What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-06 compared with 2023-03-07 · 477 added, 350 removed, 829 unchanged (50% of the section changed)

6 unchanged sentences

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended December 31, 202 3 , 202 2 and 2021

Consolidated Statements of Changes in S tock holders’ Equity for the years ended December 31, 202 2 , 202 1 and 2020

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 202 3 , 202 2 and 20 21

Consolidated Statements of Cash Flows for the years ended December 31, 202 3 , 202 2 and 20 21

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of Zymeworks Inc.

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of income (loss), comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of (loss) income and comprehensive (loss) income, changes in stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 6, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of distinct performance obligations related to the license and collaboration agreement with Jazz Pharmaceuticals Ireland Limited

As discussed in Note 12 to the consolidated financial statements, the Company entered into a license and collaboration agreement with Jazz Pharmaceuticals Ireland Limited (“Jazz”).

The Company recognized upfront consideration of $375.0 million related to the license of intellectual property and $24.3 million related to performance of ongoing clinical research activities during the year ended December 31, 2022.

As discussed in Note 2, the accounting for the Company’s contracts with customers arising from licensing and collaboration arrangements requires the Company to apply significant judgment when evaluating whether contractual obligations represent distinct performance obligations, including understanding the nature and significance of the contractual obligations and their standalone selling prices.

We identified the evaluation of distinct performance obligations, including understanding the nature and significance of the contractual obligations and their standalone selling prices, related to the license and collaboration agreement with Jazz as a critical audit matter.

Subjective and complex auditor judgment was required to assess the Company’s determination of distinct performance obligations, including evaluating the rights and obligations described in the agreement, their benefit to the customer, and the level of interdependence between the promised goods and services in the agreement.

Complex auditor judgment was also required in determining the significance of the contractual obligations to assess if these were immaterial

performance obligations.

The primary procedures we performed to address this critical audit matter included the following.

We evaluated the design of an internal control over the Company’s revenue recognition process.

This included a control over the Company’s accounting analysis of licensing and collaboration agreements, and the evaluation of distinct performance obligations.

We read the license and collaboration agreement with Jazz to gain an understanding of the contractual terms and conditions and the commitments being made in the agreement.

We conducted interviews with the Company’s business development personnel to understand the specific functionalities of the license and to evaluate the nature of the commitments made to the customer.

We evaluated management’s accounting analysis and assessed the reasonableness of management’s judgments and assumptions in the

determination of distinct performance obligations and the significance of the contractual obligations by comparing them to underlying documentation.

We assessed the stand-alone selling price of a selection of certain of the performance obligations used by the Company by comparing them to the Company’s past pricing policies and practices.

The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the contract modification related to the amended collaboration agreement with Jazz Pharmaceuticals Ireland Limited (“Jazz”)

As discussed in Note 12 to the consolidated financial statements, the Company and Jazz amended the license and collaboration agreement (amended collaboration agreement).

As part of the amended collaboration agreement, the Company agreed to provide a credit note to Jazz of $20,100 thousand, which has been recognized as a reduction to revenue for the year ended December 31, 2023.

As discussed in Note 2 to the consolidated financial statements, the accounting for the Company’s modification to existing contracts with customers arising from licensing and collaboration arrangements requires the Company to apply significant judgment when evaluating whether the modification to financial terms is related to distinct performance obligations remaining in the amended collaboration agreement.

We identified the evaluation of the contract modification related to the amended collaboration agreement with Jazz as a critical audit matter.

Subjective and complex auditor judgment was required to assess the Company’s evaluation of the contract modification, including determining the rights and obligations described in the amended collaboration agreement and whether the remaining goods and services are distinct from the goods and services transferred before the modification.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of an internal control over the Company’s revenue recognition process.

This included a control over the Company’s accounting analysis of amendments to licensing and collaboration agreements.

We read the amended collaboration agreement to gain an understanding of the contractual terms and conditions and the commitments being made in the agreement.

We evaluated management’s accounting analysis and assessed the reasonableness of management’s judgments, including assumptions relating to the level of interdependence between the promised goods and services in the original and amended collaboration agreements.

Chartered Professional Accountants

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March 6, 2024

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Zymeworks Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Zymeworks Inc.

’s (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of (loss) income and comprehensive (loss) income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated March 6, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Chartered Professional Accountants

Vancouver, Canada

March 6, 2024

ZYMEWORKS INC.

Consolidated Balance Sheets

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Current portion of operating lease liability (note 15) 4,261 3,322

Deferred revenue (note 12) 2,353 —

Deferred revenue and other consideration (note 12) 3,699 2,353

Total current liabilities 55,763 95,625

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Common shares, $ 0.00001 par value;

900,000,000 authorized shares of common stock at December 31, 2022 (no par value, unlimited shares at December 31, 2021;

63,059,501 and 46,633,935 shares issued and outstanding at December 31, 2022 and 2021, respectively (note 10b).

900,000,000 authorized shares of common stock at December 31, 2023 and December 31, 2022 ( 70,115,997 and 63,059,501 shares issued and outstanding at December 31, 2023 and 2022, respectively (note 10b).

997,227 886,322

Preferred shares, $ 0.00001 par value;

100,000,000 authorized shares of preferred stock, out of which, one share of preferred stock is a share of Special Voting Preferred Stock and outstanding as of December 31, 2022 (December 31, 2021:

nil ) (note 10b).

100,000,000 authorized shares of preferred stock, out of which, one share of preferred stock is a share of Special Voting Preferred Stock and outstanding as of December 31, 2023 and December 31, 2022 (note 10b).

Exchangeable shares, no par value, 651,219 issued and outstanding shares at December 31, 2023 (December 31, 2022:

nil ) (note 10b).

1,424,533 ) (note 10b).

Additional paid-in capital 142,274 151,614

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ZYMEWORKS INC.

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income

(Expressed in thousands of U.S.

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Total operating expenses 214,065 281,954 242,313

Income (loss) from operations 130,528 ( 215,633 ) ( 187,468 )

Other income (expense):

(Loss) income from operations ( 138,053 ) 130,528 ( 215,633 )

Other income:

Interest income 19,705 3,596 1,965

Other income, net (note 13) 1,110 1,309 1,648

Other (expense) income, net (note 13)

( 894 ) 1,110 1,309

Total other income, net 18,811 4,706 3,274

Income (loss) before income taxes 135,234 ( 212,359 ) ( 180,123 )

(Loss) income before income taxes ( 119,242 ) 135,234 ( 212,359 )

Income tax recovery (expense), net (note 14)

Net income (loss) and comprehensive income (loss) $ 124,341 $ ( 211,843 ) $ ( 180,552 )

Net income (loss) per common share (note 4):

568 ( 10,893 ) 516

Net (loss) income

$ ( 118,674 ) $ 124,341 $ ( 211,843 )

Other comprehensive income:

Unrealized income on available for sale securities, net of tax of nil (note 5)

Total other comprehensive income

Comprehensive (loss) income $ ( 118,618 ) $ 124,341 $ ( 211,843 )

Net (loss) income per common share (note 4):

Basic $ ( 1.72 ) $ 1.91 $ ( 4.11 )

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Issuance of common stock through employee stock purchase plan (note 10f) — — — — 68,964 3,080 — — — 3,080

Fair value adjustments upon reclassification of stock options to liabilities — — — — — — — — ( 110 ) ( 110 )

Issuance of common stock upon vesting of restricted stock units ("RSUs") (note 10e) — — — — 27,563 970 — — ( 970 ) —

Stock-based compensation — — — — — — — — 38,275 38,275

Issuance of common stock and pre-funded warrants in connection with public offering, net of offering costs (note 10a and 10c) — — — — 5,824,729 254,018 — — 46,892 300,910

Net loss — — — — — — ( 211,843 ) — — ( 211,843 )

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Issuance of common stock through employee stock purchase plan (note 10f) — — — — 179,238 2,191 — — — 2,191

Issuance of common stock upon vesting of restricted stock units ("RSUs") (note 10e) — — — — 27,563 970 — — ( 970 ) —

Issuance of common stock upon vesting of RSUs (note 10e) — — — — 93,966 2,350 — — ( 2,350 ) —

Issuance of common stock upon exercise of pre-funded warrants (note 10c) — — — — 6,502,675 78,168 — — ( 78,168 ) —

The Redomicile Transactions (note 1, note 10b) 1 — 1,424,533 20,442 ( 1,424,533 ) ( 20,442 ) — — — —

Issuance of common stock and pre-funded warrants in connection with public offering, net of offering costs (note 10a and 10c) — — — — 11,035,000 82,549 — — 24,985 107,534

Stock-based compensation — — — — — — — — 9,516 9,516

Net loss — — — — — — ( 211,843 ) — — ( 211,843 )

Net income — — — — — — 124,341 — — 124,341

Balance at December 31, 2022 1 $ — 1,424,533 $ 20,442 63,059,501 $ 886,322 $ ( 558,763 ) $ ( 6,659 ) $ 151,614 $ 492,956

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Issuance of common stock upon exercise of pre-funded warrants (note 10c) — — — — 2,079,193 63,775 — — ( 63,775 ) —

The Redomicile Transactions (note 1, note 10b) 1 — 1,424,533 20,442 ( 1,424,533 ) ( 20,442 ) — — — —

Issuance of common stock for retracted exchangeable shares

— — ( 773,314 ) ( 11,097 ) 773,314 11,097 — — — —

Issuance of common stock in connection with At-The-Market ("ATM") sale (note 10a)

— — — — 3,350,000 26,233 — — — 26,233

Private placement (note 10a)

— — — — — — — — 49,862 49,862

Stock-based compensation — — — — — — — — 8,196 8,196

Issuance of common stock and pre-funded warrants in connection with public offering, net of offering costs (note 10a and 10c) — — — — 11,035,000 82,549 — — 24,985 107,534

Net income — — — — — — 124,341 — — 124,341

Net loss — — — — — — ( 118,674 ) — — ( 118,674 )

Other comprehensive income — — — — — — — 56 — 56

Balance at December 31, 2023 1 $ — 651,219 $ 9,345 70,115,997 $ 997,227 $ ( 677,437 ) $ ( 6,603 ) $ 142,274 $ 464,806

