Quarterly Report for Quarter Ending September 30, 2024 (Form 10-Q)

10-Q

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 September 30, 2024

OR

☐	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: 001-39397

INOZYME PHARMA, INC.

(Exact name of registrant as specified in its charter)

Delaware	38-4024528
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
321 Summer Street, Suite 400 Boston, Massachusetts	02210
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (857) 330-4340

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, par value $0.0001 per share		INZY		Nasdaq Global Select 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.

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

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

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

As of October 29, 2024, the registrant had 64,240,198shares of common stock, $0.0001 par value per share, outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. All statements, other than statements of historical fact, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "outlook," "plan," "potential," "predict," "project," "should," "target," "will," "would," and the negative version of these words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to those described in the "Risk Factors" section in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q and include, among other things:

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q, particularly in the "Risk Factors" section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders' Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 5.	Other Information	30
Item 6.	Exhibits	31
Signatures	32

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and per share data)

		September 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents		$	24,575			$	34,588
Short-term investments			107,033				154,001
Prepaid expenses and other current assets			9,329				7,661
Total current assets			140,937				196,250
Property and equipment, net			945				1,466
Right-of-use assets			710				1,126
Restricted cash			311				311
Prepaid expenses, net of current portion			458				1,694
Total assets		$	143,361			$	200,847
Liabilities and stockholders' equity
Current liabilities:
Accounts payable		$	2,210			$	1,166
Accrued expenses			11,571				12,610
Operating lease liabilities			985				910
Current portion of long-term debt			3,578				-
Total current liabilities			18,344				14,686
Operating lease liabilities, net of current portion			164				913
Long-term debt, net			42,065				44,769
Total liabilities			60,573				60,368
Commitments and contingencies (Note 7)
Stockholders' equity:
Preferred Stock, $0.0001 par value - 5,000,000 shares authorized at September 30, 2024 and December 31, 2023; no shares issued and outstanding at September 30, 2024 or December 31, 2023			-				-
Common Stock, $0.0001 par value - 200,000,000 shares authorized at September 30, 2024 and December 31, 2023; 64,179,095 shares issued and outstanding at September 30, 2024 and 61,768,771 shares issued and outstanding at December 31, 2023			6				6
Additional paid in-capital			443,476				426,362
Accumulated other comprehensive income			186				41
Accumulated deficit			(360,880	)			(285,930	)
Total stockholders' equity			82,788				140,479
Total liabilities and stockholders' equity		$	143,361			$	200,847

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

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(amounts in thousands, except share and per share data)

		Three Months Ended September 30,			Nine Months Ended September 30,
		2024			2023			2024			2023
Operating expenses:
Research and development		$	19,890			$	13,341			$	60,758			$	36,864
General and administrative			4,961				4,733				16,101				15,973
Total operating expenses			24,851				18,074				76,859				52,837
Loss from operations			(24,851	)			(18,074	)			(76,859	)			(52,837	)
Other income (expense):
Interest income			1,778				2,369				6,182				5,306
Interest expense			(1,416	)			(953	)			(4,136	)			(2,052	)
Other (expense) income, net			(81	)			20				(137	)			(42	)
Other income, net			281				1,436				1,909				3,212
Net loss		$	(24,570	)		$	(16,638	)		$	(74,950	)		$	(49,625	)
Other comprehensive income (loss):
Unrealized gains on available-for-sale securities			290				53				137				279
Foreign currency translation adjustment			(1	)			(182	)			8				(152	)
Total other comprehensive income (loss)			289				(129	)			145				127
Comprehensive loss		$	(24,281	)		$	(16,767	)		$	(74,805	)		$	(49,498	)
Net loss attributable to common stockholders-basic and diluted		$	(24,570	)		$	(16,638	)		$	(74,950	)		$	(49,625	)
Net loss per share attributable to common stockholders-basic and diluted		$	(0.39	)		$	(0.29	)		$	(1.20	)		$	(1.02	)
Weighted-average common shares and pre-funded warrants outstanding-basic and diluted			63,276,851				56,758,395				62,334,482				48,494,175

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

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OFSTOCKHOLDERS' EQUITY

(amounts in thousands, except share data)

(Unaudited)

		Common Stock			Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders' Equity
		Shares			Amount			Capital			(Loss) Income			Deficit			(Deficit)
Balance at December 31, 2023			61,768,771			$	6			$	426,362			$	41			$	(285,930	)		$	140,479
Stock-based compensation			-				-				1,691				-				-				1,691
Exercise of stock options			3,206				-				11				-				-				11
Shares purchased in Employee Stock Purchase Plan			44,532				-				148				-				-				148
Comprehensive loss:
Unrealized loss on investments			-				-				-				(156	)			-				(156	)
Foreign currency translation adjustment			-				-				-				10				-				10
Net loss			-				-				-				-				(23,347	)			(23,347	)
Balance at March 31, 2024			61,816,509			$	6			$	428,212			$	(105	)		$	(309,277	)		$	118,836
Stock-based compensation			-				-				2,157				-				-				2,157
Exercise of stock options and RSU vesting			255,456				-				458				-				-				458
Comprehensive loss:
Unrealized gain on investments			-				-				-				3				-				3
Foreign currency translation adjustment			-				-				-				(1	)			-				(1	)
Net loss			-				-				-				-				(27,033	)			(27,033	)
Balance at June 30, 2024			62,071,965			$	6			$	430,827			$	(103	)		$	(336,310	)		$	94,420
Stock-based compensation			-				-				2,126				-				-				2,126
Exercise of stock options and RSU vesting			23,462				-				83				-				-				83
Shares issued in at-the-market offering			2,083,668				-				10,440				-				-				10,440
Comprehensive loss:
Unrealized gain on investments			-				-				-				290				-				290
Foreign currency translation adjustment			-				-				-				(1	)			-				(1	)
Net loss			-				-				-				-				(24,570	)			(24,570	)
Balance at September 30, 2024			64,179,095			$	6			$	443,476			$	186			$	(360,880	)		$	82,788

