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 September 30, 2023

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 November 1, 2023, the registrant had 61,760,748 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 and our ongoing Phase 1b clinical trial of INZ-701 for infants with ENPP1 Deficiency ("ENERGY-1 trial"), 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 trial"), pediatrics ("ENERGY-3 trial"), and adolescents and adults ("ENERGY-4 trial") with ENPP1 Deficiency and our planned Phase 3 clinical trial of INZ-701 for adults with ABCC6 Deficiency;

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

•our plans to conduct research, preclinical testing and clinical testing 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

i

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.

ii

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	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 6.	Exhibits	29
Signatures		30

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)

	September 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	46,895		$	32,915
Short-term investments		145,547			94,951
Prepaid expenses and other current assets		8,414			3,527
Total current assets		200,856			131,393
Property and equipment, net		1,584			2,018
Restricted cash		311			354
Right-of-use assets		1,256			1,620
Prepaid expenses, net of current portion		1,695			3,810
Total assets	$	205,702		$	139,195
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,006		$	2,544
Accrued expenses		9,383			11,355
Operating lease liabilities		886			816
Total current liabilities		12,275			14,715
Operating lease liabilities, net of current portion		1,149			1,823
Long-term debt, net		32,065			4,139
Other long-term liabilities		—			124
Total liabilities		45,489			20,801
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred Stock, $0.0001 par value – 5,000,000 shares authorized at September 30, 2023 and December 31, 2022; no shares issued and outstanding at September 30, 2023 or December 31, 2022		—			—
Common Stock, $0.0001 par value – 200,000,000 shares authorized at September 30, 2023 and December 31, 2022; 61,760,748 shares issued and outstanding at September 30, 2023 and 40,394,363 shares issued and outstanding at December 31, 2022		6			4
Additional paid in-capital		424,671			333,356
Accumulated other comprehensive loss		(78	)		(205	)
Accumulated deficit		(264,386	)		(214,761	)
Total stockholders’ equity		160,213			118,394
Total liabilities and stockholders’ equity	$	205,702		$	139,195

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)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Operating expenses:
Research and development	$	13,341		$	12,191		$	36,864		$	34,012
General and administrative		4,733			4,721			15,973			15,130
Total operating expenses		18,074			16,912			52,837			49,142
Loss from operations		(18,074	)		(16,912	)		(52,837	)		(49,142	)
Other income (expense):
Interest income, net		1,416			737			3,254			1,118
Other income (expense), net		20			(197	)		(42	)		(493	)
Other income, net		1,436			540			3,212			625
Net loss	$	(16,638	)	$	(16,372	)	$	(49,625	)	$	(48,517	)
Other comprehensive income (loss):
Unrealized gains (losses) on available-for-sale securities		53			(60	)		279			(417	)
Foreign currency translation adjustment		(182	)		(20	)		(152	)		(78	)
Total other comprehensive income (loss)		(129	)		(80	)		127			(495	)
Comprehensive loss	$	(16,767	)	$	(16,452	)	$	(49,498	)	$	(49,012	)
Net loss attributable to common stockholders—basic    and diluted	$	(16,638	)	$	(16,372	)	$	(49,625	)	$	(48,517	)
Net loss per share attributable to common    stockholders—basic and diluted	$	(0.29	)	$	(0.38	)	$	(1.02	)	$	(1.36	)
Weighted-average common shares and    pre-funded warrants outstanding—basic and diluted		56,758,395			43,657,718			48,494,175			35,755,695

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		(Loss) Income			Deficit
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
Other comprehensive income (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
Stock-based compensation		—		—		1,600		—			—			1,600
Shares issued in at-the-market offering		2,591,995		1		16,086		—			—			16,087
Exercise of stock options		21,608		—		55		—			—			55
Other comprehensive income (loss):
Unrealized gain on investments		—		—		—		76			—			76
Foreign currency translation adjustment		—		—		—		11			—			11
Net loss		—		—		—		—			(15,583	)		(15,583	)
Balance at June 30, 2023		46,379,088	$	5	$	353,285	$	51		$	(247,748	)	$	105,593
Stock-based compensation		—				1,672		—			—			1,672
Shares issued in at-the-market offering		962,000		—		5,149		—			—			5,149
Exercise of stock options		13,578		—		43		—			—			43
Issuance of common stock, net of issuance costs		14,375,000		1		64,412		—			—			64,413
Shares purchased in Employee Stock Purchase Plan		31,082		—		110		—			—			110
Other comprehensive income (loss):
Unrealized gain on investments		—		—		—		53			—			53
Foreign currency translation adjustment		—		—		—		(182	)		—			(182	)
Net loss		—		—		—		—			(16,638	)		(16,638	)
Balance at September 30, 2023		61,760,748	$	6	$	424,671	$	(78	)	$	(264,386	)	$	160,213

3

	Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders’ Equity
	Shares		Amount		Capital		(Loss) Income			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
Other 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
Other 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
Stock-based compensation		—		—		1,849		—			—			1,849
Exercise of stock options		59,635		—		115		—			—			115
Exercise of pre-funded warrants		197,240		—		—		—			—			—
Shares purchased in Employee Stock Purchase Plan		40,412		—		92		—			—			92
Comprehensive loss:
Unrealized loss on investments		—		—		—		(60	)		—			(60	)
Foreign currency translation adjustment		—		—		—		(20	)		—			(20	)
Net loss		—		—		—		—			(16,372	)		(16,372	)
Balance at September 30, 2022		40,394,363	$	4	$	331,470	$	(477	)	$	(196,217	)	$	134,780

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

4

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(Unaudited)

	Nine Months Ended September 30,
	2023			2022
Operating activities
Net loss	$	(49,625	)	$	(48,517	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		624			546
Loss on disposal of fixed assets		-			4
Stock-based compensation expense		5,364			5,786
Amortization of premiums and discounts on marketable securities		(3,334	)		(1,082	)
Reduction in the carrying value of right-of-use assets		364			319
Non-cash interest expense and amortization of debt issuance costs		426			27
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(4,887	)		(933	)
Accounts payable		(535	)		(1,003	)
Accrued expenses		(1,972	)		2,435
Operating lease liabilities