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Zymeworks Inc. (ZYME)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue was $27.6M, down sequentially from Q2 due to lapping large Q2 milestones, but up 72% YoY; revenue missed S&P consensus ($29.9M*) while EPS of -$0.26 beat consensus (-$0.32*) .
  • The quarter’s cash generation was driven by a $25.0M J&J milestone (pasritamig) and $1.0M royalties from Ziihera® (Jazz/BeOne), offset by lower development support revenue; net loss narrowed to $19.6M YoY .
  • Clinical execution advanced: ZW191 Phase 1 showed 53% ORR overall and 64% in gynecological cancers (at 6.4–9.6 mg/kg), with a favorable safety profile; ZW251 dosed its first HCC patient .
  • Capital allocation: $22.7M of buybacks completed (1,439,068 shares at $15.80 avg), with runway maintained into 2H-2027 based on current plans and anticipated regulatory milestones .
  • Stock reaction: modestly positive; after-hours gain of ~1.5% to $18.32 following the call .

What Went Well and What Went Wrong

What Went Well

  • Strong ZW191 Phase 1 signal: 53% ORR overall and 64% in gynecological cancers at 6.4–9.6 mg/kg; no serious treatment-related events; dose optimization starting in Q4 .
  • Non-dilutive cash inflow: Achieved $25.0M J&J development milestone; earned $1.0M royalties from Jazz/BeOne, supporting partnership-driven model .
  • Shareholder returns and discipline: $22.7M of buybacks completed; management reiterated runway into 2H-2027 and emphasized disciplined capital deployment .
    • “We remain focused on developing next generation therapies through disciplined capital deployment… to drive sustainable long-term shareholder returns.” — CEO Kenneth Galbraith .

What Went Wrong

  • Revenue missed consensus and fell sequentially vs Q2’s outsized milestone/deferred revenue recognition; development support and drug supply revenue declined .
  • Other income fell YoY due to lower interest income, partially offset by FX gain; net loss remains material despite YoY improvement .
  • Continued dependency on episodic milestones and partner timing (e.g., Jazz HERIZON-GEA-01) raises near-term variability risk in revenue trajectory .

Financial Results

Actuals vs S&P Global Consensus (Quarterly)

MetricQ1 2025Q2 2025Q3 2025
Revenue (Actual, $USD Millions)$27.1 $48.7 $27.6
Revenue Consensus Mean ($USD Millions)*$20.7$16.9$29.9
EPS (Actual, $USD)-$0.30 $0.03 -$0.26
Primary EPS Consensus Mean ($USD)*-$0.70-$0.47-$0.32
Values retrieved from S&P Global.
Notes: Q1 and Q2 were revenue/ EPS beats; Q3 was a revenue miss and EPS beat (bold in commentary).

Profitability and Margins (Quarterly)

MetricQ1 2025Q2 2025Q3 2025
Net Income Margin %*-83.5%4.8%-71.0%
EBITDA ($USD Millions)*-$23.0$1.8-$20.6
EBITDA Margin %*-84.9%3.7%-74.4%
Values retrieved from S&P Global.

YoY and Sequential Context

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$16.0 $27.1 $48.7 $27.6
EPS ($USD)-$0.39 -$0.30 $0.03 -$0.26

Revenue Composition (By Component)

Component ($USD Millions)Q1 2025Q2 2025Q3 2025
Milestones – GSK$14.0 ——
Milestones – Daiichi Sankyo$3.1 ——
Milestones – BeOne (China BTC approval)—$20.0 —
License Option – BMS—$7.5 —
Deferred Revenue Recognition—$18.3 —
Milestones – J&J (pasritamig)——$25.0
Royalty Revenue (Jazz/BeOne)$0.2 $0.6 $1.0
Development Support & Drug Supply$9.6 —— (lower vs 3Q-2024)
Other Partner Revenue (BeiOne supply)$0.2 ——

KPIs and Balance Sheet

KPIQ1 2025Q2 2025Q3 2025
Ziihera® net sales by Jazz ($USD Millions)$2.0 $5.5 —
Royalty Revenue ($USD Millions)$0.2 $0.6 $1.0
Cash Resources ($USD Millions)$321.6 $333.4 $299.4
Buybacks Completed ($USD Millions)——$22.7
Shares Repurchased (#)——1,439,068
Avg Repurchase Price ($/share)——$15.80

