Core Insights - Q32 Bio Inc. announced topline results from the SIGNAL-AA Phase 2a trial for bempikibart in alopecia areata, planning to expand the trial by enrolling additional patients [1][4] - The trial did not meet its primary endpoint in Part B, leading to a review of results and exclusion of one site from efficacy analysis due to protocol violations [2] - A post-hoc analysis indicated that bempikibart showed a 16% reduction in SALT score at week 24 compared to 2% in placebo, with 9% of patients achieving SALT-20 [3] SIGNAL-AA Trial Results - Bempikibart was safe and well-tolerated, with no serious adverse events reported [4] - The company plans to enroll approximately 20 additional patients in the Part B expansion of the SIGNAL-AA trial [4] Future Plans - Enrollment for the planned Phase 2 trial of ADX-097 in ANCA-Associated Vasculitis has been deferred to focus on ongoing trials for bempikibart and ADX-097 renal basket [5] SIGNAL-AD Trial Update - In the SIGNAL-AD trial, patients treated with bempikibart showed significant improvements in EASI scores, with 58% improvement at 2mg/kg and 84% at 3mg/kg compared to 38% in placebo [6] - Part B of the SIGNAL-AD trial showed a 74% improvement in EASI for bempikibart, compared to 76% for placebo, which was not statistically significant [7] Pharmacokinetics and Biomarkers - Bempikibart demonstrated favorable pharmacokinetics and target engagement, with substantial reductions in Th2 and Th1 biomarkers [8] Stock Performance - Q32 Bio Inc.'s stock price decreased by 67.1%, trading at $8.04 [9]

Product Development - Legacy Q32 has multiple product candidates targeting autoimmune and inflammatory diseases, with clinical readouts for two lead programs expected in 2024 and 2025[161] - Bempikibart (ADX-914) is in two Phase 2 trials for atopic dermatitis and alopecia areata, with topline data expected in Q4 2024[162] - ADX-097, a complement inhibitor, is in a Phase 1 trial and will enter a Phase 2 renal basket program, with initial data anticipated in H1 2025[163] - Following the termination of the Horizon Agreements, Legacy Q32 retained full development and commercial rights to bempikibart[167] - The company has exclusive licenses for the development and commercialization of ADX-097, with potential milestone payments of up to $2.2 million per licensed product[228] Financial Performance - As of September 30, 2024, Legacy Q32 had cash and cash equivalents of $89.1 million, expected to fund operations until mid-2026[174] - The company does not expect to generate revenue from product sales in the foreseeable future[177] - The net loss for the three months ended September 30, 2024, was $17.6 million, compared to a net loss of $14.0 million for the same period in 2023[192] - The net loss for the nine months ended September 30, 2024, was $33.5 million, compared to a net loss of $26.7 million in 2023, an increase of $6.9 million[200] - Total operating expenses for the three months ended September 30, 2024, were $18.8 million, up from $9.7 million in the same period in 2023, reflecting a loss from operations of $18.8 million[192] Expenses - Research and development expenses for the three months ended September 30, 2024, were $14.3 million, an increase of $6.9 million from $7.5 million in the same period in 2023[194] - The increase in research and development expenses was primarily due to a $6.1 million rise in clinical spending related to the bempikibart program, including a $4.0 million milestone payment to Bristol-Myers Squibb[194] - General and administrative expenses rose to $4.4 million for the three months ended September 30, 2024, compared to $2.2 million in the same period in 2023, driven by increased stock-based compensation and consulting costs[196] - Research and development expenses rose to $37.6 million in 2024, up from $23.4 million in 2023, an increase of $14.2 million[201] - General and administrative expenses increased to $14.0 million in 2024 from $7.1 million in 2023, reflecting a change of $6.9 million[203] Cash Flow and Financing - Net cash used in operating activities was $56.3 million for the nine months ended September 30, 2024, compared to $8.0 million in 2023[210] - The company raised $111.4 million in aggregate cash proceeds from various financing activities since inception[207] - The company may need to raise additional capital through private or public equity or debt financings, which could dilute existing stockholders' ownership[223] - The company expects to fund its operating expenses and capital expenditure requirements into mid-2026 based on current cash, cash equivalents, and short-term investments[222] Obligations and Commitments - The company is obligated to pay Horizon up to $75.1 million contingent on regulatory and sales milestones[180] - The company is obligated to pay Bristol-Myers Squibb up to $215 million in commercial milestone payments based on net sales of licensed products, along with tiered royalties ranging from mid-single digit percentages to up to 10%[232] - The total operating lease obligation as of September 30, 2024, is $13.229 million, with $5.259 million due in 1 to 3 years, $3.672 million in 3 to 5 years, and $4.298 million due after 5 years[225] - The company has received $55.0 million in initial consideration and staged development funding from Horizon for the bempikibart program[236] Accounting and Reporting - The company accounts for stock-based compensation based on grant date fair values, expensing awards over their service periods[258] - The company has determined that recently issued accounting pronouncements will not have a material impact on its financial position and results of operations[266] - The company is classified as a smaller reporting company and is not required to provide certain market risk disclosures[268] Market and Economic Conditions - The company may face challenges in raising additional capital due to potential worsening global economic conditions and disruptions in financial markets[223] - Management anticipates substantial increases in expenses related to ongoing research and development activities and public company operations[219]

