Source: sec
Source ID: 0001725160-26-000062
URL: https://www.sec.gov/Archives/edgar/data/1725160/000172516026000062/zntl-20260630.htm
Symbol: (ZNTL)
Published: 2026-08-06 16:13:07 EDT
Time precision: minute
Title: 10-Q 10-Q

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 2026
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to ___________________
Commission File Number:
001-39263
Zentalis Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
Delaware
82-3607803
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
10275 Science Center Dr.
,
Suite 200
92121
San Diego
,
California
(Zip Code)
(Address of principal executive offices)
(
858
)
263-4333
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock,
$0.001 par value per share
ZNTL
The Nasdaq Stock Market LLC
(The Nasdaq Global Market)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
☒
As of August 3, 2026, the registrant had
71,671,914
shares of common stock, $0.001 par value per share, outstanding.
Table of Contents
Page
PART I.
FINANCIAL INFORMATION
3
Item 1.
Financial Statements (Unaudited)
4
Condensed Consolidated Balance Sheets
4
Condensed Consolidated Statements of Operations
5
Condensed Consolidated Statements of Comprehensive Loss
6
Condensed Consolidated Statements of Cash Flows
7
Condensed Consolidated Statements of Stockholders’ Equity
9
Notes to Condensed Consolidated Financial Statements
11
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
25
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
39
Item 4.
Controls and Procedures
39
PART II.
OTHER INFORMATION
40
Item 1.
Legal Proceedings
40
Item 1A.
Risk Factors
40
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
95
Item 3.
Defaults Upon Senior Securities
95
Item 4.
Mine Safety Disclosures
95
Item 5.
Other Information
95
Item 6.
Exhibits
96
Signatures
98
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements within the meaning of the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “anticipate,” “could,” “intend,” “target,” “believe,” “estimate,” “plan,” “predict,” “potential,” “on track,” “design,” “support,” “advance,” “strive,” "opportunity," "upcoming," or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:
◦
our competitive position, including information relating to our competitors and their products and product candidates in our industry;
◦
our expectations, projections and estimates regarding our capital requirements, need for additional capital, financing our future cash needs, costs, expenses, revenues, capital resources, cash flows, financial performance, profitability, tax obligations, liquidity, growth, contractual obligations, the period of time our cash resources will fund our current operating plan, our internal control over financial reporting and disclosure controls and procedures;
◦
our prioritization of azenosertib (ZN-c3) and the potential for azenosertib to be first-in-class and best-in-class;
◦
the ability of our clinical trials to demonstrate safety and efficacy of azenosertib and other positive results;
◦
the global macroeconomic environment and increased inflation levels;
◦
our plans for, including the timing and focus of, our ongoing and future clinical trials of azenosertib, including the reporting of data from those studies and trials and the timing thereof, including DENALI Part 2, our ASPENOVA Phase 3 confirmatory trial of monotherapy azenosertib in Cyclin E1-positive platinum-resistant ovarian cancer ("PROC") patients, and our MUIR Phase 1b study evaluating azenosertib in combination with chemotherapy regimens;
◦
the design of our clinical trials, including our estimates of the number of patients that we will enroll in our clinical trials and enrollment timing;
◦
the potential benefits of the measures in our trials for enhanced patient monitoring, guidance and supportive care;
◦
the beneficial characteristics, safety, efficacy and therapeutic effects of azenosertib;
◦
our and our collaborators' strategy, plans and expectations with respect to the development, manufacturing, supply, approval and commercialization of azenosertib and the timing thereof;
◦
the designs of our studies and the type of information and data expected from our studies and the expected benefits thereof;
◦
our ability to obtain and maintain any marketing authorizations and our ability to complete post-marketing requirements with respect thereto;
◦
the timing and amounts of payments from or to our collaborators, licensors and purchasers of assets, and the anticipated arrangements and benefits under our collaboration and license agreements, including with respect to milestones and royalties;
◦
our plans and ability to raise additional capital, including under our at-the-market offering program, and the terms and timing thereof;
◦
our pipeline, including its potential, and our related research and development activities;
◦
our plans relating to a companion diagnostic to identify patients with Cyclin E1-positive PROC and other potential biomarkers to identify patients, and the costs thereof;
◦
our plans relating to the further development of azenosertib, including program timelines, potential paths to registration, and additional indications we may pursue;
◦
our ability to negotiate, secure and maintain adequate pricing, coverage and reimbursement terms and processes on a timely basis, or at all, with third-party payors for azenosertib and any future product candidates, if approved;
◦
our plans to evaluate additional strategic opportunities to maximize the value of our pipeline;
◦
our plans to develop azenosertib in combination with other therapies, resources allowing;
ii
◦
our ability to obtain, and negotiate favorable terms of any collaboration, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize azenosertib;
◦
timing and likelihood of success of our development and commercialization efforts;
◦
timing of expected milestones, and the announcement thereof;
◦
the broad franchise potential of azenosertib;
◦
the estimated size of the market opportunity for azenosertib, including the market opportunity for azenosertib in Cyclin E1-positive PROC, and our underlying assumptions thereof, including our estimate of the limited overlap between FRα-high PROC patients and those that have Cyclin E1 overexpression, and our belief that there is additional market opportunity for azenosertib as a combination therapy in earlier lines of treatment for ovarian cancer, and across other solid tumor types;
◦
our expectations regarding the approval and use of azenosertib;
◦
the timing or likelihood of regulatory filings and approvals;
◦
our ability to obtain and maintain regulatory approval of azenosertib and any future product candidates;
◦
our regulatory strategy, including the potential for DENALI Part 2, if successful, to support an accelerated approval for azenosertib, and the potential for ASPENOVA to support full approval for azenosertib;
◦
existing laws, regulations and regulatory developments in the United States, the European Union, or the EU, and other jurisdictions;
◦
our intellectual property position, including obtaining and maintaining patents, and the timing, outcome and impact of administrative, regulatory, legal and other proceedings relating to our patents and other proprietary and intellectual property rights, and the timing and resolution thereof;
◦
our facilities and lease commitments;
◦
accounting standards and estimates, their impact, and their expected timing of completion;
◦
cybersecurity and information security;
◦
expected ongoing reliance on third parties, including with respect to the development, manufacturing, supply and commercialization of azenosertib and any future product candidates;
◦
insurance coverage;
◦
estimated periods of performance of key contracts; and
◦
the potential need to hire personnel and our ability to attract and retain personnel, and our ability to provide competitive compensation and benefits.
The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties, assumptions and other important factors, including those described under “Summary Risk Factors” below and in the sections in this Quarterly Report entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report.
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, they may turn out to be inaccurate and you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results, financial condition, performance or achievements could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
ZENTALIS
®
and its associated logo are registered trademarks of Zentalis.
All other trademarks, trade names and service marks appearing in this Quarterly Report are the property of their respective owners. All website addresses given in this Quarterly Report are for information only and are not intended to be an active link or to incorporate any website information into this document.
iii
INDUSTRY AND OTHER DATA
This Quarterly Report contains industry, market and competitive position data from our own internal estimates and research as well as industry and general publications and research surveys and studies conducted by third parties. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Our internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and our management’s understanding of industry conditions. While we believe that each of these studies and publications is reliable, we have not independently verified market and industry data from third-party sources. While we believe our internal company research is reliable and the market definitions are appropriate, neither such research nor definitions have been verified by an independent source.
The industry in which we operate is subject to risks and uncertainties due to a variety of factors, including those described in Part II, Item 1A., “Risk Factors” in this Quarterly Report. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.
iv
SUMMARY RISK FACTORS
Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A, “Risk Factors” in this Quarterly Report. You should carefully consider these risks and uncertainties when investing in our common stock. The principal risks and uncertainties affecting our business include the following:
•
We have a limited operating history and have no products approved for commercial sale, which may make it difficult for you to evaluate our current business and predict our future success and viability.
•
We have incurred significant net losses since inception, and we expect to continue to incur significant net losses for the foreseeable future.
•
We will require substantial additional capital to finance our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and drug development programs or future commercialization efforts.
•
We are substantially dependent on the success of azenosertib, which is currently our only product candidate in clinical development. If we are unable to complete development of, obtain approval for and commercialize azenosertib in a timely manner, our business will be harmed.
•
The clinical trials of azenosertib or any future product candidates may not demonstrate safety and efficacy to the satisfaction of the U.S. Food and Drug Administration, or FDA, or ex-U.S. regulatory authorities or otherwise produce positive results.
•
We expect to be required by the FDA and ex-U.S. regulatory authorities to obtain approval of a companion diagnostic in connection with approval of our lead indication for azenosertib, and additional biomarkers may be required for the development and commercialization of azenosertib outside of our lead indication and for future product candidates. If regulatory approval is not obtained or there are delays in obtaining regulatory approval of any such companion diagnostic, we will not be able to commercialize azenosertib and, potentially, future product candidates, and our ability to generate product revenue will be materially impaired.
•
The regulatory approval processes of the FDA and ex-U.S. regulatory authorities are lengthy, time consuming and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for azenosertib or any future product candidates, we will be unable to generate product revenue and our business will be substantially harmed.
•
We face significant competition, and if our competitors develop and market technologies or products more rapidly than we do or that are more effective, safer or less expensive than the product candidates we develop, our commercial opportunities will be negatively impacted.
•
Our success depends on our ability to protect our intellectual property and our proprietary platform. If we are unable to adequately protect our intellectual property and our proprietary platform, or to obtain and maintain issued patents which are sufficient to protect azenosertib or any future product candidates, then others could compete against us more directly, which would negatively impact our business.
•
We rely, and expect to continue to rely, on third parties, including contract research organizations (including regional academic clinical cooperative groups or trial networks), collectively referred to in this Quarterly Report as CROs, and independent clinical investigators, to conduct certain aspects of our preclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties, comply with applicable regulatory requirements or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize azenosertib or any future product candidates and our business could be substantially harmed.
•
We contract with third parties for the manufacture of azenosertib for preclinical studies and ongoing clinical trials, and expect to continue to do so for additional clinical trials and ultimately for commercialization. This reliance on third parties increases the risk that we will not have sufficient quantities of azenosertib or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.
•
Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties. Claims by third parties that we infringe their proprietary rights may result in liability for damages or prevent or delay our developmental and commercialization efforts.
•
The competition for qualified personnel is particularly intense in our industry. If we are unable to retain or hire key personnel, then we may not be able to sustain or grow our business when needed.
•
Unfavorable U.S., global, political or economic conditions could adversely affect our business, financial condition or results of operations.
•
Business interruptions could adversely affect our operations.
v
PART I—FINANCIAL INFORMATION
3
Item 1. Financial Statements.
Zentalis Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share amounts and par value)
June 30,
December 31,
2026
2025
ASSETS
Current assets
Cash and cash equivalents
$
24,783
$
35,995
Marketable debt securities, available-for-sale
149,825
209,898
Prepaid expenses and other current assets
6,671
7,298
Total current assets
181,279
253,191
Property and equipment, net
2,500
2,770
Operating lease right-of-use assets
24,795
26,271
Prepaid expenses and other assets
4,129
4,108
Restricted cash
2,627
2,627
Total assets
$
215,330
$
288,967
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable
$
8,142
$
7,208
Accrued expenses
29,484
29,351
Total current liabilities
37,626
36,559
Long-term lease liability
33,558
35,704
Other long-term liabilities
500
500
Total liabilities
71,684
72,763
Commitments and contingencies (see Note 11)
EQUITY
Preferred stock, $
0.001
par value;
10,000,000
shares authorized;
no
shares issued and outstanding at June 30, 2026 and December 31, 2025
—
—
Common stock, $
0.001
par value;
250,000,000
shares authorized;
71,668,568
and
69,085,980
shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively
72
69
Additional paid-in capital
1,412,745
1,407,394
Accumulated other comprehensive (loss) income
(
78
)
196
Accumulated deficit
(
1,269,093
)
(
1,191,455
)
Total stockholders’ equity
143,646
216,204
Total liabilities and stockholders’ equity
$
215,330
$
288,967
See notes to condensed consolidated financial statements.
