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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

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)

 

 

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:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.0001 per share

 

INZY

 

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.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

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.

i


 

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.

ii


 

Table of Contents

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

Condensed Consolidated Balance Sheets

1

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

Condensed Consolidated Statements of Stockholders’ Equity

3

Condensed Consolidated Statements of Cash Flows

5

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

29

PART II.

OTHER INFORMATION

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 5.

Other Information

30

Item 6.

Exhibits

31

Signatures

32

 

iii


 

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)

 

 

 

September 30,
2024

 

 

December 31,
2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,575

 

 

$

34,588

 

Short-term investments

 

 

107,033

 

 

 

154,001

 

Prepaid expenses and other current assets

 

 

9,329

 

 

 

7,661

 

Total current assets

 

 

140,937

 

 

 

196,250

 

Property and equipment, net

 

 

945

 

 

 

1,466

 

Right-of-use assets

 

 

710

 

 

 

1,126

 

Restricted cash

 

 

311

 

 

 

311

 

Prepaid expenses, net of current portion

 

 

458

 

 

 

1,694

 

Total assets

 

$

143,361

 

 

$

200,847

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,210

 

 

$

1,166

 

Accrued expenses

 

 

11,571

 

 

 

12,610

 

Operating lease liabilities

 

 

985

 

 

 

910

 

Current portion of long-term debt

 

 

3,578

 

 

 

 

Total current liabilities

 

 

18,344

 

 

 

14,686

 

Operating lease liabilities, net of current portion

 

 

164

 

 

 

913

 

Long-term debt, net

 

 

42,065

 

 

 

44,769

 

Total liabilities

 

 

60,573

 

 

 

60,368

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

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

 

 

 

 

 

 

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

 

 

6

 

 

 

6

 

Additional paid in-capital

 

 

443,476

 

 

 

426,362

 

Accumulated other comprehensive income

 

 

186

 

 

 

41

 

Accumulated deficit

 

 

(360,880

)

 

 

(285,930

)

Total stockholders’ equity

 

 

82,788

 

 

 

140,479

 

Total liabilities and stockholders’ equity

 

$

143,361

 

 

$

200,847

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1


 

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.

2


 

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

 

 

3


 

 

 

 

 

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.

4


 

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.

5


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

6


 

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

7


 

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

 

 

$

 

 

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