What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-13 compared with 2025-11-12 · 181 added, 162 removed, 230 unchanged (60% of the section changed)

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The following information should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report and the audited financial information and the notes thereto included in our Annual Report on Form 10-K that was filed with the Securities and Exchange Commission, or SEC, on March 16, 2026.

This discussion and analysis contains forward-looking statements based upon current beliefs, plans, and expectations related to future events and our future performance that involves risks, uncertainties, and assumptions, such as statements regarding our intentions, plans, objectives, and expectations for our business.

Our actual results and the timing of events could differ materially from those discussed in these forward-looking statements as a result of several factors, including those set forth in the section titled “Risk Factors” in this Quarterly Report on Form 10-Q.

This discussion and analysis contain forward-looking statements based upon current beliefs, plans, and expectations related to future events and our future performance that involve risks, uncertainties, and assumptions, such as statements regarding our intentions, plans, objectives, and expectations for our business.

See also the section titled “Special Note Regarding Forward-Looking Statements.”

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We are developing obexelimab as a potential I&I franchise for patients in several autoimmune diseases, representing substantial commercial opportunities individually and in the aggregate.

The first three indications we are pursuing include IgG4-RD through an ongoing registration-directed Phase 3 trial (the “INDIGO” trial), systemic lupus erythematosus (“SLE”) through an ongoing Phase 2, double-blind, randomized, placebo-controlled trial (the “SunStone” trial), and relapsing multiple sclerosis (“RMS”) through an ongoing Phase 2, double-blind, randomized, placebo-controlled trial (the “MoonStone” trial).

On October 27, 2025, we announced topline data from the MoonStone trial.

We are conducting clinical trials in IgG4-RD through a registration-directed Phase 3 trial which reported topline data in January 2026, relapsing multiple sclerosis (“RMS”) through an ongoing Phase 2, double-blind, randomized, placebo-controlled trial which reported topline data in October 2025 and systemic lupus erythematosus (“SLE”) through an ongoing Phase 2, double-blind, randomized, placebo-controlled trial, for which we expect to report topline results, including biomarker data, in the fourth quarter 2026.

In January 2026, we reported positive results from the Phase 3 trial of obexelimab in patients with IgG4-RD.

Obexelimab met the primary endpoint, demonstrating a highly statistically significant and clinically meaningful 56% reduction in the risk of IgG4-RD flare compared to placebo (Hazard Ratio 0.44, p=0.0005) and also met and demonstrated highly statistically significant activity compared to placebo on all four key secondary endpoints.

Obexelimab was well tolerated with a safety profile consistent with that observed in previously completed clinical trials.

Based on these results, we plan to submit the obexelimab Biologics License Application to the FDA for the treatment of IgG4-RD in the second quarter of 2026.

We also intend to submit a Marketing Authorization Application to the European Medicines Agency in the second half of 2026.

In October 2025, we announced topline data from the MoonStone trial.

Obexelimab met the primary endpoint, demonstrating a statistically significant 95% relative reduction in the cumulative number of new gadolinium-enhancing T1 hyperintense lesions, which are markers of active inflammation, over week 8 and week 12 compared with placebo (p=0.0009).

The Company expects to report 24-week data from the MoonStone trial in the first quarter of 2026, which will include additional secondary and exploratory endpoints.

In February 2026, we reported the 24-week data from the MoonStone trial which confirmed the reductions in new gadolinium enhancing (“GdE”) T1 hyperintense lesions observed with obexelimab over weeks 8 and 12 were maintained through week 24;

unadjusted mean of new lesions per scan were 0.87 at baseline, 0.08 at week 12 and 0.04 at week 24 for obexelimab indicating a 95% reduction.

The 24-week data from additional secondary and exploratory endpoints may inform obexelimab’s potential impact on disability progression and help the Company determine next steps for future development of obexelimab in RMS.

In the fourth quarter of 2024, we completed the target enrollment of the INDIGO trial and expect to report topline results from the INDIGO trial around year-end 2025.

If the topline results are positive, we expect to file a Biologics License Application (“BLA”) with the U.S.

Food and Drug Administration (“FDA”) in the first half of 2026, followed by a Marketing Authorization Application with the European Medicines Agency (“EMA”), and, if approved, commence the commercial launch initially in the U.S.

and then in Europe.

We expect to report topline results from the SunStone trial in mid-2026.

As we continue to evaluate the MoonStone data and consider next steps for clinical development in this indication, we will consider, among other items, the evolving treatment landscape in RMS, including existing therapies, current pivotal trial endpoints and prioritization of capital.

In April 2026, we completed enrollment in the SunStone trial and expect to report topline results, including biomarker data, in the fourth quarter of 2026.

Based on the outcome of the SunStone trial, and considering other factors, we may initiate a Phase 3 program in patients with SLE in the first half of 2027.

On October 7, 2025, we entered into a License Agreement with InnoCare Pharma Inc.

pursuant to which we were granted exclusive rights to develop, manufacture, and commercialize orelabrutinib, a Bruton’s Tyrosine Kinase inhibitor (“BTK”),

for multiple sclerosis worldwide, and in all non-oncology indications worldwide excluding mainland China, Hong Kong, Macau and Taiwan (“Greater China”), and Brunei, Burma, Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam (“Southeast Asia”), as well as two early-development product candidates:

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

(“InnoCare”).

pursuant to which we were granted exclusive rights to develop, manufacture, and commercialize orelabrutinib, a Bruton’s Tyrosine Kinase inhibitor (“BTK”), for multiple sclerosis (“MS”) worldwide, and in all non-oncology indications worldwide excluding mainland China, Hong Kong, Macau and Taiwan (“greater China”), and Brunei, Burma, Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam (“Southeast Asia”), as well as two early-development product candidates:

ZB021, an IL-17AA/AF inhibitor, in all fields of use worldwide excluding greater China and Southeast Asia, and ZB022, a TYK2 inhibitor, in all fields of use worldwide.

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We believe orelabrutinib is designed to efficiently cross the blood-brain barrier, reaching therapeutic levels within the CNS to directly target inflammation in diseases like MS.

In September 2025, the Phase 3 clinical trial of orelabrutinib in patients with Primary Progressive Multiple Sclerosis (“PPMS”) was initiated.

The Phase 3 trial of orelabrutinib in patients with PPMS is a global, multicenter, randomized, double-blind, placebo-controlled clinical trial evaluating the safety and efficacy of orelabrutinib dosed 80 mg once daily (“QD”) compared to placebo in patients with PPMS, with a primary endpoint of time to onset of 12-week composite confirmed disability progression (“cCDP”).

