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

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

Note 1. Organization and Business

Note 2. Summary of Significant Accounting Policies

Note 3. Fair Value Measurement

Note 4. Balance Sheet Components

Note 5. Collaboration and License Agreements

Note 6. License Agreements

Note 7. Commitments and Contingencies

Note 8. Stockholders’ Equity

Note 10. Common Stock Warrants

Note 11. Stock-Based Compensation Plans

Note 12. Income Taxes

Note 13. Segment Reporting

Note 1. Organization and Business

Note 2. Summary of Significant Accounting Policies

Note 3. Fair Value Measurement

Note 4. Balance Sheet Components

Note 5. Collaboration and License Agreements

Note 6. License Agreements

Note 7. Commitments and Contingencies

Note 8. Stockholders’ Equity

Note 9. Related Party Transactions

Note 10. Common Stock Warrants

Note 11. Stock-Based Compensation Plans

Note 12. Income Taxes

Note 13. Segment Reporting

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 March 31, 2026


☐	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: 001-39635

Surrozen, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	30-1374889
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
171 Oyster Point Blvd, Suite 400, South San Francisco, California	94080
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 489-9000

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	SRZN	The Nasdaq Capital Market
Redeemable warrants, each whole warrant exercisable for one-fifteenth of a share of Common Stock	SRZNW	The Nasdaq Capital Market

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, 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.

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 ☒

As of May 4, 2026, there were 11,610,371 shares of common stock, par value $0.0001 per share, issued and outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2026 and 2025	2
	Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2026 and 2025	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	70
Item 3.	Defaults Upon Senior Securities	71
Item 4.	Mine Safety Disclosures	71
Item 5.	Other Information	71
Item 6.	Exhibits	72
Signatures		73

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this Quarterly Report on Form 10-Q for the three months ended March 31, 2026, or the Quarterly Report, constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. These forward-looking statements include statements about future financial and operating results of Surrozen; statements about the plans, strategies and objectives of management for future operations of Surrozen; and statements regarding future performance. In some cases, you can identify these forward-looking statements by the use of terminology such as “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words or phrases.

The forward-looking statements contained in this Quarterly Report reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause its actual results to differ significantly from those expressed in any forward-looking statement. There are no guarantees that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

•

the initiation, cost, timing, progress and results of research and development activities, preclinical and clinical trials with respect to current and potential future product candidates;

•

our ability to develop and expand our drug discovery and development capabilities;

•

our ability to obtain the necessary capital to fund our operations while we conduct clinical trials, seek regulatory approval for our product candidates, and complete the product development process;

•

our ability to identify, develop and commercialize product candidates;

•

the successful development and commercialization of products that compete with our product candidates or receive regulatory approval in advance of our product candidates;

•

changes in personnel and availability of qualified personnel;

•

our ability to manage growth and expand business operations effectively;

•

the effects of macroeconomic conditions, including tariffs, volatile market conditions, and global events and the actions of U.S. and foreign governments to respond to these events;

•

whether the few stockholders who own a large number of shares of our common stock exercise their voting power in a manner that adversely affects us or our stockholders; and

•

the increasingly competitive environment in which we operate.

In addition, statements that “Surrozen believes” or “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 such 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 investors are cautioned not to unduly rely upon these statements.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. Except to the extent required by applicable law, we are under no obligation (and expressly disclaim any such obligation) to update or revise our forward-looking statements whether as a result of new information, future events, or otherwise. For a further discussion of these and other factors that could cause our future results, performance or transactions to differ significantly from those expressed in any forward-looking statement, please see the section titled “Risk Factors.” You should not place undue reliance on any forward-looking statements, which are based only on information currently available to us (or to third parties making the forward-looking statements) as of the date of this Quarterly Report.

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “company,” “Surrozen,” “we,” “us” and “our” refer to Surrozen, Inc.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

SURROZEN, INC.

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)


	March 31,			December 31,
	2026			2025
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	106,910		$	89,245
Accounts receivable		5,000			—
Accounts receivable - related party		—			208
Prepaid expenses and other current assets		2,039			2,106
Total current assets		113,949			91,559

Property and equipment, net		488			433
Operating lease right-of-use assets		5,550			6,000
Restricted cash		688			688
Other assets		34			46
Total assets	$	120,709		$	98,726

Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable	$	889		$	728
Accrued and other liabilities		6,749			7,912
Lease liabilities, current portion		1,927			1,290
Total current liabilities		9,565			9,930

Lease liabilities, noncurrent portion		4,851			5,349
Tranche liability		235,517			158,662
Warrant liabilities		148,923			112,547
Total liabilities		398,856			286,488

Commitments and contingencies (Note 7)

Stockholders’ deficit:
Preferred stock, $0.0001 par value, 10,000 shares authorized; no shares issued and outstanding as of March 31, 2026 and December 31, 2025		—			—
Common stock, $0.0001 par value, 500,000 shares authorized as of March 31, 2026 and December 31, 2025; 11,490 and 9,775 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively		1			1
Additional paid-in-capital		376,642			339,522
Accumulated deficit		(654,790	)		(527,285	)
Total stockholders’ deficit		(278,147	)		(187,762	)
Total liabilities and stockholders’ deficit	$	120,709		$	98,726

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

SURROZEN, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended
	March 31,
	2026			2025
Collaboration and license revenue	$	5,000		$	—
Research service revenue – related party		—			983
Total revenue		5,000			983

Operating expenses:
Research and development		9,328			6,558
General and administrative		6,128			3,976
Total operating expenses		15,456			10,534
Loss from operations		(10,456	)		(9,551	)
Interest income		912			296
Loss on amendment and cancellation of warrants		—			(2,073	)
Loss on execution of the 2025 PIPE		—			(71,084	)
(Loss) gain on change in fair value of tranche liability		(76,855	)		16,340
Gain on settlement of tranche liability		—			1,117
Other (expense) income, net (Note 3)		(41,106	)		37,985
Net loss and comprehensive loss	$	(127,505	)	$	(26,970	)

Net loss per share attributable to common stockholders, basic and diluted	$	(11.65	)	$	(7.43	)

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		10,949			3,628

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

SURROZEN, INC.

Condensed Consolidated Statements of Stockholders’ Deficit

(Unaudited)

(In thousands)


					Additional					Total
	Common stock				paid-in		Accumulated			stockholders’
	Shares		Amount		capital		deficit			deficit
Balance at December 31, 2025		9,775	$	1	$	339,522	$	(527,285	)	$	(187,762	)
Issuance of common stock under the ATM program		1,400		—		26,858		—			26,858
Issuance of common stock upon warrant exercise		289		—		8,065		—			8,065
Issuance of common stock upon option exercises		8		—		92		—			92
Vesting of restricted stock units		18		—		—		—			—
Stock-based compensation expense		—		—		2,105		—			2,105
Net loss		—		—		—		(127,505	)		(127,505	)
Balance at March 31, 2026		11,490	$	1	$	376,642	$	(654,790	)	$	(278,147	)


					Additional					Total
	Common stock				paid-in		Accumulated			stockholders’
	Shares		Amount		capital		deficit			equity
Balance at December 31, 2024		3,262	$	—	$	263,879	$	(285,259	)	$	(21,380	)
Issuance of common stock in the 2025 PIPE		5,213		1		53,189		—			53,190
Vesting of restricted stock units		20		—		—		—			—
Stock-based compensation expense		—		—		834		—			834
Net loss		—		—		—		(26,970	)		(26,970	)
Balance at March 31, 2025		8,495	$	1	$	317,902	$	(312,229	)	$	5,674

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

SURROZEN, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2026			2025
Operating activities:
Net loss	$	(127,505	)	$	(26,970	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		65			294
Stock-based compensation		2,105			834
Non-cash operating lease expense		450			451
Loss on amendment and cancellation of warrants		—			2,073
Loss on execution of the 2025 PIPE		—			71,084
Transaction costs allocated to pre-funded warrants and warrants issued in connection with the 2025 PIPE		—			2,734
Change in fair value of tranche liability		76,855			(16,340	)
Change in fair value of warrant liabilities		41,111			(40,624	)
Gain on settlement of tranche liability		—			(1,117	)
Non-cash consideration received in connection with research service revenue		—			(231	)
Gain on foreign currency remeasurement		—			(91	)
Changes in operating assets and liabilities:
Accounts receivable		(5,000	)		—
Accounts receivable - related party		208			—
Prepaid expenses and other current assets		67			305
Other assets		12			17
Accounts payable		161			(4	)
Accrued and other liabilities		(1,163	)		(1,193	)
Operating lease liabilities		139			(501	)
Net cash used in operating activities		(12,495	)		(9,279	)
Investing activities:
Purchases of property and equipment		(120	)		(27	)
Net cash used in investing activities		(120	)		(27	)
Financing activities:
Proceeds from issuance of common stock under the ATM program, net of issuance costs		26,858			—
Proceeds from issuance of common stock upon exercise of warrants		3,330			—
Proceeds from issuance of common stock, pre-funded warrants and warrants in the 2025 PIPE, net of transaction costs		—			76,386
Proceeds from issuance of common stock upon exercise of options		92			—
Net cash provided by financing activities		30,280			76,386
Net increase in cash, cash equivalents and restricted cash		17,665			67,080
Cash, cash equivalents and restricted cash at beginning of period		89,933			35,253
Cash, cash equivalents and restricted cash at end of period	$	107,598		$	102,333

Supplemental disclosure of noncash investing and financing activities:
Transaction costs allocated to issued shares of common stock included in accrued and other liabilities	$	—		$	2,369

The following table presents a reconciliation of the Company’s cash, cash equivalents and restricted cash in the Company’s unaudited condensed consolidated balance sheets:


	March 31,
	2026		2025
Cash and cash equivalents	$	106,910	$	101,645
Restricted cash		688		688
Cash, cash equivalents and restricted cash	$	107,598	$	102,333

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

SURROZEN, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Organization

Surrozen, Inc., or the Company, is a biotechnology company committed to discovering and developing product candidates to selectively modulate the Wnt pathway, a critical mediator of tissue repair. The Company’s current strategic focus is ophthalmology, where Wnt signaling plays a central role in retinal vascular integrity, barrier function, and tissue maintenance. The Company, a Delaware corporation, is located in South San Francisco, California and it operates and manages its business in one operating segment. Surrozen Netherlands, B.V. was incorporated in Amsterdam, Netherlands as a wholly-owned subsidiary of the Company.

Liquidity

The Company has incurred operating losses since inception. During the three months ended March 31, 2026 and 2025, the Company incurred a net loss of 127.5 million and a net loss of $27.0 million, respectively. For the three months ended March 31, 2026 and 2025, the Company used $12.5 million and $9.3 million of cash in operations, respectively. As of March 31, 2026, the Company had cash and cash equivalents of $106.9 million and an accumulated deficit of approximately $654.8 million. The Company expects operating expenses to continue to be significant in connection with its ongoing pre-clinical studies and preparation for clinical studies, and anticipates the need to raise additional capital to continue to execute its long-range business plan.

Management believes that the existing cash and cash equivalents are sufficient for the Company to continue operating activities for at least the next 12 months from the date of issuance of its unaudited condensed consolidated financial statements. However, if the Company’s cash burn is greater than anticipated, the Company could use its capital resources sooner than expected which may result in the need to reduce future planned expenditures and/or raise additional capital to continue to fund the operations.

