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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-42270

Zenas BioPharma, Inc.

(Exact name of registrant as specified in its charter)


Delaware	93-2749244
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

852 Winter Street, Suite 250

Waltham, MA 02451

(Address of Principal Executive Offices)

(857) 271-2954

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	¨
Non-accelerated filer	☒	Smaller reporting company	☒	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading symbol	Name of Exchange on which registered
Common stock, par value $0.0001 per share	ZBIO	Nasdaq Global Select Market

As of October 31, 2025, there were 53,679,166 of the registrant’s common stock, par value $0.0001 per share, outstanding.

Table of Contents

TABLE OF CONTENTS


		Page

Part I	Financial Information

Item 1.	Financial Statements (Unaudited)	7

	Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024	7

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2025 and 2024	8

	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2025 and 2024	9

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024	11

	Notes to Condensed Consolidated Financial Statements	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43

Item 4.	Controls and Procedures	44

Part II	Other Information

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	105

Item 3.	Defaults Upon Senior Securities	105

Item 4.	Mine Safety Disclosures	105

Item 5.	Other Information	105

Item 6.	Exhibits	105

Exhibit Index		105

Signatures		106

Table of Contents

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;

●

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 identify collaborations and strategic partnerships to maximize the value of our 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;

●

our ability to initiate, recruit and enroll patients in and conduct our clinical trials at the pace that we project;

●

our ability to obtain and maintain regulatory approval of our product candidates, and 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;

Table of Contents

●

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 the U.S. government shutdown;

●

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 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. 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

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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.

SUMMARY RISK FACTORS

Our business is subject to a number of risks of which investors should be aware before making an investment decision. These risks are discussed more fully in Part II, Item 1A. “Risk Factors” in this Quarterly Report. These risks include the following:

●

We are a clinical stage biopharma company with a limited operating history and no products approved for commercial sale; we have incurred substantial losses since our inception, and we anticipate incurring substantial and increasing losses for the foreseeable future;

●

We will require substantial additional financing to achieve our goals, and failure to obtain additional capital when needed, or on acceptable terms, would cause us to delay, limit, reduce or terminate our product development efforts;

●

Raising additional capital may cause dilution to our stockholders, imposing restrictions on our operations or require us to relinquish rights to our product candidates;

●

Clinical development is lengthy and expensive, characterized by uncertain outcomes, with results of earlier studies and trials often failing to predict future trial results or results in other indications of a product candidate. We may incur additional costs or experience delays in completing, or fail to complete, the development and commercialization of our current product candidates or any future product candidates;

●

Delays or difficulties in the enrollment and dosing of patients in clinical trials, delay or prevent receipt of necessary regulatory approvals;

●

Any significant adverse events or undesirable side effects caused by our product candidates may delay or prevent regulatory approval or market acceptance of our product candidates, or result in significant negative consequences following marketing approval, if any;

●

We face potential competition from different sources that have made substantial investments into the rapid development of novel treatments for immunological indications, including large and specialty pharmaceutical and biotechnology companies, many of which already have approved therapies in our current indications;

●

We may not realize the benefits of our current or future collaborations or licensing arrangements and may be unsuccessful in consummating future partnerships;

●

Even if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize any product candidate in the U.S. or any other jurisdiction, and any such approval may be for a more narrow indication than we seek;

●

We are dependent on the services of our senior management and other clinical and scientific personnel, and if we are not able to retain these individuals or recruit additional management or clinical and scientific personnel, our business will suffer;

●

We will need to grow our organization, and we may experience difficulties in managing our growth and expanding our operations, which could adversely affect our business;

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●

The manufacturing of our product candidates is complex, and our third-party manufacturers may encounter difficulties in production. If our third-party manufacturers encounter such difficulties, our ability to provide supply of our product candidates for clinical trials, to obtain marketing approval, or to provide commercial supply of our products, if approved, could be delayed or halted;

●

If we are unable to obtain and maintain sufficient intellectual property protection for our product candidates or any future product candidates we may develop, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors or other third parties could develop and commercialize products similar or identical to ours, and our ability to successfully develop and commercialize our product candidates may be adversely impacted;

●

We have relied and expect to continue to rely on third parties to conduct our preclinical studies and clinical trials. If those third parties do not perform as contractually required, fail to satisfy legal or regulatory requirements, miss deadlines or terminate the relationship, our development programs could be delayed, more costly or unsuccessful, and we may never be able to seek or obtain regulatory approval for or commercialize our product candidates;

●

Our rights to develop and commercialize our product candidates are subject, in large part, to the terms and conditions of licenses granted to us by others, such as Xencor, Inc. (“Xencor”) and InnoCare Pharma Inc. (“InnoCare”). If we fail to comply with our obligations in the agreements under which we in-license or acquire development or commercialization rights to product candidates, or data from third parties, we could lose such rights that are important to our business;

●

The operations of our suppliers, many of which are located outside of the U.S., including our current sole contract manufacturing organization (“CMO”) for obexelimab drug substance and drug product, WuXi Biologics (Hong Kong) Limited (“WuXi Biologics”) and our collaboration partner, InnoCare, which are both located in China, are subject to additional risks that are beyond our control and that could harm our business, financial condition, results of operations and prospects;

●

An active and liquid trading market for our common stock may not be sustained; and

●

The market price of our common stock may be volatile, which could result in substantial losses for investors.

If we are unable to adequately address these and other risks we face, our business, results of operations, financial condition and prospects may be harmed.

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. Other trademarks referenced in this Quarterly Report are the property of their respective owners.

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PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

Zenas BioPharma, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)


	September 30,		December 31,
	2025		2024
Assets
Current assets:
Cash and cash equivalents	$	115,565	$	319,742
Short-term investments		175,319		31,024
Restricted cash		—		90
Prepaid expenses and other current assets		5,758		5,067
Total current assets		296,642		355,923
Property and equipment, net		50		185
Operating lease right-of-use assets, net		807		1,004
Long-term investments		10,717		—
Other non-current assets		13,802		12,856
Total assets	$	322,018	$	369,968
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	6,444	$	17,136
Accrued expenses		45,359		39,371
Operating lease liabilities, current		618		785
Total current liabilities		52,421		57,292
Long-term liabilities:
Royalty obligation		72,989		—
Operating lease liabilities, less current portion		180		218
Total long-term liabilities		73,169		218
Total liabilities		125,590		57,510
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, par value $0.0001 per share; 25,000,000 shares authorized and no shares issued and outstanding as of September 30, 2025 and December 31, 2024		—		—
Common stock, par value $0.0001 per share; 175,000,000 shares authorized; 42,213,465 and 41,793,412 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively		4		4
Additional paid-in capital		721,179		699,651
Accumulated other comprehensive (loss) income		(69)		194
Accumulated deficit		(524,686)		(387,391)
Total stockholders’ equity		196,428		312,458
Total liabilities and stockholders’ equity	$	322,018	$	369,968

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

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Zenas BioPharma, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share amounts)


		For the three months ended September 30,				For the nine months ended September 30,
		2025		2024		2025		2024
Revenue:
License and collaboration revenue	$	—	$	—	$	10,000	$	—
Total revenue		—		—		10,000		—
Operating expenses:
Research and development		34,402		33,530		112,343		89,982
General and administrative		13,178		7,454		37,730		18,283
Acquired in-process research and development		5,000		—		5,000		—
Total operating expenses		52,580		40,984		155,073		108,265
Loss from operations		(52,580)		(40,984)		(145,073)		(108,265)
Other income (expense), net:
Fair value adjustments to convertible notes		—		—		—		(846)
Other income, net		1,081		2,378		7,593		4,727
Total other income (expense), net		1,081		2,378		7,593		3,881
Loss before income taxes		(51,499)		(38,606)		(137,480)		(104,384)
Income tax (provision) benefit		—		—		185		—
Net loss to common stockholders	$	(51,499)	$	(38,606)	$	(137,295)	$	(104,384)
Net loss per share attributable to common stockholders - basic and diluted	$	(1.22)	$	(5.02)	$	(3.27)	$	(28.83)
Weighted-average common stock outstanding - basic and diluted		42,159,340		7,697,695		41,943,160		3,621,276
Comprehensive loss:
Net loss to common stockholders	$	(51,499)	$	(38,606)	$	(137,295)	$	(104,384)
Other comprehensive income (loss):
Unrealized gain on investments		35		—		77		—
Foreign currency translation adjustment		(10)		(50)		(340)		16
Comprehensive loss	$	(51,474)	$	(38,656)	$	(137,558)	$	(104,368)

