2021-08-01false2019FY0001403752--12-31BCOn June 7, 2018, certain amendments to the ESPP were approved by shareholders. Prior to these amendments, the ESPP allowed eligible employees to acquire common shares at a discounted purchase price of 85% of the market value of the Company’s common shares on the purchase date. The ESPP, as amended, allows eligible employees to acquire common shares at a discounted purchase price of the lesser of (i) 85% of the market price of a common share on the first day of the applicable purchase period and (ii) 85% of the market price of a common share on the purchase date. 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PART I

Item 1.

Business

 

 

 

 

 

 

 

 

Overview

Zymeworks is a clinical-stage biopharmaceutical company dedicated to the development of next-generation multifunctional biotherapeutics. Our suite of complementary therapeutic platforms and our fully integrated drug development engine provide the flexibility and compatibility to precisely engineer and develop highly differentiated product candidates. These capabilities have resulted in multiple product candidates with the potential to drive positive outcomes in large underserved and unaddressed patient populations.

Our lead product candidate, ZW25, is a novel bispecific (dual-targeting) antibody that targets two distinct domains of the human epidermal growth factor receptor 2 (“HER2”). The unique mechanism of action of ZW25 may enable it to address unmet need in patient populations with HER2-expressing cancers, including those with lower levels of expression, for which there are no approved HER2-targeted agents. In clinical trials, single agent ZW25 and ZW25 in combination with chemotherapy have been well tolerated with promising anti-tumor activity in patients with heavily pretreated

HER2-expressing

cancers that have progressed after standard of care, including multiple HER2-targeted regimens. In 2019, we initiated a global multicenter Phase 2 clinical trial evaluating ZW25 in combination with standard of care chemotherapy for the first-line treatment of HER2-positive metastatic gastroesophageal adenocarcinomas (“GEA”). Recently, we initiated a second Phase 2 clinical trial evaluating ZW25 in combination with Pfizer’s Ibrance

®

(palbociclib) and fulvestrant in patients with previously-treated locally advanced and/or metastatic HER2-positive, hormone receptor (“HR”)-positive breast cancer. In addition, ZW25 continues to be evaluated in multiple expansion cohorts in the ongoing Phase 1 trial as a single agent in several indications including biliary tract (“BTC”), colorectal, gynecological and other HER2-expressing cancers.

Our second product candidate, ZW49, combines the unique design of ZW25 with our ZymeLink antibody-drug conjugate (“ADC”) platform, comprised of our proprietary cytotoxin (cancer cell-killing compound) and cleavable linker. We designed ZW49 to be a

best-in-class

HER2-targeting

ADC to further address unmet need across a range of

HER2-expressing

cancers. A Phase 1 clinical trial to establish safety and anti-tumor activity of ZW49 began in 2019.

We are also advancing a deep pipeline of preclinical product candidates and discovery-stage programs in oncology (including immuno-oncology

(“I-O”)

agents) and other therapeutic areas.

Our proprietary capabilities and technologies include several modular, complementary therapeutic platforms that can be used in combination with each other and with existing approaches. This ability to layer technologies without compromising manufacturability enables us to engineer next-generation biotherapeutics with synergistic activity, which we believe will result in improved patient outcomes. Our core platforms include:

•

Azymetric , our bispecific platform, which enables therapeutic antibodies to simultaneously bind multiple distinct locations on a target (known as an epitope) or to multiple targets. This is achieved by tailoring multiple configurations of the antibody’s Fab regions (locations on the antibody to which epitopes bind);

 

 

 

 

 

 

 

 

•

ZymeLink, our ADC platform, comprised of cytotoxins and the linker technology used to couple these cytotoxins to tumor-targeting antibodies or proteins. This platform can be used in conjunction with our other therapeutic platforms to increase safety and efficacy as compared to existing ADC technologies; and

 

 

 

 

 

 

 

 

•

EFECT, which enables finely tuned modulation (both up and down) of immune cell recruitment and function.

 

 

 

 

 

 

 

 

Our protein engineering expertise and proprietary structure-guided molecular modeling capabilities enable these therapeutic platforms. Together with our internal antibody discovery and generation technologies, we have

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established a fully integrated drug development engine and toolkit capable of rapidly delivering a steady pipeline of next-generation product candidates in oncology and other therapeutic areas.

