What changed in this filing

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Item 1. Financial Statements

2025-11-12 compared with 2025-08-12 · 172 added, 84 removed, 409 unchanged (38% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

Current assets:

14 unchanged sentences

Total current liabilities

Operating lease liabilities, non-current

Long-term liabilities:

Royalty obligation

Operating lease liabilities, less current portion

Total long-term liabilities

Total liabilities

2 unchanged sentences

Preferred stock, par value $ 0.0001 per share;

25,000,000 shares authorized and no shares issued and outstanding as of June 30, 2025 and December 31, 2024

25,000,000 shares authorized and no shares issued and outstanding as of September 30, 2025 and December 31, 2024

Common stock, par value $ 0.0001 per share;

175,000,000 shares authorized;

42,088,697 and 41,793,412 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

42,213,465 and 41,793,412 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively

Additional paid-in capital

7 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

For the three months ended

September 30,

For the nine months ended

September 30,

License and collaboration revenue

3 unchanged sentences

General and administrative

Acquired in-process research and development

Total operating expenses

20 unchanged sentences

Additional Paid-in Capital

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive

Income (Loss)

Accumulated Deficit

11 unchanged sentences

Balance as of June 30, 2025

Exercises of common stock options

Stock-based compensation expense

Purchases of common stock under the Employee Stock Purchase Plan

Unrealized gain on investments

Foreign currency translation adjustment

Balance as of September 30, 2025

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

7 unchanged sentences

Total Stockholders'

Equity (Deficit)

Balance as of December 31, 2023

9 unchanged sentences

Balance as of June 30, 2024

Conversion of convertible preferred stock upon closing of initial public offering

( 1,785,714 )

( 17,589,380 )

( 81,242,587 )

( 116,275,239 )

Issuance of common stock from initial public offer, net of underwriting discounts, commissions and other issuance costs

Exercises of common stock options

Stock-based compensation expense

Foreign currency translation adjustment

Balance as of September 30, 2024

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

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Acquired in-process research and development

Depreciation expense

1 unchanged sentence

Net amortization of premiums and accretion of discounts on investments

Non-cash interest expense on royalty obligation

Stock-based compensation expense

6 unchanged sentences

Operating lease liabilities

Other current liabilities

Net cash used in operating activities

3 unchanged sentences

Proceeds from sales and maturities of investments

Product candidate license acquisitions

Net cash used in investing activities

2 unchanged sentences

Payment of initial public offering costs

Payment of deferred offering costs

Proceeds from royalty obligation

Proceeds from exercise of stock options

Proceeds from issuance of common stock under employee stock purchase plan

Proceeds from initial public offering, net of underwriting discount and commissions

Net cash provided by financing activities

27 unchanged sentences

The Company is subject to risks and uncertainties common to clinical stage companies in the biopharmaceutical industry, including, but not limited to, completing preclinical studies and clinical trials, obtaining regulatory approval for product candidates, market acceptance of products, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, reliance on third-party organizations, protection of proprietary technology, compliance with government regulations, and the ability to raise additional capital to fund operations.

The Company’s revenues to date have been generated from payments received under the Company’s license and collaboration agreement with Bristol-Myers Squibb Company (“BMS”), novation agreement with Tenacia Biotechnology (Hong Kong) Co., Limited (“Tenacia”) and license agreement with Zai Lab (Hong Kong) Limited (“Zai”) (please see Note 7, License and Collaboration Revenue , to these condensed consolidated financial statements).

The Company’s revenues to date have been generated from payments received under the Company’s license and collaboration agreement with Bristol-Myers Squibb Company (“BMS”), novation agreement with Tenacia Biotechnology (Hong Kong) Co., Limited (“Tenacia”), license agreement with Zai Lab (Hong Kong) Limited (“Zai”), and a royalty purchase agreement with Royalty Pharma Investments (“Royalty Pharma”) (please see Note 7, License and Collaboration Revenue and Note 9, Royalty Obligation , to these condensed consolidated financial statements).

The Company has not generated any revenue from product sales since inception, and its product candidates currently under development will require significant additional research and development efforts, including extensive clinical testing and regulatory approval prior to commercialization.

