Surrozen IncDE

Previous wording

The chart below represents a summary of our wholly owned product candidates:

Current wording

The chart below represents a summary of our product candidates:

Previous wording

SZN-043 is our candidate in development for severe alcohol-associated hepatitis, or severe AH. SZN-043, a hepatocyte-specific R-spondin mimetic bispecific fusion protein targeting ASGR1, is the first development candidate using Surrozen’s SWEETS™ technology which is designed to mimic the regenerative properties of the protein R-Spondin by enhancing Wnt signaling in a cell-targeted manner. In multiple preclinical animal models of liver injury and fibrosis, SZN-043 has been shown to selectively activate Wnt signaling in the liver, stimulate transient hepatocyte proliferation, improve liver function and reduce fibrosis. The Phase 1a study was completed in February 2024. SZN-043 demonstrated acceptable safety and tolerability in the planned Phase 1b dose range (0.5 mg/kg to 1.5 mg/kg), with evidence of target engagement, Wnt signal activation and effects on liver function. The observed safety, pharmacokinetics and pharmacodynamic activity were the basis for our previous announcement that we planned to initiate enrollment in the Phase 1b study in severe AH. We have initiated enrollment in the aforementioned Phase 1b clinical trial and anticipate proof-of-concept data from the Phase 1b clinical trial in the first half of 2025.

Current wording

SZN-043 is our candidate in development for severe alcohol-associated hepatitis, or sAH. SZN-043, a hepatocyte-specific R-spondin mimetic bispecific fusion protein targeting ASGR1, is the first development candidate using Surrozen’s SWEETS™ technology which is designed to mimic the regenerative properties of the protein R-Spondin by enhancing Wnt signaling in a cell-targeted manner. In multiple preclinical animal models of liver injury and fibrosis, SZN-043 has been shown to selectively activate Wnt signaling in the liver, stimulate transient hepatocyte proliferation, improve liver function and reduce fibrosis. The Phase 1a study was completed in February 2024. SZN-043 demonstrated acceptable safety and tolerability in the planned Phase 1b dose range (0.5 mg/kg to 1.5 mg/kg), with evidence of target engagement, Wnt signal activation and effects on liver function. The observed safety, pharmacokinetics and pharmacodynamic activity were the basis for our previous announcement that we planned to initiate enrollment in the Phase 1b study in sAH. We have initiated enrollment in the aforementioned Phase 1b clinical trial and anticipate proof-of-concept data from the Phase 1b clinical trial in the first half of 2025. We successfully completed dosing and 30-day follow-up for cohort 1 in our Phase 1b clinical trial in sAH. No drug related serious adverse events were observed in the first cohort of six patients receiving 0.5mg/kg of SZN-043. There were no patient deaths at day 30 of the study, and we observed a potential clinical benefit based on reductions in bilirubin and MELD score. A majority of patients experienced improvements in AST and ALT levels.

Previous wording

SZN-413, a Fzd4 targeted bi-specific antibody, is being developed as a novel treatment for retinal vascular-associated diseases and utilizes our proprietary SWAP technology to activate Wnt signaling. Fzd4 mediated Wnt signaling is known to play a critical role in retinal vascular integrity and function. Data generated in preclinical models of retinopathy demonstrated SZN-413 stimulated Wnt signaling and was able to induce normal retinal vessel regrowth while suppressing pathological vessel growth. In October 2022, we executed a Collaboration and Licensing Agreement, or CLA, with Boehringer Ingelheim International GmbH, or BI, to research, develop and commercialize Fzd4 bi-specific antibodies designed using our SWAP technology, including SZN-413. We anticipate the potential to nominate the lead Fzd-4 targeted Wnt agonist development candidate in 2024, which would trigger a $10.0 million milestone payment to us. See Note 5 to the unaudited condensed consolidated financial statements for further information regarding our licensing and collaboration agreement with BI.

Current wording

SZN-413, a Fzd4 targeted bi-specific antibody, is being developed as a novel treatment for retinal vascular-associated diseases and utilizes our proprietary SWAP technology to activate Wnt signaling. Fzd4 mediated Wnt signaling is known to play a critical role in retinal vascular integrity and function. Data generated in preclinical models of retinopathy demonstrated SZN-413 stimulated Wnt signaling and was able to induce normal retinal vessel regrowth while suppressing pathological vessel growth. In October 2022, we executed a Collaboration and Licensing Agreement, or CLA, with Boehringer Ingelheim International GmbH, or BI, to research, develop and commercialize Fzd4 bi-specific antibodies designed using our SWAP technology, including SZN-413. In September 2024, BI decided to move forward with the development of SZN-413, which triggered a $10.0 million milestone payment to us. See Note 5 to the unaudited condensed consolidated financial statements for further information regarding our licensing and collaboration agreement with BI.