Our Azymetric, EFECT and ZymeLink therapeutic platforms have been further leveraged through multiple revenue-generating strategic partnerships with the following global pharmaceutical companies: Merck Sharp & Dohme Research GmbH (“Merck”), Eli Lilly and Company (“Lilly”), Celgene Corporation and Celgene Alpine Investment Co. LLC (formerly “Celgene” and now a Bristol-Myers Squibb company, “BMS”), GlaxoSmithKline Intellectual Property Development Limited (“GSK”), Daiichi Sankyo Co., Ltd. (“Daiichi Sankyo”), Janssen Biotech, Inc. (“Janssen”), LEO Pharma A/S (“LEO”), BeiGene, Ltd. (“BeiGene”) and Iconic Therapeutics, Inc. (“Iconic”).

Our Strategy

Our goal is to leverage our next-generation therapeutic platforms and proprietary protein engineering capabilities to become a domain dominator in the discovery, development and commercialization of

best-in-class

multifunctional biotherapeutics for the treatment of cancer and other diseases with high unmet medical need.

Our key priorities to achieve this goal are to:

•

initiate ZW25 registration-enabling studies in 2 nd line HER2-positive BTC and 1 st line HER2-positive GEA;

 

 

 

 

 

 

 

 

•

report ZW49 Phase 1 dose-escalation data and initiate expansion cohorts;

 

 

 

 

 

 

 

 

•

expand ZW25 clinical development into additional HER2-expressing cancers;

 

 

 

 

 

 

 

 

•

report ZW25 Phase 2 chemotherapy combination data from 1 st line HER2-positive GEA; and

 

 

 

 

 

 

 

 

•

continue building a strong preclinical pipeline through internal R&D and external partnerships.

 

 

 

 

 

 

 

 

Product Candidate Pipeline and Advanced Preclinical and Discovery Programs

We currently have two lead product candidates in clinical development and several product candidates in preclinical development that leverage our multiple therapeutic platforms to address areas of significant unmet medical need. Our lead product candidates, ZW25 and ZW49, utilize the Azymetric platform to address patient populations with all levels of HER2 expression, including those with lower HER2-expressing tumors. We are also actively advancing a diverse set of preclinical and discovery programs, which leverage one or more of our proprietary therapeutic platforms to create a deep pipeline of well-differentiated product candidates for oncology and other therapeutic areas.

The table below summarizes our current product candidate pipeline.

 

 

The table below summarizes the therapeutic class of our preclinical and advanced discovery programs.

 

 

 

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The table below summarizes the stage of each of our partners’ most advanced publicly disclosed program.

 

 

ZW25: HER2-Targeted Bispecific Antibody

Overview

ZW25, our lead product candidate currently being evaluated in Phase 1 and Phase 2 clinical trials in the United States, Canada, and South Korea, is based on our Azymetric platform. It is a bispecific antibody that can simultaneously bind two

non-overlapping

epitopes, known as biparatopic binding, of HER2 resulting in dual HER2 signal blockade, increased antibody binding, receptor clustering, removal of HER2 protein from the cell surface, and potent effector function. These combined mechanisms of action have led to activity in preclinical models of breast cancer, including trastuzumab-resistant (currently branded as Herceptin) high HER2-expressing tumors, as well as in tumors with lower levels of HER2 expression. Approximately 81% of patients with HER2-expressing breast cancer and 57% of patients with

HER2-expressing

gastric and gastroesophageal junction cancer have tumors that express low to intermediate levels of HER2, making them ineligible for treatment with currently approved HER2-targeted therapies, such as Herceptin and Perjeta. In addition, multiple other cancers, including BTC, colorectal, pancreatic, prostate, endometrial, ovarian, bladder, salivary gland, and

non-small

cell lung cancer, express HER2 at varying levels. Therefore, there is a significant unmet need for HER2-targeted agents that can effectively treat these patients.

We are developing ZW25 as a foundational HER2-targeted therapy for patients with solid tumors that overexpress HER2. We believe that ZW25 has the potential to expand the opportunity for HER2-targeted therapies to include additional tumor types and tumors with lower HER2 expression levels as well as displace currently approved HER2-targeted therapies in several indications.

