aibioZymeworks enters $250 million royalty-backed financing with Royalty Pharma
Tickers ZYME
Zymeworks sold 30% of its future Ziihera royalties to a subsidiary that borrowed $250 million from Royalty Pharma. The loan costs about $481 million by its 2042 maturity, and it is secured by the subsidiary's assets.
Key facts
- Company
- Zymeworks Inc. (NASDAQ: ZYME)
- News type
- Financings
- Primary source
- Zymeworks Inc. Form 8-K filed March 2, 2026 (SEC EDGAR)
Zymeworks Inc. (Nasdaq: ZYME) completed a royalty-backed financing with Royalty Pharma on March 2, 2026. The Form 8-K filed the same day says Zymeworks BC sold 30% of future royalty payments on Ziihera to a newly formed subsidiary, Zymeworks Royalty Limited Partnership, for $250.0 million. The royalties come from the Amended and Restated License and Collaboration Agreement of May 15, 2023 with Jazz Pharmaceuticals Ireland Limited and the November 26, 2018 agreement with BeOne Medicines Ltd. The royalty sale is capped at 120% of the maximum amount payable under the loan. The press release calls the funding non-recourse.
The loan
The subsidiary took a term loan of $250.0 million from Royalty Pharma, which is administrative agent and lender under a loan agreement dated March 2, 2026. The loan bears interest at a fixed rate and matures on December 31, 2042. The amount payable by the maturity date is approximately $481.3 million. If the loan is repaid in full on or before December 31, 2033, the payable amount is $412.5 million. Those totals include interest, premiums and fees. The press release describes the caps as 1.65x the note amount by December 31, 2033, or 1.925x thereafter.
The subsidiary granted Royalty Pharma a security interest in all of its assets. Zymeworks BC and its general partner also pledged their interests. The 8-K says the lenders have no recourse against Zymeworks or Zymeworks BC beyond that collateral and Zymeworks BC's equity interest in the subsidiary. Events of default include termination of the Jazz or BeOne agreement or a change of control of Zymeworks, after which the agent could demand the principal plus fees, premiums and interest.
What Zymeworks keeps, and what it restricts
Zymeworks keeps 70% of Ziihera royalties, and full royalty rights revert to it once the loan and related amounts are repaid. It also keeps all earned regulatory and commercial milestone payments under the Jazz and BeOne agreements. The press release lists up to $440.0 million in near-term milestones tied to approvals of Ziihera in mGEA, $89.0 million in regulatory milestones for third indications, and up to $977.5 million in potential commercial milestones. It describes these as total potential remaining payments of up to $1.5 billion.
The sale agreement limits what Zymeworks BC can do with the covered agreements. It cannot amend, waive or terminate contract terms that would reduce the royalty payments or cause a material adverse effect without the consent of the subsidiary and Royalty Pharma, and it cannot sell or encumber the Ziihera intellectual property or the covered agreements without protective arrangements.
Jazz royalties run from ten to high teens percent on annual net sales up to $2.0 billion, and 20% above that. BeOne royalties are tiered from mid-single digits to mid-double digits, and 19.5% above $1.0 billion.
Advisers and use of proceeds
TD Cowen was financial adviser to Zymeworks, and Gibson Dunn was its legal adviser. Covington & Burling, Choate and Maiwald acted as legal advisers to Royalty Pharma, according to the 8-K.
Chair, Chief Executive Officer and Acting Chief Financial Officer Kenneth Galbraith said the funding is "non-dilutive capital" that adds capacity to keep repurchasing shares "at current prices", which he said are a "compelling discount to our estimate of intrinsic value". The company also cited possible acquisitions and cash runway beyond 2028.
The company's numbers
The 10-K for 2025, filed the same day, reports revenue of $106.0 million for 2025, up from $76.3 million for 2024. It shows a net loss of $81.1 million for 2025, against $122.7 million for 2024. Cash used in operations was $33.0 million in 2025 and $110.1 million in 2024. Neither the 8-K nor the press release gives year-end 2025 cash. The pledged royalties will reduce the cash Zymeworks collects from Ziihera while the note runs, and part of the proceeds is meant for share buybacks.
In the US, Ziihera is approved for previously treated HER2-positive biliary tract cancer under accelerated approval based on response rate and duration of response. The press release says continued approval may depend on a confirmatory trial. The gastroesophageal milestones depend on approvals that have not yet been granted.