Summary of Surrozen (SRZN) FY Conference - August 13, 2025 Company Overview - Surrozen is a biotechnology company focused on modulating the Wnt pathway, which is clinically validated for large markets in ophthalmology [1][2] Core Industry Insights - The Wnt pathway has garnered significant interest from major pharmaceutical companies such as Merck, Roche, and Boehringer Ingelheim due to its potential in treating diabetic macular edema and improving visual acuity outcomes [2] - Surrozen has developed a broad pipeline of ophthalmology development candidates targeting prevalent retinal and corneal diseases with significant unmet needs [2][5] Key Developments and Innovations - Surrozen's approach involves using bispecific and multispecific antibody technologies to activate Wnt signaling, which was previously considered undruggable [4] - The company has established a strong intellectual property position in activating Wnt signaling with antibodies, with their patent cited as prior art in a withdrawn Merck patent [2] - The most advanced candidate, SCN413, targets Frizzled four and has shown superior effects in preclinical models compared to existing treatments like Eylea [12][13] Clinical Data and Pipeline - SCN413 demonstrated a compelling treatment effect in rabbit and rodent models, significantly reducing vessel leakage and normalizing retinal vascular anatomy [12][13] - Surrozen is advancing additional molecules, including SCN8141 and SCN8143, which incorporate VEGF and IL-6 inhibition, aiming to improve treatment efficacy and reduce the frequency of injections [15][16] - The company is also exploring treatments for Fuchs endothelial dystrophy, showing promising results in improving corneal clarity and thickness in preclinical models [17][19] Market Opportunities - The market for treating Fuchs endothelial dystrophy is significant, with a high unmet need for effective therapies beyond current transplant options [17] - Dry AMD and geographic atrophy represent another area of focus, with current therapies being limited and a strong need for new mechanisms to preserve vision [20][21] Future Outlook - Surrozen aims to report progress and clinical outcomes in 2025 and 2026, highlighting its commitment to addressing high-need areas in ophthalmology [23]

Core Insights - Surrozen reported a significant turnaround from a net loss in Q2 2024 to a net income of $39.7 million in Q2 2025, with GAAP EPS of $2.55, surpassing analyst expectations of a loss of $1.11 per share [1][2][5] - The positive financial results were primarily driven by non-operating gains, including a $31.5 million gain from the change in fair value of its tranche liability and $16.2 million in net other income, while core business performance remained typical of a pre-commercial biotech [5][11] - The company recorded its first meaningful research service revenue of $1.0 million, attributed to a collaboration with TCGFB, Inc., with no product sales reported [6][11] Financial Performance - Q2 2025 GAAP EPS was $2.55, a significant improvement from $(7.99) in Q2 2024 [2] - Total revenue for Q2 2025 was $1.0 million, compared to $0.0 million in Q2 2024 [2] - Research and development expenses increased to $6.0 million, up 13.2% from Q2 2024, while general and administrative expenses rose to $4.0 million, an 8.1% increase [2][6] Company Overview - Surrozen focuses on therapies that modulate the Wnt pathway, crucial for tissue repair and regeneration, with a proprietary SWAP platform aimed at creating Wnt mimetics for treating retinal diseases [3][4] - The company is advancing drug candidates SZN-8141 and SZN-8143, targeting retinal diseases through Wnt pathway stimulation [4][9] Pipeline and Development - Progress in the pipeline includes continued preclinical advancement of SZN-8141 and SZN-8143, with plans to submit an IND application for SZN-8141 in 2026 [8][9] - The company expanded its intellectual property portfolio, securing U.S. Patent No. 12,297,278 for its SWAP technology [9] Strategic Partnerships and Leadership - Strategic partnerships, particularly with larger pharmaceutical firms, are essential for revenue and expertise [4][10] - The company strengthened its clinical leadership by appointing Daniel Chao, M.D. Ph.D, as Vice President and Head of Clinical Development, and established a Clinical Advisory Board [10] Cash Position and Future Outlook - As of June 30, 2025, Surrozen had cash and cash equivalents of $90.4 million, an increase from $34.6 million at the end of 2024, reflecting earlier capital raises [7] - The company did not provide formal revenue or profitability guidance but emphasized its focus on advancing the ophthalmology pipeline and submitting the SZN-8141 IND application in 2026 [12][13]

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, 2025 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: 001-39635 Surrozen, Inc. (Exact Name of Registrant as Specified in its Charter) | Delaware | | 30-1374889 | | --- | --- | --- | | ( St ...

Surrozen Reports Second Quarter 2025 Financial Results and Provides Business Update Daniel Chao, M.D., Ph.D., joins Surrozen as Vice President of Clinical Development • Ophthalmology Pipeline Progress: The company continues to progress its lead candidates, SZN-8141 and SZN-8143 to address retinal diseases. The company remains on track to submit an Investigational New Drug (IND) application for SZN-8141 in 2026. • Patent Issuance: In May 2025, Surrozen was granted U.S. Patent No. 12,297,278 by the U.S. Paten ...

Core Viewpoint - Surrozen, Inc. is advancing its ophthalmology pipeline with a focus on developing novel treatments for severe eye diseases, supported by key leadership appointments and patent issuances [1][4][5]. Business Highlights - The company is leveraging its expertise in Wnt biology and antibody technologies to develop treatments for retinal diseases [2]. - Surrozen's lead candidates, SZN-8141 and SZN-8143, are progressing towards clinical development, with an IND application for SZN-8141 expected in 2026 [5]. Key Events in Second Quarter 2025 - The appointment of Dr. Daniel Chao as Vice President of Clinical Development is expected to enhance the company's clinical capabilities [4]. - The formation of a Clinical Advisory Board consisting of leading retinal specialists aims to guide the clinical development of the ophthalmology pipeline [5]. - Surrozen presented preclinical data for SZN-8141 and SZN-8143 at major conferences, showcasing their potential in promoting retinal vessel regrowth [5]. Financial Highlights - As of June 30, 2025, Surrozen reported cash and cash equivalents of $90.4 million, down from $101.6 million as of March 31, 2025 [6]. - The company achieved a net income of $39.7 million, or $2.55 per share, for the quarter, a significant improvement from a net loss of $25.3 million, or ($7.99) per share, for the same period in 2024 [8]. - Research and development expenses increased to $6.0 million from $5.3 million year-over-year, reflecting higher manufacturing and lab costs [11]. Ophthalmology Pipeline - SZN-8141 is designed to treat diabetic macular edema (DME) and wet age-related macular degeneration (AMD) by combining Frizzled 4 (Fzd4) agonism and VEGF antagonism [9]. - SZN-8143 targets DME, wet AMD, and uveitic macular edema (UME) through a combination of Fzd4 agonism, VEGF antagonism, and interleukin-6 (IL-6) antagonism [10]. - SZN-413, another candidate, is being developed for retinal vascular-associated diseases and has shown promise in preclinical models [12].

