All Blue Ups the Ante after Zymeworks Rejects Bid

 On May 20, Zymeworks' board of directors rejected an unsolicited bid from investment firm All Blue Falcons at $10.50 per share. The Vancouver, B.C.-based company said the offer "substantially undervalues" it and wasn't in the best interest of its shareholders. Zymeworks described the bid as "unsolicited, opportunistic, non-binding" and said it "lacks credibility by offering no information regarding potential sources of funding or any details on their ability to consummate such a transaction."

On Thursday, however, Zymeworks increased its stake in the company to 6.9%, slightly under 4 million shares and options. Zymeworks' shares popped 13% after the original bid and are up another 10%, although whether this followed All Blue's investment in more shares or the company's promising early report on its HER2-targeted bispecific antibody, zanidatamab, is not clear.

Zymeworks is presenting two poster sessions at the American Society of Clinical Oncology (ASCO) Annual Meeting on June 3-7 in Chicago.

Dr. Neil Josephson, M.D., Zymeworks' chief medical officer, said, "These encouraging new data sets presented at ASCO provide further validation of zanidatamab's potential in the treatment of advanced HER2-positive cancers and follow the release of other promising data in gastroesophageal and breast cancer in 2021. These new data continue to demonstrate the potential for zanidatamab to be an important advancement in the treatment of a wide range of HER2-expressing cancers, including in first-line treatment regimens."

The first poster will describe zanidatamab in combination with chemotherapy and tislelizumab as first-line therapy for advanced HER2-positive gastric/gastroesophageal junction adenocarcinoma (G/GJEC). Tislelizumab is a humanized IgG4 anti-PD-1 monoclonal antibody being developed by Novartis and BeiGene.

In this study, in 33 evaluable patients with advanced HER2-positive G/GJEC patients treated with zanidatamab and tislelizumab in combination with the CAPOX chemotherapy regimen, the cORR (overall clinical response rate) was 75.8%, the disease control rate (DCR) was 100% and duration of response (DOR) ranged from 2.1+ to 18.2+ months.

The combination was generally well tolerated. The majority of treatment-related adverse events (TRAEs) were mild to moderate. The data support the initiation of the company's global Phase III HERIZON-GEA-01 trial.

The second poster describes zanidatamab in combination with chemotherapy agent docetaxel in HER2-positive breast cancer. It will present preliminary data from a Phase Ib/II trial. In 21 evaluable patients with advanced HER2-positive breast cancer receiving the therapy combination, the cORR was 90.5%, with 15 patients (78.9%) demonstrating an ongoing response at the time of the data cut. The median follow-up was 7.0 months, and the six-month progression-free survival rate was 95.2%.

They described the combination as having a manageable safety profile with TRAEs consistent with the standard of care.

"We will continue to support ongoing R&D efforts to generate and report robust data highlighting and reinforcing the potential applications of our therapeutics and technology platforms in the treatment of a wide range of disease," said Kenneth Galbraith, chair and chief executive officer of Zymeworks. "We remain focused on exploring potential research and collaboration opportunities that can lead to a broader portfolio of innovative therapies for patients in need around the world with difficult-to-treat cancers."

Galbraith took over the company's reins in January, replacing Ali Tehrani, Ph.D., founder of the company. He promptly cleaned house, removing 10 (50%) of the former senior management team and slashed employee headcount by at least 25% by the end of this year.

In its original letter to the Zymeworks' board on April 28, All Blue wrote, "We believe that the company has suffered from severe value erosion due to a number of serious missteps by an unfocused leadership with no clear strategy for improving performance. Over the past 12 months, stockholders have witnessed the company miss a number of important deadlines publicly announced in press releases, endured poorly executed earnings calls and experienced confusing and damaging public messaging, all of which has led to a significant loss of credibility and investor confidence in the company and its management team."

Some of what they refer to occurred prior to Galbraith's appointment, although they did criticize his decision to initiate a "highly dilutive equity offering in current volatile market conditions, in preference to other available alternatives for raising capital." The company under Galbraith's leadership raised the funds to advance its pipeline, including zanidatamab.

https://www.biospace.com/article/a-week-after-zymeworks-rejects-all-blue-falcons-bid-investment-firm-ups-the-ante/