10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________ to _____________________

Commission File Number: 001-39397

INOZYME PHARMA, INC.

(Exact name of registrant as specified in its charter)


Delaware	38-4024528
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
321 Summer Street, Suite 400 Boston, Massachusetts	02210
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (857) 330-4340

Securities registered pursuant to Section 12(b) of the Act:

    Title of each class

    Trading
Symbol(s)

    Name of each exchange on which registered

    Common stock, par value $0.0001 per share

    INZY

    Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 2, 2024, the registrant had 61,855,509 shares of common stock, $0.0001 par value per share, outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. All statements, other than statements of historical fact, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” and the negative version of these words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to those described in the “Risk Factors” section in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q and include, among other things:

•

our ongoing Phase 1/2 clinical trials of INZ-701 for adults with ENPP1 and ABCC6 Deficiencies, our ongoing Phase 1b clinical trial of INZ-701 for infants with ENPP1 Deficiency ("ENERGY-1"), our ongoing pivotal trial of INZ-701 in pediatric patients with ENPP1 Deficiency ("ENERGY-3"), and our ongoing Phase 1 clinical trial of INZ-701 in patients with end-stage kidney disease receiving hemodialysis ("SEAPORT-1"), including statements regarding the timing of enrollment and completion of the clinical trials and the period during which the results of the clinical trials will become available;

•

the timing, design, and conduct of our planned clinical trials of INZ-701 for patients with ENPP1 and ABCC6 Deficiencies, including our planned pivotal clinical trials of INZ-701 for infants ("ENERGY-2") and in adolescents and adults with ENPP1 Deficiency ("ENERGY-4"), and our planned pivotal clinical trial of INZ-701 for pediatric patients with ABCC6 Deficiency;

•

our plans to conduct research, preclinical testing and clinical trials of INZ-701 for additional indications;

•

our plans to conduct research, preclinical testing and clinical trials of other product candidates;

•

our plans to engage in regulatory interactions with the U.S. Food and Drug Administration, the European Medicines Agency and other regulatory authorities;

•

our plans with respect to regulatory filings;

•

the timing of, and our ability to obtain and maintain, marketing approvals of INZ-701, and the ability of INZ-701 and our other product candidates to meet existing or future regulatory standards;

•

our expectations regarding our ability to fund our cash flow requirements with our cash, cash equivalents and short-term investments;

•

the potential advantages of our product candidates;

•

the rate and degree of market acceptance and clinical utility of our product candidates;

•

our estimates regarding the potential market opportunity for our product candidates;

•

our commercialization and manufacturing capabilities and strategy;

•

our intellectual property position;

•

our ability to identify additional products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;

•

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•

our ability to comply with the covenants under our loan agreement;

•

the impact of government laws and regulations;

•

our competitive position; and

•

our expectations regarding the time during which we will be an emerging growth company under the Jumpstart our Business Startups Act of 2012.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we

expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
Signatures		29

iii

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and per share data)


	March 31, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	20,618		$	34,588
Short-term investments		145,535			154,001
Prepaid expenses and other current assets		8,171			7,661
Total current assets		174,324			196,250
Property and equipment, net		1,316			1,466
Right-of-use assets		992			1,126
Restricted cash		311			311
Prepaid expenses, net of current portion		—			1,694
Total assets	$	176,943		$	200,847
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,166		$	1,166
Accrued expenses		9,306			12,610
Operating lease liabilities		934			910
Total current liabilities		12,406			14,686
Operating lease liabilities, net of current portion		669			913
Long-term debt, net		45,032			44,769
Total liabilities		58,107			60,368
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred Stock, $0.0001 par value – 5,000,000 shares authorized at March 31, 2024 and December 31, 2023; no shares issued and outstanding at March 31, 2024 or December 31, 2023		—			—
Common Stock, $0.0001 par value – 200,000,000 shares authorized at March 31, 2024 and December 31, 2023; 61,816,509 shares issued and outstanding at March 31, 2024 and 61,768,771 shares issued and outstanding at December 31, 2023		6			6
Additional paid in-capital		428,212			426,362
Accumulated other comprehensive (loss) income		(105	)		41
Accumulated deficit		(309,277	)		(285,930	)
Total stockholders’ equity		118,836			140,479
Total liabilities and stockholders’ equity	$	176,943		$	200,847

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(amounts in thousands, except share and per share data)


	Three Months Ended March 31,
	2024			2023
Operating expenses:
Research and development	$	19,111		$	11,857
General and administrative		5,234			6,512
Total operating expenses		24,345			18,369
Loss from operations		(24,345	)		(18,369	)
Other income (expense):
Interest income		2,374			1,327
Interest expense		(1,325	)		(328	)
Other expense, net		(51	)		(34	)
Other income (expense), net		998			965
Net loss	$	(23,347	)	$	(17,404	)
Other comprehensive income (loss):
Unrealized (losses) gains on available-for-sale securities		(156	)		150
Foreign currency translation adjustment		10			19
Total other comprehensive (loss) income		(146	)		169
Comprehensive loss	$	(23,493	)	$	(17,235	)
Net loss attributable to common stockholders—basic and diluted	$	(23,347	)	$	(17,404	)
Net loss per share attributable to common stockholders—basic and diluted	$	(0.38	)	$	(0.40	)
Weighted-average common shares and pre-funded warrants outstanding—basic and diluted		61,772,279			43,720,578

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(amounts in thousands, except share data)

(Unaudited)


	Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders’ Equity (Deficit)
	Shares		Amount		Capital		(Loss) Income			Deficit
Balance at December 31, 2023		61,768,771	$	6	$	426,362	$	41		$	(285,930	)	$	140,479
Stock-based compensation		—		—		1,691		—			—			1,691
Exercise of stock options		3,206		—		11		—			—			11
Shares purchased in Employee Stock Purchase Plan		44,532		—		148		—			—			148
Comprehensive loss:
Unrealized loss on investments		—		—		—		(156	)		—			(156	)
Foreign currency translation adjustment		—		—		—		10			—			10
Net loss		—		—		—		—			(23,347	)		(23,347	)
Balance at March 31, 2024		61,816,509	$	6	$	428,212	$	(105	)	$	(309,277	)	$	118,836

Balance at December 31, 2022		40,394,363	$	4	$	333,356	$	(205	)	$	(214,761	)	$	118,394
Stock-based compensation		—		—		2,092		—			—			2,092
Exercise of pre-funded warrants		3,325,644		—		—		—			—			—
Shares purchased in Employee Stock Purchase Plan		45,478		—		96		—			—			96
Comprehensive loss:
Unrealized gain on investments		—		—		—		150			—			150
Foreign currency translation adjustment		—		—		—		19			—			19
Net loss		—		—		—		—			(17,404	)		(17,404	)
Balance at March 31, 2023		43,765,485	$	4	$	335,544	$	(36	)	$	(232,165	)	$	103,347

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(Unaudited)


	Three Months Ended March 31,
	2024			2023
Operating activities
Net loss	$	(23,347	)	$	(17,404	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		182			207
Stock-based compensation expense		1,691			2,092
Amortization of premiums and discounts on marketable securities		(2,116	)		(746	)
Reduction in the carrying value of right-of-use assets		134			117
Non-cash interest expense and amortization of debt issuance costs		263			80
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(510	)		309
Accounts payable		1,000			(

SEC Form 10-Q filed by Inozyme Pharma Inc.