Core Viewpoint - InnoCare Pharma Inc., a wholly-owned subsidiary of the company, has entered into an exclusive licensing and subscription agreement with Zenas BioPharma, Inc. for the development, production, and commercialization of certain products, including the BTK inhibitor, Orelabrutinib, in multiple sclerosis and other indications [1][2] Group 1 - The licensing agreement grants Zenas exclusive rights to develop, produce, and commercialize Orelabrutinib in the global multiple sclerosis field and in non-oncology indications outside Greater China and Southeast Asia [1] - The company retains full rights in the global oncology field and rights in non-oncology indications within Greater China and Southeast Asia [1] - The agreement also covers two preclinical assets, with one being an oral IL-17AA/AF inhibitor and the other an oral brain-penetrant TYK2 inhibitor, with specific regional rights outlined [1] Group 2 - Zenas will pay InnoCare up to $100 million in upfront and milestone payments, including expected milestones to be reached by 2026, and will issue up to 7 million shares of Zenas common stock [2] - The total potential value of the transaction exceeds $2 billion, including development, regulatory, and commercial milestone payments [2] - The company is entitled to receive tiered royalties of up to the high teens percentage on the annual net sales of the licensed products [2]

Core Insights - Zenas BioPharma has entered a transformative license agreement with InnoCare Pharma for the global development and commercialization rights to orelabrutinib, a highly selective oral BTK inhibitor for Multiple Sclerosis (MS) [1][4][12] - Orelabrutinib is currently in Phase 3 trials for Primary Progressive MS (PPMS) and is expected to begin trials for Secondary Progressive MS (SPMS) in Q1 2026 [2][21] - Zenas has also secured rights to two additional promising molecules: an oral IL-17AA/AF inhibitor and a TYK2 inhibitor, both expected to enter Phase 1 trials in 2026 [1][4][9] Company Developments - Zenas announced a private placement financing of approximately $120 million to support its operations and clinical development [1][13][16] - The license agreement includes upfront and milestone payments to InnoCare totaling up to $100 million in cash and up to 7 million shares of Zenas common stock, with total potential payments exceeding $2 billion [10][11] - Zenas aims to leverage this collaboration to enhance its position as a fully integrated biopharmaceutical company focused on autoimmune diseases [4][5] Clinical Trials and Pipeline - The Phase 3 trial for PPMS has been initiated, while the SPMS trial is set to start in early 2026 [2][21] - Orelabrutinib has shown significant efficacy in previous Phase 2 trials for Relapsing-Remitting MS (RRMS), demonstrating sustained reductions in inflammatory activity [3][21] - Zenas is also advancing obexelimab, which is concluding Phase 3 development for IgG4-RD, and expects to report key trial results in late 2025 and early 2026 [6][8] Market Potential - Orelabrutinib is positioned as a potential blockbuster treatment for progressive forms of MS, addressing a significant unmet medical need [4][5] - The collaboration with InnoCare is expected to enhance Zenas's capabilities in drug development and commercialization, particularly in the global market for autoimmune therapeutics [5][6] Financial Overview - The private placement is expected to provide sufficient funds to support Zenas's operations into Q4 2026, with additional potential funding from milestone payments [16][14] - Zenas's strategic focus on developing a balanced portfolio of therapies aims to maximize clinical and commercial potential across multiple therapeutic areas [6][10]

Summary of Zenas BioPharma FY Conference Call Company Overview - **Company**: Zenas BioPharma (NasdaqGS: ZBIO) - **Focus**: Autoimmune diseases, leveraging a business model for successful drug commercialization [2][4] Key Product: Obexelimab - **Mechanism**: Targets CD19-expressing cells, designed to inhibit B-cell response through co-engagement with Fc gamma R2b (CD32b) [3] - **Clinical Trials**: - Completed five studies prior to licensing, including trials for rheumatoid arthritis and systemic lupus erythematosus [3] - Pivotal Phase III trial for IgG4-related disease (IgG4RD) expected to report top-line results by year-end [3][4] - Ongoing global Phase II trials for systemic lupus erythematosus and relapsing multiple sclerosis (MS) [4] Competitive Advantages - **Administration**: At-home subcutaneous administration offers convenience compared to IV infusions, which require scheduling and monitoring [6][7] - **Cost**: Covered under Medicare Part D with a cap of $2,000 annually, contrasting with the high costs associated with IV infusions [7] - **Efficacy**: Continuous dosing may lead to better long-term outcomes by maintaining target engagement and reducing inflammation [8][9] Market Opportunity - **IgG4RD**: Approximately 20,000 diagnosed patients in the U.S., with potential market size of $3 billion [22][23] - **Differentiation**: Expected to outperform existing therapies based on flare rates and continuous target coverage [24][25] Clinical Development Strategy - **Moonstone Study**: Focused on relapsing MS with MRI endpoints; aims to demonstrate efficacy through cumulative endpoints and novel biomarkers [13][14] - **Regulatory Interaction**: Plans to engage with regulatory agencies post-Phase II data [16] Financial Position - **Capital**: $275 million on the balance sheet as of June 30, supplemented by a $75 million deal with Royalty Pharma, with additional milestones tied to Phase III results [4][21] Lupus Development - **Phase II Study**: Previous study showed a 17% effect size over placebo; current trial aims for a more robust design with optimized dosing [32][33] - **Biomarker Approach**: Evaluating gene expression groupings to identify a subset of patients that may respond better to treatment [36][38] Strategic Considerations - **Global Perspective**: The company has a small team in China for clinical trials and actively seeks licensing opportunities from Chinese firms [41] - **AI Utilization**: Currently assessing how to leverage AI while ensuring data protection [42][43] - **Regulatory Environment**: Monitoring changes at the FDA but not experiencing disruptions in current programs [44] Conclusion Zenas BioPharma is positioned to capitalize on significant market opportunities in autoimmune diseases, particularly with its lead product obexelimab. The company is focused on innovative administration methods, robust clinical trial designs, and strategic partnerships to enhance its market presence and drive shareholder value.