In the first quarter of 2026, we plan to initiate a second global, Phase 3, multicenter, randomized, double-blind, placebo-controlled clinical trial evaluating orelabrutinib dosed 80 mg QD compared to placebo in patients with Secondary Progressive Multiple Sclerosis (“SPMS”), with a primary endpoint of time to onset of 24-week CDP.

In September 2025, the Phase 3 PriMroSe trial of orelabrutinib in patients with primary progressive multiple sclerosis (“PPMS”) was initiated.

The PriMroSe trial is a global, multicenter, randomized, double-blind, placebo-controlled clinical trial evaluating the safety and efficacy of orelabrutinib dosed 80 mg once daily (“QD”) compared to placebo in patients with PPMS, with a primary endpoint of time to onset of 12-week composite confirmed disability progression.

In March of 2026, we initiated a second global, Phase 3, multicenter, randomized, double-blind, placebo-controlled clinical trial evaluating orelabrutinib dosed 80 mg QD compared to placebo in patients with non-active secondary progressive multiple sclerosis (“naSPMS”), with a primary endpoint of time to onset of 24-week CDP.

ZB021 is an oral IL-17AA/AF inhibitor designed to block both IL-17AA homodimer and IL-17AF heterodimer signaling.

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ZB021 achieved comparable activity in vivo to a reference anti-IL-17 biologic in a rat CIA model.

Subject to the results of Investigational New Drug (“IND”)-enabling studies, we expect to submit an IND application for ZB021, and if cleared, initiate a Phase 1 clinical study in 2026.

We, along with our partner, InnoCare, initiated a Phase 1 clinical study in the second quarter of 2026.

ZB022 is an oral, brain-penetrant TYK2-JH2 inhibitor, currently in IND-enabling studies.

Subject to the results of IND-enabling studies, we expect to submit an IND application for ZB022, and if cleared, initiate a Phase 1 clinical study in 2026.

Beyond our lead product candidates, we have two other programs for the potential treatment of other I&I indications that we may continue to advance and ultimately commercialize with partners.

Subject to the results of Investigational New Drug (“IND”) enabling studies, we expect to initiate a Phase 1 clinical study in 2027.

We are also advancing ZB014, a half-life extended anti-CD-19 and FcγRIIb monoclonal antibody, currently in IND-enabling studies.

Subject to the results of IND-enabling studies, we expect to initiate a Phase 1 clinical study in 2027.

In addition, we have two other programs for the potential treatment of other I&I indications that we may continue to advance and ultimately commercialize with partners.

These consist of ZB002 and ZB004.

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In addition, we hold the development and commercialization rights to one regional program, ZB001, and related programs, which were exclusively sublicensed to a partner in China, as discussed below.

On September 16, 2024, we completed our initial public offering (“IPO”) in which we issued and sold an aggregate of 15,220,588 shares of our common stock, including 1,985,294 shares of common stock sold pursuant to the full exercise of the underwriter’s option to purchase additional shares, at a public offering price of $17.00 per share, for aggregate gross proceeds of $258.7 million.

We received $234.3 million in net proceeds after deducting underwriting discounts, commissions and other offering expenses.

On October 21, 2024, we entered into the Novation Agreement with Tenacia, under which we transferred our rights and obligations under our agreements with Dianthus to Tenacia for ZB005.

In September 2024, we completed our initial public offering (“IPO”) in which we issued and sold an aggregate of 15,220,588 shares of our common stock, including 1,985,294 shares of common stock sold pursuant to the full exercise of the underwriter’s option to purchase additional shares, at a public offering price of $17.00 per share, for aggregate gross proceeds of $258.7 million.

We received $234.3 million in net proceeds after deducting underwriting discounts, commissions and other offering costs.

In October 2024, we entered into the Novation Agreement with Tenacia Biotechnology (Hong Kong) Limited (“Tenacia”), under which we transferred our rights and obligations under our agreements with Dianthus to Tenacia for ZB005.

As partial consideration for the Tenacia Agreement, we received a non-creditable, non-refundable upfront fee of $5.0 million from Tenacia.

In addition, we are eligible to receive up to $86.0 million upon the achievement of certain future regulatory and commercial milestones.

On January 24, 2025, the Company entered into the Zai License Agreement, with Zai, under which the Company granted Zai an exclusive sublicense to develop and commercialize ZB001 and related programs in greater China.

As partial consideration for the Zai License Agreement, the Company received an upfront fee of $10.0 million from Zai.

In addition, the Company is eligible to receive up to $96.0 million upon the achievement of certain future development and commercial milestones and royalty percentage rates from the low to mid-single digits, net of pass-through obligations due to Viridian.

On September 2, 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”), pursuant to which

Royalty Pharma purchased the right to receive, for each calendar quarter, (i) 5.5% of net sales of obexelimab products sold by Zenas 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.

In January 2025, we entered into the Zai License Agreement, with Zai Lab (Hong Kong) Limited (“Zai”), under which we granted to Zai an exclusive sublicense to develop and commercialize ZB001 and related programs in greater China.

As partial consideration for the Zai License Agreement, we received an upfront fee of $10.0 million from Zai.

In addition, we are eligible to receive up to $96.0 million upon the achievement of certain future development and commercial milestones and royalty percentage rates from the low to mid-single digits, net of pass-through obligations due to Viridian.

In September 2025, we entered into the Revenue Participation Right and Sales Agreement (the “Royalty Purchase Agreement”), with Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”), pursuant to which Royalty Pharma purchased the right to receive, for each calendar quarter, (i) 5.5% of net sales of obexelimab products sold by us and our affiliates worldwide, (ii) 5.5% of net sales of obexelimab products sold by licensees of us and our affiliates in the U.S., the United Kingdom and the European Union, (iii) 25% of royalty income payable to us or any of our 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 us to Xencor Inc.

and (iv) 25% of non-royalty income attributable to obexelimab products payable to us or any of our 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.

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

(“InnoCare”), under which InnoCare granted to us the exclusive rights to develop, manufacture, and commercialize:

i) orelabrutinib, in the MS field worldwide, and in all non-oncology indications outside greater China and Southeast Asia, ii) ZB021 in all fields of use worldwide, excluding greater China and Southeast Asia and iii) ZB022 in all fields of use worldwide.

We also obtained certain non-exclusive rights to perform development and manufacturing activities in greater China and Southeast Asia.

As consideration for the InnoCare License Agreement, we made a non-refundable upfront payment of $35.0 million.

