shares have appreciated substantially since August. We do have the ability to complete the entire full $60 million share purchase program and maintain our projected cash run rate into the second half of 2027. But I think now we'll do what we did last time, which is just carefully assess our financial position, look at a number of factors before we make that decision. And as we did last time, we'll be very definitive when we start. And again, you won't hear much about it until we complete that. So, if there's an update, you'll obviously hear about that publicly as required. But as of right now, we feel comfortable with what we did. We think it was an appropriate thing to do with the cash we had available, and we think there is a strong rationale for improving total shareholder returns with the action we took. Still feel we're in a very undervalued position compared to what we see inside the company. But we'll just take a moment to reflect before we think about initiating the second tranche. Again, there's no timeline or requirement or necessity for us to continue on that. We will always have the ability to initiate that whenever we and working with our Board decide that it's an appropriate thing to do for shareholders.

Got it. Thanks very much.

Thank you. Please stand by for our next question. Our next question comes from the line of Brian Cheng with JPMorgan. Your line is open.

Hi, team. Thanks for taking our question this afternoon. And Leone, congrats on joining the team. Maybe just one related to the ongoing Phase 1 for 171 and 191. Can you talk about some of the criteria that you'll be looking for in terms of efficacy before moving into larger expansion stage? And I might be asking this question a little bit earlier, but could we be expecting some clinical data at your R&D Day in December? And I have a follow-up. Thank you.

Thank you for the question. We haven't provided any guidance on when to expect clinical data for 171 and 191. These are Phase 1 studies aimed at understanding tolerability and the adverse event profile, which requires careful work involving dose escalation to accurately assess the relationship between adverse events and dose response. I don't believe we'll have this information ready by our R&D Day, as the intention of that event is not to present initial data for 171 and 191 since these studies focus on adverse events and tolerability. It's crucial for us to understand these factors. We are looking for signs of clinical activity, particularly at what we consider optimal doses for efficacy. A key point, especially with T-cell engagers, is the potential to achieve a more durable response compared to what is seen with chemotherapy or other ADCs. Therefore, it's vital to evaluate not just the overall response rate but also the duration of response, as we've noted that a high initial response might not be durable for the patient population. Gaining this understanding may require additional time. Thus, I doubt any information will be available at our R&D Day. However, once we have sufficient data regarding tolerability, adverse event profile, initial activity, and some insights into durability—which requires longer follow-up than typical early dose escalation interim reports—we will share that information in a peer-reviewed setting. When the time comes, we will also make that data public. But I wouldn't anticipate initial clinical data for 171 and 191 at the R&D Day on December 12th.

Okay. And then maybe just one more heading into the BTC's PDUFA date next month and GEA's top line next year. Just from a modeling perspective, how should we think of your partnership revenue near term?

Yeah. I think, Brian, we've already publicly disclosed as much as we're able in our agreements with Jazz. I can't really say much more about that until we start to get paid milestones and receive them or get paid and receive royalties. We can't really say much more about that. I think on timelines and guidance, with respect to top line on Zani, I will refer you back to Jazz and again also BeiGene, but especially Jazz for next week. They've already made some guidance around potential peak sales, but I would look for updates from them on development timelines, approval timelines, future filing timelines, and any revenue guidance they want to provide. That's really up to Jazz. And they have their call next week. So, I would just pay attention to that.

Great. Thank you.

Yeah. Thank you.

Please stand by for our next question. Our next question comes from the line of Jon Miller with Evercore ISI. Your line is open.

Hi, guys. Thanks so much for taking the question. I guess, I'll just first build on the earlier question. Maybe it was you guys on share repurchase. I know it seems like you're not in any rush to get started with the second half, but did the first half of the share repurchase achieve the goals that you hope to achieve with those purchases? And then beyond that, it seems like you're suggesting a strong potential for more BD or other sources of funds in the upcoming years. And I'd love to get a little bit more color on that. What kinds of deals are you interested in? Discovery collaborations, licenses on the 5 by 5 or collaborations and development there on the legacy tech? What are the things that you're looking at when you talk about the potential for future deals? And I do have a follow-up.