4 unchanged sentences

Accordingly, all share and per share amounts for all periods presented in the accompanying condensed consolidated financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the reverse stock split and the adjustment of the preferred stock conversion ratios.

The Company has incurred operating losses and negative cash flows, since its inception, including net losses of $ 52.2 million and $ 38.0 million for the three months ended June 30, 2025 and 2024, respectively, and $ 85.8 million and $ 65.8 million for the six months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, the Company had an

accumulated deficit of $ 473.2 million.

The Company has incurred operating losses and negative cash flows, since its inception, including net losses of $ 51.5 million and $ 38.6 million for the three months ended September 30, 2025 and 2024, respectively, and $ 137.3 million and

$ 104.4 million for the nine months ended September 30, 2025 and 2024, respectively.

As of September 30, 2025, the Company had an accumulated deficit of $ 524.7 million.

Management expects operating losses and negative operating cash flows to continue for the foreseeable future.

The Company expects that its existing cash, cash equivalents and investments of $ 274.9 million as of June 30, 2025, will be sufficient to fund its operating expenses and capital expenditure requirements into the fourth quarter of 2026, which is more than twelve months from the filing of these financial statements.

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.

The Company will need additional financing to support its continuing operations and to pursue its growth strategy.

Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of private or public equity financings, debt financings or other capital sources, including collaborations with other companies or other strategic transactions and licensing agreements.

The Company expects that its existing cash, cash equivalents and investments of $ 301.6 million as of September 30, 2025, together with the $ 120.0 million of gross proceeds from the Private Investment in Public Equity (“PIPE”) received in October 2025 ( Note 16, Subsequent Events ) will be sufficient to fund its operating and capital expenditures into the fourth quarter of 2026, however it will not be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date these condensed consolidated financial statements were issued.

Therefore, the Company has concluded that substantial doubt exists with respect to its ability to continue as a going concern.

As a result, the Company will need to raise additional capital to finance its operations.

The Company’s ability to fund operations is subject to substantial risks and uncertainties.

Until such time that the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of private or public equity financings, debt financings or other capital sources, including collaborations with other companies or other strategic transactions and licensing agreements.

The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all.

The inability to raise capital as and when needed could have a negative impact on the Company’s financial condition and its ability to pursue its business strategy.

The Company will need to generate significant revenue to achieve profitability, and it may never do so.

If the Company is unable to obtain sufficient capital, the Company will be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects, and the Company may be unable to continue operations.

Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are disclosed in Note 2, Summary of Significant Accounting Policies, in the audited consolidated financial statements for the year ended December 31, 2024, and notes thereto, included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 11, 2025.

Since the date of those financial statements, there have been no material changes to the Company’s significant accounting policies.

Since the date of those financial statements, other than disclosed herein, there have been no material changes to the Company’s significant accounting policies.

Basis of Presentation and Consolidation

6 unchanged sentences

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2025, and the results of operations and its cash flows for the three and six months ended June 30, 2025 and 2024.

The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2025 and 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period.

The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2025, and the results of operations and its cash flows for the three and nine months ended September 30, 2025 and 2024.

The financial

data and other information disclosed in these notes related to the three and nine months ended September 30, 2025 and 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period.

These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2024, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K as filed with the SEC, on March 11, 2025.

4 unchanged sentences

Actual results may differ from those estimates or assumptions.

Significant estimates in these condensed consolidated financial statements

include estimates made in connection with accrued research and development expenses, stock-based compensation and pre-initial public offering (“IPO”) valuations of common stock.

Significant estimates in these condensed consolidated financial statements include estimates made in connection with accrued research and development expenses, stock-based compensation, pre-initial public offering (“IPO”) valuations of common stock and the liability related to the sale of future royalties including the estimation of future payments and the related non-cash interest expense.

Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgement.

2 unchanged sentences

Actual results could differ from those estimates and any such differences may be material to the Company’s financial statements.

Royalty Obligation

In September 2025, the Company and Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”) entered into the Revenue Participation Right Purchase and Sale Agreement (the “Royalty Purchase Agreement”).

See Note 9, Royalty Obligations, for further details of the agreement.

When the Company maintains significant continuing involvement in generating the underlying cash flows, royalty financings are recognized as obligations.

