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, 2021

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 6, 2021, the registrant had 23,661,600 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 include, among other things:

• 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, enrollment and completion of the clinical trials and the period during which the results of the clinical trials will become available;

• the timing of our additional planned clinical trial applications for INZ-701 for ENPP1 Deficiency;

• 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 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, 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 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	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 6.	Exhibits	28
Signatures		29

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, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	26,239		$	28,040
Short-term investments		111,225			119,657
Prepaid expenses and other current assets		3,498			3,282
Total current assets		140,962			150,979
Property and equipment, net		2,611			2,648
Right-of-use assets		2,248			—
Restricted cash		354			354
Long-term investments		—			12,199
Prepaid expenses, net of current portion		2,084			3,183
Total assets	$	148,259		$	169,363
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	796		$	3,069
Accrued expenses		5,485			6,904
Operating lease liabilities		691			—
Total current liabilities		6,972			9,973
Operating lease liabilities, net of current portion		3,013			1,287
Total liabilities		9,985			11,260
Stockholders’ equity:
Preferred Stock, $0.0001 par value – 5,000,000 shares authorized at June 30, 2021 and December 31, 2020; No shares issued and outstanding at June 30, 2021 or December 31, 2020		—			—
Common Stock, $0.0001 par value – 200,000,000 shares authorized at June 30, 2021 and December 31, 2020; 23,570,593 shares issued and outstanding at June 30, 2021 and 23,384,969 shares issued and outstanding at December 31, 2020		2			2
Additional paid in-capital		252,920			249,175
Accumulated other comprehensive income		18			2
Accumulated deficit		(114,666	)		(91,076	)
Total stockholders’ equity		138,274			158,103
Total liabilities and stockholders’ equity	$	148,259		$	169,363

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,
	2021			2020			2021			2020
Operating expenses:
Research and development	$	8,220		$	7,877		$	14,823		$	14,283
General and administrative		4,435			1,671			8,804			3,171
Total operating expenses		12,655			9,548			23,627			17,454
Loss from operations		(12,655	)		(9,548	)		(23,627	)		(17,454	)
Other income (expense):
Interest income		58			71			121			242
Other income (expenses)		57			4			(84	)		1
Other income (expense), net		115			75			37			243
Net loss	$	(12,540	)	$	(9,473	)	$	(23,590	)	$	(17,211	)
Other comprehensive income (loss):
Unrealized gains (losses) on available-for-sale securities		6			(15	)		16			8
Total other comprehensive income (loss)		6			(15	)		16			8
Comprehensive loss	$	(12,534	)	$	(9,488	)	$	(23,574	)	$	(17,203	)
Net loss attributable to common stockholders—basic    and diluted	$	(12,540	)	$	(9,473	)	$	(23,590	)	$	(17,211	)
Net loss per share attributable to common    stockholders—basic and diluted	$	(0.53	)	$	(7.57	)	$	(1.01	)	$	(14.01	)
Weighted-average common shares outstanding—basic    and diluted		23,490,591			1,251,244			23,460,218			1,228,296

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

2

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			Deficit			(Deficit)
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
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	)

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,
	2021			2020
Operating activities
Net loss	$	(23,590	)	$	(17,211	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		325			51
Stock-based compensation expense		3,390			249
Amortization of premiums and discounts on marketable securities		116			(81	)
Reduction in the carrying value of right-of-use assets		183			—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(216	)		(465	)
Accounts payable		(2,281	)		454
Accrued expenses		(1,142	)		2,105
Operating lease liabilities		(293	)		—
Prepaid expenses - noncurrent		1,099			—
Net cash used in operating activities		(22,409	)		(14,898	)
Investing activities
Purchases of marketable securities		(62,035	)		(18,908	)
Maturities of marketable securities		82,560			21,520
Purchases of property and equipment		(278	)		(168	)
Net cash provided by investing activities		20,247			2,444
Financing activities
Proceeds from issuance of Series A-2 Convertible Preferred Stock, net of issuance costs		—			33,638
Payment of initial public offering costs		—			(1,855	)
Proceeds from exercise of stock options		361			154
Net cash provided by financing activities