Potential Advantages of ZW25

ZW25’s biparatopic binding mode increases the number of antibodies bound to HER2 receptors at the cell surface relative to monospecific antibodies and promotes receptor clustering and internalization.

ZW25 mediates its therapeutic effect on HER2-expressing tumors through multiple mechanisms of action, including:

•

cross-linked trans HER2 binding and HER2 receptor clustering;

 

 

 

 

 

 

 

 

•

enhanced antibody internalization and HER2 downregulation;

 

 

 

 

 

 

 

 

•

increased maximum binding density and potent effector function-mediated cytotoxicity; and

 

 

 

 

 

 

 

 

•

enhanced blockade of ligand-dependent and ligand-independent tumor growth.

 

 

 

 

 

 

 

 

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Clinical Development of ZW25

A

first-in-human

Phase 1 clinical trial for ZW25 commenced in September 2016, consisting of three segments. We have completed Part 1, the dose escalation segment, and identified the Phase 2 recommended dose and schedule of ZW25 as 20 mg/kg every other week. Part 2 and Part 3 of the Phase 1 clinical trial are underway and consist of five expansion cohorts that span HER2 High breast cancer, HER2 High gastric cancer, HER2 Intermediate breast cancer, HER2 Intermediate gastric cancer, and other HER2 gene amplified cancers to evaluate ZW25 as both a monotherapy (Part 2) and in combination with standard of care chemotherapy (Part 3).

ZW25 has been well tolerated with promising anti-tumor activity both as a single agent and in combination with several types of chemotherapy in patients with heavily

pre-treated

HER2-expressing

cancer that progressed after standard of care, including multiple

HER2-targeted

regimens.

These data were highlighted at several medical conferences in 2019, including the European Society for Medical Oncology (“ESMO”) Congress, the

AACR-NCI-EORTC

International Conference on Molecular Targets and Cancer Therapeutics, and the ESMO Asia Congress.

In October 2019, at the

AACR-NCI-EORTC

International Conference, we presented the safety and anti-tumor activity of ZW25 in combination with paclitaxel or capecitabine in 14 patients with heavily pretreated HER2-expressing GEA. Patients received a median of 2.5 prior systemic therapies, and 93% had progressed following trastuzumab treatment. Nine of 14 patients were response-evaluable. Overall, the majority of patients experienced a decrease in their target lesions with a disease control rate of 78%, comprising five (56%) partial responses and two (22%) stable disease. These responses were observed in both low and high HER2-expressing GEA. At the time of the data

cut-off,

four of the five partial responses had been confirmed, and five (56%) response-evaluable patients were still on study. The overall safety profile of ZW25 plus chemotherapy was similar to that seen with chemotherapy alone. The most common treatment-related adverse events (“TRAE”) occurring in two or more patients were primarily Grade 1 or 2 and manageable with symptomatic treatment.

In November 2019, at ESMO Asia, we presented updated single agent ZW25 safety and anti-tumor activity in 69 patients diagnosed with HER2-expressing solid tumors other than breast cancer who received ZW25 at the recommended dose of either 10 mg/kg weekly or 20 mg/kg every other week. Fifty-seven of 69 patients were response evaluable at the time of data

cut-off.

Overall, the disease control rate (“DCR”) was 70%, comprising 25 (44%) partial responses and 15 (26%) with stable disease, and 18 (32%) patients experienced disease control for greater than six months. In the nine evaluable BTC patients, the DCR was 78%, and the objective response rate (“ORR”) was 67%. In the 13 colorectal cancer and 23 GEA patients, ORRs were 46% and 39%, respectively. The overall median progression-free survival was 5.5 months and was still evolving at time of data

cut-off.

Overall in our Phase 1 study, ZW25 has been well tolerated with the majority of treatment-related adverse events Grade 1 or 2 in severity.

We are currently evaluating ZW25, in the following clinical trials:

•

NCT02892123 – Phase 1 study to evaluate the maximal tolerated dose, optimal biological dose or other recommended dose, and overall safety and tolerability of ZW25 in patients with locally advanced (unresectable) and/or metastatic HER2-expressing cancers.