		Common Stock			Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders' Equity
		Shares			Amount			Capital			(Loss) Income			Deficit			(Deficit)
Balance at December 31, 2022			40,394,363				4				333,356				(205	)			(214,761	)			118,394
Stock-based compensation			-				-				2,092				-				-				2,092
Exercise of pre-funded warrants			3,325,644				-				-				-				-				-
Shares purchased in Employee Stock Purchase Plan			45,478				-				96				-				-				96
Comprehensive loss:
Unrealized gain on investments			-				-				-				150				-				150
Foreign currency translation adjustment			-				-				-				19				-				19
Net loss			-				-				-				-				(17,404	)			(17,404	)
Balance at March 31, 2023			43,765,485			$	4			$	335,544			$	(36	)		$	(232,165	)		$	103,347
Stock-based compensation			-				-				1,600				-				-				1,600
Shares issues in at-the-market offering			2,591,995				1				16,086				-				-				16,087
Exercise of stock options			21,608				-				55				-				-				55
Comprehensive loss:
Unrealized gain on investments			-				-				-				76				-				76
Foreign currency translation adjustment			-				-				-				11				-				11
Net loss			-				-				-				-				(15,583	)			(15,583	)
Balance at June 30, 2023			46,379,088			$	5			$	353,285			$	51			$	(247,748	)		$	105,593
Stock-based compensation			-				-				1,672				-				-				1,672
Shares issues in at-the-market offering			962,000				-				5,149				-				-				5,149
Exercise of stock options			13,578				-				43				-				-				43
Issuance of common stock, net of issuance costs			14,375,000				1				64,412				-				-				64,413
Shares purchased in Employee Stock Purchase Plan			31,082				-				110				-				-				110
Comprehensive loss:
Unrealized gain on investments			-				-				-				53				-				53
Foreign currency translation adjustment			-				-				-				(182	)			-				(182	)
Net loss			-				-				-				-				(16,638	)			(16,638	)
Balance at September 30, 2023			61,760,748			$	6			$	424,671			$	(78	)		$	(264,386	)		$	160,213

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

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(Unaudited)

		Nine Months Ended September 30,
		2024			2023
Operating activities
Net loss		$	(74,950	)		$	(49,625	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			565				624
Stock-based compensation expense			5,974				5,364
Amortization of premiums and discounts on marketable securities			(4,497	)			(3,334	)
Reduction in the carrying value of right-of-use assets			416				364
Non-cash interest expense and amortization of debt issuance costs			874				426
Changes in operating assets and liabilities:
Prepaid expenses and other current assets			(1,668	)			(4,887	)
Accounts payable			1,044				(535	)
Accrued expenses			(1,039	)			(1,972	)
Operating lease liabilities			(674	)			(604	)
Prepaid expenses, net of current portion			1,236				2,115
Other long-term liabilities			-				(124	)
Net cash used in operating activities			(72,719	)			(52,188	)
Investing activities
Purchases of marketable securities			(126,498	)			(211,465	)
Maturities of marketable securities			178,101				164,482
Purchases of property and equipment			(45	)			(193	)
Net cash provided by (used in) investing activities			51,558				(47,176	)
Financing activities
Net proceeds from issuance of long-term debt			-				27,500
Proceeds from issuance of common stock			10,440				85,649
Proceeds from exercise of stock options			552				98
Proceeds from issuance of common stock for cash under Employee Stock Purchase Plan			148				206
Net cash provided by financing activities			11,140				113,453
Net (decrease) increase in cash, cash equivalents, and restricted cash			(10,021	)			14,089
Effect of foreign currency exchange rate on cash			8				(152	)
Cash, cash equivalents, and restricted cash at beginning of period			34,899				33,269
Cash, cash equivalents, and restricted cash at end of period		$	24,886			$	47,206
Supplemental cash flow information:
Cash and cash equivalents		$	24,575			$	46,895
Restricted cash			311				311
Cash, cash equivalents, and restricted cash at end of period		$	24,886			$	47,206
Property and equipment unpaid at end of period		$	-			$	3

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

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

The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission ("SEC") on March 12, 2024. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Risk Factors" section of our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by these forward-looking statements. For convenience of presentation, some of the numbers have been rounded in the text below.

Overview

We are a clinical-stage biopharmaceutical company dedicated to developing innovative therapeutics for rare diseases that affect bone health and blood vessel function. Our expertise lies in the PPi-Adenosine Pathway, where the ENPP1 enzyme generates inorganic pyrophosphate ("PPi"), which regulates mineralization, and adenosine, which controls intimal proliferation (the overgrowth of smooth muscle cells inside blood vessels). It is well established that low levels of PPi drive pathologic mineralization and low levels of adenosine drive intimal proliferation in a number of rare diseases. Disruptions in this pathway impact the levels of these molecules, leading to severe musculoskeletal, cardiovascular, and neurological conditions, including ENPP1 Deficiency, ABCC6 Deficiency, calciphylaxis, and ossification of the posterior longitudinal ligament ("OPLL"). We are initially focused on developing a novel therapy for diseases characterized by pathological mineralization and intimal proliferation, including ENPP1 Deficiency and ABCC6 Deficiency as well as calciphylaxis.

ENPP1 and ABCC6 Deficiencies are rare chronic, systemic, and progressive genetic diseases occurring over the course of a patient's lifetime, starting as early as fetal development and spanning into adulthood. These diseases represent a significant unmet medical need, with high mortality rates for infants with ENPP1 Deficiency and high levels of morbidity occurring for patients with these diseases throughout their lives. Calciphylaxis is a rare disorder with a high mortality rate that mostly affects patients with end-stage kidney disease ("ESKD"). There are currently no approved therapies for ENPP1 Deficiency, ABCC6 Deficiency, or calciphylaxis. Currently available treatments seek to minimize the manifestations of these diseases and do not address the underlying causes.

Our lead product candidate, INZ-701, is a soluble, recombinant, or genetically engineered, ENPP1 fusion protein that is designed to increase PPi and adenosine, enabling the potential treatment of multiple diseases caused by deficiencies in these molecules. By targeting the PPi-Adenosine Pathway, INZ-701 aims to correct pathologic mineralization and intimal proliferation, addressing the significant morbidity and mortality in these devastating diseases. We have generated robust proof of concept data in preclinical models of ENPP1 Deficiency, ABCC6 Deficiency, and in support of our calciphylaxis program, chronic kidney disease demonstrating that INZ-701 prevented pathologic mineralization and skeletal abnormalities, led to improvements in overall health and survival, and prevented intimal proliferation.

We are currently conducting clinical trials of INZ-701 for the treatment of ENPP1 Deficiency, ABCC6 Deficiency, and calciphylaxis. The U.S. Food and Drug Administration, ("FDA"), has granted Orphan Drug Designation and the European Medicines Agency ("EMA"), has granted Orphan Designation to INZ-701 for the treatment of ENPP1 Deficiency and ABCC6 Deficiency. The FDA has also granted fast track designation for INZ-701 for the treatment of ENPP1 Deficiency and for the treatment of ABCC6 Deficiency, and rare pediatric disease designation for INZ-701 for the treatment of ENPP1 Deficiency. Refer to the "Clinical Overview-ENPP1 Deficiency" and "Clinical Overview- ABCC6 Deficiency" sections below for further details on our clinical programs.

