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Zymeworks seeks to raise US$100m after month of upheaval

Biotech firm recently cut 25% of staff after departure of founding CEO
Zymeworks CEO Ken Galbraith | Submitted

B.C. biotech Zymeworks Inc. (NYSE:ZYME) is seeking to raise US$100 million through a public offering after facing a tumultuous month that saw its co-founder depart as CEO and a quarter of its staff laid off.

After shares peaked at a historical high of US$56.81 in January 2021, they've since sunk to US$8.92 as of 8 a.m. PT

That’s below the US$13 they debuted at when the company went public in 2017 and below the US$11.23 they were trading at when major layoffs were announced last.

Now the company, best known for developing platforms that help other drugs more accurately identify and target cancerous cells, is pricing 9,160,000 common shares at $8 a share.

Pre-funded warrants to purchase up to 3,340,000 common shares are being offered to certain investors at $7.99 a share.

Zymeworks is also granting the underwriters a 30-day option to purchase up to an additional 1,875,000 common shares for $8 a share. The offering is expected to close by Jan. 31.

In addition to laying off 25% of its overall workforce — about 100 employees — the company has cut its senior management team by half. That includes its chief people officer, chief commercial officer and chief scientific officer.

The layoffs come as talent in the biotech industry remains in high demand, with B.C. companies such as AbCellera Biologics Inc. (Nasdaq:ABCL), Stemcell Technologies Inc. and Aurinia Pharmaceuticals Inc. (Nasdaq:AUPH) seeking to grow significantly in the coming years.

Founding CEO Ali Tehrani told BIV last spring the recent and rapid growth of B.C.’s life sciences sector has been stemming the tide on any brain drain the province once faced.

“Now we have companies, now we have critical mass that is enabled to hire [local talent], give them a chance to shine, give them a chance to grow,” he said. 

“At the same time, because of our success, we've been able to bring talent … that historically has stayed in the United States or in Europe. Our friends south of the border, American citizens, European citizens now feel like that's where I want to go.”

After Kenneth Galbraith took over the top job Jan. 15, the company said it intended to seek additional financing after previously raising US$320 million in January 2020 as part of an underwritten public offering. Its 2017 initial public offering raised nearly $60 million. 

A representative from Zymeworks did not immediately respond to an inquiry from BIV.

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