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash runwayThrough FY 2027Fund operations into 2H-2027 Fund operations into 2H-2027 Maintained
HERIZON-GEA-01 topline PFS (Jazz)Q4 2025Expected 4Q-2025 Expected 4Q-2025; ITT population confirmed Maintained/clarified
Share repurchaseProgram status$30M authorized remaining [prior]$22.7M completed of remaining $30M as of Nov 4 Progressed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
ADC platform validation (ZW191)Trial-in-progress design highlighted Dose-escalation ongoing; start dose Q3W path Initial Phase 1 data: 53% ORR overall, 64% gyn cancers; favorable safety; dose optimization in Q4 Strengthening
ZW251 (GPC3, HCC)IND planned mid-2025 IND cleared by FDA First patient dosed; dose-escalation then randomized dose optimization Advancing
Royalty/milestone-driven modelStrong focus on partnering revenue streams Evolving strategy around Ziihera royalties/milestones CFO underscored buybacks and capital discipline; royalty streams and milestones emphasized Steady build
HERIZON-GEA-01 timingEMA CHMP positive opinion; ASCO data planned Topline PFS expected 4Q-2025 ITT population confirmed; topline still expected Q4 On track
Portfolio discipline (ZW171)Trial-in-progress; step-up dosing approach —Discontinued as monotherapy; learnings inform next-gen TCEs Refocusing

Management Commentary

  • “This has been a productive quarter… Our partnership-based model continues to generate value today, while also providing opportunity for sustainable growth of potential cash flows.” — CEO Kenneth Galbraith .
  • “This action [buybacks] reinforces our view that the stock remains undervalued… designed to drive sustainable long-term returns.” — EVP/CFO Leone Patterson .
  • “ZW191… allowed us to escalate dose up to 11.2 mg/kg… low incidence of grade ≥3 TRAEs… no serious treatment-related AEs, discontinuations, or deaths.” — SVP Clinical Dev. Dr. Sabeen Mekan .

Q&A Highlights

  • HERIZON-GEA-01 analysis set: Jazz shifted PFS/OS analysis to ITT; Zymeworks aligned with Jazz’s regulatory strategy; further details deferred to partner .
  • ZW251 (HCC) payload/dose strategy: DAR4 selected to optimize tolerability in fragile HCC population; preclinical data support efficacy with topo-1 payload; goal to enable combinations later .
  • ZW191 differentiation: Lower grade 3 cytopenia rates seen as potential enabler for earlier-line combinations (e.g., platinum-taxane-bevacizumab) .
  • Biomarker strategy: ZW191 H-score used; correlates well with TPS/PS2+; activity observed across low/negative FRα expression, supporting broader potential .
  • Capital allocation: Maintain authorized buyback optionality; consider future deployment into royalty portfolios as partner products mature .

Estimates Context

  • Q3 2025: Revenue missed S&P consensus ($27.6M vs $29.9M*), but EPS beat (-$0.26 vs -$0.32*), reflecting milestone mix and cost control. Prior quarters featured clear beats on both revenue and EPS due to milestone timing and deferred revenue recognition .
  • Near-term estimate risk: Absent large milestones, revenue trends can undershoot consensus; however, impending HERIZON-GEA-01 topline could reset royalty/milestone expectations once disclosed by Jazz .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q3 print was mixed: EPS beat but revenue miss versus S&P consensus, driven by milestone timing and lower development support revenue; YoY improvement in net loss driven by higher milestone intake .
  • Clinical momentum is the core catalyst: ZW191 early efficacy and clean safety support dose optimization and potential partnering; ZW251 is underway, targeting high-need HCC .
  • Watch partner events: Jazz’s HERIZON-GEA-01 Phase 3 topline in Q4 is the major near-term driver for royalty/milestone trajectories; Zymeworks is aligned but defers disclosures to Jazz .
  • Capital discipline: $22.7M buybacks reflect confidence and a focus on TSR while maintaining runway into 2H-2027; optionality to deploy future cash flows into royalty portfolios .
  • Revenue variability: Quarterly results will remain lumpy, tethered to milestone/royalty timing; modeling should incorporate wide bands around collaboration revenues .
  • Evidence-based portfolio pruning: ZW171 discontinuation underscores disciplined standards; learnings feed into next-gen TCE design (e.g., DLL3 tri-specific) .
  • Additional relevant press releases: Q3 IR update (Nov 6) and October scientific disclosures on ZW191 support the ADC validation narrative .