Company Overview - Surrozen, Inc. is a biotechnology company focused on developing targeted therapeutics that selectively modulate the Wnt pathway for tissue repair and regeneration, particularly in severe eye diseases [1][3] - The company utilizes proprietary technologies to harness the body's biological repair mechanisms to treat severe diseases [3] Upcoming Events - Surrozen management will present at the H.C. Wainwright 5th Annual Ophthalmology Virtual Conference on August 13, 2025, starting at 7:00 AM Eastern Time [2] - The presentation will be accessible via an audio webcast on the Surrozen website, with a replay available afterward [2]

Core Viewpoint - Surrozen, Inc. (SRZN) has experienced significant selling pressure, resulting in a 29.7% decline over the past four weeks, but analysts anticipate better earnings than previously expected, indicating potential for recovery [1] Group 1: Technical Indicators - The Relative Strength Index (RSI) is utilized to identify oversold stocks, with a reading below 30 typically indicating oversold conditions [2] - SRZN's current RSI reading is 27.4, suggesting that the heavy selling may be exhausting, which could lead to a price rebound [5] Group 2: Fundamental Indicators - There has been a strong consensus among sell-side analysts to raise earnings estimates for SRZN, resulting in a 69.2% increase in the consensus EPS estimate over the last 30 days, which often correlates with price appreciation [6] - SRZN holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a turnaround [7]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Surrozen, Inc.'s unaudited condensed consolidated financial statements for the three months ended March 31, 2025, and 2024, including balance sheets, statements of operations, stockholders' equity (deficit), and cash flows, along with detailed notes explaining significant accounting policies, fair value measurements, collaboration agreements, and related party transactions [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific points in time | Metric | March 31, 2025 (Unaudited) (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Cash and cash equivalents | $101,645 | $34,565 | | Total current assets | $106,011 | $38,932 | | Total assets | $114,829 | $48,467 | | Total current liabilities | $10,582 | $7,315 | | Tranche liability | $42,423 | — | | Warrant liabilities | $49,372 | $55,892 | | Total liabilities | $109,155 | $69,847 | | Total stockholders' equity (deficit) | $5,674 | $(21,380) | - The company's cash and cash equivalents significantly increased from **$34.6 million** at December 31, 2024, to **$101.6 million** at March 31, 2025, primarily due to financing activities[15](index=15&type=chunk) - Total assets increased by approximately **137%** from **$48.5 million** to **$114.8 million**, while total liabilities increased by about **56%** from **$69.8 million** to **$109.2 million**[15](index=15&type=chunk) - Stockholders' equity shifted from a deficit of **$(21.4) million** to a positive **$5.7 million**, reflecting recent capital raises[15](index=15&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over a period, including revenues, expenses, and net loss | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :-------------------- | :--------- | | Research service revenue – related party | $983 | $— | $983 | 100% | | Research and development | $6,558 | $5,247 | $1,311 | 25% | | General and administrative | $3,976 | $3,883 | $93 | 2% | | Total operating expenses | $10,534 | $9,130 | $1,404 | 15% | | Loss from operations | $(9,551) | $(9,130) | $(421) | 5% | | Net loss | $(26,970) | $(8,830) | $(18,140) | * | | Net loss per share (basic and diluted) | $(7.43) | $(4.24) | $(3.19) | * | - Research service revenue from related parties increased from **$0** to **$983 thousand**, indicating new collaboration activities[17](index=17&type=chunk) - Net loss significantly widened to **$(27.0) million** in Q1 2025 from **$(8.8) million** in Q1 2024, primarily due to a **$71.1 million loss** on the execution of the 2025 PIPE and a **$2.1 million loss** on warrant amendment/cancellation, partially offset by a **$16.3 million gain** on change in fair value of tranche liability and a **$38.0 million increase** in other income (expense), net[17](index=17&type=chunk) [Unaudited Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28Deficit%29) This section details changes in the company's equity, reflecting capital transactions and accumulated losses | Metric | December 31, 2024 (in thousands) | March 31, 2025 (in thousands) | | :-------------------------- | :------------------------------- | :---------------------------- | | Common stock shares | 3,262 | 8,495 | | Common stock amount | $0 | $1 | | Additional paid-in capital | $263,879 | $317,902 | | Accumulated deficit | $(285,259) | $(312,229) | | Total stockholders' equity (deficit) | $(21,380) | $5,674 | - The issuance of **5,213 thousand shares** of common stock in the 2025 PIPE contributed **$53.2 million** to additional paid-in capital[20](index=20&type=chunk) - Stock-based compensation expense for the period was **$834 thousand**[20](index=20&type=chunk) - The accumulated deficit increased by **$27.0 million** due to the net loss for the quarter[20](index=20&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net cash used in operating activities | $(9,279) | $(8,746) | | Net cash used in investing activities | $(27) | $(7) | | Net cash provided by financing activities | $76,386 | $— | | Net increase (decrease) in cash, cash equivalents and restricted cash | $67,080 | $(8,753) | | Cash, cash equivalents and restricted cash at end of period | $102,333 | $27,978 | - Net cash used in operating activities increased slightly to **$9.3 million** in Q1 2025 from **$8.7 million** in Q1 2024[23](index=23&type=chunk) - Financing activities provided **$76.4 million** in Q1 2025, primarily from the 2025 PIPE, compared to no financing activities in Q1 2024[23](index=23&type=chunk) - The company experienced a net increase of **$67.1 million** in cash, cash equivalents, and restricted cash in Q1 2025, a significant improvement from a decrease of **$8.8 million** in Q1 2024[23](index=23&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents Surrozen, Inc.'s unaudited condensed consolidated financial statements for the three months ended March 31, 2025, and 2024, including balance sheets, statements of operations, stockholders' equity (deficit), and cash flows, along with detailed notes explaining significant accounting policies, fair value measurements, collaboration agreements, and related party transactions [Note 1. Organization and Business](index=9&type=section&id=Note%201.%20Organization%20and%20Business) Surrozen, Inc. is a biotechnology company focused on discovering and developing drug candidates to modulate the Wnt pathway, primarily in ophthalmology. The company has incurred significant operating losses since inception and expects this trend to continue, but believes its existing cash and cash equivalents are sufficient for at least the next 12 months - Surrozen, Inc. is a biotechnology company focused on modulating the Wnt pathway for tissue repair, with a current emphasis on ophthalmology[25](index=25&type=chunk) | Metric | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :---------------------- | :---------------------------------------------- | :---------------------------------------------- | | Net loss | $(27.0) | $(8.8) | | Cash used in operations | $(9.3) | $(8.7) | - As of March 31, 2025, the company had **$101.6 million** in cash and cash equivalents and an accumulated deficit of approximately **$312.2 million**[26](index=26&type=chunk) - Management believes current cash and cash equivalents are sufficient for operating activities for at least the next 12 months[27](index=27&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=9&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's adherence to U.S. GAAP, the use of estimates in financial reporting, and specific accounting treatments for financial instruments like tranche and warrant liabilities. It also details recent accounting pronouncements and their potential impact - Financial statements are prepared in accordance with U.S. GAAP and SEC regulations, with certain information condensed or omitted as permitted for interim reports[28](index=28&type=chunk) - Significant estimates and assumptions are made for accrued R&D expenses, tranche liability, and fair value of warrant liabilities[31](index=31&type=chunk) - The company's cash and cash equivalents are held by financial institutions, with cash equivalents invested in institutional money market funds to limit credit risk[33](index=33&type=chunk) - **ASU 2024-03 (Income Statement Reporting—Comprehensive Income—Expense Disaggregation Disclosures):** Effective for annual periods after December 15, 2026, and interim periods after December 15, 2027. The company is evaluating the impact[40](index=40&type=chunk) - **ASU 2023-09 (Income Taxes—Improvements to Income Tax Disclosures):** Effective for annual periods after December 15, 2024. The company is evaluating the impact[41](index=41&type=chunk) [Note 3. Fair Value Measurement](index=13&type=section&id=Note%203.