Summary of Zenas BioPharma (ZBIO) 2025 Conference Call Company Overview - Zenas BioPharma is a development stage oncology company focused on autoimmune diseases, particularly with its molecule obexelimab, which is completing a global Phase 3 trial for IgG4-related disease (IgG4RD) with top-line results expected by year-end [2][22] - The company is also conducting two global Phase 2 programs: one for relapsing multiple sclerosis, with results expected in early Q4, and another for systemic lupus erythematosus (SLE), with results anticipated mid-next year [2][3] Financial Position - As of June 30, Zenas had approximately $275 million in cash, bolstered by a $300 million deal with Royalty Pharma, which extends the company's financial runway beyond the Phase 3 readout for IgG4RD [4][6] - The deal allocates $225 million specifically for the obexelimab program and IgG4RD, with additional milestones possible after Phase 3 data [4][6] Market Opportunity - The current diagnosed patient population for IgG4RD is about 20,000, with expectations that it could grow to 35,000-40,000 with a new drug on the market [8] - The company believes that the market opportunity for IgG4RD is larger than consensus estimates, which could lead to higher returns for investors [6][8] Product Differentiation - Obexelimab is engineered to target B cells differently than existing therapies, such as anti-CD20 antibodies, by removing certain aspects of the antibody that lead to B cell depletion [9][10] - The drug is designed for chronic administration, allowing for continuous inhibition of B cells, which may prevent disease flares more effectively than current therapies [15][16] - The administration method is subcutaneous and self-contained, which is expected to be more convenient for patients compared to intravenous infusions [31][32] Clinical Data and Efficacy - The Phase 3 INDIGO study for IgG4RD is the largest ever conducted for this indication, with over 190 patients enrolled [26] - The primary endpoint is the disease flare rate, with expectations based on Phase 2 data indicating a flare rate of about 10% for obexelimab compared to over 50% for the control [27][28] - The company aims to demonstrate a significant reduction in corticosteroid use and overall toxicity through its treatment regimen [28] Competitive Landscape - The anti-CD20 antibody market is substantial, accounting for nearly 60% of the market with over $10 billion in sales [37] - Zenas aims to differentiate obexelimab by addressing the ongoing disability progression in multiple sclerosis, which is not adequately managed by current therapies [44] Future Milestones - Upcoming data from the Phase 2 study for relapsing multiple sclerosis is expected soon, which will inform future development strategies [39] - The company is also exploring the potential for obexelimab in SLE, leveraging previous clinical data to support its efficacy [48] Conclusion - Zenas BioPharma is positioned to capitalize on significant market opportunities with its innovative product obexelimab, backed by strong financial support and a clear clinical development strategy aimed at addressing unmet needs in autoimmune diseases [2][4][6]

Summary of Zenas BioPharma (ZBIO) Conference Call Company Overview - **Company**: Zenas BioPharma (Ticker: ZBIO) - **Focus**: Autoimmune diseases, with a lead program on obexelimab, a novel monoclonal antibody targeting CD19 and CD32B [4][5] Key Programs and Developments - **Obexelimab**: - In-licensed from Xencor, designed to inhibit B-cell lineage cells, impacting antibody production and cytokine production [4][5] - Completed five clinical trials prior to Zenas acquiring it, including studies in rheumatoid arthritis and systemic lupus erythematosus [5] - Phase three results for IgG4-related disease expected by the end of 2025 [6][18] - Ongoing phase two global program for relapsing multiple sclerosis (RMS) with results expected early in Q4 2025 [6][42] Financial Position - **Cash Position**: Approximately $275 million as of June 30, 2025 [6] - **Strategic Collaboration**: Announced a $300 million funding deal with Royalty Pharma, with $225 million allocated for the IgG4-related disease program [6][10] Market Opportunity - **IgG4-Related Disease**: - Estimated diagnosed population of 20,000 in the U.S., with a potential market opportunity of around $3 billion [20][21] - Current treatment options are limited to corticosteroids, which are not well tolerated [14][15] - Obexelimab offers a subcutaneous self-administration option, reducing economic burden for patients [20] Clinical Trial Design and Expectations - **IgG4RD Study Design**: - Primary endpoint is time to disease flare, with a focus on reducing flare rates compared to placebo [15][16] - Previous studies showed a 60% flare rate for placebo and a single-digit flare rate for obexelimab [16][17] - **RMS Study Design**: - Phase two trial with MRI readout as the primary endpoint, focusing on cumulative new GAD-enhancing lesions [44][45] - Aims to assess neurodegeneration and disability progression, with a potential for a pivotal registration program [46] Competitive Differentiation - **Mechanism of Action**: - Obexelimab inhibits B cells rather than depleting them, allowing for a more controlled treatment approach [18][31] - Subcutaneous administration is more convenient compared to infusion therapies [19][20] - **Safety Profile**: - Well-tolerated with a potential for pausing treatment to allow for vaccination, addressing concerns raised during the pandemic [31][32] Future Plans - **Lupus Program**: - Phase two data expected mid-2026, with a focus on proper study design and patient selection to ensure robust results [56][60] - Potential to incorporate biomarker analysis into future studies [61][70] - **BLA Process**: - Initiated for IgG4-related disease, with a smaller scale compared to larger registration programs [78][79] Conclusion - Zenas BioPharma is positioned to make significant advancements in the treatment of autoimmune diseases with its lead program, obexelimab, backed by a strong financial position and strategic collaborations. The upcoming clinical trial results will be critical in validating its efficacy and market potential.

Core Insights - Royalty Pharma plc will provide up to $300 million in funding to Zenas BioPharma, in exchange for a royalty on sales of obexelimab, targeting autoimmune diseases such as IgG4-RD [1][2][3] Company Overview - Royalty Pharma is the largest buyer of biopharmaceutical royalties and a leading funder of innovation in the biopharmaceutical industry, collaborating with various innovators [8] - Zenas BioPharma is a clinical-stage biopharmaceutical company focused on developing transformative therapies for autoimmune diseases, with obexelimab as its lead product candidate [9] Product Development - Obexelimab is an investigational bifunctional monoclonal antibody designed to inhibit B cell function, currently in Phase 3 development for IgG4-RD and Phase 2 for Relapsing Multiple Sclerosis and Systemic Lupus Erythematosus [2][5][7] - The funding will support the development of obexelimab and a potential commercial launch for IgG4-RD in the first half of 2027, pending FDA approval [2][3][6] Financial Terms - The agreement includes an upfront payment of $75 million, with three additional payments of $75 million each contingent on specific milestones related to clinical trials and FDA approvals [3][6] - Royalty Pharma will receive a 5.5% royalty on worldwide net sales of obexelimab by Zenas and its affiliates [3]

Core Insights - Zenas BioPharma and Royalty Pharma have entered into a partnership where Royalty Pharma will provide up to $300 million in funding for the development and potential commercialization of obexelimab, a treatment for IgG4-Related Disease [1][2][3] Funding and Financial Terms - The agreement includes an initial payment of $75 million, with three additional payments of $75 million each contingent upon specific milestones: success in the Phase 3 INDIGO trial, FDA approval for IgG4-RD, and FDA approval for Systemic Lupus Erythematosus [3] - Royalty Pharma will receive a 5.5% royalty on worldwide net sales of obexelimab by Zenas and its affiliates [3] Product Development and Clinical Trials - Obexelimab is currently in Phase 3 development for IgG4-RD and Phase 2 development for Relapsing Multiple Sclerosis and Systemic Lupus Erythematosus [2][5][7] - The topline results from the pivotal Phase 3 trial for IgG4-RD are expected around the end of 2025, with a potential commercial launch in the first half of 2027, pending FDA approval [2][6] Mechanism of Action - Obexelimab is a bifunctional monoclonal antibody designed to inhibit B cell function by binding to CD19 and FcγRIIb, which are present across B cell lineage, without depleting them [5][8] Company Background - Zenas BioPharma is a clinical-stage biopharmaceutical company focused on developing therapies for autoimmune diseases, with obexelimab as its lead product candidate [8] - Royalty Pharma is a leading funder of innovation in the biopharmaceutical industry, known for acquiring royalties and co-funding late-stage clinical trials [9]