Basis of Presentation

The Company’s unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, as determined by the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, and pursuant to the regulations of the U.S. Securities and Exchange Commission, or SEC. As permitted under those rules, certain notes or other financial information that are normally required by U.S. GAAP have been condensed or omitted and accordingly, the consolidated balance sheet as of December 31, 2025 has been derived from the Company’s audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete consolidated financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal, recurring nature that are necessary for a fair presentation. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the year ended December 31, 2026 or for any other interim period or future year.

The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany transactions and balances have been eliminated.

The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 23, 2026.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions made in the accompanying unaudited condensed consolidated financial statements include valuations of tranche liability and warrant liabilities. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that are believed to be reasonable under the circumstances,

the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could materially differ from those estimates.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist of cash and cash equivalents. The Company’s cash is held by financial institutions that may at times exceed federally insured limits. However, the Company’s exposure to credit risk in the event of default by the financial institution is limited to the extent of amounts recorded on the unaudited condensed consolidated balance sheets. The Company believes it is not exposed to significant credit risk on cash. The Company’s cash equivalents were held in custodial accounts maintained by third-party custodians. The Company’s policy is to invest cash in institutional money market funds with high credit quality to limit the amount of credit exposure. The Company has not experienced any losses on its cash equivalents.

Tranche Liability

The Company executed a private placement on March 24, 2025, or the 2025 PIPE, which includes a right provided to the investors to purchase the Company’s securities in two tranches. Each tranche was determined to be a freestanding instrument and accounted for as tranche liability within the unaudited condensed consolidated balance sheets. The tranche liability was recorded at its fair value on issuance and is subsequently remeasured at each reporting period with changes in fair value recorded in the unaudited condensed consolidated statements of operations and comprehensive loss until settlement.

Warrant Liabilities

The Company’s warrants are classified as liabilities and measured at fair value. Transaction costs associated with the warrant liabilities are recognized as other expenses when incurred. At the end of each reporting period, any change in fair value during the period is recognized in other (expense) income, net within the unaudited condensed consolidated statements of operations and comprehensive loss. The Company will continue to adjust the warrant liabilities pertaining to the outstanding warrants for changes in the fair value until the earlier of a) the exercise, cancellation or expiration of the warrants or b) the redemption of the warrants, at which time such warrants will be reclassified to additional paid-in capital.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (Topic 606), or by analogy, when its counterparty obtains control of promised goods or services, in an amount that reflects the consideration that the Company expects to receive in exchange for these goods or services. At contract inception, the Company assesses the goods or services promised within the contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes revenue for the amount of the transaction price that is allocated to the respective performance obligations when or as the performance obligations are satisfied. The Company constrains its estimate of the transaction price up to the amount (the variable consideration constraint) that a significant reversal of recognized revenue is not probable. The Company records accounts receivable for which the Company has an unconditional right to consideration. The Company assesses accounts receivable for credit losses and, to date, no credit losses have been recorded.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss attributable to common stock by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive securities. Diluted net loss per share is calculated using the more dilutive of the two-class method or treasury method. The Company’s basic net loss per share is the same as diluted net loss per share as the effects of the potentially dilutive securities are antidilutive. The following table presents the potential shares of common stock outstanding that were excluded from the computation of diluted net loss per share of common stock as of the periods presented because including them would have been antidilutive (in thousands):


	March 31,
	2026		2025
Common stock issuable upon exercise of stock options		1,956		923
Unvested restricted stock units		811		19
Common stock issuable upon exercise of warrants		7,116		7,463
Common stock issuable upon settlement of tranche liability in the 2025 PIPE		12,297		12,750
Total		22,180		21,155

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board, or FASB, issued Accounting Standards update 2024-03, Income Statement Reporting—Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses. The standard improves the disclosures about a public business entity’s expenses and requires more detailed disclosures about specified categories of expenses (including employee compensation, depreciation, and amortization) included in expense captions presented on the statement of operations and comprehensive loss. The guidance will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The standard is to be applied either prospectively or retrospectively. The Company is evaluating the impact of adopting this standard on its unaudited consolidated condensed financial statements and related disclosures.

The following tables summarize the Company’s financial assets and liabilities that are measured at fair value on a recurring basis (in thousands):


	As of March 31, 2026
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	99,530	$	—	$	—	$	99,530
Total financial assets measured at fair value	$	99,530	$	—	$	—	$	99,530

Liabilities:
Tranche liability(2)	$	—	$	—	$	235,517	$	235,517
2021 Public Warrants(3)		81		—		—		81
2021 PIPE Warrants(3)		—		10		—		10
2024 PIPE Warrants(3)		—		—		41,974		41,974
2025 Pre-Funded Warrants(3)		—		38,014		—		38,014
2025 PIPE Warrants(3)		—		—		68,844		68,844
Total financial liabilities measured at fair value	$	81	$	38,024	$	346,335	$	384,440


	As of December 31, 2025
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds (1)	$	74,782	$	—	$	—	$	74,782
Total financial assets measured at fair value	$	74,782	$	—	$	—	$	74,782

Liabilities:
Tranche liability(2)	$	—	$	—	$	158,662	$	158,662
2021 Public Warrants(3)		101		—		—		101
2021 PIPE Warrants(3)		—		12		—		12
2024 PIPE Warrants(3)		—		—		33,156		33,156
2025 Pre-Funded Warrants(3)		—		29,492		—		29,492
2025 PIPE Warrants(3)		—		—		49,786		49,786
Total financial liabilities measured at fair value	$	101	$	29,504	$	241,604	$	271,209

(1)

Included in cash and cash equivalents on the condensed consolidated balance sheets.

(2)

See Note 8.

(3)

See Note 10.

There were no changes to the valuation methods utilized on existing financial instruments, and there were no transfers of financial instruments between Level 1, Level 2, and Level 3 during the three months ended March 31, 2026.

The 2021 Public Warrants (as defined in Note 10 below) are classified as Level 1 due to the use of an observable market quote in an active market. The 2021 PIPE Warrants (as defined in Note 10 below) are classified as Level 2 due to the use of observable market data for identical or similar liabilities. The fair value of each 2021 PIPE Warrant is determined to be consistent with that of a 2021 Public

Warrant because the 2021 PIPE Warrants are also subject to the make-whole redemption feature, which allows the Company to redeem both types of warrants on similar terms.

The 2025 Pre-Funded Warrants (as defined in Note 10 below) are classified as Level 2 due to the use of observable market data for similar instruments. The fair value of the pre-funded warrants is determined to be consistent with the fair value of the Company’s common stock due to the nominal exercise price.

The tranche liability (Note 8), 2024 PIPE Warrants and 2025 PIPE Warrants (as defined in Note 10 below) are classified as Level 3 because the fair value was measured based on significant inputs that are unobservable in the market. The fair value of the tranche liability was determined using both the forward contract model and the contingent option model. The fair value of 2024 PIPE Warrants and 2025 PIPE Warrants were determined using the Black-Scholes option-pricing model. These Level 3 liabilities were initially recorded at fair value and subsequently remeasured at each reporting period with the following assumptions: expected term, expected volatility, risk-free interest rate and dividend yield. The significant unobservable inputs used in the fair value measurement of the tranche liability also included the probabilities of achieving the milestones. The probabilities were determined based on the stage of development of the underlying program at the measurement date. The expected volatility was based on historical volatility of the Company’s stock price with a risk adjustment. The expected term was estimated based on expiration date or the timing of when the milestone is expected to be achieved. The risk-free interest rate was based on the implied yield available on U.S. Treasury Securities with a maturity equivalent to the expected term. The dividend rate is based on the historical rate, which the Company anticipated remaining at zero.

The fair value of the Level 3 liabilities may change significantly as additional data is obtained. In evaluating this information, considerable judgment is required to interpret the data used to develop the assumptions and estimates. Accordingly, the use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts, and such changes could materially impact the Company’s results of operations in future periods.

The key inputs into the fair value measurement of the Level 3 liabilities were as follows:


	Tranche Liability						2025 PIPE Warrants						2024 PIPE Warrants
	March 31,			December 31,			March 31,			December 31,			March 31,			December 31,
	2026			2025			2026			2025			2026			2025
Expected term (in years)	0.6 - 5.6			0.8 - 5.8			4.0 - 4.7			4.2 - 4.9				3.0			3.3
Expected volatility		55	%		55	%		55	%		55	%		55	%		55	%
Risk-free interest rate	3.7% - 3.9%			3.5% - 3.8%			3.8% - 3.9%			3.6% - 3.7%				3.8	%		3.5	%
Dividend yield		—			—			—			—			—			—

Warrant Amendment and Cancellation

As defined in Note 10 below, the 2024 PIPE Warrants include Series A, Series B, Series C and Series D common stock warrants. Due to the discontinuation of clinical development of SZN-043 in the first quarter of 2025, the fair value of the Series C and Series D common stock warrant liabilities became zero as they would not be exercisable. Additionally, in connection with the 2025 PIPE completed in March 2025 as described in Note 8, both the exercise prices of the Company’s outstanding Series A and Series B common stock warrants were reduced to $11.54 per share, except that the exercise prices per warrant for such warrants held by members of management were reduced to $12.45 per share, and the Company’s outstanding Series C and Series D common stock warrants were cancelled. The 2024 PIPE Warrants were revalued using the Black-Scholes option pricing model immediately before and after the modification and cancellation using the following assumptions: (a) fair value of common stock of $12.00 per share, (b) expected volatility of 55%, (c) dividend yield of zero, (d) risk-free interest rate of 4.01%, and (e) expected term of 4.0 years. The increase in the fair value of the 2024 PIPE Warrants resulted from the amendment and cancellation of warrants was recorded as a loss of $2.1 million in the unaudited consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025.

Activity of Level 3 liabilities is summarized in the following table (in thousands):


	Tranche Liability		2025 PIPE Warrants			2024 PIPE Warrants
Balance, December 31, 2025	$	158,662	$	49,786		$	33,156
Exercise of warrants		—		(596	)		(4,140	)
Change in fair value upon remeasurement (1)		76,855		19,654			12,958
Balance, March 31, 2026	$	235,517	$	68,844		$	41,974

(1) Change in fair value of tranche liability is on the unaudited consolidated statements of operations and comprehensive loss. Change in fair value of warrant liabilities is included in other (expense) income, net on the unaudited consolidated statements of operations and comprehensive loss.

Accrued and Other Liabilities

Accrued and other liabilities consist of the following (in thousands):


	March 31,		December 31,
	2026		2025
Accrued research and development expenses	$	3,260	$	3,711
Accrued payroll and related expenses		2,286		3,583
Accrued financing costs		—		229
Accrued professional service fees		863		100
Other		340		289
Accrued and other liabilities	$	6,749	$	7,912

Collaboration and License Agreement with Boehringer Ingelheim International GmbH

In October 2022, the Company executed a Collaboration and License Agreement, or the CLA, with Boehringer Ingelheim International GmbH, or Boehringer Ingelheim, to research, develop and commercialize Frizzled 4, or Fzd4, bi-specific antibodies designed using the Company’s SWAP technology, including SZN-413. Boehringer Ingelheim and the Company conducted partnership research focused on SZN-413 during a 1.5-year period. The Company granted Boehringer Ingelheim an exclusive, royalty-bearing, worldwide, sublicensable license, under the applicable patents and know-how, to develop, manufacture and commercialize, for all uses, one lead and two back-up Fzd4 bi-specific antibodies selected by Boehringer Ingelheim. After an initial period of joint research, Boehringer Ingelheim is responsible for all further research, preclinical and clinical development, manufacturing, regulatory approvals, and commercialization of licensed products at its expense. Unless terminated earlier, the CLA will remain effective, on a country-by-country and product-by-product basis, until the expiration of Boehringer Ingelheim’s royalty obligations. Boehringer Ingelheim has the right to terminate the CLA for any reason after a specified notice period. Each party has the right to terminate the CLA on account of the other party’s bankruptcy or material, uncured breach.

