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Based in Vancouver, British Columbia, Zymeworks Inc. is a privately held biotechnology company committed to developing best-in-class protein therapeutics for the treatment of cancer, autoimmune and inflammatory diseases.

Zymeworks’ business model leverages its antibody and alternative protein scaffold platforms and focuses on highly-strategic collaborative drug development agreements with pharmaceutical partners and the development of an internal pipeline of antibody and protein-based drug candidates.

A scheduled presenter at OneMedForum NY 2012, Zymeworks CEO, Ali Tehrani, was interviewed below by OneMedRadio where he discusses the company’s technology and future milestones.

Click below to hear full audio interview and see below for transcript.

Matthew Margolis:    Greetings from OneMedRadio. I’m Matt Margolis. Today, I’m speaking with Dr. Ali Tehrani, co-founder and CEO of Zymeworks, a privately-held biotechnology company developing protein therapeutics to treat cancer, autoimmune, and inflammatory diseases. The company’s lead technology platform is the Azymetric Scaffold that enables the development of biospecific antibodies. Last year, the company signed a major deal with Merck worth over $187 million. The company’s business model is to develop its own therapeutic drugs and also to do joint drug development with big pharma. Thank you for joining us, Dr. Tehrani.

Ali Tehrani:     A pleasure to be here.

MM:     So today we’re discussing the rise of biologics and drug development, but I think we should start with an overview of the company. What is it that you guys do?

AT:    Thank you for that, and thank you for the opportunity to speak with you. Zymeworks’ business, its core business is antibody engineering. So what are antibodies? Antibodies can be thought of as the body’s main soldier in its immune system. Antibodies defend the body against foreign molecules, foreign objects, and of course, antibodies defend the body when something goes wrong.

Our business, our science is to engineer antibodies so that they could do their job better. In the cases where the immune system is attacking the body itself such as rheumatoid arthritis, we want to use antibodies to, you know, stop that event. In the cases of oncology or cancer when, you know, a tumor is formed, we want to use antibodies to defeat the activity of the tumor.

So at the heart of it, we’re antibody engineers, and this is a direction that the world of drug development is moving towards.

MM:    Maybe you can go into some detail about that. I mean are we experiencing sort of a paradigm shift in how we’re going to be treating diseases?

AT:      Absolutely. Absolutely, there’s a paradigm shift happening. I think one of the key things to realize is first, what is a disease and then what is a drug if you really want to understand this paradigm shift.

A disease can be very simply put as when there is an up regulation or a down regulation in an event that, you know, normally happens in the body at a certain pace. So you know, something that is supposed to happen at a normal pace, when it happens too fast or too much that becomes a disease. Or when it is underactive, that is also a disease.

A drug isn’t meant to bring that back to a status quo, and in the past, the kind of drugs that have been developed have been based on medicinal chemistry. Scientists look at these events in the body, and then they go using chemistry invent molecules that bring that event back to status quo. However, that has been somewhat ineffective. Although some great drugs have been developed and innovated, the overall number of patients that could benefit from these drugs have been very low. The efficacy has been very low and the potency has been very low.

So the paradigm shift is now towards looking at molecules that naturally exist in the body such as antibodies that are part of the immune system such as other proteins that naturally exist in the body to again bring these reactions that are somewhat out of whack back to a status quo, and that is called the movement towards biologics. Right now, there are 30 protein-based therapeutics in the market that are doing amazing things.

The leading protein therapeutics-based drug in the market is Humera with a revenue close to $8 billion a year. It’s actually thought that this year, it will become the number one drug in the entire world, and that’s because how effective it is. Not too far behind us, we have another protein-based therapeutic called Herceptin that is one of the leading drugs to treat breast cancer.

So there is a movement towards more efficacious, more potent drugs that help more patients without side effects, without toxicity, without some of the things that were typically, you know, we know of that are associated with drugs of the past.

MM:     So why are people excited about your specific technology? You know, you’ve established where we’re headed, but how can you play a part in this?

AT:   There’s multiple answers to that question. First and foremost is I just said there are about 30 antibody-based protein therapeutics on the market right now. The problem is we’re at a point of saturation. Most of the antibody-based therapeutic stats one could have developed starting back in the 1980s has been developed and it’s on the market. So the entire pharmaceutical sector is looking for new drugs, new antibody-based drugs, and the reason they’re excited about us is because of the Azymetric Platform that enables the development of bispecific antibodies.

So what are bispecific antibodies? Brazenly put, the drugs that are in the market, the antibody drugs that are in the market bind to a single target, to a single point in the body to, you know, defeat it or create some sort of a reaction. Our antibodies bind to two. So what that enables is to essentially perhaps eliminate cocktails of drugs. So if you have to take two antibody-based drugs, now you can take one, but more importantly, it enables drug developers to take advantage of new biology, go after two independent targets, two independent points that must be destroyed, but do it in such a way that if you can do it together you have a much more global effect.

The way I’d like to call it is imagine an antibody that is developed to destroy a tumor. Normally, as this antibody binds to a single let’s call it pressure point on the tumor cell that causes destruction. But imagine if you could bind to two pressure points, and even put more pressure on the tumor to be destroyed in a much more potent efficacious way, and that’s what bispecific antibodies enable. One thing that they enable. They enable more things, but that’s an example of what they enable.