Executive Summary

During the three months ended September 30, 2024, we continued to advance our ongoing clinical trials of INZ-701 in patients with ENPP1 Deficiency, ABCC6 Deficiency, and calciphylaxis. Key highlights and accomplishments during the three months ended September 30, 2024, as well as upcoming anticipated milestones include:

Key Highlights

Select Anticipated Milestones for INZ-701

ENPP1 Deficiency

ABCC6 Deficiency

Calciphylaxis

Clinical Overview

ENPP1 Deficiency

Phase 1/2 Clinical Trial in Adults with ENPP1 Deficiency

In November 2021, we initiated our Phase 1/2 clinical trial of INZ-701 in adult patients with ENPP1 Deficiency. The Phase 1/2 clinical trial of INZ-701 is an open-label, first-in-human, multiple ascending dose trial. The trial is primarily assessing the safety and tolerability of INZ-701 in adult patients with ENPP1 Deficiency, as well as characterizing the pharmacokinetic and pharmacodynamic profile of INZ-701, including evaluation of levels of plasma PPi and other biomarker levels. In the Phase 1 dose-escalation portion of the trial, we assessed INZ-701 for 32 days at doses of 0.2 mg/kg, 0.6 mg/kg, and 1.8 mg/kg administered via subcutaneous injection, with three patients planned per dose cohort. Patients received a single dose and then began twice-weekly dosing one week later. The trial initially enrolled nine patients with ENPP1 Deficiency at sites in North America and Europe. The Phase 1 dose-escalation portion of the trial sought to identify a safe and tolerable dose that increases plasma PPi levels, and that can be used for further clinical development. The Phase 1 dose-escalation portion of the trial is complete. The ongoing open-label Phase 2 extension portion of the trial is assessing long-term safety, pharmacokinetics, and pharmacodynamics of continued treatment with INZ-701 for up to 48 weeks, where patients may receive doses of INZ-701 at home depending on site-specific protocols. Exploratory endpoints include evaluations of ectopic calcification, skeletal, vascular, and physical function, patient-reported outcomes and exploratory biomarkers. Exploratory biomarker data were collected to provide evidence of the potential for disease modification with ongoing treatment with INZ-701. Notable changes in patient reported outcomes and functional outcomes were observed in all cohorts, including concordant improvement in global impression of change scores reported by patients ("P-GIC") and clinicians ("C-GIC"), and no patient showed a deterioration from baseline.

In February 2023, we reported interim pharmacokinetic, pharmacodynamic, and safety data from this trial. A rapid, significant, and sustained increase in plasma PPi was observed in all dose cohorts and in all patients, with a target plasma PPi threshold observed from the lowest dose of 0.2 mg/kg. Plasma PPi increased in all patients to levels comparable to those observed in a study of healthy subjects (n=10) (1002 nM and 2169 nM). The mean baseline plasma PPi across all three cohorts in the trial was 426±407 nM.

In April 2024, we reported positive topline safety, pharmacokinetic, pharmacodynamic, and exploratory efficacy data from this trial. Notable changes from baseline in key biomarkers were observed and support our clinical hypothesis. Significant reductions of fibroblast growth factor-23, increases in bone specific alkaline phosphatase levels, and decreases in c-telopeptide were observed in the 1.8 mg/kg dose cohort (Cohort 3) through week 48, which indicates the restoration of proper bone mineralization. Favorable responses on the Patient-Reported Outcome Measurement Information Scales of Pain Intensity, Fatigue and Pain Interference, and P-GIC were maintained. In the fourth quarter of 2023, we dosed two patients in a fourth cohort at 1.2 mg/kg to investigate the potential for once weekly dosing of INZ-701 in the ongoing trial. We completed enrollment of this fourth cohort in the fourth quarter of 2023. Data from the once-weekly dose cohort showed a sustained increase in plasma PPi levels comparable to those observed in our study of healthy subjects (n=10). INZ-701 was generally well-tolerated and exhibited a favorable safety profile, with no serious or severe adverse events ("AEs") attributed to INZ-701 and no AEs leading to study withdrawal. Eleven patients remain in the trial, and 10 self-administer INZ-701 treatment. Time on study ranged from 22 to over 742 days. Total time on treatment across all dose cohorts corresponds to approximately 12+ patient-years. INZ-701 exhibited a favorable immunogenicity profile with low titers of non-neutralizing anti-drug antibodies ("ADA") observed in 11 of 14 patients. The ADA levels were transient in three of 11 patients. Plasma PPi levels observed after INZ-701 administration are shown in the table below:

			Mean Plasma PPi (nM) ± SEM
			Cohort 1 (0.2 mg/kg)	Cohort 2 (0.6 mg/kg)	Cohort 3 (1.8 mg/kg)
Phase 1	Single Dose	Day 1-8	1229±87	1438±146	1220±87
2x/Week Dose	Day 11-32	1494±111	1745±170	1352±71
Phase 2	2x/Week Dose	Day 32-672	1118±93	1316±116	1598±322

Cohort 1 - n=2 post day 84; Cohort 2 n=2 post day 336; Cohort 3 n=2 post day 252

All patients currently enrolled have completed the dose escalation period and are expected to complete at least through week 44 of the extension period. The last patient's last visit is expected by the end of the fourth quarter of 2024. The remaining enrolled patients are expected to complete enrollment in our ongoing open label long term safety trial of INZ-701 in patients with ENPP1 or ABCC6 Deficiencies who have received INZ-701 in an existing trial ("ADAPT") by the end of the fourth quarter of 2024.

ENERGY 1 Clinical Trial in Infants with ENPP1 Deficiency

In June 2023, we dosed the first infant patient in our Phase 1b, single arm, open-label clinical trial of INZ-701 (the "ENERGY 1 trial"), designed primarily to assess the safety, tolerability, pharmacokinetics, and pharmacodynamics of INZ-701 in infants with ENPP1 Deficiency. The ENERGY 1 trial is expected to enroll up to eight infants between the ages of 1 and 12 months across multiple sites in the United States and Europe. Patients will receive subcutaneous doses of INZ-701 during the treatment period of 52 weeks and may continue to receive INZ-701 in an extension period beyond 52 weeks. Doses range from 0.2 mg/kg once weekly through 0.6 mg/kg twice weekly, with the ability to increase the dose further depending on the results of pharmacokinetics, pharmacodynamics, and safety data. Other outcome measures include evaluation of plasma PPi levels, survival, growth, development, functional performance, cardiac function, and exploratory biomarkers. We expect to report interim data from the ENERGY 1 trial in the fourth quarter of 2024.

Global Development Strategy of INZ-701 for the Treatment of ENPP1 Deficiency

We initiated pivotal trial meetings with the FDA in the first quarter of 2023. In July 2023, we announced a regulatory update for our global development strategy of INZ-701 for the treatment of ENPP1 Deficiency following meetings with the FDA and the Paediatric Committee of the EMA ("PDCO"). Also in July 2023, we completed a scientific advice procedure and reached alignment with the Committee for Medicinal Products for Human Use ("CHMP") regarding our global development strategy.