Under the terms of the CLA, Boehringer Ingelheim agreed to pay a non-refundable upfront payment of $12.5 million less any applicable withholding tax, success-based milestone payments up to a total of $587.0 million and mid-single digit to low-double digit royalties on net sales of the licensed products should any reach commercialization. The royalty payments will be subject to reduction due to patent expiration, generic competition and payments made under certain licenses for third-party intellectual property. In March 2026, Boehringer Ingelheim achieved a research milestone, reflecting a positive outcome of the IND-enabling GLP toxicology study. The achievement of the research milestone entitled the Company to receive a $5.0 million non-refundable and non-creditable payment from Boehringer Ingelheim. The Company recognized such amount as collaboration and license revenue for the three months ended March 31, 2026 and accounts receivable as of March 31, 2026. The milestone payment of $5.0 million was received in April 2026.

The Company determined that the CLA is within the scope of ASC 606. The Company evaluated the promised goods and services and determined that the license to the Company’s intellectual property granted to Boehringer Ingelheim represented one performance obligation for the purposes of conducting the partnership research and further development on SZN-413. The transaction price was determined to be the non-refundable upfront payment at the inception. Variable consideration related to future milestones is fully constrained because the Company cannot conclude that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, given the inherent uncertainty of success with these future milestones. For sales-based royalties, the Company determined that the license is the predominant item to which the royalties relate to. Accordingly, the Company will recognize revenue

at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all the royalty has been allocated has been satisfied (or partially satisfied). The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Stanford License Agreement

In March 2016, the Company entered into a license agreement with Stanford University, or the Stanford Agreement, which was amended in July 2016, October 2016 and January 2021, pursuant to which the Company obtained from Stanford a worldwide, exclusive, sublicensable license under certain patents, rights, or licensed patents and technology related to its engineered Wnt surrogate molecules to make, use, import, offer to sell and sell products that are claimed by the licensed patents or that use or incorporate such technology, or licensed products, for the treatment, diagnosis and prevention of human and veterinary diseases. The Company agreed to pay Stanford (i) nominal annual license maintenance fees which are creditable against earned royalties owed to Stanford for the same year, (ii) an aggregate of up to $0.9 million for the achievement of specified development and regulatory milestones, and (iii) an aggregate of up to $5.0 million for achievement of specified sales milestones. Stanford is also entitled to receive royalties from the Company equal to a very low single digit percentage of the Company’s and its sublicensees’ net sales of licensed products that are covered by a valid claim of a licensed patent. Additionally, the Company agreed to pay Stanford a sub-teen double digit percentage of certain consideration the Company receives as a result of granting sublicenses to the licensed patents. However, the Company and Stanford may be able to negotiate a lower non-royalty sublicense percentage based on then-current value of the licensed patents for each sublicense product. If the Company is acquired, it agreed to pay a one-time change of control fee in the low six figures. Stanford retains the right under the Stanford Agreement, on behalf of itself, Stanford Hospital and Clinics, the University of Washington and all other non-profit research institutions, to practice the licensed patents and technology for any non-profit purpose. The licensed patents and technology are additionally subject to a non-exclusive, irrevocable, worldwide license held by the Howard Hughes Medical Institute to practice the licensed patents and technology for its research purposes, but with no right to assign or sublicense.

For the three months ended March 31, 2026 and 2025, the Company incurred $0.1 million and de minimis research and development expenses under the Stanford Agreement, respectively. No milestones have been achieved as of March 31, 2026.

From time to time, the Company enters into certain types of contracts that contingently require it to indemnify various parties against claims from third parties and the Company may be involved in litigation related to claims that arise in the ordinary course of its business activities. The Company accrues for these matters when it is probable that future expenditures will be made and these expenditures can be reasonably estimated. As of March 31, 2026, the Company has not accrued any contingent liabilities related to indemnification obligations or litigation, and management is not aware of any proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition, or results of operations.

At-the-Market Program

In August 2025, the Company entered into a sales agreement with TD Securities (USA) LLC, or TD Cowen, to issue and sell up to $50.0 million of shares of common stock, or the 2025 ATM. The compensation payable to TD Cowen was up to 3.0% of the gross sales price of any shares sold pursuant to the sales agreement. During the three months ended March 31, 2026, the Company sold 1.4 million shares of common stock under the 2025 ATM for net proceeds of $26.9 million, after deducting sales agent commissions.

In March 2026, the Company terminated the 2025 ATM and entered into a new sales agreement with TD Cowen to issue and sell up to $50.0 million of shares of common stock, or the 2026 ATM. The compensation payable to TD Cowen is up to 3.0% of the gross sales price of any shares sold pursuant to the sales agreement. As of March 31, 2026, the Company had not sold any shares of common stock under the 2026 ATM.

2025 Private Placement

In March 2025, the Company entered into a securities purchase agreement with certain institutional and accredited investors to issue and sell an aggregate of 15.1 million units in a two-tranche private placement (the 2025 PIPE) at a purchase price of $11.60 per share unit and $11.5999 per pre-funded warrant unit, for gross proceeds of approximately $175.0 million to fund multiple ophthalmology programs through initial Phase 1 safety, tolerability and efficacy studies. Each unit consists of one share of common stock, or pre-funded warrant in lieu thereof, and an accompanying one half of a Series E common stock warrant. The purchase price per unit includes $0.0625

for the accompanying one half of a Series E common stock warrant. Each pre-funded warrant has an exercise price of $0.0001 per share, is exercisable immediately and will not expire until exercised in full. Each Series E common stock warrant has an exercise price of $11.54 per share, is exercisable immediately and expires five years from the date of issuance.

At the closing of the first tranche in March 2025, (i) 5.2 million shares of common stock, (ii) pre-funded warrants to purchase up to 1.4 million shares of common stock, and (iii) Series E common stock warrants to purchase up to 3.3 million shares of common stock were issued and sold for aggregate net proceeds of approximately $71.2 million, after deducting placement agent fees and other expenses. The Company incurred transaction costs of $5.1 million, consisting of placement agent fees and other expenses, $2.7 million of which was allocated to warrant liabilities and recognized as other expenses when incurred. The remaining $2.4 million was allocated to the issued shares of common stock and recognized as a reduction in equity.

In the second tranche of the 2025 PIPE, which is contingent upon the public announcement of the receipt of clearance from the U.S. Food and Drug Administration on or prior to October 31, 2026 of the Company’s Investigation New Drug Application for SZN-8141, the Company expects to issue a (i) 5.7 million shares of common stock, (ii) pre-funded warrants to purchase up to 2.5 million shares of common stock, and (iii) Series E common stock warrants to purchase up to 4.1 million shares of common stock for aggregate gross proceeds of approximately $95.1 million. If the Company terminates its SZN-8141 program prior to October 31, 2026, then it will provide written notice to each purchaser, or the Termination Notice, and each purchaser will have the right, but not the obligation to purchase the additional shares of common stock, pre-funded warrants, and Series E common stock warrants subscribed for by such purchaser in the second closing. In addition, at any time prior to October 31, 2026 or the date of the Termination Notice (if earlier), in lieu of the requirement to purchase units in the second closing, each purchaser has the right, but not the obligation to purchase all (but not a portion) of the units subscribed for by such purchaser in the second tranche, referred to as an optional closing. If a purchaser fails to purchase in full its subscribed for units in the second tranche, then the Series E common stock warrants issued to such purchaser shall automatically be cancelled and cease to be exercisable.

The securities purchase agreement contains a right provided to the investors to purchase units in two tranches. Each tranche was determined to be a freestanding instrument and accounted for as tranche liability at the contract execution date. The total tranche liability in excess of committed proceeds from the 2025 PIPE resulted in a loss of $71.1 million upon execution. At the closing of the first tranche in March 2025, a portion of the tranche liability was remeasured and settled in relation to the issuance of common stock, pre-funded warrants and Series E common stock warrants. The difference in the fair value of the tranche liability immediately prior to the settlement and the fair value of the securities issued in excess of proceeds resulted in a gain of $1.1 million on settlement of tranche liability. At the end of each reporting period, any change in fair value of the tranche liability during the period is recognized in the unaudited condensed consolidated statements of operations and comprehensive loss. See Note 3 for discussion of tranche liability valuation.

The pre-funded warrants and Series E common stock warrants issued under the 2025 PIPE are classified as warrant liabilities. At the end of each reporting period, any change in fair value of warrant liabilities during the period is recognized in other (expense) income, net within the unaudited condensed consolidated statements of operations and comprehensive loss. See Note 3 for discussion of warrant liabilities valuation. See Note 10 for more information regarding the Series E common stock warrants.

Research Collaboration Agreement with TCGFB, Inc.

In October 2024, the Company entered into a strategic research collaboration with a privately-held company, TCGFB, Inc., or TCGFB, to discover antibody therapeutics targeting transforming growth factor beta, or TGF-β, for the potential treatment of patients with idiopathic pulmonary fibrosis, or TCGFB Collaboration. Under the terms of the agreement, the Company provided antibody discovery services, and TCGFB owned all TGF-β product related intellectual property. In exchange for the Company’s research services, TCGFB paid a fixed monthly service fee, plus any third-party costs, and issued the Company a warrant exercisable for up to 3.4 million shares of TCGFB common stock at an exercise price of $0.0001 per share. The warrant was recognized as warrant asset once the vesting restrictions were lifted. In October 2025, the Company received a notice from TCGFB to terminate the TCGFB Collaboration effective as of November 13, 2025. Neither TCGFB nor the Company incurred any termination penalties. Due to the dissolution of TCGFB, the Company wrote off the recognized warrant asset in December 2025.

TCGFB was founded and was controlled by entities affiliated with The Column Group. The agreement constituted a related party transaction because entities affiliated with The Column Group hold more than 5% of the Company’s common stock and Dr. Kutzkey, a member of the Company’s board of directors, serves as Managing Partner of The Column Group.

During the three months ended March 31, 2025, the Company recognized $1.0 million as research service revenue – related party for the services rendered, consisting of the fixed cash consideration of $0.8 million and the variable noncash consideration of $0.2 million. There was no research service revenue recognized for the three months ended March 31, 2026.

