Deals

J&J antes $50M to get Zymeworks’ 6th big bispecifics alliance underway, with $6B in total milestones on the table

Newly public Zymeworks $ZYME has just lined up its 6th major biopharma discovery alliance, this time bringing J&J $JNJ into a fold that already includes such big players as Merck, Eli Lilly, Celgene, GSK and Daiichi Sankyo. And this deal starts with a substantial — for a discovery deal — upfront along with $1.4 billion in total milestones on the table.

Zymeworks’ somewhat battered shares took off on the news, spiking 38% Monday morning.

As in some of its other deals, Zymeworks is bringing its Azymetric and EFECT platforms to the table — this time looking to identify 6 bispecifics for a slate of undeclared targets picked by Janssen. And J&J is paying $50 million to get things started with another $282 million in development milestones and $1.12 billion in commercial cash on the line for successful work.

Ali Tehrani

Zymeworks CEO Ali Tehrani tells me that this brings the grand total of biobucks now up for grabs to about $6 billion, with around $100 million claimed in upfronts and support payments from partners.

That’s about all the detail you’re going to get on this particular pact. Tehrani can’t go into specifics, a common aspect of any research pact this early in the game. But he does allow that J&J isn’t looking at this in a narrow framework, instead taking a “broad mindset” on what Zymeworks can do.

This has been something of a tough year for Zymeworks. The Vancouver-based biotech — which has been absorbing new platform tech in a fast-paced drive to expand alliances as it went after its own in-house programs — took in $59 million on its IPO after penciling in a higher figure, then watched its share price gradually slide to about half of the open.

The lockup on the stock ended a couple of weeks ago, says the CEO, and he’s happy enough with where the company is on the street. Franklin Templeton and Cormorant came in on the stock. He expects more such longterm investors to follow, with a new road show in the offing. About $40 million of the stock was spoken for going in, a common feature in the biotech IPO world, and now every time a generalist sells a thousand shares on a thinly traded stock like this, it can have a big impact on the price.

“Our objective was to introduce the street (to Zymeworks) piece by piece,” he says. And that means deals like this, more data on the in-house drug ZW25, with an update coming at the San Antonio Breast Cancer Symposium and a splash planned for ASCO next summer.

“If you look at every conversation we’ve had,” Tehrani tells me, “you know we promise and we deliver. We do what we say.”

And as the biotech performs for Wall Street, he believes that message will resonate and the price will head back up. As it did this morning.

He’s promised. Now he gets to deliver.



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