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, 2024

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 July 30, 2024, the registrant had 62,734,395 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 open label long term safety study of INZ-701 in patients with ENPP1 or ABCC6 Deficiencies who have received INZ-701 in an existing study ("ADAPT"), 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"), our planned pivotal clinical trial of INZ-701 for pediatric patients with ABCC6 Deficiency, and our planned clinical trial for ENPP1 Deficient patients ineligible for other ongoing studies;

•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.

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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.

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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	14
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	29
Item 5.	Other Information	29
Item 6.	Exhibits	30
Signatures		31

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PART I – FINANCIAL INFORMATION

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

	June 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	15,233		$	34,588
Short-term investments		129,290			154,001
Prepaid expenses and other current assets		8,439			7,661
Total current assets		152,962			196,250
Property and equipment, net		1,128			1,466
Right-of-use assets		853			1,126
Restricted cash		311			311
Prepaid expenses, net of current portion		458			1,694
Total assets	$	155,712		$	200,847
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,527		$	1,166
Accrued expenses		11,055			12,610
Operating lease liabilities		959			910
Total current liabilities		15,541			14,686
Operating lease liabilities, net of current portion		419			913
Long-term debt, net		45,332			44,769
Total liabilities		61,292			60,368
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred Stock, $0.0001 par value – 5,000,000 shares authorized at June 30, 2024 and December 31, 2023; no shares issued and outstanding at June 30, 2024 or December 31, 2023		—			—
Common Stock, $0.0001 par value – 200,000,000 shares authorized at June 30, 2024 and December 31, 2023; 62,071,965 shares issued and outstanding at June 30, 2024 and 61,768,771 shares issued and outstanding at December 31, 2023		6			6
Additional paid in-capital		430,827			426,362
Accumulated other comprehensive (loss) income		(103	)		41
Accumulated deficit		(336,310	)		(285,930	)
Total stockholders’ equity		94,420			140,479
Total liabilities and stockholders’ equity	$	155,712		$	200,847

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 June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Operating expenses:
Research and development	$	21,758		$	11,666		$	40,868		$	23,523
General and administrative		5,907			4,728			11,141			11,240
Total operating expenses		27,665			16,394			52,009			34,763
Loss from operations		(27,665	)		(16,394	)		(52,009	)		(34,763	)
Other income (expense):
Interest income		2,030			1,610			4,404			2,937
Interest expense		(1,395	)		(771	)		(2,720	)		(1,099	)
Other expense, net		(3	)		(28	)		(55	)		(62	)
Other income (expense), net		632			811			1,629			1,776
Net loss	$	(27,033	)	$	(15,583	)	$	(50,380	)	$	(32,987	)
Other comprehensive income (loss):
Unrealized gains (losses) on available-for-sale securities		3			76			(153	)		226
Foreign currency translation adjustment		(1	)		11			9			30
Total other comprehensive income (loss)		2			87			(144	)		256
Comprehensive loss	$	(27,031	)	$	(15,496	)	$	(50,524	)	$	(32,731	)
Net loss attributable to common stockholders—basic    and diluted	$	(27,033	)	$	(15,583	)	$	(50,380	)	$	(32,987	)
Net loss per share attributable to common    stockholders—basic and diluted	$	(0.44	)	$	(0.35	)	$	(0.81	)	$	(0.74	)
Weighted-average common shares and pre-funded warrants outstanding—basic    and diluted		61,943,960			44,860,279			61,858,119			44,293,577

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

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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			(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
Stock-based compensation		—		—		2,157		—			—			2,157
Exercise of stock options and RSU vesting		255,456		—		458		—			—			458
Comprehensive loss:
Unrealized gain on investments		—		—		—		3			—			3
Foreign currency translation adjustment		—		—		—		(1	)		—			(1	)
Net loss		—		—		—		—			(27,033	)		(27,033	)
Balance at June 30, 2024		62,071,965	$	6	$	430,827	$	(103	)	$	(336,310	)	$	94,420
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
Stock-based compensation		—		—		1,600		—			—			1,600
Shares issues in at-the-market offering		2,591,995		1		16,086		—			—			16,087
Exercise of stock options		21,608		—		55		—			—			55
Comprehensive 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