Sublease

In April 2024, the Company entered into a related party transaction with Nura Bio, Inc., or Nura Bio, to sublease approximately 6,102 square feet of the Company’s office and laboratory space. The sublease term was initially on a month-to-month basis and the monthly base rent is approximately $35,000, escalating at 3% per annum. In July 2025, the Company and Nura Bio executed a sublease extension agreement effective May 2025, to extend the lease term for an additional 12 months until May 2026. Nura Bio is also responsible for its share of real estate taxes, utilities and other operating expenses applicable to the subleased space. During the three months ended March 31, 2026 and 2025, the Company recognized sublease income of $0.2 million for each period as reductions to operating expenses. Tim Kutzkey, Ph.D., a member of the Company’s board of directors, serves as the chairman of the board of directors of Nura Bio. Dr. Kutzkey also serves as Managing Partner of The Column Group, LLC, which is the general partner of certain limited partnerships which are significant stockholders of Nura Bio. The Column Group holds more than 5% of the Company’s common stock. Therefore, the agreement constitutes a related party transaction.

The following table sets forth the common stock warrants outstanding (in thousands):

         Type

         Expiry Date

         Classification

         March 31, 2026

         December 31, 2025

2021 Public Warrants

8/12/2026

Liability

5,054

5,054

2021 PIPE Warrants

8/12/2026

Liability

620

620

2025 Pre-Funded Warrants

N/A

Liability

1,305

1,305

2024 PIPE Warrants – Series A

4/4/2029

Liability

878

1,132

2024 PIPE Warrants – Series B

4/4/2029

Liability

1,231

1,231

2025 PIPE Warrants – Series E

3/26/2030

Liability

3,173

3,207

2025 PIPE Warrants – Series E

12/8/2030

Liability

151

151

Total

12,412

12,700

2025 Pre-Funded Warrants and 2025 PIPE Warrants

As described in Note 8, in March 2025, the Company entered into a securities purchase agreement with certain institutional and accredited investors to issue and sell an aggregate of 15.1 million units in the 2025 PIPE. The purchase price per unit includes $0.0625 for the accompanying one half of a Series E common stock warrant. Each pre-funded warrant has an exercise price of $0.0001 per share, is exercisable immediately and will not expire until exercised in full. Each Series E common stock warrant has an exercise price of $11.54 per share, is exercisable immediately and expires five years from the date of issuance.

During the three months ended March 31, 2026, none of the 2025 Pre-Funded Warrants were exercised and the 2025 PIPE Warrants to purchase 34,000 shares of common stock were exercised for gross proceeds of $0.4 million. During the three months ended March 31, 2025, none of the 2025 Pre-Funded Warrants and 2025 PIPE Warrants were exercised. The 2025 Pre-Funded Warrants and 2025 PIPE Warrants may be exercised for cash or on a cashless, net-exercise basis.

2024 Pre-Funded Warrants and 2024 PIPE Warrants

In April 2024, the Company entered into a securities purchase agreement with investors and certain members of management whereby the Company issued and sold in a private placement, or the 2024 PIPE: (i) common stock, (ii) pre-funded warrants to purchase common stock, or the 2024 Pre-Funded Warrants, and (iii) warrants to purchase common stock, or the 2024 PIPE Warrants. The purchase price per share of common stock and per pre-funded warrant includes $1.25 for the following accompanying common stock warrants issued to the investors:

•

Series A common stock warrants to purchase up to 1.1 million shares of common stock with an exercise price of $15.50 per share exercisable immediately upon issuance for five years. The exercise price per share of these warrants was reduced to $11.54 per share in March 2025, except that the exercise price per share of common stock to purchase 2,948 shares for such warrants held by members of management was reduced to $12.45 per share. See Note 3.

•

Series B common stock warrants to purchase up to 1.2 million shares of common stock with an exercise price of $14.25 per share exercisable immediately for five years. The exercise price per share of these warrants was reduced to $11.54 per share in March 2025, except that the exercise price per share of common stock to purchase 3,206 shares for such warrants held by members of management was reduced to $12.45 per share. See Note 3.

•

Series C common stock warrants to purchase up to 4.4 million shares of common stock with an exercise price of $16.00 per share. These warrants were cancelled in March 2025. See Note 3.

•

Series D common stock warrants to purchase up to 4.4 million shares of common stock with an exercise price of $16.00 per share. These warrants were cancelled in March 2025. See Note 3.

If there is an effective registration statement and the prospectus is available for the resale of common stock issued upon exercise of 2024 PIPE Warrants, such warrants may only be exercised for cash. During the three months ended March 31, 2026, none of the 2024 Pre-Funded Warrants were exercised and the 2024 PIPE Warrants to purchase 0.3 million shares of common stock were exercised for gross proceeds of $2.9 million. During the three months ended March 31, 2025, none of the 2024 Pre-Funded Warrants or 2024 PIPE Warrants were exercised.

2021 Public Warrants

Every 15 outstanding public warrants, or 2021 Public Warrants, entitles the holders thereof to receive one share of common stock that may be purchased at a price of $172.50 per share, at any time commencing on November 23, 2021 and terminating at the earlier of August 12, 2026 or upon redemption or liquidation. None of the 2021 Public Warrants had been exercised as of March 31, 2026.

2021 PIPE Warrants

The Company’s warrants that were issued in connection with a private placement occurring in 2021, or the 2021 PIPE Warrants, are the same in all respects as the 2021 Public Warrants. None of the 2021 PIPE Warrants had been exercised as of March 31, 2026.

Participating Securities

The holders of the 2025 Pre-Funded Warrants, 2025 PIPE Warrants, 2024 Pre-Funded Warrants and 2024 PIPE Warrants are entitled to receive dividends if the Company declares or makes a dividend to holders of shares of common stock while such warrants are outstanding. However, they do not have a contractual obligation to share in losses. These warrants are considered participating securities and included in computing basic and diluted net loss per share under the two-class method.

Classification

In no event will the Company be required to net cash settle outstanding warrants. The holders of all of the Company’s warrants do not have the rights or privileges of common stockholders and any voting rights until they exercise warrants and receive common stock. All of the Company’s outstanding warrants are classified as liabilities and recorded at fair value with subsequent change in their respective fair value recognized in other (expense) income, net within the unaudited condensed consolidated statements of operations and comprehensive loss. Please see Note 3 for discussion of warrant valuations.

The Company maintains the 2021 Equity Incentive Plan, or the 2021 Plan, which provides for the granting of stock awards to employees, directors and consultants. As of March 31, 2026, there were 0.3 million shares of common stock available for issuance under the 2021 Plan. The Company also maintains the 2021 Employee Stock Purchase Plan, or the ESPP, which allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to plan limitations. As of March 31, 2026, there were approximately 0.1 million shares of common stock available for issuance under the ESPP. In August 2025, the Company adopted the 2025 Equity Inducement Plan, or the Inducement Plan, to grant share-based awards, including nonqualified stock options and restricted stock units, to newly hired employees as an inducement to such individuals’ entry into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4). As of March 31, 2026, there were approximately 0.2 million shares of common stock available for issuance under the Inducement Plan.

Stock Options

A summary of stock option activity is set forth below (shares in thousands):


	Options Outstanding
				Weighted		Average		Aggregate
				Average		Remaining		Intrinsic
	Number of			Exercise		Contractual Life		Value
	Options			Price		(In years)		(In thousands)
Outstanding – December 31, 2025		1,269		$	14.30		8.43
Granted		738			24.52
Exercised		(8	)		11.54
Forfeited		(43	)		16.11
Outstanding – March 31, 2026		1,956			18.13		8.77	$	22,958
Exercisable – March 31, 2026		532			18.83		7.18		6,910

The aggregate intrinsic value of options outstanding and exercisable are the difference between the exercise price of the options and the fair value of the Company’s common stock at March 31, 2026.

During the three months ended March 31, 2026 and 2025, the Company granted options with a weighted-average grant-date fair value of $19.24 per share and $9.61 per share.

The intrinsic value of options exercised during the three months ended March 31, 2026 was $0.1 million. No options were exercised during the three months ended March 31, 2025.

The fair value of options is estimated at the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	Three Months Ended March 31,
	2026			2025
Expected term (in years)		6.02			6.02
Expected volatility		95.4	%		97.0	%
Risk-free rate		3.7	%		4.5	%
Dividend yield		—			—

Restricted Stock Units

The following table summarizes the Company’s activity of restricted stock units, or RSUs (shares in thousands):


				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
RSUs, unvested at December 31, 2025		115		$	10.27
Granted		734			24.53
Vested		(18	)		9.16
Cancelled		(20	)		21.46
RSUs, unvested at March 31, 2026		811			22.92

The fair value of RSUs vested during the three months ended March 31, 2026 and 2025 was $0.4 million and $0.3 million, respectively.

Stock-Based Compensation

Total stock-based compensation expense recorded in the unaudited condensed consolidated statements of operations and comprehensive loss was as follows (in thousands):


	Three Months Ended March 31,
	2026		2025
Research and development	$	762	$	266
General and administrative		1,343		568
Total stock-based compensation expense	$	2,105	$	834

As of March 31, 2026, there was approximately $37.3 million of stock-based compensation expense to be recognized over a weighted-average period of approximately 3.60 years.

For the three months ended March 31, 2026 and 2025, the Company did not recognize any income tax expense or benefit as it continues to generate net operating losses and maintains a full valuation allowance against its deferred tax assets. Accordingly, no current or deferred income tax expense was recorded in the periods presented.

The Company has one reportable segment relating to the research and development of product candidates to selectively modulate the Wnt pathway for tissue repair and regeneration. The segment derives its revenue from licensing and research collaborations.

The Company’s Chief Executive Officer and the Chief Operating Officer are together considered the Company’s Chief Operating Decision Maker, or CODM, on a consolidated basis. The CODM uses consolidated operating expenses by function to evaluate financial performance, monitor budget versus actual results, and manage the Company’s operations for the purposes of allocating resources and establishing business strategies. The measure of segment assets is not reported as it is not regularly provided or reviewed by the Company’s CODM.

The table below is a summary of the segment profit or loss, including significant segment expenses (in thousands):


	Three Months Ended March 31,
	2026			2025
Total revenue	$	5,000		$	983
Less:
Compensation excluding stock-based compensation		(4,445	)		(3,330	)
Consultants and third-party services		(2,964	)		(1,297	)
Stock-based compensation		(2,105	)		(834	)
Development and manufacturing costs		(2,054	)		(2,110	)
Professional services		(1,771	)		(743	)
Rent and facility expenses		(1,016	)		(1,109	)
Depreciation and amortization		(65	)		(294	)
Other expense, including loss on execution of the 2025 PIPE (1)		(117,049	)		(17,420	)
Other segment items (2)		(1,036	)		(816	)
Segment and consolidated net loss	$	(127,505	)	$	(26,970	)

(1) Other information not reported to CODM includes loss on execution of the 2025 PIPE, loss on amendment and cancellation of warrants, interest income, gain/loss on change in fair value of tranche liability, and gain/loss on change in fair value of warrant liabilities, which are reported as other (expense) income, net on the unaudited consolidated statements of operations and comprehensive loss.

(2) Other segment items primarily consist of lab expenses and information technology costs.

For the three months ended March 31, 2026, collaboration and license revenue of $5.0 million is attributed to Boehringer Ingelheim, which is domiciled in Germany. For the three months ended March 31, 2025, research service revenue – related party of $1.0 million was generated in the United States. As of March 31, 2026 and December 31, 2025, all long-lived assets of the Company reside in the United States.

Note 14. Subsequent Events

In April 2026, Series B common stock warrants were exercised for 70,158 shares of common stock, resulting in gross proceeds of $0.8 million.