We also issued 5,000,000 shares of common stock to InnoCare in a private placement, and we may be required to issue an additional 2,000,000 shares of common stock in a private placement, upon the occurrence of our initiation of a Phase 3 clinical trial for orelabrutinib in any indication other than PPMS.

We are 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 $656.0 million.

In addition, we 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.

Since inception, our operations have focused on research and development activities with respect to our product candidates as described above, as well as raising capital, business planning, organizing and staffing our company, establishing our intellectual property portfolio, establishing arrangements with third parties for the manufacture of our product candidates and related raw materials, and providing general and administrative support for these operations.

Through September 30, 2025, we have financed our operations primarily with the proceeds from the issuance of convertible preferred stock, our convertible notes, payments received under our license and collaboration agreements and from the sale of common stock in our IPO completed in September 2024.

Additionally, on October 9, 2025, we closed our private investment in public equity (“PIPE”) of 6,311,030 shares of common stock for gross proceeds of approximately $120.0 million, before deducting placement agent fees and other expenses.

We have financed our operations to date primarily with the proceeds from the issuance of convertible preferred stock, convertible senior notes, from the sale of common stock in our IPO completed in September 2024, private and public equity offerings, as well as from payments received under our license, collaboration and royalty purchase agreements and the senior secured term loan with Pharmakon Advisors, LP (“Pharmakon”).

In October 2025, we closed our private investment in public equity (“PIPE”) of 6,311,030 shares of common stock for net proceeds of approximately $111.8 million, after deducting agent fees and other offering costs.

Additionally, in October 2025, we entered into a sales agreement with Jefferies LLC (“Jefferies”) under which we may, from time to time, issue and sell shares of our common stock having aggregate sales

proceeds of up to $200.0 million, in a series of one or more at-the-market (“ATM”) equity offerings (“2025 ATM Program”).

For the three months ended March 31, 2026, we sold 2,827,723 shares of common stock under the 2025 ATM Program, with proceeds of $71.5 million, net of commissions.

As of March 31, 2026, $96.8 million remained available under the 2025 ATM Program.

Further in March 2026, we entered into the Loan Agreement with the Collateral Agent, BPCR Limited Partnership and BioPharma Credit Investments V (Master) LP, which are funds managed by Pharmakon, providing for up to a $250.0 million term loan facility consisting of several tranches of loans that will become available upon the achievement of certain milestones.

We have incurred significant operating losses and negative cash flows since inception.

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates.

Our net losses for the three and nine months ended September 30, 2025 were $51.5 million and $137.3 million, respectively, and we recorded net loss of $38.6 million and $104.4 million, for the three and nine months ended September 30, 2024.

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

Our net losses for the three months ended March 31, 2026 and 2025 were $81.0 million and $33.6 million, respectively.

As of March 31, 2026, we had an accumulated deficit of $846.1 million.

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

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● identify additional product candidates and acquire rights from third parties to those product candidates through licenses or acquisitions and conduct development activities, including preclinical studies and clinical trials;

● make royalty, milestone or other payments under current, and any future, license or collaboration agreements;

● make royalty, milestone or other payments under current, and any future, license, synthetic royalty or collaboration agreements;

● make payments under current, and any future, secured term loans and convertible senior notes.

● procure the manufacturing of preclinical, clinical and commercial supply of our current or any future product candidates;

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● establish agreements with contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”);

● incur additional costs associated with being a public company, including audit, legal, regulatory, and tax-related services associated with maintaining compliance with an exchange listing and the SEC requirements, director and officer insurance premiums and investor relations costs.

● incur additional costs associated with being a public company, including audit, legal, regulatory, and tax-related services associated with maintaining compliance with an exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for a product candidate, and we cannot assure investors that we will ever generate significant revenue or profits.

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If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

We had $301.6 million in cash, cash equivalents and investments as of September 30, 2025.

Based on our current operating plans, including $120.0 million of gross proceeds from the PIPE received in October 2025 ( Note 16, Subsequent Events ), we expect that our existing cash, cash equivalents and investments will be sufficient to fund our capital and operating expenditures into the fourth quarter of 2026, however it will not be sufficient to fund our operations and capital expenditure requirements for at least twelve months from the date our condensed consolidated financial statements are issued and accordingly have concluded that there is substantial doubt with respect to our ability to continue as a going concern.

Our financial statements do not include any adjustments or changes in classification of assets or liabilities that may result from our possible inability to continue as a going concern.

However, we expect to finance our operations through private or public equity financing, debt financing or other capital resources.

As of March 31, 2026, we had $718.5 million in cash, cash equivalents and investments.

We expect that our existing cash, cash equivalents and investments will be sufficient to fund our capital and operating expenditures for at least twelve months from the date of the issuance of these unaudited condensed consolidated financial statements.

We estimate that our existing cash, cash equivalents and investments will be sufficient to fund our projected operations and capital expenditure requirements into 2029.

Assuming receipt of the potential $75 million milestone payment from Royalty Pharma and combined $75 million from the Term Loans associated with achieving FDA marketing approval of obexelimab for IgG4-RD, the Company expects that its cash, cash equivalents and investments will fund its operating expenses and capital expenditure requirements at least through the second quarter of 2029.

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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Significant Risks and Uncertainties

The current geopolitical, trade, regulatory and economic environment, including, but not limited to the imposition of new tariffs or increases in tariff rates and other trade measures, may materially affect our business and operating results by increasing the costs of our clinical trial materials and supplies, which in turn increase our overhead costs.

The current geopolitical, trade, regulatory and economic environment, including, but not limited to imposition of new tariffs or increases in tariff rates and other trade measures, may materially affect our business and operating results by increasing the costs of our clinical trial materials and supplies, which in turn increase our overhead costs.

Additionally, the ongoing recession risk together with the foregoing, could result in further economic uncertainty and volatility in the capital markets in the near term and, as a result could negatively affect our operations.

Furthermore, such economic conditions have produced downward pressure on share prices.

Such economic conditions could increase our operating costs, including our labor costs and research and development costs.

Such economic conditions could increase our operating

costs, including our labor costs and research and development costs.

For example, we import drug products and other components from and into China for use in the manufacturing process and in our clinical studies, and such components and products are subject to tariffs, which we anticipate will result in increased costs.

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License and Collaboration Revenue

License and collaboration revenue is generated from our BMS Agreement, our Tenacia Agreement and our Zai License Agreement.

License and collaboration revenue may be generated from milestones achieved under our BMS Agreement, our Tenacia Agreement and our Zai License Agreement.

Pursuant to the BMS Agreement, we sublicensed the rights to develop and commercialize obexelimab in Japan, South Korea, Taiwan, Singapore, Hong Kong and Australia (the “BMS Territory”).