%20Fair%20Value%20Measurement) This note details the fair value measurements of the company's financial assets and liabilities, categorizing them into Level 1, 2, and 3 based on input observability. It highlights the valuation methods for tranche and warrant liabilities, particularly the use of the Black-Scholes model for Level 3 instruments and the impact of warrant amendments and cancellations | Financial Instrument | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :------------------------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | **As of March 31, 2025:** | | | | | | Money market funds | $15,732 | $— | $— | $15,732 | | Tranche liability | $— | $— | $42,423 | $42,423 | | 2021 Public Warrants | $153 | $— | $— | $153 | | 2021 PIPE Warrants | $— | $24 | $— | $24 | | 2024 Pre-Funded Warrants | $— | $466 | $— | $466 | | 2024 PIPE Warrants | $— | $— | $12,860 | $12,860 | | 2025 Pre-Funded Warrants | $— | $16,009 | $— | $16,009 | | 2025 PIPE Warrants | $— | $— | $19,860 | $19,860 | | **As of December 31, 2024:** | | | | | | Money market funds | $25,495 | $— | $— | $25,495 | | 2021 Public Warrants | $109 | $— | $— | $109 | | 2021 PIPE Warrants | $— | $17 | $— | $17 | | 2024 Pre-Funded Warrants | $— | $574 | $— | $574 | | 2024 PIPE Warrants | $— | $— | $55,192 | $55,192 | - Tranche liability, 2024 PIPE Warrants, and 2025 PIPE Warrants are classified as Level 3, valued using the Black-Scholes option-pricing model with unobservable inputs like expected term, volatility, risk-free rate, dividend yield, and milestone probabilities[46](index=46&type=chunk) - A loss of **$2.1 million** was recorded for the three months ended March 31, 2025, due to the amendment and cancellation of 2024 PIPE Warrants (Series A, B, C, D) in connection with the 2025 PIPE, as the fair value of Series C and D warrants became zero due to discontinuation of SZN-043 development[49](index=49&type=chunk) [Note 4. Balance Sheet Components](index=16&type=section&id=Note%204.%20Balance%20Sheet%20Components) This note provides a breakdown of accrued and other liabilities, showing changes in payroll, R&D, professional service fees, and financing costs between December 31, 2024, and March 31, 2025 | Accrued and Other Liabilities | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------ | :---------------------------- | :------------------------------- | | Accrued payroll and related expenses | $1,676 | $2,929 | | Accrued research and development expenses | $1,945 | $1,904 | | Accrued professional service fees | $113 | $156 | | Accrued financing costs | $5,103 | $— | | Other | $253 | $191 | | Total | $9,090 | $5,180 | - Accrued financing costs increased significantly to **$5.1 million** as of March 31, 2025, from zero at December 31, 2024, reflecting costs associated with the 2025 PIPE[51](index=51&type=chunk) [Note 5. Collaboration and License Agreements](index=16&type=section&id=Note%205.%20Collaboration%20and%20License%20Agreements) This note details the Collaboration and License Agreement (CLA) with Boehringer Ingelheim (BI) for SZN-413, outlining the upfront payment, potential milestone payments, and royalty structure. It also explains the revenue recognition approach under ASC 606 - In October 2022, the company entered into a CLA with BI to research, develop, and commercialize Fzd4 bi-specific antibodies, including SZN-413, with a focus on retinal diseases[52](index=52&type=chunk)[103](index=103&type=chunk) - Under the CLA, BI agreed to pay a non-refundable upfront payment of **$12.5 million** (of which **$10.5 million** was received) and potential success-based milestone payments up to **$587.0 million**, plus mid-single to low-double digit royalties on net sales[53](index=53&type=chunk)[54](index=54&type=chunk) - Revenue from the upfront payment is recognized over the partnership research period, while variable consideration from future milestones is fully constrained due to inherent uncertainty[55](index=55&type=chunk) [Note 6. License Agreements](index=18&type=section&id=Note%206.%20License%20Agreements) This note describes the company's exclusive, sublicensable license agreement with Stanford University for Wnt surrogate molecules, including payment obligations for annual maintenance fees, development, regulatory, and sales milestones, and royalties - The company holds a worldwide, exclusive, sublicensable license from Stanford University for engineered Wnt surrogate molecules, covering patents and technology for treating human and veterinary diseases[56](index=56&type=chunk) - **Payments to Stanford:** Nominal annual license maintenance fees (creditable against royalties), up to **$0.9 million** for development/regulatory milestones, and up to **$5.0 million** for sales milestones[56](index=56&type=chunk) - **Royalties:** Very low single-digit percentage of net sales of licensed products[56](index=56&type=chunk) - **Sublicense Fees:** Sub-teen double-digit percentage of certain consideration from sublicenses[56](index=56&type=chunk) - No milestones have been achieved under the Stanford Agreement as of March 31, 2025[57](index=57&type=chunk) [Note 7. Commitments and Contingencies](index=18&type=section&id=Note%207.%20Commitments%20and%20Contingencies) This note outlines the company's operating lease commitments for its office and laboratory space, including the lease term, extension and early termination options, and future minimum rental payments - The company has an operating lease for its **32,813 square feet** office and laboratory space in South San Francisco, California, with a term ending in April 2029[58](index=58&type=chunk) - The lease includes an option to extend for four years and a one-time early termination option effective April 30, 2026, subject to a **$0.4 million** fee[58](index=58&type=chunk) | Period | Future Minimum Rental Payments (in thousands) | | :-------------------------------- | :------------------------------------------ | | Remaining nine months ending December 31, 2025 | $1,772 | | Year ending December 31, 2026 | $1,797 | | Year ending December 31, 2027 | $2,461 | | Year ending December 31, 2028 | $2,547 | | Year ending December 31, 2029 | $857 | | Total lease payments | $9,434 | | Less: Imputed interest | $(1,466) | | Operating lease liabilities | $7,968 | [Note 8. Stockholders' Equity](index=19&type=section&id=Note%208.%20Stockholders%27%20Equity) This note details the 2025 Private Placement (PIPE), a two-tranche offering that raised approximately $175.0 million in gross proceeds. It explains the issuance of common stock, pre-funded warrants, and Series E common stock warrants, as well as the accounting treatment for the tranche liability and associated transaction costs - On March 24, 2025, the company executed the 2025 PIPE to issue and sell **15.1 million units** for gross proceeds of approximately **$175.0 million**, aimed at funding ophthalmology programs[61](index=61&type=chunk)[122](index=122&type=chunk) - **First Tranche (March 26, 2025):** Issued **5.2 million** common shares, **1.4 million** pre-funded warrants, and **3.3 million** Series E common stock warrants for net proceeds of approximately **$71.3 million**[62](index=62&type=chunk)[122](index=122&type=chunk) - **Second Tranche:** Contingent on FDA clearance of SZN-8141 IND by October 31, 2026, expected to issue **6.0 million** common shares, **2.5 million** pre-funded warrants, and **4.2 million** Series E common stock warrants for gross proceeds of approximately **$98.6 million**[62](index=62&type=chunk)[122](index=122&type=chunk) - The tranche liability for the 2025 PIPE had an initial fair value of **$91.5 million** (first tranche) and **$49.6 million** (second tranche), resulting in a **$71.1 million loss** upon execution[63](index=63&type=chunk) - A **$1.1 million gain** on settlement of tranche liability was recognized at the first tranche closing[63](index=63&type=chunk) - Transaction costs of **$5.1 million** were incurred, with **$2.7 million** allocated to warrant liabilities (recognized as expense) and **$2.4 million** to issued common stock (reduction in equity)[64](index=64&type=chunk) [Note 9. Related Party Transactions](index=21&type=section&id=Note%209.%20Related%20Party%20Transactions) This note details related party transactions, including a strategic research collaboration with TCGFB, Inc. for antibody discovery, which generated research service revenue and involved the issuance of a warrant asset. It also mentions the 2024 PIPE with management participation and a sublease agreement with Nura Bio, Inc - The company entered a strategic research collaboration with TCGFB, Inc. (a related party) in October 2024 for TGF-β antibody therapeutics discovery[66](index=66&type=chunk) - **TCGFB Collaboration Terms:** Fixed monthly service fee up to **$6.0 million**, plus third-party costs, and a warrant exercisable for up to **3.4 million shares** of TCGFB common stock[66](index=66&type=chunk)[68](index=68&type=chunk) - **Revenue Recognition:** **$1.0 million** recognized as research service revenue in Q1 2025, consisting of **$0.8 million** cash and **$0.2 million** non-cash (warrant)[66](index=66&type=chunk)[68](index=68&type=chunk) - In April 2024, members of management purchased **2,948 shares** of common stock and associated Series A and B common stock warrants in the 2024 PIPE, with exercise prices later reduced in March 2025[69](index=69&type=chunk) - The company subleased approximately **6,102 square feet** of office/lab space to Nura Bio, Inc. (a related party) on a month-to-month basis, recognizing **$0.2 million** in sublease income in Q1 2025[71](index=71&type=chunk) [Note 10. Common Stock Warrants](index=23&type=section&id=Note%2010.