In April 2026, the Company received a research milestone payment of $5.0 million from Boehringer Ingelheim.

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, and our consolidated financial statements and related notes thereto for the year ended December 31, 2025 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 23, 2026.

Forward-Looking Statements

The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. All statements other than statements of historical facts are “forward-looking statements” for purposes of these provisions, including those relating to future events or our future financial performance and financial guidance. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “project,” “believe,” “estimate,” “predict,” “potential,” “intend” or “continue,” the negative of terms like these or other comparable terminology, and other words or terms of similar meaning in connection with any discussion of future operating or financial performance. These statements are only predictions.

All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Any or all of our forward-looking statements in this document may turn out to be wrong. Actual events or results may differ materially. Our forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks, uncertainties and other factors. In evaluating these statements, you should specifically consider various factors, including the risks outlined under the caption “Risk Factors” set forth in Item 1A of Part II of this Quarterly Report, as well as those contained from time to time in our other filings with the SEC. We caution investors that our business and financial performance are subject to substantial risks and uncertainties.

Overview

We are a biotechnology company committed to discovering and developing product candidates to selectively modulate the Wnt pathway, a critical mediator of tissue repair. Our current strategic focus is ophthalmology, where Wnt signaling plays a central role in retinal vascular integrity, barrier function, and tissue maintenance. We are located in South San Francisco, California.

Our mission is to transform the treatment of serious ophthalmic disease by fully exploiting the Wnt pathway. Building upon the seminal work of our founders and scientific advisors who discovered the Wnt gene and key regulators of the Wnt pathway, we have made breakthrough discoveries that we believe will overcome previous limitations in harnessing the potential of Wnt biology in a tissue-selective manner. These breakthroughs enable us to rapidly and flexibly design tissue-targeted therapeutics that modulate Wnt signaling and form the foundation of our ophthalmology portfolio and research programs, which are designed to restore tissue structure and function in serious eye diseases with high unmet medical need.

Our lead product candidates are multi-specific, antibody-based therapeutics that mimic the roles of naturally occurring Wnt proteins, which are involved in activation and enhancement of the Wnt pathway. Wnt signaling is essential in tissue maintenance and regeneration throughout the body. Our current development efforts are focused on ophthalmology, where the biology of the Wnt pathway is clinically validated and localized delivery enables controlled therapeutic modulation. We believe our approach has the potential to change the treatment paradigm for ophthalmic disease and substantially impact patient outcomes.

Our strategy is to exploit the full potential of Wnt signaling by identifying disease states responsive to Wnt modulation, designing tissue-selective therapeutics, evaluating mechanisms complementary to Wnt signaling, and advancing candidates into clinical development in targeted ophthalmic indications with high unmet need. Our unique approach and platform technologies have led to the discovery and advancement of multiple product candidates. We believe that ophthalmology indications are particularly well-suited for Wnt modulating therapeutics due to the combination of strong genetic and biologic validation and the need for approaches to restore tissue structure and function.

SZN-8141 for Retinal Diseases

We are developing SZN-8141 for the treatment of diabetic macular edema, or DME, and neovascular age-related macular degeneration, or wet AMD. SZN-8141 combines Frizzled 4, or Fzd4, agonism and vascular endothelial growth factor, or VEGF, antagonism and has the potential to provide benefits over treatment with single mechanism agents against these targets. The current standard of care for diabetic retinopathy (including DME), retinal vein occlusion and wet AMD is intravitreal administration of anti-VEGF therapies, including monotherapies and dual-pathway agents targeting VEGF and angiopoietin-2, or Ang-2. In addition, MK-3000, a Fzd4

monotherapy, has demonstrated proof of concept in DME in clinical trials. We believe SZN-8141 has the potential to treat multiple retinopathy indications and be differentiated from existing therapies. Data generated in preclinical models of retinopathy demonstrated that SZN-8141 stimulated Wnt signaling and induced normal retinal vessel regrowth while suppressing pathological vessel growth. We anticipate submitting an IND for SZN-8141 in the second half of 2026.

SZN-8143 for Retinal Diseases

We are developing SZN-8143 for the treatment of DME, wet AMD, and uveitic macular edema, or UME. SZN-8143 combines Fzd4 agonism, VEGF antagonism, and interleukin-6, or IL-6, antagonism and may have benefits over single mechanism agents against these targets. The current standard of care for diabetic retinopathy (including DME), retinal vein occlusion and wet AMD is intravitreal administration of anti-VEGF therapies, including monotherapies and dual-pathway agents targeting VEGF and Ang-2. In addition, MK-3000, a Fzd4 monotherapy, has demonstrated proof of concept in DME in clinical trials. We believe SZN-8143 has the potential to treat multiple retinopathy indications and be differentiated from existing therapies. Data generated in preclinical models of retinopathy demonstrated that SZN-8143 stimulated Wnt signaling and induced normal retinal vessel regrowth while suppressing pathological vessel growth.

Research Programs

In addition to SZN-8141 and SZN-8143, we are evaluating research-stage programs focused on other ophthalmic indications where Wnt signaling plays an important role in tissue maintenance and regeneration.

In preclinical models of corneal endothelial disease, these programs enhanced proliferation of primary human corneal endothelial cells in vitro, demonstrated evidence of wound healing in acute corneal endothelial injury models, and rapidly reduced central corneal thickness along with demonstrating improved corneal clarity in a cryoinjury model in mouse and rabbit. In preclinical retinal research models, these programs stimulated retinal pigment epithelium cell proliferation and differentiation in culture and provided neuroprotection in acute injury and progressive degeneration models of photoreceptor degeneration.

SZN-413 for Retinal Diseases

In the first quarter of 2022, we nominated SZN-413, a Fzd4, targeted bi-specific antibody, as a development candidate for the treatment of retinal vascular associated diseases. Fzd4 mediated Wnt signaling is known to play a critical role in retinal vascular integrity and function. Data generated in preclinical models of retinopathy demonstrated SZN-413 stimulated Wnt signaling and the ability to induce normal retinal vessel regrowth while suppressing pathological vessel growth.

In October 2022, we executed a Collaboration and License Agreement, or CLA, with Boehringer Ingelheim International GmbH, or Boehringer Ingelheim, to research, develop and commercialize Fzd4 bi-specific antibodies designed using our SWAP technology, including SZN-413. In September 2024, Boehringer Ingelheim decided to move forward with the development of SZN-413, which triggered a $10.0 million milestone payment to us. In March 2026, Boehringer Ingelheim achieved a research milestone, reflecting a positive outcome of the IND-enabling GLP toxicology study. We received the research milestone payment of $5.0 million from Boehringer Ingelheim in April 2026.

The chart below represents a summary of our product candidates:

Since our inception in 2015, we have devoted substantially all of our efforts and financial resources to organizing and staffing our company, business planning, raising capital, developing and optimizing our Wnt therapeutics platform, identifying potential product candidates, undertaking research and development activities, engaging in strategic transactions, establishing and enhancing our intellectual property portfolio, and providing general and administrative support for these operations. We have incurred operating losses since inception. During the three months ended March 31, 2026 and 2025, we incurred a net loss of $127.5 million and a net loss of $27.0 million, respectively. As of March 31, 2026, we had an accumulated deficit of $654.8 million and cash and cash equivalents of $106.9 million.

We expect to continue to incur losses for the foreseeable future and expect to incur increased expenses as we expand our pipeline and advance our product candidates through clinical development and regulatory submissions. Specifically, in the near term we expect to incur substantial expenses relating to our clinical trials, the development and validation of our manufacturing processes, and other research and development activities.

Critical Accounting Policies, Significant Judgments and Use of Estimates

Our unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.

During the three months ended March 31, 2026, there were no material changes to our critical accounting policies or in the methodology used for estimates from those described under Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Results of Operations

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

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


	Three Months Ended March 31,						$			%
	2026			2025			Change			Change
Collaboration and license revenue	$	5,000		$	—		$	5,000		*
Research service revenue – related party		—			983			(983	)	*
Total revenue		5,000			983			4,017		*

Operating expenses:
Research and development		9,328			6,558			2,770			42	%
General and administrative		6,128			3,976			2,152			54	%
Total operating expenses		15,456			10,534			4,922			47	%
Loss from operations		(10,456	)		(9,551	)		(905	)		9	%
Interest income		912			296			616		*
Loss on amendment and cancellation of warrants		—			(2,073	)		2,073		*
Loss on execution of the 2025 PIPE		—			(71,084	)		71,084		*
(Loss) gain on change in fair value of tranche liability		(76,855	)		16,340			(93,195	)	*
Gain on settlement of tranche liability		—			1,117			(1,117	)	*
Other (expense) income, net		(41,106	)		37,985			(79,091	)	*
Net loss and comprehensive loss	$	(127,505	)	$	(26,970	)	$	(100,535	)	*

* Percentage is not meaningful

Collaboration and License Revenue

The increase of $5.0 million in collaboration and license revenue for three months ended March 31, 2026, compared to three months ended March 31, 2025 is due to the recognition of a milestone achieved by Boehringer Ingelheim under the CLA in March 2026.

Research Service Revenue – Related Party

The decrease of $1.0 million in research service revenue – related party for three months ended March 31, 2026, compared to three months ended March 31, 2025, is attributable to the termination of the Research Collaboration Agreement with TCGFB, Inc., effective in November 2025.

Research and Development Expenses

The increase of $2.8 million, or 42%, in research and development expenses for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, is primarily due to a $2.4 million increase in manufacturing costs, lab expenses and consulting fees for SZN-8141 and a $1.2 million increase in employee-related expenses, offset by a $0.9 million decrease in clinical expenses as a result of the discontinuation of clinical development of SZN-043.

General and Administrative Expenses

The increase of $2.2 million, or 54%, in general and administrative expenses for the three months ended March 31, 2026, compared to the three months ended March 31, 2025 is primarily attributable to a $1.1 million increase in employee-related expenses and a $1.0 million increase in professional service fees.

Interest Income

The increase of $0.6 million in interest income for the three months ended March 31, 2026, compared to the three months ended March 31, 2025 is due to an increase in cash and cash equivalents.

Loss on Amendment and Cancellation of Warrants

The loss on amendment and cancellation of warrants for the three months ended March 31, 2025 was due to the non-cash change in the fair value of warrant liabilities resulting from the amendment of Series A and Series B common stock warrants and cancellation of Series C and Series D common stock warrants in connection with a private placement which was executed in March 2025, or the 2025 PIPE.

Loss on Execution of the 2025 PIPE

Loss on execution of the 2025 PIPE for the three months ended March 31, 2025 reflects the loss recognized upon the initial execution of the 2025 PIPE as the committed proceeds from the 2025 PIPE were less than the fair value of the tranche liability recognized at contract execution date. See Note 8 to the unaudited condensed consolidated financial statements for further information regarding the 2025 PIPE.

(Loss) Gain on Change in Fair Value of Tranche Liability

The increase of $93.2 million in loss on change in fair value of tranche liability for the three months ended March 31, 2026, compared to three months ended March 31, 2025 was attributable to the non-cash change in fair value of tranche liability during the period, which was primarily driven by the increase in our stock price.