4
Zentalis Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Operating Expenses
Research and development
$
35,163
$
27,610
$
63,879
$
54,857
General and administrative
9,228
8,448
18,367
19,028
Restructuring
—
—
—
7,796
Total operating expenses
44,391
36,058
82,246
81,681
Loss from operations
(
44,391
)
(
36,058
)
(
82,246
)
(
81,681
)
Other Income (Expense)
Investment and other income, net
2,243
9,184
4,866
6,528
Net loss before income taxes
(
42,148
)
(
26,874
)
(
77,380
)
(
75,153
)
Income tax expense
138
—
258
—
Net loss
$
(
42,286
)
$
(
26,874
)
$
(
77,638
)
$
(
75,153
)
Net loss per common share outstanding, basic and diluted
$
(
0.59
)
$
(
0.37
)
$
(
1.10
)
$
(
1.05
)
Common shares used in computing net loss per share, basic and diluted
71,326
71,992
70,798
71,836
See notes to condensed consolidated financial statements.
5
Zentalis Pharmaceuticals, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
(In thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Net loss
$
(
42,286
)
$
(
26,874
)
$
(
77,638
)
$
(
75,153
)
Other comprehensive loss:
Unrealized loss on marketable debt securities
(
28
)
(
299
)
(
274
)
(
499
)
Total comprehensive loss
$
(
42,314
)
$
(
27,173
)
$
(
77,912
)
$
(
75,652
)
See notes to condensed consolidated financial statements.
6
Zentalis Pharmaceuticals, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2026
2025
Operating Activities:
Net loss
$
(
77,638
)
$
(
75,153
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
304
422
Fixed asset impairment
—
1,152
Share-based compensation
6,412
12,772
Gain on disposal of equipment
—
(
531
)
Non-cash recognized loss on mark-to-market of equity securities
—
2,383
Accretion of discounts on marketable securities, net
(
273
)
(
1,815
)
Changes in operating assets and liabilities:
Contracts receivable
—
5,000
Prepaid expenses and other assets
606
3,012
Accounts payable and accrued liabilities
808
(
14,607
)
Operating lease right-of-use assets and liabilities, net
(
411
)
21
Net cash used in operating activities
(
70,192
)
(
67,344
)
Investing Activities:
Purchases of marketable securities
(
59,928
)
(
59,716
)
Proceeds from maturities of marketable securities
120,000
130,000
Proceeds from sale of property and equipment
—
569
Purchases of property and equipment
(
34
)
—
Net cash provided by investing activities
60,038
70,853
Financing Activities:
Proceeds from issuance of common stock under equity incentive plans
396
189
Net-settlement of restricted stock unit vesting
(
1,454
)
—
Net cash (used in) provided by financing activities
(
1,058
)
189
Net (decrease) increase in cash, cash equivalents and restricted cash
(
11,212
)
3,698
Cash, cash equivalents and restricted cash at beginning of period
38,622
36,528
Cash, cash equivalents and restricted cash at end of period
$
27,410
$
40,226
7
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Statements of Cash Flows for the periods presented:
June 30,
2026
2025
Cash and cash equivalents
$
24,783
$
37,599
Restricted cash
2,627
2,627
Total cash, cash equivalents and restricted cash reported in the Condensed Consolidated Statements of Cash Flows
$
27,410
$
40,226
See notes to condensed consolidated financial statements .
8
Zentalis Pharmaceuticals, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands)
Three Months Ended June 30, 2026
Common
Additional
Paid-In
Capital
Accumulated Other Comprehensive Income (Loss)
Accumulated
Deficit
Total
Equity
Shares
Amount
Balance at March 31, 2026
71,156
$
71
$
1,409,466
$
(
50
)
$
(
1,226,807
)
$
182,680
Share-based compensation expense
—
—
3,215
—
—
3,215
Other comprehensive loss
—
—
—
(
28
)
—
(
28
)
Issuance of common stock in connection with restricted stock unit vesting, net
477
1
(
1
)
—
—
—
Issuance of common stock upon exercise of options, net
36
—
65
—
—
65
Net loss
—
—
—
—
(
42,286
)
(
42,286
)
Balance at June 30, 2026
71,669
$
72
$
1,412,745
$
(
78
)
$
(
1,269,093
)
$
143,646
Six Months Ended June 30, 2026
Common
Additional
Paid-In
Capital
Accumulated Other Comprehensive Income (Loss)
Accumulated
Deficit
Total
Equity
Shares
Amount
Balance at December 31, 2025
69,086
$
69
$
1,407,394
$
196
$
(
1,191,455
)
$
216,204
Share-based compensation expense
—
—
6,412
—
—
6,412
Other comprehensive loss
—
—
—
(
274
)
—
(
274
)
Issuance of common stock in connection with restricted stock unit vesting, net
2,301
3
(
1,457
)
—
—
(
1,454
)
Issuance of common stock upon exercise of options, net
57
—
101
—
—
101
Shares issued under employee stock purchase plan
225
—
295
—
—
295
Net loss
—
—
—
—
(
77,638
)
(
77,638
)
Balance at June 30, 2026
71,669
$
72
$
1,412,745
$
(
78
)
$
(
1,269,093
)
$
143,646
9
Three Months Ended June 30, 2025
Common
Additional
Paid-In
Capital
Accumulated Other Comprehensive Income
Accumulated
Deficit
Total
Equity
Shares
Amount
Balance at March 31, 2025
71,951
$
72
$
1,397,626
$
358
$
(
1,102,674
)
$
295,382
Share-based compensation expense
—
—
6,286
—
—
6,286
Other comprehensive loss
—
—
—
(
299
)
—
(
299
)
Issuance of common stock in connection with restricted stock unit vesting, net
184
—
—
—
—
—
Net loss
—
—
—
—
(
26,874
)
(
26,874
)
Balance at June 30, 2025
72,135
$
72
$
1,403,912
$
59
$
(
1,129,548
)
$
274,495
Six Months Ended June 30, 2025
Common
Additional
Paid-In
Capital
Accumulated Other Comprehensive Income
Accumulated
Deficit
Total
Equity
Shares
Amount
Balance at December 31, 2024
71,282
$
71
$
1,390,952
$
558
$
(
1,054,395
)
$
337,186
Share-based compensation expense
—
—
12,772
—
—
12,772
Other comprehensive loss
—
—
—
(
499
)
—
(
499
)
Issuance of common stock in connection with restricted stock unit vesting, net
714
1
(
1
)
—
—
—
Shares issued under employee stock purchase plan
139
—
189
—
—
189
Net loss
—
—
—
—
(
75,153
)
(
75,153
)
Balance at June 30, 2025
72,135
$
72
$
1,403,912
$
59
$
(
1,129,548
)
$
274,495
See notes to condensed consolidated financial statements.
10
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.
Organization and Business
Organization
Zentalis Pharmaceuticals, Inc. (“Zentalis,” “We” or the “Company”) is a clinical-stage biopharmaceutical company developing azenosertib (ZN-c3), an investigational potentially first-in-class and best-in-class WEE1 inhibitor for patients with Cyclin E1-positive platinum-resistant ovarian cancer ("Cyclin E1-positive PROC"). The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. All of the Company’s tangible assets are held in the United States.
Liquidity
The Company has incurred significant net losses since inception and expects to continue to incur significant net losses for the foreseeable future as it pursues development of azenosertib. As of June 30, 2026, the Company had an accumulated deficit of $
1.3
billion and cash, cash equivalents and marketable securities of $
174.6
million. The Company does not have any products approved for commercial sale, has not generated any revenues from product sales and will not generate revenue from product sales unless and until it successfully completes clinical development, obtains regulatory approval for, and commercializes one or more of its product candidates.
Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year from the financial statements issuance date. The Company determined that there are no conditions or events that raise substantial doubt about its ability to continue as a going concern within one year after the date that the interim unaudited condensed consolidated financial statements for the quarter ended June 30, 2026 are issued. Beyond that date, the Company may need to raise additional capital through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements to achieve its longer-term business objectives.
2.
Interim Unaudited Financial Statements
Basis of Presentation
The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) related to a Quarterly Report on Form 10-Q. The year-end condensed consolidated balance sheet data were derived from the Company’s audited financial statements but do not include all disclosures required by U.S. GAAP. These interim unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 26, 2026. The unaudited financial information for the interim periods presented herein reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial condition and results of operation for the periods presented, with such adjustments consisting only of normal recurring adjustments.
The accompanying interim unaudited condensed consolidated financial statements include our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
11
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates and judgments, which are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from management’s estimates
.
12
3.
Recurium IP Holdings, LLC Agreement
Pursuant to a license agreement (“the Recurium Agreement”) entered into in December 2014 between the Company’s wholly owned subsidiary, Zeno Pharmaceuticals, Inc., and Recurium IP Holdings, LLC (“Recurium IP”), which was subsequently amended, Recurium IP provided Zeno Pharmaceuticals, Inc. with an exclusive worldwide license to certain intellectual property rights owned or controlled by Recurium IP to develop and commercialize pharmaceutical products for the treatment or prevention of disease, other than for providing pain relief. Following a corporate restructuring, our wholly owned subsidiary, Zeno Management, Inc. (“ZMI”) became the Zentalis contracting party to the Recurium Agreement.
The intellectual property rights exclusively licensed by ZMI under the Recurium Agreement include certain intellectual property covering azenosertib. Under the Recurium Agreement, ZMI has the right to sublicense its rights, subject to certain conditions. ZMI is required to use commercially reasonable efforts to develop and commercialize at least one product that comprises or contains a compound modulating one of ten specific biological targets and to execute certain development activities.
Under the terms of the Recurium Agreement, ZMI is obligated to make development and regulatory milestone payments, pay royalties on net sales, and make certain sublicensing payments with respect to products that comprise or contain a compound modulating one of ten specific biological targets, including azenosertib. ZMI is obligated to make development and regulatory milestone payments for each such licensed product of up to $
44.5
million, which covers the first two indications for which such licensed product receives regulatory approv
al.
During the three months ended June 30, 2026, the Company incurred and paid a $
7.0
million milestone payment to Recurium IP as a result of the commencement of our Phase 3 ASPENOVA clinical trial. The payment has been recorded as research and development expense in the condensed consolidated statement of operations. In the event that a licensed product receives regulatory approval in any additional indications beyond the first two, ZMI would be obligated to pay an additional one-time milestone payment for each such approval. In addition, ZMI is obligated to make milestone payments of up to $
150
thousand for certain licensed products used in animals. ZMI is also obligated to pay royalties on sales of such licensed products at a mid- to high-single digit percentage. In addition, if ZMI chooses to sublicense or assign to any third parties its rights under certain patents exclusively in-licensed under the Recurium Agreement, ZMI must pay to Recurium IP
20
% of certain sublicensing income received in connection with such transaction.
The Recurium Agreement will expire on the later of December 21, 2032 and, on a country-by-country basis, on the date of expiration of the last-to-expire royalty term for all licensed products in such country, unless earlier terminated by either party for cause or a bankruptcy event.
13
4.
Restructuring
On January 28, 2025, the Company announced a corporate restructuring, (the “Restructuring”) that reduced its work force by approximately
40
%. In connection with the Restructuring, the Company recorded restructuring charges of $
7.8
million primarily consisting of employee separation costs which are reported as a separate line item in the accompanying condensed consolidated statement of operations for the three and six months ended June 30, 2025. The Company has completed all of the activities included in the restructuring plan as of December 31, 2025 and all of the costs associated with the restructuring were incurred during the quarter ended March 31, 2025.
5.
Segment Reporting and Disaggregation of Relevant Expense Captions
The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The determination of a single business segment is consistent with the consolidated financial information periodically reviewed by the Chief Executive Officer as chief operating decision maker ("CODM") in assessing segment performance and deciding how to allocate resources.
The CODM uses net income or loss to monitor budgets, forecasts and expected and actual cash flow from operations in assessing segment performance and in deciding how to allocate resources. The measure of segment assets is reported on the consolidated balance sheets as total assets.
The following table presents information about reported significant segment expenses and net loss (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Research and development
(1)
:
Azenosertib external development costs
$
23,687
$
10,945
$
40,227
$
20,551
Unallocated research and development expenses and discontinued programs
11,476
16,665
23,652
34,306
Total research and development
35,163
27,610
63,879
54,857
General and administrative
9,228
8,448
18,367
19,028
Other
(2)
2,105
9,184
4,608
(
1,268
)
Net loss
$
(
42,286
)
$
(
26,874
)
$
(
77,638
)
$
(
75,153
)
Adjustments for cash used in operations:
Non-cash expenses
3,319
494
6,443
14,383
Changes in working capital
1,731
(
8,328
)
1,003
(
6,574
)
Cash used in operations:
$
(
37,236
)
$
(
34,708
)
$
(
70,192
)
$
(
67,344
)
(1)
The Company tracks external development costs by product candidate or development program, but does not allocate personnel costs, general license payments made under our licensing arrangements or other internal costs to specific development programs or product candidates. These costs are included in unallocated research and development expenses and discontinued programs.
