0001558370-24-015162 | 10-Q | XBRL Viewer

Accrued Expenses

9 Months Ended

Sep. 30, 2024

6.Accrued Expenses

Accrued expenses consisted of the following (in thousands):


	September 30,		December 31,
	2024		2023
Employee compensation and benefits	$	6,188	$	5,122
External research, development and manufacturing expenses		20,049		9,398
Professional and consultant fees		1,962		2,379
Income taxes payable		—		301
Other		332		106
Total accrued expenses	$	28,531	$	17,306

Employee Benefit Plans	9 Months Ended
Sep. 30, 2024
Employee Benefit Plans
Employee Benefit Plans	15.Employee Benefit Plans Effective June 2020, the Company adopted the Zenas BioPharma 401(k) Plan (the “401(k) Plan”) for its employees, which is designed to be qualified under Section 401(k) of the Internal Revenue Code. Eligible employees are permitted to contribute to the 401(k) Plan within statutory and 401(k) Plan limits. Since inception of the 401(k) Plan and through September 30, 2024, the Company has not made any contributions to the 401(k) Plan.

Employee Benefit Plans

9 Months Ended

Sep. 30, 2024

Employee Benefit Plans

Employee Benefit Plans

15.Employee Benefit Plans

Effective June 2020, the Company adopted the Zenas BioPharma 401(k) Plan (the “401(k) Plan”) for its employees, which is designed to be qualified under Section 401(k) of the Internal Revenue Code. Eligible employees are permitted to contribute to the 401(k) Plan within statutory and 401(k) Plan limits. Since inception of the 401(k) Plan and through September 30, 2024, the Company has not made any contributions to the 401(k) Plan.

- Definition

The entire disclosure for retirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 70
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480794/715-70-50-1

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 17
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480482/715-20-55-17

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)(iv)(03)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)(i)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (q)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (l)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/715/tableOfContent

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)(iii)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (o)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
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-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
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-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
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-Section 50
-Paragraph 1
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480126/715-20-S99-2

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 60
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480266/715-60-50-3

+ Details

Convertible Preferred Stock - Schedule (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Convertible Preferred Stock
Preferred Stock Authorized		100,617,681
Preferred Stock Issued		100,617,681
Preferred Stock Outstanding		100,617,681
Carrying Value		$ 250,086
Liquidation Value		$ 250,969
Common Stock Issuable Upon Conversion		11,587,744
Series Seed convertible preferred stock
Convertible Preferred Stock
Preferred Stock Authorized	0	1,785,714
Preferred Stock Issued	0	1,785,714
Preferred Stock Outstanding	0	1,785,714
Carrying Value		$ 956
Liquidation Value	$ 0	$ 1,000
Common Stock Issuable Upon Conversion		205,653
Series A convertible preferred stock
Convertible Preferred Stock
Preferred Stock Authorized	0	17,589,380
Preferred Stock Issued	0	17,589,380
Preferred Stock Outstanding	0	17,589,380
Carrying Value		$ 55,840
Liquidation Value	$ 0	$ 56,071
Common Stock Issuable Upon Conversion		2,025,699
Series B convertible preferred stock
Convertible Preferred Stock
Preferred Stock Authorized	0	81,242,587
Preferred Stock Issued	0	81,242,587
Preferred Stock Outstanding	0	81,242,587
Carrying Value		$ 193,290
Liquidation Value	$ 0	$ 193,898
Common Stock Issuable Upon Conversion		9,356,392

Stock-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2024
Number of Shares
Balance at beginning (in shares)	2,382,933
Balance outstanding at ending (in shares)	8,630,075
Employee Stock Option
Stock-Based Compensation
Vesting period (years)	4 years
Maximum term of options granted (years)	10 years
Number of Shares
Balance at beginning (in shares)	2,382,933
Granted (in shares)	6,363,022
Exercised (in shares)	(25,953)
Forfeited or cancelled (in shares)	(89,927)
Balance outstanding at ending (in shares)	8,630,075
Options vested and exercisable at ending (in shares)	1,017,323
Options vested and expected to vest ending (in shares)	8,630,075
Weighted-Average Exercise Price
Balance at beginning (in dollars per share)	$ 8.51
Granted (in dollars per share)	14.86
Exercised (in dollars per share)	7.56
Forfeited or cancelled (in dollars per share)	9.21
Balance outstanding at ending (in dollars per share)	13.19
Options vested and exercisable at ending (in dollars per share)	7.00
Options vested and expected to vest at ending (in dollars per share)	$ 13.19
Weighted-Average Remaining Contractual Term (In years)
Balance outstanding at ending (in years)	9 years 5 months 1 day
Options vested and exercisable at ending (in years)	7 years 8 months 15 days
Options vested and expected to vest at ending (in years)	9 years 5 months 1 day
Aggregate Intrinsic Value
Balance at beginning	$ 8,084
Exercised	78
Balance outstanding at ending	32,545
Options vested and exercisable at ending	10,093
Options vested and expected to vest at ending	32,545
Unrecognized compensation cost related to unvested stock options	$ 79,200
Weighted average period over which unrecognized compensation cost is expected to be recognized	3 years 3 months 18 days

Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Convertible Preferred Stock Series Seed convertible preferred stock	Convertible Preferred Stock Series A convertible preferred stock	Convertible Preferred Stock Series B convertible preferred stock	Convertible Preferred Stock Series C convertible preferred stock	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Series Seed convertible preferred stock	Series A convertible preferred stock	Series B convertible preferred stock	Total
Balance at the beginning at Dec. 31, 2022	$ 956	$ 55,840	$ 183,290
Balance at the beginning (in shares) at Dec. 31, 2022	1,785,714	17,589,380	77,052,632
Balance at the end at Mar. 31, 2023	$ 956	$ 55,840	$ 183,290
Balance at the end (in shares) at Mar. 31, 2023	1,785,714	17,589,380	77,052,632
Balance at the beginning at Dec. 31, 2022						$ 1,034	$ (41)	$ (193,279)				$ (192,286)
Balance at the beginning (in shares) at Dec. 31, 2022					1,549,275
Changes in Stockholders' Equity (Deficit)
Exercises of common stock options						55						55
Exercises of common stock options (in shares)					15,835
Stock-based compensation expense						687						687
Net (loss) income								(19,098)				(19,098)
Foreign currency translation adjustment							(4)					(4)
Balance at the end at Mar. 31, 2023						1,776	(45)	(212,377)				(210,646)
Balance at the end (in shares) at Mar. 31, 2023					1,565,110
Balance at the beginning at Dec. 31, 2022	$ 956	$ 55,840	$ 183,290
Balance at the beginning (in shares) at Dec. 31, 2022	1,785,714	17,589,380	77,052,632
Balance at the end at Sep. 30, 2023	$ 956	$ 55,840	$ 193,290
Balance at the end (in shares) at Sep. 30, 2023	1,785,714	17,589,380	81,242,587
Balance at the beginning at Dec. 31, 2022						1,034	(41)	(193,279)				(192,286)
Balance at the beginning (in shares) at Dec. 31, 2022					1,549,275
Changes in Stockholders' Equity (Deficit)
Net (loss) income												(12,537)
Foreign currency translation adjustment												165
Balance at the end at Sep. 30, 2023						3,460	124	(205,816)				(202,232)
Balance at the end (in shares) at Sep. 30, 2023					1,568,218
Balance at the beginning at Mar. 31, 2023	$ 956	$ 55,840	$ 183,290
Balance at the beginning (in shares) at Mar. 31, 2023	1,785,714	17,589,380	77,052,632
Changes in Convertible Preferred Stock
Issuance of convertible preferred stock			$ 10,000
Issuance of convertible preferred stock (in shares)			4,189,955
Balance at the end at Jun. 30, 2023	$ 956	$ 55,840	$ 193,290
Balance at the end (in shares) at Jun. 30, 2023	1,785,714	17,589,380	81,242,587
Balance at the beginning at Mar. 31, 2023						1,776	(45)	(212,377)				(210,646)
Balance at the beginning (in shares) at Mar. 31, 2023					1,565,110
Changes in Stockholders' Equity (Deficit)
Exercises of common stock options						11						11
Exercises of common stock options (in shares)					3,108
Stock-based compensation expense						669						669
Net (loss) income								(29,047)				(29,047)
Foreign currency translation adjustment							160					160
Balance at the end at Jun. 30, 2023						2,456	115	(241,424)				(238,853)
Balance at the end (in shares) at Jun. 30, 2023					1,568,218
Balance at the end at Sep. 30, 2023	$ 956	$ 55,840	$ 193,290
Balance at the end (in shares) at Sep. 30, 2023	1,785,714	17,589,380	81,242,587
Changes in Stockholders' Equity (Deficit)
Stock-based compensation expense						1,004						1,004
Net (loss) income								35,608				35,608
Foreign currency translation adjustment							9					9
Balance at the end at Sep. 30, 2023						3,460	124	(205,816)				(202,232)
Balance at the end (in shares) at Sep. 30, 2023					1,568,218
Balance at the beginning at Dec. 31, 2023	$ 956	$ 55,840	$ 193,290						$ 956	$ 55,840	$ 193,290	$ 250,086
Balance at the beginning (in shares) at Dec. 31, 2023	1,785,714	17,589,380	81,242,587						1,785,714	17,589,380	81,242,587	100,617,681
Balance at the end at Mar. 31, 2024	$ 956	$ 55,840	$ 193,290
Balance at the end (in shares) at Mar. 31, 2024	1,785,714	17,589,380	81,242,587
Balance at the beginning at Dec. 31, 2023						4,645	37	(230,403)				$ (225,721)
Balance at the beginning (in shares) at Dec. 31, 2023					1,576,854
Changes in Stockholders' Equity (Deficit)
Repurchase of unvested restricted stock awards (in shares)					(21,172)
Exercises of common stock options						42						42
Exercises of common stock options (in shares)					7,035
Stock-based compensation expense						947						947
Net (loss) income								(27,800)				(27,800)
Foreign currency translation adjustment							37					37
Balance at the end at Mar. 31, 2024						5,634	74	(258,203)				(252,495)
Balance at the end (in shares) at Mar. 31, 2024					1,562,717
Balance at the beginning at Dec. 31, 2023	$ 956	$ 55,840	$ 193,290						$ 956	$ 55,840	$ 193,290	$ 250,086
Balance at the beginning (in shares) at Dec. 31, 2023	1,785,714	17,589,380	81,242,587						1,785,714	17,589,380	81,242,587	100,617,681
Balance at the end (in shares) at Sep. 30, 2024									0	0	0
Balance at the beginning at Dec. 31, 2023						4,645	37	(230,403)				$ (225,721)
Balance at the beginning (in shares) at Dec. 31, 2023					1,576,854
Changes in Stockholders' Equity (Deficit)
Net (loss) income												(104,384)
Foreign currency translation adjustment												16
Balance at the end at Sep. 30, 2024					$ 4	694,163	54	(334,786)				359,435
Balance at the end (in shares) at Sep. 30, 2024					41,780,938
Balance at the beginning at Mar. 31, 2024	$ 956	$ 55,840	$ 193,290
Balance at the beginning (in shares) at Mar. 31, 2024	1,785,714	17,589,380	81,242,587
Changes in Convertible Preferred Stock
Issuance of convertible preferred stock				$ 199,526
Issuance of convertible preferred stock (in shares)				116,275,239
Balance at the end at Jun. 30, 2024	$ 956	$ 55,840	$ 193,290	$ 199,526
Balance at the end (in shares) at Jun. 30, 2024	1,785,714	17,589,380	81,242,587	116,275,239
Balance at the beginning at Mar. 31, 2024						5,634	74	(258,203)				(252,495)
Balance at the beginning (in shares) at Mar. 31, 2024					1,562,717
Changes in Stockholders' Equity (Deficit)
Exercises of common stock options						124						124
Exercises of common stock options (in shares)					15,655
Stock-based compensation expense						1,536						1,536
Net (loss) income								(37,977)				(37,977)
Foreign currency translation adjustment							30					30
Balance at the end at Jun. 30, 2024						7,294	104	(296,180)				(288,782)
Balance at the end (in shares) at Jun. 30, 2024					1,578,372
Changes in Convertible Preferred Stock
Conversion of convertible preferred stock to common stock upon closing of initial public offering	$ (956)	$ (55,840)	$ (193,290)	$ (199,526)
Conversion of convertible preferred stock to common stock upon closing of initial public offering (in shares)	(1,785,714)	(17,589,380)	(81,242,587)	(116,275,239)
Balance at the end (in shares) at Sep. 30, 2024									0	0	0
Changes in Stockholders' Equity (Deficit)
Exercises of common stock options						32						32
Exercises of common stock options (in shares)					3,263
Stock-based compensation expense						2,843						2,843
Net (loss) income								(38,606)				(38,606)
Foreign currency translation adjustment							(50)					(50)
Conversion of convertible preferred stock to common stock upon closing of initial public offering					$ 2	449,610						449,612
Conversion of convertible preferred stock to common stock upon closing of initial public offering (in shares)					24,978,715
Issuance of common stock					$ 2	234,384						234,386
Issuance of common stock (in shares)					15,220,588
Balance at the end at Sep. 30, 2024					$ 4	$ 694,163	$ 54	$ (334,786)				$ 359,435
Balance at the end (in shares) at Sep. 30, 2024					41,780,938