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Cash flows from operating activities:

Net income (loss) $ 124,341 $ ( 211,843 ) $ ( 180,552 )

Net (loss) income $ ( 118,674 ) $ 124,341 $ ( 211,843 )

Items not involving cash:

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Amortization and impairment of operating lease right-of-use assets 7,141 4,769 3,051

Deferred income tax expense (recovery) 1,940 ( 953 ) 266

Non-cash consideration from licensing agreement — — ( 218 )

Deferred income tax (recovery) expense (note 14)

( 757 ) 1,940 ( 953 )

Change in fair value of contingent consideration liability (note 16)

630 ( 250 ) 213

Change in fair value of investments in equity instruments 667 — ( 167 )

5 unchanged sentences

Operating lease liabilities ( 3,663 ) ( 3,736 ) ( 26 )

Deferred revenue and other consideration 3,699 — —

Income taxes payable 970 840 —

Net cash provided by / (used in) operating activities $ 144,109 $ ( 192,451 ) $ ( 151,403 )

Net cash (used in) / provided by operating activities $ ( 118,303 ) $ 144,109 $ ( 192,451 )

Cash flows from financing activities:

Proceeds from public offerings, net of issuance costs (note 10a) 107,534 — 300,910

Proceeds from issuance of common stock under at-the-market program and from public offerings, net of issuance costs (notes 10a) 26,233 107,534 —

Private placement (note 10a)

Issuance of common stock on exercise of stock options (note 10e) 5,006 255 6,428

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Cash flows from investing activities:

Net redemptions (purchases) of short-term investments ( 40,724 ) 157,881 13,325

Purchases of long-term investments — — ( 50,500 )

Purchases of marketable securities ( 553,249 ) ( 113,005 ) ( 35,081 )

Proceeds from marketable securities 350,073 72,281 192,962

Acquisition of property and equipment ( 2,474 ) ( 8,150 ) ( 12,404 )

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Zymeworks Inc.

(the “Company” or “Zymeworks”) is a clinical-stage biopharmaceutical company dedicated to the development of next-generation multifunctional biotherapeutics.

together with its subsidiaries (collectively the “Company” or “Zymeworks”) is a clinical-stage biopharmaceutical company dedicated to the development of next-generation multifunctional biotherapeutics.

Zymeworks BC Inc.

(previously known as "Zymeworks Inc.") was incorporated on September 8, 2003 under the laws of the Canada Business Corporations Act.

("Zymeworks BC") (previously known as “Zymeworks Inc.”) was incorporated on September 8, 2003 under the laws of the Canada Business Corporations Act.

On October 22, 2003, the Company was registered as an extra-provincial company under the Company Act (British Columbia).

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The Company supports these activities through general and administrative support, as well as by raising capital, conducting business planning and protecting its intellectual property.

On July 15, 2022, the Company announced its intention to become a Delaware corporation, subject to receipt of necessary shareholder, stock exchange, and court approvals (the "Redomicile Transactions").

The Redomicile Transactions were completed on October 13, 2022.

On October 13, 2022, the Company changed its name to Zymeworks BC Inc.

On October 13, 2022, the Company completed an internal reorganization transaction resulting in a Delaware incorporated entity becoming the listed company (the “Redomicile Transactions”).

Prior to the Redomicile Transactions, the shares of Zymeworks BC Inc.

(formerly known as Zymeworks Inc.) were publicly listed.

Unless the context otherwise requires or otherwise expressly states, all references in the accompanying consolidated financial statements to “Zymeworks,” the “Company,” “we,” “us” and “our” (i) for periods until completion of the Redomicile Transactions, refer to Zymeworks BC Inc.

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A special meeting of Company security holders was held on October 7, 2022 to approve the Redomicile Transactions.

The Redomicile Transactions were governed by a transaction agreement dated July 14, 2022, as restated and amended on August 18, 2022 (the “Restated and Amended Transaction Agreement”), by and among the Company and its direct or indirect subsidiaries Zymeworks Inc., Zymeworks CallCo ULC and Zymeworks ExchangeCo Ltd., including a plan of arrangement included as Exhibit A to the Restated and Amended Transaction Agreement (the “Plan of Arrangement”).

The Redomicile Transactions were governed by a transaction agreement dated July 14, 2022, as restated and amended on August 18, 2022 (the “Restated and Amended Transaction Agreement”), by and among the Company and its direct or indirect subsidiaries Zymeworks Inc., Zymeworks CallCo ULC ("CallCo") and Zymeworks ExchangeCo Ltd., ("ExchangeCo") including a plan of arrangement included as Exhibit A to the Restated and Amended Transaction Agreement (the “Plan of Arrangement”).

Summary of Significant Accounting Policies

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The consolidated financial statements include the accounts of Zymeworks Inc.

and its wholly owned subsidiaries, Zymeworks BC Inc., Zymeworks Biopharmaceuticals Inc., Zymeworks Pharmaceuticals Limited (Ireland), Zymeworks CallCo ULC, Zymeworks ExchangeCo Ltd., Zymeworks Management Inc.

and its wholly owned subsidiaries, Zymeworks BC Inc., Zymeworks Biopharmaceuticals Inc., Zymeworks Pharmaceuticals Limited (Ireland), Zymeworks Lifesciences Pte.

(Singapore), Zymeworks CallCo ULC, Zymeworks ExchangeCo Ltd., Zymeworks Management Inc.

(including this entity's branch in the United Kingdom) and Zymeworks Zanidatamab Inc.

(refer to note 12).

Al l inter-company accounts and transactions have been eliminated on consolidation.

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dollars and references to “C$” are to Canadian dollars.

Certain prior year amounts have been reclassified for consistency with the current period presentation.

These reclassifications had no effect on the reported results of operations.

Foreign Currency

1 unchanged sentence

Transactions denominated in foreign currencies are translated at the approximate exchange rate prevailing on the date of the transaction.

At period end, monetary assets and liabilities denominated in foreign currencies are translated into U.S.

At period end, monetary assets and liabilities denominated

in foreign currencies are translated into U.S.

dollars using exchange rates in effect at the balance sheet date.

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GAAP requires the Company to make estimates and judgments in certain circumstances that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

On an ongoing basis, the Company evaluates its estimates, most notably those related to revenue recognition including estimated timing of completion of performance obligations required to meet revenue recognition criteria, accrual of expenses including clinical and preclinical study expense accruals, stock-based compensation, valuation allowance for deferred taxes, benefits under the Scientific Research and Experimental Development (“SR&ED”) program, and other contingencies.

On an ongoing basis, the Company evaluates its estimates, most notably those related to revenue recognition including estimated timing of completion of performance obligations required to meet revenue recognition criteria, accrual of expenses including clinical and preclinical study expense accruals, stock-based compensation, valuation allowance for deferred taxes, measurement of contingent consideration liabilities, and other contingencies.

Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances.

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If the expectation at contract inception is such that the period between payment by the licensee and the completion of related performance obligations will be one year or less, the Company assumes that the contract does not have a significant financing component.

When applying the revenue recognition criteria of ASC 606 to license and collaboration agreements, the Company may be required to apply significant judgment when evaluating whether contractual obligations represent distinct performance obligations including understanding the nature and significance of the contractual obligations and their standalone selling prices, determining when performance obligations have been met, assessing the recognition and future reversal of variable consideration, and determining and applying appropriate methods of measuring progress for performance obligations satisfied

prices, determining when performance obligations have been met, assessing the recognition and future reversal of variable consideration, and determining and applying appropriate methods of measuring progress for performance obligations satisfied over time.

The accounting for the modification to existing contracts with customers arising from licensing and collaboration arrangements requires management to apply significant judgment when evaluating whether the modification to financial terms is related to distinct performance obligations remaining in the amended collaboration agreement.

These judgments are discussed in more detail in the following paragraphs for each type of payment received by the Company under the terms of the license and collaborations agreements.

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Payments for research and development supplies provided are recognized as revenue upon delivery of the supplies.

Supply of clinical trial drugs and comparator drugs

Amounts receivable by the Company for the provision of drugs to licensee or to clinical trials on behalf of licensee are recognized in revenue at a point in time when title to drugs has transferred to the licensee, which generally occurs upon shipment.

Royalties and commercial milestone payments

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Amounts not expected to be recognized as revenue within the next twelve months of the consolidated balance sheet date are classified as long-term deferred revenue.

Cash and Cash Equivalents

Modifications of contracts with customers

The Company accounts for a modification to a contract with a customer as a separate contract if both the scope of the contract increases because of the addition of promised goods or services that are distinct, and the price of the contract increases by an amount of consideration that reflects the Company’s stand-alone selling price of the additional promised goods or services.

A modification that does not meet this criteria is accounted for as an adjustment to the existing contract, either prospectively or through a cumulative catch-up adjustment.

The Company accounts for a contract modification prospectively if the remaining goods or services are distinct from the goods or services transferred before the modification, but the consideration for those goods or services does not reflect their stand-alone selling prices.

Any changes in the transaction price that arise as a result of a contract modification that are not allocated to remaining goods or services are recognized as a cumulative catch-up adjustment.

Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of 90 days or less at the date of acquisition to be cash equivalents.

Cash equivalents are recorded at cost plus accrued interest.

The Company’s short-term and long-term investments include guaranteed investment certificates and term deposits with original maturities exceeding three months.

Cash equivalents include guaranteed investment certificates (“GICs”) acquired from financial institutions and money market funds which are recorded at cost plus accrued interest.

Marketable Securities

The Company's investments include high credit quality investment grade debt securities which comprise investments in U.S.

Treasury notes and corporate debt securities.

The Company classifies all of its investment grade debt securities as available-for-sale (note 5).

Marketable securities also include GICs with original maturities of greater than 90 days.

These investments are recorded at cost plus accrued interest, which approximates their fair value.

The Company also holds a limited number of equity securities in private entities which are accounted for as available for sale financial instruments with changes in fair value recorded through other comprehensive income or at cost subject to impairment (note 5).

