10-K: Zenas BioPharma Reports Positive Phase 3 IgG4-RD Data Amidst Going Concern Warning

Zenas BioPharma announced positive Phase 3 results for obexelimab in IgG4-RD and promising Phase 2 RMS data, while reporting significant net losses and a going concern warning from its auditor.

Summary

• Zenas BioPharma is a clinical-stage global biopharmaceutical company focused on developing transformative immunology and inflammation (I&I) therapies.
• Obexelimab, a lead product candidate, is a bifunctional monoclonal antibody designed to inhibit B cell activity without depleting them.
• The Phase 3 INDIGO trial for obexelimab in IgG4-RD reported positive results in January 2026, meeting the primary endpoint with a highly statistically significant 56% reduction in flare risk (Hazard Ratio 0.44, p=0.0005) and all four key secondary endpoints.
• The company plans to submit the obexelimab Biologics License Application (BLA) to the FDA for IgG4-RD in Q2 2026 and a Marketing Authorization Application (MAA) to the EMA in H2 2026.
• The Phase 2 MoonStone trial for obexelimab in relapsing multiple sclerosis (RMS) met its 12-week primary endpoint in October 2025, demonstrating a highly statistically significant 95% relative reduction in new gadolinium-enhancing (GdE) T1 hyperintense lesions (p=0.0009).
• 24-week data from the MoonStone trial in February 2026 confirmed maintained lesion reductions and a 40% reduction in serum Neurofilament Light (NfL).
• An ongoing Phase 2 SunStone trial for systemic lupus erythematosus (SLE) expects topline results, including biomarker data, in Q4 2026.
• Zenas acquired orelabrutinib, a Bruton's Tyrosine Kinase (BTK) inhibitor, for progressive forms of MS from InnoCare Pharma Inc. in October 2025.
• The Phase 3 PriMroSe trial for orelabrutinib in Primary Progressive Multiple Sclerosis (PPMS) was initiated in September 2025, with topline results expected in 2030.
• A second global Phase 3 Monarch trial for orelabrutinib in non-active Secondary Progressive Multiple Sclerosis (non-active SPMS) is planned for initiation in Q1 2026, with topline results expected in 2030.
• Early-development candidates ZB021 (oral IL-17AA/AF inhibitor) and ZB022 (oral, brain-penetrant TYK2-JH2 inhibitor) are both expected to initiate Phase 1 clinical studies in 2026.
• The company reported a net loss of $377.7 million for the year ended December 31, 2025, compared to $157.0 million for 2024.
• The accumulated deficit reached $765.1 million as of December 31, 2025.
• Cash, cash equivalents, and investments totaled $360.5 million as of December 31, 2025.
• The independent registered public accounting firm expressed substantial doubt about the company's ability to continue as a going concern.
• A $250.0 million term loan facility was secured with Pharmakon in March 2026, with an initial tranche of $75.0 million.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed filing. While positive clinical data for obexelimab in IgG4-RD and RMS are significant achievements, the substantial net losses, accumulated deficit, and the explicit 'going concern' warning from the auditor indicate significant financial challenges and operational risks. The partial clinical hold on orelabrutinib also adds a layer of uncertainty.

Positives

• Obexelimab Phase 3 INDIGO trial in IgG4-RD met its primary endpoint with a highly statistically significant 56% reduction in flare risk (Hazard Ratio 0.44, p=0.0005) and all four key secondary endpoints.
• Obexelimab was well-tolerated in the IgG4-RD Phase 3 trial, with a safety profile consistent with previous trials, and lower incidences of serious adverse events (10% vs. 19% for placebo) and Grade 3 infections (2% vs. 4% for placebo).
• Obexelimab Phase 2 MoonStone trial in RMS met its 12-week primary endpoint, showing a highly statistically significant 95% relative reduction in new GdE T1 hyperintense lesions (p=0.0009).
• 24-week data from the MoonStone trial confirmed robust and durable activity of obexelimab in RMS, maintaining lesion reductions and showing a 40% reduction in serum NfL.
• The acquisition of orelabrutinib, ZB021, and ZB022 from InnoCare Pharma Inc. expands the I&I pipeline.
• Initiation of the Phase 3 PriMroSe trial for orelabrutinib in PPMS and planned initiation of the Phase 3 Monarch trial in non-active SPMS.
• Received a $10.0 million upfront fee from Zai Lab for the ZB001 sublicense and a $5.0 million upfront fee from Tenacia for the ZB005 transfer.
• Secured a $250.0 million term loan facility with Pharmakon in March 2026, with an initial $75.0 million tranche.
• Raised $111.8 million net proceeds from a PIPE offering and $28.5 million net proceeds from the 2025 ATM Program in 2025, with an additional $71.5 million from the ATM in Q1 2026.

