Zentalis(ZNTL) - 2025 Q1 - Quarterly Report

Financial Performance - Total assets decreased from $430,337,000 on December 31, 2024, to $384,021,000 on March 31, 2025, a decline of approximately 10.7%[24] - License revenue for the three months ended March 31, 2025, was $0, compared to $40,560,000 for the same period in 2024, representing a decrease of 100%[26] - The net loss attributable to Zentalis for Q1 2025 was $48,279,000, compared to a net income of $10,068,000 in Q1 2024, indicating a significant shift in performance[26] - The company reported a total comprehensive loss of $48,479,000 for Q1 2025, compared to a comprehensive income of $8,647,000 in Q1 2024[27] - The Company reported no revenues for the three months ended March 31, 2025, compared to $40.56 million in the same period of 2024[56] - The net loss for the three months ended March 31, 2025, was $48.28 million, compared to a net income of $10.04 million in Q1 2024[56] - The company incurred a net loss of $165.9 million for the year ended December 31, 2024, and a net loss of $48.3 million for the three months ended March 31, 2025, with an accumulated deficit of $1.1 billion[167] Cash and Assets - Cash and cash equivalents increased from $33,901,000 on December 31, 2024, to $41,929,000 on March 31, 2025, an increase of approximately 23.7%[24] - The Company had available-for-sale marketable debt securities with an estimated fair value of $278.37 million as of March 31, 2025[59] - As of March 31, 2025, total assets measured at fair value amounted to $299,655 thousand, with $21,282 thousand in Level 1, $278,373 thousand in Level 2, and no assets in Level 3[63] - As of March 31, 2025, the company had $41.9 million in cash and cash equivalents and an accumulated deficit of $1.1 billion[140] - Cash, cash equivalents, and marketable securities totaled $332.5 million as of March 31, 2025, expected to fund operations into late 2027[107] Operating Expenses - Total operating expenses decreased from $65,325,000 in Q1 2024 to $45,623,000 in Q1 2025, a reduction of approximately 30.2%[26] - General and administrative expenses fell to $10.6 million in Q1 2025 from $15.7 million in Q1 2024, a decrease of $5.1 million[133] - Total operating expenses decreased to $45.6 million in Q1 2025 from $65.3 million in Q1 2024, a reduction of $19.7 million[130] - The Company’s cash used in operations for Q1 2025 was $32.64 million, an improvement from $51.97 million in Q1 2024[56] - Restructuring expenses for Q1 2025 were $7.8 million, compared to zero in Q1 2024[135] Research and Development - Research and development expenses for Q1 2025 were $27,247,000, down from $49,585,000 in Q1 2024, a decrease of approximately 45%[26] - Total research and development expenses for Q1 2025 were $27.25 million, a decrease of 45% from $49.59 million in Q1 2024[56] - Research and development expenses for Azenosertib were $9.6 million for the three months ended March 31, 2025, down from $21.7 million in the same period in 2024[121] - The company is focused on the clinical development of azenosertib for Cyclin E1+ PROC and is also developing a companion diagnostic[169][171] - Azenosertib is currently involved in multiple clinical trials, including ongoing studies for ovarian cancer and uterine serous carcinoma[101] Clinical Trials and Product Development - Azenosertib is currently in a Phase 2 clinical trial (DENALI Part 2) targeting approximately 100 patients with Cyclin E1+ PROC, with topline data anticipated by the end of 2026[100] - The FDA has granted Fast Track Designation to azenosertib for the treatment of PROC patients who are positive for Cyclin E1 IHC[100] - Azenosertib demonstrated an objective response rate (ORR) of 34.9% in patients with Cyclin E1+ PROC tumors, based on 43 response-evaluable patients[102] - The median duration of response (mDOR) for the intent-to-treat population in DENALI Part 1b increased to approximately 6.3 months as of January 13, 2025[105] - Azenosertib is being evaluated in combination with chemotherapy or bevacizumab in a Phase 1b clinical trial for platinum-sensitive ovarian cancer[100] Market and Regulatory Environment - The global ovarian cancer market was approximately $3 billion in 2022, with significant growth expected, particularly for Cyclin E1+ PROC patients, estimated at 21,500 patients annually in the U.S. and EU4[97] - The regulatory approval processes for azenosertib are lengthy and unpredictable, with no current marketing approvals obtained[189] - The company may face challenges in developing companion diagnostics required for regulatory approval, impacting the commercialization of azenosertib[206] - The lengthy approval process and unpredictability of clinical trial results may significantly harm the company's business and prospects[194] - Market acceptance of azenosertib and future product candidates is crucial for commercial success, influenced by various factors[220] Financial Outlook and Funding - The company plans to finance operations through equity sales, debt financing, or collaborations, with no assurance of obtaining adequate funding[138] - The company recognizes the need for substantial additional capital to finance operations and may need to seek additional funds sooner than planned[171][174] - The company has established no credit facility, and any future capital raises may dilute existing ownership interests[153] - The company has not generated any revenue from product sales and does not expect to do so in the foreseeable future[106][117] - Collaborations with third parties, including Pfizer and GSK, are being pursued for the development and commercialization of azenosertib, but the success of these collaborations is uncertain[180]