Payments received are recorded as the principal amount of the obligation on the consolidated balance sheet as long-term liabilities.

The carrying amount of the obligation is accreted to reflect the total expected royalty and related payments due to Royalty Pharma, using the effective interest method.

As royalties and other related payments are made, the outstanding royalty obligation will be reduced over the estimated term of the arrangement.

The royalty obligation, effective interest rate, and corresponding interest expense are determined based on the Company’s estimate of future anticipated royalty payments under the arrangement.

These estimates are reassessed at the end of each reporting period according to the Company’s latest projections.

Should these estimated cash flows change as a result of this review, the Company will recalculate the effective interest rate and adjust the accretion of interest on the royalty obligation prospectively.

Any additional funding received from Royalty Pharma will also be treated as an obligation, with a prospective adjustment to the effective interest rate applied upon receipt of such funds.

Recent Accounting Pronouncements

12 unchanged sentences

The following table presents information about the Company’s assets and liabilities that are regularly measured and carried at fair value and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value (in thousands):

As of June 30, 2025

As of September 30, 2025

Total Carrying Value

8 unchanged sentences

Long-term investments:

Corporate debt securities

Government securities

As of December 31, 2024

8 unchanged sentences

Government securities

There have been no material impairments of our assets measured and carried at fair value as of June 30, 2025 and December 31, 2024.

In addition, there have been no changes in valuation techniques as of June 30, 2025 and December 31, 2024.

There have been no material impairments of our assets measured and carried at fair value as of September 30, 2025 and December 31, 2024.

In addition, there have been no changes in valuation techniques as of September 30, 2025 and

December 31, 2024.

The fair value of Level 1 instruments classified as money market funds and government securities are valued using quoted market prices in active markets.

The fair value of Level 2 instruments classified as short-term investments was determined using other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date and fair value is determined using models or other valuation methodologies.

During the six months ended June 30, 2025 and year ended December 31, 2024, there were no transfers between levels.

The short and long-term investments are classified as available-for-sales securities.

As of June 30, 2025, the remaining contractual maturities of the available-for-sales securities were 1 to 15 months , the balance in the Company’s accumulated other comprehensive income was comprised of activity related to the Company’s available-for-sale securities.

There were no realized gains or losses recognized on the sale or maturity of available-for-sale securities during the three and six months ended June 30, 2025 and 2024.

During the nine months ended September 30, 2025 and year ended December 31, 2024, there were no transfers between levels.

The short and long-term investments are classified as available-for-sale securities.

As of September 30, 2025, the remaining contractual maturities of the available-for-sale securities were 1 to 16 months , and the balance in the Company’s accumulated other comprehensive income was comprised of activity related to the Company’s available-for-sale securities.

There were no realized gains or losses recognized on the sale or maturity of available-for-sale securities during the three and nine months ended September 30, 2025 and 2024.

As a result, the Company did not reclassify any amounts out of accumulated other comprehensive income for the same period.

The Company had a limited number of available-for-sale securities in

insignificant loss positions as of June 30, 2025, which the Company does not intend to sell and has concluded it will not be required to sell before recovery of amortized cost for the investment maturity.

The Company had a limited number of available-for-sale securities in insignificant loss positions as of September 30, 2025, which the Company does not intend to sell and has concluded it will not be required to sell before recovery of amortized cost for the investment maturity.

The following table summarizes the available-for-sale securities (in thousands):

As of June 30, 2025

As of September 30, 2025

Amortized Cost

1 unchanged sentence

Gross Unrealized Losses

June 30, 2025

Commercial paper

5 unchanged sentences

Gross Unrealized Losses

December 31, 2024

Commercial paper

3 unchanged sentences

Other assets consisted of the following (in thousands):

June 30, 2025

September 30, 2025

December 31, 2024

Clinical trial deposits

Deferred offering costs

Total other assets

1 unchanged sentence

Accrued expenses consisted of the following (in thousands):

June 30, 2025

September 30, 2025

December 31, 2024

9 unchanged sentences

The minimum lease payments under the Company’s operating leases are expected to be as follows (in thousands):

2025 (remaining six months)

2025 (remaining three months)

Total future minimum lease payments

7 unchanged sentences

The Company is also entitled to receive one-time sales milestone payments up to $ 70.0 million upon BMS achieving certain net sales milestones in a given year in the BMS Territory.