Negatives

• The company incurred substantial net losses of $377.7 million in 2025, a significant increase from $157.0 million in 2024.
• An accumulated deficit of $765.1 million was reported as of December 31, 2025.
• The independent registered public accounting firm expressed substantial doubt about the company's ability to continue as a going concern.
• The Phase 2 trial for obexelimab in SLE (XmAb5871-04) did not achieve statistical significance for its primary endpoint in the Efficacy Evaluable population (p=0.183).
• The FDA issued a partial clinical hold for the orelabrutinib RMS trial due to hepatotoxicity concerns, similar to three other BTK inhibitors in development for progressive MS.
• Reliance on single-source third-party CMOs (WuXi Biologics for obexelimab, InnoCare for orelabrutinib, ZB021, ZB022), primarily located in China, poses supply chain risks, especially with geopolitical tensions and potential impacts from the BIOSECURE Act.
• The patent covering obexelimab's composition of matter expires in May 2028, and orelabrutinib's in September 2034, potentially leading to earlier generic/biosimilar competition.
• The company has no products approved for commercial sale and has not generated any revenue from product sales to date.
• The company expects to incur significant and increasing losses for the foreseeable future.
• The Royalty Purchase Agreement with Royalty Pharma includes an effective interest rate of 30.7% on the royalty obligation, indicating a high cost of capital for this financing.

Risks

• Limited operating history and no products approved for commercial sale, leading to substantial and increasing losses.
• Requires substantial additional financing; failure to obtain capital would delay, limit, reduce, or terminate product development efforts.
• Raising additional capital may cause dilution to stockholders, impose restrictions on operations, or require relinquishing rights to product candidates.
• Clinical development is lengthy, expensive, and characterized by uncertain outcomes; earlier trial results may not predict future results.
• Delays or difficulties in patient enrollment and dosing in clinical trials could delay or prevent regulatory approvals.
• Significant adverse events or undesirable side effects from product candidates may delay/prevent regulatory approval or market acceptance.
• Potential competition from large and specialty pharmaceutical/biotechnology companies with substantial investments and approved therapies.
• May not realize benefits of current or future collaborations/licensing arrangements and may be unsuccessful in consummating future partnerships.
• Uncertainty regarding regulatory approval timelines and potential for narrower indications than sought.
• Dependence on senior management and other clinical/scientific personnel; inability to retain or recruit key individuals would harm the business.
• Independent registered public accounting firm expressed substantial doubt about the ability to continue as a going concern.
• Need to grow the organization, which may lead to difficulties in managing growth and expanding operations.
• Manufacturing of product candidates is complex, and third-party manufacturers may encounter production difficulties, leading to supply delays or halts.
• Inability to obtain and maintain sufficient intellectual property protection could allow competitors to commercialize similar products.
• Reliance on third parties (CROs, CMOs) to conduct preclinical studies and clinical trials; their non-performance could lead to delays or increased costs.
• Rights to product candidates are subject to terms of licenses (e.g., Xencor, InnoCare); failure to comply could lead to loss of rights.
• Operations of suppliers, many outside the U.S. (e.g., WuXi Biologics, InnoCare in China), are subject to additional risks beyond control, including geopolitical tensions and potential impacts from the BIOSECURE Act.
• Indebtedness from the Loan Agreement with Pharmakon or future indebtedness could adversely affect financial condition or restrict future operations.
• An active and liquid trading market for common stock may not be sustained, and the market price may be volatile.
• Interim, initial, top-line, and preliminary data are subject to audit and verification and may differ materially from final data.
• Clinical trials, even if successful, may not be sufficient for marketing approval (e.g., FDA may require two Phase 3 trials).
• Commercial opportunities and market growth forecasts may be smaller than believed.
• Operating in foreign markets subjects the company to additional regulatory burdens and risks.
• Strategic transactions could impact liquidity, increase expenses, and distract management.
• Compromised internal IT systems or those of third parties could lead to adverse consequences.
• Significant product liability risk.
• Public opinion and scrutiny of I&I treatments may impact public perception.
• Changes in patent law could diminish the value of patents.
• In-licensed patent portfolios mean no solely owned issued patents relating to product candidates.
• May be involved in lawsuits to protect or enforce patents, which are expensive and time-consuming.
• Patent terms may be inadequate to protect competitive position for an adequate amount of time.
• Failure to obtain patent term extension could harm the business.
• Competition from biosimilar or generic products approved through abbreviated regulatory pathways.
• Inability to protect confidentiality of trade secrets would harm business.
• Inadequate protection of trademarks and trade names could affect name recognition.
• Claims asserting wrongful use or disclosure of trade secrets by employees/consultants.
• Regulatory approval process is highly uncertain and subject to delays.
• Ongoing regulatory obligations and review, even if approved, may result in significant additional expense and market withdrawal.
• Disruptions at FDA or comparable foreign regulatory authorities (e.g., funding shortages, government shutdowns) could hinder approvals.
• Recently enacted legislation (e.g., IRA) and future healthcare reform measures may increase difficulty and cost of commercialization and affect pricing.
• Failure to comply with healthcare and other regulations could lead to substantial penalties.
• Governments outside the U.S. tend to impose strict price controls.
• Stringent and evolving data privacy and security laws (GDPR, CCPA) pose compliance risks and potential penalties.
• Subject to U.S. and foreign export/import controls, sanctions, anti-corruption, and anti-money laundering laws.
• Significant political, trade, and regulatory developments, including U.S.-China relations, may adversely impact business.
• Unstable economic and market conditions may have serious adverse consequences.
• If securities or industry analysts cease publishing reports or publish unfavorable research, stock price could decline.
• Increased costs of operating as a public company and management time devoted to compliance.
• Failure to maintain effective internal control over financial reporting.
• Disclosure controls and procedures may not prevent or detect all errors or fraud.
• Insurance policies are expensive and may not protect from all business risks.
• Subject to securities litigation, which is expensive and distracting.
• Ability to use net operating loss carryforwards and other tax attributes may be limited.
• Changes in tax rates or new tax legislation could harm the business.