We plan to conduct pivotal clinical trials of INZ-701 designed to support registration in infant, pediatric, and adult patient populations with ENPP1 Deficiency. Many companies pursuing marketing approval for enzyme replacement therapies in rare diseases have followed a similar clinical development strategy.

We anticipate initiating the ENERGY 2 trial, an open label, single arm, pivotal trial of INZ-701 in infants with ENPP1 Deficiency, outside of the United States in the fourth quarter of 2024. The trial's co-primary endpoints will be change in plasma PPi from baseline and survival. The trial is expected to enroll up to 12 infants between birth and up to 12 months of age. Primary endpoint data from this trial will be compared to a natural history control group with patients matched on covariates associated with mortality.

We have reached agreement with the EMA on a Paediatric Investigational Plan for a pivotal trial of INZ-701 in pediatric patients with ENPP1 Deficiency. We have shared the design for a global pivotal clinical trial of INZ-701 in pediatric patients with ENPP1 Deficiency (the "ENERGY 3 trial"). The ENERGY 3 trial is a multicenter, randomized, open label trial expected to enroll up to 33 patients between the ages of one and less than 13 years across multiple sites globally. The trial is designed primarily to assess the

efficacy and safety of INZ-701 in pediatric patients with ENPP1 Deficiency. Enrollment criteria for the trial include a confirmed genetic diagnosis of ENPP1 Deficiency, radiographic evidence of skeletal abnormalities and low plasma PPi. Patients will be randomized in a 2:1 ratio to an INZ-701 arm or a control arm (conventional therapy, which is oral phosphate and active vitamin D) for 52 weeks, followed by an open label extension period during which all patients may receive INZ-701. INZ-701 will be administered at a 2.4 mg/kg once weekly dose via subcutaneous injection.

The ENERGY 3 trial is a single, multicenter, clinical trial with differences in the statistical treatment of endpoints, based on guidance from the FDA and PDCO. In the United States, the primary endpoint is change in plasma PPi from baseline, and the secondary endpoints are Radiographic Global Impression of Change ("RGI-C") score, Rickets Severity Score ("RSS"), Growth Z-score and pharmacokinetics. Based on recommendations from the FDA, the primary endpoint of plasma PPi should be supported by consistent trends in appropriate secondary endpoints. Based on the agreed Paediatric Investigational Plan with PDCO, plasma PPi and RGI-C are co-primary endpoints, with a relaxed p-value of <0.2 for RGI-C.

In September 2023, we opened the first site for the ENERGY 3 trial. Patient recruitment is underway and we incurred a $0.5 million milestone payment following completion of dosing of the first patient in our pivotal clinical trial of INZ-701 in pediatric patients with ENPP1 Deficiency. We expect to complete enrollment by the end of 2024. We anticipate reporting topline data from the ENERGY 3 trial in early 2026. We also intend to treat ENPP1-deficient patients ineligible for ENERGY 3 or other ongoing studies to further our understanding of INZ-701's safety and efficacy.

Basis for Planned Marketing Applications

Based on regulatory feedback from the FDA and EMA, positive data from the ongoing and planned clinical trials of INZ-701 in patients with ENPP1 Deficiency, including comprehensive data demonstrating clinical impact of plasma PPi, could provide the basis for our submission of marketing applications in both the United States and the European Union. These data will include final results from our ongoing Phase 1/2 trial in adult patients with ENPP1 Deficiency, available results from our ongoing ENERGY 1 trial, available results from the planned pivotal ENERGY 2 trial in infants to be initiated outside of the United States, and final results from the ongoing pivotal ENERGY 3 trial in pediatric patients.

If these marketing applications are approved, we expect to commercially launch INZ-701 for infant and pediatric patients as early as the first half of 2027.

ABCC6 Deficiency

In April 2022, we initiated our Phase 1/2 clinical trial of INZ-701 in adult patients with ABCC6 Deficiency. The Phase 1/2 clinical trial of INZ-701 is an open-label multiple ascending dose trial, which initially enrolled nine adult patients at sites in the United States and Europe. The trial is primarily assessing the safety and tolerability of INZ-701 in adult patients with ABCC6 Deficiency, as well as characterizing the pharmacokinetic and pharmacodynamic profile of INZ-701, including the evaluation of levels of plasma PPi and other biomarker levels. In the Phase 1 dose-escalation portion of the clinical trial, we assessed INZ-701 for 32 days at doses of 0.2 mg/kg, 0.6 mg/kg, and 1.8 mg/kg administered via subcutaneous injection, with three patients per dose cohort, which doses were selected based on preclinical studies and pharmacokinetic/pharmacodynamic modeling. Patients received a single dose and then began twice-weekly dosing one week later. The Phase 1 dose-escalation portion of the trial sought to identify a safe and tolerable dose that increases plasma PPi levels for further clinical development. The open-label Phase 2 extension portion of the trial will assess long-term safety, pharmacokinetics, and pharmacodynamics of continued treatment with INZ-701 for up to 48 weeks, where patients may receive doses of INZ-701 at home depending on site-specific protocols. Exploratory endpoints will include evaluations of ectopic calcification, vascular and retinal function, patient reported outcomes, and exploratory biomarkers.

Beginning in January 2023, self-administration of INZ-701 in the open-label Phase 2 extension portion of the trial was available.

In February 2023, we reported interim pharmacokinetic, pharmacodynamic, and safety data from this trial. A rapid, significant, and sustained increase in plasma PPi was observed in all cohorts with a dose response observed. Plasma PPi showed sustained increase in the highest dose cohort to levels comparable to those observed in our study of healthy subjects (n=10) (1002 nM to 2169 nM). Mean baseline plasma PPi across all three cohorts in the trial was 947±193 nM.

In April 2024, we reported positive topline safety, pharmacokinetic, pharmacodynamic, and exploratory efficacy data from this trial. Exploratory markers of clinical benefit were collected throughout the trial to provide evidence of the potential for disease modification with ongoing INZ-701 treatment. Reduction or stabilization of carotid intima-media thickness was observed across all dose cohorts (seven of eight evaluable patients), indicating a potential beneficial effect of INZ-701 on vascular pathology. Increased choroidal thickness was observed across all dose cohorts (seven of eight evaluable patients), which indicated a potential beneficial effect of INZ-701 on retinal disease. Four of six evaluable patients with Global Visual Function Questionnaire ("VFQ-25")

scores below normal at baseline improved over 48 weeks. Improvement in visual function was greater in older patients. A correlation between improvements in VFQ-25 and increases in choroidal thickness was preserved after 48 weeks. All evaluable patients (nine of nine) showed improvement from baseline on C-GIC, and seven of nine evaluable patients showed improvement from baseline on P-GIC. The rapid increase in plasma PPi levels observed at the 1.8 mg/kg dose level (Cohort 3) was sustained to levels comparable to those observed in our study of healthy subjects (n=10). INZ-701 was generally well tolerated and exhibited a favorable safety profile, with no serious or severe AEs. All AEs were mild to moderate in severity. Eight patients remain in the trial, and seven self-administer INZ-701 treatment. Time on study ranged from 45 to over 631 days, and total time on treatment across all cohorts corresponds to approximately 12+ patient-years. INZ-701 exhibited a favorable immunogenicity profile with low titers of non-neutralizing ADAs observed in eight of 10 patients. The ADA levels were transient in three of eight patients. Plasma PPi levels observed after INZ-701 administration are shown in the table below:

			Mean Plasma PPi (nM) ± SEM
			Cohort 1 (0.2 mg/kg)	Cohort 2 (0.6 mg/kg)	Cohort 3 (1.8 mg/kg)
Phase 1	Single Dose	Day 1-8	1087±162	1326±67	1540±169
2x/Week Dose	Day 11-32	1023±99	1119±48	1312±122
Phase 2	2x/Week Dose	Day 32-588	1018±73	931±87	1613±188

Cohort 1 n=2 post day 504; Cohort 2 n=3; Cohort 3 n=2 post day 84

The last patient's last visit occurred in July 2024. All patients are currently in the extension period and in the process of rolling over to the ADAPT trial.

Subject to regulatory review and sufficient funding, we plan to initiate a pivotal clinical trial of INZ-701 in pediatric patients with ABCC6 Deficiency in 2025 for registrational purposes. Prior to initiating this pivotal clinical trial, we plan to engage with the regulatory authorities in the United States, Europe, and other jurisdictions to determine appropriate primary efficacy endpoints and other requirements for potential marketing approval. In particular, if we propose new or novel endpoints or methodologies for our clinical trials, regulatory authorities will ultimately need to conclude that the endpoints of our clinical trials have provided clinically meaningful results before we are able to obtain potential marketing approval. Results from the Phase 1/2 clinical trial have provided evidence of the restoration of plasma PPi levels and measures of clinical and physiological efficacy informed the design of our planned pivotal clinical trial. Our clinical strategy, subject to ongoing discussions with the regulatory authorities in the United States, Europe, and other jurisdictions, is to pursue registration of INZ-701 for ABCC6 Deficiency by linking the restoration of plasma PPi levels to measures of physiological and clinical efficacy in this patient population.

Calciphylaxis

In February 2024, we initiated SEAPORT 1, a Phase 1 clinical trial designed to assess safety, tolerability, pharmacokinetics, and pharmacodynamics of INZ-701 in patients with ESKD receiving hemodialysis. Patients will receive 1.8 mg/kg of INZ-701 once weekly coinciding with their hemodialysis treatment for a total of 30 days. The trial's primary endpoint will assess safety and change from baseline plasma PPi concentration, with secondary endpoints including pharmacokinetic and pharmacodynamic parameters. In June 2024, SEAPORT 1 was fully enrolled.

In October 2024, we announced positive interim data from SEAPORT 1. The interim data demonstrated that INZ-701 significantly increased PPi levels in ESKD patients receiving hemodialysis, with levels rising into the normal range by week 3 of the trial's four-week dosing schedule. The largest changes occurred in patients with the lowest baseline PPi levels.

Timepoint	Mean PPi (nM) ± SEM (n=8)
Baseline-Day 3 pre-dose*	619±74
Day 10 pre-dose	931±255
Day 17 pre-dose	1498±224
Day 24 pre-dose	1551±270

*Baseline consists of three timepoints collected prior to the initiation of dosing

A prior study of healthy subjects (n=10) showed PPi levels between 1002 nM and 2169 nM.

INZ-701 also led to reductions in biomarkers of mineral metabolism, including serum phosphate and fibroblast growth factor-23, which are implicated in the pathogenesis of vascular calcification in ESKD. These findings suggest INZ-701 may mitigate the risk of pathologic calcification in these patients.

The interim data further demonstrated that INZ-701 was generally well-tolerated and exhibited a favorable safety profile, with no drug-related treatment-emergent adverse events ("TEAEs") reported in the 11 patients who completed the four-week treatment period. All observed TEAEs were mild to moderate in severity except for one case of hyperkalemia requiring urgent dialysis. Consistent drug exposure to INZ-701 was observed with 1.8 mg/kg weekly dosing and pharmacokinetic profiles were consistent with our prior studies in non-hemodialysis patients. We believe these results suggest consistent drug pharmacokinetic profiles can be maintained in dialysis patients, providing further confidence in dose selection for future trials.

Finally, low titers of anti-drug antibodies ("ADAs") were detected in three of 11 patients, at the end-of-study timepoint, approximately 30 days after the last dose. Two of these patients became ADA-negative by Day 60 after the last dose. The presence of ADAs was not associated with any adverse events.

We plan to present additional follow-up data, including characterization of genetic markers associated with PPi and adenosine metabolism and pharmacokinetics/pharmacodynamics analyses, at a later date.

Based on these results, we plan to initiate a pivotal trial of INZ-701 in patients with calciphylaxis in 2025, subject to regulatory review and sufficient funding.

ADAPT Long-Term Safety Study in Patients with ENPP1 and ABCC6 Deficiencies

In June 2024, we initiated ADAPT, a multicenter, open-label, long-term safety trial of INZ-701 in patients with ENPP1 Deficiency or ABCC6 Deficiency who have received INZ-701 in an existing clinical trial and choose to continue dosing for the potential treatment of their condition. Patients are eligible if they have completed the protocol-required safety and pharmacokinetic and pharmacodynamic and/or efficacy period(s) of a previous trial with INZ-701. Adult patients will receive once weekly subcutaneous doses of 1.8 mg/kg or a once weekly flat dose of 150 mg; pediatric patients will receive once weekly subcutaneous doses of 2.4 mg/kg. Other outcome measures include evaluation of pharmacokinetic parameters and plasma PPi with long-term INZ-701 treatment. ADAPT will initially open with sites in the United States and Europe and has begun enrolling patients who have completed a Phase 1/2 trial in adults with ENPP1 and ABCC6 Deficiencies.

Expanded Access Program

In February 2023, we dosed our first pediatric patient with ENPP1 Deficiency with INZ-701 under our expanded access program. Under our expanded access program, we can use INZ-701 outside of our clinical trials to treat patients with serious or immediately life-threatening diseases or conditions when there are no comparable or satisfactory alternative treatment options and when other criteria are met. Other criteria include, but are not limited to, lack of success from standard treatments, ineligibility for participation in any ongoing clinical trial of INZ-701 (including lack of access due to geographic limitations), and having a disease for which there is sufficient evidence of a projected benefit from the use of INZ-701. We expect that data collected from patients treated under our expanded access program will provide further support for the potential safety and clinical benefits of INZ-701.

