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 June 30, 2022

OR

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.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

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 August 10, 2022, the registrant had 40,145,674 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

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 ENPP1 and ABCC6 Deficiencies, 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 and conduct of our planned later stage clinical trials of INZ-701 for patients with ENPP1 and ABCC6 Deficiencies;
our plans to conduct research and preclinical testing of INZ-701 for additional indications;
our plans to conduct research and preclinical testing of other product candidates;
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 operating expenses, capital expenditures, and debt service obligations 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;
the impact of COVID-19 on our business and operations;
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;
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.

i


 

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

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

28

PART II.

OTHER INFORMATION

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 6.

Exhibits

31

Signatures

32

 

ii


 

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)

(Unaudited)

 

 

 

June 30,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

62,620

 

 

$

23,316

 

Short-term investments

 

 

88,860

 

 

 

88,485

 

Prepaid expenses and other current assets

 

 

2,268

 

 

 

3,541

 

Total current assets

 

 

153,748

 

 

 

115,342

 

Property and equipment, net

 

 

2,208

 

 

 

2,383

 

Other assets

 

 

379

 

 

 

354

 

Right-of-use assets

 

 

1,844

 

 

 

2,053

 

Prepaid expenses, net of current portion

 

 

3,810

 

 

 

3,409

 

Total assets

 

$

161,989

 

 

$

123,541

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,339

 

 

$

2,394

 

Accrued expenses

 

 

8,461

 

 

 

8,508

 

Operating lease liabilities

 

 

773

 

 

 

731

 

Total current liabilities

 

 

10,573

 

 

 

11,633

 

Operating lease liabilities, net of current portion

 

 

2,240

 

 

 

2,640

 

Total liabilities

 

 

12,813

 

 

 

14,273

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred Stock, $0.0001 par value – 5,000,000 shares authorized at June 30, 2022 and December 31, 2021; No shares issued and outstanding at June 30, 2022 or December 31, 2021

 

 

 

 

 

 

Common Stock, $0.0001 par value – 200,000,000 shares authorized at June 30, 2022 and December 31, 2021; 40,097,076 shares issued and outstanding at June 30, 2022 and 23,668,747 shares issued and outstanding at December 31, 2021

 

 

4

 

 

 

2

 

Additional paid in-capital

 

 

329,414

 

 

 

256,948

 

Accumulated other comprehensive (loss) income

 

 

(397

)

 

 

18

 

Accumulated deficit

 

 

(179,845

)

 

 

(147,700

)

Total stockholders’ equity

 

 

149,176

 

 

 

109,268

 

Total liabilities and stockholders’ equity

 

$

161,989

 

 

$

123,541

 

 

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

1


 

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

10,007

 

 

$

8,220

 

 

$

21,821

 

 

$

14,823

 

General and administrative

 

 

5,384

 

 

 

4,435

 

 

 

10,409

 

 

 

8,804

 

Total operating expenses

 

 

15,391

 

 

 

12,655

 

 

 

32,230

 

 

 

23,627

 

Loss from operations

 

 

(15,391

)

 

 

(12,655

)

 

 

(32,230

)

 

 

(23,627

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

321

 

 

 

58

 

 

 

381

 

 

 

121

 

Other (expenses) income

 

 

(191

)

 

 

57

 

 

 

(296

)

 

 

(84

)

Other income, net

 

 

130

 

 

 

115

 

 

 

85

 

 

 

37

 

Net loss

 

$

(15,261

)

 

$

(12,540

)

 

$

(32,145

)

 

$

(23,590

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (losses) gains on available-for-sale securities

 

 

(225

)

 

 

6

 

 

 

(357

)

 

 

16

 

Foreign currency translation adjustment

 

 

(43

)

 

 

 

 

 

(58

)

 

 

 

Total other comprehensive (loss) income

 

 

(268

)

 

 

6

 

 

 

(415

)

 

 

16

 

Comprehensive loss

 

$

(15,529

)

 

$

(12,534

)

 

$

(32,560

)

 

$

(23,574

)

Net loss attributable to common stockholders—basic
   and diluted

 

$

(15,261

)

 

$

(12,540

)

 

$

(32,145

)

 

$

(23,590

)

Net loss per share attributable to common
   stockholders—basic and diluted

 

$

(0.38

)

 

$

(0.53

)

 

$

(1.01

)

 

$

(1.01

)

Weighted-average common shares and pre-funded warrants outstanding—basic
   and diluted

 

 

39,703,550

 

 

 

23,490,591

 

 

 

31,739,197

 

 

 

23,460,218

 

 

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

2


 

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

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

 