Future Outlook

The company expects to continue incurring significant and increasing losses for the foreseeable future. It anticipates submitting the obexelimab BLA for IgG4-RD to the FDA in Q2 2026 and MAA to the EMA in H2 2026. Topline results for the SLE Phase 2 trial are expected in Q4 2026, potentially leading to a Phase 3 program in H1 2027. Phase 1 clinical studies for ZB021 and ZB022 are expected to initiate in 2026, with potential for initial data in patients in 2027. Phase 3 trials for orelabrutinib in PPMS and non-active SPMS are expected to report topline results in 2030. The company believes its existing cash, cash equivalents, and investments, along with recent financing, will fund operations for approximately twelve months from the filing date.

Management Comments

• The compensation philosophy of Zenas BioPharma, Inc. is to attract, motivate, retain and reward employees with base pay, short-term and long-term incentives, and benefits that are competitive in the market.
• The Company's incentive programs provide employees with the opportunity to earn compensation in addition to their base salary based, among other factors, on the Company's and the employee's achievement of pre-established performance targets.
• Our vision is to become a global leader in delivering transformative I&I therapeutics to patients in need.
• We intend to leverage the experience and capabilities of our executive management team and our established networks throughout the biopharmaceutical industry to identify, acquire, develop and, if approved, commercialize product candidates that we believe can offer enhanced efficacy, safety and/or convenience over existing therapies and thereby provide superior benefits to patients.
• We believe obexelimab holds the potential to provide meaningful clinical benefit for patients in multiple I&I indications.
• We believe obexelimab's mechanism of action and chronic dosing regimen may broadly and effectively address the pathogenic role of B cell lineage in chronic autoimmune disease.
• We believe obexelimab could have potential advantages over anti-CD19 and -CD20 targeted depleting agents.
• We believe orelabrutinib is designed to efficiently cross the blood-brain barrier, reaching therapeutic levels within the CNS to directly target inflammation in diseases like MS.
• We believe ZB021 provides an opportunity for Zenas to expand its pipeline within rheumatology and into other therapeutic areas including dermatology.
• We believe the drug substance and drug product processes for obexelimab and our other product candidates are amenable to scale-up.
• Management has concluded that these resources are not sufficient to alleviate substantial doubt with respect to our ability to continue as a going concern.

