What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-12 · 79 added, 54 removed, 210 unchanged (39% of the section changed)

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We have incurred significant losses and negative cash flows from operations since our inception, except for the net income and cash provided by operations due to license revenue recognized during the year ended December 31, 2024, and we expect to incur significant and increasing losses as a result of our continued research and development activities.

During the three and six months ended June 30, 2025, we incurred net losses of $33.7 million and $66.5 million, respectively.

During the three and six months ended June 30, 2024, we incurred net income of $139.1 million and $106.6 million, respectively.

As of June 30, 2025, we had an accumulated deficit of $424.9 million and do not expect positive cash flows from operations in the foreseeable future.

During the three and nine months ended September 30, 2025, we incurred a net loss of $30.1 million and $96.6 million, respectively.

During the three and nine months ended September 30, 2024, we incurred a net loss of $24.8 million and net income of $81.8 million, respectively.

As of September 30, 2025, we had an accumulated deficit of $455.0 million and do not expect positive cash flows from operations in the foreseeable future.

We expect to continue incurring significant expenses and increasing losses for the foreseeable future.

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In addition, we expect to incur additional costs associated with operating as a public company.

As of June 30, 2025, we had cash and cash equivalents of $264.5 million.

As of September 30, 2025, we had cash, cash equivalents and marketable securities of $383.9 million.

Since our inception, we have financed our operations primarily through issuances of our equity, license agreements with biotechnology companies and issuances of convertible promissory notes.

In September 2025, we entered into a securities purchase agreement, or the Private Placement, with certain investors, pursuant to which we issued and sold an aggregate of 4,000,002 shares of our common stock at a purchase price of $16.25 per share and pre-funded warrants, or the Pre-Funded Warrants, to purchase up to an aggregate of 5,231,090 shares of our common stock at a purchase price of $16.249 per Pre-Funded Warrant, resulting in gross proceeds of $150.0 million.

The Pre-Funded Warrants have an exercise price of $0.001 per share, are immediately exercisable and do not expire.

We will require substantial additional capital to develop our therapeutic candidates and fund operations for the foreseeable future.

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In 2020, we formed a spin-out company, Broadwing Bio LLC, or Broadwing, with Alloy Therapeutics, Inc., or Alloy, to develop therapeutic antibody therapies for ANGPTL7 and another undisclosed target in ophthalmic diseases, informed by our Compass platform.

As of June 30, 2025, we owned approximately 48% of the outstanding equity of Broadwing, and we expect our ownership to be significantly diluted upon the conversion of outstanding convertible notes issued by Broadwing.

As of September 30, 2025, we owned approximately 48% of the outstanding equity of Broadwing, and we expect our ownership to be significantly diluted upon the conversion of outstanding convertible notes issued by Broadwing.

We retain certain opt-in rights to jointly develop and commercialize certain therapeutic candidates developed through Broadwing with Alloy.

We are not involved in the development of Broadwing’s therapeutic candidate.

MZE782 Phase 1 Trial Results

On September 11, 2025, we announced positive clinical results from the Phase 1 healthy volunteer study of MZE782.

The Phase 1 trial of MZE782 was a randomized, double-blind, placebo-controlled study evaluating single ascending doses and multiple ascending doses of orally administered MZE782 in 112 healthy adult volunteers.

The single ascending doses, or SAD, ranged from 30 mg to 960 mg and the multiple ascending doses, or MAD, with dosing once or twice daily for seven days, ranged from 120 mg to 240 mg twice daily and 120 mg to 720 mg once daily.

The primary objective was to evaluate the safety and tolerability of single and multiple ascending oral doses of MZE782 in healthy volunteers.

Secondary and exploratory endpoints included pharmacokinetics, food effect, pharmacodynamic measures of target engagement, specifically urinary excretion of phenylalanine, or Phe, and glutamine, or Gln, as predictive biomarkers of SLC6A19 inhibition and disease control, and estimated glomerular filtration rate, or eGFR.

