Zymeworks is the latest biotech to go public, raising $58.5 million through a stock offering that the company says will finance early stage clinical trials for its two lead cancer drug candidates.
Vancouver, BC-based Zymeworks sold 4.5 million shares at $13 apiece, coming in at the low end of the $13 to $16 per range that the company had set. Zymeworks shares are now trading on both the Toronto and New York stock exchanges under the symbol “ZYME.”
Zymeworks develops antibody drugs for cancer. While the field for such treatments is hyper competitive, Zymeworks has caught the eye of some larger pharmaceutical companies aiming to develop antibody drugs that are “bispecific,” meaning they can hit two or more targets on cells instead of just one. In 2011, Zymeworks reached a deal with Merck (NYSE: MRK) that could pay the biotech up to $187 million if it can help its larger partner create bispecific antibodies. Zymeworks also inked a partnership with Imclone Systems, a subsidiary of Indianapolis-based Eli Lilly (NYSE: LLY) in 2014. Financial terms for that deal weren’t initially disclosed but according to the filing, Zymeworks stands to gain as much as $375 million.
In early 2015, Zymeworks began a partnership with Summit, NJ-base Celgene (NASDAQ: CELG) that could eventually pay up to $164 million. And a year ago, Zymeworks signed a deal with GlaxoSmithKline (NYSE: GSK) that could yield as much as 908 million, depending on the partners’ success developing and commercializing bispecific antibodies. In the last three years, partnerships have generated $22.2 million in revenue for Zymeworks, according to the filing.
Zymeworks is also developing its own antibody drug candidates. The company’s lead drug, ZW25, is a bispecific antibody developed to hit two different targets on human epidermal growth factor receptor 2 (HER2), a protein important to cancer cell growth. Zymeworks says in its prospectus that the drug could address patients whose tumors have low levels of this protein and might not be eligible for treatment with the HER2-targeting therapies now available, such as the Roche breast cancer drugs trastuzumab (Herceptin) and pertuzumab (Perjeta), which combined accounted for $8.6 billion in sales last year. Zymeworks says ZW25 has potential applications in breast, stomach, and ovarian cancers.
A second Zymeworks drug, ZW33, is what’s called an antibody drug conjugate (ADC). These kinds of drugs are developed to deliver a toxic payload directly to cancer cells, a targeted approach that’s meant to spare healthy tissue. Zymeworks expects to start a Phase 1 trial testing the drug in the second half of the year. The company says ZW33 could be tested in breast and ovarian cancers.
Most of the IPO proceeds will pay for product manufacturing and clinical trials. A portion of the funds will support preclinical work on other drugs. Last year, Zymeworks spent $36.8 million on research and development, according to the company’s filing. As of Dec. 31, Zymeworks had $40.3 million in cash.
According to the prospectus, the largest shareholders in Zymeworks include Eli Lilly; CTI Life Sciences Fund; and Ian Ihnatowycz, the president and CEO of Toronto-based investment firm First Generation Capital.