ZYME 10-K & 10-Q changes, risk factors and insider trading

•Our adoption of a royalty-driven asset aggregation strategy is unproven and may not be successful.

•Strategic transactions could disrupt our business, cause dilution to our stockholders and otherwise harm our business.

•Our long-term prospects depend upon successfully discovering or acquiring favorable assets and progressing the assets through preclinical and clinical development.

•If our partnered product candidates do not meet regulatory and commercial milestones, or experience significant delays in doing so, our results of operations will be materially adversely affected.

•The outcome of clinical trials is inherently uncertain, and current and planned clinical trials may not satisfy the requirements of the FDA or comparable regulatory authorities outside the United States.

•If clinical trials for product candidates are prolonged, delayed or stopped, we may be unable to successfully partner our product candidates, or obtain regulatory approval and commercialize product candidates on a timely basis, or at all, which could require us to incur additional costs and delay our receipt of any product revenue.

•Undesirable side effects from product candidates may delay or prevent marketing approval or, if approved, require withdrawal from the market, inclusion of safety warnings, or otherwise limit sales.

•We face significant competition, and if any competitors develop and market products that are more effective, safer and/or less expensive than our partnered product candidates, our ability to generate revenue will be negatively impacted.

•If zanidatamab or any current or future partnered product candidate that receives regulatory approval in the future does not achieve broad market acceptance among physicians, patients, the medical community and third-party payors, revenue generated from commercialization efforts will be materially and adversely impacted.

•Current and future healthcare regulations and reimbursement decisions by third-party payors may have an adverse effect on pricing and market acceptance.

•If any product liability lawsuits are successfully brought against us or any of our strategic partners, we may incur substantial liabilities and commercialization efforts of zanidatamab or any other approved partnered products may need to be limited.

•If we, our strategic partners or any of our third-party manufacturers encounter manufacturing difficulties, supply of product candidates for clinical trials or any approved products for patients could be delayed or prevented.

•We have incurred significant losses since inception and anticipate that we will continue to incur losses for the foreseeable future. We have only one product approved for commercial sale, and, as of December 31, 2025, we have not received any revenue or profit from product sales, other than the receipt of royalties relating to sales of zanidatamab. We may never achieve or sustain profitability.

•Tax law changes could adversely affect our business and financial condition.

Risks Related to Our Business

Our adoption of a royalty-driven asset aggregation strategy is unproven and may not be successful.

We are evolving our business strategy to help enhance long-term stockholder value through thoughtful capital allocation, while continuing to pursue meaningful impact on patient outcomes through our research and development efforts. We believe that, if we can successfully implement this royalty-driven asset aggregation strategy through continued partnering as well as potential acquisitions, the anticipated royalty and milestone revenues could serve as both a longer-term funding source for our continued research and development operations and as a foundation from which to grow our self-contained royalty income over the longer term. There can be no assurance that we will be successful or will achieve the intended results.

Our new strategy requires revisions to multiple facets of our business, including our organizational structure, operations, personnel and tax planning. Our new strategy may also result in delays and disruptions to existing research and development efforts, increased costs, loss of key personnel and diversion of management’s attention, any of which could materially adversely affect our business.

Even if we successfully implement our new strategy, we cannot be certain that anticipated royalty and milestone revenues will be sufficient to appropriately fund and advance our research and development pipeline or enhance long-term stockholder value.

We actively evaluate various strategic transactions, and we may acquire other businesses, products, product candidates, milestone payments and royalty streams, programs or technologies as well as pursue strategic alliances, joint ventures, investments in complementary businesses, out-licensing and in-licensing agreements, divestitures or other transactions. As part of our royalty-driven asset aggregation strategy, we plan to look for opportunities to augment our development pipeline with external programs and product candidates, as well as other opportunistic investments that may bolster our royalty-driven cash flows. Suitable acquisition or in-licensing opportunities on acceptable prices, terms and conditions may be limited. These transactions could be material to our financial condition and operating results and expose us to many risks, including:

•difficulties integrating acquired personnel, technologies, operations, products, product candidates or programs into our existing business;

We face intense competition from larger, better-resourced companies in acquiring or in-licensing promising assets. We also face competition from other companies, funds and investment vehicles seeking to aggregate royalties or provide alternative financing to biotechnology companies. These competitors may have a lower cost of capital or access to greater amounts of capital and thereby may be able to successfully acquire assets that we are also targeting for acquisitions. There is a limited number of suitable and attractive acquisition or partnering opportunities available in the market, and competition to acquire such assets may be intense. In order to compete successfully in the current business climate, we may have to pay higher prices for assets than may have been paid historically, which may make it more difficult for us to realize an adequate return on any acquisition. Any future acquisitions or dispositions could result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses or write-offs of goodwill, any of which could harm our financial condition or reputation. We cannot predict the number, timing or size of any future strategic alliances, joint ventures, investments, acquisitions, divestitures or other strategic transactions, or the effect that any such transactions might have on our operating results.

