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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2024
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____________________ to _____________________
Commission File Number: 001-39397
INOZYME PHARMA, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
38-4024528 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
321 Summer Street, Suite 400 Boston, Massachusetts |
02210 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (857) 330-4340
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common stock, par value $0.0001 per share |
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INZY |
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Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 29, 2024, the registrant had 64,240,198 shares of common stock, $0.0001 par value per share, outstanding.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. All statements, other than statements of historical fact, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” and the negative version of these words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to those described in the “Risk Factors” section in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q and include, among other things:
•our ongoing Phase 1/2 clinical trials of INZ-701 for adults with ENPP1 and ABCC6 Deficiencies, our ongoing open label long term safety study of INZ-701 in patients with ENPP1 or ABCC6 Deficiencies who have received INZ-701 in an existing study ("ADAPT"), our ongoing Phase 1b clinical trial of INZ-701 for infants with ENPP1 Deficiency ("ENERGY 1"), our ongoing pivotal trial of INZ-701 in pediatric patients with ENPP1 Deficiency ("ENERGY 3"), and our ongoing Phase 1 clinical trial of INZ-701 in patients with end-stage kidney disease receiving hemodialysis ("SEAPORT 1"), including statements regarding the timing of enrollment and completion of the clinical trials and the period during which the results of the clinical trials will become available;
•the timing, design, and conduct of our planned clinical trials of INZ-701 for patients with ENPP1 and ABCC6 Deficiencies, including our planned pivotal clinical trials of INZ-701 for infants ("ENERGY 2"), our planned pivotal clinical trial of INZ-701 for pediatric patients with ABCC6 Deficiency, our planned pivotal trial of INZ-701 in patients with calciphylaxis, and our planned clinical trial for ENPP1 Deficient patients ineligible for other ongoing studies;
•our plans to conduct research, preclinical testing and clinical trials of INZ-701 for additional indications;
•our plans to conduct research, preclinical testing and clinical trials of other product candidates;
•our plans to engage in regulatory interactions with the U.S. Food and Drug Administration, the European Medicines Agency and other regulatory authorities;
•our plans with respect to regulatory filings;
•the timing of, and our ability to obtain and maintain, marketing approvals of INZ-701, and the ability of INZ-701 and our other product candidates to meet existing or future regulatory standards;
•our expectations regarding our ability to fund our cash flow requirements with our cash, cash equivalents and short-term investments;
•the potential advantages of our product candidates;
•the rate and degree of market acceptance and clinical utility of our product candidates;
•our estimates regarding the potential market opportunity for our product candidates;
•our commercialization and manufacturing capabilities and strategy;
•our intellectual property position;
•our ability to identify additional products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;
•our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
•our ability to comply with the covenants under our loan agreement;
•the impact of government laws and regulations;
•our competitive position; and
•our expectations regarding the time during which we will be an emerging growth company under the Jumpstart our Business Startups Act of 2012.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments we may make or enter into.
