Zymeworks — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for the three months ended September 30, 2026, was $256.5 million, compared to $27.6 million in the same period in 2025.
• Net income for the quarter was $173.7 million, compared to a net loss of $19.6 million in the prior year period.
• Revenue growth was primarily driven by a $250.0 million milestone payment from Jazz Pharmaceuticals following the U.S. FDA approval of Ziihera, partially offset by the absence of a $25.0 million development milestone from Johnson & Johnson recognized in Q3 2025.
• Royalty revenue from Jazz Pharmaceuticals and BeOne Medicines was $2.3 million for the quarter.
• YUPELRI collaboration revenue increased 4% year-over-year, with U.S. net sales of $71.5 million recognized by Viatris, representing a 0.2% year-over-year increase.
• Theravance Biopharma contributed approximately $1.5 million of revenue during the quarter, reflecting seven days of ownership following the September 23, 2026 acquisition.
• Research and development expenses were $36.1 million in Q3 2026, compared to $35.6 million in Q3 2025.
• Selling, general, and administrative (SG&A) expenses were $42.7 million in Q3 2026, compared to $14.1 million in Q3 2025, driven by acquisition-related costs and higher stock-based compensation.
• Net other expense was $4.4 million in Q3 2026, compared to net other income of $3.8 million in Q3 2025.
• Adjusted EBITDA guidance for 2026 was raised to a range of $176 million to $190 million (previously $114 million to $128 million).
• The company accessed $600 million of non-dilutive financing in 2026 with a weighted average cost of capital of less than 10%.
• The company repurchased 534,381 shares for $14.0 million in Q3 2026; total share repurchases for the first nine months of 2026 were 5,737,790 shares for $140.4 million at an average price of $24.48 per share.
• Cumulative share repurchases since August 2024 totaled $279.8 million for 12,940,827 shares at an average price of $21.63 per share.
• As of November 6, 2026, the company had approximately 69.0 million common shares outstanding.

Guidance and Future Outlook:

• 2026 total revenue guidance was raised to a range of $337 million to $351 million (previously $278 million to $292 million).
• 2026 Adjusted EBITDA guidance was raised to a range of $176 million to $190 million (previously $114 million to $128 million).
• The financial guidance is subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976 regarding the Roche collaboration, expected in Q4 2026.
• The company has no current plans for additional equity issuances.
• Post-closing of the Theravance Biopharma acquisition, the company expects to eliminate $13 million to $15 million of annualized overhead and corporate costs.
• The company plans to host an R&D Day in New York on February 11, 2027.

Business Segments and Product Lines:

• Ziihera received U.S. FDA approval on August 25, 2026, for first-line treatment of HER2-positive advanced gastroesophageal adenocarcinoma (GEA).
• Ziihera is eligible for up to $190 million in potential additional global regulatory milestones from Jazz and BeOne Medicines related to ex-U.S. approvals.
• Ziihera received a Category 2A recommendation from the National Comprehensive Cancer Network and a recommendation in the European Society for Medical Oncology Clinical Practice Guidelines.
• Interim analysis of the HERIZON-GEA-01 trial showed a median overall survival of 27 months for Ziihera plus tislelizumab and chemotherapy, with a 35% reduction in the risk of death (HR 0.65).
• Theravance Biopharma was acquired on September 23, 2026, adding YUPELRI to the portfolio and providing a recurring commercial cash-flow stream.
• ZW209 received an exclusive global collaboration and license agreement with Roche, including an upfront payment of $55 million and a $40 million payment upon Phase 1b trial initiation.
• ZW209 is eligible for up to $718 million in additional milestone payments and tiered royalties ranging from high single digits to mid-teens.
• ZW209 received Investigational New Drug clearance from the U.S. FDA, with a Phase 1 study anticipated to initiate in 2026.
• Pasritamig (KLK2×CD3) data presented at SITC showed a 73% PSA50 response rate and 47% PSA90 response rate in combination with JNJ-9401 for metastatic castration-resistant prostate cancer.
• ZW191 (folate receptor alpha-targeting ADC) presented Phase 1 data showing a 64.5% confirmed objective response rate in platinum-resistant ovarian cancer.
• New preclinical data was presented on a PD1xVEGFxIL-7 multispecific antibody and a penta-specific antibody (ZW1953) targeting AML.

Market and Competitive Landscape:

• Ziihera is positioned as a preferred treatment for first-line GEA patients following ESMO and NCCN recommendations.
• The company's strategy focuses on building a diversified revenue-generating biotechnology company combining innovative R&D with commercial and royalty-based cash flows.
• The company aims to match capital and ownership structures to opportunities, utilizing acquisitions, partnerships, licensing, and external venture capital without assuming full balance sheet funding for every opportunity.

Risks and Challenges:

• The 2026 financial guidance is contingent on the expiration or termination of the HSR waiting period for the Roche collaboration.
• Forward-looking statements include risks regarding product candidate failure, regulatory delays, commercial success of YUPELRI and TRELEGY ELLIPTA, and the ability to successfully execute the Theravance acquisition.
• Risks include potential negative impacts of FDA regulatory delays, changes in drug pricing controls, and market conditions including tariffs.
• The company faces risks related to the inability to maintain or enter new partnerships, the potential failure of clinical trials to demonstrate safety and efficacy, and the possibility that anticipated milestones or royalty streams may not be realized.

Management Commentary and Tone:

• Kenneth Galbraith, Chair and CEO, stated the company is entering the next phase of growth with a "fundamentally stronger and more diversified business."
• Management highlighted the transformation of the financial profile through the expansion of Ziihera's label, the Theravance acquisition, and strategic transactions like the Roche collaboration.
• Galbraith noted that recurring cash flows provide flexibility to invest selectively in programs with meaningful value-creation potential while the R&D engine creates additional opportunities for milestones and royalties.
• The company elected not to host a third-quarter earnings conference call following the release of financial results.

Other Key Points:

• The company appointed Stuart Knight as Executive Vice President, Chief Information Officer, and Jesse Fecker as Vice President of Intellectual Property, both joining from Theravance Biopharma.
• Suzanne Monahan was appointed Senior Vice President and General Manager of Theravance Biopharma on October 19, 2026.
• The company received a $250 million U.S. approval milestone from Jazz Pharmaceuticals in October 2026.
• The company utilized non-recourse royalty-backed notes and non-recourse notes to fund the Theravance acquisition and share repurchase program while minimizing equity dilution.
• The company has no current plans for additional equity issuances.