Future Development Plans; Other Potential Indications for INZ-701

Subject to successfully completing clinical development of INZ-701 in ENPP1 and ABCC6 Deficiencies, we plan to seek marketing approvals for INZ-701 on a worldwide basis. Beyond our development focus on INZ-701, we believe that our therapeutic approach has the potential to benefit patients suffering from additional diseases of pathologic mineralization and intimal proliferation.

Based on its mechanism of action, we believe that INZ-701 has the potential to increase plasma PPi levels and provide therapeutic benefit to patients beyond those with monogenic defects in the ENPP1 or ABCC6 gene. We intend to explore the potential of INZ-701 as a therapy in other diseases of pathologic mineralization associated with low levels of plasma PPi.

Diseases of intimal proliferation include diseases without a clear genetic basis. In preclinical studies, INZ-701 prevented intimal proliferation in both wild-type and Enpp1-deficient mice, which we believe is attributable to increased levels of adenosine. We plan to continue to explore the potential of INZ-701 in diseases in which arteries have been damaged or disrupted by insertion of a stent, bypass graft occlusion, transplant vasculopathy, or inflammation known as arteritis.

Our Operations

We have not yet commercialized any products or generated any revenue from product sales. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, securing intellectual property rights, conducting research and development activities, conducting preclinical studies and early-stage clinical trials, establishing arrangements for the manufacture of INZ-701, and longer-term planning for potential commercialization.

Since inception, we have incurred significant operating losses. Our ability to generate revenue from product sales sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of INZ-701 or one or more of our future product candidates and programs.

We expect to continue to incur significant operating expenses for the foreseeable future. In addition, if we obtain marketing approval for INZ-701 or any other product candidate we develop, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing, and distribution. We have incurred and expect to continue to incur additional costs associated with operating as a public company.

As a result, we will need to obtain substantial additional funding to support our continuing operations. Until such time, if ever, as we can generate significant revenues from product sales, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution and licensing arrangements. We do not have any committed external source of funds, other than under our loan and security agreement with K2 HealthVentures LLC (the "Loan Agreement"). Our ability to borrow under our Loan Agreement is subject to our satisfaction of specified conditions and lender discretion. If we are unable to raise capital or obtain adequate funds when needed or on acceptable terms, we may be required to delay, limit, reduce, or terminate our research and development programs or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. In addition, attempting to secure additional financing may divert the time and attention of our management from day-to-day activities and distract from our research and development efforts.

Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our research and development efforts, diversify our pipeline of product candidates, or even continue our operations.

Based on our current operating plan, we believe that our existing cash, cash equivalents, and short-term investments as of September 30, 2024 will enable us to fund our cash flow requirements for at least the next 12 months from the filing date of this Quarterly Report on Form 10-Q. We based this estimate on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us. See "Liquidity and Capital Resources."

To finance our operations beyond that point, we will need to raise additional capital, which cannot be assured. We anticipate that our expenses will increase substantially if and as we:

Financial Operations Overview

Research and Development Expenses

Research and development activities are central to our business model. Research and development costs consist of direct and indirect costs related to specific projects as well as fees paid to other entities that conduct certain research and development activities on our behalf and primarily relate to costs incurred in connection with the discovery and development of our lead product candidate, INZ-701.

We expense research and development costs as incurred. These expenses include:

We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers. We do not currently track research and development expenses by specific indication.

We are currently conducting our Phase 1/2 clinical trials of INZ-701 for adults with ENPP1 Deficiency and ABCC6 Deficiency, our Phase 1b ENERGY 1 trial for infants with ENPP1 Deficiency, our pivotal ENERGY 3 trial of INZ-701 for pediatric patients with ENPP1 Deficiency, our Phase 1 SEAPORT 1 clinical trial of INZ-701 for patients with ESKD receiving hemodialysis, and our ongoing open-label long term safety study of INZ-701 in patients with ENPP1 or ABCC6 Deficiencies who have received INZ-701 in an existing study. Product candidates in later stages of clinical development generally have higher development costs than those in preclinical development or in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will continue to increase substantially for the foreseeable future as we execute on our global development strategy, prepare for and conduct the ongoing and planned clinical trials of INZ-701, further scale our manufacturing processes, advance development of INZ-701 for additional indications, and potentially develop additional product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries, related benefits, travel, and stock-based compensation expense for personnel in executive, finance, and administrative functions. General and administrative expenses also include professional fees for legal, consulting, accounting, tax, and audit services, and an allocation of facilities and information technology infrastructure costs. We incur, and anticipate that we will continue to incur, costs associated with being a public company, including costs of accounting, audit, legal, regulatory, compliance and tax-related services related to maintaining compliance with requirements of Nasdaq and the SEC; director and officer insurance costs; and investor and public relations costs. Additionally, we may experience an increase in payroll and expense as a result of our preparation for potential commercial operations, especially related to sales and marketing costs. We expect that our general and administrative expenses will increase in future periods as we expand our operations and execute on our global development strategy.

Interest Income

Interest income consists of income from bank deposits and investments.

Interest Expense

Interest expense consists of interest expense related to our Loan Agreement, as well as amortization of debt discount and debt issuance costs.

Other Expense, net

Other expense, net primarily consists of realized gains and losses on marketable securities and foreign exchange gains or losses.

Results of Operations

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

The following table summarizes our results of operations for the three months ended September 30, 2024 and 2023 (in thousands):

		Three Months Ended September 30,
		2024			2023			Change
Operating expenses:
Research and development		$	19,890			$	13,341			$	6,549
General and administrative			4,961				4,733				228
Total operating expenses			24,851				18,074				6,777
Loss from operations			(24,851	)			(18,074	)			(6,777	)
Other income (expense):
Interest income			1,778				2,369				(591	)
Interest expense			(1,416	)			(953	)			(463	)
Other (expense) income, net			(81	)			20				(101	)
Other income, net			281				1,436				(1,155	)
Net loss		$	(24,570	)		$	(16,638	)		$	(7,932	)

Research and Development Expense

The following table summarizes our research and development expense for the three months ended September 30, 2024 and 2023 (in thousands):

		Three Months Ended September 30,
		2024			2023			Change
INZ-701-related research and development expense		$	13,888			$	8,236			$	5,652
Unallocated expenses:
Personnel-related expense (including stock-based compensation)			5,315				4,335				980
Facilities and administrative expense			687				770				(83	)
Total		$	19,890			$	13,341			$	6,549

Research and development expense increased $6.5 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to a $5.7 million increase in INZ-701-related research and development expense and a $0.9 million increase in personnel related costs, including stock-based compensation expense and facilities and administrative expense.

