What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-05 compared with 2024-03-06 · 298 added, 232 removed, 1074 unchanged (33% of the section changed)

5 unchanged sentences

Consolidated Balance Sheets as at December 31, 202 4 and 20 23

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

Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the years ended December 31, 2024, 2023 and 2022

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2024, 202 3 and 2022

1 unchanged sentence

Notes to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

2 unchanged sentences

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

(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 subsidiaries (the Company) as of December 31, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2024, 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 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 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.

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

1 unchanged sentence

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 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 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 a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue recognition from drug supply for ongoing studies from Jazz Pharmaceuticals Ireland Limited (Jazz)

As discussed in Note 11 to the consolidated financial statements, the Company recognized revenue from Jazz related to drug supply for ongoing studies of $19,228 thousand for the year ended December 31, 2024.

As discussed in Note 2, amounts receivable by the Company for the provision of drugs to clinical trials on behalf of the customer are recognized in revenue at a point in time when title to drugs has transferred to the customer, which generally occurs upon shipment or delivery, depending on contractual terms.

We identified the sufficiency of audit evidence relating to revenue recognition from drug supply for ongoing studies with Jazz as a critical audit matter.

Subjective auditor judgment was required to evaluate the sufficiency of audit evidence obtained related to the Company’s revenue from drug supply for ongoing studies because of the involvement of clinical research support organizations in tracking and fulfilment of the drugs provided across multiple locations.

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.

We evaluated the design and implementation of internal controls over the Company’s revenue recognition process.

We obtained a confirmation from the customer on invoices billed related to goods and services provided for the year ended December 31, 2024 and agreed the quantity of drugs invoiced to the Company’s records.

We assessed the recorded revenue by selecting a sample of revenue transactions and comparing the amounts recognized for consistency with relevant underlying documentation.

We evaluated the sufficiency of audit evidence obtained over revenue by assessing the results of the procedures performed, including the appropriateness of the nature and extent of such evidence.

Chartered Professional Accountants

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March 5, 2025

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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Cash and cash equivalents $ 66,103 $ 157,557

Short-term investments (note 5) 216,770 91,320

Short-term marketable securities (note 5)

159,673 216,770

Accounts receivable 55,815 19,477

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Total current assets 300,451 412,926

Deferred financing fees 108 10

Long-term investments (note 5) 82,148 886

Long-term prepaid assets 7,240 15,729

Long-term marketable securities (note 5)

98,428 81,930

Long-term prepaids and other assets

Deferred tax asset (note 13)

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Operating lease right-of-use assets (note 14)

16,666 17,696

Intangible assets, net (note 8) 4,576 7,656

Acquired in-process research and development (note 6) 17,628 17,628

Acquired in-process research and development assets (“IPR&D”) (note 6)

Goodwill (note 6) 12,016 12,016

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Income tax payable (note 13)

Fair value of liability-classified stock options 960 1,642

Current portion of operating lease liability (note 14)

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Long-term portion of operating lease liability (note 14)

15,738 22,369

Deferred revenue (note 11)

14,607 32,941

Other long-term liabilities (note 9) 923 1,701

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Commitments and contingencies (note 15)

The accompanying notes are an integral part of these financial statements

Subsequent event (note 17)

ZYMEWORKS INC.

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Research and development collaborations (note 11)

$ 76,304 $ 76,012 $ 412,482

Operating expenses:

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General and administrative 61,506 70,446 73,358

Impairment on IPR&D (note 6)

Total operating expenses 213,414 214,065 281,954

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Interest income 19,941 19,705 3,596

Other (expense) income, net (note 13)

Other income (expense), net (note 12)

558 ( 894 ) 1,110

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(Loss) income before income taxes ( 116,611 ) ( 119,242 ) 135,234

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

Income tax (expense) recovery (note 13)

( 6,084 ) 568 ( 10,893 )

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Other comprehensive income:

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

Total other comprehensive income

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

Total other comprehensive (loss) income

Comprehensive (loss) income $ ( 123,044 ) $ ( 118,618 ) $ 124,341

5 unchanged sentences

Diluted 75,878,738 68,863,010 65,249,184

The accompanying notes are an integral part of these financial statements

ZYMEWORKS INC.

Consolidated Statements of Changes in Stockholders’ Equity (Note 1)

(Expressed in thousands of U.S.