You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
INOZYME PHARMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share and per share data)
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September 30, 2024 |
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December 31, 2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
24,575 |
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$ |
34,588 |
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Short-term investments |
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107,033 |
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154,001 |
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Prepaid expenses and other current assets |
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9,329 |
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7,661 |
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Total current assets |
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140,937 |
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196,250 |
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Property and equipment, net |
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945 |
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1,466 |
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Right-of-use assets |
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710 |
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1,126 |
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Restricted cash |
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311 |
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311 |
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Prepaid expenses, net of current portion |
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458 |
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1,694 |
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Total assets |
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$ |
143,361 |
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$ |
200,847 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
2,210 |
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$ |
1,166 |
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Accrued expenses |
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11,571 |
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12,610 |
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Operating lease liabilities |
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985 |
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910 |
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Current portion of long-term debt |
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3,578 |
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— |
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Total current liabilities |
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18,344 |
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14,686 |
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Operating lease liabilities, net of current portion |
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164 |
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913 |
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Long-term debt, net |
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42,065 |
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44,769 |
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Total liabilities |
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60,573 |
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60,368 |
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Commitments and contingencies (Note 7) |
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Stockholders’ equity: |
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Preferred Stock, $0.0001 par value – 5,000,000 shares authorized at September 30, 2024 and December 31, 2023; no shares issued and outstanding at September 30, 2024 or December 31, 2023 |
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— |
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— |
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Common Stock, $0.0001 par value – 200,000,000 shares authorized at September 30, 2024 and December 31, 2023; 64,179,095 shares issued and outstanding at September 30, 2024 and 61,768,771 shares issued and outstanding at December 31, 2023 |
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6 |
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6 |
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Additional paid in-capital |
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443,476 |
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426,362 |
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Accumulated other comprehensive income |
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186 |
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41 |
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Accumulated deficit |
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(360,880 |
