inzy-10q_20200930.htm

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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, 2020

☐	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 November 6, 2020, the registrant had 23,372,844 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 under the “Risk Factors” section and include, among other things:

•

our ability to favorably resolve the clinical hold with regard to our planned Phase 1/2 clinical trial of INZ-701 for ENPP1 deficiency and, if so resolved, the timing of such resolution;

•

the timing of our planned clinical trial application submissions for INZ-701;

•

the timing and conduct of our planned Phase 1/2 clinical trials of INZ-701 for ENPP1 and ABCC6 deficiencies, including statements regarding the timing of initiation 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 and capital expenditure requirements with our cash, cash equivalents and short-term and long-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 JOBS Act.

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 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 Convertible Preferred Stock and Stockholders’ Equity (Deficit)	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	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	83
Item 6.	Exhibits	84
Signatures		86

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)

(Unaudited)

	September 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	59,858		$	31,605
Short-term investments		99,644			15,527
Prepaid expenses and other current assets		4,475			328
Total current assets		163,977			47,460
Property and equipment, net		2,455			298
Restricted cash		354			130
Long-term investments		12,207			—
Deferred issuance costs		—			56
Total assets	$	178,993		$	47,944
Liabilities, convertible preferred stock and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	3,665		$	901
Accrued expenses		6,149			2,335
Total current liabilities		9,814			3,236
Deferred lease obligations		1,263			—
Total liabilities		11,077			3,236
Commitments (Note 7)
Series A Convertible Preferred Stock, $0.0001 par value – No shares authorized, issued, or outstanding at September 30, 2020; 48,850,000 shares authorized, issued, and outstanding at December 31, 2019; Liquidation preference of $0 at September 30, 2020 and $48.9 million at December 31, 2019		—			44,657
Series A-2 Convertible Preferred Stock, $0.0001 par value – No shares authorized, issued, or outstanding at September 30, 2020; 47,132,862 shares authorized and 23,566,431 shares issued and outstanding at December 31, 2019; Liquidation preference of $0 at September 30, 2020 and $33.7 million at December 31, 2019		—			33,270
Stockholders’ equity (deficit):
Preferred Stock, $0.0001 par value - 5,000,000 shares authorized at September 30, 2020 and no shares authorized at December 31, 2019; No shares issued and outstanding at September 30, 2020 or December 31, 2019		—			—
Common Stock, $0.0001 par value – 200,000,000 shares authorized at September 30, 2020 and 129,000,000 shares authorized at December 31, 2019; 23,364,851 shares issued and outstanding at September 30, 2020 and 1,204,630 shares issued and outstanding at December 31, 2019		2			—
Additional paid in-capital		247,872			1,428
Accumulated other comprehensive income		—			5
Accumulated deficit		(79,958	)		(34,652	)
Total stockholders’ equity (deficit)		167,916			(33,219	)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$	178,993		$	47,944

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)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Operating expenses:
Research and development	$	25,174		$	3,317		$	39,457		$	10,941
General and administrative		3,142			1,003			6,313			3,097
Total operating expenses		28,316			4,320			45,770			14,038
Loss from operations		(28,316	)		(4,320	)		(45,770	)		(14,038	)
Other income (expense):
Interest income		64			288			306			892
Other income (expense), net		157			(3	)		158			(34	)
Other income (expense), net		221			285			464			858
Net loss	$	(28,095	)	$	(4,035	)	$	(45,306	)	$	(13,180	)
Other comprehensive (loss) income:
Unrealized (losses) gains on available-for-sale securities		(13	)		(2	)		(5	)		8
Total other comprehensive (loss) income		(13	)		(2	)		(5	)		8
Comprehensive loss	$	(28,108	)	$	(4,037	)	$	(45,311	)	$	(13,172	)
Net loss attributable to common stockholders—basic and diluted	$	(28,095	)	$	(4,035	)	$	(45,306	)	$	(13,180	)
Net loss per share attributable to common stockholders—basic and diluted	$	(1.55	)	$	(3.38	)	$	(6.57	)	$	(11.20	)
Weighted-average common shares outstanding—basic and diluted		18,101,496			1,195,309			6,893,745			1,176,769

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

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(amounts in thousands, except share data)

(Unaudited)