Our long-term prospects depend upon successfully discovering or acquiring favorable assets and progressing the assets through preclinical and clinical development.

Our investments in internally-developed or acquired assets may not yield promising product candidates, and even if such candidates advance into clinical studies, the historical failure rate of biopharmaceutical product candidates is high due to risks relating to safety, efficacy, clinical execution, changing standards of medical care, other unpredictable variables and the other factors discussed under “Risks Relating to Development of Product Candidates – The outcome of clinical trials is inherently uncertain, and current and planned clinical trials may not satisfy the requirements of the FDA or comparable regulatory authorities outside the United States.” Results from preclinical testing or early clinical trials of our product candidates may not predict outcomes in later-stage clinical trials by us or future strategic partners.

Successful development of our current and future product candidates is uncertain, and we may discontinue or reprioritize the development of any of our product candidates at any time, at our discretion.

Before advancing any of our product candidates into later stage development either alone or with a strategic partner, we must first conduct, at our own expense, extensive preclinical tests and early clinical trials to demonstrate the safety and potential efficacy of our product candidates in humans. Preclinical and clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. Additionally, the results from nonclinical testing or early clinical trials of a product candidate may not predict the results that will be obtained in subsequent human clinical trials of that product candidate. There is a high failure rate for drugs proceeding through clinical studies. For example, in September 2025, we announced the decision to discontinue the clinical development program of ZW171 based on completion of the planned cohorts of the dose escalation portion of the Phase 1 trial of ZW171 in patients with ovarian cancer and non-small cell lung cancer. After completing the planned dose escalation cohorts and establishing a maximum tolerated dose, we determined that further dose evaluation in the trial would be unlikely to support a benefit-risk profile consistent with the desired monotherapy target product profile. In addition, management may elect to discontinue development of certain product candidates to accommodate a shift in corporate strategy, despite positive clinical results. Based on our operating results and business strategy, among other factors, we may discontinue the development of any of our product candidates under development or reprioritize our focus on other product candidates at any time and at our discretion.

Because we have limited financial and managerial resources, we focus on research programs, therapeutic platforms and product candidates that we identify for specific indications. As a result, we may forgo or delay pursuit of opportunities with other therapeutic platforms or product candidates or for other indications that later prove to have greater commercial potential.

We may not be able to develop product candidates that are safe and effective. Although we expect that our therapeutic platforms will allow us to develop further product candidates, they may not prove to be successful at doing so. Even if we are successful in continuing to build our pipeline, the potential product candidates that we identify may not be suitable for clinical development, including due to being shown to have harmful side effects or other characteristics that indicate that they are unlikely to receive marketing approval and achieve market acceptance. If we do not continue to successfully develop product candidates, we will face difficulty in obtaining product revenue or in securing additional partnerships and generating additional milestone and royalty revenues in future periods, which could result in significant harm to our financial position and adversely affect our stock price.

Many of these factors are wholly or partially beyond our or our strategic partners’ control, including clinical advancement, the regulatory submission process and changes in the competitive landscape. If our product candidates do not achieve one or more of these factors in a timely manner, we or our strategic partners could experience significant delays or an inability to develop the product candidates, which could adversely affect our results of operations. Excluding zanidatamab, which has been licensed to our strategic partners for commercialization and further regulatory approvals, our other product candidates are in preclinical or clinical development, and neither we nor our strategic partners have submitted any marketing application, or received marketing approval, for the other product candidates in our portfolio, and such product candidates may never be able to achieve such regulatory approval. In addition, although Jazz is developing zanidatamab for regulatory approval in additional indications, such regulatory approval may never be achieved.

Economic downturns, a volatile business environment, or large-scale unpredictable market conditions, including a prolonged government shutdown or geopolitical events, may materially and adversely impact our business, financial condition and stock price, including making any necessary debt or equity financing more difficult, more costly and more dilutive, and reducing opportunities for additional partnering or strategic transactions.