Unrealized fair value gains and losses for investments classified as available-for-sale are recorded through other comprehensive income (loss) in stockholders' equity.

When the fair value of an available-for-sale security falls below the amortized cost basis it is evaluated to determine if any of the decline in value is attributable to credit loss.

Decreases in fair value attributable to credit loss are recorded directly to the consolidated statement of (loss) income with a corresponding allowance for credit losses, limited to the amount that the fair value is below the amortized cost basis.

If the credit quality subsequently improves the allowance is reversed up to a maximum of the previously recorded credit losses.

When the Company intends to sell an impaired available-for-sale security, or if it is more likely than not that the Company will be required to sell the security prior to recovering the amortized cost basis, the entire fair value adjustment will immediately be recognized in the consolidated statement of (loss) income with no corresponding allowance for credit losses.

Realized gains and losses and credit losses, if any, on available-for-sale securities are included in interest income (expense), based on the specific identification method.

Available-for-sale securities are also adjusted for amortization of premiums and accretion of discounts to maturity, with such amortization and accretion included within interest income.

Marketable securities with remaining maturities of less than one year from the balance sheet date are classified as short-term investments and greater than one year from the balance sheet date are classified as long-term investments.

Equity Securities

The Company’s long-term investments include equity securities acquired for strategic purposes or in connection with licensing and collaboration agreements.

As the Company's investments in equity securities do not have readily determinable fair value, they are carried at cost, less any impairment, including any adjustments resulting from observable price changes (note 5).

Accounts Receivable and Expected Credit Losses

Accounts receivable are recorded at invoiced amounts, net of any allowance for doubtful accounts.

The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in existing accounts receivable.

Accounts receivable are recorded at invoiced amounts, net of any allowance for expected credit losses.

The allowance for expected credit losses is the Company’s best estimate of the amount of probable credit losses in existing accounts receivable.

The Company evaluates the collectability of accounts receivable on a regular basis based upon various factors including the financial condition and payment history of customers, an overall review of collections experience on other accounts and economic factors or events expected to affect future collections experience.

Expected credit losses on our accounts receivable were immaterial as at December 31, 2023 and 2022.

Financial Instruments

The Company evaluates financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level of classification each reporting period.

This determination requires the Company to make subjective judgments as to the significance of inputs used in determining fair value and where such inputs lie within the fair value hierarchy.

Fair Value Measurements

The Company measures certain financial instruments and other items at fair value.

To determine fair value, the Company uses a fair value hierarchy that prioritizes the inputs, assumptions and valuation techniques used to measure fair value.

The three levels of the fair value hierarchy are as follows:

• Level 1 inputs are unadjusted quoted market prices for identical instruments available in active markets.

• Level 2 inputs are inputs other than Level 1 prices, such as prices for a similar asset or liability that are observable either directly or indirectly.

If the asset or liability has a contractual term, the input must be observable for substantially the full term.

An example includes quoted market prices for similar assets or liabilities in active markets.

• Level 3 inputs are unobservable inputs for the asset or liability and will reflect management’s assessment about market assumptions that would be used to price the asset or liability.

Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements.

Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

The Company’s financial instruments consist of cash and cash equivalents, short-term and long-term investments in marketable and other securities, accounts receivable, accounts payable and accrued liabilities, contingent consideration, finance and operating lease obligations, and other long-term liabilities.

The carrying values of cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximate their fair values due to the near-term maturities of these financial instruments.

All marketable securities are classified as available-for-sale and are recorded at fair value.

As at December 31, 2023, long-term investments in equity securities of private entities are accounted for as available for sale at their fair values.

Other long-term liabilities for contingent consideration related to business acquisitions are recorded at fair value on the acquisition date and are adjusted quarterly for changes in fair value.

Changes in the fair value of contingent consideration liabilities can result from changes in anticipated milestone payments and changes in assumed discount periods and rates.

These inputs are unobservable in the market and therefore categorized as level 3 inputs as defined above.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents, short-term investments, long-term investments and accounts receivable.

Cash and cash equivalents and investments in marketable securities are invested in accordance with the Company’s cash investment policy with the primary objective being the preservation of capital and maintenance of liquidity.

The cash investment policy includes guidelines on the quality of

financial instruments and defines allowable investments that the Company believes minimizes the exposure to concentration of credit risk.

The Company limits its exposure to credit loss by placing its cash and cash equivalents and investments with high credit quality financial institutions.

At December 31, 2023, the maximum exposure to credit risk for accounts receivable was $ 19,477 , 85 % of which was from Jazz Pharmaceuticals Ireland Limited or Jazz Pharmaceuticals, Inc.

(subsidiaries of Jazz Pharmaceuticals plc, collectively referred to as “Jazz”) (December 31, 2022:

$ 33,400 73 % of which was from Jazz Pharmaceuticals Ireland Limited) and all accounts receivable are due within the next 12 months.

As at December 31, 2023 and December 31, 2022, the Company has recognized nominal amounts of provision for expected credit losses in relation to accounts receivable.

Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

The Company’s short-term cash requirements are primarily to settle its financial liabilities, which consist primarily of accounts payable and accrued liabilities falling due within 45 days and current portion of lease obligations falling due within the next 12 months, with medium term requirements to invest in property and equipment and research and development.

The Company’s principal sources of liquidity to settle its financial liabilities are cash, cash equivalents, short-term and long-term investments, collection of accounts receivable relating to research collaboration and license agreements and additional public equity offerings as required.

The Company believes that these principal sources of liquidity are sufficient to fund its operations for at least the next 12 months.

Foreign Currency Risk

The Company incurs certain operating expenses in currencies other than the U.S.

dollar and accordingly is subject to foreign exchange risk due to fluctuations in exchange rates.

The Company does not use derivative instruments to hedge exposure to foreign exchange risk and therefore assumes the risk of future gains or losses in its consolidated statements of (loss) income.

At December 31, 2023, the Company’s net monetary assets denominated in Canadian dollars were $ 1,392 (C$ 1,844 ).

The operating results and financial position of the Company are reported in U.S.

dollars in the Company’s consolidated financial statements.

The fluctuation of the U.S.

dollar relative to the Canadian dollar and other foreign currencies will have an impact on the reported balances for net assets, net loss and stockholders’ equity in the Company’s consolidated financial statements.

Deferred Financing Fees

Deferred financing fees consist of amounts charged by underwriters, attorneys, accountants and printers that are directly attributable to future financing transactions.

Deferred financing fees consist of amounts charged by underwriters, attorneys, accountants and printers that are directly attributable to future financing transactions that are probable to occur.

These costs are deferred and subsequently charged against the gross proceeds of the related financing transaction upon closing of such transaction.

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Laboratory equipment 7 years

Leasehold improvements Shorter of the initial lease term or useful life

Leasehold improvements Shorter of the lease term or useful life

Property and equipment acquired or disposed of during the year are depreciated proportionately for the period they are in use.

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The Company recognized CEWS and CERS grants when it is probable that it complied with relevant eligibility requirements and conditions of the grant and that the grant would be received.

These grants are recorded as reductions to wage and rent expenditures.

These grants are recorded as reductions to wage and rent expenditures in 2022 and 2021.

Both CEWS and CERS programs ended in 2021, with application deadlines in 2022.

Research and Development Costs

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Equity classified awards are measured using their grant date fair value.

Liability classified awards are initially measured using their grant date fair value and are subsequently remeasured at fair value at each balance sheet date until exercised or cancelled, with changes in fair value recognized as compensation cost (ASC 718 awards) or other income and expenses (ASC 815 awards) for the period, while fair value changes below the grant date fair value of the original awards are recorded in additional paid-in capital.

ASC 718 “Compensation—Stock Options” (“ASC 718”), with an exercise price which is not denominated in:

the period, while fair value changes below the grant date fair value of the original awards are recorded in additional paid-in capital.

Under ASC 718 Compensation—Stock Options (“ASC 718”), warrants or stock options with exercise price which is not denominated in:

(a) the currency of a market in which a substantial portion of the Company’s equity securities trades, (b) the currency in which the individual’s pay is denominated, or (c) the Company’s functional currency, are required to be classified as liabilities.

For awards accounted for under ASC 815 Derivatives and Hedging (“ASC 815”), any warrant or option that provides for an exercise price which is not denominated in the Company’s functional currency is required to be classified as a liability.

Certain option awards which were classified as equity on grant dates were subsequently reclassified to liability upon the change of the compensation currency for certain executives and employees holding these option awards from Canadian dollars to U.S.

Total fair value of these options on reclassification date were recorded as liability awards.

Accumulated expense amount to the reclassification date was reversed from additional paid-in capital and the remaining amount was recorded to the statement of loss on reclassification date.

The Company has an employee stock purchase plan which is considered compensatory.

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All research and development costs incurred subsequent to the acquisition of IPR&D are expensed as incurred.

Indefinite-lived intangible assets are evaluated for impairment on an annual basis or more frequently if an indicator of impairment is present.

Indefinite-lived intangible assets are reviewed for impairment on an annual basis or more frequently if an indicator of impairment is present.

The Company may first perform a qualitative assessment to determine whether it is necessary to perform the quantitative impairment test.

Definite-lived intangible assets include computer software and a research license and are amortized on a basis which reflects the pattern in which the economic benefits are consumed.

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The Company has reviewed recent accounting pronouncements and concluded that they are either not applicable, or that no material impact is expected on the consolidated financial statements as a result of future adoption.

Net Income (Loss) per Share

Net income (loss) per share for the years ended December 31, 2022, 2021 and 2020 was as follows:

Net (Loss) Income per Share

Net (loss) income per share for the years ended December 31, 2023, 2022 and 2021 was as follows:

Year Ended December 31,

2023 2022 2021

Net income (loss) attributable to common stockholders:

Net (loss) income attributable to common stockholders:

Basic $ ( 118,674 ) $ 124,341 $ ( 211,843 )

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Diluted 68,863,010 65,249,184 52,131,596

Net income (loss) per common share – basic $ 1.91 $ ( 4.11 ) $ ( 3.58 )

Net income (loss) per common share – diluted $ 1.90 $ ( 4.61 ) $ ( 3.58 )

Weighted average number of common shares used in the basic and diluted earnings per share calculations include Exchangeable Shares and the pre-funded warrants issued in connection with the Company’s June 2019 and January 2020 offerings as the warrants are exercisable at any time for nominal cash consideration.

