Zymeworks Makes First Dermatology Licensing Deal

In a unique deal, Zymeworks (NYSE:ZYME,TSX ZYME) announced on Tuesday (October 23) that it has entered into a bispecific antibody licensing and research collaboration deal with LEO Pharma.

This is the first joint antibody discovery and development collaboration for Zymeworks and marks the first dermatology-specific partnership for the company. It will also be the first collaboration in which Zymeworks will use its antibody discovery capabilities for the programs.

LEO will keep the rights to develop two bispecific antibodies for dermatology application. Zymeworks will retain the rights to develop antibodies from the collaboration in every other category of therapeutic areas.

The Investing News Network spoke with Zymeworks Executive Director David Poon, and Ryan Dercho, associate director of external research and development and alliances in business development, to discuss the deal.

Poon said this program will differentiate from other collaborations and licensing deals by starting from a “conceptual step one” in drug development. “Clinical studies will come, but we haven’t guided on when that will be occurring,” he said.

The companies will work to discover “a number of different bispecifics that may have applications in dermatology,” Dercho said.

After the initial discovery period, LEO will select two bispecifics to move forward with for further developing. This means the companies will find the best antibody and then build and identify the bispecifics. Dercho explained Zymeworks will keep the other preclinical discovery programs and non-dermatology rights to ones LEO retains.

Zymeworks will receive a US$5 million upfront payment and undisclosed research funding payments. The company is also eligible to receive US$231 million for the first drug candidate and up to US$244 million for the second. As part of the agreement, Zymeworks may also receive tiered royalties of up to 20 percent in the US and varied royalties for other countries for the first and second candidates.

In previous deals with other companies, Derchos explained Zymeworks supported the “partners on their antibody and everything belonged to them.”

“In this case, everything belongs to [Zymeworks] except for those two [programs and rights] that LEO selects,” he said

Other deals,such as the one with Johnson & Johnson (NYSE:JNJ) last year, was strictly an out-licensing technology opportunity. Meanwhile Zymeworks played a role in the research setting for deals with Merck (NYSE:MRK) and Eli Lilly (NYSE:LLY).

Previous partnerships brought antibody candidates with them for Zymeworks to engineer into biospecifics, but Poon said this deal with LEO is “from the ground floor up.”

Zymeworks decided on LEO based on its specialty pharma focus in dermatology. It also has a “complementary” expertise and capabilities to Zymeworks, to supply “a meaningful and true collaboration,” Poon said, adding that the company is always trying to get beyond oncology

Some skin conditions LEO focuses on are psoriasis, eczema, and skin infections among others. The company also concentrates on blood clots, and has products in every division. Based in Denmark, the company has a presence in 100 countries including LEO Pharma Canada.

For Zymeworks, this collaboration could expand its pipeline to inflammation and autoimmunity, while LEO will keep the dermatology applications. Zymeworks will use its Azymetric and EFECT platforms to research, develop and commercialize LEO’s two bispecific antibodies.

A variation of both Zymeworks’ platforms have been used in other collaborations. The Azymetric platform helps to transform monospecific antibodies into bispecifics, allowing it to bind to two different targets. The products of the platform retains drug-like qualities of naturally occuring antibodies, but with long half-life and high stability among other benefits.

The EFECT at its core is a “library of antibody Fc modifications.” Its biological process uses these modifications to modify antibody-mediated immune responses, which allows the customization of therapeutic responses for different diseases.

Investor takeaway

Closing up the trading period on Tuesday, Zymeworks’ share price increased by over two percent on the NYSE and TSX to US$12.85 and C$16.95, respectively.

TipRanks suggests share price high of US$27 and a low of US$20 on the NYSE over the next six months, based off of analyst reports. Over the past five months, five out of the six analysts hold “Buy” positions on the company. Barclays analyst Gena Wang has a “Hold” position on the company.

Though there aren’t any upcoming events for this specific collaboration, investors can look forward to multiple events for Zymeworks. In November, the company will be presenting data on ZW25 at the EORTC-AACR-NCI symposium in Ireland.

The company also plans to submit an Investigational New Drug application for ZW49 to the US Food and Drug Administration by the end of 2018. If approved, the company could begin dosing patients with the candidate early 2019.

Don’t forget to follow@INN_LifeScience for real-time updates!

Securities Disclosure: I, Gabrielle Lakusta, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.