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

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Zenas BioPharma, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(Unaudited)

(in thousands, except share data)


	Common Stock
	Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders' Equity
Balance as of December 31, 2024	41,793,412	$	4	$	699,651	$	194	$	(387,391)	$	312,458
Exercises of common stock options	28,475		—		99		—		—		99
Stock-based compensation expense	—		—		5,386		—		—		5,386
Unrealized gain on investments	—		—		—		12		—		12
Foreign currency translation adjustment	—		—		—		(65)		—		(65)
Net loss	—		—		—		—		(33,573)		(33,573)
Balance as of March 31, 2025	41,821,887	$	4	$	705,136	$	141	$	(420,964)	$	284,317
Exercises of common stock options	266,810		—		1,722		—		—		1,722
Stock-based compensation expense	—		—		6,045		—		—		6,045
Unrealized gain on investments	—		—		—		30		—		30
Foreign currency translation adjustment	—		—		—		(265)		—		(265)
Net loss	—		—		—		—		(52,223)		(52,223)
Balance as of June 30, 2025	42,088,697	$	4	$	712,903	$	(94)	$	(473,187)	$	239,626
Exercises of common stock options	82,000		—		664		—		—		664
Stock-based compensation expense	—		—		7,336		—		—		7,336
Purchases of common stock under the Employee Stock Purchase Plan	42,768		—		276		—		—		276
Unrealized gain on investments	—		—		—		35		—		35
Foreign currency translation adjustment	—		—		—		(10)		—		(10)
Net loss	—		—		—		—		(51,499)		(51,499)
Balance as of September 30, 2025	42,213,465	$	4	$	721,179	$	(69)	$	(524,686)	$	196,428

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

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Zenas BioPharma, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(Unaudited)

(in thousands, except share data)


	Convertible Preferred Stock
	Seed Series			Series A			Series B			Series C			Common Stock
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders' Equity (Deficit)
Balance as of December 31, 2023	1,785,714	$	956	17,589,380	$	55,840	81,242,587	$	193,290	—	$	—	1,576,854	$	—	$	4,645	$	37	$	(230,403)	$	(225,721)
Repurchase of unvested restricted stock awards	—		—	—		—	—		—	—		—	(21,172)		—		—		—		—		—
Exercises of common stock options	—		—	—		—	—		—	—		—	7,035		—		42		—		—		42
Stock-based compensation expense	—		—	—		—	—		—	—		—	—		—		947		—		—		947
Foreign currency translation adjustment	—		—	—		—	—		—	—		—	—		—		—		37		—		37
Net loss	—		—	—		—	—		—	—		—	—		—		—		—		(27,800)		(27,800)
Balance as of March 31, 2024	1,785,714	$	956	17,589,380	$	55,840	81,242,587	$	193,290	—	$	—	1,562,717	$	—	$	5,634	$	74	$	(258,203)	$	(252,495)
Issuance of Series C convertible preferred stock, net of $619 issuance cost	—		—	—		—	—		—	116,275,239		199,526	—		—		—		—		—		—
Exercises of common stock options	—		—	—		—	—		—	—		—	15,655		—		124		—		—		124
Stock-based compensation expense	—		—	—		—	—		—	—		—	—		—		1,536		—		—		1,536
Foreign currency translation adjustment	—		—	—		—	—		—	—		—	—		—		—		30		—		30
Net loss	—		—	—		—	—		—	—		—	—		—		—		—		(37,977)		(37,977)
Balance as of June 30, 2024	1,785,714	$	956	17,589,380	$	55,840	81,242,587	$	193,290	116,275,239	$	199,526	1,578,372	$	—	$	7,294	$	104	$	(296,180)	$	(288,782)
Conversion of convertible preferred stock upon closing of initial public offering	(1,785,714)		(956)	(17,589,380)		(55,840)	(81,242,587)		(193,290)	(116,275,239)		(199,526)	24,978,715		2		449,610		—		—		449,612
Issuance of common stock from initial public offer, net of underwriting discounts, commissions and other issuance costs	—		—	—		—	—		—	—		—	15,220,588		2		234,384		—		—		234,386
Exercises of common stock options	—		—	—		—	—		—	—		—	3,263		—		32		—		—		32
Stock-based compensation expense	—		—	—		—	—		—	—		—	—		—		2,843		—		—		2,843
Foreign currency translation adjustment	—		—	—		—	—		—	—		—	—		—		—		(50)		—		(50)
Net loss	—		—	—		—	—		—	—		—	—		—		—		—		(38,606)		(38,606)
Balance as of September 30, 2024	—	$	—	—	$	—	—	$	—	—	$	—	41,780,938	$	4	$	694,163	$	54	$	(334,786)	$	359,435

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

Zenas BioPharma, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


		Nine Months Ended September 30,
		2025		2024
Cash flows from operating activities:
Net loss	$	(137,295)	$	(104,384)
Adjustments to reconcile net loss to net cash used in operating activities:
Acquired in-process research and development		5,000		—
Depreciation expense		46		104
Loss on disposal of property and equipment		107		—
Net amortization of premiums and accretion of discounts on investments		(1,510)		—
Non-cash interest expense on royalty obligation		1,679		—
Stock-based compensation expense		18,767		5,326
Change in fair value of convertible notes		—		846
Non-cash lease expense		651		423
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(799)		475
Accounts payable		(11,159)		6,319
Accrued expenses		5,251		10,200
Operating lease liabilities		(657)		(429)
Net cash used in operating activities		(119,919)		(81,120)
Cash flows from investing activities:
Purchases of property and equipment		(18)		(57)
Purchases of investments		(284,862)		(26,760)
Proceeds from sales and maturities of investments		131,358		—
Product candidate license acquisitions		(5,000)		—
Net cash used in investing activities		(158,522)		(26,817)
Cash flows from financing activities:
Proceeds from issuance of Series C convertible preferred stock, net of issuance costs		—		178,381
Payment of initial public offering costs		—		(1,861)
Payment of deferred offering costs		(3,324)		—
Proceeds from royalty obligation		75,000		—
Proceeds from exercise of stock options		2,485		198
Proceeds from issuance of common stock under employee stock purchase plan		276		—
Proceeds from initial public offering, net of underwriting discount and commissions		—		234,387
Net cash provided by financing activities		74,437		411,105
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(263)		16
Net (decrease) increase in cash, cash equivalents and restricted cash		(204,267)		303,184
Cash, cash equivalents and restricted cash at beginning of period		319,832		56,943
Cash, cash equivalents and restricted cash at end of period	$	115,565	$	360,127

Supplemental disclosure of non-cash investing and financing activities:
Right-of-use assets obtained under operating lease arrangements	$	445	$	—
Conversion of BMS Note into Series C convertible preferred stock	$	—	$	21,146
Deferred offering costs in accounts payable and accrued expenses	$	1,204	$	4,389

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	115,565	$	360,038
Restricted cash		—		89
Total cash, cash equivalents and restricted cash	$	115,565	$	360,127

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

Zenas BioPharma, Inc.

Notes to Condensed Consolidated Financial Statements

1.Nature of Business

Organization

Zenas BioPharma, Inc. (“Zenas” or the “Company”) was incorporated in November 2019 as Zenas BioPharma (Cayman) Limited, an exempted company incorporated in the Cayman Islands with limited liability and commenced operations in 2020. On August 2, 2023, the Company (then known as Zenas BioPharma (Cayman) Limited) de-registered from the Cayman Islands and registered by way of continuation in the State of Delaware. Zenas is a clinical-stage global biopharmaceutical company committed to being a leader in the development and commercialization of transformative immunology-based therapies for patients in need. The Company’s goal is to build an immunology and inflammation (“I&I”) focused biopharmaceutical company. The Company has in-licensed and is developing several product candidates for the treatment of various auto-immune and rare diseases. The Company is headquartered in Waltham, Massachusetts and operates in one segment, which is the business of acquiring and developing immune-based therapies for potential commercialization.

The Company’s condensed consolidated financial statements include the accounts of its wholly owned subsidiaries which include Zenas BioPharma (HK) Limited (“Zenas HK”), Zenas BioPharma (USA) LLC, Shanghai Zenas Biotechnology Co. Limited, Zenas BioPharma Securities Corp., and Zenas BioPharma GmbH.