Financial Position - Cash and cash equivalents were $89.1 million as of September 30, 2024, expected to fund operations into mid-2026[8] - Total assets increased to $104,542,000 as of September 30, 2024, compared to $47,057,000 on December 31, 2023, representing a growth of 122%[19] - Cash and cash equivalents rose significantly to $89,078,000 from $25,617,000, marking an increase of 248%[19] - Stockholders' equity improved to $18,295,000, recovering from a deficit of $(182,921,000) as of December 31, 2023[19] - Accounts payable and accrued expenses decreased to $10,170,000 from $13,231,000, a reduction of 23%[19] - Venture debt increased to $12,604,000 from $5,459,000, reflecting a rise of 130%[19] - The company reported a CVR liability of $2,680,000, which was not present in the previous period[19] - Right-of-use asset for operating leases slightly decreased to $5,869,000 from $6,301,000, a decline of 7%[19] - Restricted cash and equivalents dropped significantly to $647,000 from $5,647,000, a decrease of 89%[19] - Other assets decreased to $6,348,000 from $9,492,000, a decline of 33%[19] - Convertible preferred stock was eliminated, down from $111,445,000 in the previous period[19] Expenses - Research and development expenses increased to $14.3 million for Q3 2024, up from $7.5 million in Q3 2023, primarily due to higher clinical trial costs[9] - General and administrative expenses rose to $4.5 million for Q3 2024, compared to $2.2 million in Q3 2023, driven by increased stock-based compensation and consulting costs[10] Net Loss - Net loss for Q3 2024 was $17.6 million, or $1.46 per share, compared to a net loss of $14.0 million, or $40.52 per share, in Q3 2023[11] Clinical Trials - Bempikibart Phase 2 trials for atopic dermatitis and alopecia areata are on track, with topline results expected in December 2024[2] - Enrollment in the ADX-097 Phase 2 basket trial for complement mediated renal diseases is ongoing, with initial open-label data expected in 1H 2025[6] - A total of 121 patients were enrolled in the Bempikibart SIGNAL-AD Phase 2 trial, exceeding the initial target of approximately 100 patients due to high demand[4] - The primary endpoint for the Bempikibart SIGNAL-AD trial is the mean percent change in the Eczema Area and Severity Index (EASI) score from baseline to week 14[3] - The company plans to commence the ADX-097 Phase 2 trial in ANCA-Associated Vasculitis in the first half of 2025, with topline results expected in the second half of 2025[6] - Positive Phase 1 results for ADX-097 were presented at ASN Kidney Week 2024, demonstrating a favorable safety profile and desired pharmacokinetic properties[7]

Core Insights - Q32 Bio Inc. is a clinical stage biotechnology company focused on developing biologic therapeutics aimed at restoring immune homeostasis [3][4] - The company will participate in a fireside chat at Guggenheim's Inaugural Healthcare Innovation Conference on November 12, 2024 [1] Company Overview - Q32 Bio develops biologic therapeutics targeting regulators of the innate and adaptive immune systems to address autoimmune and inflammatory diseases [3] - The lead programs focus on the IL-7 / TSLP receptor pathways and the complement system, which are crucial for re-balancing immunity [3] Product Pipeline - The lead product, bempikibart (ADX-914), is a fully human anti-IL-7Rα antibody being evaluated in two Phase 2 trials for atopic dermatitis and alopecia areata [4] - The second product, ADX-097, targets the complement system with a novel platform that allows tissue-targeted regulation without long-term systemic blockade, differentiating it from current therapies [4] - ADX-097 has completed a Phase 1 ascending dose clinical study in healthy volunteers [4]

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 June 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: 001-38433 Q32 Bio Inc. (Exact name of registrant as specified in its charter) Delaware 47-3468 ...

Exhibit 99.1 Q32 Bio Reports Second Quarter 2024 Financial Results and Provides Corporate Update -- Completed enrollment in bempikibart atopic dermatitis (AD) Phase 2 clinical trial and increased trial size to 121 patients based on Part B patient demand -- -- Bempikibart Phase 2 topline results in AD and alopecia areata (AA) remain on-track for Q4'24 -- -- Enrolling patients in the Phase 2 basket trial of ADX-097 for complement mediated renal diseases; initial open-label data expected by year-end 2024 and t ...