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

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INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(Unaudited)

	Six Months Ended June 30,
	2024			2023
Operating activities
Net loss	$	(50,380	)	$	(32,987	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		370			416
Stock-based compensation expense		3,848			3,692
Amortization of premiums and discounts on marketable securities		(3,684	)		(1,850	)
Reduction in the carrying value of right-of-use assets		273			239
Non-cash interest expense and amortization of debt issuance costs		563			238
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(778	)		186
Accounts payable		2,361			(530	)
Accrued expenses		(1,555	)		(2,150	)
Operating lease liabilities		(445	)		(399	)
Prepaid expenses, net of current portion		1,236			(51	)
Other long-term liabilities		—			(124	)
Net cash used in operating activities		(48,191	)		(33,320	)
Investing activities
Purchases of marketable securities		(98,784	)		(106,875	)
Maturities of marketable securities		127,026			104,500
Purchases of property and equipment		(32	)		(186	)
Net cash provided by (used in) investing activities		28,210			(2,561	)
Financing activities
Net proceeds from issuance of long-term debt		—			27,500
Proceeds from issuance of common stock		—			16,087
Proceeds from exercise of stock options		469			55
Proceeds from issuance of common stock for cash under Employee Stock Purchase Plan		148			96
Net cash provided by financing activities		617			43,738
Net (decrease) increase in cash, cash equivalents, and restricted cash		(19,364	)		7,857
Effect of foreign currency exchange rate on cash		9			30
Cash, cash equivalents, and restricted cash at beginning of period		34,899			33,269
Cash, cash equivalents, and restricted cash at end of period	$	15,544		$	41,156
Supplemental cash flow information:
Cash and cash equivalents	$	15,233		$	40,845
Restricted cash		311			311
Cash, cash equivalents, and restricted cash at end of period	$	15,544		$	41,156
Property and equipment unpaid at end of period	$	—		$	—

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

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Inozyme Pharma, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in thousands, except share and per share data and where otherwise noted)

1. Organization and Basis of Presentation

Inozyme Pharma, Inc. (the “Company”) is a clinical-stage biopharmaceutical company developing novel therapeutics for rare diseases impacting bone health and blood vessel function.

Through the Company’s in-depth understanding of a key biological pathway, the PPi-Adenosine Pathway, the Company is pursuing the development of therapeutics that address pathologic mineralization and intimal proliferation, or smooth muscle cell overgrowth that leads to narrowing and the obstruction of blood vessels, to improve the underlying causes of these debilitating diseases. The ENPP1 enzyme is central to this pathway and generates plasma pyrophosphate ("PPi") and adenosine. It is well established that low levels of plasma pyrophosphate drive pathologic mineralization and low levels of adenosine drive intimal proliferation in a number of rare diseases. Disruptions in this pathway impact the levels of these molecules, leading to severe musculoskeletal, cardiovascular, and neurological conditions, including ENPP1 Deficiency, ABCC6 Deficiency, calciphylaxis, and ossification of the posterior longitudinal ligament ("OPLL"). The Company is initially focused on developing a novel therapy for diseases characterized by pathologic mineralization and intimal proliferation, including ENPP1 Deficiency and ABCC6 Deficiency as well as calciphylaxis.