Liquidity and Capital Resources

Since its inception, the Company has devoted its efforts principally to research and development and raising capital. The Company is subject to risks and uncertainties common to clinical stage companies in the biopharmaceutical industry, including, but not limited to, completing preclinical studies and clinical trials, obtaining regulatory approval for product candidates, market acceptance of products, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, reliance on third-party organizations, protection of proprietary technology, compliance with government regulations, and the ability to raise additional capital to fund operations. The Company’s revenues to date have been generated from payments received under the Company’s license and collaboration agreement with Bristol-Myers Squibb Company (“BMS”), novation agreement with Tenacia Biotechnology (Hong Kong) Co., Limited (“Tenacia”), license agreement with Zai Lab (Hong Kong) Limited (“Zai”), and a royalty purchase agreement with Royalty Pharma Investments (“Royalty Pharma”) (please see Note 7, License and Collaboration Revenue and Note 9, Royalty Obligation, to these condensed consolidated financial statements). The Company has not generated any revenue from product sales since inception, and its product candidates currently under development will require significant additional research and development efforts, including extensive clinical testing and regulatory approval prior to commercialization.

On September 16, 2024, the Company completed its initial public offering (“IPO”), in which the Company issued and sold 15,220,588 shares of its common stock, including 1,985,294 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $17.00 per share, for aggregate gross proceeds of $258.7 million. The Company received $234.3 million in net proceeds after deducting underwriting discounts, commissions and other offering expenses. In connection with the IPO, all outstanding shares of convertible preferred stock converted into 24,978,715 shares of the Company’s common stock.

In connection with, and prior to, the Company’s IPO, the Company effected a 1-for-8.6831 reverse stock split of the Company’s issued and outstanding common stock and adjusted the conversion ratio of all the Company’s outstanding convertible preferred stock. Accordingly, all share and per share amounts for all periods presented in the accompanying condensed consolidated financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the reverse stock split and the adjustment of the preferred stock conversion ratios.

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

$104.4 million for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, the Company had an accumulated deficit of $524.7 million. Management expects operating losses and negative operating cash flows to continue for the foreseeable future.

The Company expects that its existing cash, cash equivalents and investments of $301.6 million as of September 30, 2025, together with the $120.0 million of gross proceeds from the Private Investment in Public Equity (“PIPE”) received in October 2025 (Note 16, Subsequent Events) will be sufficient to fund its operating and capital expenditures into the fourth quarter of 2026, however it will not be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date these condensed consolidated financial statements were issued. Therefore, the Company has concluded that substantial doubt exists with respect to its ability to continue as a going concern. As a result, the Company will need to raise additional capital to finance its operations. The Company’s ability to fund operations is subject to substantial risks and uncertainties.

Until such time that the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of private or public equity financings, debt financings or other capital sources, including collaborations with other companies or other strategic transactions and licensing agreements. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. If the Company is unable to obtain sufficient capital, the Company will be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects, and the Company may be unable to continue operations. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

2.Summary of Significant Accounting Policies

The Company’s significant accounting policies are disclosed in Note 2, Summary of Significant Accounting Policies, in the audited consolidated financial statements for the year ended December 31, 2024, and notes thereto, included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 11, 2025. Since the date of those financial statements, other than disclosed herein, there have been no material changes to the Company’s significant accounting policies.

Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements include the operations of the Company and its wholly-owned subsidiaries. All intercompany accounts, transactions, and balances have been eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been or omitted pursuant to such rules and regulations.

Unaudited Interim Financial Information

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

data and other information disclosed in these notes related to the three and nine months ended September 30, 2025 and 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period. These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2024, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K as filed with the SEC, on March 11, 2025.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, expenses, and related disclosures. The Company bases its estimates on historical experience, known trends and other market-specific factors or other relevant factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis using such factors and adjusts those estimates and assumptions as facts and circumstances dictate. Actual results may differ from those estimates or assumptions. Significant estimates in these condensed consolidated financial statements include estimates made in connection with accrued research and development expenses, stock-based compensation, pre-initial public offering (“IPO”) valuations of common stock and the liability related to the sale of future royalties including the estimation of future payments and the related non-cash interest expense.

Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgement. As of the date of the issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgements or revise the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained and are recognized in the financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s financial statements.

Royalty Obligation

In September 2025, the Company and Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”) entered into the Revenue Participation Right Purchase and Sale Agreement (the “Royalty Purchase Agreement”). See Note 9, Royalty Obligations, for further details of the agreement.

When the Company maintains significant continuing involvement in generating the underlying cash flows, royalty financings are recognized as obligations. Payments received are recorded as the principal amount of the obligation on the consolidated balance sheet as long-term liabilities. The carrying amount of the obligation is accreted to reflect the total expected royalty and related payments due to Royalty Pharma, using the effective interest method. As royalties and other related payments are made, the outstanding royalty obligation will be reduced over the estimated term of the arrangement.

The royalty obligation, effective interest rate, and corresponding interest expense are determined based on the Company’s estimate of future anticipated royalty payments under the arrangement. These estimates are reassessed at the end of each reporting period according to the Company’s latest projections. Should these estimated cash flows change as a result of this review, the Company will recalculate the effective interest rate and adjust the accretion of interest on the royalty obligation prospectively. Any additional funding received from Royalty Pharma will also be treated as an obligation, with a prospective adjustment to the effective interest rate applied upon receipt of such funds.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires a company to expand its existing income tax disclosures, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for the Company beginning in fiscal year 2025, with early adoption permitted. ASU 2023-09 may be applied retrospectively or prospectively to the financial statements. The Company is currently evaluating the impact of ASU 2023-09 on the consolidated financial statements and related disclosures.

In November 2024, the FASB issued 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires entities to disclose additional information about specific expense categories in the notes to the financial statements. ASU 2024-03 is effective annual periods beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. ASU 2024-03 may be applied retrospectively or prospectively to the financial statements. The Company is currently evaluating the impact of ASU 2024-03 on the consolidated financial statements and related disclosures.

From time to time, new accounting pronouncements are issued by the “FASB” or other standard setting bodies that we adopt as of the specified effective date. Unless otherwise discussed, we do not believe that the adoption of recently issued standards have or may have a material impact on our condensed consolidated statements or disclosures.

3.Fair Value Measurements

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


		As of September 30, 2025
Description		Total Carrying Value		Quoted Prices in Active Market (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Observable Inputs (Level 3)
Assets:
Cash	$	100,852	$	100,852	$	—	$	—
Money market funds		14,713		14,713		—		—
Short-term investments:
Commercial paper		6,338		—		6,338		—
Corporate debt securities		38,944		—		38,944		—
Government securities		130,037		130,037		—		—
Long-term investments:
Government securities		10,717		10,717		—		—
Total assets	$	301,601	$	256,319	$	45,282	$	—


		As of December 31, 2024
Description		Total Carrying Value		Quoted Prices in Active Market (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Observable Inputs (Level 3)
Assets:
Cash	$	19,070	$	19,070	$	—	$	—
Money market funds		300,672		300,672		—		—
Short-term investments:
Commercial paper		3,315		—		3,315		—
Corporate debt securities		8,601		—		8,601		—
Government securities		19,108		19,108		—		—
Total assets	$	350,766	$	338,850	$	11,916	$	—

There have been no material impairments of our assets measured and carried at fair value as of September 30, 2025 and December 31, 2024. In addition, there have been no changes in valuation techniques as of September 30, 2025 and

December 31, 2024. The fair value of Level 1 instruments classified as money market funds and government securities are valued using quoted market prices in active markets. The fair value of Level 2 instruments classified as short-term investments was determined using other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date and fair value is determined using models or other valuation methodologies. During the nine months ended September 30, 2025 and year ended December 31, 2024, there were no transfers between levels.

The short and long-term investments are classified as available-for-sale securities. As of September 30, 2025, the remaining contractual maturities of the available-for-sale securities were 1 to 16 months, and the balance in the Company’s accumulated other comprehensive income was comprised of activity related to the Company’s available-for-sale securities. There were no realized gains or losses recognized on the sale or maturity of available-for-sale securities during the three and nine months ended September 30, 2025 and 2024. As a result, the Company did not reclassify any amounts out of accumulated other comprehensive income for the same period. The Company had a limited number of available-for-sale securities in insignificant loss positions as of September 30, 2025, which the Company does not intend to sell and has concluded it will not be required to sell before recovery of amortized cost for the investment maturity.