The Company is also eligible to receive tiered high single-digit to low double-digit royalties on net sales in the BMS Territory, subject to specified reductions.

The Company is also

eligible to receive tiered high single-digit to low double-digit royalties on net sales in the BMS Territory, subject to specified reductions.

The Company will continue to perform and oversee the ongoing Phase 3 trial of obexelimab in the IgG4-RD indication and BMS will participate in the performance of the study.

2 unchanged sentences

The global development activities under the agreement do not represent a transaction with a customer and reimbursement payments received by the Company for global development activities are accounted for as a reduction of the related research and development expenses.

As of June 30, 2025 and 2024, the Company recorded $ 1.3 million and $ 1.2 million, respectively, as a receivable included in prepaid expenses and other current assets.

The Company recorded $ 1.3 million and $ 1.2 million for the three months ended June 30, 2025 and 2024, respectively, as a reduction to research and development expense for global development costs to be reimbursed by BMS.

The Company recorded $ 3.0 million and $ 2.2 million for the six months ended June 30, 2025 and 2024, respectively, as a reduction of research and development expense for global development costs to be

reimbursed by BMS.

The Company did no t recognize revenue related to the BMS Agreement during the three and six months ended June 30, 2025 and 2024.

As of September 30, 2025 and 2024, the Company recorded $ 1.3 million and $ 1.8 million, respectively, as a receivable included in prepaid expenses and other current assets.

The Company recorded $ 1.3 million and $ 1.8 million for the three months ended September 30, 2025 and 2024, respectively, as a reduction to research and development expense for global development costs to be reimbursed by BMS.

The Company recorded $ 4.2 million and $ 3.9 million for the nine months ended September 30, 2025 and 2024, respectively, as a reduction of research and development expense for global development costs to be reimbursed by BMS.

The Company did no t recognize revenue related to the BMS Agreement during the three and nine months ended September 30, 2025 and 2024.

Tenacia Biotechnology Co.

5 unchanged sentences

The Company is entitled to receive further development, regulatory and sales milestones from Tenacia of up to approximately $ 86.0 million if certain milestones are successfully achieved.

The Company did not recognize revenue related to the Tenacia Agreement during the six months ended June 30, 2025 and 2024.

The Company did not recognize revenue related to the Tenacia Agreement during the nine months ended September 30, 2025 and 2024.

License Agreement with Zai Lab (Hong Kong) Limited

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The Company will recognize such milestone and royalty revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

As of June 30, 2025, no milestones were achieved or deemed probable of achievement.

As of September 30, 2025, no milestones were achieved or deemed probable of achievement.

License Agreements

5 unchanged sentences

The Company is also obligated to reimburse Xencor for third-party costs incurred for certain patent filings, prosecution and maintenance as further specified in the 2020 Xencor Agreement.

During the six months ended June 30, 2025 and 2024, the Company incurred no such reimbursable costs.

During the nine months ended September 30, 2025 and 2024, the Company incurred no such reimbursable costs.

2021 Xencor Agreement

2 unchanged sentences

In addition, the Company is required to pay Xencor tiered royalties on annual net sales of successfully commercialized products utilizing obexelimab, with the royalty percentages varying based on regions and ranging from the mid-single digits to the mid-teens.

For the six months ended June 30, 2025 and 2024, the Company recorded no reimbursable patent-related costs.

For the nine months ended September 30, 2025 and 2024, the Company recorded no reimbursable patent-related costs.

License Agreement with Viridian Therapeutics, Inc.

3 unchanged sentences

Viridian retains its rights to develop and commercialize such product candidates outside of the Zenas Territories.

In December 2021, the Company and Viridian entered into two letter agreements to authorize initiation of certain manufacturing and development activities related to the licensed product candidate, ZB001.

December 2021, the Company and Viridian entered into two letter agreements to authorize initiation of certain manufacturing and development activities related to the licensed product candidate, ZB001.

