Inozyme Pharma(INZY) - 2021 Q4 - Annual Report

Financial Performance - The company has not yet commercialized any products or generated revenue from product sales, with net losses of $56.6 million and $56.4 million for the years ended December 31, 2021, and 2020, respectively, resulting in an accumulated deficit of $147.7 million as of December 31, 2021[549]. - The company incurred a net loss of $56.6 million for the year ended December 31, 2021, compared to a net loss of $56.4 million for the year ended December 31, 2020, reflecting an increase in loss of $200,000[568]. - Cash, cash equivalents, and short-term investments totaled approximately $111.8 million as of December 31, 2021, down from $159.9 million as of December 31, 2020[577]. - Net cash used in operating activities was $48.2 million for the year ended December 31, 2021, compared to $36.0 million for the year ended December 31, 2020, representing an increase of $12.2 million[580]. - The company faces substantial doubt about its ability to continue as a going concern within one year after the issuance of its financial statements, necessitating additional funding[553]. Research and Development - The company has incurred $94.3 million in research and development costs for INZ-701 from inception through December 31, 2021, and expects these costs to continue to increase substantially as clinical trials progress[561]. - The company expects research and development expenses to increase as it prepares for and conducts clinical trials of INZ-701[570]. - The company anticipates significant increases in expenses related to ongoing and planned clinical trials, particularly for INZ-701[550]. - The company has entered into a sponsored research agreement with Yale, committing to provide a total of $2.4 million in research support funding over a period of five and a half years[591]. - The company estimates accrued research and development expenses based on service provider contracts and historical experience, with no material differences reported to date[597]. Clinical Trials and Regulatory Approvals - INZ-701 has received orphan drug designation from the FDA and EMA for the treatment of ENPP1 and ABCC6 Deficiencies, with fast track designation also granted by the FDA for ENPP1 Deficiency[543]. - The company initiated its Phase 1/2 clinical trial of INZ-701 for ENPP1 Deficiency in November 2021, with plans to report preliminary safety and biomarker data in the first half of 2022[544]. - The company has received regulatory approvals for clinical trials in the UK, Canada, and the EU for INZ-701, allowing for broader clinical development outside the US[544]. - The company plans to seek worldwide marketing approvals for INZ-701 upon successful completion of clinical development for ENPP1 and ABCC6 Deficiencies[546]. Expenses and Funding - General and administrative expenses increased by $8.4 million to $18.9 million for the year ended December 31, 2021, compared to $10.5 million for the year ended December 31, 2020[571]. - Research and development expenses decreased by $8.8 million to $37.7 million for the year ended December 31, 2021, from $46.5 million for the year ended December 31, 2020[568]. - The company has funded operations primarily through proceeds from the sales of convertible preferred stock and common stock, totaling approximately $227.4 million as of December 31, 2021[547]. - The company expects to need substantial additional funding to support ongoing and planned activities, particularly for clinical trials and commercialization efforts[583]. - The company filed a universal shelf registration statement allowing it to offer and sell up to $200 million of various securities, including common stock[576]. Market and Economic Factors - The company is exposed to market risk related to interest rate changes, but an immediate change of 100 basis points in interest rates would not materially affect the fair market value of its investment portfolio[602]. - The company has not experienced significant market risk related to foreign currency exchange rates, although it may contract with foreign vendors in the future[603]. - Inflation has not had a material effect on the company's business or financial condition during the years ended December 31, 2021, and 2020[604]. Accounting and Compliance - The fair value of stock options is estimated using the Black-Scholes model, with inputs based on historical volatility of similar public companies[598]. - The company has elected to use an extended transition period for complying with new or revised accounting standards as an emerging growth company[600]. - The company may need to relinquish valuable rights to technologies or revenue streams if it raises additional funds through collaborations or licensing arrangements[589]. - The company is responsible for paying annual license maintenance fees, milestone payments, and royalties under its license agreement with Yale, with the timing and likelihood of such payments being uncertain[591].