Zymeworks Inc. (ZYME) Bundle
Understanding Zymeworks Inc. (ZYME) Revenue Streams
Understanding Zymeworks Inc. (ZYME)’s Revenue Streams
The revenue of Zymeworks Inc. is primarily derived from its collaborations and partnerships, particularly in research and development. The following insights detail the company's revenue sources and trends.
Breakdown of Primary Revenue Sources
| Revenue Source | Q3 2024 (in millions) | Q3 2023 (in millions) | Change (in millions) | Change (%) |
|---|---|---|---|---|
| Research and Development Collaborations | $16.0 | $16.5 | $(0.5) | (3%) |
| Total Revenue for Nine Months | $45.3 | $59.1 | $(13.8) | (23%) |
| Development Support and Drug Supply Revenue from Jazz | $12.1 | $15.4 | $(3.3) | (21.4%) |
| Milestone Revenue from GSK | $2.5 | $0.2 | $2.3 | 1,150% |
| Drug Supply Revenue from BeiGene | $1.4 | $0.9 | $0.5 | 55.6% |
Year-over-Year Revenue Growth Rate
In the nine months ended September 30, 2024, total revenue decreased by $13.8 million compared to the same period in 2023, representing a decrease of 23%.
For the three months ended September 30, 2024, total revenue decreased by $0.5 million, or 3%, compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
The primary contributors to revenue during the nine months ended September 30, 2024, included:
- Development support and drug supply revenue from Jazz: $32.8 million
- Milestone revenue from BeiGene: $8.0 million
- Milestone revenue from GSK: $2.5 million
- Research support payments from BeiGene: $1.8 million
- Other research support payments: $0.2 million
Analysis of Significant Changes in Revenue Streams
The decrease in revenue from Jazz reflects the transfer of responsibility for certain clinical trials regarding zanidatamab to Jazz. This shift resulted in a significant reduction of support revenue previously recognized by Zymeworks.
In contrast, milestone revenue from GSK saw a substantial increase, contributing positively to the overall revenue despite the declines from other sources.
Overall, the company has not generated any revenue from the sale of approved products as of September 30, 2024, with future revenue contingent upon the successful development and commercialization of its product candidates.
A Deep Dive into Zymeworks Inc. (ZYME) Profitability
Profitability Metrics
As of September 30, 2024, the company reported a net loss of $99.2 million for the nine months ended, compared to a net loss of $104.2 million for the same period in 2023. The net loss per common share was $(1.30) for the nine months ended September 30, 2024, compared to $(1.53) for the same period in 2023.
The total revenue for the nine months ended September 30, 2024, was $45.3 million, down from $59.1 million in the nine months ended September 30, 2023, reflecting a decrease of 23%.
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Net Loss | $(99.2 million) | $(104.2 million) | 5% improvement |
| Net Loss per Share | $(1.30) | $(1.53) | 15% improvement |
| Total Revenue | $45.3 million | $59.1 million | 23% decrease |
Gross profit for the nine months ended September 30, 2024, was $45.3 million, which reflects a gross margin of 100% as the revenue is primarily derived from collaborations and not from product sales. The operating profit, however, reflected a loss of $(114.9 million) for the same period.
In terms of operational efficiency, total operating expenses for the nine months ended September 30, 2024, amounted to $160.2 million, compared to $173.7 million in the previous year, marking a decrease of 8%. The breakdown of operating expenses is as follows:
| Expense Type | 2024 | 2023 | Change |
|---|---|---|---|
| Research and Development | $97.6 million | $118.1 million | 17% decrease |
| General and Administrative | $45.3 million | $55.6 million | 19% decrease |
| Impairment on Acquired IPR&D | $17.3 million | $0 | New charge |
The operating profit margin reflects the company's ongoing challenges in achieving profitability, with a margin of $(34.2 million) for the three months ended September 30, 2024, compared to $(33.2 million) in the same quarter of 2023. This indicates a slight deterioration in operational efficiency despite the reduction in operating expenses.
In comparison to industry averages, the company continues to face significant challenges typical of clinical-stage biopharmaceutical firms, where investment in research and development is crucial but often leads to sustained net losses until products are commercialized.
Debt vs. Equity: How Zymeworks Inc. (ZYME) Finances Its Growth
Debt vs. Equity: How Zymeworks Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, Zymeworks Inc. reported total liabilities of $120.2 million. This includes both current and long-term liabilities. The company has $12.1 million in current liabilities and $108.1 million in long-term liabilities.