Consolidated Statements of Changes in Stockholders’ Equity (Note 1) (Expressed in thousands of U.S.

dollars except share data)

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Balance at December 31, 2021 — $ — — $ — 46,633,935 $ 741,147 $ ( 683,104 ) $ ( 6,659 ) $ 197,710 $ 249,094

Issuance of common stock on exercise of stock options (note 10e) — — — — 502,019 12,878 — — ( 3,218 ) 9,660

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

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

Issuance of common stock on exercise of stock options (note 10f)

— — — — 39,220 359 — — ( 79 ) 280

Issuance of common stock through employee stock purchase plan (note 10g)

— — — — 179,238 2,191 — — — 2,191

Issuance of common stock upon vesting of restricted stock units ("RSUs") (note 10f)

— — — — 93,966 2,350 — — ( 2,350 ) —

Issuance of common stock upon exercise of pre-funded warrants (note 10d)

— — — — 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 10d)

— — — — 11,035,000 82,549 — — 24,985 107,534

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

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

Issuance of common stock on exercise stock options (note 10e) — — — — 39,220 359 — — ( 79 ) 280

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

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

Issuance of common stock on exercise stock options (note 10f)

— — — — 641,129 6,958 — — ( 1,736 ) 5,222

Issuance of common stock through employee stock purchase plan (note 10g)

— — — — 111,911 955 — — — 955

Issuance of common stock upon vesting of RSUs (note 10f)

— — — — 100,949 1,887 — — ( 1,887 ) —

Issuance of common stock upon exercise of pre-funded warrants (note 10d)

— — — — 2,079,193 63,775 — — ( 63,775 ) —

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 and 10d)

— — — — — — — — 49,862 49,862

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

Net income — — — — — — ( 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

Issuance of common stock on exercise of stock options (note 10e) — — — — 641,129 6,958 — — ( 1,736 ) 5,222

Issuance of common stock through employee share purchase plan (note 10f) — — — — 111,911 955 — — — 955

Issuance of common stock upon vesting of RSUs (note 10e) — — — — 100,949 1,887 — — ( 1,887 ) —

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

Issuance of common stock for retracted exchangeable shares

Issuance of common stock on exercise of stock options (note 10f)

— — — — 959,906 13,952 — — ( 4,770 ) 9,182

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

Issuance of common stock through employee share purchase plan (note 10g)

— — — — 128,232 1,311 — — — 1,311

Private placement (note 10a)

Issuance of common stock upon vesting of RSUs (note 10f)

— — — — 225,004 1,971 — — ( 1,971 ) —

Issuance of common stock for retracted exchangeable shares

— — ( 80,582 ) ( 1,157 ) 80,582 1,157 — — — —

Stock-based compensation — — — — — — — — 16,716 16,716

Purchase and retirement of common stock (10c)

— — — — ( 2,545,402 ) — ( 30,051 ) — — ( 30,051 )

Excise tax on repurchase of common stock — — — — — — ( 152 ) — — ( 152 )

Net loss — — — — — — ( 122,695 ) — — ( 122,695 )

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

Other comprehensive loss

— — — — — — — ( 349 ) — ( 349 )

Balance at December 31, 2024 1 $ — 570,637 $ 8,188 68,964,319 $ 1,015,618 $ ( 830,335 ) $ ( 6,952 ) $ 152,249 $ 338,768

The accompanying notes are an integral part of these financial statements

ZYMEWORKS INC.

8 unchanged sentences

Amortization of intangible assets (note 8) 4,496 2,702 1,015

Stock-based compensation (note 10e) 8,102 4,015 10,756

Stock-based compensation (note 10f)

17,792 8,102 4,015

Amortization and impairment of operating lease right-of-use assets 2,509 7,141 4,769

Deferred income tax (recovery) expense (note 14)

Impairment of acquired IPR&D (note 6) 17,287 — —

Deferred income tax expense (recovery) (note 13)

691 ( 757 ) 1,940

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Private placement (note 10a) — 49,862 —

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

Issuance of common stock through employee stock purchase plan (note 10f) 820 1,403 2,070

Issuance of common stock on exercise of stock options (note 10f)

8,857 5,006 255

Issuance of common stock through employee stock purchase plan (note 10g)

930 820 1,403

Purchases of common stock for retirement (note 10c)

( 30,051 ) — —

Deferred financing fees ( 174 ) ( 53 ) ( 596 )

Finance lease payments ( 14 ) ( 21 ) ( 14 )

Net cash provided by financing activities $ 81,847 $ 108,582 $ 8,011

Net cash (used in) / provided by financing activities

$ ( 20,452 ) $ 81,847 $ 108,582

Cash flows from investing activities:

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Acquisition of intangible assets ( 1,075 ) ( 1,603 ) ( 4,975 )

Net cash (used in) / provided by investing activities $ ( 207,253 ) $ ( 53,849 ) $ 144,596

Net cash provided by / (used in) investing activities

$ 38,756 $ ( 207,253 ) $ ( 53,849 )

Effect of exchange rate changes on cash and cash equivalents 286 354 203

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Cash and cash equivalents, end of year $ 66,103 $ 157,557 $ 400,912

Supplemental cash flow information:

Net cash paid during the year for income taxes

$ 3,179 $ 165 $ 10,000

Supplemental disclosure of non-cash investing and finance items:

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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.

(Singapore), Zymeworks CallCo ULC, Zymeworks ExchangeCo Ltd., Zymeworks Managemen t Inc.

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

(refer to note 11).