We have physical operations and personnel in North America, Europe and Asia, and some of our suppliers and collaborative and clinical trial relationships are located outside the United States. Our future results could be harmed by a variety of factors, including:

•instability in the international geopolitical environment;

•sociopolitical instability in particular non-U.S. economies and markets;

•differing regulatory requirements for drug approvals in non-U.S. countries;

•changes in U.S. or non-U.S. customs laws and regulations, tariffs and trade barriers, including any changes that nations may impose as a result of political tensions;

•fluctuations in the U.S. dollar, particularly a weakening of the U.S. dollar against other currencies;

•business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters; and

In particular, there is currently significant uncertainty about the future relationship between the United States and various other countries, most significantly China, with respect to trade policies, treaties, tariffs, treatment of intellectual property, taxes, and other limitations on cross-border operations, including the provision of services and the exchange of data. The U.S. government has made and continues to make significant changes in U.S. trade policy and may continue to take actions that could negatively impact U.S. trade. For example, the President recently signed into law the National Defense Authorization Act of 2026, which includes Section 851 regarding “prohibition on contracting with certain biotechnology providers” (the “BIOSECURE Act”), which restricts federal government contracts, grants, and loans from being issued to companies that use biotechnology equipment or services from any designated “biotechnology company of concern,” as part of such companies’ performance of those agreements with the U.S. government. Once fully implemented through issuance of regulations, the BIOSECURE Act may ultimately limit certain U.S. biotechnology companies (such as ours) from using equipment or services produced or provided by Chinese biotechnology companies that meet the designation criteria of the new law, or certain affiliated entities. In addition, even if we do not seek any covered federal government contracts, grants or loans, commercial partners, government agencies, or other third parties may view our business less favorably if we contract with entities that ultimately become biotechnology companies of concern.

As another example, the U.S. Department of Justice’s Data Security Program places limitations on U.S. companies’ ability to enter into (and in some cases prohibits) certain contracts involving transfers of sensitive personal data to business partners located in China, or with other specified links to China and other designated countries. The rule further requires U.S. persons to obtain from certain foreign counterparties contractual commitments to refrain from engaging in subsequent transfers of sensitive personal data to entities located in China or with other specified links to China and other designated countries. This new rule will impact our ability to contract not just with Chinese companies but also with foreign entities in general, potentially requiring us to extract promises related to compliance with this new rule.

The United States has recently enacted significant new tariffs on many countries. For example, between April 2025 and February 2026, the U.S. government imposed global “reciprocal” tariffs affecting most U.S. trading partners and between February 2025 and February 2026 the U.S. government imposed additional “fentanyl-related” tariffs targeting goods from Canada, Mexico, and China. These additional U.S. tariffs were implemented under authorities asserted in the International Emergency Economic Powers Act (“IEEPA”) and rescinded on February 24, 2026, following a Supreme Court decision invalidating the use of IEEPA to authorize these tariffs. The availability, timing, and amount of any related refunds associated with payments of these duties remain uncertain and subject to further legal, regulatory, and administrative action. Beginning February 24, 2026, the U.S. government implemented a new, global “temporary import surcharge” of 10% on many of the same products affected by the prior reciprocal tariffs, under authorities provided for in Section 122 of the Trade Act of 1974, supplementing existing non-IEEPA tariff measures. For example, additional tariffs have been recently imposed under Section 232 and Section 301 tariff measures, and additional trade-related investigations by the U.S. government are in progress and could result in the imposition of additional tariffs as well. There has been ongoing action, discussion, negotiation, commentary and litigation regarding these and potential further changes to U.S. trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, have caused and may continue to cause significant volatility in global financial markets and may have a material adverse effect on global economic conditions and global trade. Additionally, these developments could weaken the U.S. dollar against other currencies, which may adversely affect our business, including as a result of increased costs for goods and services denominated in other currencies. These effects may also negatively impact our strategic partners. Any of these factors could depress economic activity, restrict our access to third-party services, and disrupt the supply chain for our product candidates. For example, the early-stage clinical supplies for our internal pipeline are currently sourced from China, and while we are actively monitoring tariffs and evaluating other locations for future clinical product requirements, our mitigation efforts may not be successful, and our business may be adversely affected. We also run a portion of our global clinical studies and utilize clinical trial sites in non-U.S. locations; we cannot predict how these non-U.S. locations may be impacted by tariffs or a broader trade war. If we or our strategic partners are unable to obtain or use services from existing providers, source supplies of product candidates or approved drugs, or export or sell approved products at competitive prices, our business, liquidity, financial condition, and/or results of operations could be materially and adversely affected. The Department of Commerce has initiated an investigation into imports of pharmaceuticals and pharmaceutical products. If a threat is determined to exist, the current U.S. Presidential administration could impose new and/or additional pharmaceutical-specific tariffs or take other actions. While we cannot predict the outcome of this investigation, if additional tariffs are imposed, it could materially increase our costs and complicate our supply chain for the manufacture and importation of our product candidates.