The Company’s lead product candidate, INZ-701, is a soluble, recombinant, or genetically engineered, ENPP1 fusion protein that is designed to increase PPi and adenosine, enabling the potential treatment of multiple diseases caused by deficiencies in these molecules. By targeting the PPi-Adenosine Pathway, INZ-701 aims to correct pathologic mineralization and intimal proliferation, addressing the significant morbidity and mortality in these devastating diseases.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") for interim financial information. Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and note disclosures required by U.S. GAAP for audited year-end financial statements. The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the interim period results. The results for the three and six month periods ended June 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

Liquidity, Capital Resources, and Going Concern

Since the Company’s incorporation in 2017 and through June 30, 2024, the Company has devoted substantially all of its efforts to raising capital, building infrastructure, developing intellectual property, and conducting research and development activities. The Company incurred net losses of $50.4 million for the six months ended June 30, 2024 and had an accumulated deficit of $336.3 million as of June 30, 2024. The Company had cash, cash equivalents, and short-term investments of $144.5 million as of June 30, 2024.

The Company has incurred recurring losses and negative cash flows from operations since inception and has primarily funded its operations with proceeds from the issuance of convertible preferred stock, offerings of common stock and pre-funded warrants, and its loan and security agreement (the “Loan Agreement”) with K2 HealthVentures LLC (see Note 8). The Company expects its operating losses and negative operating cash flows to continue into the foreseeable future as it continues to expand its research and development efforts.

The accompanying condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business. The Company believes its available cash, cash equivalents, and short-term investments as of June 30, 2024 will be sufficient to fund its cash flow requirements for at least 12 months from the filing date of this Quarterly Report on Form 10-Q. Management’s expectations with respect to its ability to fund current and long-term planned operations are based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, the Company may need to seek additional strategic or financing opportunities sooner than would otherwise be expected. However, there is no guarantee that any of these strategic or financing opportunities will be executed on favorable terms, or at all, and some could be dilutive to existing stockholders. If the Company is

5

unable to obtain additional funding on a timely basis, it may be forced to delay, reduce, or eliminate some or all of its research and development programs, portfolio expansion, or commercialization efforts, which could adversely affect its business prospects.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Inozyme Securities Corp., which is a Massachusetts subsidiary created to buy, sell, and hold securities; Inozyme Ireland Limited; and Inozyme Pharma Switzerland GmbH. All intercompany transactions and balances have been eliminated.

Summary of Significant Accounting Policies

The significant accounting policies and estimates used in the preparation of the accompanying condensed consolidated financial statements are described in the Company’s audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2024.

Use of Estimates

The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Estimates and judgments are based on historical information and other market-specific or various relevant assumptions, including, in certain circumstances, future projections that management believes to be reasonable under the circumstances. Actual results could differ materially from estimates. Significant estimates and assumptions are used for, but not limited to, the accruals for research and development expenses. The Company evaluates its estimates and assumptions on an ongoing basis. All revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Concentration of Credit Risk and Off-Balance Sheet Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, and short-term investments and, from time to time, long-term investments. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits and limits its exposure to credit risk by placing its cash with high credit quality financial institutions. The Company’s investments are currently composed of U.S. Treasury securities and U.S. government agency debt securities. The Company mitigates credit risk by maintaining a diversified portfolio and limiting the amount of investment exposure as to institution, maturity, and investment type.

The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts, or other foreign hedging arrangements.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents include cash in readily available checking accounts, money market accounts, and certain marketable securities. Cash is carried at cost, which approximates its fair value. Cash equivalents are carried at fair market value.

Restricted Cash

Restricted cash is composed of amounts held to collateralize the letter of credit related to the Company’s lease arrangements. Restricted cash is classified as either current or non-current based on the terms of the underlying lease arrangement.

3. Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the

6

Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

4. Short-Term Investments

Short-term investments consisted of the following:

	June 30, 2024
Description	Maturity	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Treasury securities	1 year or less	$	59,074	$	—	$	(38	)	$	59,036
U.S. government agency debt securities	1 year or less		70,302		1		(49	)		70,254
		$	129,376	$	1	$	(87	)	$	129,290

	December 31, 2023
Description	Maturity	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Treasury securities	1 year or less	$	80,160	$	59	$	(1	)	$	80,218
U.S. government agency debt securities	1 year or less		73,774		17		(8	)		73,783
		$	153,934	$	76	$	(9	)	$	154,001

The Company did not have any investments in a continuous unrealized loss position for more than 12 months as of June 30, 2024. As of June 30, 2024, the Company believes that the cost basis of its available-for-sale securities is recoverable, and the Company has the intent and ability to hold its available-for-sale securities until recovery. Therefore, no allowance for credit losses was recorded.