Stock-Based Compensation

9 Months Ended

Sep. 30, 2024

Stock-Based Compensation

Stock-Based Compensation

12.Stock-Based Compensation

2020 Plan

On August 21, 2020, the Company’s sole director and member approved the Zenas BioPharma (Cayman) Limited 2020 Equity Incentive Plan (the “2020 Plan”). The 2020 Plan allowed the Company to grant stock options, restricted stock awards (“RSAs”), restricted stock units, and other stock-based awards to employees, officers, directors and consultants of the Company and its subsidiaries.

Since inception of the 2020 Plan, the Company has granted RSAs and stock options. RSAs and stock options granted by the Company generally vest over four years, with 25% of the total shares granted vesting on the anniversary of the vesting commencement date and the remaining 75% vesting in equal monthly installments over the subsequent thirty-six (36) months.

In August 2023, as part of the Redomicile, the 2020 Plan was transferred from Zenas BioPharma Cayman Limited to Zenas BioPharma, Inc and was renamed the Zenas BioPharma, Inc. 2020 Equity Incentive Plan. Upon the transfer, there was no legal modification to the outstanding RSAs and stock options, and no changes to any existing terms of the outstanding awards (exercise price, term, vesting, etc.). Upon effectiveness of the 2024 Plan (as defined below), the Company ceased granting additional awards under the 2020 Plan.

2024 Plan

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

Upon the effectiveness of the 2024 Plan, the number of shares of common stock initially reserved for issuance was 4,775,477 shares of common stock which is equal to 12% of the number of shares of common stock issued and outstanding immediately following the consummation of the Company’s IPO. The number of shares reserved for issuance under the 2024 Plan will increase automatically on the first day of each fiscal year commencing on January 1, 2025 through January 1, 2034 by the number of shares equal to the lesser of (a) five percent of the aggregate number of shares of common stock outstanding as of such date, and (b) a number of shares as may be determined by the Board on or prior to such date. As of September 30, 2024, 447,981 shares of common stock remain available for future issuance under the 2024 Plan.

2024 ESPP

On September 3, 2024, the Board adopted the 2024 Employee Stock Purchase Plan (the “ESPP”), which became effective immediately prior to the effectiveness of the registration statement for the Company’s IPO. The Company initially reserved 397,956 shares for issuance under the ESPP which is equal to 1% of the number of shares of common stock issued and outstanding immediately following the consummation of the Company’s IPO. The number of shares reserved for sale under the ESPP will increase automatically on the first day of each fiscal year commencing on January 1, 2025 through January 1, 2034, by the number of shares equal to the lesser of (a) one percent of the aggregate number of shares of common stock outstanding as of such date, and (b) a number of shares as may be determined by the Board on or prior to such date, up to a maximum of 1,000,000 shares in the aggregate per year. As of September 30, 2024, no shares of common stock have been issued and no stock-based compensation has been recognized related to the ESPP.

Restricted Stock Awards

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


			Weighted-
	Number of		Average Grant-Date
	Shares		Fair Value
Unvested as of December 31, 2023		27,199	$	2.71
Vested		(6,027)		0.01
Repurchased		(21,172)		3.48
Unvested as of September 30, 2024		—	$	—

There were no RSAs granted during the nine months ended September 30, 2024. As of September 30, 2024, all RSAs were fully vested.

Stock Options

The Company has granted stock options with service-based vesting conditions. Stock options typically vest over four years and have a maximum term of ten years. The Company typically grants stock options to employees and non-employees at exercise prices deemed by the Board to be equal to the fair value of the common stock at the time of grant.

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


					Weighted-Average		Aggregate
	Number of		Weighted-Average		Remaining		Intrinsic
	Shares		Exercise Price		Contractual Term		Value
						(in years)		(in thousands)
Balance as of December 31, 2023		2,382,933	$	8.51			$	8,084
Granted		6,363,022		14.86
Exercised		(25,953)		7.56				78
Forfeited or cancelled		(89,927)		9.21
Balance outstanding as of September 30, 2024		8,630,075	$	13.19		9.42	$	32,545
Options vested and exercisable as of September 30, 2024		1,017,323	$	7.00		7.71	$	10,093
Options vested and expected to vest as of September 30, 2024		8,630,075	$	13.19		9.42	$	32,545

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock for those stock options that had an exercise price lower than the fair value of the Company’s common stock as of the measurement date of September 30, 2024. The aggregate intrinsic value of options exercised during each of the nine months ended September 30, 2024 and 2023 was $0.1 million.

As of September 30, 2024, unrecognized compensation cost related to unvested stock options was $79.2 million, which is expected to be recognized over a weighted average period of 3.3 years.

Stock-Based Compensation Expense

The following table presents stock-based compensation expense as reflected in the Company’s condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	1,257	$	510	$	2,378	$	1,040
General and administrative		1,586		493		2,948		1,320
Total stock-based compensation expense	$	2,843	$	1,003	$	5,326	$	2,360

Convertible Preferred Stock - Rights and Privileges (Details) $ in Millions	9 Months Ended
	Sep. 30, 2024 USD ($) Vote
Convertible Preferred Stock
Convertible preferred stock, number of votes per share \| Vote	1
Conversion ratio	1
Dividends declared	$ 0.0
Dividends paid	$ 0.0
Series Seed convertible preferred stock
Convertible Preferred Stock
Dividend rate, percentage	6.00%
Series A convertible preferred stock
Convertible Preferred Stock
Dividend rate, percentage	6.00%
Series B convertible preferred stock
Convertible Preferred Stock
Dividend rate, percentage	6.00%
Series C convertible preferred stock
Convertible Preferred Stock
Dividend rate, percentage	6.00%

Leases (Tables)

9 Months Ended

Sep. 30, 2024

Leases

Schedule of maturities of the operating lease liabilities and quantitative disclosure

Maturities of the operating lease liabilities as of September 30, 2024 are as follows (in thousands):


Fiscal Year	Amount
2024 (remaining three months)	$	203
2025		439
Total future minimum lease payments		642
Less: imputed interest		(258)
Total operating lease liabilities	$	384

Related Party Transactions (Details) $ in Millions	1 Months Ended		9 Months Ended		12 Months Ended
Related Party Transactions (Details) $ in Millions	Sep. 30, 2024 shares	Jun. 30, 2023 shares	Sep. 30, 2024 USD ($) item	Sep. 30, 2023 USD ($)	Dec. 31, 2020 shares
Related Party Transactions
Number of common stock issued	15,220,588
Xencor
Related Party Transactions
Reimbursable costs \| $			$ 0.0	$ 0.0
Xencor \| Maximum
Related Party Transactions
Reimbursable patent \| $			$ 0.1	$ 0.1
Xencor \| Related party
Related Party Transactions
Number of antibody product candidates \| item			4
Number of license agreements \| item			2
Equity interest held (in percent)	7.40%		7.40%
Xencor \| Related party \| Series A convertible preferred stock
Related Party Transactions
Number of preferred stock issued					5,041,542
Xencor \| Related party \| Series B convertible preferred stock
Related Party Transactions
Number of preferred stock issued		4,189,955
Viridian \| Related party
Related Party Transactions
Ownership percentage by related party	5.00%		5.00%
Number of common stock issued					38,707
Viridian \| Related party \| Maximum
Related Party Transactions
Ownership percentage by related party	5.00%		5.00%
Viridian \| Related party \| Fairmount Funds Management LLC
Related Party Transactions
Number of seats held in board \| item			2
Dianthus \| Related party
Related Party Transactions
Number of antibody product candidates \| item			2
Number of common stock issued					18,063
Dianthus \| Related party \| Maximum
Related Party Transactions
Ownership percentage by related party	5.00%		5.00%

License and Option Agreements

9 Months Ended

Sep. 30, 2024

License and Option Agreements

License and Option Agreements

9.License and Option Agreements

Prior to 2024, the Company entered into license and option agreements with various companies in the biotechnology and life sciences industry to in-license certain technologies for the Company’s use. The Company’s agreements are disclosed in Note 9, “License and Option Agreements,” in the audited consolidated financial statements for the years ended December 31, 2023 and 2022, included in the IPO Prospectus. Since the date of those financial statements, there have been no changes to these agreements, except as noted below.

Xencor, Inc.

2020 Xencor Agreement

In September 2020, the Company entered into the 2020 Xencor Agreement, under which the Company is obligated to reimburse Xencor for third-party costs incurred for certain patent filings, prosecution and maintenance as further specified in the 2020 Xencor Agreement. During the three and nine months ended September 30, 2024 and 2023, the Company incurred no such reimbursable costs.

2021 Xencor Agreement

In May 2021, the Company entered into the 2021 Xencor Agreement, through which it obtained an exclusive, royalty-bearing, sublicensable worldwide license to research, develop, manufacture, market and sell obexelimab. In April 2023, the Company incurred a $10.0 million development milestone pursuant to the 2021 Xencor Agreement, which Xencor elected to receive in the form of the Company’s Series B convertible preferred stock (“Series B Preferred Stock). See Note 10, “Convertible Preferred Stock,” for details. The milestone was recorded as acquired in-process research and development expense in the Company’s condensed consolidated statements of operations and comprehensive loss during the nine months ended September 30, 2023.

Dianthus Therapeutics Inc.

