Zymeworks (NASDAQ:ZYME) said it has completed its acquisition of Theravance Biopharma, adding the COPD medicine YUPELRI, an acquired research portfolio, collaboration and royalty economics, Irish tax attributes and a commercial organization to its business.
Management said the transaction represents an expansion of Zymeworks’ strategy beyond its historical focus on research and development catalysts. The company now expects to operate with multiple sources of revenue and operating cash flow, including profit-sharing economics from YUPELRI and royalties associated with ZIIHERA.
YUPELRI and Commercial Operations
Scott Platshon, Zymeworks’ chief business officer, said hospital sales for YUPELRI grew approximately 25% year over year in the second quarter of 2026. He said the hospital channel remains underpenetrated and offers opportunities both to bring new hospital accounts online and to expand use within existing accounts.
“The answer is both,” Platshon said in response to a question about whether growth is being driven by new accounts or existing hospitals. He noted that gaining hospital formulary access can take from six months to multiple years.
Management said approximately 12% to 13% of YUPELRI volume currently comes from the hospital channel. Platshon also said the hospital setting can support community use after patients are discharged, as hospitals, payers and patients may have incentives to maintain treatment with YUPELRI.
Zymeworks plans to add Stuart Knight as executive vice president and chief information officer, and Jesse Fecker as vice president of intellectual property. The company also plans to hire an experienced pharmaceutical executive to lead the Theravance commercial operations.
Financing Structure and Expected Returns
Zymeworks said its base-case underwriting anticipates a mid-teen internal rate of return over the long term, primarily driven by YUPELRI and with a smaller contribution from VIBATIV, an antibiotic sold by Cumberland. Management said the base case does not assign value to the acquired research portfolio, Irish tax attributes or certain potential milestones and business-development opportunities.
The acquisition was financed in part through a $350 million non-recourse, royalty-backed note with OMERS Life Sciences. The financing is secured solely by YUPELRI cash flows, according to the company. YUPELRI is currently generating approximately $60 million in annualized cash flows at current run rates, Zymeworks said.
During the note period, OMERS will receive 75% of YUPELRI profit-share cash flows to service interest and principal, while Zymeworks retains the residual economics. After repayment, the remaining cash flows will revert to Zymeworks. Chief Financial Officer Kristin Stafford said the company was not providing guidance on the timing of repayment.
Stafford said YUPELRI economics are structured around a 35%/65% profit-sharing arrangement with Viatris. Viatris records 100% of product net sales, while Theravance historically reported net collaboration revenue reflecting its share of profits and losses and shared-cost adjustments.
Guidance and Capital Allocation
Following the acquisition and a $250 million milestone payment triggered by FDA approval of ZIIHERA in gastroesophageal adenocarcinoma on Aug. 25, 2026, Zymeworks issued updated 2026 guidance. The company expects:
- Total revenue of $278 million to $292 million.
- Adjusted EBITDA of $114 million to $128 million, excluding the impact of future transactions.
The company said it will use total revenue and adjusted EBITDA as key measures as it transitions to a business supported by several revenue sources. It expects to provide initial 2027 guidance with its 2026 annual results in the first quarter of 2027.
Zymeworks said it may allocate cash flow among wholly owned research programs, acquired research assets, additional acquisitions, royalty streams, commercial assets and share repurchases. Management said it will assess these choices based on risk-adjusted returns, strategic fit and its financial position.
The company said it accessed approximately $600 million of non-dilutive financing during 2026 through non-recourse notes, supporting the Theravance transaction and share repurchases. Zymeworks said its last public equity offering was in January 2022 and that it currently has no plans for another equity issuance.
R&D Portfolio and Tax Attributes
The acquisition includes an R&D portfolio focused broadly on autoimmune and inflammatory programs, according to management. Zymeworks said it will evaluate internal development, partnerships, licensing and spinout options, but will allocate capital only to programs with clear risk-adjusted value-creation potential.
The company also acquired approximately $2.5 billion in Irish tax attributes. Stafford said Zymeworks has assigned no value to those attributes in its base-case return analysis or expected purchase accounting, and will evaluate potential uses involving future Irish revenue, intellectual property structuring, acquisitions or investments involving Irish legal entities.
Management said it expects to provide more detail on the acquired research portfolio during an R&D day planned for the first quarter of 2027. Before then, Zymeworks expects phase I optimization data for ZW191 to be presented at ESMO in Madrid on Oct. 24.
About Zymeworks (NASDAQ:ZYME)
Zymeworks Inc (NASDAQ: ZYME) is a biopharmaceutical company focused on discovering, developing and commercializing engineered antibody-based therapeutics for cancer and other serious diseases. The company’s technologies are designed to create bispecific and multispecific antibodies, as well as antibody-drug conjugates that can target tumor cells and deliver therapeutic payloads.
Zymeworks’ leading product is zanidatamab, marketed in the United States as Ziihera. The bispecific antibody targets two separate sites on the HER2 protein and received U.S.