%20Common%20Stock%20Warrants) This note provides a summary of all outstanding common stock warrants, including those from 2021, 2024, and 2025 private placements. It details their classification as liabilities, exercise terms, and the impact of the 2025 PIPE on warrant numbers and terms | Warrant Type | Classification | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :------------- | :---------------------------- | :------------------------------- | | 2021 Public Warrants | Liability | 5,117 | 5,117 | | 2021 PIPE Warrants | Liability | 791 | 790 | | 2024 Pre-Funded Warrants | Liability | 40 | 40 | | 2025 Pre-Funded Warrants | Liability | 1,373 | — | | 2024 PIPE Warrants – Series A | Liability | 1,132 | 1,132 | | 2024 PIPE Warrants – Series B | Liability | 1,231 | 1,231 | | 2024 PIPE Warrants – Series C | Liability | — | 4,386 | | 2024 PIPE Warrants – Series D | Liability | — | 4,386 | | 2025 PIPE Warrants – Series E | Liability | 3,293 | — | | Total | | 12,977 | 17,082 | - The 2025 PIPE resulted in the issuance of **1.4 million** 2025 Pre-Funded Warrants (exercise price **$0.0001**) and **3.3 million** 2025 PIPE Warrants (Series E, exercise price **$11.54**, expires in five years)[73](index=73&type=chunk)[74](index=74&type=chunk) - 2024 PIPE Warrants Series C and D (totaling **8.8 million shares**) were cancelled in March 2025 due to the discontinuation of SZN-043 clinical development[76](index=76&type=chunk)[83](index=83&type=chunk) - All outstanding warrants are classified as liabilities and measured at fair value, with changes recognized in other income (expense), net[81](index=81&type=chunk) [Note 11. Stock-Based Compensation Plans](index=24&type=section&id=Note%2011.%20Stock-Based%20Compensation%20Plans) This note details the company's stock-based compensation plans, including the 2021 Equity Incentive Plan and the 2021 Employee Stock Purchase Plan (ESPP). It summarizes stock option and restricted stock unit (RSU) activity and the total stock-based compensation expense recognized - **2021 Equity Incentive Plan:** **0.5 million shares** of common stock available for issuance as of March 31, 2025[82](index=82&type=chunk) - **2021 Employee Stock Purchase Plan (ESPP):** **0.1 million shares** of common stock available for issuance as of March 31, 2025[82](index=82&type=chunk) | Stock Option Activity (in thousands) | Number of Options | Weighted Average Exercise Price | | :----------------------------------- | :---------------- | :------------------------------ | | Outstanding – December 31, 2024 | 536 | $19.45 | | Granted | 392 | $12.07 | | Forfeited | (1) | $13.41 | | Expired | (4) | $32.83 | | Outstanding – March 31, 2025 | 923 | $16.25 | | Exercisable – March 31, 2025 | 300 | $23.95 | | Stock-Based Compensation Expense (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $266 | $298 | | General and administrative | $568 | $732 | | Total stock-based compensation expense | $834 | $1,030 | - As of March 31, 2025, approximately **$6.3 million** of stock-based compensation expense remains to be recognized over a weighted-average period of **2.97 years**[87](index=87&type=chunk) [Note 12. Segment Reporting](index=26&type=section&id=Note%2012.%20Segment%20Reporting) The company operates as a single reportable segment focused on the research and development of Wnt pathway drug candidates. The Chief Operating Decision Maker (CODM) evaluates performance based on consolidated operating expenses - The company has one reportable segment: research and development of drug candidates to selectively modulate the Wnt pathway[88](index=88&type=chunk) - The CODM (CEO and CFO/COO) uses consolidated operating expenses by function to evaluate financial performance and manage operations[89](index=89&type=chunk) | Segment Expense Category (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenue | $983 | $— | | Compensation (excluding stock-based) | $(3,330) | $(3,376) | | Development and manufacturing costs | $(2,110) | $(1,287) | | Consultants and third-party services | $(1,297) | $(820) | | Rent and facility expenses | $(1,109) | $(1,093) | | Stock-based compensation | $(834) | $(1,030) | | Depreciation and amortization | $(294) | $(392) | | Other (expense) income, including loss on execution of the 2025 PIPE | $(17,420) | $301 | | Other segment items | $(1,559) | $(1,133) | | Segment and consolidated net loss | $(26,970) | $(8,830) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, highlighting its strategic focus on Wnt pathway modulation in ophthalmology, the status of its product candidates, and the financial performance for the three months ended March 31, 2025. It also discusses liquidity, capital resources, and various factors impacting the business [Overview](index=27&type=section&id=Overview) This overview highlights Surrozen's strategic focus on Wnt pathway modulation in ophthalmology, product candidate status, and key financial metrics - Surrozen is a biotechnology company focused on discovering and developing drug candidates to selectively modulate the Wnt pathway for tissue repair, with a current strategic focus on ophthalmology[95](index=95&type=chunk)[96](index=96&type=chunk)[98](index=98&type=chunk) - **SZN-8141 (Retinal Diseases):** Nominated in Q3 2024, combines Fzd4 agonism and VEGF antagonism for DME and wet AMD. IND filing and clinical studies expected in 2026[99](index=99&type=chunk) - **SZN-8143 (Retinal Diseases):** Nominated in Q3 2024, combines Fzd4 agonism, VEGF antagonism, and IL-6 antagonism for DME/wet AMD/UME[100](index=100&type=chunk) - **SZN-113 (Fuchs' Endothelial Corneal Dystrophy and Geographic Atrophy):** Targets Fzd127, showed promise in preclinical models for FECD and GA[101](index=101&type=chunk) - **SZN-413 (Retinal Diseases):** Nominated in Q1 2022, Fzd4-targeted bi-specific antibody. Boehringer Ingelheim (BI) is developing it, triggering a **$10.0 million** milestone payment in September 2024[102](index=102&type=chunk)[103](index=103&type=chunk) - **SZN-043:** Development discontinued in Q1 2025 for severe alcohol-associated hepatitis due to insufficient early signal of clinical benefit, despite being safe and well-tolerated[104](index=104&type=chunk) | Financial Metric | As of March 31, 2025 (in millions) | | :----------------- | :--------------------------------- | | Net loss | $(27.0) | | Accumulated deficit | $(312.2) | | Cash and cash equivalents | $101.6 | - The company expects to continue incurring significant losses as it expands its pipeline and advances product candidates through clinical development[108](index=108&type=chunk) [Critical Accounting Policies, Significant Judgments and Use of Estimates](index=30&type=section&id=Critical%20Accounting%20Policies%2C%20Significant%20Judgments%20and%20Use%20of%20Estimates) This section discusses the key accounting policies and significant estimates management uses in preparing financial statements - The preparation of financial statements requires management to make estimates and assumptions in conformity with U.S. GAAP[109](index=109&type=chunk) - There were no material changes to critical accounting policies or estimation methodologies during the three months ended March 31, 2025, compared to the Annual Report on Form 10-K for December 31, 2024[110](index=110&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing revenue, expenses, and net loss for the reporting period | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :-------------------- | :--------- | | Research service revenue – related party | $983 | $— | $983 | 100% | | Research and development | $6,558 | $5,247 | $1,311 | 25% | | General and administrative | $3,976 | $3,883 | $93 | 2% | | Loss from operations | $(9,551) | $(9,130) | $(421) | 5% | | Interest income | $296 | $385 | $(89) | -23% | | Loss on amendment and cancellation of warrants | $(2,073) | $— | $(2,073) | 100% | | Loss on execution of the 2025 PIPE | $(71,084) | $— | $(71,084) | 100% | | Gain on change in fair value of tranche liability | $16,340 | $— | $16,340 | 100% | | Gain on settlement of tranche liability | $1,117 | $— | $1,117 | 100% | | Other income (expense), net | $37,985 | $(85) | $38,070 | * | | Net loss | $(26,970) | $(8,830) | $(18,140) | * | - **Research Service Revenue – Related Party:** Increased by **$1.0 million** due to the TCGFB, Inc. research collaboration[112](index=112&type=chunk) - **Research and Development Expenses:** Increased by **$1.3 million (25%)** due to higher manufacturing costs for SZN-043 and consulting fees for ophthalmology programs, partially offset by reduced clinical expenses from SZN-043 discontinuation[113](index=113&type=chunk) - **Loss on Amendment and Cancellation of Warrants:** **$2.1 million loss** due to non-cash change in fair value of warrants from the 2025 PIPE[114](index=114&type=chunk) - **Loss on Execution of the 2025 PIPE:** **$71.1 million loss** recognized because the fair value of tranche liability exceeded committed proceeds from the first tranche[115](index=115&type=chunk) - **Gain on Change in Fair Value of Tranche Liability:** **$16.3 million gain** from non-cash change in fair value[116](index=116&type=chunk) - **Gain on Settlement of Tranche Liability:** **$1.1 million gain** from the issuance of common stock and warrants in the first closing of the 2025 PIPE[117](index=117&type=chunk) - **Other Income (Expense), Net:** Increased by **$38.1 million**, primarily due to a **$40.7 million** non-cash change in fair value of warrant liabilities, offset by **$2.7 million** in transaction costs. The fair value of Series C and D warrants became zero due to SZN-043 discontinuation[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations and fund future operations - The company has historically financed operations through equity sales and collaboration payments, incurring significant operating losses and negative cash flows[121](index=121&type=chunk) - **2025 