No. Thanks for the questions. I'll pick them both. So, I think respect to the share repurchase program, I think we carefully consider this before we initiate the first $30 million in August. I think we've been able to retire a little more than 2.5 million shares out of the cap table, which I think can provide a total shareholder return not just immediately, but over time. So, I think we still feel very strongly that we were able to achieve that objective despite the obviously the increase in our price during that timeframe. I think we still feel that some of the elements related to our decision to do that still exist. We still believe that although we've had some appreciation since August in the share price, that we still feel very undervalued compared to what we believe the long-term value for the company is. And what we see inside it reflects our confidence in the future outlook of our business, the potential of not just Zani, but our wholly owned product candidate portfolio. And I think the long-term value of even our further preclinical development pipeline, which you hear more about at R&D Day. I think the repurchase program is obviously one component of the overall capital allocation strategy we need to think about. I mean ideally first, we need to make sure that we sufficiently fund the core business that we have, of all the exciting R&D opportunities we have inside the company. That's always our first priority. I think if we do see opportunities to also provide some upside of total shareholder return, we are required to look at that and consider it. But I think we've accomplished the objectives we had. I think we, obviously, have the ability at any time to go ahead with a further share repurchase program when we consult with our Board and make that known. Right now, we're just taking a little pause to consider that with a number of other factors in consideration. I think with respect to partnership, collaboration strategy, I think we tried to be very clear. I think with the 5 by 5 program. And you'll hear the last nomination at R&D Day. We've obviously got a really exciting portfolio of agents that we like a lot. And we're moving into clinical data. We're almost two years early in formulating that portfolio into clinical studies. It's our nomination in clinical studies, which is great. I think you'll hear at R&D Day. We have a whole host of other opportunities in the preclinical pipeline that we've also been working on advancing much closer to IND so we can see a very broad and exciting portfolio in front of us. We realize that not all of those are going to work out the way that we might have expected. So there will be some attrition rate in that portfolio. That's the natural part of our business. You can't be 100%. I think the other thing we realize is that the more exciting that portfolio looks, we can't possibly do all of that ourselves. So, though, it's wholly owned today, we do expect that we will have to bring in partners and collaborators to help us move that forward. Either accelerate some of the timeframes, use some of their capital or clinical resources to move this along. And we're carefully considering how we overlay the continued growth of the R&D portfolio, not just the 5 by 5, but beyond that with potential partnerships and collaborations to get the right mix of capital we can allocate to the program of our own capital versus sharing risk and capital with others versus retaining commercial rights for ourselves. I think very clearly with zanidatamab, we decided to out-license that program outright to BeiGene and Jazz and not have a commercial role. I think in the future we're looking to retain some additional rights longer in development and potentially give us a commercialization option later. And so doing that on a portfolio basis is something that we're thinking about very carefully. And so, I expect as you learn more about the portfolio and look at how it might even grow beyond the 5 by 5, there are some natural points in time for us to think about adding some partners to help us move that portfolio forward. And those are things we've been thinking about all year, and things we'll continue to think about. I think once we find the right partner who's interested in moving those assets forward with us in the way that we think they should be moved forward, and we can get paid appropriately for our efforts to date and continue to have upside as we work with partners to move those forward, then I think we're quite happy to look at partnership possibilities at that time. The nice thing about having a strong financial position is that we can do that within a timeframe that generally we can set ourselves. And I think there's some advantage in making sure you can find the right partner for the right set of products at the right time in the right deal structure that works for our shareholders. That's one of the reasons that we try to put ourselves in a strong financial position and continue to be in a strong financial position going forward into those discussions.