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

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

All amounts expressed in the consolidated financial statements of the Company and the accompanying notes thereto are expressed in thousands of U.S.

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

Resulting foreign exchange gains and losses are reflected in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).

Resulting foreign exchange gains and losses are reflected in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income.

Use of Estimates

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For collaborative arrangements that fall within the scope of ASC 808, Collaborative Arrangements (“ASC 808”), the Company applies the revenue recognition model under ASC 606 to part or all of the arrangements, when deemed appropriate.

For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company determines which elements of the arrangement are within the scope of ASC 808 and which elements are within the scope of ASC 606, which may require application of judgment.

In accordance with ASC 606, the Company recognizes revenue when the Company’s customer obtains control of promised goods or services, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company performs the following steps:

(i) identification of the promised deliverables in the contract;

(ii) determination of whether the promised deliverables are performance obligations including whether they are distinct;

(iii) measurement of the transaction price, including uncertainties related to variable consideration;

(iv) allocation of the transaction price to the performance obligations based on the stand-alone selling prices;

and (v) recognition of revenue when or as the Company satisfies each performance obligation.

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations including whether they are distinct;

(iii) determine the transaction price, including uncertainties related to variable consideration;

(iv) allocate the transaction price to the performance obligations based on the stand-alone selling prices;

and (v) recognize revenue when or as the Company satisfies each performance obligation and when collectability is probable.

The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration that it is entitled to in exchange for the goods and services transferred to the customer.

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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.

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.

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 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.

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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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Achievement of these royalties and commercial milestones may solely depend upon performance of the licensee.

The Company started recognizing royalty income during the year ended December 31, 2024.

The Company's commercial partner is obligated to report its net product sales and resulting royalty due to the Company within 60 days from the end of each quarter.

The Company accrues royalty revenue based on historic product sales, royalty receipts and other relevant information as available and recognizes any adjustment when it receives royalty reports from its commercial partner in the subsequent period.

Contract assets and liabilities

Contract assets are mainly comprised of trade receivables net of expected credit losses, which includes amounts billed and currently due from customers.

Contract assets are mainly comprised of accrued revenue for which one of more performance obligations has been completed but not yet billed, which includes amounts billed and currently due from customers.

Contract liabilities are mainly comprised of deferred revenues.

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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.

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.

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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

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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.

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.

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

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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 ).

At December 31, 2024, the Company’s net monetary liabilities denominated in Canadian dollars were $ 3,464 (C$ 4,982 ) (December 31, 2023:

$ 1,392 (C$ 1,844 )).

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

7 unchanged sentences

The Company operates and manages its business in one segment, which is the discovery, development and commercialization of next-generation multifunctional biotherapeutics.

Operating segments are defined as components of an enterprise about which separate discrete information is available for the chief operating decision maker, or decision making group, in deciding how to allocate resources and assessing performance.

Operating segments are defined as components of an enterprise about which separate discrete information is available for the chief operating decision maker (“CODM”), in deciding how to allocate resources and assessing performance.

Property and Equipment

39 unchanged sentences

The refundable portion of investment tax credits are recorded as reductions to research and development expenditures.

The Company also participated in the Canada Emergency Wage Subsidy (“CEWS”) and Canada Emergency Rent Subsidy (“CERS”) programs announced by the Government of Canada in April 2020, in order to help employers keep and/or return Canadian-based employees to payrolls in response to challenges posed by the COVID-19 pandemic.

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 in 2022 and 2021.

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

Research and Development Costs

13 unchanged sentences

The Company recognizes stock-based compensation expense on equity and liability classified stock-based awards granted to employees, directors, and certain consultants.

The Company measures the cost of such awards based on the fair value of the award, net of estimated forfeitures, and recognizes stock-based 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 measures the cost of such awards based on the fair value of the award, net of estimated forfeitures, and recognizes stock-based compensation expense in the consolidated statements of (loss) income and comprehensive (loss) income on a straight-line basis over the requisite service period.

The requisite service period generally equals the vesting period of the awards.

4 unchanged sentences

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

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

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 (expense) income (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.

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.

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.

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

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Net income (loss) per share

Basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding for the year.

Diluted net income (loss) per share attributable to common stockholders is computed by adjusting net income (loss) attributable

to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities, including outstanding stock options and warrants.

Diluted net income (loss) per share attributable to common stockholders is computed by adjusting net income (loss) attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities, including outstanding stock options and warrants.

Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the year, including potential dilutive shares of common stock assuming the dilutive effect of outstanding instruments.

The treasury stock method is used to determine the dilutive effect of the Company’s stock option grants and warrants.

ASC 260 Earnings Per Share requires an adjustment to the numerator for any income or loss related to liability classified warrants and stock options, if dilutive, if they are presumed to be share settled.

ASC 260 Earnings Per

Share requires an adjustment to the numerator for any income or loss related to liability classified warrants and stock options, if dilutive, if they are presumed to be share settled.

Recent Accounting Pronouncements

Recent accounting pronouncements adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures.