Previous wording

Since our inception in 2015, we have devoted substantially all of our efforts and financial resources to organizing and staffing our company, business planning, raising capital, developing and optimizing our Wnt therapeutics platform, identifying potential product candidates, undertaking research and development activities, engaging in strategic transactions, establishing and enhancing our intellectual property portfolio, and providing general and administrative support for these operations. We have incurred net losses since inception. During the three and six months ended June 30, 2024, we incurred net losses of $25.3 million and $34.1 million, respectively. During the three and six months ended June 30, 2023, we incurred a net loss of $9.4 million and $23.7 million, respectively. As of June 30, 2024, we had an accumulated deficit of $255.8 million and cash and cash equivalents of $37.8 million.

Current wording

Since our inception in 2015, we have devoted substantially all of our efforts and financial resources to organizing and staffing our company, business planning, raising capital, developing and optimizing our Wnt therapeutics platform, identifying potential product candidates, undertaking research and development activities, engaging in strategic transactions, establishing and enhancing our intellectual property portfolio, and providing general and administrative support for these operations. We have incurred net losses since inception. During the three and nine months ended September 30, 2024, we incurred net losses of $1.4 million and $35.5 million, respectively. During the three and nine months ended September 30, 2023, we incurred a net loss of $10.4 million and $34.1 million, respectively. As of September 30, 2024, we had an accumulated deficit of $257.2 million and cash and cash equivalents of $31.0 million.

Previous wording

During the six months ended June 30, 2024, there were no material changes to our critical accounting policies or in the methodology used for estimates from those described under Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

During the nine months ended September 30, 2024, there were no material changes to our critical accounting policies or in the methodology used for estimates from those described under Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

The increase of $0.5 million, or 24%, in SZN-043 program expenses for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, is primarily due to the initiation of our Phase 1b clinical trial. The decrease of $1.1 million, or 69%, in SZN-1326 program expenses for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, is primarily due to the workforce reductions we implemented in 2023, as well as the discontinuation of the clinical development of SZN-1326 in January 2024. The decrease of $1.0 million, or 32%, in discovery and preclinical stage program expenses for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, is primarily due to the workforce reductions we implemented in 2023 to focus our resources on our clinical stage programs.

Current wording

The decrease of $0.1 million, or 4%, in SZN-043 program expenses for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, is primarily due to the workforce reductions we implemented in 2023. The decrease of $0.9 million, or 72%, in SZN-1326 program expenses for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, is also due to the workforce reductions we implemented in 2023, as well as the discontinuation of the clinical development of SZN-1326 in January 2024. The increase of $0.1 million, or 6%, in discovery and preclinical stage program expenses for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, is primarily due to the increase in costs on our ophthalmology product candidates.

Previous wording

The decrease of $1.2 million, or 100%, in restructuring charges for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, is attributable to the workforce reduction we implemented in the first quarter of 2023.

Current wording

The decrease of $1.5 million, or 100%, in restructuring charges for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, is attributable to the workforce reductions we implemented in 2023.

Previous wording

The decrease of $0.1 million, or 21%, in interest income for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, is primarily due to a decrease in cash equivalents and marketable securities.

Current wording

The decrease of $0.2 million, or 35%, in interest income for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, is primarily due to a decrease in cash equivalents and marketable securities.

Previous wording

The increase of $3.6 million in other income, net, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, is primarily attributable to a $5.0 million increase in non-cash change in fair value of warrant liabilities, offset by $1.5 million related to the transaction costs allocated to the warrants issued in a private placement.

Current wording

The increase of $3.2 million in other expense, net for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, is primarily attributable to non-cash change in fair value of warrant liabilities.

