Zymeworks pivots to royalty-first model after cancer drug success

Zymeworks is abandoning traditional drug commercialization to focus on licensing and royalties following strong Phase 3 results for its cancer drug Ziihera.

Why it matters: This shift positions Zymeworks for long-term revenue stability without the heavy financial burden of launching and marketing its own drugs, a key concern in biotech.

Backstory: Ziihera, developed with Jazz Pharmaceuticals, showed promising results for HER2-positive gastroesophageal cancer on Monday. The drug is already approved for biliary tract cancer in the U.S., and new data could expand its market and replace existing treatments like Herceptin. As an indirect result, Zymeworks’ stock climbed 30% after the announcement.

Zoom in: Zymeworks could earn up to $440M in milestone payments from Jazz and its other partner BeOne Medicines; small potatoes compared to the analysts’ projected $2.9B in annual peak sales that Ziihera could generate, but still enough to completely shift its business model.

Big picture: The royalty-first model reflects a broader trend in biotech where companies seek sustainable revenue through partnerships and royalties rather than risk-heavy commercialization, reducing capital needs and financial volatility.

What’s next: Zymeworks’ future strategy includes acquiring new assets and advancing differentiated programs for out-licensing, in what CEO Kenneth Galbraith has a “repeatable framework”.