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For a more detailed description of these agreements, see Note 7, License and Collaboration Revenue, to our condensed consolidated financial statements in this Quarterly Report.

For a more detailed description of these agreements, see Note 7, License and Collaboration Revenue, to our unaudited condensed consolidated financial statements in this Quarterly Report.

Operating Expenses

Our operating expenses consist of (i) research and development expenses, and (ii) general and administrative expenses.

Our operating expenses consist of (i) research and development expenses, (ii) general and administrative expenses and (iii) acquired in-process research and development expenses.

Research and Development Expenses

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We do not track internal costs on a program specific or stage of program basis because these costs are deployed across multiple programs and, as such, are not separately classified.

Where we share costs with our collaboration partners, such as in our BMS Agreement, research and development expenses may include cost sharing reimbursements from our partner.

Where we share costs with our collaboration partners, such as in our BMS Agreement, research and development expenses may include cost sharing reimbursements from our partners.

Research and development activities are central to our business model.

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Product candidates in later stages of clinical development will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials and additional manufacturing activities.

There are numerous factors associated with the successful development and commercialization of any product candidates we may develop, including the safety and efficacy of our product candidates, investment in our clinical programs, manufacturing capability and competition with other products, and future commercial and regulatory factors beyond our control that will impact our clinical development program and plans.

There are numerous factors associated with

the successful development and commercialization of any product candidates we may develop, including the safety and efficacy of our product candidates, investment in our clinical programs, manufacturing capability and competition with other products, and future commercial and regulatory factors beyond our control that will impact our clinical development program and plans.

The successful development of our current product candidates, or any product candidates we may develop in the future is highly uncertain.

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● obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;

● our ability to hire additional personnel and consultants as our business grows, including additional executive officers and clinical development, regulatory, chemistry, manufacturing, and controls (“CMC”), quality and commercial personnel;

● commercializing product candidates, if approved, whether alone or in collaboration with others;

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Any changes in the outcome of any of these variables with respect to the development of our current product candidates or any future product candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates.

For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently anticipate would be required for the completion of clinical development, or if we experience significant delays in enrollment in any clinical trials following the FDA’s acceptance and clearance of an IND, we could be required to expend significant additional financial resources and time to complete clinical development than we currently expect.

For example, if the Food and Drug Administration (“FDA”) or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently anticipate would be required for the completion of clinical development, or if we experience significant delays in enrollment in any clinical trials following the FDA’s acceptance and clearance of an IND, we could be required to expend significant additional financial resources and time to complete clinical development than we currently expect.

We may never obtain regulatory approval for any product candidates that we develop.

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In addition, if we obtain regulatory approval for our current product candidates or any product candidates we may develop in the future and do not enter into a third-party commercialization collaboration, we expect to incur significant expenses related to building a sales and marketing team to support product sales, marketing and distribution activities.

We will also incur pre-commercialization expenses to facilitate commercial readiness, if a product candidate is approved.

Acquired In-Process Research and Development Expense

We will also incur pre-commercialization expenses to facilitate commercial readiness, as we prepare for a potential product candidate approval.

Acquired In-Process Research and Development Expenses

We expense acquisition costs for assets purchased for use in research and development activities that have no alternative future use as in-process research and development (“IPR&D”) expenses as of the acquisition date.

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We measure and recognize contingent consideration in the period in which the related milestone is achieved and becomes payable.

Total Other Income (Expense), Net

Other Income (Expense), Net

Other income (expense), net primarily consists of interest income generated from cash equivalents and investments and realized and unrealized gains and losses on foreign currency transactions and interest expense related to our royalty obligation.

Certain agreements may require the payment of milestones in shares of our common stock, which if determined not to be a derivative or liability are recognized as acquired IPR&D expense and a component of equity based on the fair value of the shares at execution.

Total Other (Expense) Income, Net

Other (Expense) Income, Net

Other (expense) income, net primarily consists of interest expense related to our royalty obligation, our senior secured term loan and our convertible senior notes, income generated from cash equivalents and investments as well as realized and unrealized gains and losses on foreign currency transactions.

Since our inception, we have not recorded income tax benefits for any of our deferred tax assets, including the net operating losses (“NOLs”) incurred or the research and development tax credits generated in each year, as we have concluded that it is more likely than not that these deferred tax assets will not be realized.

Results of Operations

Comparison of the Three Months Ended September 30, 2025 and 2024

The following table summarizes our results of operations for each of the periods presented (in thousands):

Three Months Ended September 30,

Increase (Decrease)

Operating expenses:

Research and development

General and administrative

Acquired in-process research and development

Total operating expenses

Loss from operations

Other income (expense), net:

Other income, net

Total other income (expense), net

Research and Development Expenses

The following table summarizes our research and development expenses for each of the periods presented (in thousands):

Three Months Ended September 30,

Increase (Decrease)

Direct research and development expenses by program:

Other programs (ZB002 & ZB004)

Partnered regional programs (ZB001 & ZB005)

Unallocated research and development expenses:

Personnel expenses (including stock-based compensation)

Other expenses

Total research and development expenses

Research and development expenses were $34.4 million for the three months ended September 30, 2025, compared to $33.5 million for the three months ended September 30, 2024.

The increase of $0.9 million was primarily attributable to

the following:

● a $0.6 million decrease in costs related to the development of obexelimab, our lead product candidate, primarily driven by a $3.6 million decrease in manufacturing costs for clinical trial materials and partially offset by a $2.8 million increase in clinical trial and regulatory costs;

● a $2.2 million decrease in costs related to our partnered regional programs, including a $1.9 million decrease related to ZB005 and a $0.3 million decrease related to ZB001, as a result of transitioning these programs to Tenacia and Zai, respectively;

● a $3.4 million increase in personnel costs, including a $2.2 million increase in salary and benefit related expense, primarily due to an increase in headcount, a $1.1 million increase in stock-based compensation expense, and a $0.1 million increase in external contractor expenses and other personnel costs.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for each of the periods presented (in thousands):

Three Months Ended September 30,

Increase (Decrease)

Personnel related expenses (including stock-based compensation)

Legal and professional fees

Other expenses

Total general and administrative expenses

General and administrative expenses were $13.2 million for the three months ended September 30, 2025, compared to $7.5 million for the three months ended September 30, 2024.