) |
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(285,930 |
) |
Total stockholders’ equity |
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82,788 |
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140,479 |
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Total liabilities and stockholders’ equity |
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$ |
143,361 |
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$ |
200,847 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
INOZYME PHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(amounts in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
19,890 |
|
|
$ |
13,341 |
|
|
$ |
60,758 |
|
|
$ |
36,864 |
|
General and administrative |
|
|
4,961 |
|
|
|
4,733 |
|
|
|
16,101 |
|
|
|
15,973 |
|
Total operating expenses |
|
|
24,851 |
|
|
|
18,074 |
|
|
|
76,859 |
|
|
|
52,837 |
|
Loss from operations |
|
|
(24,851 |
) |
|
|
(18,074 |
) |
|
|
(76,859 |
) |
|
|
(52,837 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
1,778 |
|
|
|
2,369 |
|
|
|
6,182 |
|
|
|
5,306 |
|
Interest expense |
|
|
(1,416 |
) |
|
|
(953 |
) |
|
|
(4,136 |
) |
|
|
(2,052 |
) |
Other (expense) income, net |
|
|
(81 |
) |
|
|
20 |
|
|
|
(137 |
) |
|
|
(42 |
) |
Other income, net |
|
|
281 |
|
|
|
1,436 |
|
|
|
1,909 |
|
|
|
3,212 |
|
Net loss |
|
$ |
(24,570 |
) |
|
$ |
(16,638 |
) |
|
$ |
(74,950 |
) |
|
$ |
(49,625 |
) |
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains on available-for-sale securities |
|
|
290 |
|
|
|
53 |
|
|
|
137 |
|
|
|
279 |
|
Foreign currency translation adjustment |
|
|
(1 |
) |
|
|
(182 |
) |
|
|
8 |
|
|
|
(152 |
) |
Total other comprehensive income (loss) |
|
|
289 |
|
|
|
(129 |
) |
|
|
145 |
|
|
|
127 |
|
Comprehensive loss |
|
$ |
(24,281 |
) |
|
$ |
(16,767 |
) |
|
$ |
(74,805 |
) |
|
$ |
(49,498 |
) |
Net loss attributable to common stockholders—basic and diluted |
|
$ |
(24,570 |
) |
|
$ |
(16,638 |
) |
|
$ |
(74,950 |
) |
|
$ |
(49,625 |
) |
Net loss per share attributable to common stockholders—basic and diluted |
|
$ |
(0.39 |
) |
|
$ |
(0.29 |
) |
|
$ |
(1.20 |
) |
|
$ |
(1.02 |
) |
Weighted-average common shares and pre-funded warrants outstanding—basic and diluted |
|
|
63,276,851 |
|
|
|
56,758,395 |
|
|
|
62,334,482 |
|
|
|
48,494,175 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
INOZYME PHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(amounts in thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional Paid-in |
|
|
Accumulated Other Comprehensive |
|
|
Accumulated |
|
|
Total Stockholders’ Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
(Loss) Income |
|
|
Deficit |
|
|
(Deficit) |
|
Balance at December 31, 2023 |
|
|
61,768,771 |
|
|
$ |
6 |
|
|
$ |
426,362 |
|
|
$ |
41 |
|
|
$ |
(285,930 |
) |
|
$ |
140,479 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
1,691 |
|
|
|
— |
|
|
|
— |
|
|
|
1,691 |
|
Exercise of stock options |
|
|
3,206 |
|
|
|
— |
|
|
|
11 |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
Shares purchased in Employee Stock Purchase Plan |
|
|
44,532 |
|
|
|
— |
|
|
|
148 |
|
|
|
— |
|
|
|
— |
|
|
|
148 |
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(156 |
) |
|
|
— |
|
|
|
(156 |
) |
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10 |
|
|
|
— |
|
|
|
10 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(23,347 |
) |
|
|
(23,347 |
) |
Balance at March 31, 2024 |
|
|
61,816,509 |
|
|
$ |
6 |
|
|
$ |
428,212 |
|
|
$ |
(105 |
) |
|
$ |
(309,277 |
) |
|
$ |
118,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
2,157 |
|
|
|
— |
|
|
|
— |
|
|
|
2,157 |
|
Exercise of stock options and RSU vesting |
|
|
255,456 |
|
|
|
— |
|
|
|
458 |
|
|
|
— |
|
|
|
— |
|
|
|
458 |
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
3 |
|
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(27,033 |
) |
|
|
(27,033 |
) |
Balance at June 30, 2024 |
|
|
62,071,965 |
|
|
$ |
6 |
|
|
$ |
430,827 |
|
|
$ |
(103 |
) |
|
$ |
(336,310 |
) |
|
$ |
94,420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
2,126 |
|
|
|
— |
|
|
|
— |
|
|
|
2,126 |
|
Exercise of stock options and RSU vesting |
|
|
23,462 |
|
|
|
— |
|
|
|
83 |
|
|
|
— |
|
|
|
— |
|
|
|
83 |
|
Shares issued in at-the-market offering |
|
|
2,083,668 |
|
|
|
— |
|
|
|
10,440 |
|
|
|
— |
|
|
|
— |
|
|
|
10,440 |
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
290 |
|
|
|
— |
|
|
|
290 |
|
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(24,570 |
) |
|
|
(24,570 |
) |
Balance at September 30, 2024 |
|
|
64,179,095 |
|
|
$ |
6 |
|
|
$ |
443,476 |
|
|
$ |
186 |
|
|
$ |
(360,880 |
) |
|
$ |
82,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional Paid-in |
|
|
Accumulated Other Comprehensive |
|
|
Accumulated |
|
|
Total Stockholders’ Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
(Loss) Income |
|
|
Deficit |
|
|
(Deficit) |
|
Balance at December 31, 2022 |
|
|
40,394,363 |
|
|
|
4 |
|
|
|
333,356 |
|
|
|
(205 |
) |
|
|
(214,761 |
) |
|
|
118,394 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
2,092 |
|
|
|
— |
|
|
|
— |
|
|
|
2,092 |
|
Exercise of pre-funded warrants |