 

Balance at December 31, 2021

 

 

23,668,747

 

 

$

2

 

 

$

256,948

 

 

$

18

 

 

$

(147,700

)

 

$

109,268

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,752

 

 

 

 

 

 

 

 

 

1,752

 

Exercise of stock options

 

 

149,664

 

 

 

 

 

 

240

 

 

 

 

 

 

 

 

 

240

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

(132

)

 

 

 

 

 

(132

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

(15

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,884

)

 

 

(16,884

)

Balance at March 31, 2022

 

 

23,818,411

 

 

$

2

 

 

$

258,940

 

 

$

(129

)

 

$

(164,584

)

 

$

94,229

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,185

 

 

 

 

 

 

 

 

 

2,185

 

Exercise of stock options

 

 

1,678

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

Issuance of common stock, net of issuance costs

 

 

16,276,987

 

 

 

2

 

 

 

56,135

 

 

 

 

 

 

 

 

 

56,137

 

Issuance of pre-funded warrants, net of issuance costs

 

 

 

 

 

 

 

 

12,150

 

 

 

 

 

 

 

 

 

12,150

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

(225

)

 

 

 

 

 

(225

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(43

)

 

 

 

 

 

(43

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,261

)

 

 

(15,261

)

Balance at June 30, 2022

 

 

40,097,076

 

 

$

4

 

 

$

329,414

 

 

$

(397

)

 

$

(179,845

)

 

$

149,176

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

23,384,969

 

 

$

2

 

 

$

249,175

 

 

$

2

 

 

$

(91,076

)

 

$

158,103

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,577

 

 

 

 

 

 

 

 

 

1,577

 

Exercise of stock options

 

 

88,734

 

 

 

 

 

 

249

 

 

 

 

 

 

 

 

 

249

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

10

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,050

)

 

 

(11,050

)

Balance at March 31, 2021

 

 

23,473,703

 

 

$

2

 

 

$

251,001

 

 

$

12

 

 

$

(102,126

)

 

$

148,889

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,813

 

 

 

 

 

 

 

 

 

1,813

 

Exercise of stock options

 

 

96,890

 

 

 

 

 

 

106

 

 

 

 

 

 

 

 

 

106

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

6

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,540

)

 

 

(12,540

)

Balance at June 30, 2021

 

 

23,570,593

 

 

$

2

 

 

$

252,920

 

 

$

18

 

 

$

(114,666

)

 

$

138,274

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

3


 

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(Unaudited)

 

 

 

Six Months Ended
June 30,

 

 

 

2022

 

 

2021

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(32,145

)

 

$

(23,590

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

357

 

 

 

325

 

Stock-based compensation expense

 

 

3,937

 

 

 

3,390

 

Amortization of premiums and discounts on marketable securities

 

 

(583

)

 

 

116

 

Reduction in the carrying value of right-of-use assets

 

 

209

 

 

 

183

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

1,273

 

 

 

(216

)

Accounts payable

 

 

(1,090

)

 

 

(2,281

)

Accrued expenses

 

 

(21

)

 

 

(1,142

)

Operating lease liabilities

 

 

(358

)

 

 

(293

)

Other assets

 

 

(25

)

 

 

 

Prepaid expenses - noncurrent

 

 

(401

)

 

 

1,099

 

Net cash used in operating activities

 

 

(28,847

)

 

 

(22,409

)

Investing activities

 

 

 

 

 

 

Purchases of marketable securities

 

 

(81,647

)

 

 

(62,035

)

Maturities of marketable securities

 

 

81,500

 

 

 

82,560

 

Purchases of property and equipment

 

 

(217

)

 

 

(278

)

Net cash (used in) provided by investing activities

 

 

(364

)

 

 

20,247

 

Financing activities

 

 

 

 

 

 

Net proceeds from issuance of common stock

 

 

56,179

 

 

 

 

Net proceeds from issuance of pre-funded warrants

 

 

12,150

 

 

 

 

Proceeds from exercise of stock options

 

 

244

 

 

 

361

 

Net cash provided by financing activities

 

 

68,573

 

 

 

361

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

39,362

 

 

 

(1,801

)

Effect of foreign currency exchange rate in cash

 

 

(58

)

 

 

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

23,670

 

 

 

28,394

 

Cash, cash equivalents and restricted cash at end of period

 

$

62,974

 

 

$

26,593

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash and cash equivalents

 

$

62,620

 

 

$

26,239

 

Restricted cash

 

 

354

 

 

 

354

 

Cash, cash equivalents and restricted cash at end of period

 

$

62,974

 

 

$

26,593