Private Placement (PIPE):** Raised approximately **$175.0 million** in gross proceeds to fund ophthalmology programs. The first tranche closed in March 2025, providing net proceeds of **$71.3 million**[122](index=122&type=chunk) - **Second Tranche:** Contingent on FDA clearance of SZN-8141 IND by October 31, 2026, expected to provide approximately **$98.6 million**[122](index=122&type=chunk) | Financial Metric | As of March 31, 2025 (in millions) | | :----------------- | :--------------------------------- | | Cash and cash equivalents | $101.6 | | Accumulated deficit | $(312.2) | - Existing cash and cash equivalents are believed to be sufficient to fund operations for at least the next 12 months[124](index=124&type=chunk) - Long-term funding will require additional capital through equity offerings, debt financings, grants, or collaborations, with no assurance of availability on attractive terms[124](index=124&type=chunk) | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(9,279) | $(8,746) | | Net cash used in investing activities | $(27) | $(7) | | Net cash provided by financing activities | $76,386 | $— | [Contractual Obligations and Commitments](index=36&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's future payment obligations under various contracts and agreements - The company's contractual obligations as of March 31, 2025, have not materially changed since December 31, 2024[133](index=133&type=chunk) [Emerging Growth Company Status](index=36&type=section&id=Emerging%20Growth%20Company%20Status) This section explains the company's status as an emerging growth company and the associated exemptions from certain reporting requirements - The company qualifies as an "emerging growth company" (EGC) under the JOBS Act, allowing it to take advantage of certain exemptions from reporting requirements[134](index=134&type=chunk) - **Exemptions include:** Not required to comply with auditor attestation for internal controls (Section 404(b)), reduced executive compensation disclosures, and delayed adoption of new or revised accounting standards[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - **EGC status will continue until the earliest of:** Fiscal year 2025, total annual gross revenue of **$1.235 billion**, becoming a large accelerated filer, or issuing over **$1 billion** in non-convertible debt over three years[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) [Recent Accounting Pronouncements](index=38&type=section&id=Recent%20Accounting%20Pronouncements) This section provides updates on new accounting standards and their potential impact on the company's financial reporting - Information regarding recent accounting pronouncements, their adoption timing, and potential impact is provided in Note 2 to the unaudited condensed consolidated financial statements[137](index=137&type=chunk) [Impact of Inflation](index=38&type=section&id=Impact%20of%20Inflation) This section discusses the potential effects of inflation on the company's operating costs and financial performance - Inflation is expected to increase labor, research, and clinical trial costs, potentially adversely affecting the company's financial condition and results of operations[138](index=138&type=chunk) - While inflation has not had a material effect on financial condition and results of operations during the periods presented, worsening conditions could impact capital raising and stock price[138](index=138&type=chunk) [Impact of Tariffs](index=38&type=section&id=Impact%20of%20Tariffs) This section addresses the potential impact of international trade policies and tariffs on the company's business and supply chain - The company is evaluating the potential impact of tariffs on its business, particularly given its contract manufacturing organization is located in the United Kingdom[139](index=139&type=chunk) - International trade policies, including tariffs, sanctions, and trade barriers, may adversely affect the company's business, financial condition, results of operations, and prospects[139](index=139&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Surrozen, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[140](index=140&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of the company's disclosure controls and procedures and internal control over financial reporting, noting management's conclusion of effectiveness and the inherent limitations of such controls [Management's Evaluation of Disclosure Controls and Procedures](index=38&type=section&id=Management%27s%20Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section presents management's assessment of the effectiveness of the company's disclosure controls and procedures - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2025[141](index=141&type=chunk) [Changes in Internal Control Over Financial Reporting](index=38&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes to the company's internal control over financial reporting during the quarter - There were no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2025[142](index=142&type=chunk) [Inherent Limitations on Effectiveness of Controls and Procedures](index=38&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) This section acknowledges the inherent limitations of internal controls, which provide reasonable but not absolute assurance against misstatements - The company acknowledges that disclosure controls and procedures provide only reasonable, not absolute, assurance and may not prevent all errors or instances of fraud due to inherent limitations and resource constraints[143](index=143&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings that are expected to have a material adverse effect on its business, financial condition, or results of operations, though litigation can still have adverse impacts - The company is not currently involved in or aware of any legal proceedings that are believed to have a material adverse effect on its business[145](index=145&type=chunk) - Regardless of the outcome, litigation can adversely impact the company due to defense and settlement costs, diversion of management resources, and other factors[145](index=145&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) This section details the significant risks associated with investing in Surrozen, Inc., covering business operations, financial condition, intellectual property, government regulation, and stock ownership. Key risks include a history of losses, the need for substantial additional funding, challenges in obtaining regulatory approval for product candidates, intense competition, and the complexities of protecting intellectual property [Summary of Risk Factors](index=39&type=section&id=Summary%20of%20Risk%20Factors) This section provides a high-level overview of the principal risks that could materially affect the company's business, financial condition, and future prospects - The company has a history of losses and expects to incur significant losses, potentially never achieving profitability[147](index=147&type=chunk)[148](index=148&type=chunk) - Substantial additional funds are needed to advance product candidates, with no guarantee of sufficient future funding[147](index=147&type=chunk)[148](index=148&type=chunk) - None of the product candidates have received regulatory approval; profitability depends on successful commercialization[147](index=147&type=chunk)[148](index=148&type=chunk) - Undesirable safety or tolerability side effects in clinical trials or after approval could compromise marketability[147](index=147&type=chunk)[148](index=148&type=chunk) - Future equity or debt issuances may dilute existing stockholders[147](index=147&type=chunk)[148](index=148&type=chunk) - Reliance on third parties for preclinical studies and clinical trials poses performance risks[147](index=147&type=chunk)[148](index=148&type=chunk) - Clinical development activities are subject to delays and adverse effects[147](index=147&type=chunk)[148](index=148&type=chunk) - Difficulty in patient enrollment and retention for clinical trials is a significant risk[147](index=147&type=chunk)[148](index=148&type=chunk) - Manufacturing of product candidates is complex, with potential for production difficulties and supply delays[147](index=147&type=chunk)[148](index=148&type=chunk) - Intense competition from well-resourced entities developing novel treatments[147](index=147&type=chunk)[148](index=148&type=chunk) - Inability to maintain proper internal controls over financial reporting could adversely affect financial reporting accuracy and stock price[147](index=147&type=chunk)[148](index=148&type=chunk) - Operating in foreign markets introduces additional regulatory burdens and risks[147](index=147&type=chunk)[148](index=148&type=chunk) - International trade policies, including tariffs, may adversely affect business[147](index=147&type=chunk)[148](index=148&type=chunk) - Health epidemics, natural disasters, and other events could disrupt business and clinical development[147](index=147&type=chunk)[148](index=148&type=chunk) - Dependence on collaborations for development and commercialization, with risks of unsuccessful partnerships[147](index=147&type=chunk)[148](index=148&type=chunk) - Challenges in obtaining or protecting intellectual property rights could impair competitiveness[147](index=147&type=chunk)[148](index=148&type=chunk) - Government-funded intellectual property may be subject to "march-in" rights and U.S.