In September 2020, the Company entered into the Dianthus Option Agreement, under which the Company obtained an exclusive option to negotiate and enter into exclusive license agreements for the rights to research, develop, manufacture, market and sell products related to either or both of two antibody product candidates based on Dianthus’ proprietary technology. Dianthus will notify the Company when it has identified each of two antibody product candidates, and the Company will then have sixty (60) days to notify Dianthus if the Company intends to exercise each of the options. In October 2021, the Company notified Dianthus of its intention to exercise its option to ZB005 (also known as DNTH103) and in June 2022, the Company and Dianthus executed a license agreement for ZB005 (the “Dianthus License Agreement”). As of September 30, 2024, Dianthus had not notified the Company of its identification of the second antibody product candidate. In October 2024, the Company entered into a Novation Agreement (the “Novation Agreement”) with Tenacia Biotechnology (Hong Kong) Co., Limited (“Tenacia”), under which the Company transferred all of its rights and obligations under the Dianthus Option Agreement and the Dianthus License Agreement to Tenacia (see Note 17).

During the three months ended September 30, 2024, and 2023, the Company incurred $1.9 million and $0.6 million of reimbursable expenses, respectively, and $4.7 million and $2.7 million for the nine months ended September 30, 2024 and 2023, respectively, which are recorded within research and development expenses in the condensed consolidated statements of operations and comprehensive loss. Of these amounts, $0.6 million and $1.9 million were recorded in accounts payable and accrued expenses, respectively, on the Company’s condensed consolidated balance sheet as of September 30, 2024. As of December 31, 2023, less than $0.1 million and $0.4 million were recorded in accounts payable and accrued expenses, respectively, on the Company’s consolidated balance sheet.

Viridian Therapeutics, Inc.

In October 2020, the Company entered into the Viridian Agreement to obtain an exclusive, royalty-bearing, sublicensable license to research, develop, manufacture, market and sell certain antibody product candidates based on Viridian’s proprietary technology. The Company’s license rights are limited to non-oncology indications and are limited to China, Hong Kong, Macau and Taiwan (the “Zenas Territories”). Viridian retains its rights to develop and commercialize such product candidates outside of the Zenas Territories. The Company is obligated to make development milestone payments to Viridian, totaling up to $12.0 million, based on achievement of each of the specified milestone events. During each of the nine months ended September 30, 2024, and 2023, the Company incurred and paid no milestones to Viridian. As of September 30, 2024, Viridian had not notified the Company of any additional antibody product candidate.

During each of the three months ended September 30, 2024 and 2023, the Company recognized no expense related to Viridian. The Company recognized $0.1 million for each of the nine months ended September 30, 2024 and 2023, respectively, related to amounts reimbursed to Viridian for manufacturing activities, which were recorded in research and development expenses in the condensed consolidated statement of operations. No related amounts were recorded in accrued expenses or in accounts payable on the Company’s condensed consolidated balance sheet as of September 30, 2024. As of December 31, 2023, less than $0.1 million was included in accrued expenses and no amount was included in accounts payable on the Company’s consolidated balance sheet. In addition, Viridian has agreed to reimburse the Company for certain services it performs on Viridian’s behalf, with reimbursements being recorded as a reduction of research and development expense. Such amounts have been and are expected to be immaterial.

Investments - Amortized cost and estimated fair value (Details) $ in Thousands	Sep. 30, 2024 USD ($)
Investments
Amortized Cost	$ 26,699
Gross Unrealized Gains	62
Fair Value	26,761
Commercial paper
Investments
Amortized Cost	3,570
Gross Unrealized Gains	9
Fair Value	3,579
Corporate debt securities
Investments
Amortized Cost	8,007
Gross Unrealized Gains	26
Fair Value	8,033
Government securities
Investments
Amortized Cost	15,122
Gross Unrealized Gains	27
Fair Value	$ 15,149

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481800/320-10-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
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-Name Accounting Standards Codification
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-Paragraph 2
-Subparagraph (a)
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Subsequent Events (Details) - Subsequent event - USD ($) $ in Millions	Oct. 11, 2024	Oct. 10, 2024	Oct. 21, 2024
Subsequent event
Early termination fee	$ 0.1
Non-refundable upfront fee			$ 5.0
Maximum payment receivable			$ 86.0
Waltham Sublease
Subsequent event
Initial term		18 months
Term extension for additional years		false
Rental Payment		$ 1.0

Other Assets

9 Months Ended

Sep. 30, 2024

Other Assets

Other Assets

5.Other Assets

Other assets consisted of the following (in thousands):


	September 30,		December 31,
	2024		2023
Prepaid clinical expenses	$	8,920	$	5,788
Deferred offering costs		—		1,388
Other		100		100
Total other assets	$	9,020	$	7,276

Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended						9 Months Ended
	Sep. 16, 2024	May 03, 2024	Sep. 30, 2024	May 31, 2023	Apr. 30, 2023	Nov. 30, 2022	Nov. 30, 2020	Sep. 30, 2020	Sep. 30, 2024	Dec. 31, 2023
Convertible Preferred Stock
Convertible preferred stock, shares issued										100,617,681
Number of common stock issued			15,220,588
Public offering price			$ 17.00						$ 17.00
Gross proceeds from initial public offering			$ 258,700
Proceeds from initial public offering, net of underwriting discount			$ 234,400						$ 234,387
Series Seed convertible preferred stock
Convertible Preferred Stock
Convertible preferred stock, shares issued			0						0	1,785,714
Series A convertible preferred stock
Convertible Preferred Stock
Convertible preferred stock, shares issued			0						0	17,589,380
Series A convertible preferred stock \| 2020 Xencor Agreement
Convertible Preferred Stock
Number of preferred stock issued							5,041,542
Series B convertible preferred stock
Convertible Preferred Stock
Convertible preferred stock, shares issued			0						0	81,242,587
Series B convertible preferred stock \| Convertible notes
Convertible Preferred Stock
Number of shares issued upon conversion of convertible notes						37,471,107
Series B convertible preferred stock \| 2021 Xencor Agreement
Convertible Preferred Stock
Number of shares issued upon exercise of warrants						14,441,793
Development milestone expense					$ 10,000
Number of shares issued in pursuant to development milestone payment					4,189,955
Series C convertible preferred stock
Convertible Preferred Stock
Convertible preferred stock, shares issued				116,275,239
Series C convertible preferred stock \| BMS Notes
Convertible Preferred Stock
Number of shares issued upon conversion of convertible notes		12,284,686		12,284,686
Private financing \| Series Seed convertible preferred stock
Convertible Preferred Stock
Number of preferred stock issued								1,785,714
Purchase price per share								$ 0.56
Net cash proceeds from issuance								$ 1,000
Private financing \| Series A convertible preferred stock
Convertible Preferred Stock
Number of preferred stock issued							12,547,838
Purchase price per share							$ 3.1878
Net cash proceeds from issuance							$ 39,900
Private financing \| Series B convertible preferred stock
Convertible Preferred Stock
Number of preferred stock issued						25,139,732
Purchase price per share						$ 2.38666
Net cash proceeds from issuance						$ 59,400
Private financing \| Series C convertible preferred stock
Convertible Preferred Stock
Number of preferred stock issued				103,990,553
Purchase price per share				$ 1.72131
Net cash proceeds from issuance				$ 178,400
IPO
Convertible Preferred Stock
Number of common stock issued	15,220,588
Public offering price	$ 17.00
Proceeds from initial public offering, net of underwriting discount	$ 258,700
Number of common shares issued upon conversion of convertible preferred stock			24,978,715						24,978,715
Underwriter's option
Convertible Preferred Stock
Number of common stock issued	1,985,294		1,985,294

Investments (Tables)

9 Months Ended

Sep. 30, 2024

Investments

Schedule of available-for-sale securities reconciliation

The following table summarizes the amortized cost and estimated fair value of the Company’s investments, which are considered to be available-for-sale investments and were included in short-term investments on the condensed consolidated balance sheets (in thousands):


		September 30, 2024
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term investments:
Commercial paper	$	3,570	$	9	$	—	$	3,579
Corporate debt securities		8,007		26		—		8,033
Government securities		15,122		27		—		15,149
Total	$	26,699	$	62	$	—	$	26,761

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (38,606)	$ (37,977)	$ (27,800)	$ 35,608	$ (29,047)	$ (19,098)	$ (104,384)	$ (12,537)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

Condensed Consolidated Statements of Cash Flows (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$ 360,038	$ 56,857	$ 72,311
Restricted cash	89	86	86
Total cash and restricted cash	$ 360,127	$ 56,943	$ 72,397	$ 67,295

Fair Value Measurement - Fair Value Transfers (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Fair Value Measurement
Assets - Transfer from level 1 to 2	$ 0	$ 0
Assets - Transfer from level 2 to 1	0	0
Assets - Transfer into level 3	0	0
Assets - Transfer out of level 3	0	0
Liabilities - Transfer from level 1 to 2	0	0
Liabilities - Transfer from level 2 to 1	0	0
Liabilities - Transfer into level 3	0	0
Liabilities - Transfer out of level 3	$ 0	$ 0

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Stock-Based Compensation Expense
Total stock-based compensation expense	$ 2,843	$ 1,003	$ 5,326	$ 2,360
Research and development
Stock-Based Compensation Expense
Total stock-based compensation expense	1,257	510	2,378	1,040
General and administrative
Stock-Based Compensation Expense
Total stock-based compensation expense	$ 1,586	$ 493	$ 2,948	$ 1,320

Convertible Preferred Stock (Tables)

9 Months Ended

Sep. 30, 2024

Convertible Preferred Stock

Schedule of convertible preferred stock

Preferred Stock consisted of the following (in thousands, except share amounts):


	December 31, 2023
		Preferred Stock					Common Stock
	Preferred Stock	Issued and					Issuable Upon
	Authorized	Outstanding	Carrying Value		Liquidation Value		Conversion
Series Seed Preferred Stock	1,785,714	1,785,714	$	956	$	1,000	205,653
Series A Preferred Stock	17,589,380	17,589,380		55,840		56,071	2,025,699
Series B Preferred Stock	81,242,587	81,242,587		193,290		193,898	9,356,392
Total	100,617,681	100,617,681	$	250,086	$	250,969	11,587,744

Investments (Details) - USD ($) $ in Millions	9 Months Ended
Investments (Details) - USD ($) $ in Millions	Sep. 30, 2024	Jun. 30, 2024	Dec. 31, 2023
Investments
Long-term investments	$ 0.0
Amount of investments held		$ 0.0	$ 0.0
Unrealized loss position	0.0
Amount of allowances for credit losses	0.0
Aggregate fair value of available-for-sale securities in an unrealized loss position	$ 0.0
Maximum
Investments
Short-term investments, contractual maturity (in years)	1 year

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Investments

9 Months Ended

Sep. 30, 2024

Investments

Investments

3.Investments


		September 30, 2024
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term investments:
Commercial paper	$	3,570	$	9	$	—	$	3,579
Corporate debt securities		8,007		26		—		8,033
Government securities		15,122		27		—		15,149
Total	$	26,699	$	62	$	—	$	26,761

Certain short-term debt securities with original maturities of less than 90 days are included in cash and cash equivalents on the condensed consolidated balance sheets and are not included in the table above. As of September 30, 2024, all short-term investments had contractual maturities within one year and there were no long-term investments held. The Company held no investments as of December 31, 2023.