The change in the standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The changes improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses.

The guidance will be effective for annual reporting periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024.

Early adoption is permitted and the standard should be applied retrospectively.

The Company has adopted this accounting pronouncement on the accompanying financial statements as of and for the year ended December 31, 2024 (note 16).

Recent accounting pronouncements not yet adopted

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.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

The amendments require disclosure of specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions.

The ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The standard is to be applied on a prospective basis, with the option for retrospective application.

The Company is currently evaluating the impact of adoption of the standard on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting – Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses.

The standard update improves the disclosures about a public business entity’s expenses by requiring more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation and amortization) included within income statement expense captions.

The guidance will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The standard updates are to be applied prospectively with the option for retrospective application.

The Company is currently evaluating the impact of adoption of the standard update on its consolidated financial statements.

Net (Loss) Income per Share

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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:

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 years ended December 31, 2024 and 2023 as the effect would be antidilutive.

Cash, Cash Equivalents and Marketable Securities

The following table summarizes the Company's marketable securities as of December 31, 2024:

December 31, 2024

Amortized Cost Unrealized Gain (Loss)

Short-term investments:

Short-term marketable securities:

Contractual maturity of one year or less:

Guaranteed investment certificates (“GICs”) and mutual funds

$ 37,166 $ — $ 37,166

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159,659 14 159,673

Long-term investments:

Long-term marketable securities:

Contractual maturity of one to three years:

Treasury notes 14,979 2 14,981

Corporate debt securities 65,461 ( 153 ) 65,308

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Corporate debt securities 18,295 ( 156 ) 18,139

Equity securities 218 — 218

98,735 ( 307 ) 98,428

$ 258,394 $ ( 293 ) $ 258,101

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

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

December 31, 2023

Amortized Cost Unrealized Gain (Loss)

Short-term investments:

Short-term marketable securities:

Contractual maturity of one year or less:

GICs $ 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 marketable 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

82,262 ( 332 ) 81,930

Long-term investments:

Equity securities 886 — 886

$ 298,644 $ 56 $ 298,700

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31,483 — — 66,103 134,431 — — 157,557

Marketable securities:

GICs and mutual funds

37,166 — — 37,166 75,066 — — 75,066

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In-process research and development assets (“IPR&D”) acquired in the 2016 Kairos Therapeutics Inc.

(“Kairos”) business combination are classified as indefinite-lived intangible assets and are not currently being amortized.

(“Kairos”) business combination were classified as indefinite-lived intangible assets and were not amortized until their classification as definite-lived assets.

During the year ended December 31, 2024, the Company determined that the fair value of IPR&D, which was estimated using an income approach, was less than its carrying value.

Accordingly, the Company recorded an impairment charge of $ 17,287 .

The impairment was a result of the Company's decision to discontinue the zanidatamab zovodotin clinical

development program which utilized the acquired technology represented by the IPR&D assets.

As of July 1, 2024, the Company classified the remaining assets as definite-lived and commenced amortization.

The following table summarizes the carrying value of IPR&D, net of impairment:

IPR&D Accumulated

Impairment Net

Impairment Accumulated

Balance at December 31, 2021 $ 20,700 $ ( 3,072 ) $ — $ 17,628

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Balance at December 31, 2024 $ 20,700 $ ( 20,359 ) $ ( 341 ) $ —

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 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, 2024 and concluded that no impairment existed.

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Amortization expense on intangible assets for the years ended December 31, 2024, 2023 and 2022 was $ 4,496 , $ 2,702 and $ 1,015 , respectively.

At December 31, 2023, amortization expense on capitalized intangible assets is estimated to be as follows for each of the next five years:

At December 31, 2024, amortization expense on capitalized intangible assets is estimated to be as follows for the next five years:

Amortization expense

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Goods and services tax payable

Employee compensation and vacation accruals 6,153 14,365

Accrued legal and professional fees 3,707 7,799

Employee compensation and related accruals

Fair value of liability classified stock options

Accrued legal, professional fees and other

Liability for contingent consideration (note 15)

Other 729 1,839

Total $ 59,838 $ 45,992

Other long-term liabilities consisted of the following:

Liability for contingent consideration (note 16)

$ 308 $ 1,248

Liability from in-licensing agreements $ 447 $ 747

Finance lease liability 92 124

Liability for contingent consideration (note 15)

Finance lease liability (note 14)

Other 448 554

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2022 Public Offering

On January 31, 2022, the Company closed a public offering pursuant to which the Company sold 11,035,000 common shares, including the sale of 1,875,000 common shares to the underwriters upon their full exercise of their over-allotment option, at $ 8.00 per common share and 3,340,000 pre-funded warrants (note 10c) in lieu of common shares at $ 7.9999 per pre-funded warrant.