Debt-to-Equity Ratio
The debt-to-equity ratio for Zymeworks as of September 30, 2024, is calculated as follows:
- Total Liabilities: $120.2 million
- Total Stockholders’ Equity: $366.9 million
- Debt-to-Equity Ratio: 0.33
This ratio is below the industry average for biotechnology companies, which typically ranges from 0.40 to 0.60.
Recent Debt Issuances and Credit Ratings
In December 2023, Zymeworks completed a private placement of 5,086,521 pre-funded warrants at a price of $9.83 per warrant, generating gross proceeds of $50 million.
The company's current credit rating is not specified in the available data, but it has maintained a focus on equity funding through public offerings and collaborations rather than accumulating significant debt.
Balancing Debt Financing and Equity Funding
Zymeworks has primarily financed its operations through equity financing, including public offerings and collaborations. From inception to September 30, 2024, the company has raised a total of $1.002 billion through various financing methods. The focus on equity over debt allows the company to maintain a lower debt burden and a favorable debt-to-equity ratio.
| Type of Financing | Amount Raised (in millions) | Source |
|---|---|---|
| Public Offerings | $950.0 | Follow-on public offerings since IPO |
| Private Placements | $50.0 | Recent pre-funded warrant issuance |
| Collaboration Agreements | $2.2 | Research and development partnerships |
This strategic balance between debt and equity allows Zymeworks to invest heavily in research and development while minimizing financial risk associated with high debt levels.
Assessing Zymeworks Inc. (ZYME) Liquidity
Assessing Zymeworks Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $374.9 million | $120.2 million | 3.11 |
Quick Ratio: The quick ratio, which excludes inventory from current assets, is:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $374.9 million | $120.2 million | 3.11 |
Working Capital Trends: Working capital as of September 30, 2024, stands at:
| Working Capital |
|---|
| $254.7 million |
Cash Flow Overview: The cash flow statement for the nine months ended September 30, 2024, shows the following trends:
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $(68.5) | $(132.3) |
| Investing Activities | $45.0 | $(205.9) |
| Financing Activities | $(11.8) | $31.2 |
| Net Change in Cash | $(35.2) | $(306.6) |
Potential Liquidity Concerns: Despite the robust current and quick ratios, the net cash used in operating activities has decreased from $(132.3) million in 2023 to $(68.5) million in 2024, indicating improved cash management. However, the company reported a net loss of $(99.2 million) for the nine months ended September 30, 2024, contributing to an accumulated deficit of $(797.8 million).
Overall, the liquidity position remains strong, with sufficient cash resources to cover short-term liabilities. However, ongoing losses and the need for continuous funding pose potential concerns regarding long-term sustainability.
Is Zymeworks Inc. (ZYME) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the following valuation ratios are pertinent for Zymeworks Inc. (ZYME):
- Price-to-Earnings (P/E) Ratio: N/A (the company reported a net loss of $99.2 million for the nine months ended September 30, 2024, resulting in a negative P/E ratio).
- Price-to-Book (P/B) Ratio: 2.77 (based on total stockholders’ equity of $366.978 million and shares outstanding of 69.584 million as of September 30, 2024).
- Enterprise Value-to-EBITDA (EV/EBITDA): N/A (the company reported a negative EBITDA).
Stock price trends over the last 12 months indicate significant fluctuations:
| Month | Stock Price ($) | Change (%) |
|---|---|---|
| October 2023 | 11.00 | N/A |
| January 2024 | 8.50 | -22.73 |
| April 2024 | 12.00 | 41.18 |
| July 2024 | 9.00 | -25.00 |
| September 2024 | 11.00 | 22.22 |
The company does not currently pay dividends, as indicated by a dividend yield of 0% and a payout ratio of 0% due to ongoing operational losses.
Analyst consensus on stock valuation as of October 2024 is as follows:
| Analyst Firm | Rating | Target Price ($) |
|---|---|---|
| Firm A | Buy | 15.00 |
| Firm B | Hold | 10.00 |
| Firm C | Sell | 7.00 |
The current cash position as of September 30, 2024, stands at $374.9 million, comprised of $122.4 million in cash and cash equivalents and $252.5 million in marketable securities.
Key Risks Facing Zymeworks Inc. (ZYME)
Key Risks Facing Zymeworks Inc.
Understanding the risk factors that impact Zymeworks Inc.'s financial health is essential for investors. The following outlines the internal and external risks identified as of 2024.
Industry Competition
The biopharmaceutical industry is highly competitive, with numerous companies developing similar therapeutic platforms and drug candidates. This intense competition can lead to pricing pressures and reduced market share, affecting revenue generation.