|
|
3,325,644 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Shares purchased in Employee Stock Purchase Plan |
|
|
45,478 |
|
|
|
— |
|
|
|
96 |
|
|
|
— |
|
|
|
— |
|
|
|
96 |
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
150 |
|
|
|
— |
|
|
|
150 |
|
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19 |
|
|
|
— |
|
|
|
19 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(17,404 |
) |
|
|
(17,404 |
) |
Balance at March 31, 2023 |
|
|
43,765,485 |
|
|
$ |
4 |
|
|
$ |
335,544 |
|
|
$ |
(36 |
) |
|
$ |
(232,165 |
) |
|
$ |
103,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
1,600 |
|
|
|
— |
|
|
|
— |
|
|
|
1,600 |
|
Shares issues in at-the-market offering |
|
|
2,591,995 |
|
|
|
1 |
|
|
|
16,086 |
|
|
|
— |
|
|
|
— |
|
|
|
16,087 |
|
Exercise of stock options |
|
|
21,608 |
|
|
|
— |
|
|
|
55 |
|
|
|
— |
|
|
|
— |
|
|
|
55 |
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
76 |
|
|
|
— |
|
|
|
76 |
|
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
|
|
— |
|
|
|
11 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(15,583 |
) |
|
|
(15,583 |
) |
Balance at June 30, 2023 |
|
|
46,379,088 |
|
|
$ |
5 |
|
|
$ |
353,285 |
|
|
$ |
51 |
|
|
$ |
(247,748 |
) |
|
$ |
105,593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
1,672 |
|
|
|
— |
|
|
|
— |
|
|
|
1,672 |
|
Shares issues in at-the-market offering |
|
|
962,000 |
|
|
|
— |
|
|
|
5,149 |
|
|
|
— |
|
|
|
— |
|
|
|
5,149 |
|
Exercise of stock options |
|
|
13,578 |
|
|
|
— |
|
|
|
43 |
|
|
|
— |
|
|
|
— |
|
|
|
43 |
|
Issuance of common stock, net of issuance costs |
|
|
14,375,000 |
|
|
|
1 |
|
|
|
64,412 |
|
|
|
— |
|
|
|
— |
|
|
|
64,413 |
|
Shares purchased in Employee Stock Purchase Plan |
|
|
31,082 |
|
|
|
— |
|
|
|
110 |
|
|
|
— |
|
|
|
— |
|
|
|
110 |
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
53 |
|
|
|
— |
|
|
|
53 |
|
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(182 |
) |
|
|
— |
|
|
|
(182 |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(16,638 |
) |
|
|
(16,638 |
) |
Balance at September 30, 2023 |
|
|
61,760,748 |
|
|
$ |
6 |
|
|
$ |
424,671 |
|
|
$ |
(78 |
) |
|
$ |
(264,386 |
) |
|
$ |
160,213 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
INOZYME PHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
2023 |
|
Operating activities |
|
|
|
|
|
|
Net loss |
|
$ |
(74,950 |
) |
|
$ |
(49,625 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
565 |
|
|
|
624 |
|
Stock-based compensation expense |
|
|
5,974 |
|
|
|
5,364 |
|
Amortization of premiums and discounts on marketable securities |
|
|
(4,497 |
) |
|
|
(3,334 |
) |
Reduction in the carrying value of right-of-use assets |
|
|
416 |
|
|
|
364 |
|
Non-cash interest expense and amortization of debt issuance costs |
|
|
874 |
|
|
|
426 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
(1,668 |
) |
|
|
(4,887 |
) |
Accounts payable |
|
|
1,044 |
|
|
|
(535 |
) |
Accrued expenses |
|
|
(1,039 |
) |
|
|
(1,972 |
) |
Operating lease liabilities |
|
|
(674 |
) |
|
|
(604 |
) |
Prepaid expenses, net of current portion |
|
|
1,236 |
|
|
|
2,115 |
|
Other long-term liabilities |
|
|
— |
|
|
|
(124 |
) |
Net cash used in operating activities |
|
|
(72,719 |
) |
|
|
(52,188 |
) |
Investing activities |
|
|
|
|
|
|
Purchases of marketable securities |
|
|
(126,498 |
) |
|
|
(211,465 |
) |
Maturities of marketable securities |
|
|
178,101 |
|
|
|
164,482 |
|
Purchases of property and equipment |
|
|
(45 |
) |
|
|
(193 |
) |
Net cash provided by (used in) investing activities |
|
|
51,558 |
|
|
|
(47,176 |
) |
Financing activities |
|
|
|
|
|
|
Net proceeds from issuance of long-term debt |
|
|
— |
|
|
|
27,500 |
|
Proceeds from issuance of common stock |
|
|
10,440 |
|
|
|
85,649 |
|
Proceeds from exercise of stock options |
|
|
552 |
|
|
|
98 |
|
Proceeds from issuance of common stock for cash under Employee Stock Purchase Plan |
|
|
148 |
|
|
|
206 |
|
Net cash provided by financing activities |
|
|
11,140 |
|
|
|
113,453 |
|
Net (decrease) increase in cash, cash equivalents, and restricted cash |
|
|
(10,021 |
) |
|
|
14,089 |
|
Effect of foreign currency exchange rate on cash |
|
|
8 |
|
|
|
(152 |
) |
Cash, cash equivalents, and restricted cash at beginning of period |
|
|
34,899 |
|
|
|
33,269 |
|
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
24,886 |
|
|
$ |
47,206 |
|
Supplemental cash flow information: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
24,575 |
|
|
$ |
46,895 |
|
Restricted cash |
|
|
311 |
|
|
|
311 |
|
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
24,886 |
|
|
$ |
47,206 |
|
Property and equipment unpaid at end of period |
|
$ |
— |
|
|
$ |
3 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Inozyme Pharma, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(amounts in thousands, except share and per share data and where otherwise noted)
1. Organization and Basis of Presentation
Inozyme Pharma, Inc. (the “Company”) is a clinical-stage biopharmaceutical company developing novel therapeutics for rare diseases impacting bone health and blood vessel function.