Public health outbreaks and pandemics could cause us to experience disruptions that could significantly impact our current and planned clinical trials, preclinical research and other business activities, including operational challenges, difficulty in recruiting patients or staff, regulatory delays, supply chain disruptions and shortages, and other disruptions. Public health outbreaks, pandemics, and related disruptions could disrupt global financial markets, reduce our ability to access capital, negatively affect our liquidity, and increase financial market volatility, which could adversely impact the value of our common stock.

Risks Relating to Our Partnerships

Zymeworks is a global biotechnology company managing a portfolio of licensed healthcare assets and developing a diverse pipeline of novel, multifunctional biotherapeutics to improve the standard of care for difficult-to-treat conditions, including cancer, inflammation, and autoimmune disease. We believe our asset and royalty aggregation strategy differentiates us from other biotechnology companies because it provides us with an opportunity to optimize future milestone and royalty cash flows and selectively invest in high quality assets while retaining the flexibility to return capital to stockholders.

We reported a net loss of $81.1 million for the year ended December 31, 2025, and through December 31, 2025, we had an accumulated deficit of $953.2 million. We expect to continue to incur operating losses in the near to medium term as we execute our strategic plan announced in 2025 (as discussed further in the section titled “Recent Developments” below), which emphasizes disciplined capital allocation, focused research and development investment, advancement of partnered programs, and active management of our royalty and asset portfolio. Our operating expense outlook reflects a multi-year planning framework designed to align spending with defined strategic priorities, including pipeline progression, technology platform advancement, and value-enhancing business development activities. We are prioritizing investments where we believe risk-adjusted returns are most attractive and expect operating expenses to be managed within this structured framework.

In January 2026, we announced our R&D priorities for 2026 and beyond, including our intention to continue conducting Phase 1 clinical studies for ZW191 and ZW251 in 2026. Advancement of other ADC programs, including potential clinical development of ZW220, ZW327, and ZW418, will be contingent on the availability of partnerships, collaborations, and/or external funding. We also announced that beyond 2026, we expect to focus our ADVANCE research efforts on multispecific antibody and engineered-cytokine platforms, funded partially with early-stage partnerships and collaborations. INDs for multispecific programs, ZW209 and ZW1528, remain on track for submission in 2026. We anticipate that development of wholly-owned preclinical candidates from our multispecific antibody portfolio should provide for one planned IND filing per annum commencing in 2028.

Partnered Programs

In November 2025, together with our partners Jazz and BeOne, we announced positive topline results from the Phase 3 HERIZON-GEA-01 trial supporting Ziihera as the potential HER2-targeted agent-of-choice and new standard of care in first-line HER2+ locally advanced or metastatic GEA regardless of PD-L1 status. The full results were subsequently presented at the American Society of Clinical Oncology’s Gastrointestinal Cancers Symposium in January 2026, where:

•Ziihera plus tislelizumab and chemotherapy and Ziihera plus chemotherapy showed a clinically meaningful and statistically significant prolongation of progression-free survival (PFS) with approximately 35% reduction in the risk of disease progression or death versus trastuzumab and chemotherapy;

•Ziihera plus tislelizumab and chemotherapy demonstrated a statistically significant and clinically meaningful overall survival (OS) benefit with a median OS of more than two years (26.4 months); and

•At this first interim analysis, Ziihera plus chemotherapy showed a median OS of more than two years, with a strong trend toward statistical significance, favoring Ziihera plus chemotherapy versus trastuzumab plus chemotherapy. An additional planned OS interim analysis for Ziihera plus chemotherapy is currently expected in mid-2026.

Based on these data, our partner Jazz expects to complete the sBLA submission for zanidatamab in the first quarter of 2026 for the treatment of first-line HER2+ locally advanced or metastatic GEA under the real-time oncology review program in the United States where zanidatamab has been granted Breakthrough Therapy Designation for patients with HER2+ GEA. Jazz has also submitted these data for inclusion in the National Comprehensive Cancer Network Guidelines (NCCN Guidelines). Upon regulatory review, Jazz expects a potential commercial launch for zanidatamab in 1L HER2+ GEA to take place in the second half of 2026.