The increase of $5.7 million was primarily attributable to the following:

a $3.9 million increase in personnel costs, including a $3.3 million increase in stock-based compensation expense, and a $0.7 million increase in salary and benefit related expenses, primarily due to an increase in headcount associated with pre-commercialization activities partially offset by a $0.1 million decrease in contractor-related expenses.

a $1.1 million increase in professional fees, including legal, audit and tax expenses, primarily attributable to operating as a public company;

a $0.7 million increase in facilities and other expenses, primarily attributable to facility, insurance and other variable costs related to operating as a public company.

Acquired In-Process Research and Development

Acquired in-process research and development was $5.0 million for the three months ended September 30, 2025 related to a deposit paid toward the $35.0 million upfront payment for the exclusive rights to develop and manufacture product candidates under the License Agreement with InnoCare.

Total Other Income (Expense), Net

Total other income (expense), net was $1.1 million for the three months ended September 30, 2025, was due to an increase in interest income related to our cash equivalents and investments, partially offset by interest expense related to our royalty obligation.

Comparison of the Nine Months Ended September 30, 2025 and 2024

Comparison of the Three Months Ended March 31, 2026 and 2025

The following table summarizes our results of operations for each of the periods presented (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Increase (Decrease)

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General and administrative

Acquired in-process research and development

Total operating expenses

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Other income (expense), net:

Fair value adjustments to convertible notes

Other income, net

Total other income (expense), net

Interest expense on royalty obligation

Interest expense on senior secured term loan

Interest income

Other (expense) income, net

Total other (expense) income, net

Loss before income taxes

Income tax benefit

For the nine months ended September 30, 2025, revenue increased $10.0 million, compared to the same period in 2024.

The increase is related to the one-time non-refundable upfront cash payment under the Zai License Agreement that was recognized upon delivery of the license and related technology transfer.

We did not recognize any license and collaboration revenue during the nine months ended September 30, 2024.

Income tax provision

For the three months ended March 31, 2026, we did not recognize any revenue.

For the three months ended March 31, 2025, we recognized revenue of $10.0 million related to the one-time non-refundable upfront cash payment under the Zai License Agreement that was recognized upon delivery of the license and related technology transfer.

Research and Development Expenses

The following table summarizes our research and development expenses for each of the periods presented (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Increase (Decrease)

Direct research and development expenses by program:

Other programs (ZB002 & ZB004)

Orelabrutinib

Other programs (ZB002, ZB004, ZB014, ZB021 & ZB022)

Partnered regional programs (ZB001 & ZB005)

Unallocated research and development expenses:

Personnel expenses (including stock-based compensation)

Personnel related expenses (including stock-based compensation)

Other expenses

Total research and development expenses

Research and development expenses were $112.3 million for the nine months ended September 30, 2025, compared to $90.0 million for the nine months ended September 30, 2024.

Research and development expenses were $60.4 million for the three months ended March 31, 2026, compared to $34.9 million for the three months ended March 31, 2025.

The increase of $25.5 million was primarily attributable to the following:

● a $17.6 million increase in costs related to the development of obexelimab, our lead product candidate, primarily driven by a $11.2 million increase in clinical trial and regulatory costs and a $5.6 million increase in manufacturing costs for clinical trial materials;

● a $6.2 million decrease in costs related to our partnered regional programs, including a $4.6 million decrease related to ZB005 and a $1.6 million decrease related ZB001, as a result of transitioning these programs to Tenacia and Zai, respectively;

● a $11.3 million increase in personnel costs, including a $7.2 million increase in salary and benefit related expenses, primarily due to an increase in headcount, a $3.7 million increase in stock-based compensation expense, and a $0.4 million increase in external contractor expenses and other personnel costs.

● a $8.3 million increase in costs related to the development of obexelimab, our lead product candidate, driven by a $4.4 million increase in manufacturing costs for clinical trial materials and a $3.9 million increase in clinical trial, development and regulatory costs;

● a $10.1 million increase in costs related to the development of orelabrutinib, driven by clinical trial and regulatory costs;

● a $5.8 million increase in personnel costs, including a $3.9 million increase in salary and benefit related expense, due to an increase in headcount, a $1.5 million increase in stock-based compensation expense, and a $0.4 million increase in external contractor expenses and other personnel costs.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for each of the periods presented (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Increase (Decrease)

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Legal and professional fees

Other expenses

Facilities and other expenses

Total general and administrative expenses

General and administrative expenses were $37.7 million for the nine months ended September 30, 2025, compared to $18.3 million for the nine months ended September 30, 2024.

General and administrative expenses were $16.9 million for the three months ended March 31, 2026, compared to $12.4 million for the three months ended March 31, 2025.

The increase of $4.5 million was primarily attributable to the following:

a $14.3 million increase in personnel costs, primarily including a $9.7 million increase in stock-based compensation expense, a $4.4 million increase in salary and benefit related expense, primarily due to an increase in headcount

associated with pre-commercialization activities, a $0.6 million increase in recruiting expense partially offset by a $0.4 million decrease in contractor-related expenses;

a $2.5 million increase in professional fees, including legal, audit and tax expenses, primarily attributable to operating as a public company;

a $2.6 million increase in facilities and other expenses, primarily attributable to facility, insurance and other variable costs related to operating as a public company.

Acquired In-Process Research and Development

Acquired in-process research and development was $5.0 million for the nine months ended September 30, 2025, related to a deposit paid toward the $35.0 million upfront payment for the exclusive rights to develop and manufacture product candidates under the License Agreement with InnoCare.

Total Other Income (Expense), Net

Total other income (expense), net was $7.6 million for the nine months ended September 30, 2025, was due to an increase in interest income related to our cash equivalents and investments, partially offset by interest expense related to our royalty obligation.

● a $3.9 million increase in personnel costs, including a $2.3 million increase in stock-based compensation expense, a $1.7 million increase in salary and benefit related expense, primarily due to an increase in headcount to support pre-commercialization efforts, and a $0.2 million increase in external contractor expenses and other personnel

costs, offset by a $0.3 million decrease in recruiting expense;

● a $1.5 million increase in legal and professional fees, including consulting, audit and tax expenses, primarily attributable to company growth and continued operations as a public company.

Total Other (Expense) Income, Net

For the three months ended March 31, 2026, total other (expense) income, net was $3.6 million of expense, compared to $3.6 million of income for the three months ended March 31, 2025.

The change of $7.2 million is primarily related to an increase in interest expense of $6.6 million related to our royalty obligation and senior secured term loan, partially offset by interest income related to higher cash, cash equivalents and investments balances.

Liquidity and Capital Resources

We have incurred significant operating losses since inception.

We have not yet commercialized any product candidates, and we do not expect to generate revenue from sales of any product candidates or from other sources for several years, if at all.