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


	As of September 30, 2025
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Commercial paper	$	6,334	$	4	$	—	$	6,338
Corporate debt securities		38,914		31		(1)		38,944
Government securities		140,680		77		(3)		140,754
Total	$	185,928	$	112	$	(4)	$	186,036


	As of December 31, 2024
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Commercial paper	$	3,311	$	4	$	—	$	3,315
Corporate debt securities		8,589		12		—		8,601
Government securities		19,093		17		(2)		19,108
Total	$	30,993	$	33	$	(2)	$	31,024

Certain short-term debt securities with original maturities of less than 90 days are included in cash and cash equivalents on the condensed consolidated balance sheets and are not included in the table above.

4.Other Assets

Other assets consisted of the following (in thousands):


	September 30, 2025		December 31, 2024
Clinical trial deposits	$	12,882	$	12,639
Deferred offering costs		837		—
Other		83		217
Total other assets	$	13,802	$	12,856

5.Accrued Expenses

Accrued expenses consisted of the following (in thousands):



	September 30, 2025		December 31, 2024
External research, development and manufacturing expenses	$	34,102	$	29,338
Employee compensation and benefits		8,757		8,308
Professional and consultant fees		1,920		1,265
Income taxes payable		—		211
Other		580		249
Total accrued expenses	$	45,359	$	39,371

6.Leases

The Company has various leases for office space, which are accounted for as operating leases and generally have terms of less than two years in length, some of which have the option to renew. The Company recognizes monthly operating lease expense on a straight-line basis over the term of the lease as general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. Variable lease expense relates primarily to office lease common area maintenance, insurance, and property taxes, and it is expensed as incurred. Variable lease expense is also excluded from the calculation of lease liabilities and right-of-use-assets.

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


Fiscal Year	Amount
2025 (remaining three months)	$	239
2026		457
2027		138
Thereafter		—
Total future minimum lease payments		834
Less: imputed interest		(36)
Total operating lease liabilities	$	798

7.License and Collaboration Revenue

License and Collaboration Agreement with Bristol-Myers Squibb

In August 2023, the Company entered into a license and collaboration agreement (the “BMS Agreement”) with BMS, under which the Company granted BMS an exclusive license to (i) develop, manufacture (subject to the Company’s rights to be the exclusive manufacturer for BMS for a certain period of time), commercialize or otherwise exploit obexelimab and any biological product (irrespective of presentations, formulations or dosages) containing obexelimab but not any of the Company’s other proprietary active ingredient (the “BMS Product”) into Japan, South Korea, Taiwan, Singapore, Hong Kong and Australia (collectively, the “BMS Territory”) and (ii) develop and manufacture obexelimab and the BMS Product outside the BMS Territory provided that obexelimab and the BMS Product are solely used in the BMS Territory.

Pursuant to the BMS Agreement, BMS paid the Company a one-time non-refundable upfront cash payment of $50.0 million. The Company is entitled to receive further separate development, regulatory milestone payments from BMS of up to approximately $79.5 million. The Company is also entitled to receive one-time sales milestone payments up to $70.0 million upon BMS achieving certain net sales milestones in a given year in the BMS Territory. The Company is also

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

The Company will continue to perform and oversee the ongoing Phase 3 trial of obexelimab in the IgG4-RD indication and BMS will participate in the performance of the study. BMS will fund their pro rata share of the total global study costs up to a specified percentage of the patients enrolled in the study from the BMS Territory. Should the percentage of patients from the BMS Territory fall below the specified percentage, BMS’s funding would proportionately decrease. The global development activities under the agreement do not represent a transaction with a customer and reimbursement payments received by the Company for global development activities are accounted for as a reduction of the related research and development expenses.

As of September 30, 2025 and 2024, the Company recorded $1.3 million and $1.8 million, respectively, as a receivable included in prepaid expenses and other current assets. The Company recorded $1.3 million and $1.8 million for the three months ended September 30, 2025 and 2024, respectively, as a reduction to research and development expense for global development costs to be reimbursed by BMS. The Company recorded $4.2 million and $3.9 million for the nine months ended September 30, 2025 and 2024, respectively, as a reduction of research and development expense for global development costs to be reimbursed by BMS. The Company did not recognize revenue related to the BMS Agreement during the three and nine months ended September 30, 2025 and 2024.

Tenacia Biotechnology Co. Novation Agreement

In October 2024, the Company entered into a novation agreement with Tenacia Biotechnology (Hong Kong) Co., Limited (“Tenacia”), under which the Company transferred its rights and obligations under the agreements with Dianthus to Tenacia (the “Tenacia Agreement”). Pursuant to the Tenacia Agreement, the Company, transferred all the ZB005 inventory, analytical methods and manufacturing records generated, under the Dianthus Option Agreement and License Agreement (collectively the “Dianthus Agreements”) to Tenacia, for the exclusive right to research, develop, manufacture and commercialize products within China, Hong Kong, Macau and Taiwan (“greater China”). As a result of the Tenacia Agreement, the Company has no further obligations to Dianthus pursuant to the Dianthus Agreements.

Pursuant to the Tenacia Agreement, Tenacia paid the Company a one-time non-refundable upfront cash payment of $5.0 million, which was recognized as revenue in the fourth quarter of 2024. The Company is entitled to receive further development, regulatory and sales milestones from Tenacia of up to approximately $86.0 million if certain milestones are successfully achieved. The Company did not recognize revenue related to the Tenacia Agreement during the nine months ended September 30, 2025 and 2024.

License Agreement with Zai Lab (Hong Kong) Limited

In January 2025, the Company entered into a license agreement (the “Zai License Agreement”), with Zai, under which the Company granted Zai an exclusive sublicense to develop, manufacture and commercialize ZB001 and related programs in greater China. Under the Zai Agreement, Zai will be responsible for conducting all research and development activities, manufacturing, regulatory and commercialization in greater China.

Pursuant to the Zai Agreement, Zai paid the Company a one-time non-refundable upfront cash payment of $10.0 million. The Company is entitled to receive further development, regulatory and sales milestones from Zai up to approximately $117.0 million if certain milestones are successfully achieved, with passthrough obligations of $21.0 million due to Viridian. The Company is also eligible to receive tiered royalties on net sales in greater China, ranging from the low to mid-single digits, net of passthrough obligations due to Viridian.

The Company evaluated the terms of the Zai Agreement and determined it is within the scope of ASC 606. The Company identified the following promises in the Zai Agreement that were evaluated under the scope of ASC 606: (i) transfer of the license for ZB001, (ii) licensed technology transfer (iii) licensed material transfer and (iv) continued licensed technology transfer. The Company also evaluated whether certain options outlined in the Zai Agreement represented material rights that would give rise to a performance obligation and concluded that none of the options conveyed a material right to Zai or were immaterial and, therefore, are not considered separate performance obligations within the Zai Agreement.

The Company assessed the above promises and determined that the license for ZB001 and technology transfer are a combined distinct performance obligation within the scope of ASC 606. The licensed material transfer and the continued technology know-how transfer services are promises that are separately identifiable and considered to be distinct. The Company determined the transfer of the licensed materials and continued technology know-how transfer services were immaterial in the context of the contract based on the minimal resources required to fulfill the obligations and the estimated standalone selling price of the licensed materials. Therefore, the sublicense and technology transfer represent a single performance obligation at contract inception.

The Company concluded that the transaction price of $10.0 million was allocated to the combined performance obligation, which was recognized upon delivery prior to March 31, 2025. The Company used the most likely amount method to estimate variable consideration and estimated that the most likely amount for each potential developmental and regulatory variable consideration milestone payment under the agreement is zero, as achievement of those milestones is uncertain and susceptible to factors outside the Company’s control. Accordingly, all such milestone payments were excluded from the transaction price. Management will reevaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, will adjust the transaction price as necessary. Sales and royalty based milestones structured on the level of sales, were also excluded from the transaction price, as the license is deemed to be the predominant item to which the transaction price relates. The Company will recognize such milestone and royalty revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

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

8.License Agreements

License Agreements with Xencor, Inc.

2020 Xencor Agreement

In September 2020, the Company entered into a license agreement (the “2020 Xencor Agreement”) with Xencor, Inc. (“Xencor”), under which the Company is required to pay Xencor tiered royalties on annual net sales of successfully commercialized products, including ZB002 and ZB004. The royalty percentage rates vary by geographic areas as defined in the 2020 Xencor Agreement and range from the mid-single digits to mid-teens. The Company is also obligated to reimburse Xencor for third-party costs incurred for certain patent filings, prosecution and maintenance as further specified in the 2020 Xencor Agreement. During the nine months ended September 30, 2025 and 2024, the Company incurred no such reimbursable costs.