Previous wording

Comparison of the Six Months Ended June 30, 2024 and 2023

Current wording

Comparison of the Nine Months Ended September 30, 2024 and 2023

Previous wording

The decrease of $0.2 million, or 4%, in total SZN-043 program expense for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023 is primarily due to the workforce reductions we implemented in 2023. The decrease of $2.3 million, or 71%, in SZN-1326 program expenses for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, is also due to the workforce reductions we implemented in 2023, as well as the discontinuation of the clinical development of SZN-1326 in January 2024. The decrease of $1.9 million, or 32%, in discovery and preclinical stage program expenses for the six months ended June 30, 2024, compared to six months ended June 30, 2023, is primarily due to the workforce reductions we implemented in 2023 to focus our resources on our clinical stage programs.

Current wording

The decrease of $0.4 million, or 4%, in total SZN-043 program expense for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023 is primarily due to the workforce reductions we implemented in 2023. The decrease of $3.2 million, or 71%, in SZN-1326 program expenses for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, is also due to the workforce reductions we implemented in 2023, as well as the discontinuation of the clinical development of SZN-1326 in January 2024. The decrease of $1.8 million, or 22%, in discovery and preclinical stage program expenses for the nine months ended September 30, 2024, compared to nine months ended September 30, 2023, is primarily due to the workforce reductions we implemented in 2023 to focus our resources on our clinical stage programs.

Previous wording

The decrease of $1.0 million, or 12%, in general and administrative expenses for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, is primarily attributable to reductions in employee-related expenses as a result of the workforce reductions we implemented in 2023, as well as lower consulting and professional fees as a result of the restructuring plans we implemented in 2023.

Current wording

The decrease of $1.0 million, or 9%, in general and administrative expenses for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, is primarily attributable to reductions in employee-related expenses as a result of the workforce reductions in 2023, as well as lower consulting and professional fees as a result of the restructuring plans we implemented in 2023.

Previous wording

The decrease of $0.3 million, or 25%, in interest income for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, is primarily due to a decrease in money market funds and marketable securities.

Current wording

The decrease of $0.5 million, or 29%, in interest income for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, is primarily due to a decrease in cash equivalents and marketable securities.

Previous wording

The increase of $3.4 million in other income, net for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, is primarily attributable to a $4.8 million increase in non-cash change in fair value of warrant liabilities, offset by $1.5 million related to the transaction costs allocated to the warrants issued in a private placement.

Current wording

The increase of $0.4 million in other income, net, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, is primarily attributable to a $1.8 million increase in non-cash change in fair value of warrant liabilities, offset by $1.5 million related to the transaction costs allocated to the warrants issued in a private placement.

Previous wording

The increase of $20.4 million in loss on issuance of common stock, pre-funded warrants and warrants for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, as the fair value of warrants issued was greater than the proceeds received in a private placement closed in April 2024.

Current wording

The increase of $20.4 million in loss on issuance of common stock, pre-funded warrants and warrants for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, as the fair value of warrants issued was greater than the proceeds received in a private placement closed in April 2024.

Previous wording

In April 2024, we entered into a related party transaction with Nura Bio, Inc., or Nura Bio, to sublease approximately 6,102 square feet of our office and laboratory space in South San Francisco, California. The sublease term is on a month-to-month basis and the monthly base rent is approximately $35,000, escalating at 3% per annum. Nura Bio is also responsible for its share of real estate taxes, utilities and other operating expenses applicable to the subleased space. Please see “Part II, Item 5 – Other Information” for a further discussion of the sublease.

Current wording

In April 2024, we entered into a related party transaction with Nura Bio, Inc., or Nura Bio, to sublease approximately 6,102 square feet of our office and laboratory space in South San Francisco, California. The sublease term is on a month-to-month basis and the monthly base rent is approximately $35,000, escalating at 3% per annum. Nura Bio is also responsible for its share of real estate taxes, utilities and other operating expenses applicable to the subleased space. Please see Note 11 to the unaudited condensed consolidated financial statements for further information regarding the sublease.

Previous wording

As of June 30, 2024, we had cash and cash equivalents of $37.8 million and accumulated deficit of $255.8 million. We believe, based on our current operating plan, that our existing cash and cash equivalents will be sufficient to fund our operations for at least the next 12 months from the filing date of this Quarterly Report. We expect that in the long-term we will need to raise additional capital through public or private equity offerings, debt financings or other capital sources, including government grants, potential collaborations with other companies or other strategic transactions until we are able to generate revenue on our own. Our ability to continue as a going concern in the long-term is dependent upon our ability to successfully secure sources of financing and ultimately achieve profitable operations. There can be no assurance that sufficient funds will be available to us at all or on attractive terms when needed from these sources. If we are unable to obtain additional funding from these or other sources when needed, we may be necessary to significantly reduce expenses through reductions in staff and delaying, scaling back operations, or stopping certain research and development programs.