Under the terms of the letter agreements, Viridian engaged a third-party contract manufacturer to initiate certain work related to ZB001.

4 unchanged sentences

For additional information on the Zai Agreement, please see License Agreement with Zai Lab (Hong Kong) Limited in Note 7 – License and Collaboration Revenue to these condensed consolidated financial statements.

During the three and six months ended June 30, 2025, the Company recognized no expense related to Viridian contract manufacturing organization (“CMO”) costs.

During the three and six months ended June 30, 2024, the Company recognized $ 0.1 million in expense related to Viridian CMO costs.

During the three and nine months ended September 30, 2025, the Company recognized no expense related to Viridian contract manufacturing organization (“CMO”) costs.

During the three and nine months ended September 30, 2024, the Company recognized no expense and $ 0.1 million in expense related to Viridian CMO costs, respectively.

Viridian has agreed to reimburse the Company for certain services the Company performs on Viridian’s behalf, with reimbursements being recorded as a reduction in research and development expenses.

During the three and six months ended June 30, 2025, the Company recorded an immaterial amount and $ 0.2 million in reimbursable expenses, respectively.

During the three and six months ended June 30, 2024, the Company recorded $ 1.0 million in reimbursable expenses.

Additionally, during the six months ended June 30, 2025 and 2024, no milestones were achieved.

In September 2024, upon the completion of the IPO, the Company restated its certificate of incorporation, pursuant to which the Company is authorized to issue 175,000,000 shares of $ 0.0001 par value common stock.

During the three and nine months ended September 30, 2025, the Company recorded an immaterial amount and $ 0.2 million in reimbursable expenses, respectively.

During the three and nine months ended September 30, 2024, the Company recorded $ 0.5 million and $ 1.5 million in reimbursable expenses, respectively.

Additionally, during the nine months ended September 30, 2025 and 2024, no milestones were achieved.

Royalty Obligation

In September 2025, the Company and Royalty Pharma entered into the Royalty Purchase Agreement.

Pursuant to the Royalty Purchase Agreement, the Company received a $ 75.0 million upfront payment in exchange for which Royalty Pharma purchased the right to receive, for each calendar quarter, (i) 5.5 % of net sales of obexelimab products sold by the Company and its affiliates worldwide, (ii) 5.5 % of net sales of obexelimab products sold by licensees of Zenas and its affiliates in the U.S., the United Kingdom and the European Union, (iii) 25 % of royalty income payable to Zenas or any of its affiliates on sales of obexelimab products in countries other than the U.S., the United Kingdom, and in the European Union by its licensees pursuant to out-licenses less royalty payments payable by Zenas to Xencor Inc.

and (iv) 25 % of non-royalty income attributable to obexelimab products payable to Zenas or any of its affiliates by its licensees (other than certain milestone payments payable by Bristol-Myers Squibb) pursuant to out-licenses and allocated to countries other than the U.S., the United Kingdom and in the European Union.

The Royalty Purchase Agreement provides for an additional $ 225.0 million of payments to be paid to the Company by Royalty Pharma upon the occurrence of certain triggering events which includes (1) $ 75.0 million payable upon the achievement of certain milestones with respect to Zenas’ INDIGO Phase 3 Trial of obexelimab for the treatment of patients with IgG4-Related Disease on or before a specified date, (2) $ 75.0 million payable following receipt of marketing approval for obexelimab from the U.S.

Food and Drug Administration (the “FDA”) for the treatment of IgG4-Related Disease on or before a specified date and (3) $ 75.0 million payable following receipt of marketing approval for obexelimab from the FDA for the treatment of systemic lupus erythematosus on or before a specified date.

The Company accounted for the Royalty Purchase Agreement as a debt financing, primarily because it has significant continuing involvement in generating the future revenue on which the royalty payments are based.

The $ 75.0 million upfront payment received was recorded as a liability, net of issuance costs of $ 3.7 million.

The effective interest rate was determined based on the Company’s projections of future royalty payments.

The Company will evaluate the estimated timing and amount of future royalty payments for each reporting period and will revise the effective interest rate prospectively if those estimates change materially.