2021 Xencor Agreement

In May 2021, the Company entered into a license agreement with Xencor (the “2021 Xencor Agreement”), under which the Company obtained an exclusive, royalty-bearing, sublicensable worldwide license to research, develop, manufacture, market and sell obexelimab. The Company is also obligated to make regulatory milestone payments up to $75.0 million and one-time sales milestone payments up to $385.0 million upon achieving milestone events of net sales in a given calendar year in the territory equal to certain threshold amounts. In addition, the Company is required to pay Xencor tiered royalties on annual net sales of successfully commercialized products utilizing obexelimab, with the royalty percentages varying based on regions and ranging from the mid-single digits to the mid-teens.

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

License Agreement with Viridian Therapeutics, Inc.

In October 2020, the Company entered into a license agreement with Viridian Therapeutics, Inc. (the “Viridian Agreement”) to obtain an exclusive, royalty-bearing, sublicensable license to research, develop, manufacture, market and sell certain antibody product candidates based on Viridian’s proprietary technology. The Company’s license rights are limited to non-oncology indications and are limited to China, Hong Kong, Macau and Taiwan (“Zenas Territories”). Viridian retains its rights to develop and commercialize such product candidates outside of the Zenas Territories. In

December 2021, the Company and Viridian entered into two letter agreements to authorize initiation of certain manufacturing and development activities related to the licensed product candidate, ZB001. Under the terms of the letter agreements, Viridian engaged a third-party contract manufacturer to initiate certain work related to ZB001. In May 2022, the Company entered into a manufacturing development and supply agreement (“Viridian Supply Agreement”). In January 2025, the Company entered into a third amendment to the Viridian Agreement, under which the Company is obligated to make development and sales milestone payments to Viridian, totaling $21.0 million, based on achievement of certain specified development and sales milestones, and royalties on net sales.

In January 2025, the Company entered the Zai License Agreement under which the Company granted Zai an exclusive sublicense to develop, manufacture and commercialize ZB001 and related programs in greater China. In connection with the Zai License Agreement, the Company assigned the Viridian Supply Agreement to Zai. For additional information on the Zai Agreement, please see License Agreement with Zai Lab (Hong Kong) Limited in Note 7 – License and Collaboration Revenue to these condensed consolidated financial statements.

During the three and nine months ended September 30, 2025, the Company recognized no expense related to Viridian contract manufacturing organization (“CMO”) costs. During the three and nine months ended September 30, 2024, the Company recognized no expense and $0.1 million in expense related to Viridian CMO costs, respectively. Viridian has agreed to reimburse the Company for certain services the Company performs on Viridian’s behalf, with reimbursements being recorded as a reduction in research and development expenses. During the three and nine months ended September 30, 2025, the Company recorded an immaterial amount and $0.2 million in reimbursable expenses, respectively. During the three and nine months ended September 30, 2024, the Company recorded $0.5 million and $1.5 million in reimbursable expenses, respectively. Additionally, during the nine months ended September 30, 2025 and 2024, no milestones were achieved.

9.Royalty Obligation

In September 2025, the Company and Royalty Pharma entered into the Royalty Purchase Agreement. Pursuant to the Royalty Purchase Agreement, the Company received a $75.0 million upfront payment in exchange for which Royalty Pharma purchased the right to receive, for each calendar quarter, (i) 5.5% of net sales of obexelimab products sold by the Company and its affiliates worldwide, (ii) 5.5% of net sales of obexelimab products sold by licensees of Zenas and its affiliates in the U.S., the United Kingdom and the European Union, (iii) 25% of royalty income payable to Zenas or any of its affiliates on sales of obexelimab products in countries other than the U.S., the United Kingdom, and in the European Union by its licensees pursuant to out-licenses less royalty payments payable by Zenas to Xencor Inc. and (iv) 25% of non-royalty income attributable to obexelimab products payable to Zenas or any of its affiliates by its licensees (other than certain milestone payments payable by Bristol-Myers Squibb) pursuant to out-licenses and allocated to countries other than the U.S., the United Kingdom and in the European Union.

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

The Company accounted for the Royalty Purchase Agreement as a debt financing, primarily because it has significant continuing involvement in generating the future revenue on which the royalty payments are based. The $75.0 million upfront payment received was recorded as a liability, net of issuance costs of $3.7 million. The effective interest rate was determined based on the Company’s projections of future royalty payments. The Company will evaluate the estimated timing and amount of future royalty payments for each reporting period and will revise the effective interest rate prospectively if those estimates change materially.

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

Purchase Agreement, which are subject to significant estimation uncertainty and are based on various assumptions made by the Company. These assumption inputs are determined to be Level 3 inputs in the fair value hierarchy as they involve significant unobservable inputs and judgment.

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


	Amount
Proceeds from royalty obligation	$	75,000
Issuance costs		(3,690)
Interest expense related to royalty obligation		1,679
Royalty obligation as of September 30, 2025	$	72,989
Effective interest rate		30.7%

10.Common Stock

In September 2024, upon the completion of the IPO, the Company restated its certificate of incorporation, pursuant to which the Company is authorized to issue 175,000,000 shares of common stock $0.0001 par value. The voting, dividend and liquidation rights of the holders of the Company’s common stock were subject to and qualified by the rights, powers and preference of the holders of any preferred stock then issued and outstanding.

The holders of the common stock are entitled to one vote for each share of common stock held at all meetings of stockholders (and written actions in lieu of meetings), and there are no cumulative voting rights.

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


	September 30, 2025	December 31, 2024
Options to purchase common stock	10,507,497	8,706,197
Remaining shares reserved for future issuance	507,134	359,399
RSUs	525,350	—
Employee stock purchase plan	773,122	397,956
Total	12,313,103	9,463,552

11.Stock-Based Compensation

2024 Plan

On September 3, 2024, the Board of Directors (the “Board”) adopted the 2024 Equity Incentive Plan (the “2024 Plan”), which became effective immediately prior to the effectiveness of the registration statement for the Company’s IPO. The 2024 Plan provides for the award of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, unrestricted stock, restricted stock units and other stock-based awards.

The number of shares reserved and available for issuance under the 2024 Plan will automatically increase each January 1, beginning on January 1, 2025 through January 1, 2034, by the number of shares equal to the lesser of (i) five percent of the aggregate number of shares of common stock outstanding as of such date, and (ii) a number of shares as may be determined by the Board on or prior to such date. In January 2025, the number of shares of common stock available for issuance under the Company’s 2024 Plan, was increased by 2,089,670 shares of common stock due to the automatic annual provision to increase shares of common stock available under the 2024 Plan. As of September 30, 2025, 507,134 shares of common stock were available for issuance under the 2024 Plan.

Stock Options

The Company has granted stock-based awards with either service or performance based vesting conditions. Compensation expense related to awards to employees and directors with service based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. Compensation expense related to awards to employees with performance based vesting conditions is recognized based on the grant date fair value once the achievement of the performance condition is probable.

From time to time, the Company grants equity awards to newly hired employees as an inducement to enter into employment with the Company. The grants constitute "employment inducement grants" in accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules and are issued outside of the 2024 Plan. The inducement grants include non-statutory stock options to purchase shares of the Company's common stock. The inducement grants have terms and conditions consistent with those set forth under the 2024 Plan and vest under the same respective vesting schedules as stock option awards granted under the 2024 Plan. The inducement grants are included in the stock option award tables below. As of September 30, 2025, the Company granted 762,000 non-statutory stock options as inducement grants. No inducement grants were awarded during 2024.

The following table presents a summary of the Company’s stock option activity and related information:




	Number of Shares	Weighted - Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding - December 31, 2024	8,706,197	$	13.21		$	2,104
Granted	2,703,600	$	10.82
Exercised	(377,285)	$	6.59		$	1,731
Forfeited or cancelled	(525,015)	$	12.59
Outstanding - September 30, 2025	10,507,497	$	12.86	8.81	$	98,133
Options vested and exercisable as of September 30, 2025	2,833,037	$	12.12	8.12	$	28,548
Options vested and expected to vest as of September 30, 2025	10,507,497	$	12.86	8.81	$	98,133

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

Restricted Stock Units

The Company granted to certain employees restricted stock units (“RSUs”) that are subject to time-based vesting conditions, that vest equally over four years, assuming continued employment. RSUs with time-based vesting conditions are valued on the grant date using the grant date market value price of the underlying shares of the Company’s common stock. The Company did not grant any RSU’s in 2024. The following table summarizes the Company’s RSU activity:


	Number of Shares		Weighted - Average Grant Date Fair Value
Unvested as of December 31, 2024	—	$	—
Granted	538,550	$	12.15
Vested	—	$	—
Forfeited	(13,200)	$	11.94
Unvested as of September 30, 2025	525,350	$	12.16

No RSUs vested during the current or prior year periods.