As the Company held no investments until the three months ended September 30, 2024, no available-for-sale securities were in a continuous unrealized loss position for greater than 12 months. There were no available-for-sale securities held by the Company in an unrealized loss position as of September 30, 2024. Therefore, the Company does not consider these investments to be impaired and there are no allowances for credit losses as of September 30, 2024.

Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value Measurement

Schedule of financial assets and liabilities measured at fair value on a recurring basis

The following tables present information about the Company’s financial instruments measured at fair value on a recurring basis (in thousands):


		September 30, 2024
Description	Balance Sheet Classification	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	Current assets	$	468	$	—	$	—	$	468
Government securities	Current assets		3,987		—		—		3,987
Investments:
Commercial paper	Current assets		—		3,579		—		3,579
Corporate debt securities	Current assets		—		8,033		—		8,033
Government securities	Current assets		15,149		—		—		15,149
		$	19,604	$	11,612	$	—	$	31,216


		December 31, 2023
Description	Balance Sheet Classification	Level 1		Level 2		Level 3		Total
Liabilities:
BMS Note	Non-current liability	$	—	$	—	$	20,300	$	20,300
		$	—	$	—	$	20,300	$	20,300

Schedule of changes in the company's liabilities with significant unobservable inputs

The table below presents changes in the Company’s liabilities with significant unobservable inputs (Level 3 liabilities) during the nine months ended September 30, 2024 (in thousands):


	Convertible notes
Balance as of December 31, 2023	$	20,300
Change in fair value of BMS Note		846
Issuance of Series C Preferred Stock in exchange for BMS Note		(21,146)
Balance as of September 30, 2024	$	—

Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Accrued Expenses
Employee compensation and benefits	$ 6,188	$ 5,122
External research, development and manufacturing expenses	20,049	9,398
Professional and consultant fees	1,962	2,379
Income taxes payable		301
Other	332	106
Total accrued expenses	$ 28,531	$ 17,306

Stock-Based Compensation - Restricted Stock Awards (Details) - RSA	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Number of Shares
Unvested as of beginning (Shares)	27,199
Vested (shares)	(6,027)
Repurchased (shares)	(21,172)
Weighted-Average Grant-Date Fair Value
Unvested as of beginning ($ per share) \| $ / shares	$ 2.71
Vested ($ per share) \| $ / shares	0.01
Repurchased ($ per share) \| $ / shares	$ 3.48
Number of RSAs granted (shares)	0

Net (Loss) Income Per Share

9 Months Ended

Sep. 30, 2024

Net (Loss) Income Per Share

Net (Loss) Income Per Share

13.Net (Loss) Income Per Share

In periods when participating securities are outstanding and the Company has income, net income (loss) per share information is determined using the two-class method, which includes the weighted-average number of shares of common stock outstanding during the period and other securities that participate in dividends (a participating security). The Company considers the convertible preferred stock to be participating securities because they include rights to participate in dividends with the common stock.

Under the two-class method, basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share attributable to common stockholders is computed using the more dilutive of (1) the two-class method or (2) the if-converted method. The Company allocates net income first to preferred stockholders based on dividend rights under the Company's certificate of incorporation and then to preferred and common stockholders based on ownership interests. Net losses are not allocated to preferred stockholders as they do not have an obligation to share in the Company's net losses.

Diluted net income (loss) per share gives effect to all potentially dilutive securities. Potential dilutive securities consist of shares of common stock issuable upon the exercise of stock options, and shares of common stock issuable upon the conversion of the outstanding convertible preferred stock and convertible debt. The dilutive effect of these common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method. In periods in which the Company reports a net loss, diluted net loss per share is the same as basic net loss per share since dilutive common shares are not assumed to have been issued if their effect is antidilutive.

Basic and diluted net (loss) income per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator:
Net (loss) income	$	(38,606)	$	35,608	$	(104,384)	$	(12,537)
Less: Noncumulative undeclared convertible preferred stock dividends		—		(3,766)		—		—
Less: Earnings attributable to participating securities		—		(28,119)		—		—
Net (loss) income attributable to common stockholders - basic and diluted	$	(38,606)	$	3,723	$	(104,384)	$	(12,537)

Denominator:
Weighted-average common stock outstanding - basic		7,697,695		1,537,918		3,621,276		1,527,730
Dilutive effect of options to purchase common stock		—		360,473		—		—
Weighted-average common stock outstanding - diluted		7,697,695		1,898,391		3,621,276		1,527,730
Net (loss) income per share attributable to common stockholders - basic	$	(5.02)	$	2.42	$	(28.83)	$	(8.21)
Net (loss) income per share attributable to common stockholders - diluted	$	(5.02)	$	1.96	$	(28.83)	$	(8.21)

The Company excluded the following shares from the computation of diluted net (loss) income per share attributable to common stockholders as of September 30, 2024 and 2023 because including them would have had an anti-dilutive effect:


	September 30,
	2024	2023
Convertible preferred stock	—	11,587,744
Unvested restricted stock	—	29,459
Options to purchase common stock	8,630,075	1,945,373

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Accounts payable	$ 15,082	$ 5,396
Accrued expenses	$ 28,531	$ 17,306
Convertible preferred stock, shares authorized		100,617,681
Convertible preferred stock, shares issued		100,617,681
Convertible preferred stock, shares outstanding		100,617,681
Convertible preferred stock, liquidation preference		$ 250,969
Preferred stock, par value (in dollar per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	25,000,000	0
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollar per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	175,000,000	175,000,000
Common stock, shares issued	41,780,938	1,576,854
Common Stock, Shares, Outstanding	41,780,938	1,576,854
Related party
Accounts payable	$ 594	$ 21
Accrued expenses	$ 1,873	$ 404
Series Seed convertible preferred stock
Convertible preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Convertible preferred stock, shares authorized	0	1,785,714
Convertible preferred stock, shares issued	0	1,785,714
Convertible preferred stock, shares outstanding	0	1,785,714
Convertible preferred stock, liquidation preference	$ 0	$ 1,000
Series A convertible preferred stock
Convertible preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Convertible preferred stock, shares authorized	0	17,589,380
Convertible preferred stock, shares issued	0	17,589,380
Convertible preferred stock, shares outstanding	0	17,589,380
Convertible preferred stock, liquidation preference	$ 0	$ 56,071
Series B convertible preferred stock
Convertible preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Convertible preferred stock, shares authorized	0	81,242,587
Convertible preferred stock, shares issued	0	81,242,587
Convertible preferred stock, shares outstanding	0	81,242,587
Convertible preferred stock, liquidation preference	$ 0	$ 193,898

Collaboration Revenue (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
Collaboration Revenue (Details) - USD ($) $ in Thousands	Aug. 31, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Nature of Business
Revenue			$ 50,000		$ 50,000
BMS Agreement
Nature of Business
Amount of upfront cash payment received	$ 50,000
Maximum amount of payments receivable	$ 149,500
Amount of reduction to research and development expenses		$ 1,800	3,400	$ 3,900	3,400
Amount receivable		1,800		1,800
Revenue		$ 0	$ 50,000	$ 0	$ 50,000

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-41

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 270
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-Paragraph 1
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482964/270-10-50-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 32
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Reference 4: http://fasb.org/us-gaap/role/ref/otherTransitionRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/1943274/2147479806/606-10-50-4

+ Details

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenue:
Collaboration revenue		$ 50,000		$ 50,000
Total revenue		50,000		50,000
Operating expenses:
Research and development (includes $1,375, $612, $3,247 and $2,117 from related parties, respectively)	$ 33,530	9,352	$ 89,982	39,615
General and administrative (includes $0, $3, $0 and $71 from related parties, respectively)	7,454	5,024	18,283	12,753
Acquired in-process research and development				10,000
Total operating expenses	40,984	14,376	108,265	62,368
(Loss) income from operations	(40,984)	35,624	(108,265)	(12,368)
Other income (expense), net:
Fair value adjustments to convertible notes			(846)
Other income (expense), net	2,378	(16)	4,727	(169)
Total other income (expense), net	2,378	(16)	3,881	(169)
Net (loss) income	$ (38,606)	$ 35,608	$ (104,384)	$ (12,537)
Net (loss) income per share attributable to common stockholders - basic (in dollars per share)	$ (5.02)	$ 2.42	$ (28.83)	$ (8.21)
Net (loss) income per share attributable to common stockholders - diluted (in dollars per share)	$ (5.02)	$ 1.96	$ (28.83)	$ (8.21)
Weighted-average common stock outstanding - basic (in shares)	7,697,695	1,537,918	3,621,276	1,527,730
Weighted-average common stock outstanding - diluted (in shares)	7,697,695	1,898,391	3,621,276	1,527,730
Comprehensive loss:
Net (loss) income	$ (38,606)	$ 35,608	$ (104,384)	$ (12,537)
Other comprehensive income:
Foreign currency translation adjustment	(50)	9	16	165
Comprehensive (loss) income	$ (38,656)	$ 35,617	$ (104,368)	$ (12,372)

Other Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Other Assets
Prepaid clinical expenses	$ 8,920	$ 5,788
Deferred offering costs	0	1,388
Other	100	100
Total other assets	$ 9,020	$ 7,276

Other Assets (Tables)

9 Months Ended

Sep. 30, 2024

Other Assets

Summary of other assets

Other assets consisted of the following (in thousands):


	September 30,		December 31,
	2024		2023
Prepaid clinical expenses	$	8,920	$	5,788
Deferred offering costs		—		1,388
Other		100		100
Total other assets	$	9,020	$	7,276

Net (Loss) Income Per Share - Anti-dilutive Securities (Details) - shares	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Convertible preferred stock
Net (Loss) Income Per Share
Anti-dilutive securities excluded from computation of diluted net (loss) per share		11,587,744
Unvested restricted stock
Net (Loss) Income Per Share
Anti-dilutive securities excluded from computation of diluted net (loss) per share		29,459
Options to purchase common stock
Net (Loss) Income Per Share
Anti-dilutive securities excluded from computation of diluted net (loss) per share	8,630,075	1,945,373

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2024

Stock-Based Compensation

Schedule of RSA activity and related information


			Weighted-
	Number of		Average Grant-Date
	Shares		Fair Value
Unvested as of December 31, 2023		27,199	$	2.71
Vested		(6,027)		0.01
Repurchased		(21,172)		3.48
Unvested as of September 30, 2024		—	$	—

Schedule of stock option activity and related information


					Weighted-Average		Aggregate
	Number of		Weighted-Average		Remaining		Intrinsic
	Shares		Exercise Price		Contractual Term		Value
						(in years)		(in thousands)
Balance as of December 31, 2023		2,382,933	$	8.51			$	8,084
Granted		6,363,022		14.86
Exercised		(25,953)		7.56				78
Forfeited or cancelled		(89,927)		9.21
Balance outstanding as of September 30, 2024		8,630,075	$	13.19		9.42	$	32,545
Options vested and exercisable as of September 30, 2024		1,017,323	$	7.00		7.71	$	10,093
Options vested and expected to vest as of September 30, 2024		8,630,075	$	13.19		9.42	$	32,545

Schedule of stock-based compensation expense as reflected in condensed consolidated statements of operations and comprehensive loss