5. Fair Value Measurement

Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

•Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

•Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or

•Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following tables represent the Company’s financial assets measured at fair value on a recurring basis and indicate the level of fair value hierarchy utilized to determine such fair values:

			Fair Value Measurements at Reporting Date Using
Description	June 30, 2024		Level 1		Level 2		Level 3
Assets:
Money market funds (included in cash and cash equivalents)	$	14,303	$	14,303	$	—	$	—
U.S. government agency debt securities		70,254		—		70,254		—
U.S. Treasury securities		59,036		59,036		—		—
Total assets	$	143,593	$	73,339	$	70,254	$	—

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			Fair Value Measurements at Reporting Date Using
Description	December 31, 2023		Level 1		Level 2		Level 3
Assets:
Money market funds (included in cash and cash equivalents)	$	33,830	$	33,830	$	—	$	—
U.S. government agency debt securities		73,783		—		73,783		—
U.S. Treasury securities		80,218		80,218		—		—
Total assets	$	187,831	$	114,048	$	73,783	$	—

There have been no transfers between fair value levels during the three or six months ended June 30, 2024.

6. License Agreement

In January 2017, the Company entered into a license agreement with Yale University (“Yale”), which was amended in May 2020 and July 2020, under which the Company licensed certain intellectual property related to ectonucleotide pyrophosphatase/phosphodiesterase enzymes that is the basis for the Company’s INZ-701 development program. Pursuant to the license agreement, as partial upfront consideration, the Company made a payment of approximately $0.1 million to Yale, which amount reflected unreimbursed patent expenses incurred by Yale prior to the date of the license agreement. The Company is responsible for paying Yale an annual license maintenance fee in varying amounts throughout the term ranging from the low tens of thousands of dollars to the high tens of thousands of dollars. As of June 30, 2024, the Company had incurred a life-to-date total of $0.4 million in license maintenance fees to Yale.

The Company is required to pay Yale up to $3.0 million, based on the achievement of a specified net product sales milestone or specified development and commercialization milestones, for each therapeutic and prophylactic-licensed product developed. In January 2022, the Company paid Yale an approximately $0.3 million milestone payment following dosing of the first patient in the Company’s Phase 1/2 clinical trial of INZ-701 in adult patients with ENPP1 Deficiency in November 2021. In March 2022, the Company paid Yale an approximately $0.3 million milestone payment following completion of the first cohort of the Company's Phase 1/2 clinical trial of INZ-701 in adult patients with ENPP1 Deficiency in January 2022. In March 2024, the Company incurred a $0.5 million milestone payment following completion of dosing of the first patient in the Company’s pivotal clinical trial of INZ-701 in pediatric patients with ENPP1 Deficiency. In addition, the Company is required to pay Yale an amount in the several hundreds of thousands of dollars, based on the achievement of a specified net product sales milestone or specified development and commercialization milestones, for each diagnostic licensed product developed. While the agreement remains in effect, the Company is required to pay Yale low single-digit percentage royalties on aggregate worldwide net sales of certain licensed products, which may be subject to reductions. Yale is guaranteed a minimum royalty payment amount (ranging in dollar amounts from the mid six figures to low seven figures) for each year after the first sale of a therapeutic or prophylactic-licensed product that results in net sales. Yale is guaranteed a minimum royalty payment amount (ranging from the low tens of thousands of dollars to the mid tens of thousands of dollars) for each year after the first sale of a diagnostic licensed product that results in net sales. Such minimum royalty payment amounts are summed for each year after the first sale of both a therapeutic or prophylactic-licensed product and a diagnostic licensed product has occurred. The Company must also pay Yale a percentage in the twenties of certain types of income it receives from sublicensees. The Company is also responsible for costs relating to the prosecution and maintenance of the licensed patents. Finally, subject to certain conditions, all payments due by the Company to Yale will be tripled following any patent challenge or challenge to a claim by Yale that a product is a licensed product under the agreement, made by the Company against Yale if Yale prevails in such challenge.