MZE782 was well tolerated across all doses in all cohorts.

There were no serious adverse events, no severe adverse events and no treatment-related adverse events, or TRAEs, leading to discontinuation.

In the single ascending dose portion of the study (n=56), there were a total of three TRAEs reported that were all mild in severity and not seen at the higher doses.

Headache was reported in two patients (4%) and diarrhea was reported in one patient (2%).

There were no TRAEs reported in the MAD portion of the study.

No clinically relevant changes in vital signs, laboratory tests or electrocardiograms were observed.

MZE782 demonstrated a favorable plasma pharmacokinetics profile after single and multiple oral doses.

Oral administration was associated with consistent absorption, with a time to maximum concentration (tmax) of six hours and a half-life (t1/2) of 11 hours.

Exposure increased proportionally with dose, and steady-state was achieved by Day 3.

This is supportive of a once- or twice-daily dosing regimen to be evaluated in Phase 2.

MZE782 produced dose-dependent increases in 24-hour urinary excretion of the neutral amino acids Phe and Gln across both SAD and MAD cohorts, confirming target engagement and SLC6A19 inhibition.

All participants in the MAD cohorts of the Phase 1 study were assessed for changes in eGFR.

MZE782 demonstrated a dose-dependent initial eGFR dip over seven days of dosing that was similar in magnitude to what has been observed in patients initiating SGLT2 and RAAS inhibitors.

We plan to initiate two Phase 2 proof-of-concept trials of MZE782, evaluating plasma Phe reduction in phenylketonuria, or PKU, and proteinuria reduction in chronic kidney disease, or CKD, in 2026.

Exclusive license agreement

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The License Agreement will expire on a Licensed-Product by Licensed-Product and country-by-country basis upon the expiration of the royalty term for such Licensed Product, which will be the latest of the date when there are no remaining valid claims covering the applicable Licensed Product, the expiration of regulatory exclusivity for the applicable Licensed Product, or 11 years after the first commercial sale of the applicable Licensed Product, subject to earlier termination by the parties.

As of June 30, 2025, we estimate that the last patent right for the only currently issued patent licensed under the License Agreement will expire in 2042, without giving effect to any potential patent term extensions, patent term adjustments , or future patents that may or may not issue with respect to the Licensed Products.

As of September 30, 2025, we estimate that the last patent right for the only currently issued patent licensed under the License Agreement will expire in 2042, without giving effect to any potential patent term extensions, patent term adjustments , or future patents that may or may not issue with respect to the Licensed Products.

Upon expiration of the License Agreement, the licenses granted to Shionogi will become fully paid-up, perpetual, irrevocable and royalty-free.

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Interest and other income, net

Interest and other income, net consists of interest income earned on our cash and cash equivalents, interest expense, foreign currency re-measurement and transaction gains and losses.

We expect interest income to increase as a result of the receipt of net proceeds of approximately $127.8 million from our initial public offering completed in February 2025.

Interest and other income, net consists of interest income earned on our cash, cash equivalents and marketable securities, interest expense, foreign currency re-measurement and transaction gains and losses.

We expect interest income to increase as a result of the receipt of net proceeds of approximately $127.8 million from our initial public offering completed in February 2025 and net proceeds of approximately $141.3 million from our Private Placement completed in September 2025.

However, interest income may vary each reporting period depending on our average cash deposits, money market fund balances and other investment balances during the period and prevailing market interest rates.

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As such, the convertible promissory notes were recognized at fair value with changes in fair value recognized in the condensed statements of operations and comprehensive (loss) income.

We recorded a net gain of $0.2 million and a net loss of $4.5 million in the condensed statements of operations and comprehensive (loss) income for the three and six months ended June 30, 2024, respectively, reflecting the change in the fair value of the convertible promissory notes.