On January 31, 2022, the Company closed a public offering pursuant to which the Company sold 11,035,000 common shares, including the sale of 1,875,000 common shares to the underwriters upon their full exercise of their over-allotment option, at $ 8.00 per common share and 3,340,000 pre-funded warrants (note 10d) in lieu of common shares at $ 7.9999 per pre-funded warrant.

Net proceeds were $ 107,534 , after underwriting discounts, commissions and offering expenses.

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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.

Immediately prior to the completion of the Redomicile Transactions, there were 61,699,387 Zymeworks BC 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 Exchangeable Shares were issued to former Zymeworks BC shareholders.

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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.

These Exchangeable Shares and the Special Voting Preferred Stock, when taken together, are simil ar in substance to the Company’s common stock and are treated as such in calculation of basic net (loss) income per share.

Stock Repurchase Program

On August 1, 2024, the board of directors of the Company authorized a stock repurchase program (the “Repurchase Program”), whereby the Company may repurchase up to $ 60,000 of the Company’s outstanding common stock, par value $ 0.00001 per share.

As part of the Repurchase Program, the Company adopted an accounting policy whereby the par value of each share is deducted from common stock and the remainder of the repurchase price is debited to accumulated deficit.

During the year ended December 31, 2024, the Company repurchased 2,545,402 shares of its common stock for a cost of $ 30,000 , and incurred commission expense of $ 51 , under the Repurchase Program, which have been recorded against accumulated deficit.

The Company’s share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act of $ 152 .

During the year ended December 31, 2024, the Company retired all 2,545,402 shares repurchased.

These shares were returned to the status of authorized and unissued shares.

The following table presents the Company’s Repurchase Program activity:

Total number of shares purchased

Average price paid per share

Approximate value of shares purchased

Year Ended December 31, 2024

2,545,402 $ 11.79 $ 30,000

Pre-Funded Common Share Warrants

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.

In connection with the public offerings completed on June 24, 2019, January 27, 2020, 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 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.

As the amounts required to exercise the warrants are nominal, these instruments are considered in the calculation of basic net (loss) income per share.

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.

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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.

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.

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4,594,639 shares of common stock).

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

On January 5, 2022, the 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.

On July 19, 2024, the board of directors approved an amendment and restatement of the Inducement Plan, which increased the number of shares of the Company’s common stock available for future issuance pursuant to equity awards granted under the Inducement Plan by 700,000 shares.

As a result of this increase, a total of 1,450,000 shares will have been available for issuance pursuant to equity awards granted under the Inducement Plan since the inception of the Inducement Plan in January 2022.

As of December 31, 2024, 390,000 shares of common stock were available for future award grants under this plan (December 31, 2023:

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The estimated fair values of options granted to officers, directors, employees and consultants are amortized over the relevant vesting periods.

Stock-based compensation expense for equity classified instruments, as well as the financial statement impact of the amortization and periodic revaluation of liability classified instruments (note 2), are recorded in research and development expense, general and administration expense and finance expense as follows:

Stock-based compensation expense for equity classified instruments, as well as the financial statement impact of the amortization and periodic revaluation of liability classified instruments (note 2), are recorded in research and development expense and general and administration expense as follows:

Year Ended December 31,

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Research and development expense

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 )

$ 8,382 $ 2,404 $ 2,393

General and administrative expense

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 )

$ 9,041 $ 5,316 $ 1,209

Finance income:

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

$ ( 5 ) $ ( 11 ) $ ( 129 )

Amounts for equity classified instruments above include stock-based compensation expense relating to RSUs of $ 5,813 for the year ended December 31, 2024 (2023:

$ 3,369 and 2022:

For the year ended December 31, 2023, stock-based compensation expense of $ 8,196 was recorded in additional paid-in capital and recovery of $ 630 was recorded in the liability classified stock options and ESPP liability accounts (2022:

For the year ended December 31, 2024, stock-based compensation expense of $ 16,716 was recorded in additional paid-in capital and $ 1,076 was recorded in the liability classified stock options and ESPP liability accounts (2023:

$ 8,196 in additional paid-in capital and recovery of $ 630 in liability classified stock options and ESPP liability accounts, 2022:

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Expected Volatility — Volatility is a measure of the amount by which a financial variable such as a share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period.

The Company has calculated the expected volatility using the volatility of its own stock and that of several public entities of similar complexity and stage of development and calculates historical volatility using the volatility of these companies.

The Company has calculated the expected volatility using the volatility of its own stock for the years ended December 31, 2024 and 2023 while also using stocks of several public entities of similar complexity and stage of development for the year ended December 31, 2022.

Risk-Free Interest Rate — This rate is from the Government of Canada and U.S.

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As of December 31, 2024, the total amount contributed by ESPP participants and not yet settled is $ 577 (December 31, 2023:

Government Grants and Credits

Year Ended December 31,

2023 2022 2021

CEWS and CERS subsidies $ — $ 130 $ 3,402

SR&ED credits, net 99 — 78

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 nil (2022:

$ 130 and 2021:

$ 2,805 ) and nil (2022:

nil and 2021:

$ 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 (loss) income.

