Zymeworks bags a $61.5M round, with a merger on tap and an IPO in view

Zymeworks CEO Ali Tehrani

Vancouver-based Zymeworks has completed a long-awaited venture raise, bagging a $61.5 million mezzanine round with an eye to following up with an IPO--when the time is right. The round was paired with an equity investment in neighboring biotech Kairos Therapeutics, which will now collaborate on developing antibody drug conjugates as Zymeworks ponders an option to buy.

Eli Lilly and Celgene, both of which are collaborating with Zymeworks' bi- and multispecific antibody development team, participated in the syndicate. They were joined by co-lead investors BDC Capital and Lumira Capital, first timers, with existing investors CTI Life Sciences Fund and the Fonds de solidarité FTQ jumping in. New investors in the financing include Perceptive Advisors, Teralys Capital, Northleaf Venture Catalyst Fund, Brace Pharma Capital, Merlin Nexus and others.

Kairos is a spinout of The Centre for Drug Research and Development.

Zymeworks has built its reputation around a slate of Big Pharma deals. In addition to Lilly and Celgene, GlaxoSmithKline and Merck have jumped on board the biotech's primary Azymetric drug development platform. Much of the new money will be earmarked for the clinical development of two lead programs--ZW25 and ZW33--which go into the clinic later this year.

The biotech is right on track with the three-year game plan, says CEO Ali Tehrani. Marquee collaborations with Big Pharma? Check. A base of nondilutive partnership cash and grant money to help fuel growth? Check. New venture cash and crossover money on tap while shooting for proof-of-concept data on in-house drugs and partnered assets? Check. Next stop? Clinical data and an IPO, when the time is right.

"The simple answer is, we're going to be opportunistic," says Tehrani about the company's current position. "It gives us a very long runway, essentially through Q4 of 2017; a two-year runway. We're actively considering accessing the public market, when it makes sense. We're keeping our hand on the pulse."

Right now, as anyone checking the latest biotech index or S&P results would tell you in a heartbeat, that pulse is profoundly erratic. But when it evens out, the biotech plans to be ready with a convincing story after raising around $150 million in total, so far, to bankroll operations.

In the meantime, Tehrani plans to use his cash position to line up any new deals needed to help improve the biotech's lineup of meds for the pipeline, including new licensing deals and acquisitions, or looking to in-house innovations to fill gaps.

The new cash injection, though, provides a cushion of time for executing on the next stage of the business plan.

"I don't want to do anything because I have to," says Tehrani. "We no longer want to do anything out of desperation."

Dion Madsen, senior managing partner in BDC Capital's Healthcare Venture fund, will join Zymeworks' board of directors, and Dr. Daniel Hétu, managing director in Lumira Capital, will join as an observer.