	Series A Convertible Preferred Stock						Series A-2 Convertible Preferred Stock						Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders’ Equity
	Shares			Amount			Shares			Amount			Shares		Amount		Capital		Income (Loss)			Deficit			(Deficit)
Balance at December 31, 2019		48,850,000		$	44,657			23,566,431		$	33,270			1,204,630	$	—	$	1,428	$	5		$	(34,652	)	$	(33,219	)
Stock-based compensation		—			—			—			—			—		—		129		—			—			129
Exercise of stock options		—			—			—			—			2,677		—		5		—			—			5
Comprehensive income:
Unrealized gain on investments		—			—			—			—			—		—		—		23			—			23
Net loss		—			—			—			—			—		—		—		—			(7,738	)		(7,738	)
Balance at March 31, 2020		48,850,000		$	44,657			23,566,431		$	33,270			1,207,307	$	—	$	1,562	$	28		$	(42,390	)	$	(40,800	)
Issuance of Series A-2 Convertible Preferred Stock, net of issuance costs of $0.1 million		—			—			23,566,431			33,638			—		—		—		—			—			—
Stock-based compensation		—			—			—			—			—		—		120		—			—			120
Exercise of stock options		—			—			—			—			137,397		—		149		—			—			149
Comprehensive income:
Unrealized loss on investments		—			—			—			—			—		—		—		(15	)		—			(15	)
Net loss		—			—			—			—			—		—		—		—			(9,473	)		(9,473	)
Balance at June 30, 2020		48,850,000		$	44,657			47,132,862		$	66,908			1,344,704	$	—	$	1,831	$	13		$	(51,863	)	$	(50,019	)
Issuance of shares to acquire in-process research and development		—			—			8,294,360			17,759			—		—		—		—			—			—
Initial public offering, net of issuance costs of $3.9 million		—			—			—			—			8,050,000		1		115,914		—			—			115,915
Conversion of convertible preferred stock into common stock		(48,850,000	)		(44,657	)		(55,427,222	)		(84,667	)		13,953,850		1		129,323		—			—			129,324
Stock-based compensation		—			—			—			—			—		—		786		—			—			786
Exercise of stock options		—			—			—			—			16,297		—		18		—			—			18
Comprehensive income:
Unrealized loss on investments		—			—			—			—			—		—		—		(13	)		—			(13	)
Net loss		—			—			—			—			—		—		—		—			(28,095	)		(28,095	)
Balance at September 30, 2020		—		$	—			—		$	—			23,364,851	$	2	$	247,872	$	—		$	(79,958	)	$	167,916
Balance at December 31, 2018		48,850,000		$	44,657			7,482,515		$	10,372			1,135,015	$	—	$	1,055	$	(2	)	$	(14,928	)	$	(13,875	)
Issuance of Series A-2 Convertible Preferred Stock, net of issuance costs of $0.1 million		—			—			16,083,916			22,898			—		—		—		—			—			—
Stock-based compensation		—			—			—			—			—		—		41		—			—			41
Exercise of stock options		—			—			—			—			35,460		—		34		—			—			34
Comprehensive income:
Unrealized gain on investments		—			—			—			—			—		—		—		2			—			2
Net loss		—			—			—			—			—		—		—		—			(4,971	)		(4,971	)
Balance at March 31, 2019		48,850,000		$	44,657			23,566,431		$	33,270			1,170,475	$	—	$	1,130	$	—		$	(19,899	)	$	(18,769	)
Stock-based compensation		—			—			—			—			—		—		40		—			—			40
Comprehensive income:
Unrealized gain on investments		—			—			—			—			—		—		—		8			—			8
Net loss		—			—			—			—			—		—		—		—			(4,173	)		(4,173	)
Balance at June 30, 2019		48,850,000		$	44,657			23,566,431		$	33,270			1,170,475	$	—	$	1,170	$	8		$	(24,072	)	$	(22,894	)
Stock-based compensation		—			—			—			—			—		—		107		—			—			107
Exercise of stock options		—			—			—			—			29,251		—		29		—			—			29
Comprehensive income:
Unrealized loss on investments		—			—			—			—			—		—		—		(2	)		—			(2	)
Net loss		—			—			—			—			—		—		—		—			(4,035	)		(4,035	)
Balance at September 30, 2019		48,850,000		$	44,657			23,566,431		$	33,270			1,199,726	$	—	$	1,306	$	6		$	(28,107	)	$	(26,795	)

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)

Nine Months Ended

September 30,