SCHEDULE 13D: EcoR1 Capital Significantly Boosts Zymeworks Stake to Over 30% Through Warrant Exercise

EcoR1 Capital, LLC and its affiliates have substantially increased their beneficial ownership in Zymeworks Inc. to 30.7% of outstanding common stock following the full exercise of pre-funded warrants.

Summary

• EcoR1 Capital, LLC, Oleg Nodelman, and EcoR1 Capital Fund Qualified, L.P. collectively reported beneficial ownership of 22,970,388 shares of Zymeworks Inc. Common Stock, representing 30.7% of the class.
• The percentage is calculated based on 74,844,505 shares of Common Stock outstanding, as reported by Zymeworks Inc. on June 27, 2025.
• The reporting persons acquired the Common Stock for investment purposes, believing it was undervalued and represented an attractive investment opportunity.
• Funds managed by EcoR1 Capital used working capital to purchase Zymeworks Common Stock and Pre-Funded Warrants, with total investments of $192,880,935.01 by EcoR1 Capital Fund Qualified, L.P. and $12,853,702.36 by EcoR1 Capital Fund, L.P.
• On June 26, 2025, the Funds exercised Pre-Funded Warrants to acquire 5,086,521 shares of Common Stock at an exercise price of $0.0001 per share on a cashless basis.
• An amendment to the Pre-Funded Warrants was entered into on June 26, 2025, removing a limitation that prevented exercise if beneficial ownership exceeded 19.99% of outstanding shares.
• Recent open market purchases include 49,502 shares on May 15, 2025, at $11.4308 per share, and 5,919 shares on May 19, 2025, at $11.7821 per share.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The reporting persons explicitly state their belief that the stock was undervalued and represented an attractive investment opportunity, and they significantly increased their stake. The removal of the ownership limitation on warrant exercise further indicates strong commitment and potential for future influence. No explicit negatives or delays are mentioned.

Positives

• The reporting persons acquired the Common Stock for investment purposes based on their belief that the Issuer's Common Stock, when purchased, was undervalued and represented an attractive investment opportunity.
• The significant increase in beneficial ownership to 30.7% demonstrates strong conviction from a major institutional investor.
• The full exercise of pre-funded warrants at a nominal price of $0.0001 per share indicates a strategic move to convert existing rights into direct equity ownership.

Risks

• The Issuer is subject to liquidated damages if it fails to file or make effective a registration statement for the resale of the Warrant Shares by specified deadlines, or if the registration statement becomes unavailable for sales. Damages are 1% of the aggregate purchase price per 30-day period, capped at 6% in total and 1% per 30-day period.
• The reporting persons may sell all or part of their Common Stock holdings at any time, which could exert downward pressure on the stock price.
• The investment is subject to general economic, financial market, and industry conditions, which could negatively impact the Issuer's prospects and stock value.

Future Outlook

The reporting persons will routinely monitor Zymeworks Inc. regarding various factors affecting their investment, including trading prices, operations, financial position, and market conditions. Depending on their evaluation, they may purchase additional Common Stock, sell existing holdings, enter into hedging transactions, or communicate with other stockholders and industry participants. They have no present plan for specific corporate actions but may recommend actions to Zymeworks' management, board, and stockholders.

Management Comments

• Oleg Nodelman, the manager of EcoR1, and Scott Platshon, an EcoR1 employee, are members of Zymeworks' board of directors.
• The reporting persons acquired the Common Stock for investment purposes based on their belief that the Issuer's Common Stock, when purchased, was undervalued and represented an attractive investment opportunity.

Industry Context

This filing indicates a significant increase in a major institutional investor's stake in a publicly traded biotechnology company. Such a substantial position, coupled with board representation, suggests a high level of conviction in the company's long-term prospects and potentially an active role in its strategic direction, which is a common characteristic of activist or engaged institutional investors in the biotech sector.

Comparison to Industry Standards

• This Schedule 13D filing primarily discloses beneficial ownership and investment intent, rather than operational or financial performance that would typically be benchmarked against industry peers.
• Direct comparisons of 'results' in the context of global benchmarks or specific comparable companies/projects are not applicable to the content of this document, as it focuses on an investor's stake and related agreements.

Management Changes

Corporate Governance

Related Party Transactions

• EcoR1 Capital, LLC acts as an investment adviser to its client funds, including EcoR1 Capital Fund Qualified, L.P., pursuant to investment management or limited partnership agreements.
• EcoR1 Capital, LLC is entitled to allocations or fees based on assets under management and realized/unrealized gains from its clients.
• Oleg Nodelman, manager and control person of EcoR1 Capital, LLC, and Scott Platshon, an EcoR1 employee, are members of Zymeworks' board of directors, providing direct representation for the reporting persons on the Issuer's board.

Stakeholder Impact

• Shareholders: Increased institutional ownership by a potentially active investor could lead to greater oversight, strategic shifts, or increased liquidity, but also potential for large block sales.
• Management/Board: The presence of EcoR1 representatives on the board and their significant ownership stake may lead to increased engagement and potential influence on strategic decisions.
• Creditors: No direct impact mentioned, but a stronger, more engaged shareholder base could indirectly affect financial stability.

Next Steps

• The reporting persons will routinely monitor Zymeworks Inc. regarding various factors affecting their investment.
• They may purchase additional Common Stock in the open market or through privately negotiated transactions.
• They may sell all or part of their Common Stock holdings at any time.
• They may enter into or unwind hedging or other derivative transactions.
• They may communicate with other stockholders, industry participants, and interested parties about Zymeworks Inc.
• They may recommend actions to Zymeworks' management, board of directors, and stockholders, potentially involving mergers, consolidations, sales or acquisitions of assets, changes in control, or other changes in capitalization.

Key Dates

Keywords

Zymeworks Inc., EcoR1 Capital, Beneficial Ownership, Schedule 13D, Pre-Funded Warrants, Investment, Common Stock, Biotechnology, Institutional Investor, Private Placement