Current wording

As of September 30, 2024, we had cash and cash equivalents of $31.0 million and accumulated deficit of $257.2 million. We believe, based on our current operating plan, that our existing cash and cash equivalents, plus a $10.0 million milestone payment received in October 2024, will be sufficient to fund our operations for at least the next 12 months from the filing date of this Quarterly Report. We expect that in the long-term we will need to raise additional capital through public or private equity offerings, debt financings or other capital sources, including government grants, potential collaborations with other companies or other strategic transactions until we are able to generate revenue on our own. Our ability to continue as a going concern in the long-term is dependent upon our ability to successfully secure sources of financing and ultimately achieve profitable operations. There can be no assurance that sufficient funds will be available to us at all or on attractive terms when needed from these sources. If we are unable to obtain additional funding from these or other sources when needed, we may be necessary to significantly reduce expenses through reductions in staff and delaying, scaling back operations, or stopping certain research and development programs.

Previous wording

Cash used in operating activities of $14.4 million for the six months ended June 30, 2024 was primarily due to the use of funds in our operations, the resulting net loss of $34.1 million and a net change of $0.9 million in our net operating assets and liabilities, offset by $20.6 million in non-cash charges. Cash used in operating activities of $22.9 million for the six months ended June 30, 2023 was primarily due to the use of funds in our operations, and the resulting net loss of $23.7 million and a net change of $2.6 million in our net operating assets and liabilities, offset by $3.4 million in non-cash charges.

Current wording

Cash used in operating activities of $21.1 million for the nine months ended September 30, 2024 was primarily due to the use of funds in our operations, the resulting net loss of $35.5 million and a net change of $11.0 million in our net operating assets and liabilities, offset by $25.4 million in non-cash charges. Cash used in operating activities of $33.1 million for the nine months ended September 30, 2023 was primarily due to the use of funds in our operations, and the resulting net loss of $34.1 million and a net change of $3.7 million in our net operating assets and liabilities, offset by $4.8 million in non-cash charges.

Previous wording

Cash used in investing activities of $7,000 for the six months ended June 30, 2024 was related to the purchases of lab equipment. Cash provided by investing activities of $34.6 million for the six months ended June 30, 2023 was primarily related to $53.7 million of proceeds from maturities of marketable securities, offset by $18.7 million of cash used for the purchase of marketable securities and $0.4 million of cash used for the purchase of laboratory, office and computer equipment.

Current wording

Cash used in investing activities of $7,000 for the nine months ended September 30, 2024 was related to the purchases of lab equipment. Cash provided by investing activities of $42.2 million for the nine months ended September 30, 2023 was primarily related to $70.7 million of proceeds from maturities of marketable securities, offset by $28.0 million of cash used for the purchase of marketable securities and $0.4 million of cash used for the purchase of laboratory, office, computer equipment and software.

Previous wording

Cash provided by financing activities of $16.1 million for the six months ended June 30, 2024 was primarily related to the issuance and sale of common stock, pre-funded warrants and warrants to investors and certain members of management in a private placement. Cash used in financing activities of $0.1 million for the six months ended June 30, 2023 was primarily related to the $0.2 million of proceeds from the issuance of common stock upon employee stock plan purchases, offset by $39,000 of cash used in the repurchase of early exercised options.

Current wording

Cash provided by financing activities of $16.1 million for the nine months ended September 30, 2024 was primarily related to the issuance and sale of common stock, pre-funded warrants and warrants to investors and certain members of management in a private placement. Cash provided by financing activities of $0.1 million for the nine months ended September 30, 2023 was primarily related to the $0.2 million of proceeds from the issuance of common stock upon employee stock plan purchases, offset by $55,000 of cash used in the repurchase of early exercised options.

Previous wording

Our contractual obligations as of June 30, 2024 have not materially changed since December 31, 2023. Please see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023 for information regarding our contractual obligations and commitments.

Current wording

Other than the extension of our existing lease term as described above and in Note 13 to our unaudited condensed consolidated financial statements contained in Part 1 to this Quarterly Report, our contractual obligations as of September 30, 2024 have not materially changed since December 31, 2023. Please see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023 for information regarding our contractual obligations and commitments.