In January 2026, Jazz updated enrollment guidance for EmpowHER-303 in which they expect to complete enrollment in the first half of 2027, with a top-line data readout later in 2027 or in early 2028. The EmpowHER-BC-303 study is a randomized clinical trial comparing zanidatamab plus physician’s choice of chemotherapy against trastuzumab plus physician’s choice of chemotherapy for the treatment of patients with metastatic HER+ breast cancer. Jazz is also pursuing collaborations with partners to combine zanidatamab with novel therapies. For example, the Phase 1 Beamion-BCGC1 trial (NCT06324357) in combination with Boehringer Ingelheim’s zongertinib was recently initiated to explore the combination in metastatic HER2+ breast cancer, along with other potential tumor types.

In January 2026, the New Drug Submission (“NDS”) for Ziihera was approved by Health Canada for the treatment of adults with previously treated, unresectable locally advanced or metastatic HER2-positive (IHC 3+) biliary tract cancer, as monotherapy. Ziihera’s market authorization has been issued with conditions, pending the results of trials to verify its clinical benefit. Subsequently, in February 2026 zanidatamab (Ziihera) was approved by the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) for the treatment of biliary tract cancer.

In addition to $53.0 million already received for Ziihera (zanidatamab) in biliary tract cancer, Zymeworks is entitled to receive up to $440.0 million in milestone payments from Jazz and BeOne related to approvals of Ziihera in GEA in United States, Europe, Japan and China. Zymeworks also has the potential to receive milestone payments related to future regulatory approvals in a third indication totaling $89.0 million, collectively, from Jazz and BeOne. For Jazz this includes a $50.0 million milestone payment upon regulatory approval of zanidatamab from the FDA in a third indication and a $25.0 million milestone payment upon regulatory approval of zanidatamab from the European Commission in a third indication. For BeOne, this includes $4.0 million payable upon first patient dosed with zanidatamab in a third registrational study in the territory and $10.0 million upon approval of zanidatamab by a regulatory authority for the third indication in the territory.

Our royalty revenue from Jazz and BeOne was $1.0 million and $2.8 million in the three months and the year ended December 31, 2025, respectively, driven primarily by net product sales of Ziihera by Jazz.

Pasritamig

In 2025, our partner J&J initiated two Phase 3 trials studying pasritamig as monotherapy in late-line metastatic castration-resistant prostate cancer (mCRPC) and pasritamig in combination with docetaxel in participants with metastatic castration-resistant prostate cancer (KLK2-PASenger).

In February 2026, J&J presented new clinical data on pasritamig at the 2026 American Society of Clinical Oncology Genitourinary annual meeting as follows:

•Poster - 171: Safety and efficacy of pasritamig (PAS) + docetaxel (DOCE) in participants with metastatic castration-resistant prostate cancer (mcrPc): Initial results of a phase 1b study.

•Poster - 172: Phase 1 safety, efficacy, pharmacokinetics (PK) and pharmacodynamics (PD) of pasritamig in Asian population with metastatic castration-resistant prostate cancer (mCRPC).

As of November 10, 2025, we completed the remaining $30.0 million of our previously approved repurchase program approved in 2024 for 1,856,907 shares of our common stock at an average price per share of $16.15 (exclusive of commission expense and estimated excise tax).

In November 2025, our board of directors authorized a new share repurchase program providing the ability to repurchase up to $125.0 million in shares of our common stock. Through February 26, 2026, we have utilized approximately $62.5 million of this approved repurchase program to acquire 2,580,415 shares of our common stock at an average price per share of $24.22 (exclusive of commission expense and estimated excise tax).

Also in November 2025, we announced the evolution of our business strategy as a global biotechnology company managing a portfolio of licensed healthcare assets and developing a diverse pipeline of novel, multifunctional biotherapeutics to improve the standard of care for difficult-to-treat diseases, including cancer, inflammation, and autoimmune disease.

In January 2026, we announced leadership appointments and transitions to align with the evolution of our corporate strategy, including the following changes:

•Brian N. Cherry appointed to our board of directors.

•Mark Hollywood promoted to Executive Vice President and Chief Operating Officer.