The Company has also agreed to pay for research support from Yale pursuant to a sponsored research agreement that the Company entered into with Yale in January 2017 and amended in February 2019, February 2022, May 2022, May 2023, and January 2024. Under the sponsored research agreement, as amended, the Company agreed to pay Yale an aggregate of $3.0 million over eight years, ending in December 2024. As of June 30, 2024, the Company incurred a total of $2.9 million for research support under this agreement since inception.

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7. Commitments and Contingencies

Operating Leases

The Company held the following significant operating leases as of June 30, 2024:

•8,499 square feet of office space in Boston, Massachusetts that expires in 2025 with an option to extend the term for five years; and

•6,244 square feet of laboratory space in Boston, Massachusetts that expires in 2025 with an option to extend the term for five years.

The exercise of each option was determined not to be reasonably certain and thus neither option was included in the operating lease liability on the condensed consolidated balance sheets as of June 30, 2024 or December 31, 2023.

During the six months ended June 30, 2024, cash paid for amounts included in the measurement of lease liabilities was $0.5 million, and the Company recorded operating lease expense of $0.3 million.

Future lease payments under non-cancelable leases as of June 30, 2024 are as follows:

Year Ending December 31,
2024 (remaining 6 months)	$	509
2025		944
Total future minimum lease payments		1,453
Less: interest		75
Present value of operating lease liabilities	$	1,378
Lease liability - current	$	959
Lease liability - long-term	$	419

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners, and other parties with respect to certain matters arising out of the relationship between such parties and the Company. In addition, the Company has entered into indemnification agreements with members of its board of directors and senior management that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations as of June 30, 2024 or December 31, 2023.

Legal Proceedings

The Company is not currently a party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses the costs related to its legal proceedings as they are incurred. No such costs have been incurred during the three and six months ended June 30, 2024 and 2023.

8. Convertible Debt

Loan Agreement with K2 HealthVentures LLC

On July 25, 2022, the Company, as borrower, entered into the Loan Agreement with K2 HealthVentures LLC ( together with any other lender from time to time, the “Lenders”), as administrative agent for the Lenders, and Ankura Trust Company, LLC, as collateral agent for the Lenders. The Loan Agreement provides up to $70.0 million principal in term loans, subject to certain customary conditions. The Company received $5.0 million from the first tranche commitment upon closing. The first tranche commitment contained an additional $20.0 million available to be drawn at the Company’s option through March 31, 2023. The Company elected to borrow the remaining $20.0 million in February 2023. Two subsequent tranche commitments totaling $20.0

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million in the aggregate were available to be drawn at the Company’s option during certain availability periods, subject to the achievement of certain clinical and regulatory milestones relating to INZ-701. The Company borrowed $7.5 million under the second tranche commitment in June 2023 and borrowed $12.5 million under the third tranche commitment in December 2023. A fourth tranche commitment of $25.0 million may be made available to be drawn down at the Company’s option through August 31, 2025, subject to use of proceeds limitations and Lender's consent at its discretion. The fourth tranche commitment is subject to an additional 0.75% facility fee. As of June 30, 2024, a total of $25.0 million of borrowing capacity remained available under the Loan Agreement, subject to the terms and conditions set forth therein. As security for its obligations under the Loan Agreement, the Company granted the Lenders a first priority security interest on substantially all of the Company’s assets (other than intellectual property), subject to certain exceptions.