Net (loss) income per common share – basic $ ( 1.72 ) $ 1.91 $ ( 4.11 )

Net (loss) income per common share – diluted $ ( 1.72 ) $ 1.90 $ ( 4.61 )

Weighted average number of shares of common stock used in the basic and diluted earnings per share calculations include Exchangeable Shares and the pre-funded warrants issued in connection with the Company’s June 2019, January 2020 and January 2022 offerings and December 2023 private placement as the warrants were exercisable at any time for nominal cash consideration.

The Company’s potentially dilutive securities, which include stock options and RSUs, have been excluded from the computation of diluted net loss per share for the year ended December 31, 2023 as the effect would be to reduce the net loss per share.

Cash, Cash Equivalents and Investments

The following table summarizes the Company's investments as of December 31, 2023:

December 31, 2023

Amortized Cost Unrealized Gain (Loss)

Short-term investments:

Short-term investments are denominated in U.S.

dollars or Canadian dollars and consist of guaranteed investment certificates (“GICs”) acquired from financial institutions in accordance with the Company’s cash investment policy.

Short-term GICs are classified as held to maturity and available for sale and are accounted for at amortized cost or at fair value.

Contractual maturity of one year or less:

$ 75,066 $ — $ 75,066

Treasury notes 46,416 136 46,552

Corporate debt securities 94,900 252 95,152

216,382 388 216,770

Long-term investments:

Long-term investments at December 31, 2022 consist of equity securities of $ 886 acquired for strategic purposes or in connection with licensing and collaboration agreements (December 31, 2021 - $ 886 which included both equity and debt securities).

Contractual maturity of one to three years:

Corporate debt securities 70,181 ( 321 ) 69,860

Contractual maturity of three to four years:

Corporate debt securities 12,081 ( 11 ) 12,070

Equity securities 218 — 218

82,480 ( 332 ) 82,148

$ 298,862 $ 56 $ 298,918

The following table summarizes the Company's investments as of December 31, 2022:

December 31, 2022

Amortized Cost Unrealized Gain (Loss)

Short-term investments:

Contractual maturity of one year or less:

$ 91,320 $ — $ 91,320

91,320 — 91,320

Long-term investments:

Equity securities 886 — 886

$ 92,206 $ — $ 92,206

The following tables present information about the Company’s assets that are measured at fair value on a recurring basis, and indicate the fair value hierarchy of the valuation techniques used to determine such fair value:

2023 December 31,

Level 1 Level 2 Level 3 Total

Cash and cash equivalents:

$ 23,126 $ 200,623

Cash equivalents:

Money market funds

$ 64,247 $ — $ — $ 64,247 $ — $ — $ — $ —

70,184 — — 70,184 200,289 — — 200,289

134,431 — — 157,557 200,289 — — 400,912

75,066 — — 75,066 91,320 — — 91,320

Treasury notes

46,552 — — 46,552 — — — —

Corporate debt securities — 177,082 — 177,082 — — — —

121,618 177,082 — 298,700 91,320 — — 91,320

$ 256,049 $ 177,082 $ — $ 456,257 $ 291,609 $ — $ — $ 492,232

IPR&D and Goodwill

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For the years ended December 31, 2023, December 31, 2022 and December 31, 2021, the Company did no t record any impairment charge related to the fair value of IPR&D.

The Company performed a qualitative test and concluded that IPR&D was not impaired as of December 31, 2022.

The Company performed a quantitative test and concluded that IPR&D was not impaired as of December 31, 2023.

The Company performed its annual impairment test of goodwill as of December 31, 2023 and concluded that no impairment existed.

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As at December 31, 2023, the Company performed a qualitative assessment for its annual impairment test of goodwill after concluding that it was not more likely than not that the fair value of the reporting unit was less than its carrying value.

Consequently, the quantitative impairment test was not required.

Consequently, a quantitative impairment test was not required.

Property and Equipment

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Computer software 7,878 7,522

Software implementation costs 469 1,289

Costs for in-progress software implementations

Intangible assets 24,531 22,927

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Amortization expense

Accounts payable and accrued expenses consisted of the following:

Accounts payable and accrued liabilities consisted of the following:

Trade payables $ 6,212 $ 7,863

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Accrued legal and professional fees 3,707 7,799

Liability for contingent consideration (note 16)

Other 729 1,839

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Liability for contingent consideration (note 16)

$ 308 $ 1,248

Liability from in-licensing agreements 747 1,047

Finance lease liabilities 124 100

Finance lease liability 92 124

Other 554 682

Total $ 1,701 $ 3,101

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Equity Offerings

2020 Public Offering

On January 27, 2020, the Company closed a public offering pursuant to which the Company sold 5,824,729 common shares, including the sale of 900,000 common shares to the underwriters upon their full exercise of their over-allotment option, at $ 46.50 per common share and 1,075,271 pre-funded warrants (note 10c) in lieu of common shares at $ 46.4999 per pre-funded warrant.

Net proceeds were $ 300,910 , after underwriting discounts, commissions and offering expenses of $ 19,940 .

2023 Private Placement

On December 28, 2023, the Company completed a private placement pursuant to which the Company sold 5,086,521 pre-funded warrants to purchase 5,086,521 shares of common stock at $ 9.8299 per pre-funded warrant.

The Company received gross proceeds of $ 50,000 and net proceeds were $ 49,862 , after expenses.

2023 ATM financing

On June 16, 2023, the Company sold 3,350,000 shares of common stock pursuant to the Company's at-the-market sale program, at $ 8.12 per common share.

Net proceeds were $ 26,233 after underwriting commissions and offering expenses.

2022 Public Offering

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The Company’s authorized share capital consists of 1,000,000,000 shares of stock, consisting of (i) 900,000,000 shares of common stock, par value $ 0.00001 per share, and (ii) 100,000,000 shares of preferred stock, par value $ 0.00001 per share.

In connection with the Plan of Arrangement, we issued to Computershare Trust Company of Canada, a trust company existing under the laws of Canada (the “Share Trustee”), one share of our preferred stock, par value $ 0.00001 per share, which has certain variable voting rights in proportion to the number of Exchangeable Shares outstanding (the “Special Voting Preferred Stock”), enabling the Share Trustee to exercise voting rights for the benefit of the Exchangeable Shareholders.

In connection with the Plan of Arrangement, the Company issued to Computershare Trust Company of Canada, a trust company existing under the laws of Canada (the “Share Trustee”), one share of the Company's preferred stock, par value $ 0.00001 per share, which has certain variable voting rights in proportion to the number of Exchangeable Shares outstanding (the “Special Voting Preferred Stock”), enabling the Share Trustee to exercise voting rights for the benefit of the Exchangeable Shareholders.

Immediately prior to the completion of the Redomicile Transactions, there were 61,699,387 Zymeworks BC Inc.

common shares issued and outstanding.

In connection with the consummation of the Plan of Arrangement, 60,274,854 shares of Common Stock and 1,424,533 Exchangeab le Shares were issued to former Zymeworks BC shareholders.

As of December 31, 2022, the re we re 1,424,533 Exchangeable Shares outstanding.

We will issue shares of our common stock as consideration when a holder of Exchangeable Share s calls for Exchangeable Shares to be retracted by ExchangeCo, when ExchangeCo redeems Exchangeable Shares from the holder, or when CallCo purchases Exchangeable Shares from the Exchangeable Shareholder under CallCo’s overriding call rights.

These Exchangeable Shares and the Special Voting Preferred Stock, when taken together, are similar in substance to the Company’s common stock.

In connection with the consummation of the Plan of Arrangement, 60,274,854 shares of Common Stock and 1,424,533 Exchangeable Shares were issued to former Zymeworks BC shareholders.

As of December 31, 2023, there were 651,219 Exchangeable Shares held by former Zymeworks BC shareholders (December 31, 2022:

The Company will issue shares of its common stock as consideration when a holder of Exchangeable Shares calls for Exchangeable Shares to be retracted by ExchangeCo, when ExchangeCo redeems Exchangeable Shares from the holder, or when CallCo purchases Exchangeable Shares from the Exchangeable Shareholder under CallCo’s overriding call rights.

These Exchangeable Shares and the Special Voting Preferred Stock, when taken together, are simil ar in substance to the Company’s common stock.

Pre-Funded Common Share Warrants

In connection with a public offering completed on June 24, 2019, the Company issued 4,166,690 pre-funded warrants at a price of $ 17.9999 per pre-funded warrant which granted holders of warrants the right to purchase up to 4,166,690 common shares of the Company, at an exercise price of $ 0.0001 per share.

In connection with a public offering completed on January 27, 2020 (note 10a), the Company issued 1,075,271 pre-funded warrants at a price of $ 46.4999 per pre-funded warrant which granted holders of warrants the right to purchase up to 1,075,271 common shares of the Company, at an exercise price of $ 0.0001 per share.

In connection with a public offering completed on January 31, 2022 (note 10a), the Company issued 3,340,000 pre-funded warrants at a price of $ 7.9999 per pre-funded warrant which granted holders of warrants the right to purchase up to 3,340,000 common shares of the Company, at an exercise price of $ 0.0001 per share.

In connection with the public offerings completed on June 24, 2019, January 27, 2020 and January 31, 2022 and private placement completed on December 28, 2023 (note 10a), the Company issued a total of 13,668,482 pre-funded warrants which granted holders of warrants the right to purchase up to 13,668,482 common shares or shares of common stock of the Company, at an exercise price of $ 0.0001 per share.

The pre-funded warrants are exercisable by the holders at any time on or after the original issue date.

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Upon exercise of the pre-funded warrants, the historical costs recorded in additional paid-in capital along with exercise price collected from holders will be recorded in common shares.

On August 23, 2022, 3,787,737 pre-funded warrants were exercised in a cashless transaction in exchange for issuance of 3,787,675 common shares upon which $ 57,858 has been transferred to common shares account from additional paid-in capital.