INZ-701-related research and development expense increased $5.7 million primarily due to a $3.0 million increase in chemistry, manufacturing, and controls expense to support our ongoing clinical trials and prepare for potential commercialization and a $2.7 million increase in clinical development and related consulting costs to support our ongoing clinical trials.

General and Administrative Expense

General and administrative expense remained relatively consistent for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Interest Income

Interest income for the three months ended September 30, 2024 decreased approximately $0.6 million compared to the three months ended September 30, 2023 due to a lower cash balance on which we are earning interest in 2024.

Interest Expense

Interest expense increased $0.5 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to borrowings under our Loan Agreement.

Other Expense, net

Other expense, net remained relatively consistent for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

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

The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023 (in thousands):

		Nine Months Ended September 30,
		2024			2023			Change
Operating expenses:
Research and development		$	60,758			$	36,864			$	23,894
General and administrative			16,101				15,973				128
Total operating expenses			76,859				52,837				24,022
Loss from operations			(76,859	)			(52,837	)			(24,022	)
Other income (expense):
Interest income			6,182				5,306				876
Interest expense			(4,136	)			(2,052	)			(2,084	)
Other expense, net			(137	)			(42	)			(95	)
Other income, net			1,909				3,212				(1,303	)
Net loss		$	(74,950	)		$	(49,625	)		$	(25,325	)

Research and Development Expense

The following table summarizes our research and development expense for the nine months ended September 30, 2024 and 2023 (in thousands):

		Nine Months Ended September 30,
		2024			2023			Change
INZ-701-related research and development expense		$	42,258			$	22,064			$	20,194
Unallocated expenses:
Personnel-related expense (including stock-based compensation)			16,226				12,817				3,409
Facilities and administrative expense			2,274				1,983				291
Total		$	60,758			$	36,864			$	23,894

Research and development expense increased $23.9 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to a $20.2 million increase in INZ-701-related research and development expense and a $3.7 million increase in personnel related costs, including stock-based compensation expense and facilities and administrative expense.

INZ-701-related research and development expense increased $20.2 million primarily due to a $9.3 million increase in chemistry, manufacturing, and controls expense to support our ongoing clinical trials and prepare for potential commercialization and a $10.9 million increase in clinical development and related consulting costs to support our ongoing clinical trials.

General and Administrative Expense

General and administrative expense remained relatively consistent for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Interest Income

Interest income for the nine months ended September 30, 2024 increased approximately $0.9 million compared to the nine months ended September 30, 2023 due to higher interest rates and a larger cash balance on which we are earning interest in 2024.

Interest Expense

Interest expense increased $2.1 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to borrowings under our Loan Agreement.

Other Expense, net

Other expense, net remained relatively consistent for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have not generated any revenue and have incurred significant operating losses and negative cash flows from our operations. To date, we have funded our operations primarily with proceeds from the sales of convertible preferred stock, offerings of common stock and pre-funded warrants, and borrowings under our Loan Agreement. Until such time, if ever, as we can generate substantial revenues from product sales, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution or licensing arrangements.

On August 11, 2021, we filed a universal shelf registration statement on Form S-3, which was declared effective on August 23, 2021 (the "2021 Registration Statement"). Under the 2021 Registration Statement, we could offer and sell up to $200.0 million of a variety of securities, including common stock, preferred stock, depositary shares, debt securities, warrants, subscription rights or units from time to time pursuant to one or more offerings at prices and terms to be determined at the time of the sale. In connection with the filing of the 2021 Registration Statement, we entered into an Open Market Sale Agreement with Jefferies LLC, as sales agent, pursuant to which we may offer and sell shares of our common stock with an aggregate offering price of up to $50.0 million under an "at-the-market" offering program (the "At-the-Market Offering Program"). On November 7, 2023, we filed a universal shelf registration statement on Form S-3, which was declared effective on November 15, 2023 (the "2023 Registration Statement"). Under the 2023 Registration Statement, we may offer and sell up to $300.0 million of a variety of securities, including common stock, preferred stock, depositary shares, debt securities, warrants, subscription rights or units from time to time pursuant to one or more offerings at prices and terms to be determined at the time of the sale. On August 6, 2024, in anticipation of the expiration of the 2021 Registration Statement, we filed a prospectus supplement (the "2024 Prospectus Supplement") under the 2023 Registration Statement to register the offer and sale of the outstanding shares that could be sold under the At-the-Market Offering Program, which prospectus supplement superseded and replaced the sales agreement prospectus, dated August 23, 2021, under the 2021 Registration Statement. As of December 31, 2023, we had sold 3,553,995 shares of our common stock pursuant to the Open Market Sale Agreement for aggregate net proceeds of $21.2 million. As of the date of filing of the 2024 Prospectus Supplement, we had issued and sold 4,364,440 shares of common stock pursuant to the Open Market Sale Agreement for aggregate gross proceeds of approximately $26.2 million. Under the 2024 Prospectus Supplement, we may sell the remaining shares of common stock under the Open Market Sale Agreement for an aggregate offering price of up to approximately $23.8 million. During the three and nine months ended September 30, 2024, we sold 2,083,668 shares of our common stock pursuant to the Open Market Sale Agreement for aggregate net proceeds of $10.4 million.

In April 2022, we closed an underwritten offering in which we sold 16,276,987 shares of common stock and pre-funded warrants to purchase 3,523,013 shares of common stock under the 2021 Registration Statement. Net proceeds from the offering were approximately $68.3 million, after deducting underwriting discounts and commissions and offering expenses.

In July 2022, we entered into the Loan Agreement with K2 HealthVentures LLC (together with any other lender from time to time, "the Lenders"), which provides up to $70.0 million principal in term loans consisting of (subject to certain customary conditions): (i) a First Tranche Commitment of $25.0 million, of which $5.0 million was funded at closing and of which the remaining $20.0 million was funded at our election in February 2023, (ii) two subsequent tranche commitments totaling $20.0 million in the aggregate to be drawn at our option during certain availability periods, subject to the achievement, as determined by the administrative agent in its sole discretion, of certain time-based, financial, clinical, and regulatory milestones relating to INZ-701 of which $7.5 million was funded at our election in June 2023 and the remaining $12.5 million was funded at our election in December 2023, and (iii) a fourth tranche commitment of $25.0 million is available to be drawn at our option through August 31, 2025, subject to use of proceeds limitations and Lenders' consent in its discretion. We have an aggregate of $45.0 million principal in term loans outstanding. The Lenders may elect to purchase up to $5.0 million of shares of our common stock pursuant to the Loan Agreement. Additional information on the Loan Agreement is described in Note 8 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

In August 2023, we closed an underwritten offering in which we sold 14,375,000 shares of common stock under the 2021 Registration Statement. Net proceeds from the offering were approximately $64.4 million, after deducting underwriting discounts and commissions and estimated offering expenses.