-based manufacturing preferences[147](index=147&type=chunk)[148](index=148&type=chunk) - Clinical development is lengthy, expensive, and uncertain, with earlier results not predictive of future outcomes[147](index=147&type=chunk)[148](index=148&type=chunk) - Obtaining regulatory approval in one jurisdiction does not guarantee success in others[147](index=147&type=chunk)[148](index=148&type=chunk) - Concentrated voting power by a few stockholders, including a director, could adversely affect other stockholders[147](index=147&type=chunk)[148](index=148&type=chunk) [Risks Related to Our Business](index=42&type=section&id=Risks%20Related%20to%20Our%20Business) This section details the operational and strategic risks inherent in the company's biotechnology business, including development, regulatory, and market challenges - The company has incurred significant operating losses since inception and expects continued losses, as it has not generated product sales revenue and does not anticipate doing so in the foreseeable future[149](index=149&type=chunk)[174](index=174&type=chunk) - Substantial additional funds are required for product candidate development, clinical trials, and commercialization, with financing primarily through equity sales. Inability to raise capital could lead to delays or discontinuation of programs[151](index=151&type=chunk)[152](index=152&type=chunk)[154](index=154&type=chunk) - None of the product candidates have received regulatory approval, and there is no guarantee that preclinical studies or clinical trials will be successful, or that regulatory authorities will permit or approve them[157](index=157&type=chunk)[158](index=158&type=chunk) - Product candidates may not demonstrate necessary safety or efficacy in humans, potentially leading to trial suspensions, denials of approval, or market rejection due to undesirable side effects (e.g., tumor formation concerns with Wnt pathway therapeutics)[162](index=162&type=chunk)[169](index=169&type=chunk)[172](index=172&type=chunk) - The company's strategy to expand its Wnt therapeutics platform and pipeline may not be successful, potentially leading to a failure to identify viable new product candidates[163](index=163&type=chunk)[164](index=164&type=chunk) - Market acceptance of approved product candidates is uncertain and depends on factors like safety, efficacy, convenience, pricing, and reimbursement, which could materially affect revenue generation[168](index=168&type=chunk)[171](index=171&type=chunk) - Reliance on third-party CROs and manufacturers for preclinical and clinical trials reduces control over timing and quality, posing risks of delays, non-compliance, and increased costs[185](index=185&type=chunk)[186](index=186&type=chunk)[205](index=205&type=chunk) - Manufacturing of product candidates is complex and susceptible to issues like contamination, equipment failure, and scaling difficulties, which could delay or halt supply for trials or commercial sale[202](index=202&type=chunk)[208](index=208&type=chunk) - The company faces intense competition from well-resourced pharmaceutical and biotechnology companies, which could develop more effective or safer products, impacting Surrozen's commercial opportunity[213](index=213&type=chunk)[215](index=215&type=chunk) - Operating in foreign markets and international trade policies, including tariffs, expose the company to additional regulatory, political, operational, and financial risks, potentially increasing costs and disrupting supply chains[227](index=227&type=chunk)[232](index=232&type=chunk)[234](index=234&type=chunk) - The company is exposed to significant product liability risks and potential misconduct by employees or collaborators, which could lead to claims, investigations, and financial penalties[237](index=237&type=chunk)[238](index=238&type=chunk) - Compliance with complex and evolving health and data protection laws (e.g., HIPAA, GDPR, CCPA) is costly and critical, with potential for enforcement actions, litigation, and reputational harm if non-compliance occurs[239](index=239&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk) [Risks Related to Our Intellectual Property](index=78&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) This section outlines risks associated with the company's ability to obtain, maintain, and enforce its intellectual property rights, crucial for its competitive position - The company's success depends on obtaining and maintaining protection for its intellectual property (IP), including patents and in-licensed rights. Patent prosecution is expensive, complex, and uncertain, with no guarantee of adequate protection or competitive advantage[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk) - Issued patents may be challenged for validity or enforceability, potentially leading to narrowing, invalidation, or loss of exclusivity, which would harm commercialization efforts[266](index=266&type=chunk)[267](index=267&type=chunk) - Reliance on third parties for patent prosecution, maintenance, and enforcement carries risks, as their failure to act in the company's best interest could lead to loss of IP rights[270](index=270&type=chunk) - Breaching license or collaboration agreements could result in damages or loss of critical intellectual property rights necessary for product development[271](index=271&type=chunk)[280](index=280&type=chunk) - Patent terms are limited, and extensions may not be granted or sufficient, potentially exposing the company to competition from generics or biosimilars after patent expiration[285](index=285&type=chunk)[286](index=286&type=chunk) - Changes in U.S. and foreign patent laws (e.g., Leahy-Smith Act, UPC) or their interpretation could diminish the value of patents and increase prosecution/enforcement costs[287](index=287&type=chunk)[288](index=288&type=chunk)[289](index=289&type=chunk) - Third parties may initiate legal proceedings alleging infringement, misappropriation, or violation of their IP rights, leading to costly litigation, development delays, and potential injunctions or damages[297](index=297&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk) - Protecting IP rights globally is expensive and challenging, as foreign laws may offer less protection, making it difficult to prevent infringement or marketing of competing products[294](index=294&type=chunk)[295](index=295&type=chunk) - In-licensed IP generated through U.S. government funding may be subject to "march-in" rights, reporting requirements, and a preference for U.S.-based manufacturing, potentially limiting exclusive rights[313](index=313&type=chunk)[314](index=314&type=chunk) - Inability to protect trade secrets or claims of wrongful use of former employers' proprietary information could harm the business and competitive position[308](index=308&type=chunk)[309](index=309&type=chunk) [Risks Related to Government Regulation](index=97&type=section&id=Risks%20Related%20to%20Government%20Regulation) This section describes the extensive and complex regulatory environment governing drug development, approval, and commercialization, posing significant risks to the company - Clinical development is a lengthy, expensive, and uncertain process with a high risk of failure. Delays in trials, negative results, or unforeseen safety issues could prevent regulatory approval and commercialization[318](index=318&type=chunk)[319](index=319&type=chunk) - Obtaining U.S. and foreign regulatory approval for product candidates is unpredictable and time-consuming, with no guarantee of success. Approval may be limited in scope or subject to post-marketing requirements[320](index=320&type=chunk)[321](index=321&type=chunk)[322](index=322&type=chunk)[323](index=323&type=chunk) - Even with regulatory approval, the company will face ongoing regulatory obligations and review, including manufacturing, labeling, advertising, and adverse event reporting. Non-compliance could lead to penalties, product withdrawal, or market restrictions[328](index=328&type=chunk)[330](index=330&type=chunk)[331](index=331&type=chunk) - Commercialization success depends on favorable pricing regulations and third-party coverage/reimbursement policies. Cost-containment efforts and legislative reforms (e.g., ACA, IRA) could limit product demand or impose pricing pressures[333](index=333&type=chunk)[334](index=334&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk)[347](index=347&type=chunk) - The company is subject to U.S. and foreign anti-corruption and anti-money laundering laws. Non-compliance, including by third-party intermediaries, could lead to investigations, significant fines, and reputational harm[348](index=348&type=chunk)[349](index=349&type=chunk)[350](index=350&type=chunk) - Inadequate funding or disruptions at government agencies like the FDA and SEC could hinder timely reviews and approvals of product candidates, negatively impacting the business[351](index=351&type=chunk)[352](index=352&type=chunk) [Risks Related to Ownership of Our Shares](index=109&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Shares) This section addresses risks pertinent to investors, including stock price volatility, dilution, corporate governance, and anti-takeover provisions - The company's stock price is likely to be volatile, influenced by factors such as clinical trial results, regulatory developments, competition, financial performance, and general market conditions, potentially leading to substantial losses for investors[353](index=353&type=chunk)[354](index=354&type=chunk) - Management has flexibility in allocating cash, and there is no guarantee that investments will yield a favorable return[355](index=355&type=chunk) - Future issuances of common stock or other equity securities, including