 

 

 

 

 

 

 

 

•

NCT03929666 – A multicenter, global, Phase 2, open-label, two-part, 1st line study to investigate the safety, tolerability, and anti-tumor activity of ZW25 plus physician’s choice of combination chemotherapy in HER2-expressing GEA. Eligible patients include those with unresectable, locally advanced, recurrent or metastatic HER2-expressing GEA.

 

 

 

 

 

 

 

 

•

NCT04224272 – A multicenter, global, Phase 2, open-label, two-part study. Part one of the study will evaluate the safety and tolerability of ZW25 in combination with palbociclib and fulvestrant and identify the recommended doses (“RD”) of ZW25 and palbociclib. Part two of the study will evaluate anti-tumor activity at the RD level.

 

 

 

 

 

 

 

 

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PART II

Item 5.

Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

 

Market Information

Our common shares began trading on the NYSE and the Toronto Stock Exchange (“TSX”) on April 28, 2017 under the symbol “ZYME.” Prior to such time, there was no public market for our common shares. We voluntarily delisted our common shares from the TSX as of the close of business on October 1, 2019. The following table sets forth the high and low sales prices per common share as reported on the NYSE and TSX for the periods indicated.

		NYSE								TSX
		High				Low				High				Low
		US$								C$
Quarter Ended
December 31, 2019			45.83				24.00				n/a				n/a
September 30, 2019			29.75				21.52				39.10				29.64
June 30, 2019			23.17				14.65				30.43				19.75
March 31, 2019			17.30				13.96				23.02				18.73
December 31, 2018			15.73				10.72				20.52				14.34
September 30, 2018			16.88				12.15				21.69				15.84
June 30, 2018			29.00				10.37				30.36				13.37
March 31, 2018			14.00				7.69				17.31				9.62
December 31, 2017			9.33				6.87				11.60				9.00
September 30, 2017			9.12				6.25				11.48				8.05
April 28, 2017 to June 30, 2017			14.25				7.24				19.55				10.50

 

On February 27, 2020, the last reported sale price of our common shares on the NYSE was $39.70 per share.

Holders

As at February 27, 2020, we had 31 shareholders of record holding our common shares, of which six were U.S. shareholders. A substantially greater number of holders of Zymeworks’ common stock are “street name” or beneficial holders whose shares of record are held by banks, brokers, and other financial institutions.

Dividends

We have never paid any dividends on our common shares or any of our other securities. We currently intend to retain any future earnings to finance the growth and development of our business, and we do not anticipate that we will declare or pay any cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, capital requirements, restrictions under any future indebtedness and other factors the board of directors deems relevant.

Certain Canadian Federal Income Tax Considerations for U.S. Holders

The following is a general summary of the principal Canadian federal income tax considerations generally applicable under

Income Tax Act

(Canada) (the “Tax Act”) to a holder of common shares, each of whom, at all relevant times, for the purposes of the Tax Act, holds such common shares as capital property, deals at arm’s length with the Company, is not affiliated with the Company and, for purposes of the Tax Act, is not, and is not deemed to be, a resident of Canada and has not and will not use or hold or be deemed to use or hold the common

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shares in the course of carrying on business in Canada (a

“Non-Resident

Holder”) and is not a “specified shareholder” (as defined in subsection 18(5) of the Tax Act). A “specified shareholder” for these purposes generally includes a person who (either alone or together with persons with whom that person is not dealing at arm’s length for purposes of the Tax Act) owns or has the right to acquire or control 25% or more of the common shares determined on a votes or fair market value basis. Special rules, which are not discussed below, may apply to a

non-resident

of Canada that is an insurer that carries on business in Canada and elsewhere.

The common shares will generally be considered capital property to a

Non-Resident

Holder unless either (i) the

Non-Resident

Holder holds the common shares in the course of carrying on a business of buying and selling securities or (ii) the

Non-Resident

Holder has acquired the common shares in a transaction or transactions considered to be an adventure or concern in the nature of trade.