Company Overview - Zenas BioPharma, Inc. is a clinical-stage global biopharmaceutical company focused on developing transformative therapies for autoimmune diseases [2] - The company's lead product candidate, obexelimab, is a bifunctional monoclonal antibody targeting CD19 and FcγRIIb to inhibit the activity of B cells involved in autoimmune diseases without depleting them [2] - Zenas aims to leverage its experienced leadership and disciplined product acquisition strategy to identify and develop candidates that provide superior clinical benefits for patients [2] Upcoming Events - Zenas will present at the Citi's 2025 Biopharma Back to School Conference on September 2, 2025, at 1:00 p.m. ET [3] - The company will also participate in the Cantor Global Healthcare Conference 2025 on September 3, 2025, at 8:35 a.m. ET [3] - Additionally, Zenas is scheduled to present at the Morgan Stanley 23rd Annual Global Healthcare Conference on September 10, 2025, at 7:45 a.m. ET [3]

[Preliminary Information](index=3&type=section&id=Preliminary%20Information) This section provides essential introductory information, including forward-looking statements, key risk factors, and trademark notices [Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section clarifies that the report contains forward-looking statements, subject to risks and uncertainties, and should not be unduly relied upon as future guarantees - Forward-looking statements are identified by terms such as '**may**,' '**will**,' '**should**,' '**expect**,' '**plan**,' '**anticipate**,' '**could**,' '**intend**,' '**target**,' '**project**,' '**contemplate**,' '**believe**,' '**estimate**,' '**predict**,' '**potential**' or '**continue**' or their negatives[8](index=8&type=chunk) - Key forward-looking statements concern the commercial opportunities of obexelimab, ability to develop and commercialize products, obtaining orphan drug designation, timing and cost of clinical studies, ability to obtain additional funding, and regulatory approvals[8](index=8&type=chunk)[10](index=10&type=chunk) - These statements are subject to risks and uncertainties described in '**Risk Factors**' and '**Management's Discussion and Analysis of Financial Condition and Results of Operations**,' and the company does not undertake to publicly update or revise them[9](index=9&type=chunk) [Summary Risk Factors](index=5&type=section&id=SUMMARY%20RISK%20FACTORS) This section outlines key investment risks, including the company's clinical stage, substantial losses, financing needs, uncertain clinical development, and intense competition - The company is a clinical-stage biopharma company with no approved products and has incurred **substantial losses** since inception, anticipating increasing losses[12](index=12&type=chunk) - **Substantial additional financing** is required to achieve goals; failure to obtain it would delay, limit, reduce, or terminate product development[12](index=12&type=chunk) - Clinical development is **lengthy, expensive, and uncertain**, with earlier trial results often failing to predict future outcomes, potentially leading to delays or failures in commercialization[12](index=12&type=chunk) - The company faces **significant competition** from large pharmaceutical and biotechnology companies, many with approved therapies in its target indications[12](index=12&type=chunk) - **Dependence on third parties** for preclinical studies, clinical trials, and manufacturing poses risks if they fail to perform as required[15](index=15&type=chunk) - Inability to obtain and maintain **insufficient intellectual property protection** could allow competitors to commercialize similar products[15](index=15&type=chunk) [Note Regarding Trademarks](index=6&type=section&id=NOTE%20REGARDING%20TRADEMARKS) This section clarifies that 'Zenas BioPharma' and its associated designs are company trademarks, while other marks belong to their owners - The Zenas BioPharma word mark, logo mark, and 'lightning bolt' design are **trademarks** of Zenas BioPharma, Inc. or its affiliated companies[14](index=14&type=chunk) - The ® and ™ designations for these trademarks are sometimes omitted in the report, but **all rights are owned by Zenas BioPharma, Inc.**[14](index=14&type=chunk) [Part I — Financial Information](index=7&type=section&id=Part%20I%20Financial%20Information) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial performance [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section provides the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with explanatory notes [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $44,006 | $319,742 | | Short-term investments | $229,273 | $31,024 | | Total current assets | $278,603 | $355,923 | | Total assets | $293,085 | $369,968 | | Total current liabilities | $53,244 | $57,292 | | Total liabilities | $53,459 | $57,510 | | Total stockholders' equity | $239,626 | $312,458 | - Cash and cash equivalents significantly decreased from **$319.7 million** at December 31, 2024, to **$44.0 million** at June 30, 2025, while short-term investments increased from **$31.0 million** to **$229.3 million**[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This statement details the company's revenues, expenses, and net loss over specific reporting periods, reflecting operational performance | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | License and collaboration revenue | $— | $— | $10,000 | $— | | Research and development | $43,027 | $33,807 | $77,942 | $56,452 | | General and administrative | $12,136 | $5,895 | $24,551 | $10,828 | | Total operating expenses | $55,163 | $39,702 | $102,493 | $67,280 | | Net loss to common stockholders | $(52,223) | $(37,977) | $(85,796) | $(65,777) | | Net loss per share - basic and diluted | $(1.25) | $(24.23) | $(2.05) | $(42.15) | - The company recognized **$10.0 million** in license and collaboration revenue for the six months ended June 30, 2025, compared to none in the prior year period[19](index=19&type=chunk) - Research and development expenses increased by **$9.2 million (27.3%)** for the three months and **$21.5 million (38.1%)** for the six months ended June 30, 2025, compared to 2024[19](index=19&type=chunk) - General and administrative expenses increased by **$6.2 million (105.8%)** for the three months and **$13.7 million (126.7%)** for the six months ended June 30, 2025, compared to 2024[19](index=19&type=chunk) - Net loss increased to **$52.2 million** for the three months and **$85.8 million** for the six months ended June 30, 2025, from **$38.0 million** and **$65.8 million** in the respective prior year periods[19](index=19&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) This statement tracks changes in the company's equity over time, reflecting net income/loss, stock issuances, and other comprehensive income | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | | :-------------------------------- | :------------------------------- | :--------------------------- | | Additional paid-in capital | $699,651 | $712,903 | | Accumulated deficit | $(387,391) | $(473,187) | | Total stockholders' equity | $312,458 | $239,626 | - Total stockholders' equity decreased from **$312.5 million** at December 31, 2024, to **$239.6 million** at June 30, 2025, primarily due to the net loss incurred[22](index=22&type=chunk) - Stock-based compensation expense contributed **$11.4 million** to additional paid-in capital for the six months ended June 30, 2025[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash generated and used by the company across operating, investing, and financing activities | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(78,794) | $(50,061) | | Net cash used in investing activities | $(198,565) | $(57) | | Net cash provided by financing activities | $1,821 | $177,125 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(275,826) | $127,075 | - Net cash used in operating activities increased to **$78.8 million** for the six months ended June 30, 2025, from **$50.1 million** in the prior year, driven by increased net loss and changes in working capital[29](index=29&type=chunk)[173](index=173&type=chunk)[175](index=175&type=chunk) - Net cash used in investing activities significantly increased to **$198.6 million** for the six months ended June 30, 2025, primarily due to purchases of investments[29](index=29&type=chunk)[176](index=176&type=chunk) - Net cash provided by financing activities decreased substantially to **$1.8 million** for the six months ended June 30, 2025, from **$177.1 million** in the prior year, as 2024 included proceeds from Series C preferred stock issuance[29](index=29&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [1. Nature of Business](index=12&type=section&id=1.%20Nature%20of%20Business) This note describes the company's core operations, its financial performance history, and its capital funding status - Zenas BioPharma, Inc. is a **clinical-stage global biopharmaceutical company** focused on developing and commercializing transformative immunology-based therapies[31](index=31&type=chunk) - The company has incurred operating losses and negative cash flows since inception, with net losses of **$52.2 million** and **$85.8 million** for the three and six months ended June 30, 2025, respectively, and an accumulated deficit of **$473.2 million** as of June 30, 2025[36](index=36&type=chunk)[37](index=37&type=chunk) - Existing cash, cash equivalents, and investments of **$274.9 million** as of June 30, 2025, are expected to fund operations into the **fourth quarter of 2026**[38](index=38&type=chunk) - The company completed its IPO on September 16, 2024, issuing 15,220,588 shares of common stock for aggregate net proceeds of **$234.3 million**[34](index=34&type=chunk) [2. Summary of Significant Accounting Policies](index=13&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and estimation methods used in preparing the condensed consolidated financial statements - The condensed consolidated financial statements are prepared in accordance with **U.S. GAAP and SEC rules**, consolidating wholly-owned subsidiaries[40](index=40&type=chunk) - Management's **estimates and assumptions**, particularly for accrued R&D expenses, stock-based compensation, and pre-IPO common stock valuations, are crucial[42](index=42&type=chunk)[44](index=44&type=chunk) - The company is evaluating the impact of new accounting pronouncements **ASU 2023-09 (Income Tax Disclosures)** and **ASU 2024-03 (Expense Disaggregation Disclosures)**, effective fiscal years 2025 and 2026/2027 respectively[46](index=46&type=chunk)[47](index=47&type=chunk) [3. Fair Value Measurements](index=15&type=section&id=3.