•Dr. Jeffrey Smith, Executive Vice President and Chief Medical Officer, retired and Dr. Sabeen Mekan promoted to Senior Vice President and Chief Medical Officer.

•Leone Patterson, Chief Financial and Business Officer, and Daniel Dex, General Counsel, departed during the first quarter of 2026. The Company has commenced searches for a permanent Chief Financial Officer and for a General Counsel. Kenneth Galbraith has assumed the role of interim Chief Financial Officer on an interim basis.

In March 2026, we entered into a $250.0 million loan arrangement with Royalty Pharma. For additional information regarding this arrangement, see the section titled “Liquidity and Capital Resources” below.

Our revenue arrangements with partners often include multiple components – such as licenses, milestones, development activities, and drug supply – that require significant judgment to evaluate under Accounting Standards Codification (“ASC”) Topic 606. The most subjective areas involve:

•Determining distinct performance obligations in complex collaboration agreements;

•Estimating variable consideration, including the probability of achieving development and regulatory milestones; and

•Assessing contract modifications, which may change performance obligations or transaction consideration.

These judgments affect the timing and amount of revenue recognized, and changes in assumptions (e.g., milestone probability, development timelines, or partner plans) could materially impact results. Additional detail about our revenue accounting policies is provided in Note 2 - Revenue Recognition of our consolidated financial statements.

•Risks related to our proposed acquisition of Theravance.

•the risk of litigation or regulatory actions related to such a transaction;

We may be unable to complete our proposed acquisition of Theravance within the anticipated timeframe or at all, which could prevent us from receiving the anticipated benefits from the acquisition.

On June 28, 2026, we entered into the Merger Agreement with Theravance. The parties expect the Merger and the other transactions contemplated by the Merger Agreement to close in the second half of 2026, subject to customary closing conditions, including, without limitation, HSR Act Clearance and the Theravance Requisite Vote. As a result of such conditions, there is no assurance that the acquisition will be consummated in the anticipated timeframe or at all.

Subject to the terms and conditions of the Merger Agreement, we or Theravance may terminate the Merger Agreement if the Merger is not consummated by December 28, 2026, which period may be extended automatically for two three-month periods if at the end of the prior period, all conditions to closing of the Merger other than conditions relating to HSR Act Clearance have been satisfied or waived as of such date (the “End Date”). Upon termination of the Merger Agreement in specified circumstances, Theravance will be required to pay us a termination fee of $32,515,000. Such circumstances include, among others, where the Merger Agreement is terminated prior to the Theravance Requisite Vote (i) in connection with Theravance accepting a Superior Proposal (as defined in the Merger Agreement) and entering into an Alternative Acquisition Agreement (as defined in the Merger Agreement) for the consummation of a transaction that Theravance Board determines constitutes a Superior Proposal and (ii) due to the Theravance's Board’s Change of Recommendation (as defined in the Merger Agreement). The Merger Agreement further provides that we will be required to pay Theravance a reverse termination fee of $32,515,000 in the event the Merger Agreement is terminated in certain specified circumstances, including if the Merger is not consummated before the End Date because certain conditions related to HSR Act Clearance have not been satisfied or waived.

Any failure to consummate the acquisition in the anticipated timeframe or at all could prevent us from receiving the expected benefits from the acquisition and could negatively affect the market price of our common stock.

We have expended and will continue to expend significant time and resources in connection with our proposed acquisition of Theravance and expect to use cash on hand and incur indebtedness to fund the acquisition.

We have expended and will continue to expend significant management time and resources and expenses related to our proposed acquisition of Theravance, many of which must be paid regardless of whether the acquisition is consummated. For example, such time, resources and expenses will be incurred in connection with seeking HSR Act Clearance for the transaction.

We also expect to finance the proposed acquisition of Theravance with a combination of cash on hand and $350 million of new debt financing from OMERS Life Sciences, which will increase our leverage, reduce our current cash resources, and require us to dedicate a portion of future cash flows to debt service obligations. In addition, the financing arrangements may contain various operational, reporting, cash management and other covenants that may restrict certain activities.

Our business may be adversely affected if we do not successfully realize the anticipated benefits of our proposed acquisition of Theravance.

We may not be able to achieve the full strategic and financial benefits expected to result from our proposed acquisition of Theravance, or the benefits may be delayed or not occur at all. We may also face additional costs or liabilities in completing the acquisition that were not contemplated prior to completion. Our ability to realize the anticipated benefits of our proposed acquisition depends on, among other things, our ability to complete the transaction in a timely manner or at all, and how efficiently and effectively we are able to integrate Theravance's operations into ours and the continued successful performance of the YUPELRI and Trelegy products.