The term loan matures on August 1, 2026, and the Company is obligated to make interest only payments for the first 36 months and then interest and equal principal payments through the maturity date. The term loan bears a variable interest rate equal to the greater of (i) 7.85%, and (ii) the sum of (A) the prime rate last quoted in The Wall Street Journal (or a comparable replacement rate if The Wall Street Journal ceases to quote such rate) and (B) 3.85%; provided that the interest rate cannot exceed 9.60%. The interest rate as of June 30, 2024 was 9.60%. The Company has the option to prepay all, but not less than, all of the outstanding principal balance and all accrued and unpaid interest with respect to the principal balance being repaid of the term loans, subject to a prepayment premium to which the Lenders are entitled. The prepayment fee was 3% prior to the second anniversary of the July 25, 2022 funding date, 2% after the second anniversary but prior to the third anniversary of the funding date, and 1% thereafter if prior to the maturity date. Upon final payment or prepayment of the loans, the Company must pay a final payment equal to 6.25% of the loans borrowed ("Final Fee"), which is being accrued as interest expense over the term of the loan using the effective interest method.

The Lenders may elect, prior to the full repayment of the term loans, to convert up to $5.0 million of outstanding principal of the term loans into shares of the Company’s common stock, at a conversion price of $6.21 per share, subject to customary adjustments and 9.99% and 19.99% beneficial ownership limitations. The Company determined that the embedded conversion option was not required to be separated from the term loan. The embedded conversion option met the derivative accounting scope exception since the embedded conversion option is indexed to the Company’s own common stock and qualifies for classification within stockholders’ equity.

The Loan Agreement contains customary representations and warranties, events of default and affirmative and negative covenants, including covenants that limit or restrict the Company’s ability to, among other things, dispose of assets, make changes to the Company’s business, management, ownership or business locations, merge or consolidate, incur additional indebtedness, incur additional liens, pay dividends or other distributions or repurchase equity, make investments, and enter into certain transactions with affiliates, in each case subject to certain exceptions. Upon the occurrence of an event of default, a default interest rate of an additional 5.00% per annum may be applied to the outstanding loan balances, and the Lender may declare all outstanding obligations immediately due and payable and exercise all of its rights and remedies as set forth in the Loan Agreement and under applicable law. As of June 30, 2024, the Company was in compliance with all covenants under the Loan Agreement.

Subject to certain conditions, the Company granted the Lenders the right, prior to repayment of the term loans, to invest up to $5.0 million in the aggregate in future offerings of common stock, convertible preferred stock, or other equity securities of the Company that are broadly marketed and offered to multiple investors on the same terms, conditions, and pricing afforded to others participating in any such financing.

The Company incurred debt issuance costs of $0.5 million in connection with the term loan. In addition, at the time of closing, the Company paid to the Lenders a facility fee of $0.4 million, as well as $0.1 million of other expenses incurred by the Lenders and reimbursed by the Company (“Lender Expenses”). The debt issuance costs, Lender Expenses, and the Final Fee are being amortized as additional interest expense over the term of the loan using the effective interest method. At June 30, 2024, the carrying value of the Loan Agreement approximated the fair value of the term loan, considering that it bears interest that is similar to prevailing market rates.

The following table summarizes the impact of the term loan on the Company’s condensed consolidated balance sheet at June 30, 2024:

	June 30, 2024
Gross proceeds	$	45,000
Unamortized debt issuance costs and accretion of final payments, net		332
Carrying value	$	45,332

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Future principal payments, which include the Final Fee, in connection with the Loan Agreement as of June 30, 2024 are as follows:

Fiscal Year
2024	$	—
2025		14,508
2026		33,305
Total	$	47,813

9. Stockholders’ Equity

July 2023 Underwritten Offering

On July 27, 2023, the Company entered into an underwriting agreement with BofA Securities, Inc., Cowen and Company, LLC and Piper Sandler & Co., as representatives of the several underwriters named therein (collectively, the “Underwriters”), relating to an underwritten public offering of 14,375,000 shares of the Company's common stock, which included 1,875,000 shares issued upon the exercise in full by the underwriters of their option to purchase additional shares (the "July 2023 Shares"). The closing of the offering took place on August 1, 2023. All of the July 2023 Shares were sold by the Company. The offering price of the July 2023 Shares was $4.80 per share. Net proceeds from the sale and issuance of the July 2023 Shares were approximately $64.4 million, after deducting underwriting discounts and commissions and offering expenses.