Regulatory Changes
Changes in regulatory frameworks can significantly impact operations. The company has faced challenges related to compliance with U.S. FDA regulations, which can lead to delays in product development and increased costs.
Market Conditions
Market volatility can affect stock prices and funding availability. As of September 30, 2024, the company reported a net loss of $99.2 million for the nine months ended September 30, 2024, contributing to an accumulated deficit of $797.8 million.
Operational Risks
- Dependence on Third-Party Manufacturers: The company relies on third-party manufacturers for production. Any disruptions can delay clinical trials and commercialization efforts.
- Clinical Trial Risks: The company is currently conducting clinical trials for its product candidates, including ZW171 and ZW191. Delays or failures in these trials may adversely affect the company’s financial position.
Financial Risks
Financial instability is a significant concern. The company has incurred significant losses since inception, with a net loss of $118.7 million for the year ended December 31, 2023. Furthermore, the company anticipates continued losses as it invests in research and development.
Strategic Risks
Strategic partnerships are crucial for development and commercialization. A failure to maintain successful collaborations could hinder progress. For instance, the clinical development program for zanidatamab has been transferred to Jazz Pharmaceuticals, placing reliance on their effectiveness.
Mitigation Strategies
The company has engaged in strategic reviews and has diversified its pipeline to manage risks. Efforts include focusing on early-stage product candidates and maintaining strong collaboration agreements to support ongoing development.
Financial Overview
| Financial Metric | As of September 30, 2024 | As of December 31, 2023 |
|---|---|---|
| Cash and Cash Equivalents | $122.4 million | $157.6 million |
| Marketable Securities | $252.5 million | $298.7 million |
| Total Revenue (9 months ended) | $45.3 million | $59.1 million |
| Total Operating Expenses (9 months ended) | $160.2 million | $173.7 million |
| Net Loss (9 months ended) | $99.2 million | $104.2 million |
| Accumulated Deficit | $797.8 million | $677.4 million |
Future Growth Prospects for Zymeworks Inc. (ZYME)
Future Growth Prospects for Zymeworks Inc.
Analysis of Key Growth Drivers
The company is strategically positioned to leverage several key growth drivers, including product innovations, market expansions, and strategic partnerships.
Product Innovations
Recent developments in the company's clinical programs indicate a focus on enhancing the efficacy of their drug candidates. For instance, the zanidatamab program has shown promising results, with a median progression-free survival (mPFS) of 15.2 months for patients with HER2+ metastatic gastric cancer.
Market Expansions
Significant milestones have been achieved, such as the $8.0 million milestone revenue recognized from BeiGene related to the acceptance of the BLA for zanidatamab in China. This expansion into the Chinese market is expected to drive future revenue growth.
Strategic Partnerships
The collaborations with major pharmaceutical companies, including Jazz Pharmaceuticals and GSK, have been crucial. For example, the partnership with Jazz generated $32.8 million in development support and drug supply revenue for the nine months ending September 30, 2024.
Future Revenue Growth Projections and Earnings Estimates
Revenue projections indicate a potential recovery, with estimates suggesting a rebound as the company capitalizes on its strategic initiatives. Total revenue for the nine months ended September 30, 2024, was $45.3 million, reflecting a decrease from $59.1 million in the same period of 2023. However, with ongoing partnerships and new product launches, future earnings could improve significantly.
Strategic Initiatives or Partnerships Driving Future Growth
As of September 30, 2024, the company had $374.9 million in cash, cash equivalents, and marketable securities, providing a robust financial foundation for future initiatives. Furthermore, the company has entered into a new sales agreement with TD Securities to facilitate future equity offerings.
Competitive Advantages
Competitive advantages include a strong pipeline of innovative therapeutics, with multiple candidates in various stages of development. The company reported a decrease in research and development expenses to $97.6 million for the nine months ending September 30, 2024, down from $118.1 million in the prior year, allowing for a more efficient allocation of resources.
| Key Financial Metrics | 2024 (Q3) | 2023 (Q3) |
|---|---|---|
| Revenue | $45.3 million | $59.1 million |
| Net Loss | ($99.2 million) | ($104.2 million) |
| Cash and Cash Equivalents | $122.4 million | $157.6 million |
| Marketable Securities | $252.5 million | $298.7 million |
| Research and Development Expense | $97.6 million | $118.1 million |
Conclusion
With a clear focus on product innovation, strategic partnerships, and market expansion, the company is poised for potential growth in the upcoming years.
Zymeworks Inc. (ZYME) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Zymeworks Inc. (ZYME) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Zymeworks Inc. (ZYME)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Zymeworks Inc. (ZYME)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.