through employee stock plans and warrant/option exercises, will dilute existing stockholders' ownership interests and may depress the market price[356](index=356&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk) - A few stockholders, including entities affiliated with The Column Group (**21.7% ownership** as of March 31, 2025), control a large number of voting rights and can significantly influence corporate decisions[359](index=359&type=chunk) - The company does not anticipate paying cash dividends, making capital appreciation the sole source of gain for the foreseeable future[360](index=360&type=chunk) - Anti-takeover provisions in charter documents and Delaware law could make an acquisition more difficult and prevent stockholders from replacing current management[361](index=361&type=chunk)[362](index=362&type=chunk)[364](index=364&type=chunk) - Exclusive forum provisions in the certificate of incorporation may limit stockholders' ability to choose a favorable judicial forum for disputes, potentially discouraging lawsuits[365](index=365&type=chunk)[367](index=367&type=chunk)[368](index=368&type=chunk) - The company qualifies as an emerging growth company (EGC) and a smaller reporting company, utilizing exemptions that may make its securities less attractive to investors and comparisons with other public companies difficult[372](index=372&type=chunk)[373](index=373&type=chunk)[374](index=374&type=chunk) - The terms of public warrants can be amended adversely with the approval of at least **50%** of holders, and the company may redeem unexpired public warrants at a disadvantageous time, potentially rendering them worthless[375](index=375&type=chunk)[377](index=377&type=chunk)[378](index=378&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=118&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section reports on any unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities - No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities occurred[379](index=379&type=chunk) [Item 3. Defaults Upon Senior Securities](index=118&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports on any defaults upon senior securities during the reporting period - No defaults upon senior securities occurred[379](index=379&type=chunk) [Item 4. Mine Safety Disclosures](index=118&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section confirms the non-applicability of mine safety disclosures to the company's operations - Mine safety disclosures are not applicable[379](index=379&type=chunk) [Item 5. Other Information](index=118&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no additional material information to report for the period - No other information to report[379](index=379&type=chunk) [Item 6. Exhibits](index=119&type=section&id=Item%206.%20Exhibits) This section lists all documents filed as exhibits to the Form 10-Q, providing supporting information for the financial statements and disclosures - **Organizational Documents:** Certificate of Incorporation, Amended and Restated Bylaws, Certificate of Amendment to Certificate of Incorporation[382](index=382&type=chunk) - **Warrant Agreements:** Specimen Warrant Certificate, Amended and Restated Warrant Agreement[382](index=382&type=chunk) - **Securities Purchase Agreements:** Form of Securities Purchase Agreement (March 2025), Form of Pre-Funded Warrant (March 2025), Form of Series E Common Warrant, Form of Registration Rights Agreement (March 2025)[382](index=382&type=chunk) - **Certifications:** Certifications of Principal Executive Officer and Principal Financial Officer (pursuant to Rules 13a-14(a), 15d-14(a), and 18 U.S.C. Section 1350)[382](index=382&type=chunk) - **XBRL Documents:** XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Labels Linkbase, Presentation Linkbase, Cover Page Interactive Data File[382](index=382&type=chunk) [Signatures](index=120&type=section&id=Signatures) This section contains the official signatures of the company's principal executive and financial officers, certifying the accuracy of the report - The report is signed by Craig Parker, President and Chief Executive Officer (Principal Executive Officer), and Charles Williams, Chief Financial Officer and Chief Operating Officer (Principal Financial Officer and Principal Accounting Officer), on May 9, 2025[386](index=386&type=chunk)

[Company Overview and Business Update](index=1&type=section&id=1.0_Company_Overview_and_Business_Update) Surrozen shifted its strategic focus to ophthalmology, advancing lead candidates SZN-8141 and SZN-8143, and secured significant financing to support clinical development [First Quarter 2025 Highlights](index=1&type=section&id=1.1_First_Quarter_2025_Highlights) Surrozen announced Q1 2025 financial results and business updates, emphasizing its strategic shift to ophthalmology, leveraging Wnt pathway modulation for severe eye diseases - Surrozen, Inc. (Nasdaq: SRZN) released Q1 2025 financial results and business updates, focusing on tissue repair and regeneration via Wnt pathway modulation, with a current emphasis on severe eye diseases[1](index=1&type=chunk) - The company has redirected its R&D focus to ophthalmology, utilizing Wnt biology expertise and antibody technology to develop novel therapies for severe eye diseases like Age-related Macular Degeneration (AMD) and Diabetic Retinopathy[2](index=2&type=chunk)[4](index=4&type=chunk) - Development of SZN-043 for severe alcohol-associated hepatitis was discontinued in Q1 2025 due to insufficient clinical benefit in a Phase 1b trial[2](index=2&type=chunk) [Strategic Focus and Pipeline Development](index=1&type=section&id=1.2_Strategic_Focus_and_Pipeline_Development) The company is actively advancing its lead ophthalmic candidates, SZN-8141 and SZN-8143, into clinical studies, with an IND filing for SZN-8141 planned for 2026 - The company has reallocated resources to advance its lead ophthalmic candidates, SZN-8141 and SZN-8143, into clinical studies[3](index=3&type=chunk) - SZN-8141 combines Frizzled 4 (Fzd4) agonism with VEGF antagonism, while SZN-8143 adds IL-6 antagonism, potentially differentiating them from existing therapies[3](index=3&type=chunk) - Surrozen anticipates filing an IND for SZN-8141 and initiating clinical studies in **2026**[3](index=3&type=chunk)[4](index=4&type=chunk) [Funding and Collaborations](index=1&type=section&id=1.3_Funding_and_Collaborations) The company enhanced its cash position with a $175 million private placement, with the first tranche of $76.4 million completed in March 2025, and continues collaboration with Boehringer Ingelheim on SZN-413 - The company significantly strengthened its cash position by closing the first tranche of a **$175 million** private placement in March 2025, generating **$76.4 million** in gross proceeds[3](index=3&type=chunk)[5](index=5&type=chunk) - The second tranche of **$98.6 million** in private placement funds will be triggered upon FDA clearance of the SZN-8141 IND application, expected to fund efficacy, safety, and tolerability studies for SZN-8141 and SZN-8143[3](index=3&type=chunk) - The company continues its collaboration with Boehringer Ingelheim on SZN-413 for retinal vascular diseases[3](index=3&type=chunk) [First Quarter 2025 Financial Performance](index=2&type=section&id=2.0_First_Quarter_2025_Financial_Performance) Surrozen's Q1 2025 saw a significant increase in cash due to private placement, but also expanded net loss driven by non-cash charges related to warrant revisions and PIPE execution [Financial Highlights Summary](index=2&type=section&id=2.1_Financial_Highlights_Summary) Surrozen's Q1 2025 cash and cash equivalents significantly increased to $101.6 million due to private placement, while R&D expenses rose, leading to an expanded net loss of $27.0 million First Quarter 2025 Key Financial Highlights (vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | Source | | :----------------------------------- | :------------- | :------------- | :----- | :----- | | Cash and Cash Equivalents (End of Period) | **$101.6M** | $34.6M (Dec 31, 2024) | +**$67.0M** | [5] | | Related Party Research Service Revenue | **$1.0M** | $0 | +**$1.0M** | [6] | | Research and Development Expenses | **$6.6M** | $5.2M | +**$1.4M** | [8] | | Selling, General and Administrative Expenses | **$4.0M** | $3.9M | +**$0.1M** | [8] | | Interest Income | **$0.3M** | $0.4M | -**$0.1M** | [8] | | Loss on Warrant Amendment and Cancellation | **$2.1M** | $0 | +**$2.1M** | [8] | | Loss on 2025 PIPE Execution | **$71.1M** | $0 | +**$71.1M** | [8] | | Gain from Fair Value Change of Tranche Liability | **$16.3M** | $0 | +**$16.3M** | [8] | | Gain from Settlement of Tranche Liability | **$1.1M** | $0 | +**$1.1M** | [8] | | Other Income (Expense), Net | **$38.0M** | -$0.1M | +**$38.1M** | [8],[9] | | Net Loss | **$27.0M** | $8.8M | +**$18.2M** | [9] | | Net Loss Per Share (Basic and Diluted) | **($7.43)** | ($4.24) | -**($3.19)** | [9] | [Condensed Consolidated Statements of Operations](index=6&type=section&id=2.2_Condensed_Consolidated_Statements_of_Operations) For the three months ended March 31, 2025, Surrozen reported $0.983 million in related party research service revenue and an expanded net loss of $26.97 million, or $7.43 per share, primarily due to non-cash losses Unaudited Condensed Consolidated Statements of Operations (Three Months Ended March 31, in thousands of USD) | Metric | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Related party research service revenue | **$983** | $— | | Operating expenses: | | | | Research and development | **6,558** | 5,247 | | Selling, general