The fair value of the liability approximates the carrying value and was determined based on the current estimate of the timing and amount of expected future royalty payments expected to be paid over the estimated term of the Royalty

Purchase Agreement, which are subject to significant estimation uncertainty and are based on various assumptions made by the Company.

These assumption inputs are determined to be Level 3 inputs in the fair value hierarchy as they involve significant unobservable inputs and judgment.

The following table shows the activity for the royalty obligation during the three and nine months ended September 30, 2025 (in thousands):

Proceeds from royalty obligation

Issuance costs

Interest expense related to royalty obligation

Royalty obligation as of September 30, 2025

Effective interest rate

The voting, dividend and liquidation rights of the holders of the Company’s common stock were subject to and qualified by the rights, powers and preference of the holders of any preferred stock then issued and outstanding.

1 unchanged sentence

The Company had reserved the following shares of common stock for the potential conversion of outstanding stock options:

June 30, 2025

September 30, 2025

December 31, 2024

7 unchanged sentences

In January 2025, the number of shares of common stock available for issuance under the Company’s 2024 Plan, was increased by 2,089,670 shares of common stock due to the automatic annual provision to increase shares of common stock available under the 2024 Plan.

As of June 30, 2025, 495,412 shares of common stock were available for issuance under the 2024 Plan.

As of September 30, 2025, 507,134 shares of common stock were available for issuance under the 2024 Plan.

Stock Options

7 unchanged sentences

The inducement grants are included in the stock option award tables below.

As of June 30, 2025, the Company granted 762,000 non-statutory stock options as inducement grants.

As of September 30, 2025, the Company granted 762,000 non-statutory stock options as inducement grants.

No inducement grants were awarded during 2024.

7 unchanged sentences

Forfeited or cancelled

Outstanding - June 30, 2025

Options vested and exercisable as of June 30, 2025

Options vested and expected to vest as of June 30, 2025

The aggregate intrinsic value of the stock options is calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock for those stock options that had an exercise price lower than the fair value of the Company’s common stock as of the measurement date of June 30, 2025.

Outstanding - September 30, 2025

Options vested and exercisable as of September 30, 2025

Options vested and expected to vest as of September 30, 2025

Restricted Stock Units

6 unchanged sentences

Unvested as of December 31, 2024

Unvested as of June 30, 2025

Unvested as of September 30, 2025

No RSUs vested during the current or prior year periods.

As of June 30, 2025, there was $ 88.1 million of unrecognized stock-based compensation related to unvested stock options, granted RSU’s and ESPP, which is expected to be recognized over a weighted-average period of 3.19 years.

As of September 30, 2025, there was $ 81.2 million of unrecognized stock-based compensation related to unvested stock options, granted RSU’s and the Employee Stock Purchase Plan (the “ESPP”), which is expected to be recognized over a weighted-average period of 3.0 years.

The Company recognized stock-based compensation expense related to the issuance of equity awards to employees and directors in the condensed consolidated statement of operations as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

4 unchanged sentences

The number of shares of common stock available under the ESPP will automatically increase on January 1st of each year, beginning on January 1, 2025 through January 1, 2034, by the number of shares equal to the lesser of (i) one percent of the aggregate number of shares of common stock outstanding as of such date, and (ii) a number of shares as may be determined by the Board on or prior to such date, up to a maximum of 1,000,000 shares in the aggregate per year.

On January 1, 2025, the number of shares of common stock authorized for issuance under the ESPP increased automatically by 417,934 shares and as of June 30, 2025, a total of 815,890 shares were available for future issuance under the ESPP.

There were no shares issued under the ESPP during the six months ended June 30, 2025.

On January 1, 2025, the number of shares of common stock authorized for issuance under the ESPP increased automatically by 417,934 shares and as of September 30, 2025, a total of 773,122 shares were available for future issuance under the ESPP.

During the three and nine months ended September 30, 2025, there were 42,768 shares issued under the ESPP.

Net Loss Per Share

1 unchanged sentence

Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

The Company excluded the following shares from the computation of diluted net loss per share attributable to common stockholders as of June 30, 2025 and 2024 because including them would have had an anti-dilutive effect:

Convertible preferred stock

The Company excluded the following shares from the computation of diluted net loss per share attributable to common stockholders as of September 30, 2025 and 2024 because including them would have had an anti-dilutive effect:

September 30,

Unvested restricted stock units

Unvested restricted stock

Options to purchase common stock

6 unchanged sentences

see Note 8, License Agreements , for details.