As of September 30, 2025, we had $301.6 million in cash, cash equivalents, and investments and we had an accumulated deficit of $524.7 million.

Additionally, on October 9, 2025, we closed a PIPE of 6,311,030 shares of common stock for gross proceeds of approximately $120.0 million, before deducting placement fees and other expenses.

Through September 30, 2025, we have funded our operations primarily with gross proceeds of $358.0 million through the sale and issuance of our preferred stock, our convertible notes, as well as $65.0 million through our BMS Agreement, Tenacia Agreement and Zai Agreement, collectively, $75.0 million through our Royalty Purchase Agreement, and from the sale of common stock in our IPO for which we received $234.3 million in net proceeds, after deducting underwriting discounts, commissions and other offering expenses.

We have not yet commercialized any product candidates, and we do not expect to generate revenue from sales of any product candidates or from other sources until 2027 at the earliest, if at all.

As of March 31, 2026, we had $718.5 million in cash, cash equivalents, and investments and we had an accumulated deficit of $846.1 million.

Through March 31, 2026, we have funded our operations primarily with gross proceeds of $358.0 million through the sale and issuance of preferred stock and convertible notes, net proceeds from the sale of common stock of $234.3 million after deducting underwriting discounts, commissions and other offering costs from our IPO, $111.8 million, after deducting placement fees and other offering costs from our PIPE offering, $100.1 million, after deducting commissions and other offering costs from our 2025 ATM Program, $287.3 million, after deducting commissions and issuance costs from our current convertible notes and equity offering, as well as $65.0 million from our BMS Agreement, Tenacia Agreement and Zai License Agreement, collectively, $71.3 million after deducting issuance cost, from our Royalty Purchase Agreement and $72.0 million from the first tranche under our debt arrangement with Pharmakon after deducting discounts and issuance costs.

Future Funding Requirements:

We expect that our available cash, cash equivalents and investments, as of September 30, 2025, together with the $120.0 million of gross proceeds from the PIPE received in October 2025 ( Note 16, Subsequent Events ), will be sufficient to fund our operating and capital expenditures into the fourth quarter of 2026, however it will not be sufficient to fund our operations and capital expenditure requirements for at least the next 12 months from the filing of this Quarterly Report and accordingly have concluded that there is substantial doubt with respect to our ability to continue as a going concern.

Our financial statements do not include any adjustments or changes in classification of assets or liabilities that may result from our possible inability to continue as a going concern.

However, we expect to finance our operations through private or public equity financing, debt financing or other capital resources.

We expect that our available cash, cash equivalents and investments, as of March 31, 2026, will be sufficient to fund our capital and operating expenditures for at least the next twelve months from the date of the issuance of this Quarterly Report on Form 10-Q.

We estimate that our existing cash, cash equivalents and investments will be sufficient to fund our projected operations and capital expenditure requirements into 2029.

Our primary uses of capital are, and we expect to continue to be, third-party clinical research and development services, manufacturing costs, compensation and related expenses, legal and other regulatory expenses and general overhead costs.

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Additionally, the process of testing drug candidates in clinical trials is costly, and the timing of progress in these trials is uncertain.

We cannot estimate the actual amounts necessary to successfully complete the development and

commercialization of our product candidates or whether, or when, we may achieve profitability.

We cannot estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates or whether, or when, we may achieve profitability.

Our future funding requirements will depend on, and could increase significantly as a result of, many factors, including:

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● the costs of establishing and maintaining arrangements with third-party manufacturers for the commercial supply of products that receive marketing approval, if any;

● the costs and timing of manufacturing for obexelimab and other product candidates, including commercial manufacturing at sufficient scale, if any product candidate is approved, including as a result of inflation, any supply chain issues or component shortages;

● the costs and timing of manufacturing for obexelimab, orelabrutinib and other product candidates, including commercial manufacturing at sufficient scale, if any product candidate is approved, including as a result of inflation, any supply chain issues or component shortages;

● the revenue, if any, received from commercial sale of our products, should any product candidates receive marketing approval;

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● the costs associated with operating as a public company, including legal, accounting or other expenses in operating our business.

A change in the outcome of any of these or other variables with respect to the development of obexelimab or any other product candidate could significantly change the costs and timing associated with our operating plans.

A change in the outcome of any of these or other variables with respect to the development of obexelimab, orelabrutinib or any other product candidate could significantly change the costs and timing associated with our operating plans.

Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

We have no products approved for commercial sale and have not generated any product revenues from product sales to date.

We have no products approved for commercial sale and have not generated any revenues from product sales to date.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financing and additional funding from licenses, strategic alliances and collaboration arrangements.

Except for any obligations of our collaborators to reimburse us for research and development expenses or

make milestone or royalty payments under our agreements with them, we will not have any committed external source of liquidity.

Except for any obligations of our collaborators to reimburse us for research and development expenses or make milestone or royalty payments under our agreements with them, we will not have any committed external source of liquidity.

We have incurred losses and cumulative negative cash flows from operations since our inception.

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As a result, we will need additional capital to fund our operations, which we may raise through a combination of the sale of our equity, debt financings, or other sources, including potential collaborations.

To the extent that we raise capital through the future sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders.

preferences that adversely affect the rights of our existing common stockholders.

If we enter into debt financing arrangements, if available, they may involve restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business.

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If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.

Senior Secured Term Loan

In March 2026, the Company entered into the Loan Agreement with the Collateral Agent, BPCR Limited Partnership and BioPharma Credit Investments V (Master) LP, which are funds managed by Pharmakon and the guarantors party thereto.

The Loan Agreement provides for up to a $250.0 million Term Loan that matures on March 27, 2031 and consists of five tranches including (1) a Tranche A Loan of $75.0 million drawn March 27, 2026, (2) a Tranche B Loan of $50.0 million which will be required to be drawn (and up to an additional $25.0 million that the Company may elect to draw) by no later than November 1, 2027, subject to the occurrence of the Tranche B/C Approval Condition, (3) a Tranche C Loan of $25.0 million (less any amounts elected to be (and actually) drawn under the Tranche B Loan in excess of $50.0 million) which will be available at the Company’s election, subject to the occurrence of the Tranche B/C Approval Condition, no later than April 28, 2028, (4) a Tranche D Loan of $50.0 million which will be available at the Company’s election no later than October 30, 2028, subject to the occurrence of the Tranche B/C Approval Condition and achievement of certain milestones in respect of certain net sales levels and (5) a Tranche E Loan of $50.0 million which will be available at the Company’s election no later than April 30, 2029, subject to the occurrence of the Tranche B/C Approval Condition and achievement of certain milestones in respect of net sales levels.