We recorded a net loss of $2.6 million and $7.2 million in the condensed statements of operations and comprehensive (loss) income for the three and nine months ended September 30, 2024, respectively, reflecting the change in the fair value of the convertible promissory notes.

The impact of interest expense on the convertible promissory notes is included within the changes in fair value.

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No convertible promissory notes were outstanding as of December 31, 2024.

Accordingly, no change in fair value of convertible promissory notes was recorded in the condensed statements of operations and comprehensive (loss) income for the three and six months ended June 30, 2025.

Income tax expense

Accordingly, no change in fair value of convertible promissory notes was recorded in the condensed statements of operations and comprehensive (loss) income for the three and nine months ended September 30, 2025.

Income tax benefit (expense)

We are subject to corporate United States federal and state income taxation.

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Conversely, in the event that all or part of the net deferred tax assets are determined not to be realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period when such determination is made.

We recognize uncertain income tax positions at the largest amount that is more likely than not to be sustained upon audit by the

relevant taxing authority.

We recognize uncertain income tax positions at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority.

An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.

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Results of operations

Comparisons of the three and six months ended June 30, 2025 and 2024

Three Months Ended June 30,

Six Months Ended June 30,

Comparisons of the three and nine months ended September 30, 2025 and 2024

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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Change in fair value of convertible promissory notes

(Loss) income before income tax expense

Income tax expense

Net (loss) income and comprehensive (loss) income

(Loss) income before income tax benefit (expense)

Income tax benefit (expense)

Net (loss) income

License revenue

We recognized no license revenue for the three and six months ended June 30, 2025.

We recognized a total of $165.0 million of license revenue for the three and six months ended June 30, 2024.

We recognized no license revenue for the three and nine months ended September 30, 2025.

We recognized $2.5 million and $167.5 million of license revenue for the three and nine months ended September 30, 2024, respectively.

License revenue recognized in 2024 primarily related to the License Agreement with Shionogi, wherein we received an upfront payment of $150.0 million in exchange for the transfer of the license, know-how, and materials related to the research, development, manufacture and commercialization of MZE001 and certain other small molecule compounds modulating glycogen synthase 1.

License revenue recognized in 2024 also included amounts related to the exclusive license agreement with Trace Neuroscience, Inc., or Trace, wherein we received an upfront payment of $15.0 million in exchange for the transfer of the license, know-how, and materials related to the research, development, manufacture and commercialization of a discovery research program targeting UNC13A for the treatment of amyotrophic lateral sclerosis, or ALS, and $2.5 million related to the exclusive license agreement with Neurocrine Biosciences, Inc., or Neurocrine, for the transfer of the license, know-how and materials related to a discovery research program targeting ATXN2.

Research and development expenses

Research and development expenses were $28.1 million and $19.5 million for the three months ended June 30, 2025 and 2024, respectively.

The increase of $8.6 million between the comparative three month periods was primarily due to an increase of $2.7 million in clinical trial expenses and $1.6 million in manufacturing expenses based on the progression of our Phase 2 clinical trial for MZE829 that was initiated in November 2024 and our Phase 1 clinical trial for MZE782 that was initiated in September 2024.

The increase also reflects higher personnel-related costs of $2.4 million due to an increase in headcount and higher costs for outside research and development services of $1.2 million for our early research programs.

Research and development expenses were $55.7 million and $41.4 million for the six months ended June 30, 2025 and 2024, respectively.

The increase of $14.3 million between the comparative six month periods was primarily due to an increase of $5.8 million in clinical trial expenses and $1.5 million in manufacturing expenses based on the progression of our Phase 2 clinical trial for MZE829 and our Phase 1 clinical trial for MZE782.

The increase also reflects higher personnel-related costs of $4.2 million due to an increase in headcount and higher costs for outside research and development services of $1.9 million for our early research programs.