(2)
Other consists of investment and other income (expense), net, restructuring charges and income tax expense.
14
6.
Fair Value Measurement
Available-for-sale marketable debt securities consisted of the following (in thousands):
June 30, 2026
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Corporate debt securities
$
109,939
$
10
$
(
46
)
$
109,903
US treasury securities
39,964
—
(
42
)
39,922
$
149,903
$
10
$
(
88
)
$
149,825
December 31, 2025
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Corporate debt securities
$
159,767
$
167
$
(
11
)
$
159,923
US treasury securities
49,935
40
—
49,975
$
209,702
$
207
$
(
11
)
$
209,898
As of June 30, 2026,
fifteen
of our available-for-sale debt securities with a fair market value of $
119.8
million were in a gross unrealized loss position of $
88
thousand.
Fifteen
have been in a gross unrealized loss position of $
88
thousand for less than one year and
none
have been in a gross unrealized loss position of more than one year. When evaluating an investment for impairment, we review factors such as the severity of the impairment, changes in underlying credit ratings, forecasted recovery, our intent to sell or the likelihood that we would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. Based on our review of these marketable securities, we believe none of the unrealized loss is as a result of a credit loss as of June 30, 2026, because we do not intend to sell these securities, and it is not more-likely-than-not that we will be required to sell these securities before the recovery of their amortized cost basis.
15
Contractual maturities of available-for-sale debt securities are as follows (in thousands):
June 30, 2026
December 31, 2025
Estimated Fair Value
Within one year
$
149,825
$
209,898
After one but within five years
—
—
$
149,825
$
209,898
Equity investment gains (losses) comprised the following (in thousands)
:
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Change in unrealized investment gains during the year on securities held at the end of the period
$
—
$
4,640
$
—
$
(
2,383
)
Investment gains during the period on securities sold
—
—
—
—
Net gains recognized on equity securities
$
—
$
4,640
$
—
$
(
2,383
)
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. The Company determines the fair value of financial assets and liabilities using three levels of inputs as follows:
Level 1—Inputs which include quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2—Inputs (other than quoted market prices included in Level 1) that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the instrument’s anticipated life.
Level 3—Unobservable inputs for assets or liabilities and include little or no market activity.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The Company had $
0.5
million in contingent consideration liabilities as of June 30, 2026 and December 31, 2025 related to the agreement to terminate its Collaboration and License Agreements with the Company’s former affiliate, Zentera Therapeutics, Inc. (“Zentera”). The contingent consideration balance is limited to
one
potential milestone payment measured at fair value. The fair value of the contingent consideration is estimated based on the monetary value of the milestone discounted for the probability of achieving the milestone and a present value factor based on the timing of when the milestone is expected to be achieved. The value for the contingent consideration balance is based on significant inputs not observable in the market which represents Level 3 measurement within the fair value hierarchy.
16
The following table summarizes, by major security type, our cash equivalents and available-for-sale marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):
June 30, 2026
Level 1
Level 2
Level 3
Total estimated fair value
Financial assets:
Cash equivalents:
Money market funds
$
9,352
$
—
$
—
$
9,352
Total cash equivalents:
9,352
—
—
9,352
Available-for-sale marketable securities:
Corporate debt securities
—
109,903
—
109,903
US treasury securities
39,922
—
—
39,922
Total available-for-sale marketable securities:
39,922
109,903
—
149,825
Total assets measured at fair value
$
49,274
$
109,903
$
—
$
159,177
Financial liabilities:
Contingent consideration
—
—
500
500
Total financial liabilities
$
—
$
—
$
500
$
500
December 31, 2025
Level 1
Level 2
Level 3
Total estimated fair value
Cash equivalents:
Money market funds
$
18,637
$
—
$
—
$
18,637
Total cash equivalents:
18,637
—
—
18,637
Available-for-sale marketable securities:
Corporate debt securities
—
159,923
—
159,923
US treasury securities
49,975
—
—
49,975
Total available-for-sale marketable securities:
49,975
159,923
—
209,898
Total assets measured at fair value
$
68,612
$
159,923
$
—
$
228,535
Financial liabilities:
Contingent consideration
—
—
500
500
Total financial liabilities
$
—
$
—
$
500
$
500
The following significant unobservable inputs were used in the valuation of the contingent consideration payable to Zentera as variable consideration for a change in control milestone payment of either
zero
or $
15.0
million pursuant to the termination of our Collaboration and License Agreement at June 30, 2026 and December 31, 2025:
17
Contingent Consideration Liability
Fair Value
as of
June 30, 2026
Valuation Technique
Unobservable Input
Range
(in thousands)
Milestone payment
$
500
Discounted cash flow
Likelihood of occurrence
1.0
% -
2.4
%
Discount rate
40
%
Expected term
Perpetuity
The following table reflects the activity for the Company’s contingent consideration, measured at fair value using Level 3 inputs (in thousands):
Contingent consideration at December 31, 2025
$
500
Changes in the fair value of contingent consideration
—
Contingent consideration at June 30, 2026
$
500
There were no transfers between levels of the fair value hierarchy during the six months ended June 30, 2026. The Company had
one
instrument that was classified within Level 3 as of June 30, 2026 and December 31, 2025. As of June 30, 2026 and December 31, 2025, no material fair value adjustments were required for non-financial assets and liabilities.
7.
Prepaid Expenses and Other Assets
Prepaid expenses and other assets consisted of the following (in thousands):
June 30,
December 31,
2026
2025
Prepaid insurance
$
863
$
300
Prepaid software licenses and maintenance
353
394
Foreign R&D credit refund
285
142
Prepaid research and development expenses
5,675
6,682
Interest receivable
1,723
1,928
Deferred tax asset
51
51
Sublease assets
688
496
Other prepaid expenses
1,162
1,413
Total prepaid expenses and other assets
10,800
11,406
Less long-term portion
4,129
4,108
Total prepaid expenses and other assets, current
$
6,671
$
7,298
18
8.
Property and Equipment, net
Property and equipment, net consisted of the following (in thousands):
June 30,
December 31,
2026
2025
Leasehold improvements
$
4,168
$
4,168
Office equipment and furniture
1,277
1,277
Computer equipment
120
99
Subtotal
5,565
5,544
Accumulated depreciation and amortization
(
3,065
)
(
2,774
)
Property and equipment, net
$
2,500
$
2,770
Depreciation and amortization expense for the three months ended
June 30, 2026
and
2025
was approximately
$
152
thousand and
$
160
thousand, respectively. Depreciation and amortization expense for the
six
months ended
June 30, 2026
and
2025
was
$
304
thousand and
$
422
thousand, respectively.
9.
Accrued Expenses
Accrued expenses consist of the following (in thousands):
June 30,
December 31,
2026
2025
Accrued research and development expenses
$
18,067
$
14,699
Accrued employee expenses
6,423
9,777
Accrued general and administrative expenses
388
466
Lease liability
4,132
3,873
Contingent consideration
500
500
Income taxes payable
83
194
Accrued legal expenses
391
342
Total accrued expenses
29,984
29,851
Less long-term portion
500
500
Total accrued expenses, current
$
29,484
$
29,351
19
10.
Stockholders’ Equity
Share-based Compensation
Effective April 2020, the Company’s Board of Directors adopted, and the Company’s stockholders approved, the 2020 Incentive Award Plan (the “2020 Plan”), which allows for grants to selected employees, consultants and non-employee members of the Board of Directors. The Company currently grants stock options and restricted stock units (“RSUs”) under the 2020 Plan. Awards may be made under the 2020 Plan covering up to the sum of (1)
5,600,000
shares of common stock; plus (2) any shares forfeited from the unvested restricted shares of our common stock issued upon conversion of unvested Class B common units during the corporate conversion in conjunction with our initial public offering (up to
1,250,000
shares); plus (3) an annual increase on the first day of each fiscal year beginning with the fiscal year ending December 31, 2021 and continuing to, and including, the fiscal year ending December 31, 2030, equal to the lesser of (a)
5
% of the shares of common stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as determined by our Board of Directors.
As of June 30, 2026,
11,194,368
shares were subject to outstanding awards under the 2020 Plan and
6,658,263
shares were available for future grants of share-based awards under the 2020 Plan.
In July 2022, the Company’s Board of Directors approved the Zentalis Pharmaceuticals, Inc. 2022 Employment Inducement Incentive Award Plan (the “2022 Inducement Plan”), which is used exclusively for the grant of equity awards to new employees as an inducement material to the employees’ entering into employment with the Company. As of June 30, 2026, the Board of Directors has reserved
8,775,000
shares of the Company’s common stock for issuance pursuant to awards granted under the 2022 Inducement Plan.
As of June 30, 2026,
6,991,210
shares were subject to outstanding awards under the 2022 Inducement Plan and
1,575,290
shares were available for future grants of share-based awards under the 2022 Inducement Plan.
Total share-based compensation expense related to share-based awards was comprised of the following (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Research and development expense
$
1,519
$
3,643
$
3,073
$
7,024
General and administrative expense
1,696
2,643
3,339
5,748
Total share-based compensation expense
$
3,215
$
6,286
$
6,412
$
12,772
Share-based compensation expense by type of share-based award (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Stock Options
$
2,104
$
3,302
$
4,244
$
8,047
Employee Stock Purchase Plan
80
34
137
96
RSUs
1,031
2,950
2,031
4,629
$
3,215
$
6,286
$
6,412
$
12,772
20
Stock Options and Restricted Stock Units
The exercise price of stock options granted is equal to the closing price of the Company’s common stock on the date of grant. The fair value of each option award is estimated on the date of grant using the Black-Scholes model. Due to the Company’s limited operating history and a lack of company specific historical and implied volatility data, the Company estimates expected volatility based on the historical volatility of a group of similar companies that are publicly traded. The historical volatility data was computed using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the stock-based awards. The Company uses the “simplified method” for estimating the expected term of employee options, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option (generally
10
years). The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The Company has not issued any dividends and does not expect to issue dividends over the life of the options. As a result, the Company has estimated the dividend yield to be
zero
.
The fair value of the stock options granted during the six months ended June 30, 2026 and June 30, 2025 was determined with the following assumptions:
June 30, 2026
June 30, 2025
Expected volatility
64.0
% -
91.8
%
55.9
% -
67.2
%
Average expected term (in years)
6.0
-
6.1
6.0
-
6.1
Risk-free interest rate
3.8
% -
4.2
%
3.9
% -
4.4
%
Expected dividend yield
—
%
—
%
Employee Stock Purchase Plan
Effective April 2020, the Company’s Board of Directors adopted, and the Company’s stockholders approved the Zentalis Pharmaceuticals, Inc. 2020 Employee Stock Purchase Plan (the “ESPP”), which was subsequently amended and restated effective March 15, 2021. The maximum aggregate number of shares of the Company’s common stock available for issuance under the ESPP at June 30, 2026 was
1,403,033
. Under the terms of the ESPP, the Company’s employees may elect to have up to
20
% of their compensation, up to a maximum of $
21,250
per calendar year, withheld to purchase shares of the Company’s common stock for a purchase price equal to
85
% of the lower of the fair market value per share (at closing) of the Company’s common stock on (i) the first trading day of a
six-month
offering period, or (ii) the applicable purchase date, defined as the last trading day of the
six-month
offering period.
The weighted average assumptions used to estimate the fair value of stock purchase rights under the ESPP during the period ended are as follows:
Ended June 30, 2026
ESPP
Volatility
56.5
%
Expected term (years)
0.5
Risk free rate
3.7
%
Expected dividend yield
—
21
Compensation Expense Summary
Total unrecognized estimated compensation cost by type of award and the weighted average requisite service period over which such expense is expected to be recognized (in thousands, unless otherwise noted):
June 30, 2026
Unrecognized
Expense
Remaining
Weighted-Average Recognition Period
(years)
Stock options
$
17,823
2.64
RSUs
$
4,285
1.17
During the six months ended June 30, 2026, we issued
57
thousand shares of common stock in connection with the exercises of stock options. Outstanding stock options and unvested RSUs totaling approximately
15.3
million shares and
2.9
million shares of our common stock, respectively, were outstanding as of June 30, 2026.