And the reason people are excited about us is because we’ve created a scaffold, a platform that drug developers can turn into a bispecific antibody that, you know, before us, was a concept that was being tested at what we call the bench top level with no clear risking events of what could happen in the clinic, but with the work that we’ve done, now drug developers are very excited about the clinical outcome of this type of a molecule. They believe that it has a chance to go through all the clinical tests and be successful.

So in the world of drug development, it is really good to do innovation at the bench top level, but if ultimately can pass the rigorous tests of the clinic then, you know, it’s cool science, but what we’ve done with our Azymetric platform is we’ve shown that it has all the potential of clinical success in the hands of drug developers, and that’s why companies like Merck got really excited about getting a license of the Azymetric platform to build their own drugs.

MM:     Sure. I do want to circle back to that deal with Merck. I was wondering if I could talk a little bit about, you know, the agreement.

AT:   So Merck signed a deal with us last year to gain access to the Azymetric Scaffold to develop their own bispecific-based drug. They had a lot of options to go with. Obviously, we’re not the only company in the space that is trying to develop bispecific technology. But after reviewing the other options and after reviewing our data, as I said, they saw the best potential for bringing a drug to market through the clinical testing process using our scaffold.

So the essence of the deal is that they’ve gained non-exclusive license to the Azymetric Scaffold to develop specific drugs of their own. We received certain upfront payments. We’re eligible to receive pre-clinical payments, clinical amounts, and of course, commercialization payments alongside royalty.

I think the key thing about this deal is Merck decided to place a bet on us. They had a lot of choices, but you know, one of the biggest pharma companies placing a bet on us means that we’re really onto something, that we really have something that they’re willing to invest a lot of resources and energies around, and that is the kind of market validation, small biotech companies, you know, aspire to get and have, and you know, use that as a launching point towards their next milestones and goal. POSSIBLE CUT FOR PART II.

MM:      Now in addition to partnering with Merck, you’re also developing some therapies in-house.

AT: As you mentioned at the beginning of the call, our aspiration – Our number one aspiration is to have our own therapeutic pipeline, our own drugs. On route to that, we believe the smart thing to do is to form strategic partnerships with pharma. Why? Because first and foremost, pharma has drug development experience and expertise that we don’t have, so it is very smart to hedge your bets, to, you know, get involved with the best and the brightest because it shows you what you’re missing, what you don’t have, and it also paves the past towards what you should go after.

Drug development is a very crowded space, so you really need to have a very focused plan of what’s your better mousetrap, what’s your distinctive advantage, and what your niche space is if you’re going to survive it. If you try to go after world peace and world hunger, you know, you’re doomed for failure. So strategic drug development gives you that focus, gives you that ability to work with the best, but more importantly, it also gives you revenues to be able to, you know, push your own R&D goals forward without always having to dilute shareholders or always be out on the market trying to raise money because obviously, you know, we have shareholders and our fiduciary duty is to our shareholders, and we want to make sure that they do see a return for their investment.

You know, if you’re always out there trying to raise money, you’re going to dilute them out. So this strategy, this business model gives us that opportunity of learning from the best, but also using the revenues from that interaction to further our own goal.

Regarding our own therapeutic pipeline, we’re looking at best in class antibody-based therapeutics and protein therapeutics, as you mentioned, go after cancer-related diseases and inflammatory and autoimmune-based diseases. In the area of cancer, we’re looking at various lymphomas, various B cell related oncology, lymphoma type diseases, and B cell are again part of the immune system that, you know, when something goes wrong they could result in tumor formation.

In the autoimmune and inflammatory spaces, we are looking at rheumatoid arthritis and related type diseases. We have perhaps a couple of other more long-term aspirations that, you know, this is not the right time to go into, but in sort of the immediate future, rheumatoid arthritis is an area that we are very interested.

MM:   I want to talk a little bit about your financing. In late 2011, you secured about $8 million, you know, in a round of financing. So can you go into some detail about that? And also, how have you invested the capital now?

AT:    That financing – Let me take the second part of the question first and then purely investment to R&D. And it was raised to essentially cross the Ts and dot the Is on the Azymetric Platform to ensure that it has the best clinical success chance, that it is the most the risk that, you know, we put our drug development hats on like pharma would and look at things from their perspective and make sure that, you know, the platform is ready to be in the hands of any drug developer towards the development of the drugs that they want.

So that financing, part of it was to ensure that, but the other part of it was to bring onboard expert drug developers to kick off our own therapeutic pipeline, and that’s what we did. We brought our VP pre-clinical who formally worked at Amgen and at Merck, and since then, we’ve taken big steps towards our own programs which are right now on a timeline inter clinical testing or begin clinical testing in sort of the mid to late 2014 timeframe.

MM:      So lastly, what does Zymeworks hope to accomplish in 2012?

AT:   We look to put in place another deal similar to our Merck deal, another strategic collaboration with pharma, but more importantly, officially and openly launch our own therapeutic pipeline initiative, the internal initiative, to be able to buy lots of specifics to the world as to what they can expect entering into the clinic in 2014.

I think it’s a very exciting time because, you know, you get to talk to clinicians and medical doctors and patients and say that, you know, that they should have hope that we are all working towards a common point and that there’s exciting science happening that would, you know, better the lives of patients. That’s ultimately why we’re in this business. It is a business, but we all get into it because, you know, we believe that we could do something towards the betterment of, you know, patients outcome on life.

MM:   That was a company snapshot of Zymeworks with Dr. Ali Tehrani, co-founder, CEO, and president. This is Matthew Margolis with OneMedRadio, signing off.