Three Months Ended June 30,

Six Months Ended June 30,

Research and development expenses were $25.2 million and $19.9 million for the three months ended September 30, 2025 and 2024, respectively.

The increase of $5.3 million between the comparative three month periods was primarily due to an increase of $3.1 million in personnel-related costs due to an increase in headcount, an increase of $1.9 million in clinical trial expenses based on the progression of our Phase 2 clinical trial for MZE829 that was initiated in November 2024.

The increase also reflects higher costs for outside research and development services of $0.3 million to support our research programs.

Research and development expenses were $80.9 million and $61.3 million for the nine months ended September 30, 2025 and 2024, respectively.

The increase of $19.6 million between the comparative nine month periods was primarily due to an increase of $7.8 million in clinical trial expenses and an increase of $1.7 million in manufacturing expenses based on the progression of our Phase 2 clinical trial for MZE829 and our Phase 1 clinical trial for MZE782.

The increase also reflects higher personnel-related costs of $7.3 million due to an increase in headcount and higher costs for outside research and development services of $2.1 million to support our research programs.

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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General and administrative expenses

General and administrative expenses were $8.4 million and $5.9 million for the three months ended June 30, 2025 and 2024, respectively.

The increase of $2.5 million between the comparative three month periods was primarily due to an increase of $1.2 million in personnel-related costs due to an increase in headcount and higher costs for professional service fees of $0.8 million.

General and administrative expenses were $16.2 million and $12.0 million for the six months ended June 30, 2025 and 2024, respectively.

The increase of $4.2 million between the comparative six month periods was primarily due to an increase of $2.6 million in personnel-related costs due to an increase in headcount and higher costs for professional service fees of $0.6 million.

General and administrative expenses were $7.8 million and $6.9 million for the three months ended September 30, 2025 and 2024, respectively.

The increase of $0.9 million between the comparative three month periods was primarily due to an increase of $0.7 million in personnel-related costs due to an increase in headcount and higher facilities and other costs of $0.3 million.

General and administrative expenses were $24.0 million and $18.9 million for the nine months ended September 30, 2025 and 2024, respectively.

The increase of $5.1 million between the comparative nine month periods was primarily due to an increase of $3.1 million in personnel-related costs due to an increase in headcount, higher facilities and other costs of $1.0 million, and higher costs for professional service fees of $0.7 million.

Interest and other income, net

Interest and other income, net was $2.8 million and $5.4 million for the three and six months ended June 30, 2025, respectively.

Interest and other income, net was $1.0 million and $1.3 million for the three and six months ended June 30, 2024, respectively.

The increase of $1.8 million and $4.1 million between the comparative three and six months periods, respectively, primarily reflects an increase in interest income as a result of higher cash and cash equivalent balances held during the three and six months ended June 30, 2025 from the proceeds received from the private placement of our Series D Preferred Stock completed in November 2024 and initial public offering completed in February 2025.

Interest and other income, net was $2.9 million and $8.3 million for the three and nine months ended September 30, 2025, respectively.

Interest and other income, net was $1.8 million and $3.1 million for the three and nine months ended September 30, 2024, respectively.

The increase of $1.0 million and $5.2 million between the comparative three and nine months periods, respectively, primarily reflects an increase in interest income as a result of higher cash, cash equivalent, and marketable securities balances held during the three and nine months ended September 30, 2025 from the proceeds received from the private placement of our Series D Preferred Stock completed in November 2024, the initial public offering completed in February 2025 and the Private Placement completed in September 2025.

Change in fair value of convertible promissory notes

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As such, the convertible promissory notes were recorded at fair value at each reporting period with changes in fair value recognized in the condensed statements of operations and comprehensive (loss) income.

The change in fair value of the convertible promissory notes resulted in a net gain of $0.2 million and a net loss of $4.5 million for the three and six months ended June 30, 2024.

The change in fair value of the convertible promissory notes resulted in a net loss of $2.6 million and $7.2 million for the three and nine months ended September 30, 2024, respectively.