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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2024 2023 2022

Milestone revenue $ 25,000 $ — $ —

Recognition of licensing and technology transfer fee — — 375,000

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Other drug supply

15,464 13,350 —

Recognition of licensing fee — — 5,000

Milestone revenue 8,000 — —

3,009 1,080 194

Development support payments

Milestone revenue 2,500 — —

Partner revenue — — 5,000

Research and development support and other payments 168 2,864 1,773

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Contract Assets and Liabilities

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.

As at December 31, 2024, contract assets from research, collaboration and licensing agreements were $ 0.1 million, which is presented within accounts receivable (December 31, 2023:

nil which is presented within accounts receivable) and contract liabilities were $ 40.2 million (December 31, 2023:

$ 36.6 million).

As at December 31, 2024 and 2023, $ 25.6 million and $ 3.7 million respectively, of the contract liabilities is classified as short term.

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

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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.

Brunei Darussalam, Cambodia, Indonesia, Papua New Guinea, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand, Timor-Leste, and Vietnam.

Under the Jazz Collaboration Agreement, the Company received a $ 50.0 million upfront payment upon delivery of licenses and technology transfer to Jazz as well as the receipt of United States Hart-Scott Rodino Antitrust Improvements Act of 1976 (“HSR”) Clearance (“Initial Technology Transfer”).

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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.

Pending approval, the Company is eligible to receive tiered royalties between 10 % and 20 % on Jazz’s annual net sales, with customary reductions in specified circumstances.

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

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.

In November 2024, the Company recognized milestone revenue of $ 25.0 million from Jazz in relation to the FDA approval of Ziihera® (zanidatamab-hrii) for the treatment of HER2+ BTC.

As at December 31, 2024, the Company is eligible to receive up to $ 525.0 million in certain regulatory milestone payments (of which $ 25.0 million of milestone revenue has been recognized but not received as of December 31, 2024) and up to $ 862.5 million in potential commercial milestone payments.

The Company is eligible to receive tiered royalties between 10 % and 20 % on Jazz’s annual net sales, with customary reductions in specified circumstances.

No commercial milestone payments have been recognized to date.

As at December 31, 2024, contract liabilities under the Amended Jazz Collaboration Agreement include $ 7.3 million 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.

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.

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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.

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+ 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+ GEA.

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

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

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.

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, 2024 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.

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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, 2024, 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).

As of December 31, 2024, the Company has received $ 32.9 million of the upfront fees from the Zanidatamab Agreement of which, $ 18.3 million is recorded as deferred revenue in current liabilities and $ 14.6 million as long-term deferred revenue on the Company’s consolidated balance sheet (December 31, 2023:

$ 32.9 million from the Zanidatamab Agreement and Zanidatamab Zovodotin Agreement recorded as long-term deferred revenue).

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.

In June 2024, the Company recognized $ 8.0 million of milestone revenue from BeiGene in relation to the acceptance by the CDE of the NMPA in China of the BLA for zanidatamab for second-line treatment of HER2+ BTC.

2020 Research and License Agreement with Merck

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The Company will apply its Azymetric platform in combination with BMS’s proprietary targets to create novel bispecific antibodies for which BMS has an option to develop and commercialize a certain number of products (“Commercial License Option”).

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

After conclusion of BMS’s research period, BMS will be solely responsible for the research, development, manufacturing and commercialization of the products.

In addition, the Company is eligible to receive tiered royalties calculated upon the global net sales of the resulting products.

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.

Upon the execution of the Agreement, the Company received an upfront payment of $ 8.0 million.

This agreement was expanded in 2018 to increase the number of programs from eight to ten and to extend BMS’s research period and the Company received an expansion fee of $ 4.0 million.

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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Accordingly, the upfront payment was recognized as revenue during the year ended December 31, 2020.

As of December 31, 2024, BMS had exercised one commercial license option and the Company received a $ 7.5 million option payment, but in 2023 BMS stopped development of such program.

BMS’s right to exercise options on eight programs expired in 2024 after the conclusion of BMS’s research period.

As at December 31, 2024, BMS remains eligible to exercise its one remaining option and the Company remains eligible to receive up to $ 320.5 million for the two remaining programs (or $ 164.0 million not including the one program for which BMS stopped development in 2023), comprised of a commercial license option payment of $ 7.5 million for the one remaining program, development milestone payments of up to $ 101.5 million per program, and commercial milestone payments of up to $ 55.0 million per program.

In addition, the Company is eligible to receive tiered royalties calculated upon the global net sales of the resulting products.

BMS will have exclusive worldwide commercialization rights to products derived from the agreement for those product candidates that BMS elected to exercise its commercial license option.

As BMS’s research period has concluded, BMS is solely responsible for the research, development, manufacturing and commercialization of the products.

2015 Collaboration and License Agreement with GlaxoSmithKline Intellectual Property Development Ltd.

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From contract inception to December 31, 2024, the Company has received an upfront technology access fee payment of $ 6.0 million.

