Zymeworks Inc. and Royalty Pharma PLC have announced a significant financial agreement that will provide Zymeworks with $250 million in funding through a royalty-backed note. This funding, which is non-recourse, will be secured by 30% of future royalties from the global sales of Ziihera, a therapy developed by Zymeworks and currently under collaboration agreements with partners Jazz Pharmaceuticals and Beone Medicines.
Under the terms of the agreement, Zymeworks will retain 70% of the royalties on Ziihera sales, with full royalty rights reverting to Zymeworks once the royalty payments to Royalty Pharma have ceased. This infusion of capital will strengthen Zymeworks' balance sheet with non-dilutive capital and support its stock repurchase program, potential strategic acquisitions, and cash runway beyond 2028.
Zymeworks is eligible to receive tiered royalties of 10% to high teens on global annual sales of Ziihera up to $2.0 billion under the collaboration agreement with Jazz, and tiered royalties of mid-single to mid-double digits on annual net sales of Ziihera up to $1.0 billion under the collaboration agreement with Beone.
Furthermore, all earned regulatory and commercial milestone payments under its agreements with Jazz and Beone, including up to $440.0 million in near-term milestone payments tied to future regulatory approvals of Ziihera, will be retained by Zymeworks.
This strategic funding will enable Zymeworks to continue repurchasing shares at current prices and pursue strategic acquisitions while thoughtfully reducing its share count over time, setting the company up for higher long-term shareholder value.
The funding from Royalty Pharma is seen as a significant move to support Zymeworks' financial and strategic goals, as the company continues to develop and advance its pipeline of product candidates targeting areas of significant unmet medical need, particularly in cancer, inflammation, and autoimmune disease. The market has reacted to these announcements by moving the company's shares -0.68% to a price of $23.47. For more information, read the company's full 8-K submission here.