The convertible promissory notes converted into Series D-1 Preferred Stock in November 2024 in connection with the private placement of our Series D Preferred Stock, which was a qualified preferred stock financing pursuant to the terms of the convertible promissory notes.

No convertible promissory notes were outstanding as of December 31, 2024.

Income tax expense

Income tax expense was zero for the three and six months ended June 30, 2025 compared to $1.7 million for the three and six months ended June 30, 2024.

The decrease between the comparative three and six months periods was due to the net income generated during the three and six months ended June 30, 2024, as a result of the recognition of license revenue under our license agreements with Shionogi and Trace, as compared to the net loss incurred during the three and six months ended June 30, 2025.

Income tax benefit (expense)

Income tax benefit (expense) was zero for the three and nine months ended September 30, 2025 compared to an income tax benefit of $0.3 million and an income tax expense of $1.4 million for the three and nine months ended September 30, 2024, respectively.

The amounts recognized in the comparative periods in 2024 were primarily due to the net income generated as a result of the recognition of license revenue under our license agreement with Shionogi, resulting in taxable income to the Company, as compared to the net loss incurred during the three and nine months ended September 30, 2025.

Liquidity and capital resources

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To date, we have financed our operations primarily through private placements of redeemable convertible preferred stock, one-time, nonrefundable upfront payments made to us in connection with our entry into license agreements, private placements of convertible promissory notes, and most recently, through an initial public offering of our common stock.

As of June 30, 2025, we had cash and cash equivalents of $264.5 million and an accumulated deficit of $424.9 million.

As of September 30, 2025, we had cash, cash equivalents and marketable securities of $383.9 million and an accumulated deficit of $455.0 million.

In February 2025, we completed our initial public offering, pursuant to which we issued and sold an aggregate of 8,750,000 shares of our common stock at an initial public offering price of $16.00 per share, resulting in net proceeds of approximately $127.8 million, after deducting underwriting discounts, commissions and other offering expenses paid by us in 2025.

Based on our current operating plan, we believe that our existing cash and cash equivalents will be sufficient to fund our operations for at least one year from the date of this Quarterly Report on Form 10-Q.

In September 2025, we completed the Private Placement, pursuant to which we issued and sold an aggregate of 4,000,002 shares of our common stock at a purchase price of $16.25 per share and Pre-Funded Warrants to purchase up to an aggregate of 5,231,090 shares of our common stock at a purchase price of $16.249 per Pre-Funded Warrant, resulting in net proceeds of approximately $141.3 million, after deducting placement fees and other offering expenses payable by the Company of approximately $8.7 million.

The Pre-Funded Warrants have an exercise price of $0.001 per share, are immediately exercisable and do not expire.

As of September 30, 2025, none of the Pre-Funded Warrants have been exercised.

Based on our current operating plan, we believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least one year from the date of this Quarterly Report on Form 10-Q.

We have based this estimate on our current assumptions, which may prove to be wrong, and we may exhaust our available capital resources sooner than we expect.

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We have entered into consortium agreements with the University of Helsinki and Queen Mary University to access genomic information from patient samples and genetic and paired clinical data.

As of June 30, 2025, we are obligated to pay $4.9 million under these agreements through the year ended December 31, 2027.

As of September 30, 2025, we are obligated to pay $4.6 million under these agreements through the year ended December 31, 2027.

We enter into contracts in the normal course of business with third-party contract organizations for preclinical trials, non-clinical trials and testing, and other services and products for operating purposes.

These contracts generally provide for termination following a certain period after notice.

Comparisons of the six months ended June 30, 2025 and 2024

Comparisons of the nine months ended September 30, 2025 and 2024

The following table sets forth the primary sources and uses of cash, cash equivalents, and restricted cash for the periods presented below:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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Net cash (used in) provided by operating activities

Net cash used in operating activities was $59.6 million for the six months ended June 30, 2025 and net cash provided by operating activities was $121.6 million for the six months ended June 30, 2024.