22
11.
Commitments and Contingencies
Legal Contingencies
From time to time, we may be involved in various disputes, including lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property, employment, and contractual matters. Any of these claims could subject us to costly legal expenses. The Company records a liability in its consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews these estimates each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss to the extent necessary to make the consolidated financial statements not misleading. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in our consolidated financial statements. While we do generally believe that we have adequate insurance to cover many different types of liabilities, our insurance carriers may deny coverage, or our policy limits may be inadequate to fully satisfy any damage awards or settlement. If this were to happen, the payment of any such awards could have a material adverse effect on our consolidated results of operations and financial position. Additionally, any such claims, whether or not successful, could damage our reputation and business. We are currently not a party to any legal proceedings that require a loss liability to be recorded.
Leases
Our commitments include payments related to operating leases.
Approximate annual future minimum operating lease payments as of June 30, 2026 are as follows (in thousands):
Year
Operating Leases
2026 (remaining)
$
3,645
2027
7,451
2028
7,760
2029
7,930
2030
8,105
Thereafter
14,984
Total minimum lease payments:
49,875
Less: imputed interest
12,185
Total operating lease liabilities
37,690
Less: current portion
4,132
Lease liability, net of current portion
$
33,558
The weighted-average remaining lease term of our operating leases is approximately
6.3
years.
On March 6, 2023, we entered into a sublease agreement pursuant to which we sublet the office space located at 1359 Broadway, Suites 1710 and 1800 in New York, New York to a subtenant. For the three and six months ended June 30, 2026, we recorded lease income of $
0.3
million and $
0.7
million relating to our New York sublease.
23
12.
Net Loss Per Common Share
Basic and diluted net loss per common share were calculated as follows (in thousands except per share amounts):
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Numerator:
Net loss
$
(
42,286
)
$
(
26,874
)
$
(
77,638
)
$
(
75,153
)
Denominator:
Weighted average number of common shares outstanding basic and diluted
71,326
71,992
70,798
71,836
Net loss per common share
$
(
0.59
)
$
(
0.37
)
$
(
1.10
)
$
(
1.05
)
Our potential and dilutive securities, which include outstanding stock options and unvested RSUs have been excluded from the computation of diluted net loss per common share as the effect would be anti-dilutive.
The following common stock equivalents have been excluded from the calculations of diluted net loss per common share because their inclusion would be antidilutive (in thousands).
June 30,
2026
2025
Outstanding stock options
15,316
13,062
Unvested RSUs
2,870
6,624
18,186
19,686
24
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of financial condition and operating results together with our interim unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q contains forward-looking statements based upon current plans, expectations and beliefs involving significant risks and uncertainties. As a result of many important factors, including those set forth under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements. For convenience of presentation some of the numbers have been rounded in the text below.
Overview
We are a clinical-stage biopharmaceutical company developing azenosertib (ZN-c3), an investigational, potentially first-in-class and best-in-class WEE1 inhibitor, for patients with ovarian cancer and other tumor types. In clinical trials, azenosertib has been well tolerated and has demonstrated anti-tumor activity as a single agent across multiple tumor types. We are currently focused on advancing the clinical development of azenosertib in Cyclin E1-positive platinum-resistant ovarian cancer, or PROC. We believe that our DENALI (ZN-c3-005) Part 2 clinical trial of azenosertib in patients with Cyclin E1-positive PROC, if successful, has the potential to support an accelerated approval, subject to U.S. Food and Drug Administration, or FDA, review. Our Phase 3 ASPENOVA (ZN-c3-020) clinical trial is designed as a confirmatory trial to support conversion to potential full approval, subject to data outcomes. We also believe that azenosertib has broad franchise potential beyond Cyclin E1-positive PROC. We exclusively in-license or solely own worldwide development and commercialization rights to azenosertib.
Azenosertib (WEE1 Inhibitor)
Mechanism of Action
Azenosertib is an investigational, potentially first-in-class and best-in-class oral, small molecule WEE1 inhibitor. The inhibition of WEE1, a DNA damage response kinase, drives cancer cells into mitosis without being able to repair damaged DNA, resulting in cell death and thereby preventing tumor growth and potentially causing tumor regression. We have designed azenosertib to have advantages over other investigational therapies targeting WEE1, including superior selectivity and pharmacokinetic, or PK, properties.
Cyclin E1 Expression as a Sensitive and Specific Predictive Biomarker in PROC
Cells with Cyclin E1 activation are exquisitely sensitive to WEE1 inhibition via azenosertib because Cyclin E1 activation further accelerates cancer cells into the DNA replication phase without adequate DNA repair.
As a result
, we have used retrospective analyses to establish Cyclin E1 as a sensitive and specific predictive biomarker that can be used to identify patients who might benefit from azenosertib. Based on published retrospective analyses, Cyclin E1 alteration is a biomarker of poor prognosis and low benefit from standard-of-care single-agent chemotherapy in PROC patients. Additionally, real-world data from two independent cohorts (Tempus Lens Ovarian cancer dataset and our historical clinical studies) presented at the 2026 American Association for Cancer Research, or AACR, annual meeting, consistently demonstrated that Cyclin E1-positive ovarian cancer patients experience worse clinical outcomes.
We are working with a diagnostic partner to validate a companion diagnostic test that will identify patients with PROC that overexpress the Cyclin E1 protein using our proprietary immunohistochemistry, or IHC, cutoff. A prototype of this test is being used in DENALI Part 2 and our Phase 3 ASPENOVA clinical trial.
25
Market Opportunity
In 2022, the global ovarian cancer market was approximately $3 billion, with significant growth expected over the next several years. PROC is a subset of the ovarian cancer market. Based on our retrospective, historical analysis utilizing our IHC cutoff, we estimate that approximately 50% of PROC patients overexpress Cyclin E1 protein, which accounts for approximately 20,000 patients on an annual basis in the United States, EU4 (France, Germany, Italy, Spain), the United Kingdom and Japan, based on 2025 estimates. As a result, we believe there is a significant opportunity for azenosertib in Cyclin E1-positive PROC patients. Moreover, the successful launch of mirvetuximab in PROC patients with high folate receptor alpha, or FRα-high, expression underscores the demand for biomarker-directed therapies for PROC patients. The overlap between FRα-high PROC patients and those that have Cyclin E1 overexpression is estimated to be less than 20% of all PROC patients, which highlights the significant unmet need in patients with Cyclin E1-positive PROC.
We believe there is additional market opportunity for azenosertib in earlier lines of treatment for ovarian cancer, and across other solid tumor types.
Clinical Development Program
The following ongoing and planned studies constitute the current clinical development program for azenosertib:
•
Monotherapy – Phase 2 Clinical Trial in PROC (DENALI - ZN-c3-005)
◦
DENALI Part 1b
is a fully enrolled single-arm study that evaluated azenosertib monotherapy at
400 mg QD 5:2 (single daily dose on an intermittent schedule of five days on and two days off), in 102 patients with PROC. Tissue collection for biomarker assessment was mandated in the study and upon a retrospective analysis, approximately 50% of the patients were Cyclin E1-positive per our IHC cutoff. In 2025, we announced clinical data from this study.
▪
DENALI Part 2
is prospectively enrolling PROC patients with Cyclin E1 protein overexpression based on our proprietary IHC cutoff. Part 2 consists of three cohorts across a seamless design that may support accelerated approval in patients with Cyclin E1-positive PROC, pending positive study outcomes and further discussions with the FDA. The study design consists of the following parts:
◦
Part 2a: Dose confirmation in patients with 1-3 prior lines of therapy, or up to 4 prior lines allowed in prior mirvetuximab treatment in patients with high FR
α.
Two doses were evaluated, 300mg QD 5:2 and 400mg QD 5:2, with approximately 30 patients enrolled per dose group. In April 2026, we announced that 400mg QD 5:2 was selected as the pivotal monotherapy dose and that recruitment at the 300mg QD 5:2 dose level has been discontinued. All patients enrolled in Part 2a will contribute to the overall safety database submitted to the FDA.
◦
Part 2b: Enrollment expansion in the same patient population as Part 2a at the selected 400mg QD 5:2 dose up to approximately 100 patients, including patients at that dose in Part 2a. Enrollment in this cohort is complete.
◦
Part 2c: Broadening study population, which is expected to include approximately 40 patients previously treated with a taxane-containing regimen for PROC, with 1-4 prior lines of therapy allowed, including prior mirvetuximab in patients with high FR
α
. This cohort is currently enrolling.
26
In July 2026, we met with the FDA in a Type D meeting to align on key points related to our accelerated approval strategy, including dose. The FDA had no objection to the continued study of the selected monotherapy dose of azenosertib at 400mg QD 5:2 in patients with Cyclin E1-positive PROC, selected based on a pre-specified interim analysis from DENALI Part 2a. The FDA acknowledged the DENALI Part 2 study population, including the 2c cohort, has the potential to support an accelerated approval pathway, subject to the strength of the data and the landscape of approved agents at the time of regulatory action. The FDA has granted Fast Track Designation to azenosertib for the treatment of patients with Cyclin E1-positive PROC.
The integrated dataset of DENALI Parts 2a, 2b, and 2c is designed to support accelerated approval in the Cyclin E1 biomarker-selected patient population, subject to regulatory review. We expect to provide a topline readout of DENALI Part 2 in the first half of 2027 to allow for data maturation post full enrollment.
•
Monotherapy – Phase 3 Clinical Trial in Cyclin E1-positive PROC (ASPENOVA – ZN-c3-020)
ASPENOVA is a Phase 3 randomized, confirmatory clinical trial designed to support full approval of azenosertib in patients with Cyclin E1-positive PROC. The trial is expected to enroll approximately 420 patients and compare azenosertib monotherapy at 400mg QD 5:2 to the investigator's choice of standard-of-care single-agent chemotherapy (paclitaxel, pegylated liposomal doxorubicin, gemcitabine, or topotecan). The trial design was based on feedback from the U.S. FDA regarding requirements for seeking approval under the accelerated approval pathway and requirements to support potential conversion to full approval, subject to data outcomes. In May 2026, we announced that the first patient had been dosed in the ASPENOVA trial.
•
Combination – Phase 1b Clinical Trial of Azenosertib and Chemotherapy or Bevacizumab in Ovarian Cancer (MUIR - ZN-c3-002)
MUIR is a multi-part, open-label Phase 1b clinical trial evaluating the safety, efficacy and preliminary clinical activity of azenosertib in combination in patients with ovarian cancer. The study design consists of the following parts:
▪
Part 1:
Enrolled patients with PROC treated with azenosertib in combination with one of four chemotherapy regimens: carboplatin, gemcitabine, pegylated liposomal doxorubicin, or paclitaxel. Primary objectives were safety and tolerability, with key secondary objectives including clinical activity assessed by objective response rate, duration of response, and progression-free survival per RECIST v1.1. In May 2026, we announced data from MUIR Part 1 focusing on azenosertib in combination with paclitaxel in PROC as paclitaxel is commonly used across multiple tumor types, including ovarian cancer. These data are described in the next section below titled “Recent Data and Presentations.” Data from the other combination arms will be presented at a later date.
▪
Part 2:
Evaluating azenosertib in combination with bevacizumab as a maintenance regimen (in the first line, or 1L, or second line, or 2L, of treatment) in patients with advanced ovarian, peritoneal, or fallopian tube cancer following platinum-based chemotherapy. The dose escalation portion will determine the recommended dose for azenosertib orally once daily 5 days on, 2 days off in 21-day cycles in combination with bevacizumab 15mg/kg intravenously on Day 1 of each 21-day cycle. The dose expansion portion will evaluate azenosertib at the recommended dose determined from the dose escalation portion in combination with bevacizumab. The dose expansion portion is expected to enroll approximately 40 patients with platinum-sensitive ovarian cancer in 2L who progressed while on a PARP inhibitor for 1L maintenance. The primary objective is safety and tolerability; secondary objectives include preliminary clinical activity of the combination as assessed by progression-free survival for the dose expansion portion. The dose expansion portion is currently enrolling.