On October 25, 2022, the Company issued an aggregate of 1,375,000 common shares, to a warrant holder upon the exercise of 1,375,000 pre-funded warrants.

On October 27, 2022, the Company issued an additional 1,340,000 common shares to the same

warrant holder upon the exercise of 1,340,000 pre-funded warrants.

Each pre-funded warrant had an exercise price of $ 0.0001 per share of Common Stock.

On August 23, 2022, October 25, 2022, October 27, 2022 and October 19, 2023, a total of 8,581,961 pre-funded warrants were exercised in exchange for issuance of 8,581,868 common shares.

As a result of the December 28, 2023 private placement, as of December 31, 2023, there were 5,086,521 pre-funded warrants outstanding (December 31, 2022:

Adoption of a Shareholder Rights Plan

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(Pacific Time) on October 13, 2022 (the “Record Date”) and for each share of common stock that becomes outstanding, including any shares of common stock issued in connection with the Redomicile Transactions and as consideration for the Exchangeable Shares, as applicable, between the Record Date and the earlier of the Distribution Date (as defined in the New Rights Plan) and the expiration of the Rights.

Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series B Participating Preferred Stock, par value $ 0.00001 per share, of the Company (“ Series B Preferred Stock”) at an exercise price of $ 74.00 per one one-thousandth of a share of Series

B Preferred Stock, subject to adjustment.

On October 13, 2022, the Rights Plan expired.

The New Rights Plan has substantively similar terms as the Rights Plan.

On June 8, 2023 the New Rights Plan expired by its terms.

Upon effectiveness of the Company's filing of a Certificate of Elimination with the Secretary of State of the State of Delaware on June 12, 2023, the shares that were previously designated as Series B Preferred Stock resumed the status of authorized but unissued shares of preferred stock of the Company.

Stock-Based Compensation

In connection with the Redomicile Transactions, Zymeworks BC Inc.

assigned to the Company, and the Company assumed, all of Zymeworks BC Inc.’s rights and obligations under each of the stock-based compensation plans, as described below, and such plans became the Company’s stock-based compensation plans, with each outstanding award assumed by the Company and deemed exchanged for equivalent awards of the Company, except that the security issuable upon exercise or settlement, as applicable, will be shares of common stock of the Company rather than common shares of Zymeworks BC Inc.

In connection with redomicile transactions in 2022, Zymeworks BC.

assigned to the Company, and the Company assumed, all of Zymeworks BC’s rights and obligations under each of the stock-based compensation plans, as described below, and such plans became the Company’s stock-based compensation plans, with each outstanding award assumed by the Company and deemed exchanged for equivalent awards of the Company, except that the security issuable upon exercise or settlement, as applicable, will be shares of common stock of the Company rather than common shares of Zymeworks BC.

Original Stock Option Plan

On July 14, 2006, the shareholders of the Company approved an employee stock option plan (the “Original Plan”).

The Original Plan provides for the granting of options to directors, officers, employees and consultants.

Options to purchase common shares may be granted at an exercise price of each option equal to the last private issuance of common shares immediately preceding the date of the grant.

The total number of options outstanding is not to exceed 20 % of the issued common shares of the Company.

Options granted under the Original Plan are exercisable at various dates over their 10 -year life.

Common shares are issued from treasury when options are exercised.

The exercise prices of the Company’s stock options under the Original Plan are denominated in Canadian dollars.

The Canadian dollar amounts have been translated to U.S.

dollars using the period end rate or the average foreign exchange rate for the period, as applicable, and have been provided for information purposes.

Upon the effectiveness of the Company’s New Stock Option Plan described below, no further options were issuable under the Original Plan.

Upon the effectiveness of the Company’s New Plan described below, no further options were issuable under the Original Plan.

However, all outstanding options granted under the Original Plan remain outstanding, subject to the terms of the Original Plan and the applicable grant documents, until such outstanding options are exercised or they terminate or expire by their terms.

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On April 10, 2017, the Company’s shareholders approved a new stock option plan, which became effective immediately prior to the consummation of the Company’s initial public offering (“IPO”).

This plan allows for the grant of options to directors, officers, employees and consultants in U.S.

or Canadian dollars, and also permitted the Company to grant incentive stock options (“ISOs”), within the meaning of Section 422 of the Internal Revenue Code, to its employees, until the shares reserved for issuance of ISOs were depleted.

On June 7, 2018, the Company’s shareholders approved an amendment and restatement of this plan (this plan, as amended and restated, the “New Plan”), which includes an article that allows the Company to grant restricted shares, restricted share units (“RSUs”) and other share-based awards, in addition to stock options.

On March 4, 2020, the board of directors approved certain minor amendments to the New Plan that did not require shareholder approval.

The original maximum number of common shares reserved for issuance under the New Plan as of June 7, 2018 was 5,686,097 , which includes 3,686,097 shares issuable upon exercise of options outstanding as of March 31, 2018.

Beginning in 2019 and ending in 2028, this maximum number may be increased on the first day of each calendar year by up to 4.0 % of the number of outstanding shares on the last day of the immediately preceding calendar year.

As of December 31, 2022, 3,205,132 common shares were available for future award grants under the New Plan (December 31, 2021:

952,632 common shares).

ISOs may be granted with respect to a maximum fixed amount equal to 20 % of the shares reserved for issuance under the New Plan as of June 7, 2018.

This plan allows for the grant of options, and also permitted the Company to grant incentive stock options (“ISOs”), within the meaning of Section 422 of the Internal Revenue Code, to its employees, until the shares reserved for issuance of ISOs were depleted.

On June 7, 2018, the Company’s shareholders approved an amendment and restatement of this plan (this plan, as amended and restated, the “New Plan”), which includes an article that allows the Company to grant restricted shares, RSU and other share-based awards, in addition to stock options.

As of December 31, 2023, 4,594,639 shares of common stock were available for future award grants under the New Plan (December 31, 2022:

3,205,132 shares of common stock).

On January 5, 2022, board of directors approved the Zymeworks Inc.

Inducement Stock Option and Equity Compensation Plan (the "Inducement Plan") and reserved 750,000 of the Company’s common shares for issuance pursuant to equity awards granted thereunder.

As of December 31, 2022 , 50,000 common shares were available for future award grants under this plan.

During the year ended December 31, 2020, the Company started granting RSUs to certain employees, which typically vest over a period of three years , in the amount of one-third each year on the anniversary of the grant date.

RSUs are equity-settled on each vesting date, subject to the grantee’s continued employment with the Company on the vesting date.

The fair value of RSUs granted was calculated by using the Company’s closing stock price on the grant date.

As of December 31, 2023, 50,000 shares of common stock were available for future award grants under this plan (December 31, 2022:

The following table summarizes the Company's RSU activity under the New Plan:

Number of RSUs Weighted-

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Outstanding, December 31, 2022 227,223 17.36

Granted 864,100 8.03

Vested and settled ( 100,949 ) 18.69

Forfeited ( 218,961 ) 10.65

Outstanding, December 31, 2023 771,413 8.63

As of December 31, 2023, there was $ 2,236 of unamortized RSU expense that will be recognized over a weighted average period of 1.62 years.

Stock Options

All options granted under the New Plan will have an exercise price determined and approved by the board of directors on the date of the grant, which shall not be less than the market price of the common shares at such time.

For the purposes of the New Plan, the market price of a common share shall be the closing sale price of a share on the grant date reported by the stock exchange with the greatest trading volume or, if such day is not a trading day, the closing sale price reported for the immediately preceding trading day.

The Company may convert a market price denominated in Canadian dollars into United States dollars and vice versa and such converted amount shall be the market price.

An option shall be exercisable during a period established by the board of directors which shall commence on the date of the grant and shall terminate not later than ten years after the date of the granting of the option.

The New Plan provides that the exercise period shall automatically be extended if the date on which it is scheduled to terminate shall fall during a black-out period.

In such cases, the extended exercise period shall terminate on the tenth business day after the last day of the black-out period, provided that the exercise period shall in no case be extended beyond the tenth anniversary of the date the option was granted.

All options shall vest in accordance with the terms of their grant agreements.

The following table summarizes the Company’s stock options granted in Canadian dollars under the Original Plan and the New Plan:

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Research and development expense:

Stock-based compensation for equity classified instruments $ 3,174 $ 20,090 $ 12,299

Stock-based compensation expense for equity classified instruments $ 2,112 $ 3,174 $ 20,090

Change in fair value of liability classified instruments 292 ( 781 ) ( 4,646 )

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General and administrative expense:

Stock-based compensation for equity classified instruments $ 4,102 $ 18,184 $ 14,645

Stock-based compensation expense for equity classified instruments $ 6,621 $ 4,102 $ 18,184

Change in fair value of liability classified instruments ( 1,305 ) ( 2,893 ) ( 23,758 )

$ 5,316 $ 1,209 $ ( 5,574 )

Other expense (income):

Finance income:

Change in fair value of liability classified instruments ( 5 ) ( 11 ) ( 129 )

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$ 9,516 in additional paid-in capital and recovery of $ 3,261 in liability classified stock options and ESPP liability accounts, 2021:

$ 26,945 in additional paid-in capital and $ 2,171 in liability classified stock options and ESPP liability accounts).

$ 38,275 in additional paid-in capital and recovery of $ 27,517 in liability classified stock options and ESPP liability accounts).

The estimated fair value of stock options granted under the New Plan was determined using the Black-Scholes option pricing model with the following weighted-average assumptions:

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The Company uses the simplified method to calculate the average expected term, which represents the average of the vesting period and the contractual term.

Share Fair Value — Options granted after the Company’s IPO are issued with exercise price equal to the fair market value of the Company’s common stock on the grant date.

Before the IPO, the Company granted stock options at exercise prices not less than the fair value of its common shares as determined by the board of directors, with input from management.

Management estimated the fair value of its common shares based on a number of objective and subjective factors, including the most recently available valuation of common shares prepared by independent valuation specialists, external market considerations affecting the biotechnology industry and the historic prices at which the Company sold common shares.