In July 2024, the Company recognized $ 2.5 million of milestone revenue from GSK in relation to the sequence pair nomination by GSK under the 2016 agreement between the Company and GSK.

The Company is also eligible to receive research milestone payments of up to $ 35.0 million, development milestone payments of up to $ 182.5 million and commercial milestone payments of up to $ 867.0 million.

1 unchanged sentence

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

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

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

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

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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.

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.

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Janssen also has the option to develop two additional bispecific antibodies under this agreement subject to a future option payment.

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

Under the agreement, Janssen will be solely

responsible for the research, development, manufacturing and commercialization of the products.

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

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License Agreement with Iconic Therapeutics, Inc.

On May 13, 2019, the Company entered into a license agreement with Iconic to develop and commercialize an antibody-drug conjugate (ICON-2) targeting tissue factor generated through the use of the Company’s ZymeLink platform.

On May 13, 2019, the Company entered into a license agreement with Iconic to develop and commercialize an ADC (ICON-2) targeting tissue factor generated through the use of the Company’s ZymeLink platform.

Under the terms of this agreement, the Company granted Iconic a worldwide, royalty-bearing, antibody sequence-specific, exclusive license to develop and commercialize certain products.

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

Other (Expense) Income, net

Other (expense) income, net consists of the following:

Other Income (Expense), net

Other income (expense), net consists of the following:

Year ended December 31,

2024 2023 2022

Foreign exchange (loss) gain

Foreign exchange gain (loss)

$ 776 $ ( 1,185 ) $ 1,152

1 unchanged sentence

$ 558 $ ( 894 ) $ 1,110

Income tax recovery (expense) is comprised of the following:

Income tax expense is comprised of the following:

Year Ended December 31,

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$ ( 5,393 ) $ ( 189 ) $ ( 8,953 )

Deferred income tax recovery (expense)

Deferred income tax (expense) recovery

( 691 ) 757 ( 1,940 )

Income tax recovery (expense)

Income tax (expense) recovery

$ ( 6,084 ) $ 568 $ ( 10,893 )

Current income tax recovery expense for the years ended December 31, 2024, 2023 and 2022 arose from the operations of the Company as well as its wholly owned subsidiaries in Canada, in the United States, in Ireland and in Singapore, as well as withholding taxes paid by the Company abroad in 2024, 2023 and 2022.

Income tax recovery (expense) varies from the amounts that would be computed by applying the expected U.S.

Income tax expense varies from the amounts that would be computed by applying the expected U.S.

statutory income tax rate of 21 % (2023:

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Change in valuation allowance ( 28,882 ) ( 78,668 ) 33,526

Share issuance costs in equity — — 2

Change in recognition and measurement of tax positions

( 38 ) ( 14 ) —

Changes due to SR&ED and research credits 3,102 2,661 3,238

Other ( 108 ) ( 456 ) ( 292 )

Income tax recovery (expense)

Income tax (expense) recovery

$ ( 6,084 ) $ 568 $ ( 10,893 )

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( 176 ) ( 186 )

$ ( 9,406 ) $ ( 13,010 )

248,842 222,336

valuation allowance ( 249,218 ) ( 222,021 )

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2043 1,934 — 100,086

2044 2,232 425 56,164

$ 24,966 $ 870 $ 657,995

A reconciliation of total unrecognized tax benefits for the years ended December 31, 2024, 2023, and 2022 are as follows:

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income tax examinations.

Tax years ranging from 2022 to 2023 remain subject to United Kingdom and Ireland income tax examinations.

Tax year 2023 remains subject to Singapore income tax examinations.

Tax years ranging from 2022 to 2024 remain subject to United Kingdom income tax examinations.

Tax years 2023 to 2024 remains subject to Ireland and Singapore income tax examinations.

The lease for the Company’s office and laboratory spaces in Vancouver, British Columbia, which was entered into in January 2019, has an initial term expiring in February 2032, with two five-year extension options.

In addition, the Company leases office spaces in Bellevue and Seattle, Washington and in Redwood City, California with lease terms expiring between December 2024 and May 2027.

In addition, the Company leases office spaces in Bellevue, Washington and in Redwood City, California with lease terms expiring between December 2024 and August 2027.

In addition, the Company has commitments for future operating lease payments of $ 804 under a lease agreement for office space which will commence on January 1, 2025, with an expiry date of June 30, 2026, that is not included in the table below.

None of the optional extension periods have been included in the determination of the right-of-use assets or the lease liabilities for operating leases as the Company did not consider it reasonably certain that the Company would exercise any such options.

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Cash paid for amounts included in the measurement of operating lease liabilities for fixed lease payments for the year ended December 31, 2024 was $ 4,152 and was included in net cash used in operating activities in the consolidated statement of cash flows.

In addition, on April 4, 2024, the Company terminated its long-term facility lease in Seattle, pursuant to which the Company paid $ 6,075 as a termination fee.