Royalty Obligation

The Company entered into a royalty purchase agreement under which it is obligated to make contingent payments related to future net sales and royalty income of obexelimab;

see Note 9, Royalty Obligation for details.

Other Contracts

1 unchanged sentence

Under such agreements, the Company is contractually obligated to make certain minimum payments to the vendors, with the exact amounts in the event of termination to be based on the timing of the termination and the exact terms of the agreement.

As of June 30, 2025, our total non-cancellable clinical manufacturing contract payment obligations are $ 20.6 million of which the full obligation is payable within 12 months.

As of September 30, 2025, our total non-cancellable clinical manufacturing contract payment obligations are $ 18.7 million of which the full obligation is payable within 12 months.

Indemnification Agreements

3 unchanged sentences

To date, the Company has not incurred any material costs as a result of such indemnifications.

The Company is not currently aware of any indemnification claims and had not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of June 30, 2025.

Litigation and Other Proceedings

The Company may periodically become subject to legal proceedings and claims arising in the ordinary course of business.

As of June 30, 2025, the Company was not subject to any material legal proceedings which would reasonably be expected to have a material adverse effect on the Company’s financial results.

As of September 30, 2025, the Company was not subject to any material legal proceedings which would reasonably be expected to have a material adverse effect on the Company’s financial results.

Related Party Transactions

2 unchanged sentences

In connection with the completion of the IPO, in September 2024, all outstanding shares of preferred stock converted into shares of common stock.

As of June 30, 2025, Xencor held less than 10 % of shares of the Company’s outstanding common stock.

As of September 30, 2025, Xencor held less than 10 % of shares of the Company’s outstanding common stock.

Viridian Therapeutics, Inc.

2 unchanged sentences

As initial consideration for this license, the Company issued 38,707 shares of its common stock to Viridian during the year ended December 31, 2020.

As of June 30, 2025, Viridian held 0.1 % of shares of the Company’s outstanding common stock.

As of September 30, 2025, Viridian held 0.1 % of shares of the Company’s outstanding common stock.

Zai Lab (Hong Kong) Limited

6 unchanged sentences

When evaluating the Company’s financial performance, the Company’s chief operating decision-maker (the “CODM”), its Chief Executive Officer regularly reviews consolidated net loss, total expense and direct expenses by program and compared to budget.

The CODM allocates resources based on the Company’s available cash resources, forecasted expenditures on a consolidated basis, as well as an assessment of the probability of success of its research and development activities on a program basis.

The CODM allocates resources based on the Company’s available cash resources, and forecasted expenditures on a consolidated basis, as well as an assessment of the probability of success of its research and development activities on a program basis.

Segment asset information regularly provided to the CODM is consistent with that reported on the consolidated balance sheets with particular emphasis on the Company’s available liquidity, including its cash, cash equivalents and investment balances.

Revenue is primarily attributed to individual countries based on the entity owning the license.

During the three months ended June 30, 2025, the Company did no t recognize revenue and for six months ended June 30, 2025, $ 10.0 million was recognized as revenue which was attributed to Zenas HK.

The Company did no t recognize revenue during the three or six months ended June 30, 2024.

The following table presents certain financial data for the Company’s reportable segment for the three and six months ended June 30, 2025 and 2024 (in thousands):

For the three months ended June 30,

For the six months ended June 30,

During the three months ended September 30, 2025, the Company did no t recognize revenue and for nine months ended September 30, 2025, $ 10.0 million was recognized as revenue which was attributed to Zenas HK.

The Company did no t recognize revenue during the three or nine months ended September 30, 2024.

The following table presents certain financial data for the Company’s reportable segment for the three and nine months ended September 30, 2025 and 2024 (in thousands):

For the three months ended

September 30,

For the nine months ended

September 30,

Direct research and development expenses:

3 unchanged sentences

General and administrative 3

Acquired in-process research and development

Stock-based compensation

5 unchanged sentences

4 Other segment items consist of other income (expense), net, and income tax benefit (provision).

Other income (expense), net consists of interest income and realized and unrealized gains and losses on foreign currency transactions .