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	1,257	$	510	$	2,378	$	1,040
General and administrative		1,586		493		2,948		1,320
Total stock-based compensation expense	$	2,843	$	1,003	$	5,326	$	2,360

Leases - Maturities of Operating Lease Liabilities and Quantitative Disclosure (Details) $ in Millions	Sep. 30, 2024 USD ($)
Maturities of the operating lease liabilities
2024 (remaining three months)	$ 203
2025	439
Total future minimum lease payments	642
Less: imputed interest	(258)
Total operating lease liabilities	$ 384

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2024	Oct. 31, 2024
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	001-42270
Entity Registrant Name	Zenas BioPharma, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	93-2749244
Entity Address, Address Line One	1000 Winter Street
Entity Address, Adress Line Two	North Building, Suite 1200
Entity Address, City or Town	Waltham
Entity Address State Or Province	MA
Entity Address, Postal Zip Code	02451
City Area Code	857
Local Phone Number	271-2954
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	ZBIO
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		41,791,037
Entity Central Index Key	0001953926
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false

Common Stock

9 Months Ended

Sep. 30, 2024

Common Stock

Common Stock

11.Common Stock

In August 2023, all outstanding shares of ordinary stock of Zenas Cayman automatically converted into shares of common stock of the Company upon the Redomicile and incorporation of the Company in the State of Delaware as Zenas BioPharma, Inc. In May 2024, the Company amended and restated its certificate of incorporation, whereby the Company increased the shares of common stock it was authorized to issue to 294,784,925 shares. Upon consummation of the IPO, the Company restated its certificate of incorporation, and as of September 30, 2024, the Company was authorized to issue 175,000,000 shares of $0.0001 par value common stock. The voting, dividend and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers and preference of the holders of any preferred stock then issued and outstanding.

The holders of the common stock are entitled to one vote for each share of common stock held at all meetings of stockholders (and written actions in lieu of meetings), and there are not any cumulative voting rights. The number of authorized shares of common stock may be increased or decreased by the affirmative vote of the holders of shares of capital stock of the Company; however, the issuance of common stock may be subject to the vote of the holders of one or more series of convertible preferred stock.

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


	September 30,	December 31,
	2024	2023
Conversion of outstanding shares of convertible preferred stock	—	11,587,760
Options to purchase common stock	8,630,075	2,382,933
Remaining shares reserved for future issuance	447,981	60,793
Total	9,078,056	14,031,486

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-URI https://asc.fasb.org/1943274/2147481112/505-10-50-13

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Leases

9 Months Ended

Sep. 30, 2024

Leases

Leases

7.Leases

On September 8, 2021, Zenas US entered into a lease agreement for office space in Waltham, Massachusetts (the “Waltham Lease”), commencing on March 1, 2022. The Waltham Lease was classified as an operating lease, and has a lease term of 3.3 years with total fixed payments of approximately $1.8 million over that period. The Waltham Lease is terminable by the Company upon three months’ prior written notice. Zenas US has an irrevocable letter of credit agreement for the benefit of its landlord for the Waltham Lease in the amount of $0.1 million.

On June 28, 2022, Zenas China entered into a lease agreement for office space in Shanghai, China (the “Shanghai Lease”), commencing on September 10, 2022. The Shanghai Lease has a lease term of 3.0 years with total fixed payments of $0.8 million over that period, and an option to extend the lease term for an additional three years.

The total lease cost for operating leases (recorded in general and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive loss) was $0.2 million and $0.6 million for the three and nine months ended September 30, 2024, respectively, and $0.3 million and $0.7 million for the three and nine months ended September 30, 2023, respectively.

Maturities of the operating lease liabilities as of September 30, 2024 are as follows (in thousands):


Fiscal Year	Amount
2024 (remaining three months)	$	203
2025		439
Total future minimum lease payments		642
Less: imputed interest		(258)
Total operating lease liabilities	$	384

Commitments and Contingencies

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies

Commitments and Contingencies

14.Commitments and Contingencies

Operating Leases

The Company has entered into arrangements for leases of office space; see Note 7, “Leases,” for details.

License and Option Agreements

The Company entered into licenses agreements under which it is obligated to make fixed and contingent payments; see Note 9 “License and Option Agreements,” for details.

Other Contracts

The Company has entered into agreements with certain vendors for the provision of services that the Company is not contractually able to terminate for convenience and thereby avoid any and all future obligations to the vendors. Under such agreements, the Company is contractually obligated to make certain minimum payments to the vendors, with the exact amounts in the event of termination to be based on the timing of the termination and the exact terms of the agreement.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or services as directors. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not currently aware of any indemnification claims and had not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of September 30, 2024.

Litigation and Other Proceedings

The Company may periodically become subject to legal proceedings and claims arising in connection with ongoing business activities, including claims or disputes related to patents that have been issued or that are pending in the field of research on which the Company is focused. As of September 30, 2024, the Company was not subject to any material legal proceedings which would reasonably be expected to have a material adverse effect on the Company’s financial results.

Common Stock (Details)	Sep. 30, 2024 Vote $ / shares shares	May 31, 2024 shares	Dec. 31, 2023 $ / shares shares
Common Stock
Common stock, shares authorized (in shares) \| shares	175,000,000	294,784,925	175,000,000
Common stock, par value (in dollar per share) \| $ / shares	$ 0.0001		$ 0.0001
Number of votes per share \| Vote	1

Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Deficit) (Parenthetical) - Series C convertible preferred stock - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2024	Jun. 30, 2024
Stock issuance costs	$ 6,250
Convertible Preferred Stock
Stock issuance costs		$ 619

Leases (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
Leases (Details) - USD ($) $ in Millions	Jun. 28, 2022	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 08, 2021
Leases
Total lease cost for operating leases		$ 0.2	$ 0.3	$ 0.6	$ 0.7
Office space in Waltham
Leases
Lease term						3 years 3 months 18 days
Total fixed payments						$ 1.8
Guarantee amount to landlord under irrevocable letter of credit agreement						$ 0.1
Office space in Shanghai
Leases
Lease term	3 years
Total fixed payments	$ 0.8
Option to extend	true
Additional lease term on extension	3 years

Common Stock - Reserved for Issuance (Details) - shares	Sep. 30, 2024	Dec. 31, 2023
Common Stock
Conversion of outstanding shares of convertible preferred stock		11,587,760
Options to purchase common stock	8,630,075	2,382,933
Remaining shares reserved for future issuance	447,981	60,793
Total	9,078,056	14,031,486

Fair Value Measurement - Convertible Notes (Details) - USD ($) $ in Thousands		1 Months Ended		9 Months Ended
	May 03, 2024	Aug. 31, 2023	May 31, 2023	Sep. 30, 2024	Dec. 31, 2023
Fair Value Measurement
Change in fair value of BMS Note				$ 846
Liabilities with significant unobservable inputs outstanding					$ 20,300
BMS Notes
Fair Value Measurement
Face value of notes		$ 20,000
Minimum Proceeds from Issuance of Convertible Preferred Stock For Automatic Conversion Of Convertible Promissory Notes		$ 70,000
Gain (Loss) on extinguishment	$ 0
Change in fair value of BMS Note				$ 800
BMS Notes \| Series C Preferred Stock
Fair Value Measurement
Number of shares issued on conversion	12,284,686		12,284,686

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

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+ Details

Common Stock (Tables)

9 Months Ended

Sep. 30, 2024

Common Stock

Schedule of common stock reserved for potential conversion and future issuance


	September 30,	December 31,
	2024	2023
Conversion of outstanding shares of convertible preferred stock	—	11,587,760
Options to purchase common stock	8,630,075	2,382,933
Remaining shares reserved for future issuance	447,981	60,793
Total	9,078,056	14,031,486

Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2024

Accrued Expenses

Summary of accrued expenses

Accrued expenses consisted of the following (in thousands):


	September 30,		December 31,
	2024		2023
Employee compensation and benefits	$	6,188	$	5,122
External research, development and manufacturing expenses		20,049		9,398
Professional and consultant fees		1,962		2,379
Income taxes payable		—		301
Other		332		106
Total accrued expenses	$	28,531	$	17,306

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 360,038	$ 56,857
Short-term investments	26,761
Prepaid expenses and other current assets	6,979	2,947
Total current assets	393,778	59,804
Property and equipment, net	146	193
Operating lease right-of-use assets, net	399	821
Restricted cash	89	86
Other assets	9,020	7,276
Total assets	403,432	68,180
Current liabilities:
Accounts payable (includes $594 and $21 owed to related parties, respectively)	15,082	5,396
Accrued expenses (includes $1,873 and $404 owed to related parties, respectively)	28,531	17,306
Operating lease liabilities, current	384	556
Total current liabilities	43,997	23,258
Operating lease liabilities, non-current		257
Convertible notes, at fair value		20,300
Total liabilities	43,997	43,815
Commitments and contingencies (Note 14)
Convertible preferred stock		250,086
Stockholders' equity (deficit):
Preferred stock, par value $0.0001 per share; 25,000,000 and no shares authorized as of September 30, 2024 and December 31, 2023, respectively; no shares issued and outstanding as of September 30, 2024 and December 31, 2023
Common stock, par value $0.0001 per share; 175,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 41,780,938 and 1,576,854 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	4
Additional paid-in capital	694,163	4,645
Accumulated other comprehensive income	54	37
Accumulated deficit	(334,786)	(230,403)
Total stockholders' equity (deficit)	359,435	(225,721)
Total liabilities, convertible preferred stock and stockholders' equity (deficit)	$ 403,432	68,180
Series Seed convertible preferred stock
Current liabilities:
Convertible preferred stock		956
Series A convertible preferred stock
Current liabilities:
Convertible preferred stock		55,840
Series B convertible preferred stock
Current liabilities:
Convertible preferred stock		$ 193,290

Fair Value Measurement - Assets and Liabilities Measured At Fair Value On Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Assets:
Investments:	$ 26,761
Cash equivalents	4,500	$ 0
Government securities
Assets:
Investments:	15,149
Commercial paper
Assets:
Investments:	3,579
Corporate debt securities
Assets:
Investments:	8,033
Recurring
Assets:
Total assets at fair value	31,216
Liabilities:
BMS Note		20,300
Total liabilities at fair value		20,300
Recurring \| Money market funds
Assets:
Cash equivalents	468
Recurring \| Government securities
Assets:
Investments:	15,149
Cash equivalents	3,987
Recurring \| Commercial paper
Assets:
Investments:	3,579
Recurring \| Corporate debt securities
Assets:
Investments:	8,033
Recurring \| Level 1
Assets:
Total assets at fair value	19,604
Recurring \| Level 1 \| Money market funds
Assets:
Cash equivalents	468
Recurring \| Level 1 \| Government securities
Assets:
Investments:	15,149
Cash equivalents	3,987
Recurring \| Level 2
Assets:
Total assets at fair value	11,612
Recurring \| Level 2 \| Commercial paper
Assets:
Investments:	3,579
Recurring \| Level 2 \| Corporate debt securities
Assets:
Investments:	$ 8,033
Recurring \| Level 3
Liabilities:
BMS Note		20,300
Total liabilities at fair value		$ 20,300

Net (Loss) Income Per Share (Tables)