Gain on Settlement of Tranche Liability

The gain on settlement of tranche liability for the three months ended March 31, 2025 represents the proceeds from the sale of securities in the 2025 PIPE being greater than the net value of securities issued. The net value of securities issued constitutes the fair value of the securities issued, offset by the associated tranche liability remeasured at fair value on settlement date. See Note 8 to the unaudited condensed consolidated financial statements for further information regarding the 2025 PIPE.

Other (Expense) Income, Net

The increase of $79.1 million in other expense, net for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, is primarily attributable to a $81.7 million non-cash change in fair value of warrant liabilities during the period, offset by $2.7 million financing transaction costs for the 2025 PIPE.

Liquidity and Capital Resources

Since inception, we have only generated revenue from licensing and research collaborations. We incurred significant operating losses and negative cash flows from operations. Historically, we have financed our operations primarily through the sales of our equity securities and the payments received under our collaboration and license agreements. We anticipate that we will continue to incur net losses for the foreseeable future because of additional costs and expenses related to our research and development activities, including increased expenses from pipeline advancement and advancement of our product candidates into and through clinical developments and associated regulatory submissions, as well as increased general and administrative expenses related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with the rules and regulations of the SEC and Nasdaq.

At-the-Market Program

In August 2025, we entered into a sales agreement with TD Securities (USA) LLC, or TD Cowen, to issue and sell up to $50.0 million of shares of common stock, or the 2025 ATM. The compensation payable to TD Cowen was up to 3.0% of the gross sales price of any shares sold pursuant to the sales agreement. During the three months ended March 31, 2026, we sold 1.4 million shares of common stock under the 2025 ATM for net proceeds of $26.9 million, after deducting sales agent commissions. In March 2026, we terminated the 2025 ATM and entered into a new sales agreement with TD Cowen to issue and sell up to $50.0 million of shares of common stock, or the 2026 ATM. The compensation payable to TD Cowen is up to 3.0% of the gross sales price of any shares sold pursuant to this new sales agreement. As of March 31, 2026, we had not sold any shares of common stock under the 2026 ATM.

2025 Private Placement

In March 2025, we entered into a securities purchase agreement with certain investors to issue and sell an aggregate of 15,086,236 units in a two-tranche private placement (the 2025 PIPE) at a purchase price of $11.60 per share and $11.5999 per pre-funded warrant, for gross proceeds of $175.0 million to fund multiple ophthalmology programs through initial Phase 1 safety, tolerability and efficacy studies. Each unit consists of one share of common stock, or pre-funded warrant in lieu thereof, and an accompanying one half of a warrant to purchase common stock, or Series E common stock warrant. At the closing of the first tranche of the 2025 PIPE, (i) 5,213,415

shares of common stock, (ii) pre-funded warrants to purchase up to 1,373,000 shares of common stock, and (iii) Series E common stock warrants to purchase up to 3,293,207 shares of common stock were issued and sold for aggregate net proceeds of $71.2 million, after deducting placement agent fees and other expenses.

The second tranche of the 2025 PIPE is contingent upon the public announcement of the receipt of clearance from the FDA on or prior to October 31, 2026 of our Investigation New Drug Application for SZN-8141, or the Second Closing Milestone. If we terminate our SZN-8141 program prior to October 31, 2026, then we will provide written notice to each purchaser, referred to as the Termination Notice, and each purchaser will have the right, but not the obligation, for 30 calendar days following the receipt of such notice, upon written notice to us, to purchase the additional shares of common stock, pre-funded warrants, and Series E common stock warrants subscribed for by such purchaser in the second closing. In addition, at any time prior to October 31, 2026 or the date of the Termination Notice (if earlier), in lieu of the requirement to purchase units in the second closing, each purchaser has the right, but not the obligation, upon five trading days’ prior written notice to us to purchase all (but not a portion) of the units subscribed for by such purchaser in the second closing, which we refer to as an Optional Closing. If a purchaser fails to purchase in full its subscribed for units after the achievement of the Second Closing Milestone in the second closing, or previously at the first closing or an Optional Closing, then the Series E common stock warrants issued to such purchaser shall automatically be cancelled and cease to be exercisable. In December 2025, in an optional closing we issued and sold 301,716 shares of common stock and Series E common stock warrants to purchase up to 150,858 shares of common stock for aggregate net proceeds of $3.3 million, after deducting placement agent fees and other expenses. Assuming achievement of the Second Closing Milestone, we will issue (i) 5,741,605 shares of common stock, (ii) pre-funded warrants to purchase up to 2,456,500 shares of common stock, and (iii) Series E common stock warrants to purchase up to 4,099,052 shares of common stock for aggregate gross proceeds of approximately $95.1 million in the second tranche. Please see Note 8 to the unaudited condensed consolidated financial statements for further information regarding the 2025 PIPE. During the three months ended March 31, 2026, Series E common stock warrants to purchase 34,000 shares of common stock were exercised for the gross proceeds of $0.4 million.

Funding Requirements

To date, we have only generated revenue from licensing and research collaborations. We have not generated and do not expect to generate any revenue from sales of our products unless and until we obtain regulatory approval and commercialize one of our product candidates, and we do not know when, or if, that will occur. We will continue to require substantial additional capital to develop our products candidates and fund operations for the foreseeable future. Since our inception in 2015, we have devoted substantially all of our efforts and financial resources to organizing and staffing our company, business planning, raising capital, developing and optimizing our Wnt therapeutics platform, identifying potential product candidates, undertaking research and development activities, engaging in strategic transactions, establishing and enhancing our intellectual property portfolio, and providing general and administrative support for these operations. We expect our expenses to continue to increase in connection with our ongoing activities as we continue to advance our product candidates through clinical development and regulatory approval. In addition, we will continue to incur additional costs associated with operating as a public company.

As of March 31, 2026, we had cash and cash equivalents of $106.9 million and accumulated deficit of $654.8 million. We believe, based on our current operating plan, that our existing cash and cash equivalents will be sufficient to fund our operations for at least the next 12 months from the filing date of this Quarterly Report. In addition, if the FDA clears the IND application for SZN-8141 on or prior to October 31, 2026, the second closing of the 2025 PIPE will occur and we will receive an additional $95.1 million in gross proceeds which is expected to fund multiple ophthalmology programs through initial Phase 1 safety, tolerability and efficacy studies. We expect that in the long-term we will need to raise additional capital through public or private equity offerings, debt financings or other capital sources, including government grants, potential collaborations with other companies or other strategic transactions until we are able to generate revenue on our own. Our ability to continue as a going concern in the long-term is dependent upon our ability to successfully secure sources of financing and ultimately achieve profitable operations. There can be no assurance that sufficient funds will be available to us at all or on attractive terms when needed from these sources. If we are unable to obtain additional funding from these or other sources when needed, we may be necessary to significantly reduce expenses through reductions in staff and delaying, scaling back operations, or stopping certain research and development programs.

We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:

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the scope, rate of progress, results and costs of researching and developing our lead product candidates or any future product candidates, conducting preclinical and clinical studies;

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the outcome, costs, and timing involved in obtaining regulatory approvals for our product candidates;

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the achievement of milestones that trigger payments to us and the timing, receipt and amount of royalties and any collaboration and license agreement we may enter in the future;

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

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the cost of acquiring, licensing, or investing in product candidates and technologies;

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the costs associated with securing and establishing commercialization;

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our ability to maintain, expand, and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense, and enforcement of any patents or other intellectual property rights;

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our need and ability to retain key management and hire scientific, technical, business, and medical personnel;

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the effect of competing products and product candidates and other market developments;

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the timing, receipt, and amount of sales from our lead product candidates, if approved;

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our need to implement additional internal systems and infrastructure, including financial and reporting systems;

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the economic and other terms, timing of, and success of any collaboration, licensing, or other arrangements which we may enter in the future; and

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the effects of the disruptions to and volatility in the credit and financial markets in the U.S. and worldwide.

In addition, any future financing through sales of equity securities will cause our stockholders to experience dilution. If we raise additional capital through debt financing, we may be subject to covenants that restrict our operations including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments, and engage in certain merger, consolidation, or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. If we are unable to raise additional funds when needed, we may be required to delay, reduce, or terminate some or all of our development programs and clinical trials. We may also be required to sell or license to others our rights to any of our current or future product candidates or discovery programs in certain territories or indications that we would prefer to develop and commercialize ourselves.

Summary of Cash Flows

The following table sets forth the primary sources and uses of cash, cash equivalents and restricted cash for the periods presented below (in thousands):


	Three Months Ended March 31,
	2026			2025
Net cash used in operating activities	$	(12,495	)	$	(9,279	)
Net cash used in investing activities		(120	)		(27	)
Net cash provided by financing activities		30,280			76,386
Net increase in cash, cash equivalents and restricted cash	$	17,665		$	67,080

Cash Used in Operating Activities

Cash used in operating activities of $12.5 million for the three months ended March 31, 2026 was primarily due to the use of funds in our operations, and the resulting net loss of $127.5 million and a net change of $5.6 million in our net operating assets and liabilities, offset by $120.6 million in non-cash charges. Cash used in operating activities of $9.3 million for the three months ended March 31, 2025 was primarily due to the use of funds in our operations, and the resulting a net loss of $27.0 million and a net change of $1.4 million in our net operating assets and liabilities, offset by $19.1 million in non-cash charges.

Cash Used in Investing Activities

Cash used in investing activities for the three months ended March 31, 2026 and 2025 was related to the purchases of lab equipment.

Cash Provided by Financing Activities

Cash provided by financing activities of $30.3 million for the three months ended March 31, 2026 consisted primarily of $26.9 million proceeds from the issuance and sale of common stock under the 2025 ATM and $3.3 million proceeds from issuance of common stock upon exercises of warrants. Cash provided by financing activities of $76.4 million for the three months ended March 31, 2025 consisted of the proceeds from the issuance and sale of common stock, pre-funded warrants and warrants in the 2025 PIPE.

Contractual Obligations and Commitments

Our contractual obligations as of March 31, 2026 have not materially changed since December 31, 2025. Please see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2025 for information regarding our contractual obligations and commitments.

Smaller Reporting Company Status

We are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company if (1) the market value of our common stock held by non-affiliates is less than $250 million as of the last business day of the second fiscal quarter, or (2) our annual revenues in our most recent fiscal year completed before the last business day of our second fiscal quarter are less than $100 million and the market value of our common stock held by non-affiliates is less than $700 million as of the last business day of the second fiscal quarter.

Recent Accounting Pronouncements

Please see Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report for more information about recent accounting pronouncements, the timing of their adoption and our assessment, to the extent they have been made, of their potential impact on our unaudited condensed consolidated financial statements.

Impact of Inflation

Inflation has increased and is expected to continue to increase for the near future. Inflation generally affects us by increasing our labor costs, research and clinical trial costs. While we do not believe that inflation has had a material effect on our financial condition and results of operations during the periods presented, it may result in increased costs in the foreseeable future and adversely affect our business and financial condition. In addition, inflation may cause us to experience greater uncertainty in general economic conditions and additional volatility in the market price of our common stock. If these conditions worsen or do not improve, our ability to raise capital and our stockholders’ ability to sell their shares will be adversely affected.

