ZBIO

Business Context and Reporting Period

Zenas BioPharma, Inc. (ZBIO) is a clinical-stage biopharmaceutical company focused on developing immunology and inflammation (I&I) therapies. The reporting period covers the three and nine months ended September 30, 2025. The company's lead product candidate, obexelimab, is in Phase 3 trials for IgG4-Related Disease (IgG4-RD) and Phase 2 trials for Systemic Lupus Erythematosus (SLE) and Relapsing Multiple Sclerosis (RMS). In October 2025, the company announced positive topline data from the MoonStone trial for RMS.

Key Financial Metrics

Note: Revenue for the nine months ended September 30, 2025, consists of a $10.0 million upfront payment from a license agreement with Zai Lab. There was no revenue in the three months ended September 30, 2025.

Material Changes vs. Prior Period

• Revenue: The company recognized $10.0 million in license revenue for the nine months ended September 30, 2025, compared to $0 in the same period in 2024. This was driven by the Zai Lab agreement.
• Operating Expenses: Total operating expenses increased by $11.6 million for the three months and $46.8 million for the nine months compared to the prior year periods. This increase is primarily due to higher research and development (R&D) costs for obexelimab and increased general and administrative (G&A) expenses related to operating as a public company and headcount growth.
• Acquired IPR&D: The company recorded $5.0 million in acquired in-process research and development expense for the three and nine months ended September 30, 2025, related to a deposit for the InnoCare license agreement. No such expense was recorded in the prior year periods.
• Debt/Liability: A new long-term royalty obligation of approximately $73.0 million was recorded in September 2025 following a $75.0 million upfront payment from Royalty Pharma. This liability did not exist in the prior period.

Guidance, Outlook, and Risks

• Going Concern: Management has concluded that there is substantial doubt regarding the company's ability to continue as a going concern for at least twelve months from the filing date. While cash and investments total $301.6 million (plus $120.0 million from a subsequent PIPE transaction), these funds are not sufficient to fund operations for the next 12 months without additional financing.
• Clinical Outlook:
  • Obexelimab (IgG4-RD): Topline results from the INDIGO Phase 3 trial are expected around year-end 2025. A BLA filing is anticipated in the first half of 2026 if results are positive.
  • Obexelimab (RMS): Topline data from the MoonStone Phase 2 trial (announced October 2025) met the primary endpoint. 24-week data is expected in Q1 2026.
  • Orelabrutinib: Phase 3 trials for Primary Progressive Multiple Sclerosis (PPMS) were initiated in September 2025. A second Phase 3 trial for Secondary Progressive Multiple Sclerosis (SPMS) is planned for Q1 2026.
• Recent Transactions:
  • InnoCare Agreement (Oct 2025): Acquired rights to orelabrutinib, ZB021, and ZB022. Requires $35.0 million upfront cash (partially paid) and issuance of 5 million shares.
  • PIPE (Oct 2025): Closed a private investment in public equity transaction raising approximately $120.0 million.
  • ATM Program (Oct 2025): Established an At-the-Market program to sell up to $200.0 million of common stock.
• Risks: Key risks include the need for substantial additional financing, reliance on third-party manufacturers (specifically WuXi Biologics in China), potential regulatory delays, and the uncertainty of clinical trial outcomes. The company also faces potential litigation from a securities class action filed in April 2025 regarding its IPO.

Investor Verification Checklist

• Liquidity Runway: Verify the sufficiency of the $301.6 million cash balance plus the $120.0 million PIPE proceeds against the projected burn rate to confirm the timeline for needing additional capital.
• Royalty Obligation Terms: Review the specific terms of the Royalty Pharma agreement, including the effective interest rate (30.7%) and the conditions for the potential additional $225.0 million in milestone payments.
• Manufacturing Concentration: Assess the risks associated with reliance on WuXi Biologics (China) as the sole CMO for obexelimab, particularly in light of the proposed BIOSECURE Act and geopolitical tensions.
• Clinical Data Validation: Monitor the upcoming release of 24-week data from the MoonStone trial (Q1 2026) and the INDIGO Phase 3 topline results (Year-end 2025) to validate the commercial potential of obexelimab.
• Securities Litigation: Track the status of the putative securities class action filed in April 2025 regarding the IPO, as it could result in significant costs or settlements.