9 Months Ended

Sep. 30, 2024

Net (Loss) Income Per Share

Schedule of basic and diluted net (loss) income per share

Basic and diluted net (loss) income per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator:
Net (loss) income	$	(38,606)	$	35,608	$	(104,384)	$	(12,537)
Less: Noncumulative undeclared convertible preferred stock dividends		—		(3,766)		—		—
Less: Earnings attributable to participating securities		—		(28,119)		—		—
Net (loss) income attributable to common stockholders - basic and diluted	$	(38,606)	$	3,723	$	(104,384)	$	(12,537)

Denominator:
Weighted-average common stock outstanding - basic		7,697,695		1,537,918		3,621,276		1,527,730
Dilutive effect of options to purchase common stock		—		360,473		—		—
Weighted-average common stock outstanding - diluted		7,697,695		1,898,391		3,621,276		1,527,730
Net (loss) income per share attributable to common stockholders - basic	$	(5.02)	$	2.42	$	(28.83)	$	(8.21)
Net (loss) income per share attributable to common stockholders - diluted	$	(5.02)	$	1.96	$	(28.83)	$	(8.21)

Schedule of anti-dilutive securities excluded from the computation of diluted net (loss) income per share


	September 30,
	2024	2023
Convertible preferred stock	—	11,587,744
Unvested restricted stock	—	29,459
Options to purchase common stock	8,630,075	1,945,373

Fair Value Measurement - Changes in Liabilities With Significant Unobservable Inputs (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Changes in company's liabilities with significant unobservable inputs (Level 3 liabilities)
Beginning Balance	$ 20,300
Change in fair value of BMS Note	846
Issuance of Series C Preferred Stock in exchange for BMS Note	$ (21,146)

Fair Value Measurement

9 Months Ended

Sep. 30, 2024

Fair Value Measurement

Fair Value Measurement

4.Fair Value Measurement

The following tables present information about the Company’s financial instruments measured at fair value on a recurring basis (in thousands):


		September 30, 2024
Description	Balance Sheet Classification	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	Current assets	$	468	$	—	$	—	$	468
Government securities	Current assets		3,987		—		—		3,987
Investments:
Commercial paper	Current assets		—		3,579		—		3,579
Corporate debt securities	Current assets		—		8,033		—		8,033
Government securities	Current assets		15,149		—		—		15,149
		$	19,604	$	11,612	$	—	$	31,216


		December 31, 2023
Description	Balance Sheet Classification	Level 1		Level 2		Level 3		Total
Liabilities:
BMS Note	Non-current liability	$	—	$	—	$	20,300	$	20,300
		$	—	$	—	$	20,300	$	20,300

The Company had cash equivalents of $4.5 million as of September 30, 2024 which consisted of money market funds and government securities. Money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. The Company’s government securities are classified within Level 1 of the fair value hierarchy as the fair values are based on unadjusted quoted prices for identical assets in active markets. There were no cash equivalents held as of December 31, 2023.

The Company measures its investments at fair value on a recurring basis and classifies those instruments within Level 2 of the fair value hierarchy. Investments are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.

During the nine months ended September 30, 2024 and year ended December 31, 2023, there were no transfers between levels. The Company uses the carrying amounts of its prepaid expenses and other current assets, accounts payable and accrued expenses to approximate their fair value due to the short-term nature of these amounts.

Convertible Notes

In August 2023, the Company entered into a $20.0 million convertible promissory note agreement with BMS (the “BMS Note”) in connection with its strategic license and collaboration agreement with BMS (the “BMS Agreement”) (see Note 8). In the event that the Company issued and sold its convertible preferred stock to accredited investors with total gross proceeds equal to at least $70.0 million (a “BMS Qualified Financing”), the outstanding principal and accrued interest of the BMS Note were automatically convertible into equity securities sold in the BMS Qualified Financing at a conversion price equal (i) to the outstanding principal and accrued interest under the BMS Note divided by (ii) the lowest cash price paid per equity security. The Company elected the fair value option to account for the BMS Note. Changes in fair value at every reporting date are recorded as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The BMS Note is classified as a liability on the Company’s consolidated balance sheet as of December 31, 2023 and was initially recorded at fair value. The Company subsequently remeasured the fair value of the BMS Note at each applicable reporting period.

On May 3, 2024, the Company issued and sold Series C convertible preferred stock (“Series C Preferred Stock”), which was deemed to be a BMS Qualified Financing, as described above, and resulted in the outstanding BMS Note plus accrued interest being automatically converted into 12,284,686 shares of Series C Preferred Stock (see Note 10). Immediately prior to settlement, the BMS Note was remeasured to fair value utilizing the fair value of the shares of Series C Preferred Stock for which the BMS Note converted into. The BMS Note settling in shares of Series C Preferred Stock represents the redemption of stock-settled debt and was therefore accounted for as an extinguishment. Upon extinguishment, no gain or loss was recognized. The Company recorded a $0.8 million change in fair value of the BMS Note as a component of other income (expense), net in the Company’s condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2024. The change in fair value from issuance to September 30, 2023 was immaterial due to lack of changes in the significant estimates and assumptions utilized to value the BMS Note.

The table below presents changes in the Company’s liabilities with significant unobservable inputs (Level 3 liabilities) during the nine months ended September 30, 2024 (in thousands):


	Convertible notes
Balance as of December 31, 2023	$	20,300
Change in fair value of BMS Note		846
Issuance of Series C Preferred Stock in exchange for BMS Note		(21,146)
Balance as of September 30, 2024	$	—

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 107
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482078/820-10-55-107

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 100
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482078/820-10-55-100

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)(3)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2E
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
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-Name Accounting Standards Codification
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-Paragraph 6A
-Subparagraph (e)
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-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 940
-SubTopic 820
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478119/940-820-50-1

+ Details

License and Option Agreements (Details) $ in Thousands	1 Months Ended		3 Months Ended		9 Months Ended
License and Option Agreements (Details) $ in Thousands	Apr. 30, 2023 USD ($)	Sep. 30, 2020 item	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)	Oct. 31, 2020 USD ($)
Nature of Business
Accounts payable			$ 15,082		$ 15,082		$ 5,396
Accrued expenses			28,531		28,531		17,306
2020 Xencor Agreement
Nature of Business
Reimbursable costs			0	$ 0	0	$ 0
2021 Xencor Agreement
Nature of Business
Development milestone expense	$ 10,000
Dianthus Option Agreement
Nature of Business
Reimbursable costs			1,900	600	4,700	2,700
Number of antibody product candidates \| item		2
Threshold period to notify intention for exercising option		60 days
Accounts payable			600		600		100
Accrued expenses			1,900		1,900		400
Viridian Agreement
Nature of Business
Reimbursable costs				$ 0	100
Development milestone expense					0	$ 0
Accounts payable			0		0		0
Accrued expenses			$ 0		$ 0		$ 100
Development milestone expense payable								$ 12,000

Stock-Based Compensation (Details) - USD ($) $ in Thousands			3 Months Ended		9 Months Ended
Stock-Based Compensation (Details) - USD ($) $ in Thousands	Sep. 03, 2024	Aug. 21, 2020	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Stock-Based Compensation
Number of common stock remain available for future grant			9,078,056		9,078,056		14,031,486
Stock-based compensation expense			$ 2,843	$ 1,003	$ 5,326	$ 2,360
2020 Plan
Stock-Based Compensation
Vesting period (years)		4 years
2020 Plan \| Vesting on the anniversary of the vesting commencement
Stock-Based Compensation
Vesting percentage (%)		25.00%
2020 Plan \| Vesting in equal monthly installments over the subsequent thirty-six (36) months
Stock-Based Compensation
Vesting period (years)		36 months
Vesting percentage (%)		75.00%
2024 Plan
Stock-Based Compensation
Number of shares authorized to issue under plan	4,775,477
Percentage of outstanding stock maximum	12.00%
Maximum additional number of outstanding capital stock percent	5.00%
Number of common stock remain available for future grant			447,981		447,981
2024 ESPP
Stock-Based Compensation
Number of shares authorized to issue under plan	397,956
Percentage of outstanding stock maximum	1.00%
Maximum additional number of outstanding capital stock percent	1.00%
Additional shares To Be authorized	1,000,000
Issuance of common stock in period					0
Stock-based compensation expense					$ 0

Subsequent Events

9 Months Ended

Sep. 30, 2024

Subsequent Events

Subsequent Events

17.Subsequent Events

Waltham Sublease

On October 10, 2024, the Company entered into an operating sublease agreement (the “Waltham Sublease”) for an office space located in Waltham, Massachusetts. This lease is expected to commence prior to December 31, 2024 and has an initial term of 18 months, with no options to extend the term for additional years. The aggregate estimated undiscounted rental payments due over the term of this lease is $1.0 million. The Company will assess the impact on its right-of use asset in its financial statements for the year ended December 31, 2024.

Early Termination of Waltham Lease

On October 11, 2024, the Company sent a notice of its intent to early terminate the Waltham Lease effective January 10, 2025. The Waltham Lease had an initial expiration date of June 2025. In accordance with the lease terms, the Company paid an early termination fee of $0.1 million. The Company will assess the impact on its right-of use asset in its financial statements for the year ended December 31, 2024.

Novation Agreement

On October 21, 2024, the Company entered into a Novation Agreement with Tenacia, under which the Company transferred its rights and obligations under the Dianthus Option Agreement and the Dianthus License Agreement to Tenacia. As partial consideration for the Novation Agreement, the Company will receive a non-creditable, non-refundable upfront fee of $5.0 million from Tenacia. In addition, the Company is eligible to receive up to $86.0 million upon the achievement of certain future regulatory and commercial milestones.

Nature of Business (Details) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended						9 Months Ended
	Sep. 16, 2024 USD ($) $ / shares shares	Sep. 30, 2024 USD ($) $ / shares shares	Sep. 30, 2024 USD ($) $ / shares	Jun. 30, 2024 USD ($)	Mar. 31, 2024 USD ($)	Sep. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Sep. 30, 2024 USD ($) segment $ / shares	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)
Nature of Business
Number of operating segments \| segment									1
Issuance of common stock (in shares) \| shares		15,220,588
Public offering price \| $ / shares		$ 17.00	$ 17.00						$ 17.00
Aggregate gross proceeds		$ 234,400							$ 234,387
Net Income (Loss)			$ (38,606)	$ (37,977)	$ (27,800)	$ 35,608	$ (29,047)	$ (19,098)	(104,384)	$ (12,537)
Accumulated deficit		(334,786)	(334,786)						(334,786)		$ (230,403)
Cash, cash equivalents and investments		$ 386,800	$ 386,800						$ 386,800
IPO
Nature of Business
Issuance of common stock (in shares) \| shares	15,220,588
Public offering price \| $ / shares	$ 17.00
Aggregate gross proceeds	$ 258,700
Net proceeds	$ 234,400
Convertible preferred stock into common stock \| shares	24,978,715
Reverse stock split	8.6831
Underwriter's option
Nature of Business
Issuance of common stock (in shares) \| shares	1,985,294	1,985,294

Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Summary of Significant Accounting Policies
Deferred offering costs	$ 0	$ 1,388