Open Market Sale Agreement

On August 11, 2021, the Company filed a universal shelf registration statement on Form S-3, which was declared effective on August 23, 2021 (the "Registration Statement"). Under the Registration Statement, the Company may offer and sell up to $200.0 million of a variety of securities, including common stock, preferred stock, depositary shares, debt securities, warrants, subscription rights or units from time to time pursuant to one or more offerings at prices and terms to be determined at the time of the sale. In connection with the filing of the Registration Statement, the Company entered into an Open Market Sale Agreement with Jefferies LLC, as sales agent, pursuant to which the Company may offer and sell shares of its common stock with an aggregate offering price of up to $50.0 million under an “at-the-market” offering program. As of December 31, 2023, the Company had sold 3,553,995 shares of its common stock pursuant to the Open Market Sale Agreement for aggregate net proceeds of $21.2 million. No shares of the Company’s common stock were sold pursuant to the Open Market Sale Agreement during the six months ended June 30, 2024. From July 1, 2024 through the date of this Quarterly Report on Form 10-Q, the Company sold 810,445 shares of its common stock pursuant to the Open Market Sale Agreement for aggregate net proceeds of $4.2 million.

Equity Incentive Plans

On July 17, 2020, the Company’s stockholders approved the 2020 Stock Incentive Plan (the “2020 Plan”), which became effective on July 23, 2020. The 2020 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards.

On February 27, 2023, the Company's board of directors adopted the 2023 Inducement Stock Incentive Plan (the "Inducement Plan"). The Inducement Plan provides for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards to persons who (a) were not previously an employee or director or (b) are commencing employment with the Company following a bona fide period of non-employment, in either case, as an inducement material to such person’s entry into employment with the Company and in accordance with the requirements of the Nasdaq Stock Market Rule 5635(c)(4).

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Stock Options

The Company estimates the fair value of stock options using the Black-Scholes option-pricing model. The underlying assumptions used to value stock options granted to participants using the Black-Scholes option-pricing model were as follows:

	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2024	2023	2024	2023
Risk-free interest rate range	4.19% to 4.59%	3.47% to 3.95%	3.78% to 4.59%	3.36% to 4.15%
Dividend yield	—	—	—	—
Expected term of options (years)	5.50 to 6.08	5.50 to 6.48	5.50 to 6.08	5.50 to 6.48
Volatility rate range	88.52% to 90.59%	87.97% to 89.67%	88.35% to 90.59%	87.68% to 89.67%

The weighted-average grant date fair value of options granted in the three and six months ended June 30, 2024 was $3.82 per share and $4.29 per share, respectively. The total unrecognized compensation cost related to outstanding option awards as of June 30, 2024 was $20.1 million and is expected to be recognized over a weighted-average period of 2.91 years.

Restricted Stock Units

The total unrecognized compensation cost related to outstanding RSUs as of June 30, 2024 was $0.4 million and is expected to be recognized over a weighted-average period of 2.75 years.
 

The total compensation cost recognized in the condensed consolidated statements of operations associated with all the stock-based compensation awards granted by the Company is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	1,088	$	889	$	1,937	$	1,707
General and administrative		1,069		711		1,911		1,985
Total	$	2,157	$	1,600	$	3,848	$	3,692

10. Net Loss per Share

Net Loss per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net loss per share:

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Net loss attributable to common stockholders—basic    and diluted	$	(27,033	)	$	(15,583	)	$	(50,380	)	$	(32,987	)
Net loss per share attributable to common    stockholders—basic and diluted	$	(0.44	)