Buy now, pay later: Jazz hands over $50M for Zymeworks' phase 3 HER2-directed bispecific

Jazz Pharmaceuticals has thrown its hat into the HER2 ring. For $50 million, the company has secured the chance to pay a further $325 million to take Zymeworks’ HER2-directed bispecific antibody forward after the release of pivotal data.

The agreement covers the rights to zanidatamab outside of certain Asian markets covered by a 2018 deal with BeiGene. Zymeworks has moved the bispecific antibody into a pair of phase 3 clinical trials, which are enrolling patients with biliary tract cancer and gastroesophageal adenocarcinomas, while working on earlier-stage studies that could establish it as a challenger in first- and third-line breast cancer.

Zymeworks expects to report top-line data from the phase 3 biliary tract cancer clinical trial by the end of the year. But rather than wait until the data drop to partner zanidatamab, the biotech has given Jazz first refusal to take the candidate forward under predefined financial terms.

Jazz is paying $50 million upfront for the near-global rights to the bispecific. After the readout of data from the biliary tract cancer study, Jazz will decide whether to make the $325 million payment needed to continue the partnership. If the pact goes on, Zymeworks could pocket up to $525 million in milestones tied to regulatory events and a further $862.5 million in commercial paydays, plus tiered royalties. 

Biliary tract cancer is virgin territory for HER2, enabling Zymeworks to secure a breakthrough tag in the indication. In gastroesophageal adenocarcinoma, HER2-positive patients already have access to Roche’s Herceptin—the drug Zymeworks is hoping to beat in its pivotal trial. The biotech is aiming to complete enrollment in the gastroesophageal adenocarcinoma trial by the end of next year. 

The Jazz deal comes toward the end of a tumultuous year at Zymeworks, which began with Kenneth Galbraith moving to lay off half of the senior management team and 25% of the rank and file within days of taking over as CEO in January. In April, investment firm All Blue Capital proposed a $773 million deal to take Zymeworks private—and slammed the biotech’s management for “serious missteps.” 

Zymeworks rejected the buyout bid but has struggled to drum up enthusiasm among investors. The stock is down 75% over the past year and languishing well below the $10.50 offered by All Blue. News of the Jazz deal delivered a 7% bump in premarket trading, moving the stock up to $6.