Impact of Tariffs

The current presidential administration has issued multiple executive orders directing the United States to impose new tariffs on imports from multiple nations. Our contract manufacturing organization is located in the United Kingdom and Switzerland for the manufacture and supply of our drug substance and drug projects. We are currently evaluating the potential impact of tariffs on our business. For a further discussion of the potential impact of tariffs on our business please see Part II, Section 1A. Risk Factors – “International trade policies, including tariffs, sanctions and trade barriers may adversely affect our business, financial condition, results of operations and prospects”.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are not required to provide the information otherwise required under this item.

Item 4. Controls and Procedures.

Management’s Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on the

evaluation of our disclosure controls and procedures as required by Rule 13a-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarterly period ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls and Procedures

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be subject to legal proceedings. We are not currently a party to or aware of any proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 1A. Risk Factors.

Investing in our securities involves a high degree of risk. Before you make an investment decision with respect to our securities, in addition to the risks and uncertainties discussed above under “Cautionary Note Regarding Forward-Looking Statements,” you should carefully consider the risks and uncertainties described below. These risks should be considered along with all of the other information contained in this Quarterly Report, including our unaudited condensed consolidated financial statements and related notes, before deciding to invest in our securities. If any of the events or developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially, the trading price of our securities could decline and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may become material and adversely affect our business.

Summary of Risk Factors

Below is a summary of the material factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Our business involves significant risks that may have a material adverse effect on our business, financial condition, results of operations, prospects and stock price. These risks are more fully described below and include, among others:

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We are a biopharmaceutical company with a history of losses. We expect to continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability, which could result in a decline in the market value of our common stock.

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We will need substantial additional funds to advance development of product candidates of our Wnt therapeutics platform, and we cannot guarantee that we will have sufficient funds available in the future to develop and commercialize our current or potential future product candidates.

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None of our product candidates have received regulatory approval; our ability to achieve and sustain profitability depends on obtaining regulatory approval and successfully commercializing product candidates, either alone or with collaborators.

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If any current or future product candidate, after it begins clinical trials or receives marketing approval, demonstrates undesirable safety or tolerability side effects or safety concerns, our ability to market and derive revenue from the product candidate could be compromised.

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We have incurred significant operating losses since inception and anticipate that we will incur continued losses for the foreseeable future.

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Any future equity or debt issuances or other financing transactions may have dilutive or adverse effects on our existing stockholders.

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We rely on third parties to conduct our preclinical studies and clinical trials, and those third parties may not perform satisfactorily.

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Our clinical development activities could be delayed or otherwise adversely affected for various reasons.

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We cannot predict how difficult it will be to enroll and retain patients for our future clinical trials, and we may experience difficulties in patient enrollment in our clinical trials for a variety of reasons.

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The manufacturing of our product candidates is complex. We and our third-party manufacturers may encounter difficulties in production. If we encounter any such difficulties, our ability to supply our product candidates for clinical trials or, if approved, for commercial sale, could be delayed or halted entirely.

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We face competition from entities that have developed or may develop product candidates for the treatment of the diseases that we may target, including companies developing novel treatments and therapeutic platforms. If these companies develop

therapeutics or product candidates more rapidly than we do, or if their therapeutics or product candidates are more effective or have fewer side effects, our ability to develop and successfully commercialize product candidates may be adversely affected.

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If we are unable to maintain proper and effective internal controls over financial reporting, the accuracy and timeliness of our financial reporting and the market price of our common stock may be adversely affected.

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Our future growth may depend, in part, on our ability to operate in foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties.

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International trade policies, including tariffs, sanctions and trade barriers may adversely affect our business, financial condition, results of operations and prospects.

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Our business, operations and clinical development plans and timelines could be adversely affected by the effects of health epidemics, natural disasters and other events on the manufacturing, clinical trial and other business activities performed by us or by third parties with whom it conducts business, including contract manufacturers, contract research organizations, or CROs, shippers and others.

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To the extent we enter into any other collaborations, we may depend on such collaborations for the development and commercialization of our product candidates. If those collaborations are not successful, we may not be able to capitalize on the market potential of our product candidates.

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Collaborations are complex and time-consuming to negotiate and document, and if we fail to enter into new strategic relationships, our business, financial condition, commercialization prospects and results of operations may be materially adversely affected.

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If we are unable to obtain or protect intellectual property rights related to our technology and current or future product candidates, or if our intellectual property rights are inadequate, we may not be able to compete effectively.

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Some intellectual property that we have in-licensed may have been discovered through government funded programs and thus may be subject to federal regulations such as “march-in” rights, certain reporting requirements and a preference for U.S.-based companies. Compliance with such regulations may limit our exclusive rights and limit our ability to contract with non-U.S. manufacturers.

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Clinical development includes a lengthy and expensive process with an uncertain outcome, we may have negative results and results of earlier studies and trials may not be predictive of future trial results.

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Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that it will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.

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A few stockholders, including one of our directors, control the voting rights with respect to a large number of shares of our common stock and could exercise their voting power in a manner that adversely affects us or our stockholders.

Risks Related to Our Business

We are a biopharmaceutical company with a history of losses. Since our inception, we have devoted substantially all of our resources to research and development, preclinical studies, clinical trials, building our management team and building our intellectual property portfolio, and have incurred significant operating losses. Substantially all of our losses have resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations. To date, we have not generated any revenue from product sales, and have not sought or obtained regulatory approval for any product candidate. Furthermore, we do not expect to generate any revenue from product sales for the foreseeable future, and we expect to continue to incur significant operating losses for the foreseeable future due to the cost of research and development, preclinical studies and clinical trials and the regulatory approval process for our current and potential future product candidates.

We expect our net operating losses to increase substantially as our product candidates advance into clinical development. However, the amount of our future losses is uncertain. Our ability to achieve or sustain profitability, if ever, will depend on, among other things, successfully developing product candidates, continuing development for our lead product candidates, successful development and testing of SZN-413 by Boehringer Ingelheim International GmbH, or Boehringer Ingelheim, obtaining regulatory approvals to market and commercialize product candidates, manufacturing any approved products on commercially reasonable terms, entering into potential future alliances, establishing a sales and marketing organization or suitable third-party alternatives for any approved product and raising sufficient funds to finance business activities. If we, or our current and potential future collaborators, are unable to commercialize one or more of our product candidates, or if sales revenue from any product candidate that receives approval is insufficient, we will not achieve or sustain profitability, which could have a material and adverse effect on our business, financial condition, results of operations and prospects.

The development of biopharmaceutical product candidates is capital-intensive. If our product candidates advance through preclinical studies and clinical trials, we will need substantial additional funds to expand our development, regulatory, manufacturing, marketing and sales capabilities. We have used substantial funds to develop our Wnt therapeutics platform, and our lead product candidates and we will require significant funds to continue to develop our platform and to conduct further research and development, including preclinical studies and clinical trials.

To date, we have primarily financed our operations through the sale of equity securities. Until such time as we can generate sufficient revenue from sales of our product candidates, if ever, we expect to finance our operations through public or private equity offerings, debt financings or other capital sources, including government grants, potential collaborations with other companies or other strategic transactions. Given the volatility in the capital markets, we may not be willing or able to raise equity capital through public or private equity offerings and may need to turn to other sources of funding that may have terms that are not favorable to us, or further reduce our business operations due to capital constraints.

We may be unable to raise additional funds or to enter into such agreements or arrangements on favorable terms, or at all. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States, and worldwide. The overall impact of these events on our business may be significantly affected by the actions of U.S. and foreign governments. These events and actions could result in severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive.

If we are unable to raise additional capital in sufficient amounts, in a timely manner or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the development of our product pipeline or other research and development initiatives. We also could be required to seek collaborators for our product pipeline and any future product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to our product pipeline and any future product candidates in markets where we otherwise would seek to pursue development or commercialization ourselves.

Our future capital requirements and the period for which we expect existing resources to support our operations may vary significantly from our projections. Our monthly spending levels vary based on new and ongoing research and development and other corporate

activities. Because the length of time and activities associated with successful research and development of product candidates is highly uncertain, we are unable to estimate the actual funds we will require for development and any approved marketing and commercialization activities. The timing and amount of our operating expenditures will depend largely on:

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the timing and progress of preclinical and clinical development of current and potential future product candidates;

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the timing and progress of the development of our Wnt therapeutics platform;

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the price and pricing structure that we are able to obtain from our third-party contract manufacturers to manufacture our preclinical study and clinical trial materials and supplies;

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the extent to which prices for supplies and materials increase due to inflationary pressures, tariffs and labor market constraints;

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

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

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the progress of the development efforts of parties with whom we may in the future enter into collaboration and research and development agreements;

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the costs involved in obtaining, maintaining, enforcing and defending patents and other intellectual property rights;

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the impact of the health epidemics on our business;

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the cost and timing of regulatory approvals; and

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our efforts to enhance operational systems and hire additional personnel, including personnel to support development of our product candidates and satisfy our obligations as a public company.

If we are unable to raise sufficient capital when needed, our business, financial condition and results of operations will be harmed, and we will need to significantly modify our operational plans. We may also have to liquidate assets, and the value we receive for any assets in liquidation or dissolution could be significantly lower than the values reflected in our financial statements.

Before obtaining regulatory approval for the commercial distribution of our product candidates, we or a collaborator must conduct extensive preclinical studies, followed by clinical trials to demonstrate the safety, purity and potency, or efficacy of our product candidates in humans. There is no guarantee that the U.S. Food and Drug Administration, or the FDA, or other regulatory authorities will permit us to conduct clinical trials. Further, we cannot be certain of the timely completion or outcome of our preclinical studies and cannot predict if the FDA or other regulatory authorities will accept our proposed clinical programs, our clinical protocols or if the outcome of our preclinical studies will ultimately support the further development of our preclinical programs or testing in humans. As a result, we cannot be sure that we will be able to submit Investigational New Drugs, or INDs, or similar applications for our proposed clinical programs on the timeline we expect, if at all, and cannot be sure that submission of INDs or similar applications will result in the FDA or other regulatory authorities allowing clinical trials for any of our product candidates to begin.

We are subject to the risks of failure inherent in the development of product candidates based on novel approaches, targets and mechanisms of action. There is no guarantee that we will be able to proceed with clinical development of our product candidates or that our product candidates will demonstrate a clinical benefit once we further advance these candidates. Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties that we have encountered and that are frequently encountered by clinical stage biopharmaceutical companies such as us.

We may not be able to access the financial resources to develop, or to enter into any collaborations for, our lead product candidates. This may be exacerbated if we experience any issues that delay or prevent regulatory approval of, or our ability to commercialize, a product candidate, such as:

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negative or inconclusive results from our preclinical or clinical trials (including as described above) or the clinical trials of others for product candidates similar to ours, leading to a decision or requirement to conduct additional preclinical studies or clinical trials or abandon any or all of our programs;

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product-related side effects experienced by participants in our clinical trials (such as the asymptomatic transaminase elevations) or by individuals using drugs or therapeutic antibodies similar to ours, including immunogenicity;

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delays in submitting IND applications or comparable foreign applications, or delays or failures to obtain the necessary approvals from regulators to commence a clinical trial, or a suspension or termination of a clinical trial once commenced;

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conditions imposed by the FDA or other regulatory authorities regarding the scope or design of our clinical trials;

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delays in enrolling research subjects in clinical trials;

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high drop-out rates of research subjects;

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inadequate supply or quality of product candidate components or materials or other supplies necessary for the conduct of our clinical trials;

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chemistry, manufacturing and control, or CMC, challenges associated with manufacturing and scaling up manufacturing of biologic product candidates to ensure consistent quality, stability, purity and potency among different batches used in clinical trials;

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greater-than-anticipated clinical trial costs;

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poor potency or effectiveness of our product candidates during clinical trials;

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unfavorable FDA or other regulatory authority inspection and review of a clinical trial or manufacturing site;

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failure of us or Boehringer Ingelheim International GmbH to adequately perform under the Collaboration and License Agreement;

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failure of our third-party contractors or investigators to comply with regulatory requirements or otherwise meet their contractual obligations in a timely manner, or at all;

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delays and changes in regulatory requirements, policies and guidelines; or

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the FDA or other regulatory authorities interpreting our data differently than it does.

