Surrozen, Inc. — 2023 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter report. Surrozen is a clinical-stage biotechnology company developing antibody-based therapies that modulate the Wnt pathway; it had no product-sales revenue.
Financial performance and liquidity
| Metric | 2023 | 2022 |
|---|---|---|
| Collaboration and license revenue | $0 | $12.5 million |
| Research and development expense | $27.2 million | $37.0 million |
| General and administrative expense | $15.8 million | $19.8 million |
| Total operating expenses | $45.8 million | $56.8 million |
| Loss from operations | $45.8 million | $44.3 million |
| Net loss | $43.0 million | $36.0 million |
| Net cash used in operating activities | $40.4 million | $44.1 million |
Revenue in 2022 was the one-time upfront payment from Boehringer Ingelheim (BI); no corresponding revenue was recognized in 2023. Operating expenses declined 19%, largely reflecting workforce reductions, but the operating loss increased because 2022 included the collaboration revenue. Net loss increased 20%, partly because 2022 included a much larger noncash gain on warrant-liability remeasurement ($7.6 million versus $0.4 million of other income in 2023). Operating margins are not meaningful given the absence of recurring product revenue.
At year-end, cash and cash equivalents were $36.0 million, with no marketable securities reported; total assets were $46.1 million, total liabilities $8.1 million, and stockholders’ equity $37.9 million. No borrowings are reported; liabilities included $3.4 million of operating lease obligations. Operating cash use improved by $3.8 million year over year. Investing activities provided $51.7 million, primarily from maturities of marketable securities, rather than operating earnings. The company reported an accumulated deficit of $221.7 million.
Material changes and business developments
- Two 2023 restructuring plans reduced the workforce by approximately 25% and then approximately 38%; total restructuring charges were $2.8 million. R&D expense fell 26%, including lower discovery spending and lower SZN-1326 costs.
- In January 2024, Surrozen discontinued SZN-1326 for inflammatory bowel disease after its Phase 1 single-ascending-dose study, citing difficulty identifying a safe and potentially effective dose, development expense, and market competition.
- The SZN-043 Phase 1a trial was completed in February 2024. Among 48 participants, the filing reports no serious adverse events or infusion reactions; several healthy volunteers had mild-to-moderate, transient, asymptomatic transaminase elevations that resolved without intervention. Surrozen reported target engagement and pharmacodynamic activity in cirrhotic participants.
- Surrozen was initiating a Phase 1b study of SZN-043 in severe alcohol-associated hepatitis (AH), with potential proof-of-concept data anticipated in the first half of 2025. The filing described the Phase 1b trial as planned for 2024.
- BI’s collaboration covers Fzd4 bispecific antibodies, including SZN-413. BI is responsible for further development and commercialization costs after the initial joint research period. Surrozen is eligible for up to $587 million in success-based milestones and mid-single-digit to low-double-digit royalties; a potential 2024 candidate nomination was associated with a $10 million milestone.
Outlook, risks, and unusual items
Management expects continued losses and substantial R&D spending and does not expect product revenue unless and until a candidate is approved and commercialized. Based on its operating plan, Surrozen said year-end cash plus approximately $17.6 million of gross proceeds from an April 2024 private placement would fund operations for at least 12 months from the filing date. This is an estimate, not a guarantee; the company expects to need additional capital over the longer term.
The April 2024 financing included common shares, pre-funded warrants, and warrants for up to approximately 11.1 million shares. Full exercise of the warrants could generate approximately $175.5 million in additional gross proceeds, but exercise is not assured and certain warrant tranches depend on clinical milestones or announcements. The financing creates potentially substantial dilution.
Key risks include SZN-043 safety—particularly the observed transaminase elevations—and whether clinical activity translates into benefit in severe AH; trial delays, enrollment and manufacturing constraints; reliance on third parties and BI; competition; and the need for further financing. Wnt pathway activation also carries a theoretical tumor-related risk noted by the company, although Surrozen reported no tumor formation in SZN-043 preclinical toxicology studies or its reported clinical experience to date. The company recognized a $0.2 million long-lived-asset impairment in 2023 and $2.8 million in restructuring charges. Its South San Francisco lease expires in April 2025, with $3.6 million of remaining payments at year-end. Management reported effective disclosure controls and internal control over financial reporting; the auditor issued an unqualified opinion on the financial statements but did not attest to internal-control effectiveness.
Important facts for investors to verify
- Whether the SZN-043 Phase 1b trial starts and enrolls as planned, and whether safety, pharmacokinetic, and exploratory efficacy findings support continued development.
- How management monitors and interprets the transient transaminase elevations, especially in the severe-AH patient population.
- Actual cash burn, financing runway, and any additional financing; assess dilution from the April 2024 shares and warrants separately from potential warrant proceeds.
- BI’s candidate-selection and development decisions, including whether any milestone is achieved and the terms governing potential payments and royalties.
- The clinical, regulatory, and financial consequences of discontinuing SZN-1326 and the company’s resulting pipeline concentration.