Cash in excess of immediate requirements is invested primarily with a view to liquidity and capital preservation. The following table provides information regarding our total cash, cash equivalents, and short-term investments at September 30, 2024 and December 31, 2023 (in thousands):

		September 30, 2024			December 31, 2023
Cash and cash equivalents		$	24,575			$	34,588
Short-term investments			107,033			$	154,001
Total cash, cash equivalents, and short-term investments		$	131,608			$	188,589

Cash Flows

The following table provides information regarding our cash flows for the nine months ended September 30, 2024 and 2023 (in thousands):

		Nine Months Ended September 30,
		2024			2023
Net cash used in operating activities		$	(72,719	)		$	(52,188	)
Net cash provided by (used in) investing activities			51,558				(47,176	)
Net cash provided by financing activities			11,140				113,453
Net (decrease) increase in cash, cash equivalents, and restricted cash		$	(10,021	)		$	14,089

Net Cash Used in Operating Activities

Net cash used in operating activities increased approximately $20.5 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to a $25.4 million increase in our net loss, adjusted for non-cash items, which was partially offset by approximately $4.9 million of changes in operating assets and liabilities.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities increased approximately $98.7 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to an $85.0 million decrease in purchases of marketable securities and a $13.7 million increase in maturities of marketable securities in the nine months ended September 30, 2024.

Net Cash Provided by Financing Activities

Net cash provided by financing activities decreased $102.3 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to year-over-year decreases of $27.5 million in net proceeds received from the issuance of long-term debt, $64.4 million related to the July 2023 equity offering, and $10.8 million from sales of common stock under our at-the-market facility, and an increase of $0.4 million from exercises of stock options.

Funding Requirements

We expect to devote substantial financial resources toward our ongoing and planned activities, particularly as we execute on our global development strategy, conduct our ongoing clinical trials of INZ-701 for ENPP1 Deficiency, ABCC6 Deficiency, and calciphylaxis, and continue research and development and initiate additional planned clinical trials of, and seek marketing approval for, INZ-701 and any other product candidates we develop. We expect our expenses to increase substantially in connection with our ongoing and planned activities. In addition, if we obtain marketing approval for INZ-701 or any other product candidates we develop, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing, and distribution. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital or obtain adequate funds when needed or on acceptable terms, we may be required to delay, limit, reduce, or terminate our research and development programs or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. In addition, attempting to secure additional financing may divert the time and attention of our management from day-to-day activities and distract from our research and development efforts.

Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our operations and ability to take specific actions, such as incurring additional indebtedness, making acquisitions, engaging in acquisition, merger, or collaboration transactions, selling or licensing our assets, making capital expenditures, redeeming our stock,

making certain investments, or declaring dividends. The covenants under our Loan Agreement and the pledge of our assets as collateral limit our ability to take specific actions, including obtaining additional financing. If we raise additional funds through collaborations, strategic alliances, or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us.

Based on our current operating plan, we believe that our existing cash, cash equivalents, and short-term investments as of September 30, 2024 will enable us to fund our cash flow requirements for at least the next 12 months from the filing date of this Quarterly Report on Form 10-Q. However, we have based this estimate on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us. In addition, changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more than currently expected because of circumstances beyond our control. As a result, we could deplete our capital resources sooner than we currently expect. In addition, because the successful development of INZ-701 or any other product candidates that we pursue is highly uncertain, at this time we cannot reasonably estimate or know the nature, timing, and costs of the efforts that will be necessary to complete the development of any product candidate.

Contractual Obligations, Commitments and Contingencies

During the three and nine months ended September 30, 2024, there were no material changes to our contractual obligations and commitments from those described in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Critical Accounting Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these 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 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 from these estimates under different assumptions or conditions. During the three and nine months ended September 30, 2024, there were no material changes to our critical accounting estimates from those described in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Emerging Growth Company Status

The Jumpstart Our Business Startups Act of 2012 permits an "emerging growth company" such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected to use the extended transition period for complying with new or revised accounting standards and will do so until such time that we either (1) irrevocably elect to "opt out" of such extended transition period or (2) no longer qualify as an emerging growth company.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk related to changes in interest rates. As of September 30, 2024, our cash equivalents consisted of short-term money market funds and U.S. government agency debt securities. As of September 30, 2024, our short-term investments consisted of U.S. Treasury securities and U.S. government agency debt securities. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. Due to the short-term nature of the investments in our portfolio and the low risk profile of our investments, an immediate change of 100 basis points in interest rates would not have a material effect on the fair market value of our investment portfolio or on our financial position or results of operations.

As of September 30, 2024, the aggregate principal amount outstanding under the Loan Agreement was $45.0 million, which bears interest at a variable rate equal to the greater of (i) 7.85% and (ii) the sum of (A) the prime rate last quoted in The Wall Street Journal (or a comparable replacement rate if The Wall Street Journal ceases to quote such rate) and (B) 3.85%; provided that the

interest rate cannot exceed 9.60%. Of the $45.0 million aggregate principal amount outstanding, $5.0 million was funded at closing, and we borrowed an additional $20.0 million in February 2023, $7.5 million in June 2023, and $12.5 million in December 2023 under the Loan Agreement. The interest rate as of September 30, 2024 was 9.60%.

We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we have contracted with and may continue to contract with foreign vendors that are located in Europe. Our operations may be subject to fluctuations in foreign currency exchange rates in the future.

Inflation generally affects us by increasing our cost of labor and clinical trial costs. We do not believe that inflation had a material effect on our business, financial condition, or results of operations during the nine months ended September 30, 2024 and 2023.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2024, our Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHERINFORMATION

Item 1A. Risk Factors.

In addition to all of the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023, which could materially affect our business, financial condition or results of operations. The risk factors disclosure in our Annual Report on Form 10-K for the year ended December 31, 2023 is qualified by the information that is described in this Quarterly Report on Form 10-Q. The risks described in our Annual Report on Form 10-K for the year ended December 31, 2023 are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

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

Recent Sales of Unregistered Equity Securities

We did not issue any securities that were not registered under the Securities Act of 1933, as amended during the three months ended September 30, 2024.

Item 5. Other Information.

(c) Director and Officer Trading Arrangements

None of our directors or officers adoptedor terminateda Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the three months ended September 30, 2024.

Item 6. Exhibits.

Exhibit Number		Description
3.1		Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-39397) filed with the Securities and Exchange Commission on July 28, 2020).
3.2		Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-39397) filed with the Securities and Exchange Commission on June 14, 2023).
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2+		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

* Filed herewith.

+ Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		INOZYME PHARMA, INC.
Date: November 5, 2024		By:	/s/ Douglas A. Treco
			Douglas A. Treco
			Chief Executive Officer (Principal Executive Officer)
Date: November 5, 2024		By:	/s/ Sanjay S. Subramanian
			Sanjay S. Subramanian
			Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)