A Royalty Model For Value Creation With Zymeworks' Kenneth Galbraith

What It Covers

Kenneth Galbraith, CEO of Zymeworks, explains how the company built a portfolio of five pharma partnerships using its Azymetric bispecific antibody platform, secured a $375M Jazz Pharmaceuticals deal for zanadetimab, and pivoted in November 2024 toward a hybrid royalty acquisition model to compound returns without building internal commercialization infrastructure.

Key Questions Answered

• •Royalty-weighted deal structure: When negotiating partnerships, prioritize downstream royalties and milestones over headline upfront payments. Zymeworks accepted $375M upfront from Jazz in 2022 — equal to its entire market cap at the time — while retaining royalty rights that became substantially more valuable after zanadetimab's FDA accelerated approval and positive Phase 3 gastric cancer data in 2024.
• •Open-access platform validation strategy: Rather than partnering exclusively with one pharma company, Zymeworks licensed its Azymetric design platform non-exclusively to multiple partners — GSK, Lilly, Daiichi Sankyo, J&J — retaining financial stakes in each resulting product. J&J's pazritamig, designed on Azymetric, has now entered multiple Phase 3 trials, generating milestone payments without Zymeworks funding development.
• •China partnership for clinical scale: To access HER2-expressing gastric cancer patient populations in Asia, Zymeworks partnered with BioGene (now BioNTech subsidiary B1) in 2017 specifically for China clinical operations — a market where running independent trials is operationally prohibitive. This accelerated zanadetimab's global development timeline and secured commercial coverage across three continents via two partners.
• •Hybrid capital allocation model: Zymeworks now allocates capital across three parallel tracks: internal R&D focused on trispecific antibodies and ADCs, external asset acquisition for in-house development and re-partnering, and direct royalty stream purchases on late-stage assets invented and licensed by others. Hiring a Chief Investment Officer in November 2024 signals the royalty acquisition track is being built as a distinct business unit.
• •Ten-year development cycle management: Biotech leaders must plan for capital market cycles, talent retention, and partner focus shifts that rarely align with decade-long drug development timelines. Galbraith recommends structuring partnerships and financial arrangements to accommodate investor liquidity needs mid-cycle, rather than assuming continuous capital availability — a lesson drawn from building QLT into a two-product global company over 13 years.