Thank you. That makes sense. On the science side, you mentioned in the prepared remarks your focus on targets with strong antigen expression on tumor cells and good sensitivity, along with prior validation of the target. You also highlighted your ability to achieve good effects even when the antigen expression is more modest. Some of the ADC targets you're exploring show variable antigen expression, both among different indications and even among patients within those indications. Can you elaborate on the factors influencing your strategy and how you plan to identify patients? Will you need to stratify by expression? How do you foresee advancements in the ADC field allowing for the inclusion of broader patient populations compared to aiming for those with strong expression?

Yeah. Thanks, Jonathan. Yeah. No, thanks for the opportunity to clarify. So, I think in our design and our thinking, we really do value the importance of the front end of the antibody and its ability to recognize target and internalize. So, we do take quite a lot of care and we really value that aspect of the ADC. But we also appreciate that within the tumor microenvironment, not all the tumor cells are going to necessarily have high expression. And so that's where things such as bystander activity are also a very important contribution to the mechanism. And then beyond that, within the ADC field, there's also the chemo effect that you can also get from the design of your ADC and getting that balance between the potency of that ADC, that payload, as well as the release of that payload at a tolerable pace is very much also baked into the design of our features. So, we can get the on-target effect, we can get bystander effect, and then we can potentially get some chemo effect as well. And that's how we try and factor that all into the design. And then it's also balanced by the DAR and then the tolerability profile where you're getting. You don't want to run into issues of intolerability that others have seen with the higher potency payloads.

Thank you. Please stand by for our next question. Our next question comes from the line of Derek Achila with Wells Fargo. Your line is open.

Hey, guys. Thanks for taking the questions and congrats on the progress. Just two quick ones from us. I guess, first, what do you plan to cover at the R&D Day in terms of potential expansion into autoimmune disease? I guess, is there going to be a discussion around certain targets of interest? And then second question, just in terms of your target selection process for the Tri T-cell engager, I guess maybe just run us through that. And what type of preclinical data might you highlight at the R&D Day for the development candidate you plan to nominate next? Thanks.

Yeah. Maybe I'll let Paul answer both of those if he wants. Whatever order you want.

Sure. The first question was about the scope of our presentations on the autoimmune programs. As we've mentioned before, we see significant potential for bispecifics in the autoimmune field, and we are pursuing specific programs. We plan to discuss these specific programs along with the future applications of our technology in this area. Regarding the Trispecific T-cell engagers, we have various design options available, particularly in the Trispecific area. The platform we have focused on is the CD28 CD3 Trispecific platform, or TriTCE Co-Stim. When considering targets, we aim for those with a profile that is more inclined towards tumor expression and less towards normal expression. We understand the need for careful consideration in this regard. Our design for the molecule differs from others in that our CD28 engagement occurs only with CD3 engagement and when engaging the tumor target. While we have that added CD28 effect, we aren't fundamentally different in our approach to target pairing with T-cell engagers compared to others. We believe we have advancements that can enhance the therapeutic window moving forward. For initial targets, we are quite confident in the ones we've discussed previously, DLL3 and CLDN18.2, as their tolerability profile has been encouraging in preclinical development. We are also considering additional targets beyond these, but the choice depends significantly on the platform we are using and the profile of the target antigen as it aligns with that platform.

Got it. Thank you so much.

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Ken for closing remarks.

That's great. Thank you, operator. So, thank you everyone for listening to our call today. As always, we're extremely excited about the feature for Zymeworks. We still think there's a lot of time left in 2024 for us to get some additional milestones and events behind us, so look forward to doing that. And again, we look very much forward to seeing all of you either in person or virtually for December 12th R&D Day, where we'll be able to give a great update on the 5 by 5 programs with some KOLs providing some landscape analysis and also a good overview of where our long-term R&D strategy is beyond the 5 by 5. And we really need to accelerate that view just because we're almost two years ahead of schedule in constructing the 5 by 5. So, we've been thinking about this for some timeframe and happy to share our vision for Zymeworks on a longer-term basis from an R&D perspective and look forward to seeing all of you there on December 12th again in person or virtually. So, thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.