Through the Company’s in-depth understanding of a key biological pathway, the PPi-Adenosine Pathway, the Company is pursuing the development of therapeutics that address pathologic mineralization and intimal proliferation, or smooth muscle cell overgrowth that leads to narrowing and the obstruction of blood vessels, to improve the underlying causes of these debilitating diseases. The ENPP1 enzyme is central to this pathway and generates plasma pyrophosphate ("PPi") and adenosine. It is well established that low levels of PPi drive pathologic mineralization and low levels of adenosine drive intimal proliferation in a number of rare diseases. Disruptions in this pathway impact the levels of these molecules, leading to severe musculoskeletal, cardiovascular, and neurological conditions, including ENPP1 Deficiency, ABCC6 Deficiency, calciphylaxis, and ossification of the posterior longitudinal ligament ("OPLL"). The Company is initially focused on developing a novel therapy for diseases characterized by pathologic mineralization and intimal proliferation, including ENPP1 Deficiency and ABCC6 Deficiency as well as calciphylaxis.
The Company’s lead product candidate, INZ-701, is a soluble, recombinant, or genetically engineered, ENPP1 fusion protein that is designed to increase PPi and adenosine, enabling the potential treatment of multiple diseases caused by deficiencies in these molecules. By targeting the PPi-Adenosine Pathway, INZ-701 aims to correct pathologic mineralization and intimal proliferation, addressing the significant morbidity and mortality in these devastating diseases.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") for interim financial information. Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and note disclosures required by U.S. GAAP for audited year-end financial statements. The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the interim period results. The results for the three and nine month periods ended September 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
Liquidity, Capital Resources, and Going Concern
Since the Company’s incorporation in 2017 and through September 30, 2024, the Company has devoted substantially all of its efforts to raising capital, building infrastructure, developing intellectual property, and conducting research and development activities. The Company incurred net losses of $75.0 million for the nine months ended September 30, 2024 and had an accumulated deficit of $360.9 million as of September 30, 2024. The Company had cash, cash equivalents, and short-term investments of $131.6 million as of September 30, 2024.
The Company has incurred recurring losses and negative cash flows from operations since inception and has primarily funded its operations with proceeds from the issuance of convertible preferred stock, offerings of common stock and pre-funded warrants, and its loan and security agreement (the “Loan Agreement”) with K2 HealthVentures LLC (see Note 8). The Company expects its operating losses and negative operating cash flows to continue into the foreseeable future as it continues to expand its research and development efforts.
The accompanying condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business. The Company believes its available cash, cash equivalents, and short-term investments as of September 30, 2024 will be sufficient to fund its cash flow requirements for at least 12 months from the filing date of this Quarterly Report on Form 10-Q. Management’s expectations with respect to its ability to fund current and long-term planned operations are based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, the Company may need to seek additional strategic or financing opportunities sooner than would otherwise be expected. However, there is no guarantee that any of these strategic or financing opportunities will be executed on favorable terms, or at all, and some could be dilutive to existing stockholders. If the Company is
unable to obtain additional funding on a timely basis, it may be forced to delay, reduce, or eliminate some or all of its research and development programs, portfolio expansion, or commercialization efforts, which could adversely affect its business prospects.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Inozyme Securities Corp., which is a Massachusetts subsidiary created to buy, sell, and hold securities; Inozyme Ireland Limited; and Inozyme Pharma Switzerland GmbH. All intercompany transactions and balances have been eliminated.