The weighted-average Black-Scholes option pricing assumptions for liability classified stock options outstanding at December 31, 2023 and 2022 are as follows:

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The remaining unamortized compensation expense as of December 31, 2023 will be recognized over a weighted-average period of 1.6 years.

Employee Stock Purchase Plan

On April 10, 2017, the Company’s shareholders approved an employee stock purchase plan (“ESPP”) which became effective immediately prior to the consummation of the Company’s IPO.

On June 7, 2018, certain amendments to the ESPP were approved by shareholders.

Prior to these amendments, the ESPP allowed eligible employees to acquire common shares at a discounted purchase price of 85 % of the market value of the Company’s common shares on the purchase date.

Employee Stock Purchase Plan ("ESPP")

The ESPP, as amended, allows eligible employees to acquire common shares at a discounted purchase price of the lesser of (i) 85 % of the market price of a common share on the first day of the applicable purchase period and (ii) 85 % of the market price of a common share on the purchase date.

The ESPP qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code for employees who are United States taxpayers.

The Company currently holds offerings consisting of a single six-month purchase period commencing on January 1 and July 1 of each calendar year, with a single purchase date at the end of the purchase period on June 30 and December 31 of each calendar year.

Eligible employees are able to contribute up to 15 % of their gross base earnings for purchases under the ESPP through regular payroll deductions.

Purchases of shares under the ESPP are limited for each employee at twenty-five thousand dollars worth of the Company’s common shares (determined using the lesser of (i) the market price of a common share on the first day of the applicable purchase period and (ii) the market price of a common share on the purchase date) for each year such purchase right is outstanding.

As this plan is considered compensatory, the Company recognizes compensation expense on these awards based on their estimated grant date fair value using the Black-Scholes option pricing model.

The Company recognizes compensation expense in the consolidated statements of income (loss) and comprehensive income (loss) on a straight-line basis over the requisite service period.

The Company recognizes compensation expense in the consolidated statements of (loss) income and comprehensive (loss) income on a straight-line basis over the requisite service period.

For the year ended December 31, 2023, the Company recorded compensation expense of $ 387 (2022:

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Total $ 99 $ 130 $ 3,480

For the year ended December 31, 2023, the Company recognized refundable investment tax credits of $ 99 as a reduction of research and development expense.

In April 2020, the Government of Canada announced the CEWS and CERS programs for Canadian employers whose businesses were affected by the COVID-19 pandemic.

The CEWS and CERS provide a subsidy of up to a certain percentage of eligible employees’ eligible remuneration and eligible rent payments, subject to certain criteria.

The Company applied for the CEWS and CERS to the extent it met the requirements to receive the subsidy and recognized $ 130 (2021:

The Company applied for the CEWS and CERS to the extent it met the requirements to receive the subsidy and recognized nil (2022:

$ 130 and 2021:

$ 2,805 ) and nil (2022:

$ 597 ) in total CEWS and CERS subsidies respectively, as a reduction to salaries and benefits expense and rent expense in research and development expense and general administrative expense in the consolidated statement of income (loss) and comprehensive income (loss).

For the year ended December 31, 2022, the Company recognized refundable investment tax credits of nil as a reduction of research and development expense.

Although the Company has used its best judgment and understanding of the related income tax legislation in determining its claims, it is possible the amounts could increase or decrease materially in the future, as the Canada Revenue Agency and Revenue Québec reserve the right to review and audit the investment tax credit claims.

nil and 2021:

Both CEWS and CERS programs ended at the end of 2021 with submission deadlines in 2022.

Research, Collaboration and Licensing Agreements

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Development support payments

52,619 20,671 —

Drug supply for ongoing studies

25,662 3,610 —

Credit note for amendment of program ( 20,100 ) — —

Other drug supply

Recognition of licensing fee — 5,000 —

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Partner revenue — — 5,000

Upfront fee relating to amendment — — 12,000

Research and development support and other payments 4,481 8,201 5,680

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Contract Assets and Liabilities

As at December 31, 2022, contract assets from research, collaboration and licensing agreements were $ 3,000 , which is presented within accounts receivable (December 31, 2021:

nil ) and contract liabilities were $ 32,941 (December 31, 2021:

As at December 31, 2022 and 2021, $ 2,353 and nil respectively, of the contract liabilities is classified as short term.

Contract liabilities relate to deferred revenue from the BeiGene agreement described below.

2022 Agreements:

As at December 31, 2023, contract assets from research, collaboration and licensing agreements were nil , which is presented within accounts receivable (December 31, 2022:

$ 3,000 which is presented within accounts receivable) and contract liabilities were $ 36,640 (December 31, 2022:

As at December 31, 2023 and 2022, $ 3,699 and $ 2,353 respectively, of the contract liabilities is classified as short term.

Contract liabilities relate to deferred revenue from the BeiGene and Jazz agreements described below.

Jazz Collaboration Agreement

Original Jazz Collaboration Agreement:

On October 18, 2022, the Zymeworks BC entered into a License and Collaboration Agreement (the "Jazz Collaboration Agreement") with Jazz Pharmaceuticals Ireland Limited ("Jazz"), under which Jazz will have development and commercialization rights of zanidatamab throughout the world, but excluding the People’s Republic of China, Australia, New Zealand, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, Hong Kong, Taiwan, Macau, Mongolia, South Korea, Brunei Darussalam, Cambodia, Indonesia, Papua New Guinea, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand, Timor-Leste, and Vietnam.

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Deliverables of development work performed by the Company, continuing technology transfer, participation in the Joint Steering Committee (“JSC”), and transfer of first BLA together were considered to be a single performance obligation and the consideration allocated to this performance obligation will be recognized as revenue over time as these activities are completed.

Accordingly, the Company recognized $ 24.3 million in relation to recovery of cost of development work for zanidatamab, for the year ended December 31, 2022.

Remaining deliverables of Manufacturing Technology Transfer, Development Drug Supply, Commercial Drug Supply are considered individually distinct and did not result in a performance obligation during the year ended December 31, 2022 and the revenue related to these deliveries will be recognized upon completion of future deliveries to Jazz.

Remaining deliverables of Manufacturing Technology Transfer, Development Drug Supply, Commercial Drug Supply were considered individually distinct and the revenue related to these deliveries are to be recognized upon completion of future deliveries to Jazz.

Amendment of Jazz Collaboration Agreement:

On April 25, 2023, Zymeworks BC, a subsidiary of the Company, Zymeworks Biopharmaceuticals Inc.

(“ZBI”), a subsidiary of Zymeworks BC, Zymeworks Zanidatamab Inc.

(“ZZI”), a subsidiary of ZBI formed in December 2022 focused on the Company’s development program for zanidatamab, and Jazz Pharmaceuticals, Inc.

(“Jazz Inc.”), entered into a Stock and Asset Purchase Agreement (the “Transfer Agreement”).

Under the Transfer Agreement, (i) Jazz Inc.

acquired from ZBI 100 % of the issued and outstanding capital stock of ZZI, (ii) Jazz Inc.

engaged certain Zymeworks BC and ZZI employees associated with the development of zanidatamab, and (iii) Zymeworks BC and ZBI transferred to Jazz Inc.

or one of its affiliates contracts with respect to the engagement of certain independent contractors of Zymeworks BC and ZBI that work on the Program (as defined below).

In addition, Jazz Inc.

acquired from Zymeworks BC and ZBI certain contracts related to the Program, organizational documents and other records of ZZI, certain regulatory filings related to the Program, certain other books, records and other files, documents and information related to the Program, and certain employment records of service providers to be employed by Jazz Inc.

and its affiliates following the Closing (as defined below).

Subject to the terms and conditions of the Transfer Agreement, Jazz Inc.

assumed certain liabilities that arise following the Closing related to the acquired assets and the Program, including with respect to transferred service providers.

Zymeworks BC and Jazz Pharmaceuticals Ireland Limited (an affiliate of Jazz Inc.) (a subsidiary of Jazz Pharmaceuticals plc, collectively referred to as “Jazz”) amended and restated the license and collaboration agreement dated October 18, 2022 by and between Zymeworks BC and Jazz (the “Original Jazz Collaboration Agreement”) (as amended the “Amended Jazz Collaboration Agreement”) to reflect the transfer of responsibility for the Program.

Under the Amended Jazz Collaboration Agreement, the financial terms of the Original Jazz Collaboration Agreement, as previously disclosed, was unchanged, except that the costs of the Program (including ongoing costs related to the transferred service providers) incurred following the Closing was directly borne by Jazz instead of being incurred by Zymeworks BC and charged back to Jazz for reimbursement, though Zymeworks BC will remain eligible for reimbursement of certain costs for activities where Zymeworks BC maintains responsibility under the Amended Jazz Collaboration Agreement.

As part of the amendments to the Amended Collaboration Agreement, the Company agreed to provide a credit note to Jazz of $ 20.1 million, which has been recognized as a reduction to revenue for the year ended December 31, 2023.

“Program” refers to (i) ongoing clinical trials in certain sites in South Korea that are the responsibility of Zymeworks BC under the Original Jazz Collaboration Agreement and (ii) clinical trials for zanidatamab, other than the studies referenced in (i), initiated by Zymeworks BC in the Territory (as defined in the Original Jazz Collaboration Agreement) prior to the execution of the Original Jazz Collaboration Agreement.

The consummation of the transactions contemplated by the Transfer Agreement, including the execution of the Amended Jazz Collaboration Agreement, occurred in May 2023 (the “Closing”).

In connection with the Closing, the parties entered into a transition services agreement pursuant to which Zymeworks BC and ZBI provide to Jazz Inc.

and Jazz Inc.

provides to Zymeworks BC and ZBI certain services to support the transfer of the acquired assets and the Program on a transitional basis.

The Company will be also eligible to receive up to $ 525.0 million in certain regulatory milestones payments and up to $ 862.5 million in potential commercial milestone payments.

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No development or commercial milestone payments or royalties have been received to date.

In April 2022, the Company entered into a new licensing agreement with Atreca, Inc.

(“Atreca”), granting Atreca a worldwide, royalty-bearing license to research, develop and commercialize novel ADCs.