Further, we and our current and potential future collaborator may never receive approval to market and commercialize any product candidate. Even if we or our current and potential future collaborator obtains regulatory approval, the approval may be for targets, disease indications or patient populations that are not as broad as were intended or desired or may require labeling that includes significant use or distribution restrictions or safety warnings. We or our current and potential future collaborator may be subject to post-marketing testing requirements to maintain regulatory approval.

Our product candidates that are tested in humans may not demonstrate the safety, purity and potency, or efficacy, necessary to become approvable or commercially viable.

We may ultimately discover that our product candidates do not possess certain properties that we believe are beneficial for therapeutic effectiveness and safety. Although our lead product candidates exhibited encouraging results in animal studies, they may not demonstrate the same properties in humans and may interact with human physiology in unforeseen, ineffective or harmful ways, as shown by the observations of asymptomatic transaminase elevations. As a result, we may never succeed in developing a marketable product based on any of our current or future product candidates. For example, in the first quarter of 2025, we discontinued development of our product candidate SZN-043 in severe alcohol associated hepatitis. While in clinical trials, treatment with SZN-043 was safe and well-tolerated and demonstrated positive changes in liver function assays, there was not a sufficient early signal of clinical benefit to warrant further investment given the challenges associated with an acutely ill target population and a lengthy clinical development path. If our product candidates prove to be ineffective, unsafe or commercially unviable, our entire pipeline could have little, if any, value, which could require us to change our focus and approach to antibody-based discovery and development and materially and adversely affect our business, financial condition, results of operations and prospects.

We may not be successful in our efforts to use and expand our Wnt therapeutics platform to build a pipeline of product candidates.

A key element of our strategy is to use and expand our Wnt therapeutics platform to discover and develop a portfolio of Wnt product candidates that can facilitate the repair and/or regeneration of damaged tissue for patients suffering from a variety of severe diseases. Although our research and development efforts to date have resulted in the discovery and development of current and potential product candidates, our current product candidates may not be safe or effective therapeutics and we may not be able to develop any successful product candidates. Our platform is evolving and may not reach a state at which building a pipeline of product candidates is possible. Even if we are successful in building our pipeline of product candidates, the potential product candidates that we identify may not be suitable for clinical development or generate acceptable clinical data, including as a result of being shown to have unacceptable toxicity or other characteristics that indicate that they are unlikely to be products that will receive marketing approval from the FDA or other regulatory authorities or achieve market acceptance.

Although we intend to explore other therapeutic opportunities, in addition to the product candidates that we are currently developing, we may fail to identify viable new product candidates for clinical development for a number of reasons. If we fail to identify additional potential product candidates, our business could be materially harmed.

Although a substantial amount of our efforts will focus on the planned clinical trials and potential approval of our existing product candidates and other potential product candidates we are evaluating, a key element of our strategy is to discover, develop and potentially commercialize additional products beyond our current product candidates to treat various conditions and in a variety of therapeutic areas. We intend to do so by investing in our own drug discovery efforts, exploring potential strategic alliances for the development of new products and in-licensing technologies. Identifying new investigational medicines requires substantial technical, financial and human resources, whether or not any investigational medicines are ultimately identified. Even if we identify investigational medicines that initially show promise, we may fail to successfully develop and commercialize such products for many reasons, including the following:

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the research methodology used may not be successful in identifying potential investigational medicines;

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competitors may develop alternatives that render its investigational medicines obsolete;

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investigational medicines it develops may nevertheless be covered by third parties’ patents or other exclusive rights;

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an investigational medicine may, on further study, be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria;

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it may take greater human and financial resources than we will possess to identify additional therapeutic opportunities for our product candidates or to develop suitable potential product candidates through internal research programs, thereby limiting our ability to develop, diversify and expand our product portfolio;

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an investigational medicine may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and

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an approved product may not be accepted as safe and effective by trial patients, the medical community or third-party payors.

Because we have limited financial and human resources, we intend to initially focus on research programs and product candidates for a limited set of indications. As a result, we may forgo or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential or a greater likelihood of success. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.

Accordingly, there can be no assurance that we will ever be able to identify additional therapeutic opportunities for our product candidates or to develop suitable potential product candidates through internal research programs, which could materially adversely affect our future growth and prospects. We may focus our efforts and resources on potential product candidates or other potential programs that ultimately prove to be unsuccessful.

The market may not be receptive to our current or potential future product candidates, and we may not generate any revenue from the sale or licensing of our product candidates.

Even if regulatory approval is obtained for a product candidate, we may not generate or sustain revenue from sales of approved products. Market acceptance of our current and potential future product candidates, if approved, will depend on, among other factors:

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the timing of its receipt of any marketing and commercialization approvals;

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the terms of any approvals and the countries in which approvals are obtained;

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the safety and efficacy of our product candidates;

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the prevalence and severity of any adverse side effects associated with our product candidates;

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limitations or warnings contained in any labeling approved by the FDA or other regulatory authority;

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relative convenience and ease of administration of our product candidates;

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the success of its physician education programs;

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the availability of coverage and adequate government and third-party payor reimbursement;

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the pricing of our products, particularly as compared to alternative treatments; and

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availability of alternative effective treatments for the disease indications our product candidates are intended to treat and the relative risks, benefits and costs of those treatments.

If any product candidate we commercialize fails to achieve market acceptance, it could have a material and adverse effect on our business, financial condition, results of operations and prospects.

Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities. It is also possible that there will be side effects associated with the testing or use of our product candidates. Results of our clinical trials could reveal a high and unacceptable severity and prevalence of these side effects. In such an event, our trials could be suspended or terminated and the FDA or other regulatory authorities could order us to cease further development of or deny approval of a product candidate for any or all targeted indications. Such side effects could also affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. For example, certain researchers have noted that therapeutics targeting the Wnt pathway may lead to tumor formation or proliferation as a result of the downstream impacts of Wnt signaling. To date, we have not observed any such tumor formation in our preclinical toxicology studies and clinical trials, but there can be no guarantee that our current or future product candidates will not result in tumor formation. Any of these occurrences or failure to resolve the findings may materially and adversely affect our business and financial condition and impair our ability to generate revenues.

Further, clinical trials by their nature use a sample of the potential patient population. With a limited number of patients and limited duration of exposure, rare and severe side effects of a product candidate may only be uncovered when a significantly larger number of patients are exposed to the product candidate or when patients are exposed for a longer period of time.

In the event that any of our current or potential future product candidates receive regulatory approval and we or others identify undesirable side effects caused by one of these products, any of the following adverse events could occur, which could result in the loss of significant revenue to us and materially and adversely affect our results of operations and business:

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regulatory authorities may withdraw their approval of the product or seize the product;

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we may be required to recall the product or change the way the product is administered to patients;

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additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any component thereof;

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we may be subject to fines, injunctions or the imposition of civil or criminal penalties;

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regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;

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regulatory authorities may require additional post-marketing safety studies or registries;

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we may be required to create a Medication Guide outlining the risks of such side effects for distribution to patients;

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we could be sued and held liable for harm caused to patients;

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the product may become less competitive; and

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our reputation may suffer.

We have incurred significant operating losses since inception and anticipate that we will incur continued losses for the foreseeable future.

We have incurred significant operating losses to date and it is possible we may never generate a profit. We do not expect to realize revenue from product sales or royalties from licensed products for the foreseeable future, if at all, and unless and until our current and potential future product candidates are clinically tested, approved for commercialization and successfully marketed. We expect to continue to incur additional operating losses for the foreseeable future as we continue to develop our product candidates. If the time required to generate significant product revenues and achieve profitability is longer than we currently anticipate or if we are unable to generate liquidity through equity financing or other sources of funding, we may be forced to curtail or suspend our operations.

Any future equity or debt issuances or other financing transactions may have dilutive or adverse effects on our existing stockholders.

The terms of any financing may adversely affect the holdings or the rights of our stockholders, and the issuance of additional securities by us, whether equity or debt, or the market perception that such issuances are likely to occur, could cause the market price of our common stock to decline. To the extent that we raise additional capital through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our current and potential future product candidates, future

revenue streams or research programs or to grant licenses on terms that may not be favorable to us. If we raise any additional capital through public or private equity or convertible debt offerings the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

Any additional capital raising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our current and future product candidates, if approved.

We may expend our limited resources to pursue a particular product candidate and fail to capitalize on product candidates that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we intend to focus our efforts on specific research and development programs. As a result, we may forgo or delay pursuit of other opportunities, including with potential future product candidates that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial product candidates or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable product candidates. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaborations, licensing or other royalty arrangements in cases in which we would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.

Interim, topline and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available or as additional analyses are conducted, and as the data are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publicly disclose interim, preliminary or topline data from our preclinical studies and clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the interim, preliminary or topline results that we report may differ from future results of the same trials, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data are available. From time to time, we may also disclose interim, preliminary or topline data from our clinical studies. Interim, topline or preliminary data from clinical trials that we may disclose are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between preliminary, topline or interim data and final data could significantly harm our business prospects.

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and the value of us in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product, product candidate or our business. If the topline data that we report differs from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.

We may not be able to enter into strategic transactions on acceptable terms, if at all, which could adversely affect our ability to develop and commercialize current and potential future product candidates, impact our cash position, increase our expense, and present significant distractions to our management.

From time to time, we consider strategic transactions, such as collaborations, acquisitions of companies, asset purchases, joint ventures and out- or in-licensing of product candidates or technologies. For example, in October 2022, we executed a strategic partnership with Boehringer Ingelheim for the research and development of SZN-413 for the treatment of retinal diseases. We will continue to evaluate and, if strategically attractive, seek to enter into collaborations, including with biotechnology or biopharmaceutical companies or hospitals. The competition for collaborators is intense, and the negotiation process is time-consuming and complex. If we are not able to enter into strategic transactions, we may not have access to required liquidity or expertise to further develop our potential future product candidates or our Wnt therapeutics platform. Any such collaboration, or other strategic transaction, may require us to incur

non-recurring or other charges, increase its near- and long-term expenditures and pose significant integration or implementation challenges or disrupt our management or business.

We also may acquire additional technologies and assets, form strategic alliances or create joint ventures with third parties that we believe will complement or augment our existing business, but we may not be able to realize the benefit of acquiring such assets. Conversely, any new collaboration that we enter into may be on terms that are not optimal for us or our product candidates. These transactions would entail numerous operational and financial risks, including:

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Surrozen, Inc./DE 10-Q