The term “U.S. Holder,” for the purposes of this section, means a

Non-Resident

Holder who, for purposes of the

Canada-United States Income Tax Convention

(1980) as amended, (the “Convention”), is at all relevant times a resident of the United States and is a “qualifying person” within the meaning of the Convention. In some circumstances, fiscally transparent entities (including limited liability companies) will be entitled to benefits under the Convention. U.S. Holders are urged to consult with their own tax advisors to determine their entitlement to benefits under the Convention based on their particular circumstances.

This summary is based on the current provisions of the Tax Act, the regulations thereunder (the “Regulations”), the current provisions of the Convention, and counsel’s understanding of the current published administrative policies and assessing practices of the Canada Revenue Agency (the “CRA”) publicly available prior to the date hereof. This summary also takes into account all specific proposals to amend the Tax Act and Regulations publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (collectively, the “Proposed Tax Amendments”). No assurances can be given that the Proposed Tax Amendments will be enacted or will be enacted as proposed. Other than the Proposed Tax Amendments, this summary does not take into account or anticipate any changes in law or the administration policies or assessing practice of CRA, whether by judicial, legislative, governmental or administrative decision or action, nor does it take into account provincial, territorial or foreign income tax legislation or considerations, which may differ significantly from those discussed herein.

This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any U.S. Holder and no representations with respect to the income tax consequences to any particular U.S. Holder are made. This summary is not exhaustive of all Canadian federal income tax considerations. Accordingly, U.S. Holders should consult their own tax advisors with respect to their own particular circumstances. The discussion below is qualified accordingly.

Currency Conversion

Subject to certain exceptions that are not discussed herein, for purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of common shares, including dividends, adjusted cost base and proceeds of dispositions must be determined in Canadian dollars using the daily exchange rate of the Bank of Canada on the particular date the particular amount arose or such other rate of exchange as acceptable to the CRA.

Disposition of Common Shares

A

Non-Resident

Holder will not be subject to tax under the Tax Act in respect of any capital gain realized by such

Non-Resident

Holder on a disposition of the common shares, nor will capital losses arising from the disposition be recognized under the Tax Act, unless the common shares constitute “taxable Canadian property” (as defined in the Tax Act) of the

Non-Resident

Holder at the time of disposition and the

Non-Resident

Holder is not entitled to relief under an applicable income tax treaty or convention. As long as the shares are then listed on a “designated stock exchange” (as defined in the Tax Act) (which currently includes the NYSE) at the time of

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disposition, the common shares generally will not constitute taxable Canadian property of a

Non-Resident

Holder, unless at any time during the

60-month

period immediately preceding the disposition the following two conditions are met concurrently: (i) the

Non-Resident

Holder, persons with whom the

Non-Resident

Holder did not deal at arm’s length, partnerships in which the

Non-Resident

Holder or persons with whom the

Non-Resident

Holder did not deal at arm’s length holds a membership interest directly or indirectly through one or more partnerships, or the

Non-Resident

Holder together with all such persons, owned or was considered to own 25% or more of the issued shares of any class or series of shares of the capital stock of the Company; and (ii) more than 50% of the fair market value of the common shares was derived directly or indirectly from one or any combination of real or immovable property situated in Canada, “Canadian resource properties” (as defined in the Tax Act), “timber resource properties” (as defined in the Tax Act) or a options in respect of, or interests in, or civil law rights in, such properties, whether or not it exists.

If the common shares are taxable Canadian property to a

Non-Resident

Holder, any capital gain realized on the disposition or deemed disposition of such shares may not be subject to Canadian federal income tax pursuant to the terms of an applicable income tax treaty or convention between Canada and the country of residence of a

Non-Resident

Holder, including the Convention.

A

Non-Resident

Holder whose shares are taxable Canadian property should consult their own advisors.

Dividends on Common Shares

Under the Tax Act, dividends on shares paid or credited to a

Non-Resident

Holder will be subject to Canadian withholding tax at the rate of 25% of the gross amount of the dividends. This withholding tax may be reduced pursuant to the terms of an applicable income tax treaty or convention between Canada and the country of residence of a

Non-Resident

Holder. Under the Convention, a U.S. Holder will generally be subject to Canadian withholding tax at a rate of 15% of the gross amount of such dividends (or 5% in the case of a U.S. Holder that is a company beneficially owning at least 10% of the Company’s voting shares). In addition, under the Convention, dividends may be exempt from Canadian

non-resident

withholding tax if paid to certain U.S. Holders that are qualifying religious, scientific, literary, educational or charitable

tax-exempt

organizations and qualifying trusts, companies, organizations or arrangements operated exclusively to administer or provide pension, retirement or employee benefits that are exempt from tax in the United States and that have complied with specific administrative procedures.