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

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


		Three Months Ended September 30,				Nine Months Ended September 30,
		2025		2024		2025		2024
Research and development	$	2,403	$	1,257	$	6,097	$	2,378
General and administrative		4,933		1,586		12,670		2,948
Total stock-based compensation expense	$	7,336	$	2,843	$	18,767	$	5,326

Employee Stock Purchase Plan

On September 3, 2024, the Board adopted the 2024 Employee Stock Purchase Plan (the “ESPP”), which became effective immediately prior to the effectiveness of the registration statement for the Company’s IPO. The number of shares of common stock available under the ESPP will automatically increase on January 1st of each year, beginning on January 1, 2025 through January 1, 2034, by the number of shares equal to the lesser of (i) one percent of the aggregate number of shares of common stock outstanding as of such date, and (ii) a number of shares as may be determined by the Board on or prior to such date, up to a maximum of 1,000,000 shares in the aggregate per year. On January 1, 2025, the number of shares of common stock authorized for issuance under the ESPP increased automatically by 417,934 shares and as of September 30, 2025, a total of 773,122 shares were available for future issuance under the ESPP. During the three and nine months ended September 30, 2025, there were 42,768 shares issued under the ESPP.

12.Net Loss Per Share

The Company’s potentially dilutive securities, which include convertible preferred stock, restricted stock and stock options, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following shares from the computation of diluted net loss per share attributable to common stockholders as of September 30, 2025 and 2024 because including them would have had an anti-dilutive effect:


	September 30,
	2025	2024
Unvested restricted stock units	525,350	—
Options to purchase common stock	10,507,497	8,630,075

13.Commitments and Contingencies

Operating Leases

The Company has entered into arrangements for leases of office space; see Note 6, Leases, for details.

License Agreements

The Company entered into license agreements under which it is obligated to make fixed and contingent payments; see Note 8, License Agreements, for details.

Royalty Obligation

The Company entered into a royalty purchase agreement under which it is obligated to make contingent payments related to future net sales and royalty income of obexelimab; see Note 9, Royalty Obligation for details.

Other Contracts

The Company has entered into agreements with certain vendors for the provision of services that the Company is not contractually able to terminate for convenience and thereby avoid any and all future obligations to the vendors. Under such agreements, the Company is contractually obligated to make certain minimum payments to the vendors, with the exact amounts in the event of termination to be based on the timing of the termination and the exact terms of the agreement. As of September 30, 2025, our total non-cancellable clinical manufacturing contract payment obligations are $18.7 million of which the full obligation is payable within 12 months.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and certain officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or services as directors. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not currently aware of any indemnification claims and had not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of September 30, 2025.

Litigation and Other Proceedings

The Company may periodically become subject to legal proceedings and claims arising in the ordinary course of business. As of September 30, 2025, the Company was not subject to any material legal proceedings which would reasonably be expected to have a material adverse effect on the Company’s financial results.

14.Related Party Transactions

Xencor, Inc.

The Company has obtained exclusive, worldwide licenses from Xencor to research, develop, manufacture, market and sell three antibody product candidates pursuant to two license agreements. The Company has concluded that Xencor is a related party, due to the issuance of convertible preferred stock in December 2020 and April 2023. In connection with the completion of the IPO, in September 2024, all outstanding shares of preferred stock converted into shares of common stock. As of September 30, 2025, Xencor held less than 10% of shares of the Company’s outstanding common stock.

Viridian Therapeutics, Inc.

The Company has obtained a license from Viridian to research, develop, manufacture, market and sell an antibody product candidate in China. The Company has concluded that Viridian is a related party because although Fairmount Funds Management LLC owns less than 10% of shares of the Company’s outstanding common stock, they have a seat on the Board and are also a 10% or greater stockholder of Viridian and have two seats on Viridian’s board of directors. As initial consideration for this license, the Company issued 38,707 shares of its common stock to Viridian during the year ended December 31, 2020. As of September 30, 2025, Viridian held 0.1% of shares of the Company’s outstanding common stock.

Zai Lab (Hong Kong) Limited

The Company has granted a sublicense to Zai to develop, manufacture and commercialize ZB001 and related programs in greater China. The Company has concluded that Zai is a related party, as the Company’s CEO and Chairman is a member of Zai’s board of directors.

For additional information on these arrangements, please see Note 7, License and Collaboration Revenue and Note 8, License Agreements, to these condensed consolidated financial statements.

15.Segment Information

The Company manages its operations on a consolidated basis as a single reportable segment focused on the research and development of precision immunology-based therapies. The accounting policies of the single reportable segment are identical to those described in Note 2, Summary of Significant Accounting Policies. When evaluating the Company’s financial performance, the Company’s chief operating decision-maker (the “CODM”), its Chief Executive Officer regularly reviews consolidated net loss, total expense and direct expenses by program and compared to budget. The CODM allocates resources based on the Company’s available cash resources, and forecasted expenditures on a consolidated basis, as well as an assessment of the probability of success of its research and development activities on a program basis. Segment asset information regularly provided to the CODM is consistent with that reported on the consolidated balance sheets with particular emphasis on the Company’s available liquidity, including its cash, cash equivalents and investment balances. Revenue is primarily attributed to individual countries based on the entity owning the license. During the three months ended September 30, 2025, the Company did not recognize revenue and for nine months ended September 30, 2025, $10.0 million was recognized as revenue which was attributed to Zenas HK. The Company did not recognize revenue during the three or nine months ended September 30, 2024.

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


		For the three months ended September 30,				For the nine months ended September 30,
		2025		2024		2025		2024
Revenue	$	—	$	—	$	10,000	$	—
Less:
Direct research and development expenses:¹
Obexelimab		20,753		21,326		74,006		56,408
Other programs (ZB002 & ZB004)		467		384		1,204		1,850
Partnered regional programs (ZB001 & ZB005)		172		2,344		134		6,367
Unallocated research and development²		10,607		8,219		30,902		22,979
General and administrative³		8,245		5,868		25,060		15,335
Acquired in-process research and development		5,000		—		5,000		—
Stock-based compensation		7,336		2,843		18,767		5,326
Other segment items⁴		(1,081)		(2,378)		(7,778)		(3,881)
Segment net loss	$	(51,499)	$	(38,606)	$	(137,295)	$	(104,384)

¹Direct research and development expenses primarily consist of direct costs incurred to specific program research and development activities, including costs to conduct clinical trials and to manufacture clinical drug supply.

² Unallocated research and development expenses primarily consist of indirect costs incurred in support of overall research and development activities and non-specific programs, including activities that benefit multiple programs, such as personnel costs for employees involved in research and development activities, excluding stock-based compensation, as well as contract services not allocated to specific programs.

³General and administrative expenses primarily consist of professional fees, depreciation expense, facilities expenses as well as all other personnel costs, excluding stock-based compensation.

⁴ Other segment items consist of other income (expense), net, and income tax benefit (provision). Other income (expense), net consists of interest income, interest expense related to the royalty obligation and realized and unrealized gains and losses on foreign currency transactions.

16.Subsequent Events

License Agreement with InnoCare Pharma Inc.

In October 2025, the Company entered into a License Agreement (the “InnoCare License Agreement”) with InnoCare Pharma Inc. (“InnoCare”). Under the InnoCare License Agreement, InnoCare granted the Company exclusive rights to develop, manufacture, and commercialize: i) orelabrutinib, in the multiple sclerosis (“MS”) field worldwide, and in all non-oncology indications outside Greater China and Brunei, Burma, Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam (“Southeast Asia”), ii) ZB021 (an IL-17AA/AF inhibitor) in all fields of use worldwide, excluding Greater China and Southeast Asia and iii) ZB022 (a TYK2 inhibitor) in all fields of use worldwide. The Company also obtained certain non-exclusive rights to perform development and manufacturing activities in Greater China and Southeast Asia to support each program in its respective licensed territories.

Pursuant to the InnoCare License Agreement, the Company agreed to make a one-time non-refundable upfront cash payment of $35.0 million, $5.0 million of which was paid as of September 30, 2025, prior to the transaction closing and was recorded in the condensed consolidated statement of operations and comprehensive loss as acquired in-process research and development. The Company also agreed to issue upfront, 5,000,000 shares of common stock to InnoCare in a private placement in exchange for these rights.