27
Recent Data and Presentations
In April 2026 at the AACR Annual Meeting, we presented a poster with preclinical data showing encouraging activity and tolerability of azenosertib combinations in treatment-naïve and ADC-resistant triple negative breast cancer, or TNBC, supporting the potential for pipeline expansion beyond ovarian cancer.
At this meeting, we also presented a poster with real-world data demonstrating that Cyclin E1-positive ovarian cancer patients have significantly worse outcomes, independent of CCNE1 gene amplification status, reinforcing the potential for azenosertib to address the unmet need for these patients.
In May 2026, we presented data from Part 1 of the Phase 1b MUIR trial at the ASCO Annual Meeting. The findings reflect a December 1, 2025 data cutoff and include 46 patients who received azenosertib across four dose cohorts — 200 mg QD continuously or 200 mg, 250 mg, or 300 mg QD intermittently (5 days on, 2 days off) — in combination with paclitaxel 80 mg/m². All patients had received prior paclitaxel. The data showed combinability and activity of azenosertib in an all-comer PROC setting, demonstrating the potential for azenosertib in multiple lines of ovarian cancer and more broadly in combination with cytotoxic agents in other tumor types. For a summary of the data we presented at the ASCO Annual Meeting, please refer to the 8-K Current Report we filed with the SEC on May 21, 2026.
Liquidity Overview
Since our inception, our operations have been limited to organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and performing research and development of our product pipeline. We do not have any products approved for commercial sale and have not generated any revenues from product sales. We will not generate revenue from product sales unless and until we successfully complete clinical development, obtain regulatory approval for, and commercialize one or more of our product candidates. We will need to raise substantial additional capital to support our continuing operations and pursue our growth strategy.
Since inception, we have incurred significant operating losses. Our net losses were $137.1 million for the year ended December 31, 2025. We had net losses of $77.6 million and $75.2 million for the six months ended June 30, 2026 and June 30, 2025, respectively. We had an accumulated deficit of $1.3 billion as of June 30, 2026. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We had cash, cash equivalents and marketable securities of $174.6 million as of June 30, 2026. We believe that our existing cash, cash equivalents and marketable securities as of June 30, 2026 will be sufficient to fund our operating expenses and capital expenditure requirements into late 2027. We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.
28
License Agreements and Strategic Collaborations
Recurium IP Holdings, LLC License Agreement
In December 2014, our wholly owned subsidiary, Zeno Pharmaceuticals, Inc., entered into the Recurium Agreement, with Recurium IP Holdings, LLC, or Recurium IP, which was subsequently amended, under which Zeno Pharmaceuticals, Inc. was granted an exclusive worldwide license to certain intellectual property rights owned or controlled by Recurium IP to develop and commercialize pharmaceutical products for the treatment or prevention of disease, other than for providing pain relief. Following a corporate restructuring, our wholly owned subsidiary, Zeno Management, Inc., or ZMI, became the Zentalis contracting party to the Recurium Agreement. The intellectual property rights exclusively licensed by ZMI under the Recurium Agreement include certain intellectual property covering azenosertib. ZMI has the right to sublicense its rights under the Recurium Agreement, subject to certain conditions. ZMI is required to use commercially reasonable efforts to develop and commercialize at least one product that comprises or contains a compound modulating one of ten specific biological targets and to execute certain development activities.
Under the terms of the Recurium Agreement, ZMI is obligated to make development and regulatory milestone payments, pay royalties on net sales, and make certain sublicensing payments with respect to products that comprise or contain a compound modulating one of ten specific biological targets, including azenosertib. ZMI is obligated to make development and regulatory milestone payments for each such licensed product of up to $44.5 million, which covers the first two indications for which such licensed product receives regulatory approval and includes a $7.0 million milestone payment incurred as a result of the commencement of our Phase 3 ASPENOVA clinical trial and paid during the three months ended June 30, 2026. In the event that a licensed product receives regulatory approval in any additional indications beyond the first two, ZMI would be obligated to pay an additional one-time milestone payment for each such approval. In addition, ZMI is obligated to make milestone payments of up to $150,000 for certain licensed products used in animals. ZMI is also obligated to pay royalties on sales of such licensed products at a mid- to high-single digit percentage. In addition, if ZMI chooses to sublicense or assign to any third parties its rights under certain patents exclusively in-licensed under the Recurium Agreement, ZMI must pay to Recurium IP 20% of certain sublicensing income received in connection with such transaction.
The Recurium Agreement will expire on the later of December 21, 2032 and, on a country-by-country basis, on the date of expiration of the last-to-expire royalty term for all licensed products in such country, unless earlier terminated by either party for cause or a bankruptcy event.
Pfizer Development Agreement
In April 2022, we entered into a development agreement with Pfizer to collaborate to advance the clinical development of azenosertib. We did not grant Pfizer any economic ownership or control of azenosertib or the rest of our pipeline. In October 2022, we announced our first clinical development collaboration with Pfizer to initiate a Phase 1/2 dose escalation study of azenosertib, in combination with encorafenib and cetuximab (an FDA-approved standard of care known as the BEACON regimen) in patients with BRAF V600E-mutant mCRC. In January 2025, we announced that we would not advance to the dose expansion phase of the study due to resource prioritization and an evolving treatment landscape.
GSK Clinical Trial Collaboration and Supply Agreement
In April 2021, we entered into a clinical trial collaboration and supply agreement with GSK under which we have evaluated the combination of azenosertib and niraparib, GSK’s poly (ADP-ribose) polymerase (PARP) inhibitor, in patients with PROC. In January 2025, we announced that the trial was fully enrolled and that we were not proceeding further with the development of the combination of azenosertib with niraparib as efficacious exposures of azenosertib were not reached. Pursuant to this agreement, we were responsible for the conduct and cost of the study, under the supervision of a joint development committee made up of our representatives and representatives of GSK. GSK supplied niraparib for use in the collaboration, at no cost to us.
29
This agreement does not grant any right of first negotiation to participate in future clinical trials, and neither party granted the other any additional right or ability to evaluate their respective compounds in any other clinical studies, either as monotherapy or in combination with any other product or compound, in any therapeutic area.
The agreement with GSK will expire upon completion of all obligations of the parties thereunder or upon termination by either party. In addition, there are standard early termination provisions under this agreement.
Components of Our Results of Operations
Revenue
To date, we have not generated any revenue from product sales, and we do not expect to generate any revenue in the foreseeable future. We have generated, and may in the future generate, revenue from payments received under our licensing, collaboration and asset sale agreements, which included payments of upfront fees, license fees, milestone-based payments and reimbursements for research and development efforts.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, and include:
•
salaries, benefits and other related costs, including non-cash stock-based compensation expense, for personnel engaged in research and development functions;
•
expenses incurred under agreements with third parties, including CROs and other third parties that conduct research, preclinical activities and clinical trials on our behalf as well as CMOs that manufacture drug material for use in our preclinical studies and clinical trials;
•
costs of outside consultants, including their fees, non-cash stock-based compensation and related travel expenses;
•
the costs of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials;
•
license payments made for intellectual property used in research and development activities; and
•
allocated expenses for rent and maintenance of facilities and other operating costs.
We expense research and development costs as incurred. Reimbursed research and development costs under certain collaborative arrangements are recorded as a reduction to research and development expenses and are recognized in the period in which the related costs are incurred.
We track external development costs by product candidate or development program, but we do not allocate personnel costs, general license payments made under our licensing arrangements or other internal costs to specific development programs or product candidates. These costs are included in unallocated research and development expenses and discontinued programs in the table below.
30
The following table summarizes our research and development expenses by product candidate or development program:
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Azenosertib
$
23,687
$
10,945
$
40,227
$
20,551
Unallocated research and development expenses and discontinued programs
11,476
16,665
23,652
34,306
Total research and development expenses
$
35,163
$
27,610
$
63,879
$
54,857
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. The successful development of azenosertib, and any of our future product candidates is highly uncertain. At this time, we cannot determine with certainty the duration and costs of our existing and future clinical trials of azenosertib or any other product candidate we may develop or if, when, or to what extent we will generate revenue from the commercialization and sale of any product candidate for which we obtain marketing approval. We may never succeed in obtaining marketing approval for azenosertib, or any future product candidate. The duration, costs and timing of clinical trials and development of our product candidates and any other product candidate we may develop in the future will depend on a variety of factors, including:
•
per patient trial costs;
•
the number of patients who enroll in each trial;
•
the number of trials required for approval;
•
the number of sites included in the trials;
•
the countries in which the trials are conducted;
•
the length of time required to enroll eligible patients;
•
the drop-out or discontinuation rates of patients;
•
any delays in clinical trials, including as a result of clinical holds or the global macroeconomic environment;
•
potential additional safety monitoring requested by regulatory agencies;
•
the duration of patient participation in the trials and follow-up;
•
the phase of development of the product candidate;
•
the efficacy and safety profile of the product candidate;
•
uncertainties in clinical trial design and patient enrollment rates;
•
the actual probability of success for our product candidates, including the safety and efficacy, early clinical data, competition, manufacturing capability and commercial viability;
31
•
significant and changing government regulation and regulatory guidance;
•
the timing and receipt of any marketing approvals;
•
the expense of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; and
•
our ability to attract and retain skilled personnel.
A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant delays in our clinical trials due to patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including non-cash stock-based compensation, for personnel in our executive, finance, business development and administrative functions. General and administrative expenses also include legal fees relating to intellectual property and corporate matters; professional fees for accounting, auditing, tax and consulting services; insurance costs; travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.
Restructuring Expenses
Restructuring expenses consist of involuntary employee termination benefits pursuant to a one-time benefit arrangement.
Investment and Other Income (Expense), Net
Investment and other income (expense), net consists of interest earned on cash, cash equivalents and available-for-sale marketable securities, sublease income and the change in value of equity securities during the period.
Income Taxes
Since our inception, we and our corporate subsidiaries have generated cumulative federal, state and foreign net operating loss in certain jurisdictions for which we have not recorded any net tax benefit due to uncertainty around utilizing these tax attributes within their respective carryforward periods.
32
Results of Operations
Comparison of Three Months Ended June 30, 2026 to Three Months Ended June 30, 2025
The following table summarizes our results of operations for the periods indicated, together with the changes in those items in dollars:
Three Months Ended June 30,
Increase
(Decrease)
2026
2025
(in thousands)
Operating Expenses
Research and development
$
35,163
$
27,610
$
7,553
General and administrative
9,228
8,448
780
Total operating expenses
44,391
36,058
8,333
Loss from operations
(44,391)
(36,058)
(8,333)
Other Income (Expense)
Investment and other income, net
2,243
9,184
(6,941)
Net loss before income taxes
(42,148)
(26,874)
(15,274)
Income tax expense
138
—
138
Net loss
$
(42,286)
$
(26,874)
$
(15,412)
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Research and Development Expenses
Research and development expenses for the three months ended June 30, 2026 were $35.2 million, compared to $27.6 million for the three months ended June 30, 2025. The increase of $7.6 million was primarily due to a $7.0 million milestone payment to Recurium IP Holdings, LLC required as a result of the commencement of our Phase 3 ASPENOVA clinical trial and an increase of $5.2 million related to clinical expenses and drug manufacturing, including costs associated with advancing the DENALI and ASPENOVA trials. This increase was partially offset by a decrease of $4.5 million for personnel expense, of which $2.1 million was non-cash stock-based compensation, and a decrease of $0.1 million related to allocated overhead.
General and Administrative Expenses
General and administrative expenses for the three months ended June 30, 2026 were $9.2 million, compared to $8.4 million during the three months ended June 30, 2025. This increase of $0.8 million was primarily attributable to an increase of $1.7 million for consulting and outside services. This increase was partially offset by a decrease of $0.9 million for non-cash stock-based compensation.
Investment and Other Income, Net
Investment and other income (expense), net was $2.2 million for the three months ended June 30, 2026, compared to $9.2 million for the three months ended June 30, 2025. The decrease of $7.0 million was primarily driven by a non-cash recognized gain of $4.6 million on the mark to market adjustment for equity securities during the three months ended June 30, 2025 and a decrease of $1.7 million in returns on invested cash and marketable debt securities. A gain of $0.5 million on fixed assets sold during the three months ended June 30, 2025 and a decrease of $0.2 million in other income and expense accounts also contributed to the overall decrease.