Summary of Significant Accounting Policies
The significant accounting policies and estimates used in the preparation of the accompanying condensed consolidated financial statements are described in the Company’s audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes in the Company’s significant accounting policies during the nine months ended September 30, 2024.
Use of Estimates
The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Estimates and judgments are based on historical information and other market-specific or various relevant assumptions, including, in certain circumstances, future projections that management believes to be reasonable under the circumstances. Actual results could differ materially from estimates. Significant estimates and assumptions are used for, but not limited to, the accruals for research and development expenses. The Company evaluates its estimates and assumptions on an ongoing basis. All revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Concentration of Credit Risk and Off-Balance Sheet Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, and short-term investments and, from time to time, long-term investments. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits and limits its exposure to credit risk by placing its cash with high credit quality financial institutions. The Company’s investments are currently composed of U.S. Treasury securities and U.S. government agency debt securities. The Company mitigates credit risk by maintaining a diversified portfolio and limiting the amount of investment exposure as to institution, maturity, and investment type.
The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts, or other foreign hedging arrangements.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents include cash in readily available checking accounts, money market accounts, and certain marketable securities. Cash is carried at cost, which approximates its fair value. Cash equivalents are carried at fair market value.
Restricted Cash
Restricted cash is composed of amounts held to collateralize the letter of credit related to the Company’s lease arrangements. Restricted cash is classified as either current or non-current based on the terms of the underlying lease arrangement.
3. Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the
Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
4. Short-Term Investments
Short-term investments consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2024 |
|
Description |
|
Maturity |
|
Amortized Costs |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Estimated Fair Value |
|
U.S. Treasury securities |
|
1 year or less |
|
$ |
45,983 |
|
|
$ |
96 |
|
|
$ |
— |
|
|
$ |
46,079 |
|
U.S. government agency debt securities |
|
1 year or less |
|
|
60,846 |
|
|
|
109 |
|
|
|
(1 |
) |
|
|
60,954 |
|
|
|
|
|
$ |
106,829 |
|
|
$ |
205 |
|
|
$ |
(1 |
) |
|
$ |
107,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
Description |
|
Maturity |
|
Amortized Costs |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Estimated Fair Value |
|
U.S. Treasury securities |
|
1 year or less |
|
$ |
80,160 |
|
|
$ |
59 |
|
|
$ |
(1 |
) |
|
$ |
80,218 |
|
U.S. government agency debt securities |
|
1 year or less |
|
|
73,774 |
|
|
|
17 |
|
|
|
(8 |
) |
|
|
73,783 |
|
|
|
|
|
$ |
153,934 |
|
|
$ |
76 |
|
|
$ |
(9 |
) |
|
$ |
154,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company did not have any investments in a continuous unrealized loss position for more than 12 months as of September 30, 2024. As of September 30, 2024, the Company believes that the cost basis of its available-for-sale securities is recoverable, and the Company has the intent and ability to hold its available-for-sale securities until recovery. Therefore, no allowance for credit losses was recorded.
5. Fair Value Measurement
Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
•Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;
•Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or
•Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
The following tables represent the Company’s financial assets measured at fair value on a recurring basis and indicate the level of fair value hierarchy utilized to determine such fair values:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using |
|
Description |
|
September 30, 2024 |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds (included in cash and cash equivalents) |
|
$ |
23,631 |
|
|
$ |
23,631 |
|
|
$ |
— |
|
|
$ |
— |
|
U.S. government agency debt securities |
|
|
60,954 |
|
|
|
— |
|
|
|
60,954 |
|
|
|
— |
|
U.S. Treasury securities |
|
|
46,079 |
|
|
|
46,079 |
|
|
|
— |
|
|
|
— |
|
Total assets |
|
$ |
130,664 |
|
|
$ |
69,710 |
|
|
$ |
60,954 |
|
|
$ |
— |
|