ZBIO

Business Context and Reporting Period

Zenas BioPharma, Inc. is a clinical-stage biopharmaceutical company focused on developing immunology and inflammation (I&I) therapies. The reporting period covers the fiscal year ended December 31, 2024. The company completed its Initial Public Offering (IPO) on September 16, 2024, raising approximately $234.3 million in net proceeds. Zenas has no approved products and has not generated revenue from product sales.

Key Financial Metrics

Note: Revenue in 2024 consisted of a $5.0 million upfront payment from the Tenacia Agreement. Revenue in 2023 consisted of a $50.0 million upfront payment from the Bristol-Myers Squibb (BMS) Agreement.

Material Changes vs. Prior Period

• Revenue Decline: Revenue decreased by $45.0 million year-over-year, driven by the recognition of the BMS upfront payment in 2023 versus the smaller Tenacia upfront payment in 2024.
• Increased Operating Expenses: Total operating expenses increased by $81.7 million. Research and development (R&D) expenses more than doubled to $139.1 million, primarily due to a $69.1 million increase in costs for the lead candidate, obexelimab (driven by manufacturing and clinical trial costs).
• Liquidity Expansion: Cash and investments increased significantly to $350.8 million, fueled by the IPO and a Series C preferred stock financing, compared to $56.9 million at the end of 2023.
• Capital Structure: All convertible preferred stock converted to common stock upon the IPO closing in September 2024.

Guidance, Outlook, and Risks

Outlook and Milestones:

• Obexelimab (Lead Candidate): The company is advancing obexelimab, a bifunctional antibody that inhibits B-cell activity without depletion.
  • IgG4-RD: Completed enrollment in the Phase 3 INDIGO trial in November 2024. Topline data expected year-end 2025; BLA submission expected in 2026.
  • Multiple Sclerosis (RMS): Enrolling in the Phase 2 MoonStone trial. Data expected Q3 2025.
  • Systemic Lupus Erythematosus (SLE): Enrolling in the Phase 2 SunStone trial. Data expected H1 2026.
• Other Programs: ZB002 (anti-TNFα) is in Phase 1b; ZB004 (CTLA-4-Ig) completed Phase 1. ZB001 rights were sublicensed to Zai Lab in January 2025 for a $10.0 million upfront fee.

Liquidity: Management believes current cash resources are sufficient to fund operations into the fourth quarter of 2026.

Risks and Contingencies:

• Capital Requirements: The company anticipates substantial and increasing losses and will require additional financing to achieve its goals.
• Manufacturing Concentration: Reliance on a single contract manufacturing organization (WuXi Biologics) in China for drug substance and product. The company is qualifying U.S.-based CMOs to mitigate this risk.
• Regulatory Uncertainty: Clinical development is lengthy and expensive; earlier trial results may not predict future outcomes. The company has no products approved for commercial sale.
• Geopolitical Risks: Potential impact of U.S.-China trade tensions and legislation such as the BIOSECURE Act on supply chain operations.

Investor Verification Checklist

• Cash Runway: Verify the sufficiency of the $350.8 million cash balance against the projected burn rate and the timeline for the Q4 2026 liquidity horizon.
• Manufacturing Diversification: Confirm the status of qualifying new U.S.-based CMOs to reduce reliance on WuXi Biologics in China.
• Clinical Trial Progress: Monitor enrollment rates and safety data for the Phase 3 INDIGO trial (IgG4-RD) and Phase 2 trials for RMS and SLE.
• Revenue Recognition: Understand that future revenue is contingent on achieving development, regulatory, and commercial milestones under the BMS, Tenacia, and Zai agreements, which are currently constrained.
• Intellectual Property: Review the patent expiration dates for obexelimab (composition of matter patent expires May 2028) and the status of in-licensed patents from Xencor.