Comparison of Six Months Ended June 30, 2026 to Six Months Ended June 30, 2025
The following table summarizes our results of operations for the periods indicated, together with the changes in those items in dollars:
Six Months Ended June 30,
Increase
(Decrease)
2026
2025
(in thousands)
Operating Expenses
Research and development
$
63,879
$
54,857
$
9,022
General and administrative
18,367
19,028
(661)
Restructuring
—
7,796
(7,796)
Total operating expenses
82,246
81,681
565
Loss from operations
(82,246)
(81,681)
(565)
Other Income (Expense)
Investment and other income, net
4,866
6,528
(1,662)
Net loss before income taxes
(77,380)
(75,153)
(2,227)
Income tax expense
258
—
258
Net loss
$
(77,638)
$
(75,153)
$
(2,485)
Research and Development Expenses
Research and development expenses for the six months ended June 30, 2026 were
$63.9 million
, compared to
$54.9
million for the six months ended June 30, 2025. The increase of $9.0 million was primarily due to a $7.0 million
34
milestone payment to Recurium IP Holdings, LLC required as a result of the commencement of our Phase 3 ASPENOVA clinical trial and an increase of $11.5 million related to clinical expenses and drug manufacturing, including costs associated with advancing the DENALI and ASPENOVA trials. These increases were partially offset by a decrease of $8.4 million for personnel expense, of which $3.4 million was non-cash stock-based compensation and a decrease of $1.1 million related to a one time impairment charge recorded during the quarter ended March 31, 2025.
General and Administrative Expenses
General and administrative expenses for the six months ended June 30, 2026 were
$18.4
million, compared to
$19.0
million during the six months ended June 30, 2025. This decrease of $0.6 million was attributable to a decrease of $2.8 million of personnel expense of which $2.2 million was non-cash stock-based compensation. This decrease was partially offset by an increase of $2.2 million related primarily to consulting and outside services.
Restructuring Expenses
On January 22, 2025, our Board of Directors approved a strategic restructuring of the Company to support execution of late-stage development for azenosertib, and extend its cash runway beyond a potentially registration-enabling azenosertib data readout from the Company’s DENALI Part 2 study, anticipated in the first half of 2027. In connection with this strategic restructuring, the Company reduced its workforce by approximately 40%.
Restructuring expenses for the six months ended June 30, 2026 were zero, compared to $7.8 million during the six months ended June 30, 2025.
Investment and Other Income, Net
Investment and other income (expense), net was
$4.9
million for the six months ended June 30, 2026, compared to
$6.5
million for the six months ended June 30, 2025. The decrease of $1.6 million was primarily driven by a decrease of $3.5 million in returns on invested cash and marketable debt securities partially offset by a non-cash recognized loss of $2.4 million on the mark to market adjustment for equity securities during the six months ended June 30, 2025. A gain of $0.5 million on fixed assets sold during the six months ended June 30, 2025 also contributed to the overall decrease.
Liquidity and Capital Resources
Since our inception, our operations have been limited to organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and performing research and development of our product pipeline. We do not have any products approved for commercial sale and have not generated any revenues from product sales and we have incurred significant operating losses.
As a result, we will need to raise substantial additional capital to support our continuing operations and pursue our strategy. Until such time as we can generate significant revenue from product sales, if ever, we plan to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions. There are no assurances that we will be successful in obtaining an adequate level of financing as and when needed to finance our operations on terms acceptable to us or at all, particularly in light of the global macroeconomic environment, including the ongoing trade tensions between the United States and certain ex-U.S. governments, ongoing military conflicts, and fluctuating inflation and interest rates. If we are unable to secure adequate additional funding as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of azenosertib or delay our pursuit of potential in-licenses or acquisitions.
Because of the numerous risks and uncertainties associated with developing and commercializing therapeutics, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from product sales, we may not become profitable. If we fail to
35
become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
We do not currently have any approved products and have never generated any revenue from product sales. To date, we have financed our operations primarily through the sale of equity securities. From inception through June 30, 2026, we raised a total of $1.2 billion in gross proceeds from the sale of shares of our common stock and convertible preferred units. As of June 30, 2026, we had $24.8 million in cash and cash equivalents, $149.8 million in marketable debt securities, and an accumulated deficit of $1.3 billion. We maintain the majority of our cash and cash equivalents in accounts with major financial institutions, and our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position. We had no indebtedness as of June 30, 2026.
ATM Program
In May 2021, the Company entered into a sales agreement, or the Sales Agreement, with SVB Leerink Partners LLC, or SVB Leerink, as sales agent (the “Sales Agreement”), pursuant to which the Company may, from time to time, issue and sell common stock with an aggregate value of up to $75.0 million in “at-the-market” offerings, or the ATM, under the Company’s Registration Statement on Form S-3 (File No. 333-286122) filed with the SEC, on March 26, 2025. Sales of common stock, pursuant to the Sales Agreement, may be made in sales deemed to be an “at the market offering” as defined in Rule 415(a) of the Securities Act, including sales made directly through the Nasdaq Global Market or any other existing trading market for the Company’s common stock. In December 2025, the Company sold 3,928,571 shares of common stock under the Sales Agreement at a price of $1.40 per share, raising aggregate gross proceeds of $5.5 million before fees and expenses of $0.1 million. As of June 30, 2026, there was $69.5 million of our common stock remaining available for sale under our ATM.
Stock Purchase Agreement
On December 15, 2025, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Matrix Capital Master Fund, LP ("Matrix"), one of our then-stockholders. Pursuant to the Stock Purchase Agreement, the Company agreed to repurchase 7,500,000 shares of the Company’s common stock from Matrix at a price of $1.33 per share, representing a discount from the Company’s closing share price of $1.40 on December 12, 2025 (the “Repurchase”). The Repurchase closed on December 15, 2025.
Cash Flows
The following table summarizes our sources and uses of cash for the period presented:
Six Months Ended June 30,
2026
2025
(in thousands)
Net cash used in operating activities
$
(70,192)
$
(67,344)
Net cash provided by investing activities
60,038
70,853
Net cash (used in) provided by financing activities
(1,058)
189
Net (decrease) increase in cash and cash equivalents
$
(11,212)
$
3,698
Operating Activities
Net cash used in operating activities for the six months ended June 30, 2026 was $70.2 million, consisting primarily of our net loss of $77.6 million as we incurred expenses associated with research and development activities for our
36
product candidate and general and administrative activities, partially offset by changes in operating assets and liabilities of $1.0 million and non-cash adjustments of $6.4 million.
Net cash used in operating activities for the six months ended June 30, 2025 was $67.3 million, consisting primarily of our net loss of $75.2 million as we incurred expenses associated with the restructuring event, research and development activities for our product candidates and incurred general and administrative expenses, as well as changes in operating assets and liabilities of $6.6 million and non-cash adjustments of $14.4 million.
Investing Activities
Net cash provided by investing activities for the six months ended June 30, 2026 of $60.0 million was primarily attributable to proceeds from maturities of marketable securities of $120.0 million, offset by net investment of excess cash of $59.9 million.
Net cash provided by investing activities for the six months ended June 30, 2025 of $70.9 million was attributable to proceeds from maturities of marketable securities of $130.0 million and proceeds from sale of property and equipment of $0.6 million, offset by net investment of excess cash of $59.7 million.
Financing Activities
Net cash used in financing activities for the six months ended June 30, 2026 of $1.1 million resulted from cash used for the net-settlement of restricted stock unit vesting of $1.5 million partially offset by proceeds of $0.4 million from the issuance of common stock under equity incentive plans .
Net cash provided by financing activities for the six months ended June 30, 2025 of $189 thousand was provided from the issuance of common stock under equity incentive plans.
Funding Requirements
Our future capital requirements will depend on many factors, including:
•
the clinical development of azenosertib for the treatment of oncology indications;
•
the preclinical and clinical development of other programs, resources allowing;
•
the development of a companion diagnostic with a partner in conjunction with our clinical development of azenosertib as a monotherapy for the treatment of Cyclin E1-positive PROC, if applicable, diagnostics tools for additional biomarkers for azenosertib and any future product candidates;
•
the costs of in-licensing or acquiring the rights to other products, product candidates or technologies;
•
the legal costs related to maintaining, expanding and protecting our intellectual property portfolio;
•
hiring additional personnel, if needed;
•
the costs to seek regulatory approval for azenosertib for the treatment of Cyclin E1-positive PROC and support our diagnostic partner's seeking regulatory approval of a companion diagnostic to identify patients with Cyclin E1-positive PROC, and resources allowing, seek regulatory approval of azenosertib for additional oncology indications, assuming supportive clinical data; and
•
the costs to seek regulatory approval for any future product candidates and, if needed, diagnostics tools for biomarkers associated with such product candidates, that successfully complete clinical development, resources allowing.
37
As of June 30, 2026, we have $4.1 million and $33.6 million in current and long-term lease liabilities, respectively. We believe that our existing cash, cash equivalents and marketable securities as of June 30, 2026 will be sufficient to fund our operating expenses and capital expenditure requirements into late 2027. We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical drugs, it is difficult to estimate with certainty the amount of our working capital requirements. Our future funding requirements will depend on many factors, including:
•
the progress, costs and results of our clinical trials and seeking regulatory and marketing authorizations for azenosertib as a treatment for patients with Cyclin E1-positive PROC and, resources allowing, any additional indications, and any future product candidates;
•
our efforts and costs to establish sales, marketing, and distribution infrastructure to commercialize azenosertib or any future product candidates for which we obtain approval;
•
the progress, costs and results to develop and commercialize a companion diagnostic to identify patients with Cyclin E1-positive PROC;
•
the progress, costs and results of additional research and preclinical studies in other research programs we initiate in the future and, if needed, of diagnostics tools for additional biomarkers for azenosertib and any future product candidates;
•
the costs and timing of process development and manufacturing scale-up activities associated with azenosertib and, resources allowing, our product candidates and other programs as we advance them through preclinical and clinical development;
•
our ability to establish and maintain strategic collaborations, licensing or other agreements and the financial terms of such agreements;
•
the extent to which we in-license or acquire rights to other products, product candidates or technologies;
•
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against any intellectual property-related claims; and
•
our ability to attract and retain skilled personnel.
Further, our operating results may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.
Until such time as we can generate significant revenue from product sales, if ever, we plan to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions.
We currently have no credit facility or committed sources of capital. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through other third-party funding, collaboration
38
agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.
Critical Accounting Estimates
There have been no significant changes to our critical accounting estimates from our disclosure reported in “Critical Accounting Estimates” in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2025
.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, for this reporting period and are not required to provide the information required under this item.
Item 4. Controls and Procedures.
Inherent Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2026.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
39
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
We are not subject to any material legal proceedings.
Item 1A. Risk Factors.
You should carefully consider the risks and uncertainties described below and the other information in this Quarterly Report on Form 10-Q, including our interim unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock. Our business, financial condition, results of operations or prospects could be materially and adversely affected if any of these risks occurs, and as a result, the market price of our common stock could decline and you could lose all or part of your investment. This Quarterly Report on Form 10-Q also contains forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain important factors, including those set forth below.
Risks Related to Our Financial Position and Need for Additional Capital
We have a limited operating history and have no products approved for commercial sale, which may make it difficult for you to evaluate our current business and predict our future success and viability.
We are a clinical-stage biopharmaceutical company with a limited operating history upon which you can evaluate our business and prospects. We have no products approved for commercial sale and have not generated any revenue from product sales. To date, we have devoted substantially all of our resources and efforts to organizing and staffing our company, business planning, executing partnerships, raising capital, discovering, identifying and developing potential product candidates, securing related intellectual property rights, and conducting preclinical studies and clinical trials of our product candidates, including the ongoing clinical trials of azenosertib. We have not yet demonstrated our ability to obtain marketing approvals, supply a product at commercial scale or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. As a result, it may be more difficult for you to accurately predict our future success or viability than it could be if we had a longer operating history.
In addition, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors and risks frequently experienced by clinical stage biopharmaceutical companies in rapidly evolving fields. We also may need to transition from a company with a research and development focus to a company capable of supporting commercial activities. If we do not adequately address these risks and difficulties or successfully make such a transition, our business will suffer.
We have incurred significant net losses since inception, and we expect to continue to incur significant net losses for the foreseeable future.