The Company is eligible to receive up to $ 210.0 million in option exercise fees and clinical development and regulatory approval milestone payments and up to $ 540.0 million in commercial milestone payments, as well as tiered royalties on worldwide sales.

The Company's performance obligations in relation to the research license fee of $ 5.0 million were met in April 2022.

Accordingly, the research license fee was recognized as revenue during the year ended December 31, 2022.

2021 and prior agreements:

Research and License Agreement with Merck Sharp & Dohme Research Ltd.

On August 22, 2011, the Company entered into a research and license agreement with Merck, which was amended and restated in December 2014, to develop and commercialize three bispecific antibodies generated through the use of the Company’s Azymetric and EFECT platforms.

Under the terms of the agreement, the Company granted Merck a worldwide, royalty-bearing antibody sequence pair exclusive license to research, develop and commercialize certain licensed products.

The amendments did not impact the determination of units of accounting or the allocation of the arrangement consideration.

From contract inception to December 31, 2022, the Company has received an upfront payment of $ 1.25 million and research and development related payments totaling $ 5.5 million.

Currently, there are no active programs under development pursuant to this agreement.

As at December 31, 2023, contract liabilities under the Amended Jazz Collaboration Agreement include $ 3,699 received in relation to drug supply provided to Jazz.

Collaboration and License Agreements with BeiGene, Ltd.

On November 26, 2018, the Company entered into three concurrent agreements with BeiGene whereby the Company granted BeiGene royalty-bearing exclusive licenses for the research, development and commercialization of its bispecific therapeutic candidates, zanidatamab (formerly known as “ZW25”) ( as amended on March 29, 2021 and August 10, 2021, collectively “Zanidatamab Agreement”) and zanidatamab zovodotin (formerly known as “ZW49”) ( as amended on May 25, 2020 and June 2, 2021, collectively “Zanidatamab Zovodotin Agreement”) in Asia (excluding Japan but including the People’s Republic of China, South Korea and other countries), Australia and New Zealand.

In addition, the Company also granted BeiGene a worldwide, royalty-bearing, antibody sequence pair-specific license to research, develop and commercialize globally three

bispecific antibodies generated through the use of the Company’s Azymetric and EFECT platforms, which agreement expired in November 2023.

Pursuant to these agreements, the Company received an upfront payment of $ 60.0 million for the totality of the rights described.

The Company considered the fair value of performance obligations based on the Company’s best estimate of their relative stand-alone selling prices, and allocated $ 40.0 million of the transaction price to the license and collaboration agreements for zanidatamab and zanidatamab zovodotin and $ 20.0 million to the Company’s performance obligations under the research and licensing agreement for Azymetric and EFECT Platforms.

Original License and Collaboration Agreements for Zanidatamab and Zanidatamab Zovodotin

In relation to the Zanidatamab Agreement, the Company identified the following promised goods and services at the inception of the BeiGene agreement that are material:

development and commercial licenses, initial transfer of the Company’s technologies and relevant know-how, continuing technology transfer, participation in the Joint Steering Committee (“JSC”) and other sub-committees, manufacturing technology transfer, provision of development supply, provision of commercial supply, and transfer of future rights related to the development and commercial license.

The Company concluded that the licenses and initial technology transfer are distinct together and the continuing technology transfer and the Company’s participation to the JSC and other sub-committees’ activities are also distinct together.

Remaining deliverables were individually determined to be distinct.

Development and commercial licenses as well as initial transfer of technologies and relevant know-how were considered to be a single performance obligation.

The consideration of $ 7.1 million allocated to this performance obligation was recognized as revenue over a two-month period during which the delivery of the license and transfer of the relevant technology occurred.

Deliverables of continuing technology transfer and participation in the JSC and other sub-committees together were considered to be a single performance obligation and the consideration allocated to this performance obligation will be recognized as revenue over time as these activities are completed.

Remaining deliverables are considered individually distinct and the revenue will be recognized as delivery or transfer of future rights to BeiGene occurs.

In March 2020, BeiGene dosed the first patient in a two-arm Phase 1b/2 trial evaluating zanidatamab in combination with chemotherapy as a first-line treatment for patients with metastatic HER2-positive breast cancer and in combination with chemotherapy and BeiGene’s PD-1-targeted antibody tislelizumab as a first-line treatment for patients with metastatic HER2-positive GEA.

The Company recognized revenue of $ 5.0 million in relation to this milestone.

In November 2020, BeiGene dosed the first patient in South Korea in the pivotal HERIZON-BTC-01 study .

The Company recognized revenue of $ 10.0 million in relation to this milestone.

In December 2021, BeiGene dosed the first patient in South Korea in the pivotal HERIZON-GEA-01 study and the Company recognized revenue of $ 8.0 million in relation to this milestone.

In relation to the Zanidatamab Zovodotin Agreement, the Company identified the following promised goods and services at the inception of the BeiGene agreement that are material:

development and commercial licenses, initial transfer of the Company’s technologies and relevant know-how, continuing technology transfer, participation in the JSC and other sub-committees, manufacturing technology transfer, provision of development supply, provision of commercial supply, and transfer of future rights related to the development and commercial license.

The Company concluded that the licenses and initial technology transfer together were distinct together and the continuing technology transfer and the Company’s participation to the JSC and other sub-committees’ activities were also distinct together.

Manufacturing technology transfer, provision of development supply and provision of commercial supply were individually determined to be distinct.

Development and commercial licenses as well as initial transfer of technologies and relevant know-how were considered to be a single performance obligation while continuing technology transfer and participation in the JSC and other sub-committees together were considered as a single performance obligation.

Remaining deliverables were considered individually distinct.

Termination of BeiGene License and Collaboration Agreement Regarding Zanidatamab Zovodotin and Amendment of BeiGene License and Collaboration Agreement Regarding Zanidatamab:

On September 18, 2023, Zymeworks BC and BeiGene entered into a Termination Agreement (the “Termination Agreement”) relating to the Zanidatamab Zovodotin Agreement .

The Termination Agreement does not terminate the Zanidatamab Agreement (as defined below).

Pursuant to the Termination Agreement, the Zanidatamab Zovodotin Agreement is terminated, effective as of September 18, 2023, and is no longer in effect, except that the termination does not relieve the parties from obligations under the Zanidatamab

Zovodotin Agreement that accrued prior to the termination and certain other provisions expressly indicated to survive the termination, including certain licenses to BeiGene intellectual property with respect to zanidatamab zovodotin.

Under the Zanidatamab Zovodotin Agreement, no performance obligations were completed by the Company as of December 31, 2023 as the initial transfer of technologies and relevant know-how was not going to start until the earlier of completion of the Company’s Phase-1 clinical studies for zanidatamab zovodotin or completion of dose escalation studies.

Accordingly, no revenue was recognized from the Zanidatamab Zovodotin Agreement to date.

In connection with the entry into the Termination Agreement, on September 18, 2023, Zymeworks BC and BeiGene also entered into the Third Amendment to License and Collaboration Agreement (the “Amendment”) relating to the Zanidatamab Agreement.

Pursuant to the Amendment, Zymeworks BC is eligible to receive development and commercial milestone payments of up to $ 172.0 million, together with tiered royalties up to 19.5 % of net sales in BeiGene territories increasing up to 20 % when cumulative amounts forgone as a result of a royalty reduction of 0.5 % reaches a cap in the low double-digit millions of dollars.

Pursuant to the Amendment, the remaining provisions of the Zanidatamab Agreement remain unchanged.

The Termination Agreement and the Amendment did not have any financial impact on the Company's financial statements as of and for the year ended December 31, 2023, other than allocation of consideration and performance obligations under the Zanidatamab Zovodotin Agreement to Zanidatamab Agreement.

As of December 31, 2023, the Company has $ 32,941 of the upfront fees from the Zanidatamab Agreement as deferred revenue on the Company’s consolidated balance sheet (December 31, 2022:

$ 32,941 from the Zanidatamab Agreement and Zanidatamab Zovodotin Agreement).

Amounts not expected to be recognized as revenue within the next twelve months of the consolidated balance sheet date are classified as long-term deferred revenue.

Research and Licensing Agreement for Azymetric and EFECT Platforms

For the development and commercialization licenses of up to three bispecific antibody therapeutics using the Company’s Azymetric and EFECT platforms, the Company received an upfront payment of $ 20.0 million.

The Company was also eligible to receive development and commercial milestone payments of up to $ 702.0 million.

In addition, the Company was eligible to receive tiered royalties in the mid-single digits on product sales.

No development or commercial milestone payments or royalties have been received to date.

Under this agreement, BeiGene was solely responsible for the research, development, manufacturing, and commercialization of the products.

This agreement expired in November 2023.

2020 Research and License Agreement with Merck

In July 2020, the Company entered into a new licensing agreement with Merck granting Merck a worldwide, royalty-bearing license to research, develop and commercialize up to three new multispecific antibodies toward Merck’s therapeutic targets in the human health field and up to three new multispecific antibodies toward Merck’s therapeutic targets in the animal health field using the Company’s Azymetric and EFECT platforms.

The Company is eligible to receive up to $ 419.3 million in option exercise fees and clinical development and regulatory approval milestone payments and up to $ 502.5 million in commercial milestone payments, as well as tiered royalties on worldwide sales.

Licensing and Collaboration Agreement with Eli Lilly and Company (“Lilly”)

On December 17, 2013, the Company entered into a licensing and collaboration agreement with Lilly to develop novel bispecific antibody therapeutics using the Company’s proprietary Azymetric platform.

The Company will apply its Azymetric platform in combination with Lilly’s proprietary targets to create novel bispecific antibodies which Lilly will have the right to develop and commercialize worldwide.

From contract inception to December 31, 2022, the Company has received an upfront payment of $ 1.0 million and research and development related payments of $ 3.0 million.

There are no active programs under development pursuant to this agreement.

Licensing and Collaboration Agreement with Lilly

On October 22, 2014, the Company entered into a second licensing and collaboration agreement with Lilly to develop novel bispecific antibody therapeutics using the Company’s proprietary Azymetric platform.

