Zentalis(ZNTL) - 2025 Q2 - Quarterly Report

Financial Performance - License revenue for the six months ended June 30, 2025, was $0, compared to $40,560 thousand for the same period in 2024, representing a 100% decrease [27]. - The net loss attributable to Zentalis for the three months ended June 30, 2025, was $26,874 thousand, a reduction of 69.5% compared to a net loss of $88,277 thousand for the same period in 2024 [27]. - The comprehensive loss attributable to Zentalis for the three months ended June 30, 2025, was $27,173 thousand, down from $88,910 thousand for the same period in 2024, a reduction of approximately 69.4% [29]. - Total net loss attributable to Zentalis for the six months ended June 30, 2025, was $88.3 million, compared to a net loss of $78.2 million for the same period in 2024 [83]. - The company incurred a net loss of $75.2 million for the six months ended June 30, 2025, compared to a net loss of $78.2 million for the same period in 2024, indicating a reduction in losses of 3.8% [141][142]. Assets and Liabilities - Total current assets decreased from $386,066 thousand as of December 31, 2024, to $311,596 thousand as of June 30, 2025, a decline of approximately 19.3% [24]. - The total liabilities decreased from $93,151 thousand as of December 31, 2024, to $77,212 thousand as of June 30, 2025, a reduction of approximately 17.1% [24]. - The total stockholders' equity decreased from $337,186 thousand as of December 31, 2024, to $274,495 thousand as of June 30, 2025, a decline of approximately 18.6% [24]. - As of June 30, 2025, Zentalis held available-for-sale marketable debt securities with an estimated fair value of $249.0 million [58]. - As of June 30, 2025, the company had cash, cash equivalents, and marketable securities of $303.4 million, expected to fund operations into late 2027 [106]. Operating Expenses - Total operating expenses for the three months ended June 30, 2025, were $36,058 thousand, down 44.7% from $65,148 thousand in the same period of 2024 [27]. - Research and development expenses for the six months ended June 30, 2025, totaled $54.9 million, a decrease from $97.9 million in the same period of 2024 [57]. - General and administrative expenses for Q2 2025 were $8.4 million, down $8.3 million from $16.7 million in Q2 2024 [127]. - Total operating expenses for Q2 2025 were $36.1 million, a reduction of $29.1 million compared to $65.1 million in Q2 2024 [124]. - Restructuring expenses for the six months ended June 30, 2025, were $7.8 million, compared to zero in the same period in 2024 [133]. Cash Flow - The company reported a net cash used in operating activities of $67,344 thousand for the six months ended June 30, 2025, compared to $87,110 thousand for the same period in 2024, a decrease of approximately 22.7% [32]. - The total cash used in operations for the six months ended June 30, 2025, was $67.3 million, compared to $87.1 million for the same period in 2024 [57]. - Net cash used in operating activities for the six months ended June 30, 2025, was $67.3 million, reflecting a decrease of 22.0% [141][142]. - Net cash provided by investing activities for the six months ended June 30, 2025, was $70.9 million, down from $96.0 million in 2024 [143][144]. Research and Development - Research and development expenses totaled $27.6 million for the three months ended June 30, 2025, compared to $48.4 million for the same period in 2024 [114]. - The company reported external development costs for azenosertib of $20.6 million for the six months ended June 30, 2025, down from $47.6 million in the same period of 2024 [57]. - Azenosertib demonstrated an objective response rate (ORR) of 34.9% in Cyclin E1-positive PROC patients, with a median duration of response (mDOR) of approximately 6.3 months as of January 13, 2025 [100][103]. - Azenosertib is currently undergoing a Phase 2 clinical trial in USC, with data expected to be disclosed in the first half of 2026 [98]. - The FDA has granted Fast Track Designation to azenosertib for the treatment of PROC patients who are Cyclin E1-positive [98]. Market and Competition - The global ovarian cancer market was approximately $3 billion in 2022, with significant growth expected, particularly for Cyclin E1-positive PROC patients [95]. - Approximately 50% of PROC patients are estimated to overexpress Cyclin E1 protein, representing about 21,500 patients annually in the U.S. and EU4 [95]. - The company is substantially dependent on the success of azenosertib, its only product candidate in clinical development, and any delays in clinical trials or regulatory approvals could materially harm its business [174]. - The company may need to address competition from other therapies and technological developments that could impact the commercial viability of its product candidates [169]. Regulatory and Approval Risks - The regulatory approval processes for azenosertib and future product candidates are lengthy and unpredictable, which could delay or prevent revenue generation [185]. - The company has not submitted for or obtained regulatory approval for any product candidate, including azenosertib, which may never receive approval [187]. - The approval of a companion diagnostic is critical; without it, the FDA may not approve the therapeutic product, limiting its market potential [203]. - The company may face delays in clinical trials due to disagreements with regulatory authorities regarding trial design or implementation [195]. - The company may need to conduct additional studies or collect more data independently if third-party collaborators do not perform as expected, leading to increased development costs [194].