Zymeworks and Theravance have operated and, until the completion of the Merger, will continue to operate independently. Uncertainty about the effect of the Merger on employees, strategic partners or suppliers may have an adverse effect on Zymeworks and Theravance and consequently on the combined company. These uncertainties may impair Zymeworks’ and Theravance’s ability to retain and motivate key personnel and could cause strategic partners or suppliers and others with whom each company deals to seek to change existing business relationships.

Strategic Acquisitions

Proposed Theravance Acquisition

On June 28, 2026, Parent entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Zymeworks Merger Sub 1, a wholly owned subsidiary of Parent (“Merger Sub”), and Theravance, providing for the merger of Merger Sub with and into Theravance (the “Merger”), with Theravance surviving the Merger as our wholly owned subsidiary (the “Surviving Company”).

Consummation of the Merger is subject to customary closing conditions, including, without limitation, the expiration or termination of any waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, applicable to the Merger (“HSR Act Clearance”) and the approval of the Merger Agreement, the Merger and the other transactions contemplated thereby by the affirmative vote of holders of Ordinary Shares representing at least two-thirds of the Ordinary Shares (the “Theravance Requisite Vote”) present and voting in person or by proxy as a single class at an extraordinary general meeting of Theravance for the purpose of approving the Merger Agreement, the Merger and the other transactions contemplated thereby. The parties expect the Merger and the other transactions contemplated by the Merger Agreement to close in the second half of 2026.

Pursuant to the Merger Agreement, each outstanding Theravance ordinary share will be converted into the right to receive $17.00 in cash and one contingent value right ("CVR"), subject to the terms and conditions of the Merger Agreement and the related CVR agreement. The CVR will provide holders with the opportunity to receive certain contingent payments tied to specified future ampreloxetine-related proceeds and milestones.

We expect to finance the Merger with a combination of cash on hand and new debt financing. In connection with, and concurrently with entry into, the Merger Agreement, Parent entered into a debt commitment letter dated June 28, 2026 (the “Debt Commitment Letter”) with OCM IP Healthcare Portfolio LP (“OMERS Life Sciences”), pursuant to which OMERS Life Sciences has agreed to purchase senior secured notes to be issued by certain newly formed special purpose vehicles in an aggregate principal amount of $350 million on the terms and subject to the conditions set forth in the Debt Commitment Letter for the purposes of financing the transactions contemplated by the Merger Agreement. The obligations of OMERS Life Sciences to provide the debt financing under the Debt Commitment Letter are subject to conditions customary for a transaction of this type.

On June 14, 2026, we presented new clinical data from the dose-escalation portion of the ongoing Phase 1 study evaluating ZW191, a folate receptor alpha-targeting antibody-drug conjugate , at the European Society for Medical Oncology Gynaecological Cancers Congress 2026. Among response-evaluable platinum-resistant ovarian cancer patients, ZW191 demonstrated a cORR of 78.6% in patients with FRα-positive tumors and 47.4% in patients with FRα-negative tumors across all dose levels. These findings demonstrate meaningful anti-tumor activity across both FRα-positive and FRα-negative tumors as well as in the overall population.

We continue to recruit patients in an ongoing Phase 1b study of ZW251, a GPC3-targeting antibody-drug conjugate, for the treatment of patients with hepatocellular carcinoma, squamous non-small cell lung cancer and germ cell tumors.

The top-line results from the second interim overall survival analysis for the HERIZON-GEA-01 trial doublet regimen are expected in the third quarter of 2026.

The FDA granted Breakthrough Therapy Designation ("BTD") for Zanidatamab ("Ziihera"), for the treatment of adults with previously treated, locally advanced, unresectable, or metastatic HER2-positive colorectal cancer.

The EmpowHER-303 trial is expected to complete patient enrollment in mid-2027 with top-line data expected by the end of 2027 or early 2028.

Results from Phase 3 HERIZON-GEA-01 published in The New England Journal of Medicine; Additional subgroup analyses presented in an oral presentation at the 2026 ASCO Annual Meeting showing improved clinical outcomes with zanidatamab-containing combinations regardless of PD-L1 expression, including in PD-L1-negative patients.