We received net proceeds of $73.0 million from the draw of the Tranche A Loan after deducting the 2.00% funding fee.

As of March 31, 2026, we are in compliance with all covenants under the Loan Agreement.

The Term Loan bears interest at a rate based upon an annual interest rate of 3-month secured overnight financing rate (subject to a 3.25% floor) plus 5.75% payable quarterly in arrears;

provided that the Company may elect for 100% of the interest for the first 24 months following the Tranche A Loan funding date may be paid-in-kind without an increase in the interest rate.

The Company is required to pay a funding fee equal to (i) 2.00% of $50,000,000 of the funding amount of the Tranche B Loan on the funding date for such loan, (ii) 1.00% of any amounts in excess of $50,000,000 of the funding amount for the Tranche B Loan on the funding date for such loan, and (iii) 1.00% of each of the funding amount of the Tranche C Loan, Tranche D Loan, and Tranche E Loan on each respective funding date.

The Company may elect to prepay the Term Loans in whole or, subject to certain conditions, in part prior to the Term Loan Maturity Date with such prepayments being subject to certain prepayment, make-whole and exit fees.

The Term Loans are subject to certain mandatory prepayments, including a repayment in full of all term loans in four equal payments commencing on September 30, 2028 to the extent the Tranche B/C Approval Condition is not met on or prior to June 30, 2028.

The Loan Agreement contains customary affirmative and restrictive covenants, representations and warranties and events of default.

We and our subsidiaries are bound by certain affirmative covenants setting forth actions that are required during the term of the Loan Agreement, including, without limitation, certain information delivery requirements (including that consolidated financial statements delivered for and after the fiscal year ending December 31, 2026 are not subject to any qualification as to “going concern” or “scope of audit”), obligations to maintain certain insurance, and certain notice requirements.

The Loan Agreement contains customary financial covenants, including (i) at all times prior to the satisfaction of the Tranche B/C Approval Condition, a minimum liquidity requirement and (ii) subject to the outstanding aggregate principal amount of Term Loans advanced under the Loan Agreement being equal to or greater than $200.0 million, a minimum trailing twelve months consolidated net revenue covenant.

Additionally, we and our subsidiaries are

bound by certain restrictive covenants setting forth actions that are not permitted to be taken during the term of the Loan Agreement, including, without limitation, (i) selling or disposing of assets, (ii) amending, modifying or waiving our rights under material agreements, (iii) consummating change in control transactions unless all amounts becoming due under the Loan Agreement are paid in full immediately upon (and concurrent with) the consummation of any such change in control transaction, (iv) incurring additional indebtedness, (v) incurring non-permitted liens or encumbrances on our or our subsidiaries’ assets, (vi) paying dividends or making any distribution or payment on or redeeming, retiring or purchasing any equity interests, (vii) making payments on subordinated indebtedness and (viii) making investments other than permitted acquisitions and permitted investments, in each case, subject to specified exceptions including, in the case of restrictions on incurrence of additional indebtedness, the ability to incur certain convertible indebtedness and enter into certain permitted royalty financing agreements.

The Loan Agreement also contains certain events of default, including the following:

(i) failure to pay principal, interest and other amounts when due, (ii) the breach of the covenants under the Loan Agreement, (iii) the occurrence of a material adverse change or a withdrawal event in respect of obexelimab or orelabrutinib, (iv) certain attachments of the credit parties assets and restraints on their business, (v) certain insolvency, liquidation, bankruptcy or similar events, (vi) certain cross-default of third-party indebtedness and royalty revenue contracts, (vii) the failure to pay certain judgements, (viii) material misrepresentations, (ix) the loan documents ceasing to create a valid security interest in a material portion of the collateral, (x) the occurrence of certain ERISA events and (xi) the occurrence of a default under any intercreditor agreement, in each case subject to the grace periods, cure period and thresholds as specified in the Loan Agreement.

Upon the occurrence of an event of default, the Lenders may, among other things, accelerate our obligations under the Loan Agreement (including all obligations for principal, interest and any applicable make-whole and prepayment premiums); provided that upon an event of default relating to certain insolvency, liquidation, bankruptcy or similar events, all outstanding obligations will be automatically accelerated.

Our obligations under the Loan Agreement are secured by substantially all of our assets, including our intellectual property.

Certain of our subsidiaries may, from time to time after the Tranche A Closing Date, be required to guarantee our obligations under the Loan Agreement and, in connection with such guarantee, pledge substantially all of their assets, including intellectual property, to secure such guarantee.

Convertible Senior Notes and Equity Follow-on Offering

In March 2026, the Company issued an aggregate principal amount of $200.0 million of 2.50% convertible senior notes due 2032 (the “Convertible Notes”) in an underwritten public offering.

The Convertible Notes were issued pursuant to, and are governed by, the Base Indenture, dated March 31, 2026, between the Company and U.S.

Bank Trust Company, National Association, as trustee (the “Trustee”).

Concurrently, the Company issued 5,000,000 shares of common stock at a public offering price of $20.00 per share, with gross proceeds of $100.0 million.

Additionally, in April 2026, the Company issued (i) an additional $30.0 million of Convertible Notes upon the underwriters’ exercise in full of their over-allotment option for gross proceeds of $30.0 million and (ii) an additional 750,000 shares of common stock upon the exercise in full of the underwriters’ over-allotment option to purchase additional shares for gross proceeds of $15.0 million.

The Convertible Notes are general, unsecured, senior obligations of the Company.

The Convertible Notes will accrue interest payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2026, at a rate equal to 2.50% per year.

The Convertible Notes will mature on April 1, 2032, unless earlier converted, redeemed or repurchased by us.

Holders of Convertible Notes will have the right to convert their Convertible Notes in certain circumstances and during specified periods.

See Note 6, Long-Term Obligations within the notes to the unaudited condensed consolidated financial statements for additional information.

At-the-Market Program

In October 2025, we entered into a sales agreement with Jefferies under which we could, from time to time, issue and sell shares of our common stock having aggregate sales proceeds of up to $200.0 million, under the 2025 ATM Program.

Pursuant to the sales agreement, shares will be sold under the shelf registration statement on Form S-3 ASR (Registration No.

333-290777), which became automatically effective upon filing on October 8, 2025.

Our common stock will be sold at prevailing market prices at the time of the sale;

and as a result, prices may vary.

For the three months ended March 31, 2026, we sold 2,827,723 shares of common stock under the 2025 ATM Program, with proceeds of $71.5 million, net of commissions.