This agreement did not alter or amend the initial agreement entered into on December 17, 2013.

Under the terms of this agreement Lilly was granted a worldwide, royalty-bearing antibody sequence pair-specific license to research, develop and commercialize certain licensed products.

Each of the two agreements with Lilly were negotiated independently and the deliverables covered by the respective contracts are

unrelated to one another as they cover different product candidates.

Accordingly, the second Licensing and Collaboration Agreement with Lilly has been accounted for as a new arrangement.

From contract inception to December 31, 2022, the Company has received research and development related payments totaling $ 10.0 million.

There are no active programs under development pursuant to this agreement.

Licensing and Collaboration Agreement with Celgene Corporation & Celgene Alpine Investment Co.

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Upon the execution of the Agreement, the Company received an upfront payment of $ 8.0 million and an expansion fee of $ 4.0 million.

BMS has the right to exercise options on up to ten programs and if BMS opts in on a program, the Company is eligible to receive up to $ 164.0 million per product candidate (up to $ 1.64 billion for all ten programs), comprised of a commercial license option payment of $ 7.5 million, development milestone payments of up to $ 101.5 million and commercial milestone payments of up to $ 55.0 million.

This agreement was expanded in 2018 to increase the number of programs from eight to ten and to extend BMS’s research period.

BMS has the right to exercise options on up to ten programs, but in 2023 BMS stopped further development of one of the ten programs.

If BMS opts in on a program, the Company is eligible to receive up to $ 164.0 million per product candidate (up to $ 1.64 billion for all ten programs, or $ 1.48 billion not including the one program for which BMS has stopped development), comprised of a commercial license option payment of $ 7.5 million, development milestone payments of up to $ 101.5 million and commercial milestone payments of up to $ 55.0 million.

From contract inception to December 31, 2023, BMS has exercised one commercial license option and the Company has received a total of $ 7.5 million in product candidate-specific payments.

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BMS will have exclusive worldwide commercialization rights to products derived from the agreement if BMS elects to exercise a commercial license option for each product.

The Company determined that, the events and conditions resulting in payments for research, development and commercial milestones solely depend on BMS’s performance.

The Company determined

that, the events and conditions resulting in payments for research, development and commercial milestones solely depend on BMS’s performance.

In June 2020, the Company’s existing collaboration agreement with BMS was amended to expand the license grant to include the use of the Company’s EFECT platform for the development of therapeutic candidates and to extend the research term.

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No research, development or commercial milestone payments or royalties have been received to date.

Collaboration and Cross License Agreement with Daiichi Sankyo, Co., Ltd.

2016 Collaboration Agreement with Daiichi Sankyo, Co., Ltd.

(“Daiichi Sankyo”)

On September 26, 2016, the Company entered into a collaboration and cross license agreement with Daiichi Sankyo for the research, development, and commercialization of one bispecific antibody enabled using the Company’s Azymetric and EFECT platforms.

Additionally, the Company will license immuno-oncology antibodies from Daiichi Sankyo, with the right to research, develop and commercialize multiple products globally in exchange for royalties on product sales.

Under the agreement, Daiichi Sankyo will have the option to develop and commercialize a single bispecific immuno-oncology therapeutic.

The Company is also eligible to $ 149.9 million in milestone and other payments.

From contract inception to December 31, 2022, the Company has received an upfront technology access fee payment of $ 2.0 million and research and commercial option related payments totaling $ 4.5 million.

The Company is also eligible to receive additional development milestone payments of up to $ 63.4 million, and commercial milestone payments of up to $ 80.0 million.

In addition, the Company is eligible to receive tiered royalties ranging from the low single digits up to 10 % on product sales.

The Company also has non-exclusive rights to develop and commercialize up to six products using Daiichi Sankyo’s proprietary immune-oncology antibodies, with royalties in the low single digits to be paid to Daiichi Sankyo on sales of such products.

Daiichi Sankyo is solely responsible for the research, development, manufacturing and commercialization of the products.

Under the non-exclusive immuno-oncology antibody license to Zymeworks, Zymeworks is solely responsible for all research, development and commercialization of the resulting products.

Second License Agreement with Daiichi Sankyo

On September 26, 2016, the Company and Daiichi Sankyo entered into a collaboration and cross license agreement which was amended on September 25, 2018, July 2, 2021, and June 6, 2022 (collectively, the “2016 Daiichi Collaboration Agreement”) for the research, development, and commercialization of one bispecific antibody enabled using the Company’s Azymetric and EFECT platforms.

Additionally, the Company was able to license immuno-oncology antibodies from Daiichi Sankyo, with the

right to research, develop and commercialize multiple products globally in exchange for royalties on product sales.

Under the agreement, Daiichi Sankyo had the option to develop and commercialize a single bispecific immuno-oncology therapeutic.

From contract inception to the termination of 2016 Daiichi Collaboration agreement as defined below, the Company has received an upfront technology access fee payment of $ 2.0 million and research and commercial option related payments totaling $ 4.5 million.

Termination of the 2016 Daiichi Sankyo Collaboration Agreement

In March 2023, Zymeworks BC and Daiichi Sankyo terminated the Daiichi Collaboration Agreement and is no longer in effect, except that the termination does not relieve the parties from obligations under the Daiichi Collaboration Agreement that have accrued prior to the termination or provisions of the Daiichi Collaboration Agreement expressly indicated in the Daiichi Collaboration Agreement or the Termination and License Agreement to survive the termination.

The termination of the 2016 Daiichi Collaboration Agreement did not have any financial impact during the year ended December 31, 2023.

2018 Licensing Agreement with Daiichi Sankyo

In May 2018, the Company entered into a second license agreement with Daiichi Sankyo to research, develop and commercialize two bispecific antibodies generated through the use of the Company’s Azymetric and EFECT platforms.

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Under the agreement, Daiichi Sankyo will be solely responsible for the research, development, manufacturing and commercialization of the products.

The Company is also eligible to receive up to $ 484.7 million in various milestone and other payments.

Under the terms of the agreement, the Company was eligible to receive up to $ 484.7 million in various milestone and other payments.

From contract inception to December 31, 2023, the Company has received an upfront technology access fee payment of $ 18.0 million.

The Company is also eligible to receive development milestone payments totaling up to $ 126.7 million and commercial milestone payments of up to $ 340.0 million.

The Company remains eligible to receive development milestone payments totaling up to $ 63.4 million and commercial milestone payments of up to $ 170.0 million.

In addition, the Company is eligible to receive tiered royalties ranging from the low single digits up to 10 % on product sales, with the royalty term being, on a product-by-product and country-by-country basis, either (i) for as long as there is Zymeworks platform patent coverage on products, or (ii) for 10 years beginning from the first commercial sale, whichever period is longer.

6 unchanged sentences

Under the agreement, Janssen will be solely responsible for the research, development, manufacturing and commercialization of the products.

The Company is eligible to receive up to $ 1.45 billion in various license and milestone payments.

The Company was originally eligible to receive up to $ 1.45 billion in various license and milestone payments.

From contract inception to December 31, 2023, the Company has received an upfront payment of $ 50.0 million and development milestones totaling $ 8.0 million with two bispecific antibodies initiating clinical trials.

The Company is also eligible to receive development milestone payments of up to $ 274.0 million and commercial milestone payments of up to $ 1.12 billion.

Janssen has deprioritized the development of one of those two bispecific antibodies, and in 2023 the research program term under the agreement ended with respect to the remaining four bispecific antibodies.

As a result, the Company remains eligible to receive development milestone payments of up to $ 86.0 million and commercial milestone payments of up to $ 373.0 million ($ 43.0 million and $ 186.5 million, respectively, not including the bispecific antibody that Janssen has deprioritized).

In addition, the Company is eligible to receive tiered royalties in the mid-single digits on product sales, with the royalty term being, on a product-by-product and country-by-country basis, either (i) for as long as there is Zymeworks platform patent coverage on products, or (ii) for 10 years, beginning from the first commercial sale, whichever period is longer.

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Pursuant to this agreement, the Company received an upfront payment of $ 5.0 million.

In addition, (i) for the first therapeutic candidate, the Company is eligible to receive preclinical and development milestone payments of up to $ 74.0 million and commercial milestone payments of up to $ 157.0 million together with tiered royalties on future sales of up to 20 % in the United States and up to high single digits elsewhere, and (ii) for the second therapeutic candidate, the Company is eligible to receive preclinical and development milestone payments of up to $ 86.5 million and commercial milestone payments of up to $ 157.0 million together with tiered royalties on future sales of up to low double digits globally.

For products developed by the Company outside of dermatology, LEO is eligible to receive commercial milestone payments and up to single-digit royalties on future sales.

No development or commercial milestone payments or royalties have been received to date.

Collaboration and License Agreements with BeiGene, Ltd.

On November 26, 2018, the Company entered into three concurrent agreements with BeiGene whereby the Company granted BeiGene royalty-bearing exclusive licenses for the research, development and commercialization of its bispecific therapeutic candidates, zanidatamab (formerly known as “ZW25”) (“Zanidatamab Agreement”) and zanidatamab zovodotin (formerly known as “ZW49”) (“Zanidatamab Zovodotin Agreement”) in Asia (excluding Japan but including the People’s Republic of China, South Korea and other countries), Australia and New Zealand.

In addition, the Company also granted BeiGene a worldwide, royalty-bearing, antibody sequence pair-specific license to research, develop and commercialize globally three bispecific antibodies generated through the use of the Company’s Azymetric and EFECT platforms.

Pursuant to these agreements, the Company received an upfront payment of $ 60.0 million for the totality of the rights described.

License and Collaboration Agreements for Zanidatamab and Z anidatamab Zovodotin

The Company is also eligible to receive development and commercial milestone payments of up to $ 390.0 million, together with tiered royalties from high single digits and up to 20 % on future sales of the products.

Under the agreements, the Company and BeiGene are collaborating on certain global clinical studies and both the Company and BeiGene will be independently conducting clinical studies in their own respective territories.

Each of the Company and BeiGene are responsible for all the development and commercialization costs in their own territories.