Zenas BioPharma, Inc.(ZBIO) - 2025 Q3 - Quarterly Report

Financial Performance - Total revenue for the nine months ended September 30, 2025, was $10 million, compared to $0 for the same period in 2024[20] - The net loss attributable to common stockholders for the nine months ended September 30, 2025, was $137.3 million, compared to a loss of $104.4 million for the same period in 2024[20] - The company reported a comprehensive loss of $137.6 million for the nine months ended September 30, 2025, compared to a loss of $104.4 million in 2024[20] - For the nine months ended September 30, 2025, the company reported a net loss of $137.3 million, compared to a net loss of $104.4 million for the same period in 2024, representing a 31.5% increase in losses year-over-year[33] - The company experienced a net loss of $52,223,000 for the quarter ending June 30, 2025, compared to a net loss of $33,573,000 for the previous quarter, indicating a 56% increase in losses[22] - The Company reported a segment net loss of $51.499 million for the three months ended September 30, 2025, compared to a net loss of $38.606 million for the same period in 2024[106] Expenses - Research and development expenses for the three months ended September 30, 2025, were $34.4 million, an increase from $33.5 million in the same period in 2024[20] - General and administrative expenses for the nine months ended September 30, 2025, were $37.7 million, up from $18.3 million in 2024, reflecting a 106% increase[20] - The company incurred acquired in-process research and development expenses of $5 million during the three months ended September 30, 2025[20] - The company incurred stock-based compensation expenses of $18.8 million for the nine months ended September 30, 2025, compared to $5.3 million for the same period in 2024, representing a significant increase[33] - The company reported a stock-based compensation expense of $7,336,000 for the quarter ending June 30, 2025, compared to $6,045,000 for the previous quarter, reflecting an increase of approximately 21%[22] - Total stock-based compensation expense for the three months ended September 30, 2025, was $7.336 million, compared to $2.843 million for the same period in 2024, representing an increase of 158%[92] - For the nine months ended September 30, 2025, total stock-based compensation expense was $18.767 million, up from $5.326 million in 2024, reflecting a 253% increase[92] Cash and Liquidity - Cash and cash equivalents decreased to $115.6 million as of September 30, 2025, from $319.7 million at the end of 2024[18] - As of September 30, 2025, the company had cash, cash equivalents, and restricted cash totaling $115.6 million, down from $360.1 million at the end of the same period in 2024, reflecting a decrease of 67.8%[34] - The company expects its existing cash and investments of $301.6 million, along with $120.0 million from a Private Investment in Public Equity (PIPE) received in October 2025, to fund operations into the fourth quarter of 2026[35] - As of September 30, 2025, the Company reported a total stockholders' equity of $196,428,000, down from $312,458,000 as of December 31, 2024, reflecting a decrease of approximately 37%[22] - The Company recorded total assets of $301.6 million as of September 30, 2025, compared to $350.8 million as of December 31, 2024[50] Liabilities - Total liabilities increased significantly to $125.6 million as of September 30, 2025, compared to $57.5 million at the end of 2024[18] - The Company has accrued expenses totaling $45.4 million as of September 30, 2025, an increase from $39.4 million as of December 31, 2024[55] - The Company has non-cancellable clinical manufacturing contract payment obligations totaling $18.7 million, all payable within 12 months[98] Financing and Capital - The company anticipates requiring substantial additional financing to achieve its goals, which may cause dilution to stockholders[13] - The Company completed its initial public offering (IPO) on September 16, 2024, raising net proceeds of $234.3 million from the sale of 15,220,588 shares at a public offering price of $17.00 per share[31] - The Company sold 6,262,112 shares of common stock at $19.00 per share, generating gross proceeds of approximately $120 million in October 2025[115] Agreements and Milestones - The Company entered into a license agreement with Bristol-Myers Squibb, receiving a one-time upfront payment of $50 million and potential milestone payments of up to $149.5 million[59] - The Company recognized a one-time upfront cash payment of $5 million from Tenacia Biotechnology under a novation agreement, with potential milestone payments of up to $86 million[64] - The Company received a one-time upfront cash payment of $10 million from Zai Lab under a license agreement, with potential milestone payments of up to $117 million[66] - The 2021 Xencor Agreement includes regulatory milestone payments up to $75.0 million and one-time sales milestone payments up to $385.0 million based on net sales thresholds[72] - The Company entered into a Royalty Purchase Agreement in September 2025, receiving a $75.0 million upfront payment and agreeing to pay 5.5% of net sales of obexelimab products[78] - An additional $225.0 million in payments is contingent upon achieving specific milestones related to obexelimab's clinical trials and FDA approvals[79] - The Company has committed to make a one-time non-refundable upfront cash payment of $35 million under the InnoCare License Agreement, with $5 million paid as of September 30, 2025[110] - Future regulatory and commercial milestones related to orelabrutinib could total up to $723 million, with additional development milestones for preclinical compounds up to $656 million[112] Stock Options and Equity - The weighted-average common stock outstanding for the nine months ended September 30, 2025, was 41,943,160 shares, compared to 3,621,276 shares in 2024[20] - As of September 30, 2025, the Company had 10,507,497 stock options outstanding with a weighted average exercise price of $12.86[89] - The Company granted 538,550 restricted stock units (RSUs) with a weighted average grant date fair value of $12.15, with 525,350 unvested as of September 30, 2025[90] - There was $81.2 million of unrecognized stock-based compensation related to unvested stock options and RSUs expected to be recognized over a weighted-average period of 3.0 years[91] - The Company has reserved 12,313,103 shares of common stock for potential conversion of outstanding stock options and other equity awards[84] - As of September 30, 2025, the Company had 773,122 shares available for future issuance under the Employee Stock Purchase Plan (ESPP) after an automatic increase of 417,934 shares on January 1, 2025[93] Risks and Future Outlook - The company anticipates continued operating losses and negative cash flows for the foreseeable future, necessitating additional capital to fund operations[35] - The company is subject to substantial risks and uncertainties typical of clinical-stage biopharmaceutical companies, including the need for significant research and development efforts[30] - Inflation has generally increased labor and clinical trial costs, but it has not had a material effect on the business[210] Currency and Foreign Transactions - The reporting currency for the company is the U.S. dollar (USD), with functional currencies for subsidiaries being the Chinese Yuan and Swiss Franc[208] - Realized foreign currency transaction gains (losses) were immaterial for the three and nine months ended September 30, 2025[208] - The company does not currently engage in currency hedging activities but may consider it in the future[209] - A hypothetical 10% increase or decrease in exchange rates would not have had a material impact on the financial statements[209]