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 March 31, 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: 001-38433 Q32 Bio Inc. (Exact name of registrant as specified in its charter) Delaware 47-346 ...

Exhibit 99.1 Q32 Bio Reports First Quarter 2024 Financial Results and Provides Corporate Update -- Completed enrollment in bempikibart alopecia areata (AA) Phase 2 clinical trial, with topline results expected in Q4'24; enrollment in bempikibart atopic dermatitis (AD) Phase 2 clinical trial remains ontrack, with topline results expected in Q4'24 -- -- ADX-097 continues to advance, with anticipated Phase 2 clinical trial initiations on-track: renal basket in 1H'24 and ANCA-associated vasculitis (AAV) in 1H'2 ...

Financial Performance - The company has incurred significant losses since inception and anticipates continued losses for the foreseeable future, which may affect the market value of its common stock[8]. - The company raised approximately $721 million in net proceeds since inception, including a $130 million upfront cash payment from the agreement with Oxford Biomedica[23]. - The company reduced its workforce by 86% to significantly lower ongoing operating costs while evaluating strategic alternatives[10]. Strategic Partnerships and Mergers - An Agreement and Plan of Merger was entered into with Q32 Bio Inc., with Q32 having an aggregate equity value of $195 million and the company's equity value expected to be approximately $80 million[11][12]. - Q32 is expected to complete a Concurrent Financing with gross proceeds of $42 million prior to the Merger[13]. - OXB (US) LLC was established in 2022 to support scalable AAV manufacturing, achieving high-quality titers of E15 vg/L and over 90% fully intact vector[77]. Clinical Trials and Product Development - The company has withdrawn all clinical trial applications for its investigational gene therapy candidates, including HMI-102 and HMI-203, and terminated all related clinical studies[17]. - Clinical data from the pheEDIT trial indicated that HMI-103 was generally well-tolerated, with participant 1 achieving a reduction in plasma phenylalanine levels below the treatment guideline threshold[17]. - The company is exploring strategic alternatives for its product candidates, including potential sales of HMI-103 and HMI-204[17]. - The pheEDIT Phase 1 clinical trial for HMI-103 was inactivated in September 2023, with clinical data showing that HMI-103 was well-tolerated in all three participants, with no serious adverse events reported[59]. - The company has completed IND-enabling studies for HMI-202, a gene therapy for MLD, and announced HMI-204, an optimized one-time gene therapy candidate that showed significant expression of human ARSA in multiple brain regions[18]. Regulatory Environment - The regulatory approval processes for the company's product candidates are lengthy and inherently unpredictable, which may impact future commercialization efforts[8]. - The company must comply with Good Manufacturing Practices (GMP) and conduct stability studies to ensure product quality over its shelf life[94]. - The FDA review process for biologics includes submission of a Biologics License Application (BLA) that must demonstrate safety, purity, and potency[95]. - The company is required to navigate extensive regulatory processes for product approval, which demand significant time and financial resources[90]. Gene Therapy and Gene Editing Technologies - The company focuses on gene therapy and gene editing approaches to address monogenic diseases, aiming for functional gene integration through HR[24]. - The proprietary AAVHSC platform enables nuclease-free gene editing and gene therapy with improved safety profiles and therapeutic efficiencies[29]. - AAVHSCs demonstrate high gene integration efficiencies, achieving therapeutic ranges significantly higher than traditional nuclease-based methods[29]. - The company’s gene editing approach aims to achieve functional gene integration into the patient's genome, potentially addressing the majority of monogenic diseases[24]. Market and Competitive Landscape - The company has paused development of its product candidates, facing competition from major pharmaceutical and biotechnology firms[80]. - Coverage and reimbursement decisions by third-party payors are increasingly restrictive, impacting sales of medical products[108]. - Legislative proposals in the U.S. aim to contain healthcare costs, which may affect the pricing and profitability of pharmaceutical products[111]. Intellectual Property - The company relies on a combination of patents and trade secrets to protect its intellectual property, with a focus on maintaining a competitive advantage[82]. - The patent term for most applications is 20 years, with potential extensions available under the Hatch-Waxman Act[83]. - The company holds 13 granted patents in the U.S. related to novel AAV capsids, expected to expire in 2031, with possible extensions of up to five years[85]. Employee Relations - The company emphasizes the importance of maintaining good relationships with employees, as none are represented by a labor union[136]. - As of December 31, 2023, the company had 7 full-time employees, including one with an M.D. or Ph.D. degree[136].

