What happened

Shares of Zymeworks (ZYME -0.12%) are crashing today, down by 23.7% as of 11:20 a.m. EST, after the company announced data late on Wednesday from the dose-escalation portion of a phase 1 study evaluating antibody-drug conjugate ZW49 in treating several types of HER2‑positive cancer.

So what

Zymeworks stated that there were "multiple confirmed responses and stable disease observed in several tumor types" in patients treated with ZW49. The company also said that the safety profile for the experimental therapy looked pretty good. While there were some adverse events, 90% of them were mild or moderate in severity.

Scientist looking through a microscope with another scientist in the background

Image source: Getty Images.

So why the big sell-off of the biotech stock today? Zymeworks' data was disappointing. As SVB Leerink analyst Andrew Berens wrote to clients, "The results fell well short of investor expectations for a 40%-50% response rate." 

Unsurprisingly, Zymeworks executives had a more optimistic take. Chief Medical Officer Diana Hausman said, "We are encouraged by the antitumor activity we are seeing so far with ZW49." CEO Ali Tehrani stated, "I believe ZW49 is on track for becoming the HER2 ADC that delivers efficacy without compromising safety."

At least one analyst also remained cautiously optimistic. Raymond James' David Novak acknowledged that Zymeworks' data fell short of expectations. However, he referred to the safety and tolerability profile of ZW49 as "class-leading" and said that it "creates opportunity" for the experimental drug.

Now what

The phase 1 dose-escalation study of ZW49 will continue. Zymeworks hasn't yet established the maximum tolerated dose for the therapeutic candidate. The biotech has also begun enrolling patients into the expansion cohort part of the ongoing study.