%20Fair%20Value%20Measurements) This note details the valuation methods and classifications of assets and liabilities measured at fair value | Asset Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------ | :----------------------------- | :------------------------------- | | Cash | $31,318 | $19,070 | | Money market funds | $12,688 | $300,672 | | Short-term investments | $229,273 | $31,024 | | Long-term investments | $1,614 | $— | | Total assets at fair value | $274,893 | $350,766 | - The company's assets measured at fair value primarily consist of **cash, money market funds, and short-term/long-term investments**, with a shift from money market funds to short-term investments between December 2024 and June 2025[50](index=50&type=chunk) - Available-for-sale securities had gross unrealized gains of **$21 thousand** and gross unrealized losses of **$94 thousand** as of June 30, 2025[54](index=54&type=chunk) [4. Other Assets](index=16&type=section&id=4.%20Other%20Assets) This note provides a breakdown of other non-current assets held by the company | Asset Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------- | :----------------------------- | :------------------------------- | | Clinical trial deposits | $11,707 | $12,639 | | Other | $90 | $217 | | Total other assets | $11,797 | $12,856 | - Clinical trial deposits represent the largest component of other assets, decreasing slightly from **$12.6 million** to **$11.7 million**[55](index=55&type=chunk) [5. Accrued Expenses](index=16&type=section&id=5.%20Accrued%20Expenses) This note details the various accrued liabilities, primarily related to research, development, and manufacturing activities | Expense Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------------------------- | :----------------------------- | :------------------------------- | | External research, development and manufacturing expenses | $36,938 | $29,338 | | Employee compensation and benefits | $6,048 | $8,308 | | Professional and consultant fees | $1,026 | $1,265 | | Income taxes payable | $— | $211 | | Other | $508 | $249 | | Total accrued expenses | $44,520 | $39,371 | - Accrued external research, development, and manufacturing expenses increased by **$7.6 million**, from **$29.3 million** to **$36.9 million**, as of June 30, 2025[56](index=56&type=chunk) [6. Leases](index=17&type=section&id=6.%20Leases) This note describes the company's operating lease arrangements for office space and their financial impact - The company accounts for office space leases as **operating leases**, generally with terms less than two years, and recognizes monthly operating lease expense on a straight-line basis[58](index=58&type=chunk) | Fiscal Year | Amount (in thousands) | | :------------------------ | :-------------------- | | 2025 (remaining six months) | $467 | | 2026 | $455 | | 2027 | $137 | | Total operating lease liabilities | $1,008 | [7. License and Collaboration Revenue](index=17&type=section&id=7.%20License%20and%20Collaboration%20Revenue) This note explains the revenue recognition from various collaboration and license agreements, including upfront payments and potential milestones - Under the BMS Agreement (August 2023), Zenas granted BMS exclusive rights to develop and commercialize obexelimab in Japan, South Korea, Taiwan, Singapore, Hong Kong, and Australia for an upfront payment of **$50.0 million**[60](index=60&type=chunk)[61](index=61&type=chunk) - Zenas is eligible for up to **$79.5 million** in development/regulatory milestones and **$70.0 million** in sales milestones from BMS, plus tiered high single-digit to low double-digit royalties[61](index=61&type=chunk) - In October 2024, Zenas transferred rights for ZB005 to Tenacia for an upfront payment of **$5.0 million** and potential milestones up to **$86.0 million**[66](index=66&type=chunk)[67](index=67&type=chunk) - In January 2025, Zenas granted Zai Lab an exclusive sublicense for ZB001 in greater China for an upfront payment of **$10.0 million**, recognized as revenue, and potential milestones up to **$117.0 million** (with **$21.0 million** passthrough to Viridian) plus tiered royalties[68](index=68&type=chunk)[69](index=69&type=chunk)[73](index=73&type=chunk) [8. License Agreements](index=19&type=section&id=8.%20License%20Agreements) This note details the company's inbound license agreements with third parties for product candidates, outlining royalty and milestone obligations - Zenas has license agreements with Xencor (2020 and 2021) for product candidates including ZB002, ZB004, and obexelimab, involving tiered royalties and potential milestone payments (up to **$75.0 million** regulatory, **$385.0 million** sales for obexelimab)[76](index=76&type=chunk)[77](index=77&type=chunk) - A license agreement with Viridian Therapeutics (October 2020) grants Zenas rights for certain antibody product candidates (e.g., ZB001) in non-oncology indications within greater China, with Zenas obligated to make development and sales milestone payments totaling **$21.0 million** to Viridian[79](index=79&type=chunk) - The Viridian Supply Agreement was assigned to Zai Lab in January 2025 in connection with the Zai License Agreement[80](index=80&type=chunk) [9. Common Stock](index=20&type=section&id=9.%20Common%20Stock) This note provides information on the company's authorized common stock and shares reserved for equity compensation plans - Upon IPO completion in September 2024, the company authorized **175,000,000** shares of **$0.0001** par value common stock[82](index=82&type=chunk) | Shares Reserved | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Options to purchase common stock | 10,615,469 | 8,706,197 | | Remaining shares reserved for future issuance | 495,412 | 359,399 | | RSUs | 511,100 | — | | Employee stock purchase plan | 815,890 | 397,956 | | Total | 12,437,871 | 9,463,552 | [10. Stock-Based Compensation](index=20&type=section&id=10.%20Stock-Based%20Compensation) This note details the company's equity incentive plans, stock option activity, and the associated compensation expense recognized - The **2024 Equity Incentive Plan (2024 Plan)** was adopted on September 3, 2024, with shares reserved for issuance automatically increasing each January 1st[85](index=85&type=chunk)[86](index=86&type=chunk) | Stock Option Activity | Number of Shares | Weighted-Average Exercise Price | | :-------------------------------- | :--------------- | :------------------------------ | | Outstanding - December 31, 2024 | 8,706,197 | $13.21 | | Granted | 2,593,600 | $10.66 | | Exercised | (295,285) | $6.17 | | Forfeited or cancelled | (389,043) | $12.28 | | Outstanding - June 30, 2025 | 10,615,469 | $12.81 | - As of June 30, 2025, there was **$88.1 million** of unrecognized stock-based compensation related to unvested stock options, RSUs, and ESPP, to be recognized over a weighted-average period of **3.19 years**[92](index=92&type=chunk) | Stock-Based Compensation Expense | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Research and development | $2,113 | $711 | $3,694 | $1,120 | | General and administrative | $3,932 | $825 | $7,737 | $1,363 | | Total stock-based compensation expense | $6,045 | $1,536 | $11,431 | $2,483 | [11. Net Loss Per Share](index=22&type=section&id=11.%20Net%20Loss%20Per%20Share) This note explains the calculation of basic and diluted net loss per share, including the treatment of anti-dilutive securities - Potentially dilutive securities (convertible preferred stock, restricted stock, stock options) were excluded from diluted net loss per share calculation as their effect would be **anti-dilutive**[94](index=94&type=chunk) | Anti-Dilutive Securities | June 30, 2025 | June 30, 2024 | | :------------------------------- | :------------ | :------------ | | Convertible preferred stock | — | 24,978,715 | | Unvested restricted stock units | 511,100 | — | | Options to purchase common stock | 10,615,469 | 4,270,097 | [12. Commitments and Contingencies](index=22&type=section&id=12.%20Commitments%20and%20Contingencies) This note discloses the company's contractual obligations, indemnification agreements, and any material legal proceedings - The company has non-cancellable clinical manufacturing contract payment obligations totaling **$20.6 million**, all payable within **12 months** as of June 30, 2025[98](index=98&type=chunk) - The company provides indemnification to vendors, lessors, business partners, and directors/officers, with **maximum potential payments often unlimited**, but no material costs incurred to date[99](index=99&type=chunk) - As of June 30, 2025, the company was **not subject to any material legal proceedings** expected to have an adverse effect on financial results[100](index=100&type=chunk) [13. Related Party Transactions](index=23&type=section&id=13.