We have incurred net losses in almost every reporting period since our inception, we have not generated any revenue from product sales to date, and we have financed our operations principally through private financings, our initial public offering, or IPO, and follow-on public offerings of our common stock. We incurred a net loss of $137.1 million for the year ended December 31, 2025. We had a net loss of $77.6 million and $75.2 million for the six months ended June 30, 2026 and June 30, 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $1.3 billion. Our losses have resulted principally from expenses incurred in research and development of our product candidates and from management and administrative costs and other expenses that we have incurred while building our business infrastructure. We expect that it will be several years, if ever, before we have a commercialized product and generate revenue from product sales. Even if we succeed in receiving marketing approval for and commercializing one or more of our product candidates, we expect that we will continue to incur
40
substantial research and development and other expenses as we discover, develop and market additional potential products.
We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future as we continue our research and development efforts and seek to obtain regulatory approval and commercialization of azenosertib and any future product candidates. The net losses we incur may fluctuate significantly from quarter to quarter such that a period-to-period comparison of our results of operations may not be a good indication of our future performance. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our working capital and our ability to achieve and maintain profitability.
Our ability to generate product revenue and achieve profitability depends significantly on our ability to achieve a number of objectives.
Our business depends entirely on the successful discovery, development and commercialization of azenosertib and any future product candidates. We currently generate no revenues from sales of any products. We have no products approved for commercial sale and do not anticipate generating any revenue from product sales for the next several years, if ever. Our ability to generate product revenue and achieve profitability depends significantly on our ability, or any future collaborator’s ability, to achieve a number of objectives, including:
•
successful and timely completion of the clinical development of azenosertib as a monotherapy for the treatment of Cyclin E1-positive PROC, successful and timely completion of the development of a companion diagnostic with a diagnostic partner to identify patients with Cyclin E1-positive PROC, and meeting the associated costs thereof, including any unforeseen costs we have incurred and may continue to incur as a result of delays including due to competing clinical trials leading to lower enrollment in our clinical trials, public health emergencies, U.S. and global economic issues, such as rising inflation, or ongoing military conflicts, among other causes;
•
successful and timely completion of the clinical development of azenosertib for additional oncology indications and of any future product candidates, resources allowing;
•
if applicable, the availability or successful development of diagnostic tools for biomarkers for any future product candidates or for additional biomarkers for azenosertib;
•
establishing and maintaining relationships with CROs and clinical sites for the clinical development, both in the United States and internationally, of azenosertib and any future product candidates, resources allowing;
•
timely receipt of marketing approvals from applicable regulatory authorities for azenosertib for the treatment of Cyclin E1-positive PROC and, resources allowing, additional oncology indications for azenosertib and any future product candidates, in each case for which we successfully complete clinical development;
•
timely receipt by our diagnostic partner of a marketing approval for a companion diagnostic to identify patients with Cyclin E1-positive PROC and, if applicable, marketing approval of diagnostic tools for biomarkers for any future product candidates and any additional biomarkers for azenosertib;
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maintaining marketing approvals, including our diagnostic partner's maintaining its marketing approval of a companion diagnostic to identify patients with Cyclin E1-positive PROC, and making any required post-marketing approval commitments to applicable regulatory authorities;
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developing an efficient and scalable manufacturing process for our product candidates, including obtaining finished products that are appropriately packaged for sale;
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establishing and maintaining commercially viable supply and manufacturing relationships with third parties that can provide adequate, in both amount and quality, products and services to support clinical development and meet the market demand for product candidates that we develop, if approved;
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successful commercial launch following any marketing approval, including the development of a commercial infrastructure, whether in-house or with one or more collaborators;
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a continued acceptable safety profile following any marketing approval of our product candidates;
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commercial acceptance of our product candidates by patients, the medical community and third-party payors;
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identifying, assessing and developing new product candidates;
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obtaining, maintaining and expanding our intellectual property rights, including patents, trade secrets and know how, and regulatory exclusivity, both in the United States and internationally;
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protecting our rights in our intellectual property portfolio;
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defending against third-party interference or infringement claims, if any;
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negotiating favorable terms in any collaboration, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize our product candidates;
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obtaining adequate pricing, coverage and reimbursement by hospitals, government and third-party payors for product candidates that we develop;
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addressing any competing therapies and technological and market developments; and
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attracting, hiring and retaining qualified personnel, especially in the current labor market.
We may never be successful in achieving our objectives and, even if we do, may never generate revenue that is significant or large enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to maintain or further our research and development efforts, raise additional necessary capital, grow our business and continue our operations. Additionally, our current prioritization of a single product candidate means that our financial prospects are closely tied to the success of azenosertib. Any setbacks in its development or commercialization could have a material adverse effect on our financial condition and ability to continue operations.
We will require substantial additional capital to finance our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and drug development programs or future commercialization efforts.
Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive and uncertain process that takes years to complete. Our operations have consumed substantial amounts of cash since inception. If our azenosertib development program continues to advance successfully, we expect our expenditures to increase as we execute our planned Phase 3 confirmatory clinical trial and prepare for potential commercialization. Even if azenosertib or any future product candidate that we develop is approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate. Our expenses could increase beyond our expectations if we are required by the FDA, the European Medicines Agency, or the EMA, or other regulatory agencies to perform clinical trials or preclinical studies in addition to those that we currently anticipate. We are incurring costs related to collaborating with a diagnostic company for the development, manufacturing and supply of a companion diagnostic to identify patients with Cyclin E1-positive PROC, and we may in the future incur costs relating to additional diagnostic tools for biomarkers associated with azenosertib and any future product candidates. Other unanticipated costs may also arise. In addition, if we obtain marketing approval for any of our product candidates, including azenosertib, we expect to incur significant commercialization expenses related to drug sales, marketing, manufacturing and distribution. Because the design and outcome of our planned and anticipated clinical trials are highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of any product candidate we develop. We have also incurred, and expect to continue to incur, costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in order to maintain our continuing operations.
As of June 30, 2026, we had cash and cash equivalents and marketable securities of $174.6 million. Based on current business plans, we believe that our existing cash, cash equivalents and marketable securities as of June 30, 2026 will be sufficient to fund our operating expenses and capital expenditure requirements into late 2027, but will not be sufficient to fund all of the activities that are necessary to complete the development of azenosertib and any future product candidates. This estimate is based on assumptions that may prove to be wrong, such as those relating to the timing and anticipated results of our clinical trials, and we could use our available capital resources sooner than we currently expect. Changing circumstances, some of which may be beyond our control, could cause us
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to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.
We maintain the majority of our cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at certain of these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position.
We will be required to obtain further funding through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources, which may dilute our stockholders or restrict our operating activities. We do not have any committed external source of funds. Adequate additional financing may not be available to us on acceptable terms, or at all. Market volatility resulting from public health emergencies, U.S. and global economic issues, global supply chain disruptions, international political instability, trade tensions, military conflicts, rising inflation or other factors could also adversely impact our ability to access capital as and when needed. Our failure to raise capital as and when needed or on acceptable terms would have a negative impact on our financial condition and our ability to pursue our business strategy, and we may have to delay, reduce the scope of, suspend or eliminate one or more of our clinical trials or future commercialization efforts.
Risks Related to the Discovery, Development and Commercialization of Our Product Candidates
We are substantially dependent on the success of azenosertib, which is currently our only product candidate in clinical development. If we are unable to complete development of, obtain approval for and commercialize azenosertib in a timely manner, our business will be harmed.
Our future success is dependent on our ability to timely complete clinical trials, obtain marketing approval for and successfully commercialize our only product candidate in clinical development, azenosertib. We are investing significant efforts and financial resources in the research and development of azenosertib, which will require additional clinical development, additional clinical, preclinical and manufacturing activities, marketing approval from government regulators, substantial investment and significant marketing efforts before we can generate any revenues from product sales. We are not permitted to market or promote any product candidate before we receive marketing approval from the FDA and/or ex-U.S. regulatory authorities, and we may never receive such marketing approvals.
The success of azenosertib will depend on several factors, including the following:
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the successful and timely completion of our ongoing and planned clinical trials;
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maintaining and establishing relationships with CROs and clinical sites for the clinical development of azenosertib both in the United States and internationally;
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the frequency and severity of adverse events, or AEs, observed in clinical trials;
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efficacy, safety and tolerability profiles that are satisfactory to the FDA and/or any ex-U.S. regulatory authority for marketing approval;
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the timely receipt of marketing approvals from applicable regulatory authorities;
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the extent of any required post-marketing approval commitments to applicable regulatory authorities;
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the successful development, in collaboration with our diagnostic partner, of a companion diagnostic for our lead indication for azenosertib and the availability or successful development of diagnostic tools for any additional biomarkers for azenosertib;
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the maintenance of existing or the establishment of new supply arrangements with third-party drug substance and drug product suppliers and manufacturers for clinical development of azenosertib;
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the maintenance of existing, or the establishment of new, scaled production arrangements with third-party manufacturers to obtain finished products that are appropriate for commercial sale of
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azenosertib, if approved, including for supplies of drugs that we are testing in combination with azenosertib;
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obtaining and maintaining our intellectual property rights, including patents, trade secrets and know how, and regulatory exclusivity, both in the United States and internationally;
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the protection of our rights in our intellectual property portfolio;
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the successful launch of commercial sales following any marketing approval;
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a continued acceptable safety profile following any marketing approval;
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commercial acceptance by patients, the medical community and third-party payors; and
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our ability to compete with other therapies.
We do not have complete control over many of these factors, including certain aspects of clinical development and the regulatory submission process, potential threats to our intellectual property rights and the manufacturing, marketing, distribution and sales efforts of any future collaborator. If we are not successful with respect to one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize azenosertib or any future product candidates, which would materially harm our business. If we do not receive marketing approvals for azenosertib, or any future product candidates, we may not be able to continue our operations.
We have in the past and in the future may enter into collaborations with third parties for the research, development and commercialization of certain of the product candidates we may develop. If any of these collaborations are not successful, we may not be able to capitalize on the market potential of those product candidates.
We have in the past and in the future may seek third-party collaborators for the research, development and commercialization of one or more of our product candidates. For example, we have collaborated with Pfizer, GSK and Dana Farber on the development of azenosertib. Our likely collaborators in any future collaboration arrangements include large and mid-size pharmaceutical companies and biotechnology companies. If we were to enter into any collaboration arrangements with third parties, those agreements may limit our control over the amount and timing of resources that our collaborators dedicate to the development and commercialization of any product candidates we may seek to develop with them. We cannot predict the success of any collaboration in which we have entered or may enter. Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements.
Collaborations involving azenosertib and any future research programs or product candidates we may develop pose risks to us, including the following:
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Collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations.
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Collaborators may not pursue development and commercialization of any product candidates we may develop or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator's strategic focus or market considerations, including as a result of a sale or disposition of a business unit or development function, or available funding or external factors such as an acquisition or business combination that diverts resources or creates competing priorities. If this were to happen, we may need additional capital to pursue further development or commercialization of the applicable product candidates.
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Collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, use our product candidates in clinical trials in an unsafe manner, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing.
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Collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours.
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Subject to certain diligence obligations, collaborators with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products.
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Collaborators may not properly obtain, maintain, enforce or defend our intellectual property or proprietary rights or may use proprietary information in a way that could jeopardize or invalidate our proprietary information or expose us to potential litigation.
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Collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in cases where that applies, we would not have the exclusive right to commercialize the collaboration intellectual property.
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Disputes may arise between our collaborators and us that result in the delay or termination of the research, development or commercialization of our products or product candidates or that result in costly litigation or arbitration that diverts management attention and resources.
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We may lose certain rights under circumstances identified in our collaborations, including if we undergo a change of control.
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Collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.
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Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all. If a present or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program under such collaboration could be delayed, diminished or terminated.
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Collaborators may be unable to maintain compliance with applicable laws, regulations and guidance, including good practice quality guidelines and regulations, including Good Laboratory Practice, Good Clinical Practice, or GCP, and current Good Manufacturing Practice, or cGMP, or similar ex-U.S. requirements or to secure approval for clinical development plans from the FDA or ex-U.S. regulatory authorities.
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We may require certain regulatory, clinical, manufacturing, financial and other information from our collaborators, which, if not provided in a timely manner or at all, could affect our ability to meet our business objectives and/or comply with applicable laws, regulations and guidance.
