ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On January 19, 2022, Zymeworks Inc. (the "Company") announced certain
information relating to the Company's financial condition as of December 31,
2021, including its preliminary and unaudited estimate of cash, cash equivalents
and short-term investments of approximately $250.0 million and its expectations
that such cash, cash equivalents and short-term investments are anticipated to
fund the Company's current operations through at least late 2022 (such
information, the "Financial Condition Information"). The Financial Condition
Information is set forth in a press release issued by the Company on January 19,
2022 as the first paragraph under the caption "Updated Financial Position", a
copy of which press release is attached hereto as Exhibit 99.1. The press
release is incorporated herein by reference, except for the Financial Condition
Information, which information is furnished and shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or otherwise subject to the liabilities of that section, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, as amended (the "Securities Act"), or the Exchange act, except as
expressly set forth by specific reference in such filing.
On January 19, 2022, the Company filed this press release with the Canadian
securities regulatory authorities on the System for Electronic Document Analysis
and Retrieval ("SEDAR") at www.sedar.com.
ITEM 2.05 COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES.
On January 15, 2022, the Company authorized a restructuring of the Company's
workforce (the "Restructuring"), with a target of reducing employee headcount by
at least 25% across the organization by the end of 2022. The Company took these
steps as part of its renewed focus on achieving its key strategic priorities and
to help create a more cost-efficient organization in order to execute on its
strategic priorities. The Company expects to substantially complete the
Restructuring by December 31, 2022. At this time, the Company is unable to make
a good faith determination of an estimate or a range of estimates as required by
paragraphs (b), (c) and (d) of Item 2.05 of Form 8-K with respect to the
Restructuring. The Company will file an amendment to this Current Report on Form
8-K promptly after it makes such a determination.
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
OFFICERS.
Departure of Executive Officers
In connection with the Restructuring, effective January 19, 2022, the Company
terminated the employment of Dr. Anthony Polverino, Executive Vice President,
Early Development & Chief Scientific Officer. Pursuant to the terms of
Dr. Polverino's employment agreement with the Company, effective September 17,
2018 (the "Polverino Employment Agreement"), subject to Dr. Polverino's
execution and non-revocation of a release of claims in a form acceptable to the
Company, Dr. Polverino is entitled to certain post-termination benefits,
consisting of payment of 12 months of his current annual base salary ($440,800)
and continuation of benefits for 12 months.
Also in connection with the Restructuring, effective January 19, 2022, the
Company terminated the employment of Ms. Kathryn O'Driscoll, Chief People
Officer. Pursuant to the terms of Ms. O'Driscoll's employment agreement with the
Company, effective October 14, 2019 (the "O'Driscoll Employment Agreement"),
subject to Ms. O'Driscoll's execution and non-revocation of a release of claims
in a form acceptable to the Company, Ms. O'Driscoll is entitled to certain
post-termination benefits, consisting of payment of 12 months of her current
annual base salary ($360,500) and continuation of benefits for 12 months.
Completion of Chief Executive Officer Transition
As previously reported on the Company's Current Report on Form 8-K filed on
January 5, 2022, the board of directors (the "Board") appointed Mr. Kenneth
Galbraith, age 59, as President, Chief Executive Officer and Chair of the Board
of the Company, effective upon his commencement of employment with the Company.
Mr. Galbraith's employment with the Company commenced on January 15, 2022 (the
"Start Date"). Effective as of the Start Date and in connection with
Mr. Galbraith's appointment, Dr. Ali Tehrani resigned from the positions of
President and Chief Executive Officer and as a member of the Board. Also
effective as of the Start Date, Ms. Lota Zoth, the previous Chair of the Board,
was appointed as the Board's lead independent director. For additional
information regarding Mr. Galbraith's and Ms. Zoth's appointments and
Dr. Tehrani's resignation and the compensatory arrangements related thereto,
please refer to the Company's Current Report on Form 8-K and the exhibits
thereto, filed with the Securities and Exchange Commission on January 5, 2022.
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ITEM 8.01 OTHER EVENTS
Also in connection with the Restructuring, effective January 19, 2022, the
Company terminated the employment of Mr. James Priour, Chief Commercial Officer.
On January 19, 2022, the Company issued a press release announcing a corporate
update on its strategic priorities and the Restructuring. A copy of the press
release is attached as Exhibit 99.1 hereto and is incorporated herein by
reference, except for the Financial Condition Information, which information is
furnished as described under Item 2.02.
On January 19, 2022, the Company filed a material change report with Canadian
securities regulators regarding the corporate update on its strategic priorities
and the Restructuring. A copy of this material change report is attached as
Exhibit 99.2 hereto.
Forward-Looking Statements
This Current Report on Form 8-K contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. Forward-looking statements are identified by such words as
"believe," "expect," "anticipate" and words of similar import and are based on
current expectations that involve risks and uncertainties, such as the Company's
plans, objectives, expectations and intentions. All statements other than
historical or current facts are forward-looking statements, including, without
limitation, statements about the Restructuring, including the expected timing
until completion, magnitude of employee headcount reduction, anticipated cost
savings, and the terms and conditions, and accounting impact, of any agreements
with departing executives. These forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those anticipated in the forward-looking statements. These
statements, like all statements in this report, speak only as of their date.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
Exhibit
No. Description
99.1 Press Release dated January 19, 2022.
99.2 Material Change Report dated January 19, 2022
104 Cover Page Interactive Data File (embedded as Inline XBRL document).
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