The CRA allows residents of any country with which Canada has a tax treaty to certify that they reside in that country, so they are eligible to have Canadian

non-resident

tax withheld on the payment of dividends at the reduced tax treaty rate. Individual registered shareholders should complete a Form NR301—“Declaration of Eligibility for Benefits (Reduced Tax) under a Tax Treaty for a

Non-Resident

Person” and return it to our transfer agent, Computershare Investor Services Inc.

Certain U.S. Income Tax Considerations For U.S. Holders

The following discussion is a general summary of certain U.S. federal income tax consequences of the ownership and disposition of the common shares. It applies only to U.S. Holders (as defined below) that acquire and hold the common shares as capital assets (generally, property held for investment purposes) and is of a general nature. This summary should not be construed to constitute legal or tax advice to any particular U.S. Holder.

This summary does not apply to or address U.S. Holders subject to special rules, including, without limitation, brokers, dealers in securities or currencies, traders in securities that elect to use a

mark-to-market

method of accounting for securities holdings,

tax-exempt

organizations, insurance companies, banks, thrifts and other financial institutions, persons liable for alternative minimum tax, persons that hold an interest in an entity that holds the common shares, persons that will own, or will have owned, directly, indirectly or constructively 10% or more (by vote or value) of the Company’s equity, persons that hold the common shares as part of a hedging, integration, conversion or constructive sale transaction or a straddle, or persons whose functional currency is not the U.S. dollar.

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This summary does not purport to be a complete analysis of all of the potential U.S. federal income tax considerations that may be relevant to U.S. Holders in light of their particular circumstances. Further, it does not address any aspect of foreign, state, local or estate or gift taxation or the 3.8% surtax imposed on certain net investment income.

Investors should consult their own tax advisor as to the U.S. federal, state, local, foreign and any other tax consequences of the ownership and disposition of the common shares.

This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, U.S. Treasury Regulations, Internal Revenue Service (“IRS”) rulings, published court decisions, and the Convention, all as in effect as of the date hereof, and any of which may be repealed, revoked or modified (possibly with retroactive effect) so as to result in U.S. federal income tax consequences different from those discussed below. This summary is applicable to U.S. Holders who are residents of the United States for purposes of the Convention and who qualify for the full benefits of the Convention.

A “U.S. Holder” is a beneficial owner of the common shares who, for U.S. federal income tax purposes, is a citizen or individual resident of the United States, a corporation (or other entity that is classified as a corporation for U.S. federal income tax purposes) that is created or organized in or under the laws of the United States or any State thereof or the District of Columbia, an estate whose income is subject to U.S. federal income tax regardless of its source, or a trust (i) if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) that validly elects to be treated as a U.S. person for U.S. federal income tax purposes.

If a partnership or other pass-through entity holds the common shares of the Company, the U.S. federal income tax treatment of a partner, beneficiary, or other stakeholder will generally depend on the status of that person and the tax treatment of the pass-through entity. A partner, beneficiary, or other stakeholder in a pass-through entity holding the common shares should consult its own tax advisor with regard to the U.S. federal income tax treatment of its investment in the common shares.

Distributions on the Common Shares

Subject to the PFIC rules discussed below, the gross amount of any distribution received by a U.S. Holder with respect to the common shares (including any amounts withheld to pay Canadian withholding taxes) will be included in the gross income of the U.S. Holder as a dividend to the extent attributable to the Company’s current or accumulated earnings and profits, as determined under U.S. federal income tax principles. The Company does not intend to calculate its earnings and profits under U.S. federal income tax rules. Accordingly, U.S. Holders should expect that a distribution generally will be treated as a dividend for U.S. federal income tax purposes. Unless the Company is treated as a PFIC for the taxable year in which it pays a distribution or in the preceding taxable year (see “Passive Foreign Investment Company Rules” below), the Company believes that it may qualify as a “qualified foreign corporation,” in which case distributions treated as dividends and received by

non-corporate

U.S. Holders may be eligible for a preferential tax rate. Distributions on the common shares generally will not be eligible for the dividends received deduction available to U.S. Holders that are corporations.