If we do not receive the funding or other resources we expect under these agreements, our development of product candidates could be delayed and we may need additional resources to develop our product candidates. In addition, if one of our collaborators terminates its agreement with us, we may find it more difficult to find a suitable replacement collaborator or attract new collaborators and our development programs may be delayed or the perception of us in the business and financial communities could be adversely affected. All of the risks relating to product development, marketing approval and commercialization described in this report apply to the activities of our collaborators.
We may in the future decide to collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of any product candidates we may develop. These and other similar relationships may require us to incur non-recurring and other charges, increase our near- and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business. In addition, we could face significant competition in seeking appropriate collaborators and the negotiation process is time-consuming and complex. Our ability to reach a definitive collaboration agreement will depend, among other things, upon our assessment of the collaborator's resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator's evaluation of several factors. If we license rights to any product candidates we or our collaborators may develop, we may not be able to realize the benefit of those transactions if we are unable to successfully integrate them with our existing operations and company culture.
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Our long-term prospects depend in part upon discovering, developing and commercializing additional product candidates, which may fail in development or suffer delays that adversely affect their commercial viability.
Following our January 2025 strategic restructuring, we are primarily focused on the late-stage clinical development of azenosertib. However, our long-term success may also depend on our ability to successfully discover, develop, obtain regulatory approval for and commercialize additional product candidates beyond azenosertib. Our future operating results are dependent on our ability to successfully discover, develop, obtain regulatory approval for and commercialize product candidates beyond azenosertib. A product candidate can unexpectedly fail at any stage of preclinical and clinical development. The historical failure rate for product candidates is high due to risks relating to safety, efficacy, clinical execution, changing standards of medical care and other unpredictable variables. The results from preclinical testing or early clinical trials of a product candidate may not be predictive of the results that will be obtained in later stage clinical trials of the product candidate.
The success of other product candidates we may develop will depend on many factors, including the following:
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generating sufficient data to support the initiation or continuation of clinical trials;
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obtaining regulatory permission to initiate clinical trials;
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contracting with the necessary parties to conduct clinical trials;
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successful enrollment of patients in, and the completion of, clinical trials on a timely basis;
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the timely manufacture of sufficient quantities of the product candidate for use in clinical trials; and
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AEs in the clinical trials.
Even if we successfully advance any other product candidates into clinical development, their success will be subject to all of the clinical, regulatory and commercial risks described elsewhere in this “Risk Factors” section. Accordingly, we cannot assure you that we will ever be able to discover, develop, obtain regulatory approval of, commercialize or generate significant revenue from our other product candidates.
The regulatory approval processes of the FDA and ex-U.S. regulatory authorities are lengthy, time consuming and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for azenosertib or any future product candidates, we will be unable to generate product revenue and our business will be substantially harmed.
We are not permitted to commercialize, market, promote or sell any product candidate in the United States without obtaining marketing approval from the FDA. Ex-U.S. regulatory authorities impose similar requirements. The time required to obtain approval by the FDA and ex-U.S. regulatory authorities is unpredictable, typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the type, complexity and novelty of the product candidates involved. In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions, which may cause delays in the approval or the decision not to approve an application. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other data. Even if we eventually complete clinical testing and receive approval of any regulatory filing for our product candidates, the FDA and ex-U.S. regulatory authorities may approve our product candidates for a more limited indication or a narrower patient population than we originally requested. We have not submitted for, or obtained, regulatory approval for any product candidate, and it is possible that neither azenosertib nor any product candidates we may seek to develop in the future will ever obtain regulatory approval.
Applications for our product candidates could fail to receive regulatory approval for many reasons, including the following:
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the FDA or ex-U.S. regulatory authorities may disagree with the design, implementation or results of our clinical trials;
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the FDA or ex-U.S. regulatory authorities may determine that our product candidates are not safe and effective, only moderately effective or have undesirable or unintended side effects, toxicities or other characteristics that preclude our obtaining marketing approval or prevent or limit commercial use;
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the population studied in the clinical trial may not be sufficiently broad or representative to assure efficacy and safety in the full population for which we seek approval;
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the FDA or ex-U.S. regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;
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the data collected from clinical trials of our product candidates may not be sufficient to support the submission of a New Drug Application, or an NDA, or Biologics License Application, or BLA, or other submission or to obtain regulatory approval in the United States or elsewhere;
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we may be unable to demonstrate to the FDA or ex-U.S. regulatory authorities that a product candidate’s risk-benefit ratio for its proposed indication is acceptable;
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the FDA or ex-U.S. regulatory authorities may fail to approve the manufacturing processes, test procedures and specifications or facilities of third-party manufacturers with which we contract for clinical and commercial supplies;
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if the FDA or ex-U.S. regulatory authority requires approval or clearance of a companion diagnostic for a particular product candidate, which we expect to be the case for monotherapy azenosertib for the treatment of patients with Cyclin E1-positive PROC, and the FDA or comparable regulatory authority does not provide such approval or clearance, then the product candidate may not be approved for marketing; and/or
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the approval policies or regulations of the FDA or ex-U.S. regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
In addition, the policies and practices of the FDA and ex-U.S. regulatory authorities with respect to clinical trials may change and additional government regulations may be enacted. For example, in recent years the FDA has issued guidance and launched programs aiming to reform and modernize the dose optimization procedures used by clinical trial sponsors during the development of oncology drugs. Since these guidelines are new and can potentially evolve during the conduct of our clinical trials, changes in the FDA’s thinking with respect to dose selection and optimization could require us to change the design of our planned or ongoing clinical trials or otherwise conduct additional preclinical, clinical or manufacturing studies beyond those we currently anticipate, which could increase our costs and/or delay the development of our product candidates.
In addition, the regulatory landscape related to clinical trials in the EU has evolved in the last few years. The EU Clinical Trials Regulation, or CTR, which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022. While the EU Clinical Trials Directive required a separate clinical trial application, or CTA, to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials. The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state. The assessment procedure of the CTA has been harmonized as well, including a joint assessment by all member states concerned, and a separate assessment by each member state with respect to specific requirements related to its own territory, including ethics rules. Each member state’s decision is communicated to the sponsor via the centralized EU portal. Once the CTA is approved, clinical study development may proceed. The CTR three-year transition period ended on January 31, 2025, and all clinical trials (including related applications) are now fully subject to the provisions of the CTR. Compliance with the CTR requirements by us, our collaborators and third-party service providers, such as CROs, may impact our development plans.
This lengthy approval process, as well as the unpredictability of the results of clinical trials, may result in our failing to obtain regulatory approval to market any of our product candidates, which would significantly harm our business, results of operations and prospects.
In addition, even if we obtain approval of our product candidates, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may impose significant limitations
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in the form of narrow indications, warnings and precautions, or a Risk Evaluation and Mitigation Strategy, or REMS, or similar risk management measures. Regulatory authorities may not approve the price we intend to charge for products we may develop, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could seriously harm our business.
The clinical trials of azenosertib or any future product candidates may not demonstrate safety and efficacy to the satisfaction of the FDA or ex-U.S. regulatory authorities or otherwise produce positive results.
Before obtaining marketing approval from the FDA or ex-U.S. regulatory authorities for the sale of our product candidates, we must complete preclinical development and extensive clinical trials to demonstrate the safety and efficacy of our product candidates. Clinical testing is expensive, difficult to design and implement, can take many years to complete and its ultimate outcome is uncertain. A failure of one or more clinical trials can occur at any stage of the process. The outcome of preclinical studies and early-stage clinical trials may not be predictive of the success of later clinical trials, including that potential biomarkers, even if validated preclinically or in early-stage clinical trials, may not be functionally validated in later clinical trials. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their drugs. We cannot guarantee that the FDA or ex-U.S. regulatory authorities will interpret trial results as we do, and more trials could be required before we are able to submit applications seeking approval of our product candidates, which may require us to expend significant resources that may not be available to us and/or cause delays in our planned timelines. Most product candidates that begin clinical trials are never approved by regulatory authorities for commercialization.
In addition, we may rely in part on preclinical, clinical and quality data generated by CROs, our collaborators and other third parties for regulatory submissions for our product candidates. While we have or will have agreements governing our relationships with these third parties, we have limited influence over their actual performance. If these third parties do not make data available to us, or, if applicable, do not make regulatory submissions in a timely manner, in each case pursuant to our agreements with them, our development programs may be significantly delayed, and we may need to conduct additional studies or collect additional data independently. In either case, our development costs would increase.
We do not know whether our future clinical trials will begin on time or enroll patients on time, or whether our ongoing and/or future clinical trials will be completed on schedule or at all. Clinical trials can be delayed for a variety of reasons, including delays related to:
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the FDA or ex-U.S. regulatory authorities disagreeing as to the design or implementation of our clinical studies;
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obtaining regulatory authorizations to commence a trial or reaching a consensus with regulatory authorities on trial design;
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any failure or delay in reaching an agreement with CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
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obtaining approval from one or more institutional review boards, or IRBs, or ethics committees;
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IRBs or ethics committees refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial;
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changes to the clinical trial protocol;
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clinical sites deviating from the trial protocol or dropping out of a trial;
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manufacturing sufficient quantities of product candidate or obtaining sufficient quantities of combination therapies for use in clinical trials;
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subjects failing to enroll or remain in our trial at the rate we expect, or failing to return for post-treatment follow-up;
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subjects choosing an alternative treatment for the indication for which a product candidate is being developed, or participating in competing clinical trials, which could lead to enrollment in our clinical trials being lower than required or taking longer than we have planned;
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lack of adequate funding to continue the clinical trial;
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subjects experiencing severe or unexpected drug-related AEs;
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occurrence of serious AEs in trials of the same class of agents conducted by other companies;
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selection of clinical end points that require prolonged periods of clinical observation or analysis of the resulting data;
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a facility manufacturing our product candidates or any of their components being ordered by the FDA or ex-U.S. regulatory authorities to temporarily or permanently shut down due to violations of cGMP regulations or similar ex-U.S. requirements or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process;
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any changes to our manufacturing process that may be necessary or desired;
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the imposition of a clinical hold by the FDA, such as the azenosertib partial clinical hold we announced in June 2024 that was lifted in September 2024 without any changes required by FDA to the azenosertib clinical development plan;
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third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, GCP, or other regulatory requirements;
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third-party contractors not performing data collection or analysis in a timely or accurate manner;
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third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications; and/or
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if we are collaborating with a third party on a clinical trial, our collaborator may not devote sufficient resources to or prioritize our clinical trial.
We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial, or by the FDA or ex-U.S. regulatory authorities. Such a suspension or termination may be due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or ex-U.S. regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects resulting in the imposition of a clinical hold, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. In addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical trial protocols to comply with these changes. Amendments will require us to resubmit our clinical trial protocols to IRBs or ethics committees for reexamination, which may impact the costs, timing or successful completion of a clinical trial.
Further, conducting clinical trials in ex-U.S. countries, as we do for azenosertib, presents additional risks that may delay completion of our clinical trials. These risks include the failure of enrolled patients in ex-U.S. countries to adhere to clinical protocol as a result of differences in healthcare services or cultural customs, managing additional administrative burdens associated with ex-U.S. regulatory schemes, as well as political and economic risks relevant to such ex-U.S. countries.
Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA or ex-U.S. regulatory authorities. The FDA or ex-U.S. regulatory authority may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study. The FDA or ex-U.S. regulatory authority may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA or ex-U.S. regulatory authority, as the case may be, and may ultimately lead to the denial of marketing approval of one or more of our product candidates.
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If we experience delays in the completion of, or termination of, any clinical trial of our product candidates, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenues from any of these product candidates will be delayed. Moreover, any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence product sales and generate revenues.
In addition, many of the factors that cause, or lead to, termination or suspension of, or a delay in the commencement or completion of, clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate. Any delays to our clinical trials that occur as a result could shorten any period during which we may have the exclusive right to commercialize our product candidates and our competitors may be able to bring products to market before we do, and the commercial viability of our product candidates could be significantly reduced. Any of these occurrences may harm our business, financial condition and prospects significantly.
We expect to be required by the FDA and ex-U.S. regulatory authorities to obtain approval of a companion diagnostic in connection with approval of our lead indication for azenosertib, and additional biomarkers may be required for the development and commercialization of azenosertib outside of our lead indication and for future product candidates. If regulatory approval is not obtained or there are delays in