The Company is also required to make an additional one-time non-refundable cash payment of $25.0 million and issue an additional 2,000,000 shares of common stock through a private placement upon the occurrence of Zenas’ initiated Phase 3 clinical trial for orelabrutinib in any indication other than primary progressive MS, or by March 31, 2026, upon the occurrence of certain specified events, whichever comes first. In addition, the Company has agreed to make one-time, potential near-term milestone payments of $20 million each, upon the achievement of certain regulatory milestones for ZB021 and ZB022 (the “Regulatory Milestones”).

The Company is further obligated to pay future regulatory and commercial milestones of up to $723.0 million related to orelabrutinib, and future development, regulatory, and commercial milestones of up to $656.0 million, inclusive of the two $20.0 million Regulatory Milestones specified above, for each preclinical compound if certain milestones are successfully achieved. In addition, the Company may be obligated to pay royalties on net sales at rates ranging from high-single digits to high-teens for orelabrutinib, and mid-single digits to mid-teens for the preclinical compounds.

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

The Company simultaneously entered into a Subscription Agreement and Registration Rights Agreement with InnoCare related to the shares of common stock issued and to be issued in the private placement. The Subscription Agreement provides transfer restrictions on the InnoCare shares and other customary representations, warranties and covenants that were made solely for the benefit of the parties to the Securities Purchase Agreement.

PIPE

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

At- the-Market (“ATM”) Program

In October 2025, the Company filed a registration statement on Form S-3 (the “Registration Statement”) with the SEC, which registered the offering, issuance and sale of common stock, preferred stock, warrants and debt securities, or any combination thereof, in an amount and on terms that the Company will determine at the time of the respective offering. The Company simultaneously entered into a sales agreement with Jefferies LLC as sales agent to provide for the issuance and sale by the Company of up to $200.0 million of common stock from time to time in ATM offerings under the Registration Statement.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 11, 2025. 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. See also the section titled “Special Note Regarding Forward-Looking Statements.”

Overview

We are a clinical-stage global biopharmaceutical company committed to being a leader in the development and commercialization of transformative immunology-based therapies for patients in need. With the evolving understanding of the pathogenesis of autoimmune diseases, along with the expansion of promising immunology-based pharmacologic targets, we are building an immunology and inflammation (“I&I”) focused biopharmaceutical company. Our core business strategy combines disciplined product candidate acquisition with strategic deployment of internal expertise and effective use of external resources. We leverage our experienced executive management team and our established networks throughout the biopharmaceutical industry to identify, acquire and develop product candidates that we believe can provide superior clinical benefits to patients living with autoimmune diseases.

Our lead I&I product candidate, obexelimab, is a bifunctional monoclonal antibody designed to bind both CD19 and FcγRIIb, which are broadly present across B cell lineage, in order to inhibit the activity of cells that are implicated in many autoimmune diseases without depleting them. Based on existing clinical data generated to date, we believe that targeting B cell lineage via CD19 and FcγRIIb can inhibit B cells and has been shown to be well-tolerated.

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. 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. 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. 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: 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.

Orelabrutinib is a highly selective and central nervous system (“CNS”)-penetrant, oral small molecule BTK inhibitor. Orelabrutinib is designed to bind irreversibly to BTK with minimal off-target effects, which may potentially reduce certain side effects. 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.

ZB021 is an oral IL-17AA/AF inhibitor designed to block both IL-17AA homodimer and IL-17AF heterodimer signaling. Preclinical studies for ZB021 have shown favorable PK and ADME properties. 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.

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. These consist of ZB002 and ZB004. We retain global rights for both assets. 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. 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.

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 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. We expect to continue to incur significant and increasing losses for the foreseeable future. We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

●

continue clinical development of obexelimab, orelabrutinib and our other programs;

●

advance our obexelimab and orelabrutinib programs and our other product candidates through preclinical development and clinical trials;

●

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;

●

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

●

seek marketing regulatory approvals for our current or any future product candidates that successfully complete clinical trials;

●

commercialize our current or any future product candidates, if approved;

●

take steps toward our goal of being an integrated biopharma company capable of supporting commercial activities, including establishing sales, marketing and distribution infrastructure;

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continue to develop, maintain and defend our intellectual property portfolio, including against third-party interference, infringement and other intellectual property claims, if any;

●

seek to attract, hire and retain qualified clinical, scientific, operations and management personnel;

●

add and maintain operational, financial and information management systems;

●

attempt to address any competing therapies and market developments;

●

experience delays in our preclinical studies, clinical trials or regulatory approval for our current or any future product candidates, including with respect to failed studies, inconclusive results, safety issues or other regulatory challenges;

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

●

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.

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. In addition, if we obtain regulatory approval for a product candidate and do not enter into a third-party commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution activities. We expect to continue to incur significant losses for the foreseeable future as we continue to advance the development of our product candidates and incur additional costs associated with being a public company. Our net losses may fluctuate significantly from period to period, depending on the timing of our planned clinical studies and expenditures related to our research and development activities. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our accounts payable and accrued research and development and other current liabilities.

We will need to continue to raise substantial additional capital to support our continuing operations and pursue our growth strategy as a public company. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity financings, debt financings or other capital sources, which could include collaborations with other companies, or other strategic transactions and licensing agreements. We may be unable to obtain financing on acceptable terms, or at all, and we may be unable to enter into collaborations or other arrangements. Our failure to raise capital or enter into such agreements as, and when, needed, could have a material adverse effect on our business, prospects, results of operations, and financial condition, including requiring us to have to delay, reduce or eliminate product development or future commercialization efforts, or grant rights to develop and market potential future product candidates that we would otherwise prefer to develop and market ourselves.

As there are numerous risks and uncertainties associated with development of I&I therapeutics, we are unable to predict the timing or amount of increased expenses, or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. We will need to generate significant revenue to achieve profitability, and we may never do so. 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. 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. See section titled “Liquidity and Capital Resources”.

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. 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. 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. Our operating and labor costs and research and development costs may also be negatively impacted due to supply chain constraints, global geopolitical tensions, worsening macroeconomic conditions and employee availability and wage increases, which may result in additional stress on our working capital.

Additionally, we are subject to other challenges and risk specific to our business and our ability to execute on our strategy, as well as risks and uncertainties common to companies in the clinical stage biopharmaceutical industry.

Components of Our Results of Operations

Revenue

To date, we have no product candidates approved for commercial sale in any country, and we have not generated any revenues from the sale of products. Our revenue has been derived from collaboration arrangements and license fees.

License and Collaboration Revenue

License and collaboration revenue is generated from 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”). We retain exclusive rights to commercialize the licensed products containing obexelimab outside of the BMS Territory. The revenue recognized to date pursuant to this arrangement relates to the license of obexelimab and the related technology transfer, which was recognized upon delivery of the license. This arrangement includes the participation by BMS in certain joint global studies of obexelimab in accordance with the terms of the BMS Agreement, in which BMS will reimburse us for its share of the related study costs. Such reimbursements will be classified as a reduction to research and development expense in the period such costs are incurred. We will recognize development and regulatory milestones defined in the BMS Agreement when the achievement of the underlying milestone events is deemed probable, which is expected to be upon achievement. Sales milestones and royalties on future sales will be recognized in the period the related sales occur.

Pursuant to the Tenacia Agreement, we transferred our rights, title, interest, liabilities, duties and obligations under the Option and License Agreements with Dianthus to Tenacia for ZB005. The revenue recognized to date pursuant to this arrangement relates to the novation of the ZB005 license, asset transfer and technology transfer, which was recognized upon delivery of the license, related assets and technology transfer. We will recognize development and regulatory milestones as defined in the Tenacia Agreement when the achievement of the underlying milestone events is deemed probable, which is expected to be upon achievement. Sales milestones and royalties on future sales will be recognized in the period the related sales occur.

Pursuant to the Zai License Agreement, we granted 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.

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.

Operating Expenses

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

Research and Development Expenses

Research and development expenses account for a significant portion of our operating expenses and consist primarily of external and internal costs incurred in connection with the preclinical and clinical development of our product candidates, and include:

Direct Costs:

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external research and development expenses incurred under agreements with CROs and consultants that conduct our clinical studies and other scientific development services;

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costs incurred under agreements with CMOs for manufacturing material for our preclinical studies and clinical trials;

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costs to obtain and maintain licenses to intellectual property, and related future payments should milestones described in those agreements be achieved; and

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costs related to compliance with regulatory requirements.

Indirect Costs:

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employee-related expenses including salaries, bonuses, benefits, stock-based compensation and other related costs for those employees involved in research and development activities; and

●

costs of outside consultants, including their fees, stock-based compensation and related travel expenses.