As of December 31, 2024, the maturities of the Company’s operating lease liabilities were as follows:

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Variable lease expense 1,969 1,637 1,186

Termination of long-term facility lease in Seattle, net

$ 5,449 $ 8,929 $ 7,795

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For out-licensed products and technologies incorporating certain Kairos intellectual property, the Company may also be required to pay CVI a mid-single digit percentage of certain future revenue.

As of December 31, 2023, the contingent consideration had an estimated fair value of $ 1,878 , which has been recorded in accounts payable and accrued liabilities and in other long-term liabilities on the Company’s consolidated balance sheet (December 31, 2022:

As of December 31, 2024, the contingent consideration had an estimated fair value of nil , which has been recorded within liabilities on the Company’s consolidated balance sheet (December 31, 2023:

$ 1,878 ) (note 9).

3 unchanged sentences

the beginning

of the period Increase in

of the period Increase (decrease) in

fair value of

8 unchanged sentences

Liability for contingent consideration

$ 1,878 — — $ 1,878

Total $ — $ — $ — $ —

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The Company does not believe it is currently subject to any material matters where there is at least a reasonable possibility that a material loss may be incurred.

Restructuring

During the year ended December 31, 2022, the Company completed a restructuring program (the “Restructuring”) to focus on achieving its key strategic priorities and to help create a more cost-efficient organization.

In connection with the Restructuring, the Company made changes to its management team and reduced headcount by approximately 25 % by the completion of the Restructuring.

During the year ended December 31, 2022, the Company recorded the following costs for the Restructuring:

• employee severance and termination benefits of $ 5,214 ;

• an offsetting non-cash reversal of previously recognized stock-based compensation expenses for unvested stock and RSU awards of $ 10,381 ;

• other restructuring charges primarily related to accelerated depreciation and accelerated recognition of rent expense in relation to the shutdown of certain facilities of $ 2,435 and early termination of certain service contracts of $ 1,275 .

Of the net charges, $ 5,659 expense and $ 5,516 recovery of stock-based compensation were recorded in research and development expenses, and $ 3,265 expense and $ 4,865 stock-based compensation recovery were recorded in general and administrative expenses in the accompanying statements of (loss) income and comprehensive (loss) income for the year ended December 31, 2022.

As of December 31, 2023, the net outstanding liability related to employee severance termination benefits and other contract liabilities was nil (December 31, 2022:

No costs for the Restructuring were recognized during the year ended December 31, 2023.

Business Segments

The Company operates and manages its business in a single reportable segment, which is the discovery, development and commercialization of next-generation multifunctional biotherapeutics (the “biotherapeutics segment”).

The biotherapeutics segment revenue consists of collaboration revenue, including amounts recognized relating to upfront non-refundable payments for licenses or options to obtain future licenses, research and development funding, milestone payments and royalties earned under collaboration and license agreements and is managed on a consolidated basis.

The accounting policies of the biotherapeutics segment are the same as those described in the summary of significant accounting policies.

The Company’s Chief Operating Decision Maker ("CODM”) is the Chair of the Board of Directors and Chief Executive Officer.

The CODM assesses performance for the biotherapeutics segment and decides how to allocate resources to our

development pipeline based on the results of our strategic planning, with segment (loss) income being used to monitor performance against the budgeted costs of that strategy.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

Revenue and net income for the Company's biotherapeutics segment are shown below:

Year Ended December 31,

2024 2023 2022

Revenue from research and development collaborations

$ 76,304 $ 76,012 $ 412,482

Segment expenses:

Zanidatamab 11,939 44,751 117,342

ZW171 7,151 10,686 1,900

ZW191 8,379 11,714 909

ZW220 13,824 1,585 162

ZW251 8,103 686 259

Zanidatamab zovodotin 6,595 8,046 4,834

Expense for other preclinical and research programs 17,389 7,819 7,050

Salaries and benefits 50,678 49,931 75,220

Other research and development expense 17,949 19,128 19,057

Other general and administrative expense 29,522 40,823 43,971

Total segment expenses

171,529 195,169 270,704

Segment (loss) income

( 95,225 ) ( 119,157 ) 141,778

Reconciling items:

Depreciation and amortization ( 8,684 ) ( 10,164 ) ( 7,235 )

Stock-based compensation expense

( 17,792 ) ( 8,102 ) ( 4,015 )

Change in contingent consideration

1,878 ( 630 ) —

Impairment ( 17,287 ) — —

Interest income 19,941 19,705 3,596

Other income (expense), net 558 ( 894 ) 1,110

Income tax (expense) recovery, net

( 6,084 ) 568 ( 10,893 )

Net (loss) income

$ ( 122,695 ) $ ( 118,674 ) $ 124,341

Subsequent even t

In January 2025, the Company achieved a $ 14.0 million cash research milestone associated with a clinical milestone under the Company ’ s 2016 platform technology transfer and license agreement with GSK.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data