and administrative | **3,976** | 3,883 | | **Total operating expenses** | **10,534** | **9,130** | | **Operating loss** | **(9,551)** | **(9,130)** | | Interest income | **296** | 385 | | Loss on warrant amendment and cancellation | **(2,073)** | — | | Loss on 2025 PIPE execution | **(71,084)** | — | | Gain from fair value change of tranche liability | **16,340** | — | | Gain from settlement of tranche liability | **1,117** | — | | Other income (expense), net | **37,985** | (85) | | **Net loss** | **$(26,970)** | **$(8,830)** | | Net loss per share (basic and diluted) | **$(7.43)** | $(4.24) | | Weighted-average shares used in computing net loss per share (basic and diluted) | **3,628** | 2,083 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=2.3_Condensed_Consolidated_Balance_Sheets) As of March 31, 2025, Surrozen's total assets increased significantly to $114.8 million, driven by higher cash, while total liabilities also rose to $109.2 million, with shareholder equity turning positive Condensed Consolidated Balance Sheets (As of March 31, in thousands of USD) | Metric | March 31, 2025 | December 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | | **Assets:** | | | | Cash and cash equivalents | **$101,645** | $34,565 | | Total current assets | **106,011** | 38,932 | | **Total assets** | **$114,829** | **$48,467** | | **Liabilities:** | | | | Total current liabilities | **10,582** | 7,315 | | Tranche liability | **42,423** | — | | Warrant liability | **49,372** | 55,892 | | **Total liabilities** | **109,155** | **69,847** | | **Stockholders' equity (deficit):** | | | | Total stockholders' equity (deficit) | **5,674** | (21,380) | | **Total liabilities and stockholders' equity (deficit)** | **$114,829** | **$48,467** | [Surrozen Ophthalmology Portfolio](index=3&type=section&id=3.0_Surrozen_Ophthalmology_Portfolio) Surrozen's ophthalmology portfolio includes SZN-8141, SZN-8143, and SZN-413, all designed to modulate Wnt signaling for retinal disease treatment [SZN-8141 for Retinal Diseases](index=3&type=section&id=3.1_SZN-8141_for_Retinal_Diseases) SZN-8141, combining Fzd4 agonism and VEGF antagonism, aims to offer superior benefits for DME and wet AMD by stimulating Wnt signaling and promoting normal retinal vascular regeneration - SZN-8141 combines Frizzled 4 (Fzd4) agonism and Vascular Endothelial Growth Factor (VEGF) antagonism, potentially offering superior benefits over monotherapies for Diabetic Macular Edema (DME) and neovascular Age-related Macular Degeneration (wet AMD)[10](index=10&type=chunk) - Preclinical data in retinal disease models show SZN-8141 stimulated Wnt signaling, induced normal retinal vascular regeneration, and inhibited pathological vessel growth[10](index=10&type=chunk) [SZN-8143 for Retinal Diseases](index=3&type=section&id=3.2_SZN-8143_for_Retinal_Diseases) SZN-8143, building on SZN-8141 with added IL-6 antagonism, offers a triple mechanism of action for DME, wet AMD, and UME, showing similar preclinical benefits in Wnt signaling and vascular growth - SZN-8143 combines Fzd4 agonism, VEGF antagonism, and Interleukin-6 (IL-6) antagonism, potentially offering superior benefits over monotherapies for DME, wet AMD, and Uveitic Macular Edema (UME)[11](index=11&type=chunk) - Preclinical data in retinal disease models show SZN-8143 stimulated Wnt signaling, induced normal retinal vascular regeneration, and inhibited pathological vessel growth[11](index=11&type=chunk) [SZN-413 for Retinal Diseases](index=3&type=section&id=3.3_SZN-413_for_Retinal_Diseases) SZN-413, a bispecific antibody designed using Surrozen's SWAP™ technology, targets Fzd4-mediated Wnt signaling for retinal vascular diseases, showing preclinical efficacy in regenerating healthy eye tissue - SZN-413 is a bispecific antibody designed using Surrozen's SWAP™ technology, targeting Fzd4-mediated Wnt signaling, currently being developed for retinal vascular diseases[12](index=12&type=chunk) - Preclinical data show SZN-413 effectively stimulated ocular Wnt signaling, induced normal retinal vascular regeneration, inhibited pathological vessel growth, and reduced vascular leakage[12](index=12&type=chunk) - This novel approach may allow for healthy eye tissue regeneration, potentially not only halting retinal disease progression but also achieving complete disease reversal for patients[12](index=12&type=chunk) [About Surrozen](index=4&type=section&id=4.0_About_Surrozen) Surrozen is a biotechnology company focused on developing tissue-specific antibodies to selectively modulate the Wnt pathway, with a current emphasis on ophthalmology [Company Mission and Focus](index=4&type=section&id=4.1_Company_Mission_and_Focus) Surrozen is a biotechnology company dedicated to developing tissue-specific antibodies for selective Wnt pathway modulation, currently focused on ophthalmology to treat severe diseases - Surrozen is a biotechnology company developing tissue-specific antibodies to selectively modulate the Wnt pathway[13](index=13&type=chunk) - The company is currently focused on ophthalmology, aiming to leverage the body's biological repair mechanisms to treat severe diseases[13](index=13&type=chunk) [Forward-Looking Statements](index=4&type=section&id=5.0_Forward-Looking_Statements) This section outlines the forward-looking nature of statements regarding Surrozen's development activities, clinical plans, and financial expectations, subject to various risks [Disclaimer and Risks](index=4&type=section&id=5.1_Disclaimer_and_Risks) This press release contains forward-looking statements about Surrozen's R&D, clinical plans, and financing, based on current expectations and subject to significant risks detailed in SEC filings - This press release contains forward-looking statements regarding Surrozen's discovery, research, and development activities, particularly its product candidate development plans, including anticipated clinical development plans and timelines, data availability, potential benefits of product candidates for treating human diseases or addressing unmet needs in severe eye diseases, and potential differentiation from existing therapies[14](index=14&type=chunk) - These statements are based on various assumptions and current expectations of Surrozen's management, are illustrative only, and should not be considered guarantees; actual events and circumstances are difficult to predict and will differ from assumptions[14](index=14&type=chunk) - Forward-looking statements are subject to various risks and uncertainties, including the initiation, cost, timing, progress, and results of R&D activities, and all other factors discussed in the company's SEC filings, such as 10-K and 10-Q; Surrozen undertakes no obligation to update these statements unless required by law[14](index=14&type=chunk)[15](index=15&type=chunk) [Investor/Media Contact](index=5&type=section&id=6.0_Investor_Media_Contact) This section provides the dedicated contact information for investor and media inquiries [Contact Information](index=5&type=section&id=6.1_Contact_Information) This section provides the dedicated email address for investor and media contact - Investor/Media Contact Email: **Investorinfo@surrozen.com**[16](index=16&type=chunk)

Core Viewpoint - Surrozen, Inc. is focusing on its ophthalmology pipeline, particularly targeting severe eye diseases, and has announced its financial results for Q1 2025, highlighting a strategic pivot and financial updates [1][4]. Business Highlights - The company has shifted its focus to developing treatments for severe eye diseases such as age-related macular degeneration (AMD) and diabetic retinopathy, discontinuing the development of SZN-043 for severe alcohol-associated hepatitis due to insufficient clinical benefits [2][3]. - Surrozen is advancing its lead ophthalmology candidates, SZN-8141 and SZN-8143, towards clinical studies, with SZN-8141 expected to file an Investigational New Drug (IND) application in 2026 [3]. - The company has a collaboration with Boehringer Ingelheim for SZN-413, aimed at retinal vascular-associated diseases [3]. Financial Highlights - As of March 31, 2025, Surrozen's cash and cash equivalents were $101.6 million, a significant increase from $34.6 million as of December 31, 2024, due to $76.4 million raised from a private placement [5]. - Research service revenue from a related party was $1.0 million for the quarter, compared to zero in the same period of 2024, attributed to collaboration with TCGFB, Inc. [6]. - Research and development expenses increased to $6.6 million from $5.2 million in Q1 2024, reflecting costs associated with prioritizing ophthalmology programs [8]. - The net loss for Q1 2025 was $27.0 million, or ($7.43) per share, compared to a net loss of $8.8 million, or ($4.24) per share, for the same period in 2024 [10]. Ophthalmology Portfolio - SZN-8141 combines Frizzled 4 (Fzd4) agonism and Vascular Endothelial Growth Factor (VEGF) antagonism, potentially offering advantages over existing treatments for diabetic macular edema (DME) and wet AMD [11]. - SZN-8143 incorporates Fzd4 agonism, VEGF antagonism, and interleukin-6 (IL-6) antagonism, which may provide benefits over single-agent therapies for DME, wet AMD, and uveitic macular edema [12]. - SZN-413 is a bi-specific antibody targeting Fzd4-mediated Wnt signaling, showing promise in preclinical models for retinal vascular-associated diseases [13]. Company Overview - Surrozen is a biotechnology company focused on developing tissue-specific antibodies to modulate the Wnt pathway, with a current emphasis on ophthalmology and addressing severe diseases [14].