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities:
Net Income (Loss)	$ (104,384)	$ (12,537)
Adjustments to reconcile net loss to net cash used in operating activities:
Acquired in-process research and development		10,000
Depreciation expense	104	83
Stock-based compensation expense	5,326	2,360
Change in fair value of convertible notes	846
Non-cash lease expense	423	571
Prepaid expenses and other assets	475	(4,714)
Accounts payable	6,319	(3,538)
Accrued expenses	10,200	(6,791)
Operating lease liabilities	(429)	(563)
Net cash used in operating activities	(81,120)	(15,129)
Cash flows from investing activities:
Purchases of property and equipment	(57)
Purchases of investments	(26,760)
Net cash used in investing activities	(26,817)
Cash flows from financing activities:
Proceeds from issuance of Series C convertible preferred stock, net of issuance costs	178,381
Payment of initial public offering costs	(1,861)
Proceeds from sale of convertible notes		20,000
Proceeds from exercise of stock options	198	66
Proceeds from initial public offering, net of underwriting discount	234,387
Net cash provided by financing activities	411,105	20,066
Effect of exchange rate changes on cash, cash equivalents and restricted cash	16	165
Net increase in cash, cash equivalents and restricted cash	303,184	5,102
Cash, cash equivalents and restricted cash at beginning of period	360,127	72,397
Cash, cash equivalents and restricted cash at end of period	360,127	72,397
Supplemental disclosure of non-cash investing and financing activities:
Fair value of BMS Note recognized as Series C convertible preferred stock upon conversion	21,146
Deferred offering costs in accounts payable and accrued expenses	4,389
Deferred offering costs in accrued expenses		$ 51
Conversion of convertible preferred stock to common stock upon closing of initial public offering	$ 449,613

Net (Loss) Income Per Share - Basic and diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Numerator:
Net (loss) income	$ (38,606)	$ (37,977)	$ (27,800)	$ 35,608	$ (29,047)	$ (19,098)	$ (104,384)	$ (12,537)
Less: Noncumulative undeclared convertible preferred stock dividends				(3,766)
Less: Earnings attributable to participating securities				(28,119)
Net (loss) income attributable to common stockholders - basic	(38,606)			3,723			(104,384)	(12,537)
Net (loss) income attributable to common stockholders - diluted	$ (38,606)			$ 3,723			$ (104,384)	$ (12,537)
Denominator:
Weighted-average common stock outstanding - basic (in shares)	7,697,695			1,537,918			3,621,276	1,527,730
Dilutive effect of outstanding preferred stock and common stock options				360,473
Weighted-average common stock outstanding - diluted (in shares)	7,697,695			1,898,391			3,621,276	1,527,730
Net (loss) income per share attributable to common stockholders - basic (in dollars per share)	$ (5.02)			$ 2.42			$ (28.83)	$ (8.21)
Net (loss) income per share attributable to common stockholders - diluted (in dollars per share)	$ (5.02)			$ 1.96			$ (28.83)	$ (8.21)

Related Party Transactions

9 Months Ended

Sep. 30, 2024

Related Party Transactions

Related Party Transactions

16.Related Party Transactions

As further described above in Note 9, “License and Option Agreements,” the Company has obtained exclusive, worldwide licenses from Xencor to research, develop, manufacture, market and sell four antibody product candidates pursuant to two license agreements. The Company has concluded that Xencor is a related party, because as initial consideration for the 2020 Xencor Agreement, the Company issued 5,041,542 shares of its Series A Preferred Stock to Xencor during the year ended December 31, 2020. In April 2023, Xencor elected to receive payment for a development milestone in the form of the Company’s Series B Preferred Stock and the Company issued 4,189,955 shares of Series B Preferred Stock as payment for the development milestone in June 2023. Following the IPO and as of September 30, 2024, Xencor held 7.4% of shares of the Company’s outstanding common stock. The Company recorded no reimbursable costs and less than $0.1 million in reimbursable patent-related costs to general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss during the nine months ended September 30, 2024 and 2023, respectively.

As further described above in Note 9, “License and Option Agreements,” the Company has obtained a license from Viridian to research, develop, manufacture, market and sell an antibody product candidate in China. The Company has concluded that Viridian is a related party because although Fairmount Funds Management LLC owns less than 5% of shares of the Company’s outstanding common stock, they have a seat on the Board and are also a 10% or greater stockholder of Viridian and have two seats on Viridian’s board of directors. As initial consideration for this license, the Company issued 38,707 shares of its common stock to Viridian during the year ended December 31, 2020. Following the IPO and as of September 30, 2024, Viridian held less than 5% of shares of the Company’s outstanding common stock.

As further described above in Note 9, “License and Option Agreements”, the Company obtained an exclusive option to negotiate and enter into exclusive license agreements with Dianthus for the rights (in the Zenas Territories only) to either or both of two antibody product candidates. In June 2022, the Company and Dianthus entered into the Dianthus License Agreement. In October 2024, the Dianthus Option Agreement and Dianthus License Agreement and all of their related rights and obligations were transferred to Tenacia (Note 17). The Company has concluded that Dianthus is a related party because the Company’s Chair of the Board is a member of the board of directors of Dianthus. As initial consideration for this license, the Company issued 18,063 shares of its common stock to Dianthus during the year ended December 31, 2020. Following the IPO and as of September 30, 2024, Dianthus held less than 5% of shares of the Company’s outstanding common stock.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-URI https://asc.fasb.org/1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-URI https://asc.fasb.org/1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/1943274/2147477968/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-1

+ Details

Convertible Preferred Stock

9 Months Ended

Sep. 30, 2024

Convertible Preferred Stock

Convertible Preferred Stock

10.Convertible Preferred Stock

In September 2020, the Company issued and sold 1,785,714 shares of Series Seed convertible preferred stock (“Series Seed Preferred Stock”) in a private financing transaction, at a purchase price of $0.56 per share, for total net cash proceeds of $1.0 million.

In November 2020, the Company issued 5,041,542 shares of Series A convertible preferred stock (“Series A Preferred Stock”) to Xencor as initial consideration for the 2020 Xencor Agreement. Also in November 2020, the Company issued and sold 12,547,838 shares of Series A Preferred Stock in a private financing transaction, at a purchase price of $3.1878 per share, for total net cash proceeds of $39.9 million.

In November 2022, the Company issued and sold 25,139,732 shares of Series B Preferred Stock in a private financing transaction, at a purchase price of $2.38666 per share, for total net cash proceeds of $59.4 million. Concurrent with the issuance and sale of the Series B Preferred Stock, which was deemed to be a qualified financing as defined in the convertible note agreement and resulted in the principal plus accrued interest being automatically converted into Series B Preferred Stock, the outstanding convertible notes were exchanged for 37,471,107 shares of Series B Preferred Stock. At the same time, the Xencor Warrant, which was issued as initial consideration for the 2021 Xencor Agreement, was deemed exercised for 14,441,793 shares of Series B Preferred Stock.

In April 2023, the Company incurred a $10.0 million development milestone pursuant to the 2021 Xencor Agreement. Xencor elected to receive payment in the form of the Company’s Series B Preferred Stock and the Company issued 4,189,955 shares of Series B Preferred Stock as payment for the development milestone in June 2023.

In May 2023, the Company issued and sold 103,990,553 shares of Series C convertible preferred stock (“Series C Preferred Stock”) in a private financing transaction, at a purchase price of $1.72131 per share, for total net cash proceeds of $178.4 million. Concurrent with the issuance and sale of the Series C Preferred Stock, which was deemed to be a BMS Qualified Financing as defined above in Note 4, “Fair Value Measurements,” the principal plus accrued interest of the BMS Note was automatically converted into 12,284,686 shares of Series C Preferred Stock, thereby making the total Series C issuance equal to 116,275,239 shares.

In September 2024, the Company completed its IPO, pursuant to which the Company issued and sold 15,220,588 shares of its common stock, including 1,985,294 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $17.00 per share, for aggregate gross proceeds of $258.7 million. The

Company received approximately $234.4 million in net proceeds, after deducting underwriting discounts and estimated offering expenses payable by the Company.

Upon the closing of the IPO, all outstanding shares of the Company’s Series Seed, Series A, Series B and Series C Preferred Stock (collectively, “Preferred Stock”) automatically converted into an aggregate of 24,978,715 shares of the Company’s common stock.

Upon the issuance of Series Seed, Series A, Series B, and Series C Preferred Stock, the Company assessed the embedded conversion and liquidation features of the shares and determined that such features did not require the Company to separately account for these features.

Preferred Stock consisted of the following (in thousands, except share amounts):


	December 31, 2023
		Preferred Stock					Common Stock
	Preferred Stock	Issued and					Issuable Upon
	Authorized	Outstanding	Carrying Value		Liquidation Value		Conversion
Series Seed Preferred Stock	1,785,714	1,785,714	$	956	$	1,000	205,653
Series A Preferred Stock	17,589,380	17,589,380		55,840		56,071	2,025,699
Series B Preferred Stock	81,242,587	81,242,587		193,290		193,898	9,356,392
Total	100,617,681	100,617,681	$	250,086	$	250,969	11,587,744

The holders of preferred stock had the following rights, preferences and privileges prior to conversion into common stock upon the closing of the IPO:

Voting

The holder of each share of Preferred Stock was entitled to one vote for each share of common stock into which it would convert and to vote with the common stock on all matters.

Conversion

Each share of convertible preferred stock was automatically convertible into a share of common stock, upon affirmative vote of majority of the holders of each series or upon the closing of an initial public offering of the Company’s common stock which resulted in a specified minimum amount of gross cash proceeds. The conversion ratio was initially one share of common stock for each share of convertible preferred stock and was adjustable adjusted in the event of a split or reverse split of the Company’s common stock, an issuance or declaration of dividends to holders of the Company’s common stock, a reorganization or merger transaction, or certain issuances of shares of common stock which were dilutive to holders of the Company’s preferred stock. Holders of preferred stock had the right to one vote for each share of the Company’s common stock into which such holder’s shares of preferred stock could then convert.

Dividends

Holders of Series C Preferred Stock were entitled to receive dividends, only when, as and if declared by the Board, at the annual rate of 6% of the Series C Preferred Stock issue price, payable in preference to and satisfied before any dividend or distribution on any other class or series of the Company’s shares (except for certain exempted distributions). If any assets or funds remain after dividends had been distributed to holders of Series C Preferred Stock, holders of Series B Preferred Stock would have been entitled to receive dividends, only when, as and if declared by the Board, at the annual rate of 6% of the Series B Preferred Stock issue price, payable in preference to and satisfied before any dividend or distribution on any other class or series of the Company’s shares (except for certain exempted distributions). If any assets or funds remain after dividends had been distributed to holders of Series B Preferred Stock, holders of Series A Preferred Stock would have been entitled to receive dividends, only when, as and if declared by the Board, at the annual rate of 6% of the Series A issue price, payable in preference to and satisfied before any dividend or distribution on any other class or series of the Company’s shares (except for certain exempted distributions). If any assets or funds remain after dividends

had been distributed to holders of Series A Preferred Stock, holders of Series Seed Preferred Stock would have been entitled to receive dividends, only when, as and if declared by the Board, at the annual rate of 6% of the Series Seed issue price, payable in preference to and satisfied before any dividend or distribution on any other class or series of the Company’s shares (except for certain exempted distributions). The right to receive dividends on shares of all series of preferred stock was not cumulative, and no such right accrued to holders of such shares. There were no dividends declared or paid as of September 30, 2024.