We expense research and development costs as incurred. We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors or our estimate of the level of service that has been performed at each reporting date. Payments for these external development activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed consolidated financial statements as prepaid expenses or accrued expenses. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized, even when there is no alternative future use for the research and development. The capitalized amounts are expensed as the related goods are delivered or the services are performed.

A significant portion of our research and development costs have been external costs, which we track on an individual product candidate basis after a clinical product candidate has been identified. We utilize third party contractors for our research and development activities and CMOs for our manufacturing activities and we do not have our own laboratory or manufacturing facilities. Therefore, we have no material facilities expenses attributed to research and development. Our internal research and development costs are primarily personnel-related costs and other indirect costs. 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.

Research and development activities are central to our business model. We expect that our research and development expenses will continue to increase for the foreseeable future as we advance clinical trials for our product candidates, pursue additional indications, continue to develop additional product candidates, expand our headcount and maintain, expand and enforce our intellectual property portfolio. We also expect our manufacturing costs to increase with our CMOs as we scale up our processes for commercial manufacturing. 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.

The successful development of our current product candidates, or any product candidates we may develop in the future is highly uncertain. Therefore, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development and commercialization of our product candidates, if approved, and any other product candidates that we may develop. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of any current or future product candidate, if approved. This is due to the numerous risks and uncertainties associated with product development, including the uncertainty of:

●

the scope, timing and progress of our ongoing clinical studies and other research and development activities associated with the development of our current and future product candidates;

●

the number and scope of preclinical and clinical programs we decide to pursue;

●

our ability to maintain our current research and development programs and to establish new programs;

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the timing of and successful patient enrollment in, and the initiation and completion of, clinical trials;

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the successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA, or any comparable foreign regulatory authority;

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the timing, receipt and terms of any marketing approvals from applicable regulatory authorities;

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our ability to establish new licensing or collaboration arrangements;

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the performance of our future collaborators, if any;

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our ability to establish and maintain arrangements with third-party manufacturers for the commercial supply of products that receive marketing approval, if any;

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development and timely delivery of commercial-grade drug formulations that can be used in our planned clinical trials and for commercialization;

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

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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;

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

●

the costs and timing of establishing or securing sales and marketing capabilities for our product candidates if approved;

●

the imposition of new laws and regulations, including those relating to labor conditions and safety standards, information and data transfer, imports, duties, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds, particularly new or increased tariffs imposed on imports, and as a result supply-related costs, from countries where our suppliers operate, as well as tariffs that impact the biopharmaceutical industry generally;

●

our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products; and

●

maintaining a continued acceptable safety profile of the product candidates following approval.

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

General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related expenses, including salaries, bonuses, benefits, and stock-based compensation expenses for personnel in executive, finance, accounting, human resources and other administrative functions. Other significant general and administrative expenses include legal fees relating to intellectual property and corporate matters, professional fees paid for accounting, auditing, tax and consulting and other professional services, and expenses for rent, insurance and other operating costs not otherwise classified as research and development expenses.

We anticipate that our general and administrative expenses will increase in the next few years as we increase our headcount to support our continued research and development activities of our product candidates. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, among other expenses. We also anticipate increased expenses associated with being a public company, including costs for accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with the rules and regulations of the SEC, listing standards applicable to companies listed on a national securities exchange, director and officer insurance costs, and investor and public relations costs. 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 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. When we become obligated to make contingent milestone payments under the terms of the agreements by which we acquired the IPR&D assets, we will recognize additional IPR&D expense. 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.

Income Taxes

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,
	2025		2024			Increase (Decrease)
Operating expenses:
Research and development	$	34,402	$	33,530	$	872
General and administrative		13,178		7,454		5,724
Acquired in-process research and development		5,000		—		5,000
Total operating expenses		52,580		40,984		11,596
Loss from operations		(52,580)		(40,984)		(11,596)
Other income (expense), net:
Other income, net		1,081		2,378		(1,297)
Total other income (expense), net		1,081		2,378		(1,297)
Net loss	$	(51,499)	$	(38,606)	$	(12,893)

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,
	2025		2024			Increase (Decrease)
Direct research and development expenses by program:
Obexelimab	$	20,753	$	21,326	$	(573)
Other programs (ZB002 & ZB004)		467		384		83
Partnered regional programs (ZB001 & ZB005)		172		2,344		(2,172)
Unallocated research and development expenses:
Personnel expenses (including stock-based compensation)		12,467		9,049		3,418
Other expenses		543		427		116
Total research and development expenses	$	34,402	$	33,530	$	872

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; and

●

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,
	2025		2024			Increase (Decrease)
Personnel related expenses (including stock-based compensation)	$	8,804	$	4,866	$	3,938
Legal and professional fees		2,608		1,512		1,096
Facilities		789		507		282
Other expenses		977		569		408
Total general and administrative expenses	$	13,178	$	7,454	$	5,724

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; and

•	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

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


	Nine Months Ended September 30,
	2025		2024			Increase (Decrease)
Revenue:
License and collaboration revenue	$	10,000	$	—	$	10,000
Total revenue		10,000		—		10,000
Operating expenses:
Research and development	$	112,343	$	89,982	$	22,361
General and administrative		37,730		18,283		19,447
Acquired in-process research and development		5,000		—		5,000
Total operating expenses		155,073		108,265		46,808
Loss from operations		(145,073)		(108,265)		(36,808)
Other income (expense), net:
Fair value adjustments to convertible notes		—		(846)		846
Other income, net		7,593		4,727		2,866
Total other income (expense), net		7,593		3,881		3,712
Loss before income taxes		(137,480)		(104,384)		(33,096)
Income tax benefit		185		—		185
Net loss	$	(137,295)	$	(104,384)	$	(32,911)

Revenue

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.

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,
	2025		2024			Increase (Decrease)
Direct research and development expenses by program:
Obexelimab	$	74,006	$	56,408	$	17,598
Other programs (ZB002 & ZB004)		1,204		1,850		(646)
Partnered regional programs (ZB001 & ZB005)		134		6,367		(6,233)
Unallocated research and development expenses:
Personnel expenses (including stock-based compensation)		35,548		24,210		11,338
Other expenses		1,451		1,147		304
Total research and development expenses	$	112,343	$	89,982	$	22,361

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. The increase of $22.4 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; and

●

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.

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,
	2025		2024			Increase (Decrease)
Personnel related expenses (including stock-based compensation)	$	25,261	$	10,961	$	14,300
Legal and professional fees		6,834		4,332		2,502
Facilities		2,494		1,557		937
Other expenses		3,141		1,433		1,708
Total general and administrative expenses	$	37,730	$	18,283	$	19,447

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. The increase of $19.4 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; and

•	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.

Liquidity and Capital Resources

Overview

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.

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.

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. We have based our estimates on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we currently expect.

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

●

the scope, timing, progress results and costs of our ongoing clinical studies and other research and development activities associated with the development of our other and future product candidates;

●

the costs, timing and outcome of regulatory review of product candidates;

●

the costs of future activities, including product sales, medical affairs, marketing, manufacturing, and distribution, for any product candidates for which we receive marketing approval;

●

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

●

the cash requirements of any future acquisitions or discovery of product candidates;

●

the cost and timing of attracting, hiring and retaining skilled personnel to support our operations and continued growth;

●

the cost of implementing operational, financial and management systems;

●

the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;

●

our ability to establish and maintain collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties on favorable terms, if at all;

●

our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products;

●

the timing, receipt and amount of sales of, or milestone payments related to or royalties on, current or future product candidates, if any; and

●

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. 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. 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.

We have incurred losses and cumulative negative cash flows from operations since our inception. We anticipate that we will continue to incur significant losses for at least the next several years. We expect our research and development, and general and administrative expenses will continue to increase. 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. 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.

If we raise additional funds through licenses, strategic alliances or collaboration arrangements in the future, we may have to relinquish valuable rights to our technologies, future revenue streams or drug candidates, or grant licenses on terms that may not be favorable to us. 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.

Cash Flows

The following table provides information regarding our cash flows for each of the periods presented (in thousands):


	Nine Months Ended September 30,
	2025		2024
Net cash used in operating activities	$	(119,919)	$	(81,120)
Net cash used in investing activities		(158,522)		(26,817)
Net cash provided by financing activities		74,437		411,105
Effect of exchange rate changes on cash and restricted cash		(263)		16
Net (decrease) increase in cash, cash equivalents and restricted cash

Zenas BioPharma, Inc. 10-Q