Other income (expense), net consists of interest income, interest expense related to the royalty obligation and realized and unrealized gains and losses on foreign currency transactions .

Subsequent Events

License Agreement with InnoCare Pharma Inc.

In October 2025, the Company entered into a License Agreement (the “InnoCare License Agreement”) with InnoCare Pharma Inc.

(“InnoCare”).

Under the InnoCare License Agreement, InnoCare granted the Company exclusive rights to develop, manufacture, and commercialize:

i) orelabrutinib, in the multiple sclerosis (“MS”) field worldwide, and in all non-oncology indications outside Greater China and Brunei, Burma, Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam (“Southeast Asia”), ii) ZB021 (an IL-17AA/AF inhibitor) in all fields of use worldwide, excluding Greater China and Southeast Asia and iii) ZB022 (a TYK2 inhibitor) in all fields of use worldwide.

The Company also obtained certain non-exclusive rights to perform development and manufacturing activities in Greater China and Southeast Asia to support each program in its respective licensed territories.

Pursuant to the InnoCare License Agreement, the Company agreed to make a one-time non-refundable upfront cash payment of $ 35.0 million, $ 5.0 million of which was paid as of September 30, 2025, prior to the transaction closing and was recorded in the condensed consolidated statement of operations and comprehensive loss as acquired in-process research and development.

The Company also agreed to issue upfront, 5,000,000 shares of common stock to InnoCare in a private placement in exchange for these rights.

The Company is also required to make an additional one-time non-refundable cash payment of $ 25.0 million and issue an additional 2,000,000 shares of common stock through a private placement upon the occurrence of Zenas’ initiated Phase 3 clinical trial for orelabrutinib in any indication other than primary progressive MS, or by March 31, 2026, upon the occurrence of certain specified events, whichever comes first.

In addition, the Company has agreed to make one-time, potential near-term milestone payments of $ 20 million each, upon the achievement of certain regulatory milestones for ZB021 and ZB022 (the “Regulatory Milestones”).

The Company is further obligated to pay future regulatory and commercial milestones of up to $ 723.0 million related to orelabrutinib, and future development, regulatory, and commercial milestones of up to $ 656.0 million, inclusive of the two $ 20.0 million Regulatory Milestones specified above, for each preclinical compound if certain milestones are successfully achieved.

In addition, the Company may be obligated to pay royalties on net sales at rates ranging from high-single digits to high-teens for orelabrutinib, and mid-single digits to mid-teens for the preclinical compounds.

The Company is obligated to reimburse InnoCare approximately $ 4.0 million, for certain costs related to the acquired programs which were incurred prior to and after the effective date of the InnoCare License Agreement, including clinical trial startup costs and Investigational New Drug (“IND”) enabling activities.

The Company simultaneously entered into a Subscription Agreement and Registration Rights Agreement with InnoCare related to the shares of common stock issued and to be issued in the private placement.

The Subscription Agreement provides transfer restrictions on the InnoCare shares and other customary representations, warranties and covenants that were made solely for the benefit of the parties to the Securities Purchase Agreement.

In October 2025, the Company entered into a Securities Purchase Agreement and Registration Rights Agreement related to the PIPE transaction, pursuant to which the Company sold (i) 6,262,112 shares of common stock to certain institutional and accredited investors at a price of $ 19.00 per share and (ii) 48,918 shares of common stock to certain directors and officers of the Company at a price of $ 20.85 per share for gross proceeds of approximately $ 120.0 million, before deducting placement agent fees and other offering expenses.

At- the-Market (“ATM”) Program

In October 2025, the Company filed a registration statement on Form S-3 (the “Registration Statement”) with the SEC, which registered the offering, issuance and sale of common stock, preferred stock, warrants and debt securities, or any combination thereof, in an amount and on terms that the Company will determine at the time of the respective offering.

The Company simultaneously entered into a sales agreement with Jefferies LLC as sales agent to provide for the issuance and sale by the Company of up to $ 200.0 million of common stock from time to time in ATM offerings under the Registration Statement.

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 1. Financial Statements