Liquidation Preference

In the event of a voluntary or involuntary liquidation, dissolution or winding up of the Company or a deemed liquidation event, holders of Series C Preferred Stock prior and in preference to any distribution to holders of Series B Preferred Stock, Series A Preferred Stock, Series Seed Preferred Stock and common shares, would have been entitled to be paid the issue price they originally paid to acquire their shares, plus any declared but unpaid dividends. After full payment to holders of Series C Preferred Stock, holders of Series B Preferred Stock prior and in preference to any distribution to holders of Series A Preferred Stock, Series Seed Preferred Stock and common shares, would have been entitled to be paid the issue price they originally paid to acquire their shares, plus any declared and unpaid dividends. After full payment to holders of Series B Preferred Stock, holders of Series A Preferred Stock prior and in preference to any distribution to holders of Series Seed Preferred Stock and common shares, would have been entitled to be paid the issue price they originally paid to acquire their shares, plus any declared and unpaid dividends. After full payment to holders of Series C Preferred Stock, Series B Preferred Stock, and Series A Preferred Stock, holders of Series Seed Preferred Stock prior and in preference to any distribution to holders of common shares, would have been entitled to be paid the issue price they originally paid to acquire their shares, plus any declared and unpaid dividends. Any remaining amounts after payment to holders of preferred stock, would have been paid to holders of common shares. A deemed liquidation event was defined as any consolidation, amalgamation, scheme of arrangement or merger of the Company (and any of its subsidiaries) or other reorganization resulting in loss of more than 50% voting power; the sale, transfer, lease or other disposition of all or substantially all of the Company’s assets; or the exclusive licensing of all or substantially all of the Company’s intellectual property.

Redemption

The Preferred Stock did not have redemption rights, except for the contingent redemption upon the occurrence of a Liquidation Event.

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2024
Summary of Significant Accounting Policies
Unaudited Interim Financial Information	Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of September 30, 2024, and the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2024 and 2023, and the statements of changes in convertible preferred stock and stockholders’ equity (deficit) and statements of cash flows for the nine months ended September 30, 2024 and 2023 are unaudited. The condensed consolidated interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of September 30, 2024 and the results of its operations and its cash flows for the three and nine months ended September 30, 2024 and 2023. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2024 and 2023 are also unaudited. The results for the three and nine months ended September 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, or for any other subsequent period.
Deferred Offering Costs	Deferred Offering Costs The Company capitalizes legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as other non-current assets until such financings are consummated. After consummation of the equity financing, these costs will be recorded in stockholders’ equity (deficit) as a reduction of additional paid-in-capital generated as a result of the offering. If the Company terminates its plan for an equity financing, any costs deferred will be expensed immediately. Upon closing the IPO in September 2024, the related deferred offering costs were recorded against the IPO proceeds. No deferred offering costs were recorded as of September 30, 2024. As of December 31, 2023, the Company had $1.4 million in deferred offering costs which were included in other assets.
Investments	Investments The Company classifies all investments with a remaining maturity when purchased of greater than three months as “available-for-sale”. Available-for-sale securities with a remaining maturity of greater than one year are classified as non-current assets. Available-for-sale securities are carried at fair value based upon market prices at period end, with the unrealized gains and losses included in accumulated other comprehensive income (loss) as a component of stockholders’ equity (deficit) until realized. The amortized cost of investments in this category is adjusted for amortization of premiums and accretions of discounts over the life of the instrument. Realized gains and losses are determined using the specific identification method and are included in other income (expense). The Company reviews its portfolio of investments, using both quantitative and qualitative factors, to determine if declines in fair value below cost have resulted from a credit-related loss. If the decline in fair value is due to credit-related factors, a loss is recognized in other income (expense).
Recently Issued Accounting Standards Not Yet Adopted	Recently Issued Accounting Standards Not Yet Adopted From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the condensed consolidated financial statements and disclosures.

- Definition

Disclosure of accounting policy for investment in financial asset.

+ References + Details

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Research and development	$ 33,530	$ 9,352	$ 89,982	$ 39,615
General and administrative	7,454	5,024	18,283	12,753
Related party
Research and development	1,375	612	3,247	2,704
General and administrative	$ 0	$ 3	$ 0	$ 71

Nature of Business

9 Months Ended

Sep. 30, 2024

Nature of Business

Nature of Business

1.Nature of Business

Organization

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

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

Liquidity and Capital Resources

Since its inception, the Company has devoted its efforts principally to research and development and raising capital. The Company is subject to risks and uncertainties common to early-stage companies in the biopharmaceutical industry, including, but not limited to, completing preclinical studies and clinical trials, obtaining regulatory approval for product candidates, market acceptance of products, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, reliance on third-party organizations, protection of proprietary technology, compliance with government regulations, and the ability to raise additional capital to fund operations. The Company’s revenues to date have been generated from payments received under the Company’s license agreement with Bristol-Myers Squibb Company (“BMS”) (see Note 8). The Company has not generated any revenue from product sales since inception, and its product candidates currently under development will require significant additional research and development efforts, including extensive clinical testing and regulatory approval prior to commercialization.

On September 16, 2024, the Company completed its initial public offering (“IPO”), in which the Company issued and sold 15,220,588 shares of its common stock, including 1,985,294 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $17.00 per share, for aggregate gross proceeds of $258.7 million. The Company received approximately $234.4 million in net proceeds after deducting underwriting discounts and estimated offering expenses payable by the Company. In connection with the IPO, all outstanding shares of convertible preferred stock converted into 24,978,715 shares of the Company’s common stock.

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

The Company has incurred operating losses and negative cash flows since its inception, including net losses of $104.4 million and $12.5 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the Company had an accumulated deficit of $334.8 million and $230.4 million, respectively. Management expects operating losses and negative operating cash flows to continue for the foreseeable future.

The Company expects that its existing cash, cash equivalents and investments of $386.8 million as of September 30, 2024 will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date these condensed consolidated financial statements were available to be issued. The Company will need additional financing to support its continuing operations and to pursue its growth strategy. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of private or public equity financings, debt financings or other capital sources, including collaborations with other companies or other strategic transactions and licensing agreements. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. The inability to raise capital as and when needed could have a negative impact on the Company’s financial condition and its ability to pursue its business strategy. The Company will need to generate significant revenue to achieve profitability, and it may never do so.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

Collaboration Revenue

9 Months Ended

Sep. 30, 2024

Collaboration Revenue

Collaboration Revenue

8.Collaboration Revenue

In August 2023, the Company entered into a license agreement with Bristol-Myers Squibb (the “BMS Agreement”), under which the Company granted BMS an exclusive license to (i) develop, manufacture (subject to the Company’s rights to be the exclusive manufacturer for BMS for a certain period of time), commercialize or otherwise exploit obexelimab and any biological product (irrespective of presentations, formulations or dosages) containing obexelimab but not any of the Company’s other proprietary active ingredient (the “BMS Product”) into Japan, South Korea, Taiwan, Singapore, Hong Kong and Australia (collectively, the “BMS Territory”) and (ii) develop and manufacture obexelimab and the BMS Product outside the BMS Territory provided that obexelimab and the BMS Product are solely used in the BMS Territory. The details of the BMS Agreement are further described in Note 8, “Collaboration Revenue,” in the audited consolidated financial statements for the years ended December 31, 2023 and 2022, included in the IPO Prospectus. Since the date of the audited consolidated financial statements for the years ended December 31, 2023 and 2022, there have been no changes to the BMS Agreement.

Pursuant to the BMS Agreement, BMS paid the Company a one-time non-refundable upfront cash payment of $50.0 million, which was determined to be the transaction price. The Company is entitled to receive further separate development, regulatory, and sales milestone payments from BMS of up to approximately $149.5 million if certain milestones are successfully achieved. The Company is also eligible to receive tiered high single-digit to low double-digit royalties on net sales in the BMS Territory, subject to specified reductions. As of September 30, 2024, no milestones were achieved or deemed probable of achievement, and as such, all remaining milestones remained fully constrained and excluded from the transaction price.

The Company and BMS collaborate on the performance of the ongoing Phase 3 clinical study of obexelimab in the IgG4-RD indication. BMS will fund their pro rata share of the total global study costs up to a specified percentage of the patients enrolled in the study from the BMS Territory. Should the percentage of patients from the BMS Territory fall below the specified percentage, BMS’s funding would proportionately decrease. The global development activities under the agreement do not represent a transaction where customer and reimbursement payments received by the Company for global development activities are accounted for as a reduction of the related research and development expenses. The Company recorded $1.8 million and $3.9 million, respectively, as a reduction to research and development expense during the three and nine months ended September 30, 2024, with a $1.8 million receivable included in prepaid expenses and other current assets, on the Company’s condensed consolidated balance sheet as of September 30, 2024. The Company recorded $3.4 million as a reduction to research and development expense during the three and nine months ended September 30, 2023.

The Company satisfied the performance obligation through delivery of the license and initial technology transfer during the quarter ended September 30, 2023 and recognized the upfront payment of $50.0 million as revenue during the three

and nine months ended September 30, 2023. The Company recognized no revenue during each of the three and nine months ended September 30, 2024.

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2024

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2.Summary of Significant Accounting Policies

The Company’s significant accounting policies are disclosed in Note 2, “Summary of Significant Accounting Policies,” in the audited consolidated financial statements for the years ended December 31, 2023 and 2022 and notes thereto, included in the Company’s final prospectus for its IPO filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Securities Act”) on September 13, 2024 (the “IPO Prospectus”). Since the date of those financial statements, there have been no changes to the Company’s significant accounting policies, except as noted below.

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheet as of September 30, 2024, and the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2024 and 2023, and the statements of changes in convertible preferred stock and stockholders’ equity (deficit) and statements of cash flows for the nine months ended September 30, 2024 and 2023 are unaudited. The condensed consolidated interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of September 30, 2024 and the results of its operations and its cash flows for the three and nine months ended September 30, 2024 and 2023. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2024 and 2023 are also unaudited. The results for the three and nine months ended September 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, or for any other subsequent period.

Deferred Offering Costs

The Company capitalizes legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as other non-current assets until such financings are consummated. After consummation of the equity financing, these costs will be recorded in stockholders’ equity (deficit) as a reduction of additional paid-in-capital generated as a result of the offering. If the Company terminates its plan for an equity financing, any costs deferred will be expensed immediately. Upon closing the IPO in September 2024, the related deferred offering costs were recorded against the IPO proceeds. No deferred offering costs were recorded as of September 30, 2024. As of December 31, 2023, the Company had $1.4 million in deferred offering costs which were included in other assets.

Investments

The Company classifies all investments with a remaining maturity when purchased of greater than three months as “available-for-sale”. Available-for-sale securities with a remaining maturity of greater than one year are classified as non-current assets. Available-for-sale securities are carried at fair value based upon market prices at period end, with the unrealized gains and losses included in accumulated other comprehensive income (loss) as a component of stockholders’ equity (deficit) until realized. The amortized cost of investments in this category is adjusted for amortization of premiums and accretions of discounts over the life of the instrument. Realized gains and losses are determined using the specific identification method and are included in other income (expense). The Company reviews its portfolio of investments, using both quantitative and qualitative factors, to determine if declines in fair value below cost have resulted from a credit-related loss. If the decline in fair value is due to credit-related factors, a loss is recognized in other income (expense).

Recently Issued Accounting Standards Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the condensed consolidated financial statements and disclosures.