Zanidatamab has a U.S. PDUFA target action date of August 25, 2026 for the treatment of patients with 1L HER2+ locally advanced or metastatic GEA. Zymeworks remains eligible to receive a $250M milestone payment upon potential approval in the U.S., and up to $190 million in potential additional global regulatory milestones for 1L HER2+ GEA. Zymeworks will continue to receive royalties on Ziihera sales, with royalty revenues expected to increase following U.S. and global regulatory approvals for GEA.

Pasritamig

Johnson and Johnson Innovative Medicine ("J&J") expect to present Phase 1b clinical data for pasritamig, a first-in-class bispecific antibody against KLK2, in combination with JNJ-9401 in patients with advanced prostate cancer who have progressed after multiple lines of therapy, during the second half of 2026.

J&J increased the planned enrollment for its Phase 3 trial of pasritamig (JNJ-78278343) in combination with best supportive care in patients with late-line metastatic castration-resistant prostate cancer (mCRPC), from approximately 663 to 1,203 participants. The study is actively recruiting across 172 sites globally and is evaluating overall survival versus placebo, with median overall survival as the primary endpoint. The anticipated primary completion date is now estimated as December 2027, compared with the previously estimated May 2028 date (NCT07164443).

2026 Repurchase Program

On May 14, 2026, we terminated the 2025 Repurchase Program and our board of directors authorized a new share repurchase program providing the ability to repurchase up to $125.0 million in shares of our common stock (the “2026 Repurchase Program”). Through August 4, 2026, we have repurchased 1,971,454 common shares for $49.4 million at an average price per share of $25.04 (exclusive of commission expense and estimated excise tax) under our current 2026 Repurchase Program.

Since initiating its share repurchase program in August 2024, the Company has cumulatively utilized $213.6 million to reacquire 10,571,316 shares at an average price of $20.21 per share (exclusive of commission expense and estimated excise tax). As of August 4, 2026, the Company had approximately 71.0 million common shares outstanding.

Total revenue decreased by $68.8 million in the six months ended June 30, 2026 compared to the same period in 2025. The decrease was driven primarily by the absence of significant non-recurring collaboration revenue recognized in 2026, including a $20.0 million development milestone from BeOne, $18.3 million of deferred revenue recognized in connection with the amended ZW25 license agreement and termination of the ZW49 agreement, development milestones of $14.0 million from GSK and $3.1 million from Daiichi Sankyo, and a $7.5 million option exercise fee from Bristol Myers Squibb, all of which were recognized in 2025. In addition, revenue declined due to lower development support and drug supply revenue from Jazz, reflecting the transition of responsibility for certain zanidatamab clinical activities to Jazz under our amended agreements. These decreases were slightly offset by higher royalty revenue from Jazz and BeOne in 2026. Royalty revenue from Jazz and BeOne is expected to increase over time as commercial sales of Ziihera increase.

Research and development expense decreased by $7.0 million for the three months ended June 30, 2026 compared to the same period in 2025. The decrease was driven primarily by lower third-party research and development program expenses, largely due to reduced spending on ZW171 following the discontinuation of the program in 2025 and lower spending on earlier-stage preclinical and research programs. The decrease in spending on earlier-stage programs was driven primarily by ZW209, for which IND-enabling activities were completed in 2025. These decreases were partially offset by higher spending on ZW191 and ZW251 associated with the progression of ongoing clinical studies. Unallocated research and development expenses decreased compared to the prior-year period, primarily due to lower salaries and benefits resulting from reduced headcount.

General and administrative expense increased by $4.3 million for the three months ended June 30, 2026 compared to the same period in 2025. The increase was driven primarily by higher non-cash stock-based compensation expense resulting from equity awards granted in 2026, including awards granted in connection with executive leadership transitions, higher grant date fair values associated with an increase in our stock price, and the introduction of performance-based equity awards. The increase also reflects professional fees incurred in connection with the proposed Theravance acquisition. These increases were partially offset by lower software amortization and software subscription expenses following the completion of a significant enterprise systems transition.

General and administrative expense increased by $2.5 million for the six months ended June 30, 2026 compared to the same period in 2025. The increase was driven primarily by higher non-cash stock-based compensation expense resulting from equity awards granted in 2026, including awards granted in connection with executive leadership transitions, higher grant date fair values associated with an increase in our stock price, and the introduction of performance-based equity awards. The increase also reflects higher salaries and benefits, including severance-related expenses associated with previously disclosed leadership transitions recognized during the period. These increases were partially offset by lower software amortization and software subscription expenses following the completion of a significant enterprise systems transition.