The net cash used in operating activities for the six months ended June 30, 2025 was primarily due to our net loss of $66.5 million combined with a net change in our operating assets and liabilities of $2.5 million, offset by $9.4 million in non-cash charges such as depreciation, stock-based compensation and lease expense.

The net cash provided by operating activities for the six months ended June 30, 2024 was primarily due to our net income of $106.6 million combined with a net change in our operating assets and liabilities of $2.7 million and $12.4 million in non-cash charges such as depreciation, stock-based compensation, lease expense and the change in fair value of the convertible promissory notes.

Net cash used in operating activities was $84.2 million for the nine months ended September 30, 2025 and net cash provided by operating activities was $98.4 million for the nine months ended September 30, 2024.

The net cash used in operating activities for the nine months ended September 30, 2025 was primarily due to our net loss of $96.6 million combined with a net change in our operating assets and liabilities of $2.0 million, offset by $14.3 million in non-cash charges such as depreciation, stock-based compensation, lease expense and accretion of discounts on marketable securities.

The net cash provided by operating activities for the nine months ended September 30, 2024 was primarily due to our net income of $81.8 million, combined with $19.2 million in non-cash charges such as depreciation, stock-based compensation, lease expense and the change in fair value of the convertible promissory notes, offset by a net change in our operating assets and liabilities of $2.6 million.

Net cash used in investing activities

Net cash used in investing activities was $0.7 million and $0.4 million for the six months ended June 30, 2025 and 2024, respectively, which related to the purchase of property and equipment.

Net cash used in investing activities was $67.6 million for the nine months ended September 30, 2025, which related to purchases of marketable securities of $66.8 million and purchases of property and equipment of $0.8 million.

Net cash used in investing activities was $0.5 million for the nine months ended September 30, 2024, which related to purchases of property and equipment.

Net cash provided by financing activities

For the six months ended June 30, 2025, net cash provided by financing activities was $128.0 million, which consisted of net proceeds of $127.8 million from the issuance of common stock pursuant to our initial public offering, $0.6 million from the issuance of common stock under the 2025 Employee Stock Purchase Plan and $0.1 million from the exercise of stock option awards, net of repurchases, partially offset by the payment of $0.5 million for the success fee under the loan and security agreement.

For the six months ended June 30, 2024, net cash provided by financing activities was $24.7 million, which consisted of net proceeds from the issuance of convertible promissory notes of $24.5 million and $0.4 million from the exercise of stock option awards, net of repurchases, partially offset by the payment of $0.2 million for deferred offering costs related to our initial public offering.

For the nine months ended September 30, 2025, net cash provided by financing activities was $271.7 million, which consisted of net proceeds of $127.8 million from the issuance of common stock pursuant to our initial public offering, $141.7 million of net proceeds from the issuance of common stock and Pre-Funded Warrants in the Private Placement, $2.1 million from the exercise of stock option awards, net of repurchases and $0.6 million from the issuance of common stock under the 2025 Employee Stock Purchase Plan, partially offset by the payment of $0.5 million for the success fee under the loan and security agreement.

For the nine months ended September 30, 2024, net cash provided by financing activities was $22.6 million, which consisted of net proceeds from the issuance of convertible promissory notes of $24.5 million and $0.7 million from the exercise of stock option awards, net of repurchases, partially offset by the payment of $2.6 million for deferred offering costs.

Critical accounting policies, significant judgments and use of estimates

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We described the accounting policies that we believe involve a significant level of estimation and uncertainty, which could have a material impact on our financial condition or results of operations and are therefore deemed critical accounting policies, in our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March, 31, 2025.

There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2025.

There have been no significant changes in our critical accounting policies and estimates during the nine months ended September 30, 2025.

Our condensed financial statements have been prepared in accordance with U.S.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis