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| Part I | | Financial Information | | |
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| Item 1. | | Financial Statements (Unaudited) | | 6 |
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| | | Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 | | 6 |
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| | | Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2026 and 2025 | | 7 |
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| | | Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2026 and 2025 | | 8 |
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| | | Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025 | | 10 |
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| | | Notes to Condensed Consolidated Financial Statements | | 11 |
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| Item 2. | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 31 |
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| Item 3. | | Quantitative and Qualitative Disclosures about Market Risk | | 52 |
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| Item 4. | | Controls and Procedures | | 53 |
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| Part II | | Other Information | | |
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| Item 1. | | Legal Proceedings | | 53 |
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| Item 1A. | | Risk Factors | | 53 |
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| Item 2. | | Unregistered Sales of Equity Securities and Use of Proceeds | | 56 |
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| Item 3. | | Defaults Upon Senior Securities | | 56 |
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| Item 4. | | Mine Safety Disclosures | | 56 |
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| Item 5. | | Other Information | | 57 |
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| Item 6. | | Exhibits | | 57 |
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| Exhibit Index | | | | 57 |
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| Signatures | | | | 58 |
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, forward-looking statements can be identified by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements include, but are not limited to, statements concerning:
| ● | the commercial opportunities stemming from the development of our product candidates for multiple immunology and inflammation (“I&I”) diseases; |
| ● | our ability to develop and, if approved, ultimately commercialize our product candidates and, with partners, our other programs; |
| ● | our ability to obtain or maintain orphan drug designation for certain of our product candidates; |
| ● | the initiation, timing, progress, results, and cost of our development programs, and our current and future preclinical and clinical studies, including statements regarding the timing of initiation and completion of our clinical trials, and the period during which the results of the trials will become available; |
| ● | the success, cost and timing of our clinical development of our product candidates, including the extent to which interim, topline or preliminary data may be predictive of final results or of the results of future clinical trials; |
| ● | our ability to establish clinical differentiation of our product candidates; |
| ● | our ability to develop product candidates that have broad therapeutic potential; |
| ● | our ability to utilize our business development strategy and expertise to build a balanced portfolio; |
| ● | our ability to build our operational and commercial capabilities for supplying and marketing our products, if approved, in key markets; |
| ● | market conditions in the biopharmaceutical sector and issuance of securities analysts’ reports or recommendations; |
| ● | the trading volume of our common stock; |
| ● | an inability to obtain additional funding and make future royalty payments under our Revenue Participation Right Purchase and Sale Agreement (“Royalty Purchase Agreement”) with Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”); |
| ● | an inability to obtain additional funding and make borrowings under our agreement with BioPharma Credit PLC (the “Collateral Agent”), BPCR Limited Partnership and BioPharma Credit Investments V (Master) LP, which are funds managed by Pharmakon Advisors, LP (collectively, “Pharmakon”), and the guarantors party to such agreement (the “Loan Agreement”); |
| ● | our ability to initiate, recruit and enroll patients in and conduct our clinical trials at the pace that we project; |
| ● | our ability to obtain regulatory approval of our product candidates, including our plans with respect to regulatory submissions and the timing and outcome with respect to such regulatory submissions and reviews |
by the U.S. Food and Drug Administration (the “FDA”) or comparable foreign regulatory authorities and with respect to any regulatory approvals we may receive, any related restrictions, limitations or warnings in the label of any of our product candidates, if approved;
| ● | our reliance on third parties to manufacture drug substance and drug product for use in our clinical trials; |
| ● | our ability to retain and recruit key personnel; |
| ● | our ability to obtain and maintain adequate intellectual property rights; |
| ● | our expectations regarding government and third-party payor coverage and reimbursement; |
| ● | the impact of current and future healthcare reforms, including those affecting the delivery of or payment for healthcare products and services; |
| ● | our expectations regarding federal, state and foreign regulatory requirements; |
| ● | other governmental legislation and regulation, as well as adverse effects from a shutdown of the U.S. government; |
| ● | our estimates of our expenses, ongoing losses, capital requirements and our needs for or ability to obtain additional financing; |
| ● | our existing cash and the sufficiency of our existing cash and proceeds from future capital-raising efforts, if any, to fund our future operating expenses and capital expenditure requirements; |
| ● | the potential benefits of strategic collaboration agreements; |
| ● | our ability to identify and enter into strategic collaborations or arrangements, including potential business development opportunities and potential licensing partnerships, and our ability to attract collaborators with development, regulatory and commercialization expertise; |
| ● | sales of our stock by us, our insiders or our stockholders; |
| ● | our expectations regarding the time during which we will be an emerging growth company and smaller reporting company under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”); |
| ● | general economic, industry, geopolitical and market conditions, such as military conflict or war, inflation and financial institution instability, tariffs and other trade measures, or pandemic or epidemic disease outbreaks, many of which are beyond our control; |
| ● | additions or departures of senior management, directors or key personnel; |
| ● | our financial performance; |
| ● | developments and projections relating to our competitors or our industry; and |
| ● | other risks and uncertainties, including those included in the section titled “Risk Factors.” |
The forward-looking statements in this Quarterly Report may prove incorrect. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties and assumptions, including those described under the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report and in the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and in our other filings with the Securities and Exchange Commission (the “SEC”). In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and should not be unduly relied upon. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, these forward-looking statements should not be relied upon as guarantees of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual future results, levels of activity, performance and events and circumstances could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risks and uncertainties may emerge from time to time, and management cannot predict all risks and uncertainties. Except as required by applicable law, we do not undertake to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
NOTE REGARDING TRADEMARKS
The Zenas BioPharma word mark, logo mark, and the “lightning bolt” design are trademarks of Zenas BioPharma, Inc. or its affiliated companies.
We have, in certain cases, omitted the ® and ™ designations for these trademarks used in this Quarterly Report. Nevertheless, all rights to such trademarks are owned by Zenas BioPharma, Inc. or its affiliates. Other trademarks referenced in this Quarterly Report are the property of their respective owners.