PART I—FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements.) The company's financial statements reflect a strategic halt in operations, resulting in significant net losses and going concern doubts | Indicator | As of Sep 30, 2023 (in thousands) | As of Dec 31, 2022 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $29,111 | $33,986 | | Short-term investments | $74,187 | $141,040 | | **Total current assets** | **$106,635** | **$181,015** | | **Total assets** | **$140,063** | **$228,470** | | Total liabilities | $51,852 | $50,492 | | **Total stockholders' equity** | **$88,211** | **$177,978** | | Accumulated deficit | ($525,979) | ($429,137) | | Indicator (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $802 | $1,156 | $2,406 | | Research and development | $17,519 | $25,854 | $60,489 | $71,202 | | General and administrative | $6,842 | $7,810 | $23,355 | $29,991 | | Restructuring and other charges | $6,640 | $0 | $6,640 | $0 | | **Loss from operations** | **($31,001)** | **($32,862)** | **($89,328)** | **($98,787)** | | Gain on sale of business | $0 | $0 | $0 | $131,249 | | **Net income (loss)** | **($32,954)** | **($33,726)** | **($96,842)** | **$29,290** | | **Net income (loss) per share-diluted** | **($0.57)** | **($0.59)** | **($1.68)** | **$0.51** | - In July 2023, the company initiated a review of strategic options, stopped further development of its programs, and reduced its workforce by **86%** to significantly cut operating costs[23](index=23&type=chunk) - Management has concluded there is **substantial doubt** regarding the company's ability to continue as a going concern for more than twelve months from the financial statement issuance date[30](index=30&type=chunk) - A restructuring charge of **$6.9 million** for severance and related costs was recorded in Q3 2023 in connection with the 86% workforce reduction[84](index=84&type=chunk) - Effective October 1, 2023, the company was released from its primary lease obligations, which is expected to result in a gain of **$8.8 million**[132](index=132&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses its strategic pivot, program halts, and workforce reduction, which significantly lowered operating expenses - In July 2023, the Board approved a plan to explore strategic options, including mergers or asset sales, and consequently stopped all program development and reduced its workforce by **86%**[137](index=137&type=chunk) | Expense Category (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $17,519 | $25,854 | ($8,335) | | General and administrative | $6,842 | $7,810 | ($968) | | Restructuring and other charges | $6,640 | $0 | $6,640 | - The **$8.3 million decrease** in Q3 2023 R&D expenses compared to Q3 2022 was primarily due to the decision to stop program development and the workforce reduction[167](index=167&type=chunk) - As of September 30, 2023, the company had **$103.3 million** in cash, cash equivalents, and short-term investments, but management has concluded there is **substantial doubt** about its ability to continue as a going concern[151](index=151&type=chunk)[199](index=199&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate sensitivity on its cash and investments, with inflation deemed immaterial - The company's main market risk is interest rate sensitivity on its **$103.3 million** of cash and investments; a hypothetical 10% change in interest rates is not expected to have a material effect[206](index=206&type=chunk) - As of September 30, 2023, the company does not believe inflation has had a material effect on its business, financial condition, or results of operations[207](index=207&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - Based on an evaluation as of the end of the period, the CEO and CFO concluded that the company's disclosure controls and procedures were **effective**[210](index=210&type=chunk) - No changes in internal control over financial reporting occurred during the three months ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[211](index=211&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending a securities class action lawsuit related to its HMI-102 clinical trial disclosures - The company is defending a putative class action lawsuit filed in March 2022 related to disclosures for its HMI-102 clinical trial; a motion to dismiss the case is currently pending[213](index=213&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) Key risks include a history of losses, going concern doubts, strategic uncertainty, and consequences of workforce reduction - The company has a history of significant operating losses, with an accumulated deficit of approximately **$526.0 million** as of September 30, 2023, and anticipates continued losses[216](index=216&type=chunk) - Management has concluded there is **substantial doubt** regarding the company's ability to continue as a going concern for more than twelve months[231](index=231&type=chunk) - The ongoing evaluation of strategic alternatives is costly and complex, with **no assurance** that any transaction will be completed or have a positive impact[218](index=218&type=chunk)[222](index=222&type=chunk) - The recent **86% reduction in force** may lead to unintended consequences such as loss of institutional knowledge and decreased morale[481](index=481&type=chunk)[483](index=483&type=chunk) - The company's novel gene editing and AAVHSC platforms are unproven in late-stage trials, and the regulatory landscape for such therapies is **uncertain and continues to change**[250](index=250&type=chunk)[251](index=251&type=chunk)[253](index=253&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=93&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section is not applicable for the reporting period [Item 5. Other Information](index=93&type=section&id=Item%205.%20Other%20Information) The company reports no other material information and notes its status as a smaller reporting company - The company is a **smaller reporting company** and is not required to provide information otherwise required under Item 408(a) of Regulation S-K[527](index=527&type=chunk) [Item 6. Exhibits](index=95&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and certifications