%20Related%20Party%20Transactions) This note identifies and describes transactions and relationships with entities considered related parties to the company - Xencor is a **related party** due to past convertible preferred stock issuance; as of June 30, 2025, Xencor held less than **10%** of common stock[101](index=101&type=chunk) - Viridian Therapeutics is a **related party** because Fairmount Funds Management LLC, a **10% or greater** stockholder of Viridian with two board seats, also has a seat on Zenas's Board[102](index=102&type=chunk) - Zai Lab (Hong Kong) Limited is a **related party** as Zenas's CEO and Chairman is a member of Zai's board of directors[103](index=103&type=chunk) [14. Segment Information](index=24&type=section&id=14.%20Segment%20Information) This note clarifies that the company operates as a single reportable segment focused on immunology-based therapies - The company manages its operations as a **single reportable segment** focused on research and development of precision immunology-based therapies[106](index=106&type=chunk) - For the six months ended June 30, 2025, **$10.0 million** in revenue was recognized and attributed to Zenas HK[106](index=106&type=chunk) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $— | $— | $10,000 | $— | | Direct R&D - Obexelimab | $29,894 | $22,788 | $53,254 | $35,082 | | Direct R&D - Partnered regional programs | $(137) | $2,435 | $(37) | $4,023 | | Unallocated R&D | $10,757 | $7,301 | $20,295 | $14,760 | | General and administrative | $8,204 | $5,070 | $16,814 | $9,466 | | Stock-based compensation | $6,045 | $1,536 | $11,431 | $2,483 | | Segment net loss | $(52,223) | $(37,977) | $(85,796) | $(65,777) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition, operational results, and future outlook, including liquidity, capital resources, and accounting policies [Overview](index=25&type=section&id=Overview) This section introduces Zenas BioPharma's focus, lead product candidates, recent IPO, and current financial status - Zenas BioPharma is a **clinical-stage biopharmaceutical company** focused on developing immunology and inflammation (I&I) therapies, with obexelimab as its lead product candidate[111](index=111&type=chunk)[112](index=112&type=chunk) - Obexelimab is in Phase 3 for IgG4-RD (INDIGO trial, topline results expected **year-end 2025**) and Phase 2 for relapsing multiple sclerosis (MoonStone trial, results **early Q4 2025**) and systemic lupus erythematosus (SunStone trial, enrollment by **year-end 2025**, topline results **mid-2026**)[113](index=113&type=chunk) - The company completed its IPO on September 16, 2024, raising **$234.3 million** in net proceeds[115](index=115&type=chunk) - Zenas incurred net losses of **$52.2 million** and **$85.8 million** for the three and six months ended June 30, 2025, respectively, with an accumulated deficit of **$473.2 million**[119](index=119&type=chunk) - Existing cash, cash equivalents, and investments of **$274.9 million** as of June 30, 2025, are expected to fund operations into the **fourth quarter of 2026**[123](index=123&type=chunk) [Significant Risks and Uncertainties](index=27&type=section&id=Significant%20Risks%20and%20Uncertainties) This section highlights external factors like geopolitical, economic, and regulatory environments that pose risks to the company's operations - The company faces risks from the current **geopolitical, trade, regulatory, and economic environment**, including potential increases in operating costs due to tariffs, inflation, and supply chain constraints[124](index=124&type=chunk)[125](index=125&type=chunk) - Economic conditions, such as **recession risk and volatility in capital markets**, could negatively affect operations and share prices[125](index=125&type=chunk) [Components of Our Results of Operations](index=28&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section breaks down the key revenue and expense categories that constitute the company's financial performance - Revenue is derived from **collaboration arrangements and license fees**, specifically from agreements with BMS, Tenacia, and Zai Lab[127](index=127&type=chunk)[128](index=128&type=chunk) - **Research and development expenses**, a significant portion of operating expenses, include direct costs for clinical studies and manufacturing, and indirect costs like personnel and consultants[134](index=134&type=chunk)[135](index=135&type=chunk)[139](index=139&type=chunk) - **General and administrative expenses** primarily cover personnel, legal, professional fees, facilities, and other operating costs, expected to increase with growth and public company status[143](index=143&type=chunk)[144](index=144&type=chunk) - Other income (expense), net, includes **interest income and foreign currency gains/losses**[145](index=145&type=chunk) - The company has **not recorded income tax benefits** for deferred tax assets due to expected future operating losses[146](index=146&type=chunk) [Comparison of the Three Months Ended June 30, 2025 and 2024](index=32&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section analyzes the financial performance and key changes in revenue and expenses for the three-month periods - **No license and collaboration revenue** was recognized in either period[150](index=150&type=chunk) - Research and development expenses increased by **$9.2 million** to **$43.0 million**, primarily due to a **$7.1 million** increase in obexelimab development costs (manufacturing and clinical trials) and a **$4.7 million** increase in personnel costs, partially offset by a **$2.6 million** decrease in partnered regional programs due to transitions[151](index=151&type=chunk)[155](index=155&type=chunk) - General and administrative expenses increased by **$6.2 million** to **$12.1 million**, driven by a **$4.9 million** increase in personnel costs (including stock-based compensation) for pre-commercialization activities, and increases in professional fees and other operating costs related to being a public company[152](index=152&type=chunk)[156](index=156&type=chunk) - Net loss increased to **$52.2 million** from **$38.0 million** in the prior year period[149](index=149&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=34&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section analyzes the financial performance and key changes in revenue and expenses for the six-month periods - Revenue increased by **$10.0 million** due to an upfront cash payment from the Zai License Agreement[158](index=158&type=chunk) - Research and development expenses increased by **$21.5 million** to **$78.0 million**, mainly due to an **$18.2 million** increase in obexelimab development costs (manufacturing and clinical trials) and a **$7.9 million** increase in personnel costs, partially offset by a **$4.1 million** decrease in partnered regional programs[159](index=159&type=chunk)[164](index=164&type=chunk) - General and administrative expenses increased by **$13.7 million** to **$24.6 million**, primarily due to a **$10.4 million** increase in personnel costs (including stock-based compensation) for pre-commercialization activities, and higher professional fees and other public company operating costs[160](index=160&type=chunk)[165](index=165&type=chunk) - Net loss increased to **$85.8 million** from **$65.8 million** in the prior year period[157](index=157&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its short-term and long-term financial obligations and its funding strategy - As of June 30, 2025, the company had **$274.9 million** in cash, cash equivalents, and investments, and an accumulated deficit of **$473.2 million**[162](index=162&type=chunk) - Existing capital is estimated to fund operations into the **fourth quarter of 2026**, but additional financing will be required to support continuing operations and growth strategy[166](index=166&type=chunk)[169](index=169&type=chunk) - Future funding requirements are **uncertain** and depend on clinical trial progress, regulatory approvals, commercialization costs, and intellectual property maintenance[167](index=167&type=chunk) - **Failure to raise additional funds** could lead to delays, reductions, or termination of product development efforts, or relinquishing rights to product candidates[171](index=171&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section highlights the accounting policies that require management's most difficult, subjective, or complex judgments and estimates - **No material changes** to critical accounting policies since the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[181](index=181&type=chunk) - Preparation of financial statements requires management to make **judgments, assumptions, and estimates** affecting reported amounts, which are evaluated on an ongoing basis[180](index=180&type=chunk) [Recent Accounting Pronouncements](index=39&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to disclosures regarding recently issued accounting standards and their potential impact on the financial statements - Refers to Note 2 for a description of recently issued accounting pronouncements that may impact financial position and results of operations[183](index=183&type=chunk) [Implications of Being an Emerging Growth Company and Smaller Reporting Company](index=39&type=section&id=Implications%20of%20Being%20an%20Emerging%20Growth%20Company%20and%20Smaller%20Reporting%20Company) This section explains the reduced disclosure and compliance requirements applicable to the company under specific SEC designations - The company qualifies as an '**emerging growth company**' under the JOBS Act, allowing for reduced disclosure requirements until **December 31, 2029**, or earlier if certain thresholds are met[184](index=184&type=chunk)[185](index=185&type=chunk) - The company has elected **not to 'opt out'** of the extended transition period for complying with new or revised accounting standards, adopting them at the