The amount of any dividend paid in Canadian dollars (including any amounts withheld to pay Canadian withholding taxes) will equal the U.S. dollar value of the Canadian dollars calculated by reference to the exchange rate in effect on the date the dividend is received by the U.S. Holder, regardless of whether the Canadian dollars are converted into U.S. dollars. A U.S. Holder will have a tax basis in the Canadian dollars equal to their U.S. dollar value on the date of receipt. If the Canadian dollars received are converted into U.S. dollars on the date of receipt, the U.S. Holder should generally not be required to recognize foreign currency gain or loss in respect of the distribution. If the Canadian dollars received are not converted into U.S. dollars on the date of receipt, a U.S. Holder may recognize foreign currency gain or loss on a subsequent conversion or other disposition of the Canadian dollars. Such gain or loss will be treated as U.S. source ordinary income or loss.

A U.S. Holder may be entitled to deduct or credit Canadian withholding tax imposed on dividends paid to a U.S. Holder, subject to applicable limitations in the Code. For purposes of calculating a U.S. Holder’s foreign tax

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Item 6.

Selected Financial Data

 

 

The following selected financial data is derived from our audited consolidated financial statements and should be read in conjunction with, and is qualified in its entirety by, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 8, “Financial Statements and Supplementary Data” contained elsewhere in this Annual Report on Form

10-K.

The selected Consolidated Statement of Operations Data for the years ended December 31, 2019, 2018 and 2017 and Consolidated Balance Sheet Data as of December 31, 2019 and 2018 have been derived from our audited consolidated financial statements appearing elsewhere in this Annual Report on Form

10-K.

The selected Consolidated Statement of Operations Data for the years ended December 31, 2016 and 2015 and Consolidated Balance Sheet Data as of December 31, 2017 and 2016 have been derived from our audited financial statements that are not included in this Annual Report on Form

10-K.

Historical results are not necessarily indicative of future results. Our audited annual consolidated financial statements have been prepared in U.S. dollars and in accordance with U.S. Generally Accepted Accounting Principles.

		Year Ended December 31,
		2019				2018				2017				2016				2015
						(dollars in thousands except share and per share amounts)
Consolidated Statement of Operations Data
Revenue		$	29,544			$	53,019			$	51,762			$	11,009			$	9,660
Operating Expenses:
Research and development			115,900				56,926				41,144				35,551				24,403
General and administrative			64,177				29,457				18,550				12,554				5,217
Impairment on acquired IPR&D			768				—				1,536				768				—
Total operating expenses			180,845				86,383				61,230				48,873				29,620
Loss from Operations			(151,301	)			(33,364	)			(9,468	)			(37,864	)			(19,960	)
Other income (expense), net			5,282				(1,021	)			(494	)			(1,020	)			824
Loss before income taxes			(146,019	)			(34,385	)			(9,962	)			(38,884	)			(19,136	)
Net income tax recovery (expense), net			582				(2,171	)			(444	)			5,075				(34	)
Net loss		$	(145,437	)		$	(36,556	)		$	(10,406	)		$	(33,809	)		$	(19,170	)
Net loss per common share (basic) (1)			(3.83	)			(1.26	)			(0.51	)			(2.65	)			(1.70	)
Net loss per common share (diluted) (1)			(3.83	)			(1.26	)			(0.64	)			(2.65	)			(1.70	)
Weighted-average number of common shares (basic) (1)			38,022,014				29,089,896				21,249,414				12,736,567				11,266,451
Weighted-average number of commons shares (diluted) (1)			38,022,014				29,089,896				21,321,209				12,736,567				11,266,451

 

(1)

See “Notes to the Consolidated Financial Statements—Summary of Significant Accounting Policies—Net Income (Loss) Per Share” for an explanation of the method used to calculate basic and diluted net income (loss) per common share and the weighted-average number of common shares used in computation of the per common share amounts.

 

 

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