Eyeing an IPO, Zymeworks partners up with Celgene on bispecifics

Over the past 6 months the up-and-coming Zymeworks has leveraged its expertise in bispecific antibodies into expanded development pacts with two marquee Big Pharma partners. Later today, positioning itself for what it sees as a pivotal year, the biotech plans to announce another research deal with the prolific Big Biotech Celgene ($CELG), which is inking one of its classic collaborations sweetened with an upfront payment, an equity stake and up to $164 million per project for a slate of programs that represent Zymeworks' biggest potential payoff yet. And after raising a total of $90 million in cash for the company with hundreds of millions more in milestones on the table, CEO Ali Tehrani says he's set his sights on a mezzanine venture round that could position the biotech for an IPO later this year to fund work on its in-house drug programs.

Zymeworks CEO Ali Tehrani

Bispecific antibodies have been attracting considerable interest among drug developers looking to engage two targets at once. In this case, Celgene was lured in by the Vancouver-based company's Azymetric research platform at a company which has already inspired some major league interest. Last October, Eli Lilly's ($LLY) cancer drug division expanded on its initial pact with Zymeworks to include a broader look at bispecific cancer immunotherapies in a deal including $375 million in milestones. And late last year there was a separate expanded collaboration deal with Merck ($MRK)--which originally included $187 million in milestones--in exchange for putting its platform technology to work on new bispecifics and antibody-drug conjugates.

To get its expanded deal with Merck, Tehrani's crew had to pass muster with the new R&D chief and longtime R&D chief Roger Perlmutter, who's made a number of technology gambles in his career. And the company's SEC filings outline equity stakes of C$10 million from Celgene in December and C$27 million Lilly acquired last October--all part of the C$52.7 million total raised last year.

Zymeworks' technology isn't just about being able to bind to different sites on diseased cells. It's also been working on constructing stable protein drugs that can endure for a longer stretch in the bloodstream, making it possible to come up with new drugs that may require fewer injections--a key competitive advantage--and are easier to scale up on the manufacturing side. Their proteins can also be engineered to have an "effector function," which can trigger an immune response.

"We believe we can engineer any protein pretty much to our hearts desire," says Tehrani.

The new money from Celgene is being added to a cache of cash that is being used to back a pair of INDs aimed at launching clinical-stage cancer programs next year. And the biotech has been collaborating with one of the top academics in the field in preparation for the big move into the clinic.

Zymeworks recently hammered out a deal to work with Dennis Slamon and his research team at UCLA. Slamon is one of the most storied investigators in the oncology field. (Lifetime made a movie of his life called Living Proof, where he was played by Harry Connick Jr.) His background includes credit for much of the research behind Herceptin--the original targeted cancer therapy--as well as Pfizer's ($PFE) palbociclib, which now appears headed for an accelerated approval at the FDA for breast cancer.

Slamon is currently concentrating on the preclinical work that needs to be completed ahead of an IND for the biotech's ZW33 and ZW25 programs.

Zymeworks has already completed in vivo studies on ZW33, says Ali. "Dennis and his team bring some extensive expertise with tumor panels and cell lines that the company doesn't otherwise have access to," he says. The UCLA team also makes for a useful sounding board "just to make sure we're not drinking some really cool KoolAid."

Sara Hurvitz in Slamon's lab at UCLA compares ZW33 favorably to Genentech's breakthrough antibody-drug conjugate (ADC) T-DM1 (Kadcyla), noting an added binding ability with Zymeworks' drug that allows for a more specific delivery of combination therapies to the targeted population. "With ZW33 it will be interesting to see if we need to add other agents. The hope is we can eliminate the use of traditional chemo" with an antibody that delivers a cytotoxic agent.

"The whole area of bispecifics and bispecifics with ADCs give you options you don't have with monospecific ADCs," says Slamon. "The data we've seen when we've looked at this molecule versus commercially available molecules is pretty favorable. And it looks in head-to-head like it is more efficacious. … If it looks as good clinically as it does preclinically, we'd like to stay engaged."

That narrative is the kind of story that Tehrani believes justifies a fresh injection of venture cash later this year as he times a leap onto the ongoing wave of biotech IPOs, now entering its third year. He's also been beefing up the staff, adding a Seattle satellite facility that drew in 5 researchers from Amgen as the Big Biotech shuttered its research complex in the area. After the R&D team is finished with the first two INDs, Tehrani's plan is to add two more for his pipeline in 2017, and keep going from there.

- here's the release

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