same time as private companies[186](index=186&type=chunk) - The company is also a '**smaller reporting company**,' which provides exemptions from certain disclosure requirements, such as presenting only two most recent fiscal years of audited financial statements[187](index=187&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's exposure to market risks, including interest rate and foreign currency exchange risks, and the effects of inflation - As of June 30, 2025, the company had **$274.9 million** in cash, cash equivalents, and investments, exposing it to interest rate risk[188](index=188&type=chunk) - The company is exposed to **foreign currency exchange risk** due to subsidiaries with functional currencies in Chinese Yuan and Swiss Franc, but realized foreign currency transaction gains/losses were immaterial for the periods presented[190](index=190&type=chunk) - The company does not currently hedge currency exposure but may in the future, and believes a hypothetical **10%** exchange rate change would not materially impact financial statements[191](index=191&type=chunk) - Inflation has **not had a material effect** on the business or financial statements, though it generally increases labor and clinical trial costs[192](index=192&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms management's evaluation of disclosure controls and procedures as effective, with no material changes in internal control over financial reporting - Management concluded that disclosure controls and procedures were **effective** at the reasonable assurance level as of June 30, 2025[194](index=194&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended June 30, 2025[195](index=195&type=chunk) [Part II — Other Information](index=41&type=section&id=Part%20II%20Other%20Information) This section provides additional disclosures not covered in the financial information, including legal proceedings, risk factors, and other corporate details [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms no material legal proceedings are currently active, though litigation could negatively impact the company - The company is **not currently a party to any material legal proceedings**[198](index=198&type=chunk) - Litigation can **adversely impact the company** through defense and settlement costs, diversion of management resources, negative publicity, and reputational harm[198](index=198&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This comprehensive section details various risks that could adversely impact the company's business, financial condition, and operations across multiple categories [Risks Related to Our Financial Position and Need for Capital](index=41&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Need%20for%20Capital) This section outlines financial risks, including substantial losses, the need for additional capital, and potential stockholder dilution - As a clinical-stage biopharma company with no approved products, Zenas has incurred **substantial losses** (**$473.2 million** accumulated deficit as of June 30, 2025) and anticipates increasing losses[200](index=200&type=chunk)[202](index=202&type=chunk) - The company requires **substantial additional financing** to fund operations and capital expenditures, with current capital expected to last into **Q4 2026**; failure to obtain funding could delay or terminate product development[205](index=205&type=chunk)[207](index=207&type=chunk) - Raising additional capital through equity or convertible debt would **dilute stockholders' ownership**, and debt financing may impose restrictive covenants[211](index=211&type=chunk) [Risks Related to Product Candidate Development and Commercialization](index=45&type=section&id=Risks%20Related%20to%20Product%20Candidate%20Development%20and%20Commercialization) This section details risks associated with the lengthy, expensive, and uncertain process of developing and commercializing product candidates - Clinical development is **lengthy, expensive, and uncertain**; earlier trial results may not predict later-stage outcomes, and product candidates may fail to demonstrate adequate efficacy or safety[215](index=215&type=chunk)[216](index=216&type=chunk) - **Delays or difficulties in patient enrollment** and dosing in clinical trials can prevent or delay regulatory approvals, especially for rare diseases like IgG4-RD[226](index=226&type=chunk) - **Significant adverse events or undesirable side effects** from product candidates could delay or prevent regulatory approval, limit market acceptance, or lead to negative consequences post-approval[232](index=232&type=chunk)[237](index=237&type=chunk) - The company faces **intense competition** from large pharmaceutical and biotechnology companies, many with approved therapies in its target indications (e.g., IgG4-RD, MS, SLE)[241](index=241&type=chunk)[245](index=245&type=chunk) - Even if clinical trials are successful, regulatory approval is **uncertain** and may be for narrower indications or with significant restrictions, impacting commercialization[258](index=258&type=chunk)[259](index=259&type=chunk) - Failure to obtain broad coverage, adequate reimbursement, and favorable pricing from governmental authorities and third-party payors would **limit market access and revenue generation** for approved products[266](index=266&type=chunk) [Risks Related to Our Business and Operations](index=57&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Operations) This section covers operational risks, including dependence on product candidates, key personnel, manufacturing, IT systems, and product liability - The business depends entirely on the **successful development, regulatory approval, and commercialization** of its product candidates, which is highly uncertain[277](index=277&type=chunk) - Success is dependent on **retaining senior management and key clinical/scientific personnel**, and the inability to attract or retain such individuals would harm the business[283](index=283&type=chunk)[285](index=285&type=chunk) - The company expects to grow its organization, which may lead to **difficulties in managing growth** and expanding operations, potentially affecting business adversely[286](index=286&type=chunk) - Manufacturing of product candidates is **complex** and relies on third-party manufacturers; difficulties in production could delay clinical trials, regulatory approval, or commercial supply[287](index=287&type=chunk)[290](index=290&type=chunk) - **Compromised internal IT systems** or those of third-party contractors could lead to operational interruptions, data loss, reputational harm, litigation, and financial penalties[304](index=304&type=chunk)[306](index=306&type=chunk)[314](index=314&type=chunk) - The business entails **significant product liability risk**, and insufficient insurance coverage could adversely affect financial condition and prospects[315](index=315&type=chunk) [Risks Related to Our Intellectual Property](index=66&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) This section addresses risks concerning the company's ability to obtain, maintain, and enforce intellectual property protection for its product candidates - **Inability to obtain and maintain sufficient intellectual property protection** (patents, know-how, confidentiality) for product candidates could allow competitors to commercialize similar products[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk) - The company primarily in-licenses patent portfolios and does not solely own any issued patents related to its product candidates, creating **dependence on licensors**[330](index=330&type=chunk) - Patent rights may not issue, or issued patents could be **challenged and rendered invalid/unenforceable**, due to prior art, inventorship disputes, or legal challenges[325](index=325&type=chunk)[326](index=326&type=chunk)[335](index=335&type=chunk) - Enforcing patents globally is **expensive and uncertain**, as foreign laws may offer less protection, and compulsory licensing laws could diminish patent value[336](index=336&type=chunk)[338](index=338&type=chunk) - **Changes in patent law**, such as the Leahy-Smith America Invents Act and recent Supreme Court rulings, increase uncertainties and costs for patent prosecution and enforcement[354](index=354&type=chunk)[358](index=358&type=chunk) - If approved, biologics may face **competition from biosimilars** approved through abbreviated pathways, potentially shortening exclusivity periods and increasing competitive pressure[371](index=371&type=chunk)[372](index=372&type=chunk) - **Failure to protect trade secrets or trademarks** could harm the business by eroding competitive position and hindering brand recognition[377](index=377&type=chunk)[378](index=378&type=chunk)[380](index=380&type=chunk) [Risks Related to Government Regulation](index=81&type=section&id=Risks%20Related%20to%20Government%20Regulation) This section details regulatory risks, including the approval process, ongoing compliance, agency disruptions, healthcare reforms, and data privacy laws - The regulatory approval process is **highly uncertain, costly, and time-consuming**; the company may be unable to obtain or face delays in U.S. or foreign regulatory approval for its product candidates[384](index=384&type=chunk)[385](index=385&type=chunk) - Even with regulatory approval, the company will be subject to **ongoing regulatory obligations**, post-marketing review, and potential labeling restrictions or market withdrawal, incurring significant additional expense[390](index=390&type=chunk)[391](index=391&type=chunk)[393](index=393&type=chunk) - **Disruptions at the FDA or comparable