Zymeworks Inc. ZYME-Q has joined the slender ranks of Canadian biotechnology developers whose treatments have been approved for the coveted U.S. market, marking a milestone in the Vancouver company’s continued recovery from a corporate crisis two years ago.
On Wednesday, Jazz Pharmaceuticals plc, which licensed Zymeworks’ lead cancer drug zanidatamab (since renamed Ziihera) in 2022 for North America, Europe and Japan, said the U.S. Food and Drug Administration had approved use of the tumour-fighting antibody to treat adults with a form of biliary-tract cancer (BTC).
The drug would be the first bispecific antibody and chemotherapy-free treatment for patients with metastatic HER2-positive BTC, a rare cancer that typically comes with a poor prognosis for the roughly 16,000 new patients diagnosed annually in the US.
“Words can’t describe how happy and humbled I feel,” Zymeworks co-founder and ex-chief executive officer Ali Tehrani said in a LinkedIn post. FDA approval “was the dream that many said was not possible” when the company started in 2003. “Today it became reality – most importantly for patients who will benefit from it.”
Zymeworks joins three other B.C.-founded companies who received FDA approval this decade. Vancouver’s AbCellera Biologics Inc. developed antibodies to treat COVID-19 hospital patients that partner Eli Lilly & Co. took to market after receiving emergency FDA authorization in 2020. Aurinia Pharmaceuticals Inc. got the FDA nod in January, 2021, for its lupus nephritis drug. And Vancouver’s Sierra Oncology Inc.’s blood-cancer drug momelotinib received FDA approval in September, 2023, a year after GlaxoSmithKline plc bought the company for US$1.9-billion.
The FDA approval for Jazz unlocks a relatively small market with anticipated peak global sales of US$55-million, said David Martin, an analyst with Bloom Burton & Co. in Toronto. But other advanced human trials under way at Jazz, to see if zanidatamab works on gastric cancer and another subset of biliary cancer, could expand that to US$750-million globally, he added. Peak sales for those and other treatments Jazz derived from the antibody, including for breast cancer, could reach US$2-billion, the Irish company has said.
“The fact the drug has been approved for this first indication gives increased confidence for other indications,” Mr. Martin said. “It’s proof of concept that their antibody generating platform technologies can be successful” in generating marketable drugs.
Jazz paid Zymeworks US$375-million when it struck the licensing deal in 2022, and the FDA approval triggers a further US$25-million milestone payment to Zymeworks. Much bigger financial awards lie ahead: Zymeworks is eligible to receive up to US$500-million from Jazz if zanidatamab-based drugs pass other regulatory milestones and a further US$862.5-million for hitting commercial milestones.
Zymeworks will also receive royalties of 10 per cent to 20 per cent of net sales from related products. Zymeworks has struck a similar deal with BeiGene Ltd. for other Asian markets plus Australia and New Zealand.
Zymeworks has found its footing after bottoming out in 2022. Investors began doubting the company the previous year after it posted weak results for one of its lead drugs and other pharma companies delivered strong efficacy results for rival products to zanidatamab.
The company, which had developed a platform to create a range of cancer-fighting antibodies, parted ways with Mr. Tehrani that January and hired industry veteran Kenneth Galbraith, a former company director, to replace him. By the time he joined, the stock had shed more than 70 per cent of its value in the prior 12 months. It dropped another two-thirds by that April after Zymeworks cut staff and launched a dilutive stock offering.
Hedge fund All Blue Falcons FZE launched an opportunistic takeover bid at US$10.50 a share, about double the stock’s value at the time. Zymeworks, once Canada’s most highly valuable biotech, successfully fended off the hostile bid by adopting a poison-pill plan and redomiciling to Delaware.
Mr. Galbraith, a former top executive with Vancouver drug pioneer QLT Inc., set a new course for Zymeworks. He struck the Jazz deal to shore up its finances, relying on the global pharma giant to take on the risk and development costs for zanidatamab.
His plan was to use the proceeds to fund development of a pipeline of cancer drugs and take some to market itself.
“This for me is a fundamental tenet in how we built biotechnology companies,” he said at the Bloom Burton health care investor conference in May, 2023. “We’re moving from being a platform-rich company and working with partners to being a product-focused company.”
His goal was to bring five new medicines to the clinic within five years, focusing on antibody drug conjugates and T-cell engager molecules that target solid tumours. In August, Zymeworks got FDA clearance to do that for two drugs. In October Zymeworks published strong preclinical data for another two cancer drugs, and it plans to unveil its fifth candidate next month.
Zymeworks has had one setback, halting development of a zanidatamab offshoot targeting non-small-cell lung cancer earlier this year because of rising competition from other drug developers.
The company’s stock has recovered somewhat, trading in the mid-teens on Nasdaq. That’s still well below the US$50-plus range where the stock traded at its peak in 2021.