As of March 31, 2026, $96.8 million remained available under the 2025 ATM Program.

Royalty Pharma Agreement

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.

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, noting the Company is not currently eligible for this milestone, (2) $75.0 million payable following receipt of marketing approval for obexelimab from 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 following table provides information regarding our cash flows for each of the periods presented (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net Cash Used in Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2025 was $119.9 million, and was primarily due to our net loss of $137.3 million and a decrease of $11.2 million in accounts payable and a decrease of $0.8 million in prepaid expenses and other assets, partially offset by $18.8 million of stock-based compensation expense, a $5.0 million increase in accrued expenses, an adjustment to cash used in operations of $5.0 million related to acquired in-process research and development expense for a deposit paid toward the $35.0 million upfront payment under the License Agreement with InnoCare.

The net increase in accrued expenses was primarily due to an increase in clinical study expenses, while the decrease in accounts payable was primarily due to the timing of vendor payments.

Net cash used in operating activities for the nine months ended September 30, 2024 was $81.2 million, and was primarily due to our net loss of $104.4 million, partially offset by $6.3 million increase in accounts payable, a $10.2 million increase in accrued expenses, a $0.5 million increase in prepaid expenses and other assets, a $0.8 million increase in the fair value of our BMS Note liability and $5.3 million of stock-based compensation expense.

The increase in accrued expenses and accounts payable was primarily attributable to an increase in research and development expenses, while the increase in prepaid expenses and other assets was primarily due to the timing of vendor payments.

Net Cash Used in Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2025 was $158.5 million and consisted primarily of purchases of investments of $284.9 million and $5.0 million payment as a deposit toward the $35.0 million

upfront payment under the License Agreement with InnoCare, partially offset by proceeds from sales and maturities of investments of $131.4 million.

Net cash used in investing activities for the nine months ended September 30, 2024 was $26.8 million and consisted of purchases of investments of $26.8 million and purchases of property and equipment of $0.1 million.

Net cash used in operating activities for the three months ended March 31, 2026 was $75.2 million, and was primarily due to our net loss of $81.0 million, which included non-cash charges principally related to stock-based compensation and interest charges on our agreement with Royalty Pharma.

Net changes in our working capital during the three months resulted in a $9.9 million cash outflow.

Net cash used in operating activities for the three months ended March 31, 2025 was $37.1 million, and was primarily due to our net loss of $33.6 million, which included non-cash charges principally related to stock-based compensation.

Net changes in our working capital during the three months resulted in an $8.9 million cash outflow.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2026 was $31.6 million and consisted primarily of proceeds from sales and maturities of investments of $108.1 million, partially offset by purchases of investments of $76.5 million.

Net cash used in investing activities for the three months ended March 31, 2025 was $86.3 million and consisted primarily of purchases of investments of $99.1 million and proceeds from the sale and maturities of investments of $12.9 million.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2025 was $74.4 million, resulting from $75.0 million in gross proceeds received in connection with the royalty obligation and $2.5 million of proceeds received from the exercise of stock options, offset by $3.3 million of payments related to deferred offering costs.

Net cash provided by financing activities for the nine months ended September 30, 2024 was $411.1 million, resulting from $178.4 million in net proceeds received from the issuance and sale of shares of our Series C Preferred Stock, net proceeds from our IPO of $234.4 million, and $0.2 million of proceeds received from the exercise of stock options, partially offset by a $1.9 million payment of offering costs.

Net cash provided by financing activities for the three months ended March 31, 2026 was $433.5 million, resulting primarily from $194.0 million in net proceeds received in connection with the convertible note offering, $94.0 million and $71.5 million received from the sale and issuance of common stock under a follow-on equity offering and 2025 ATM Program, net of commissions, respectively, and $73.5 million in net proceeds received in connection with the senior secured term loan, net of discounts, offset by $0.5 million of payments related to deferred offering costs and debt issuance costs.

Net cash provided by financing activities for the three months ended March 31, 2025 was $0.1 million, resulting from $0.1 million in net proceeds received from the exercise of stock options.

Material Cash Requirements for Known Contractual and Other Obligations

During the three months ended September 30, 2025, except as disclosed at Note 13 – Commitments and Contingencies , there were no material changes to our contractual obligations and commitments from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Contractual Obligations and Commitments” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

During the three months ended March 31, 2026, except as disclosed in Note 13 – Commitments and Contingencies , of these unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q, there were no material changes to our contractual obligations and commitments from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Contractual Obligations and Commitments” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Critical Accounting Policies and Significant Judgments and Estimates

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generally accepted accounting principles (“GAAP”).

The preparation of these condensed consolidated financial statements requires us to make judgements, assumptions and estimates that may affect the reported amounts of assets and liabilities, equity, and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of expenses during the reported periods.

The preparation of these condensed consolidated financial statements requires us to make judgments, assumptions and estimates that may affect the reported amounts of assets and liabilities, equity, and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of expenses during the reported periods.

On an ongoing basis, we evaluate our judgments, assumptions and estimates in light of changes in circumstances, facts and experiences.

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The effects of material revisions in estimates, if any, will be reflected in the condensed consolidated financial statements prospectively from the date of change in estimates.

There have been no material changes to our critical accounting policies from those described under our “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Judgments and Estimates” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

During the three months ended March 31, 2026, there were no material changes in our critical accounting policies from those described under our “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Judgments and Estimates” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, except for the following:

Embedded Derivative Financial Instruments

During the three months ended March 31, 2026, we entered into a senior secured term loan and issued convertible senior notes, see Note 6, Long – Term Obligations , in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Our evaluation of our debt and equity transactions, consider whether the transaction includes embedded derivatives and whether any embedded derivatives require bifurcation.

The evaluation of such features consider whether (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not -remeasured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative would be considered a derivative instrument.

We exercise judgment in the evaluation of whether embedded features require bifurcation and the fair value of any features that are bifurcated.

Should there be changes in our judgments and related conclusions, it could impact the effective interest expense recorded on our debt obligations, which could materially affect our financial statements.

Recent Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, Summary of Significant Accounting Policies , in this Quarterly Report on Form 10-Q.

Implications of Being an Emerging Growth Company and Smaller Reporting Company

We qualify as an “emerging growth company” as defined in the JOBS Act.

requirements to hold nonbinding advisory votes on executive compensation and golden parachute payments and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies, including reduced disclosure about our executive compensation arrangements, exemption from the requirements to hold nonbinding advisory votes on executive compensation and golden parachute payments and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

We may take advantage of these exemptions until December 31, 2029 or such earlier time that we are no longer an emerging growth company.

13 unchanged sentences

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