foreign regulatory authorities** (e.g., funding shortages, global health concerns, political changes) could hinder their ability to review and approve products, negatively impacting the business[396](index=396&type=chunk)[398](index=398&type=chunk)[399](index=399&type=chunk)[400](index=400&type=chunk) - **Recently enacted and future healthcare reform measures** (e.g., ACA, IRA, executive orders on drug pricing) may increase the difficulty and cost of obtaining marketing approval and commercializing products, affecting pricing and reimbursement[401](index=401&type=chunk)[403](index=403&type=chunk)[404](index=404&type=chunk) - Failure to comply with extensive federal and state healthcare laws and regulations (e.g., anti-kickback, false claims, HIPAA, FDCA) could result in **substantial penalties**, exclusion from government programs, and adverse business impacts[409](index=409&type=chunk)[412](index=412&type=chunk) - The company is subject to **stringent and evolving U.S. and foreign data privacy and security laws** (e.g., GDPR, CCPA, CPRA); non-compliance could lead to investigations, litigation, fines, and business disruptions[416](index=416&type=chunk)[417](index=417&type=chunk)[418](index=418&type=chunk)[420](index=420&type=chunk)[421](index=421&type=chunk)[424](index=424&type=chunk) [Risks Related to Our Reliance on Third Parties](index=92&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third%20Parties) This section outlines risks stemming from the company's dependence on third-party manufacturers, clinical research organizations, and collaborators - The company currently relies on a **single third-party manufacturer, WuXi Biologics (located in China)**, for drug substances and drug products; any supply interruption, quality issues, or failure to comply with regulations could delay development[433](index=433&type=chunk)[434](index=434&type=chunk) - Establishing additional or replacement suppliers for manufacturing is **time-consuming and costly**, and changes in manufacturing processes may require additional studies or delays[434](index=434&type=chunk)[292](index=292&type=chunk) - **Reliance on third parties** (clinical investigators, CROs, data management organizations) to conduct preclinical studies and clinical trials reduces control over timing and quality, and non-compliance could lead to delays or unreliability of data[442](index=442&type=chunk)[444](index=444&type=chunk) - **Conflicts with current or future licensors or collaborators** could delay or prevent product development or commercialization due to disputes over intellectual property, milestones, or contractual obligations[449](index=449&type=chunk)[454](index=454&type=chunk) - Operations of foreign suppliers, particularly WuXi Biologics in China, are subject to **geopolitical tensions, trade restrictions** (e.g., tariffs, BIOSECURE Act), and reduced intellectual property protection, which could harm the business[455](index=455&type=chunk)[458](index=458&type=chunk)[459](index=459&type=chunk) [Risks Related to Ownership of Our Common Stock](index=99&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) This section addresses risks pertinent to investors, including stock market volatility, dilution, insider influence, dividend policy, and anti-takeover provisions - An active and liquid trading market for the common stock **may not be sustained**, making it difficult for investors to sell shares at an attractive price[462](index=462&type=chunk) - The market price of common stock may be **volatile** due to operating results, competitive developments, clinical trial outcomes, regulatory changes, and general market conditions[463](index=463&type=chunk)[464](index=464&type=chunk) - Sales of a substantial number of outstanding shares by insiders or other stockholders could cause the market price to **decline significantly**[466](index=466&type=chunk)[468](index=468&type=chunk) - Directors, executive officers, and greater than **5%** stockholders collectively own approximately **63%** of outstanding common stock, giving them substantial influence over key transactions[469](index=469&type=chunk) - The company **does not anticipate paying cash dividends** in the foreseeable future, making capital appreciation the sole source of gain for investors[470](index=470&type=chunk) - Provisions in the Restated Charter, Restated Bylaws, and Delaware law (e.g., classified board, restrictions on stockholder actions) may have **anti-takeover effects**, discouraging acquisitions or changes in management[474](index=474&type=chunk)[477](index=477&type=chunk) [General Risk Factors](index=104&type=section&id=General%20Risk%20Factors) This section covers broad risks such as economic instability, analyst coverage, public company costs, internal controls, insurance, litigation, and tax changes - **Unstable economic and market conditions** (e.g., volatility, inflation, geopolitical events) may seriously adversely affect the business, financial condition, and stock price[483](index=483&type=chunk) - Failure of securities or industry analysts to publish research or publishing inaccurate/unfavorable research could lead to a **decline in stock price and trading volume**[484](index=484&type=chunk) - Operating as a public company incurs **increased costs** and requires substantial management time for compliance initiatives and corporate governance practices[485](index=485&type=chunk) - **Failure to establish and maintain effective internal control** over financial reporting could adversely affect the business and investor confidence[486](index=486&type=chunk) - The company's insurance policies are expensive and may not protect against all business risks, leaving it exposed to **significant uninsured liabilities**[491](index=491&type=chunk) - Securities class action litigation, such as the one filed in April 2025, is **expensive, time-consuming**, and can divert management attention, damaging reputation and financial condition[492](index=492&type=chunk)[493](index=493&type=chunk) - Changes in tax rates, new tax legislation, or other exposure to tax liabilities could **significantly increase the effective tax rate** and materially affect financial condition[494](index=494&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=106&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms no material change in the planned use of proceeds from the company's initial public offering - **No material change** in the planned use of proceeds from the IPO has occurred[495](index=495&type=chunk) [Item 3. Defaults Upon Senior Securities](index=106&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms no defaults upon senior securities are to be reported - This item is **not applicable**, indicating no defaults upon senior securities[496](index=496&type=chunk) [Item 4. Mine Safety Disclosures](index=107&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section confirms no mine safety disclosures are to be reported - This item is **not applicable**, indicating no mine safety disclosures[498](index=498&type=chunk) [Item 5. Other Information](index=107&type=section&id=Item%205.%20Other%20Information) This section reports no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - **No director or officer adopted or terminated** a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025[499](index=499&type=chunk) [Item 6. Exhibits](index=107&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed with the Quarterly Report, including corporate governance documents, agreements, and certifications - The exhibit index includes the Second Restated Certificate of Incorporation, Amended and Restated Bylaws, Non-Employee Director Compensation Policy, a Consulting Agreement, CEO/CFO certifications, and XBRL taxonomy documents[502](index=502&type=chunk) [Signatures](index=108&type=section&id=Signatures) This section contains the duly authorized signatures of the Chief Executive Officer and Chief Business Officer and Chief Financial Officer - The report is signed by Leon O. Moulder, Jr., Chief Executive Officer, and Jennifer Fox, Chief Business Officer and Chief Financial Officer, on **August 12, 2025**[507](index=507&type=chunk)

[Company Overview and Recent Developments](index=1&type=section&id=Company%20Overview%20and%20Recent%20Developments) This section provides an overview of Zenas BioPharma, its strategic focus on autoimmune diseases, and recent progress in its obexelimab clinical development program [Company Profile](index=2&type=section&id=Company%20Profile) Zenas BioPharma is a clinical-stage global biopharmaceutical company focused on developing transformative therapies for autoimmune diseases, leveraging an experienced leadership team and a disciplined product candidate acquisition approach - Zenas BioPharma is a clinical-stage global biopharmaceutical company specializing in transformative therapies for autoimmune diseases[8](index=8&type=chunk) - The company's strategy involves an experienced leadership team and a disciplined approach to acquiring and developing product candidates globally[8](index=8&type=chunk) [Key Highlights and CEO Commentary](index=1&type=section&id=Key%20Highlights%20and%20CEO%20Commentary) Zenas BioPharma reported **Q2 2025** financial results and corporate updates, highlighting rapid advancement of its obexelimab program, including Phase 2 MoonStone enrollment completion and anticipated Phase 3 INDIGO topline results, with cash runway **into Q4 2026** - Topline results from the pivotal Phase 3 INDIGO trial in Immunoglobulin G4-Related Disease are **expected around year-end 2025**[1](index=1&type=chunk) - Enrollment for the Phase 2 MoonStone trial in Relapsing Multiple Sclerosis has been **completed**, with results **expected early in the fourth quarter of 2025**[1](index=1&type=chunk) - Cash, cash equivalents, and investments **totaled $274.9 million** as of **June 30, 2025**, providing a cash runway **into the fourth quarter of 2026**[1](index=1&type=chunk) - CEO Lonnie Moulder expressed satisfaction with the rapid advancement of the obexelimab program and highlighted the differentiated profile of obexelimab and the company's capabilities to address autoimmune diseases[2](index=2&type=chunk) [Obexelimab Clinical Development Updates](index=1&type=section&id=Obexelimab%20Clinical%20Development%20Updates) Zenas BioPharma updated on obexelimab, its lead bifunctional monoclonal antibody, advancing multiple Phase 2 and Phase 3 trials for autoimmune diseases with key milestones expected through mid-2026 - Obexelimab is a bifunctional monoclonal antibody that binds CD19 and FcγRIIb to inhibit B cell activity without depleting them, offering a unique mechanism of action for autoimmune diseases[6](index=6&type=chunk)[8](index=8&type=chunk) - Obexelimab has been evaluated in **five completed clinical trials** involving **198 subjects**, demonstrating good tolerability and pharmacologic activity, providing initial clinical proof of concept[7](index=7&type=chunk) - Zenas is currently conducting **multiple Phase 2 and Phase 3 trials** for obexelimab in autoimmune diseases including IgG4-RD, RMS, and SLE[7](index=7&type=chunk) - Obexelimab's self-administered, subcutaneous injection regimen may broadly and effectively address the pathogenic role of B cell lineage in chronic autoimmune disease[6](index=6&type=chunk)[8](index=8&type=chunk) [Immunoglobulin G4-Related Disease (IgG4-RD) - INDIGO Trial](index=1&type=section&id=Immunoglobulin%20G4-Related%20Disease%20(IgG4-RD)%20-%20INDIGO%20Trial) The global Phase 3 INDIGO trial for obexelimab in IgG4-RD, the **largest** to date, concluded enrollment in **November 2024**, with topline results **expected around year-end 2025** - The Phase 3 INDIGO trial for obexelimab in IgG4-RD is a global, registration-directed, multicenter, randomized, double-blind, placebo-controlled trial[3](index=3&type=chunk) - Target enrollment for the INDIGO trial concluded in **November 2024**[3](index=3&type=chunk) - Topline results from the INDIGO trial are **expected around year-end 2025**[1](index=1&type=chunk)[3](index=3&type=chunk) - The INDIGO trial is the **largest clinical trial** conducted in patients living with IgG4-RD to date[3](index=3&type=chunk) [Relapsing Multiple Sclerosis (RMS) - MoonStone Trial](index=1&type=section&id=Relapsing%20Multiple%20Sclerosis%20(RMS)%20-%20MoonStone%20Trial) Enrollment for the Phase 2 MoonStone trial of obexelimab in Relapsing Multiple Sclerosis has been **completed**, and Zenas **expects** to report results, including the **12-week primary endpoint**, **early in the fourth quarter of 2025** - Enrollment for the Phase 2 MoonStone trial in Relapsing Multiple Sclerosis has been **completed**[1](index=1&type=chunk)[3](index=3&type=chunk) - Results from the MoonStone trial, including the **12-week primary endpoint**, are **expected early in the fourth quarter of 2025**[1](index=1&type=chunk)[3](index=3&type=chunk) - The MoonStone trial is a multicenter, randomized, double-blind, placebo-controlled trial evaluating obexelimab's efficacy and safety in RMS patients[3](index=3&type=chunk) [Systemic Lupus Erythematosus (SLE) - SunStone Trial](index=2&type=section&id=Systemic%20Lupus%20Erythematosus%20(SLE)%20-%20SunStone%20Trial) Enrollment for the Phase 2 SunStone trial of obexelimab in Systemic Lupus Erythematosus is ongoing and is **expected** to be **completed by year-end 2025**, with topline results anticipated **in mid-2026** - Enrollment for the Phase 2 SunStone trial in Systemic Lupus Erythematosus is **expected** to be **completed by year-end 2025**[1](index=1&type=chunk)[4](index=4&type=chunk) - Topline results from the SunStone trial are **expected in mid-2026**[1](index=1&type=chunk)[4](index=4&type=chunk) - The SunStone trial is a multicenter, randomized, double-blind, placebo-controlled trial evaluating obexelimab's efficacy and safety in SLE patients[4](index=4&type=chunk) [Second Quarter 2025 Financial Results](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Results) This section details Zenas BioPharma's financial performance for **Q2 2025**, including net loss, operating expenses, and cash position, highlighting increased R&D and G&A expenses [Financial Summary and Cash Runway](index=2&type=section&id=Financial%20Summary%20and%20Cash%20Runway) Zenas BioPharma reported a **Q2 2025 net loss of $52.2 million**, an increase from **Q2 2024**, due to higher R&D and G&A expenses, while maintaining a **$274.9 million** cash position with runway **into Q4 2026** Cash, Cash Equivalents and Investments | Metric | As of June 30, 2025 | | :--- | :--- | | Cash, cash equivalents and investments | $274.9 million | - The company expects its cash, cash equivalents, and investments as of **June 30, 2025**, to fund operating expenses and capital expenditure requirements **into the fourth quarter of 2026**[1](index=1&type=chunk)[9](index=9&type=chunk) Net Loss (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Net Loss | $(52.2) million | $(38.0) million | $(14.2) million | Research and Development (R&D) Expenses (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | R&D Expenses | $43.0 million | $33.8 million | $9.2 million | - The **increase in R&D expenses** was primarily due to increased costs related to the clinical development of obexelimab and higher personnel costs, partially offset by a decrease in partnered programs[9](index=9&type=chunk) General and Administrative (G&A) Expenses (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | G&A Expenses | $12.1 million | $5.9 million | $6.2 million | - The **increase in G&A expenses** was driven by higher personnel costs (including stock-based compensation), pre-commercialization activities, and other expenses associated with operating as a public company[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended **June 30, 2025**, Zenas BioPharma reported no revenue, total operating expenses of **$55.2 million**, and a **net loss of $52.2 million**, compared to a **net loss of $38.0 million** in the prior year period Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Metric (in million) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | License and collaboration revenue | $— | $— | | Total revenue | $— | $— | | Research and development | $43.0 | $33.8 | | General and administrative | $12.1 | $5.9 | | Total operating expenses | $55.2 | $39.7 | | Loss from operations | $(55.2) | $(39.7) | | Other income, net | $3.0 | $1.7 | | Income tax (provision) benefit | $(0.0) | $— | | Net loss to common stockholders | $(52.2) | $(38.0) | | Net loss per share - basic and diluted | $(1.25) | $(24.23) | | Weighted-average common stock outstanding - basic and diluted | 41,865,400 | 1,567,269 | [Selected Consolidated Balance Sheet Data](index=4&type=section&id=Selected%20Consolidated%20Balance%20Sheet%20Data) As of **June 30, 2025**, Zenas BioPharma reported cash, cash equivalents, and investments of **$274.9 million**, total assets of **$293.1 million**, and total stockholders' equity of **$239.6 million** Selected Consolidated Balance Sheet Data (As of June 30, 2025) | Metric (in million) | June 30, 2025 | | :--- | :--- | | Cash, cash equivalents and investments | $274.9 | | Working capital | $225.4 | | Total assets | $293.1 | | Accumulated deficit | $(473.2) | | Total stockholders' equity | $239.6 | [Forward-Looking Statements and Disclaimers](index=3&type=section&id=Forward-Looking%20Statements%20and%20Disclaimers) This section contains standard forward-looking statements regarding future events, clinical trial timings, growth strategy, and cash runway guidance, subject to risks and uncertainties that could cause actual results to differ materially, with no public update commitment [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains standard forward-looking statements regarding future events, clinical trial timings, growth strategy, and cash runway guidance, subject to risks and uncertainties that could cause actual results to differ materially, with no public update commitment - The press release contains forward-looking statements concerning the timing and results of ongoing and future clinical trials, the ability to impact autoimmune disease treatment, growth strategy, and cash runway guidance[10](index=10&type=chunk) - These statements involve risks, uncertainties, and contingencies that may cause actual results to differ materially from anticipated outcomes[10](index=10&type=chunk) - Key risks include **limited operating history**, **need for additional financing**, **uncertainty of clinical development**, **potential competition**, **regulatory approval challenges**, and **reliance on third parties**[10](index=10&type=chunk) - The company does not undertake to publicly update or revise any forward-looking statements unless required by applicable law[10](index=10&type=chunk) [Trademarks and Contact Information](index=3&type=section&id=Trademarks%20and%20Contact%20Information) This section provides information on Zenas BioPharma's trademarks and investor/media contact details - The Zenas BioPharma word mark, logo mark, and the 'lightning bolt' design are trademarks of Zenas BioPharma, Inc. or its affiliated companies[11](index=11&type=chunk) - Investor and Media Contact information is provided via Argot Partners[15](index=15&type=chunk)