Industry Context

StockSavvy.ai notes that Zenas BioPharma operates in the highly competitive and rapidly advancing biopharmaceutical industry, specifically targeting immunology and inflammation (I&I) diseases. The company's strategy of disciplined product candidate acquisition and leveraging external resources is common in this capital-intensive sector. The development of obexelimab as a B-cell inhibitor without depletion aims to differentiate it from existing anti-CD20/CD19 depleting agents like OCREVUS (ocrelizumab) and KESIMPTA (ofatumumab) in MS, and Uplizna (inebilizumab-cdon) in IgG4-RD, by potentially offering a better safety profile regarding infections and vaccine response. The pursuit of BTK inhibitors like orelabrutinib for progressive MS places Zenas in direct competition with other companies developing BTK inhibitors such as Sanofi (rilzabrutinib, tolebrutinib), Novartis (remibrutinib), and F. Hoffmann-La Roche (fenebrutinib), which have also faced clinical holds due to hepatotoxicity concerns. The company's pipeline expansion into IL-17 and TYK2 inhibitors also aligns with established targets in I&I, competing with approved biologics like Cosentyx and Taltz (IL-17) and Sotyktu (TYK2). The reliance on Chinese CMOs like WuXi Biologics introduces geopolitical and supply chain risks, a growing concern in the global biopharma landscape, especially with the BIOSECURE Act.

Comparison to Industry Standards

• Obexelimab's mechanism of action (inhibiting B cells without depleting them) is presented as a potential advantage over anti-CD20 or other anti-CD19 targeting agents (e.g., OCREVUS, KESIMPTA, Uplizna) which cause prolonged B cell depletion, leading to higher risk of opportunistic infections and reduced vaccine response.
• The rapid return of B cells (within six weeks) after obexelimab cessation contrasts with the six months or longer recovery observed with depleting agents.
• The difference in response rates between obexelimab and placebo in the SLE Phase 2 trial (17.3% absolute treatment difference in ITT population, 40.4% vs. 23.1%, p=0.06) was noted as 'similar to that observed in SLE registration-directed trials with other agents, although with different trial design and endpoints.'
• Orelabrutinib is described as a highly selective and CNS-penetrant BTK inhibitor with minimal off-target effects compared to 'certain other BTK inhibitors,' potentially reducing side effects.
• The FDA's partial clinical hold on orelabrutinib's RMS trial due to hepatotoxicity is noted as similar to holds placed on 'three other BTK inhibitors, including those currently in development for progressive MS.'
• ZB021 achieved 'comparable activity in vivo to a reference anti-IL-17 biologic' in a rat collagen-induced arthritis (CIA) model.
• The anti-IL-17 biologics market (Cosentyx, Taltz, Siliq, Bimzelx) is estimated at $10 billion, with 50% annual growth since first approval, providing context for ZB021's potential.
• TYK2 inhibition (ZB022) is compared to the first approved TYK2 inhibitor, Sotyktu, noting ZB022's brain-penetrant nature as a potential differentiator.
• ZB002 (anti-TNF) is designed to have an extended half-life compared to 'existing anti-TNF therapies' (e.g., adalimumab), with a Phase 1 study showing a half-life of approximately 55 days, potentially allowing for less frequent dosing (once every four to eight weeks).
• ZB004 (CTLA-4-Ig fusion) is designed for an extended half-life versus 'existing CTLA-4-Ig fusion protein therapies,' with a Phase 1 study showing a half-life of approximately 17.4 days at the highest dose.

Management Changes

Corporate Governance

Legal Proceedings

• A putative securities class action was filed in April 2025 against the company and certain directors/officers, as well as the underwriters in its IPO, asserting claims under Sections 11, 12, and 15 of the Securities Act. An amended complaint was filed in November 2025, and defendants moved to dismiss in January 2026.
• The company is not presently a party to any other legal proceedings that, in the opinion of management, would have a material adverse effect on its business.

Related Party Transactions

• Xencor, Inc.: The company has exclusive, worldwide licenses from Xencor for intellectual property related to obexelimab, ZB002, and ZB004. Xencor was a related party due to preferred stock issuance, but as of December 31, 2025, held less than 10% of the company's outstanding common stock.
• Viridian Therapeutics, Inc.: The company has a license from Viridian to research, develop, manufacture, market, and sell ZB001 in China. Viridian is considered a related party because Fairmount Funds Management LLC (a less than 10% Zenas common stock holder with a Board seat) is also a 10% or greater stockholder of Viridian (with two Board seats).
• Zai Lab (Hong Kong) Limited: The company granted Zai an exclusive sublicense to develop, manufacture, and commercialize ZB001 and related programs in greater China. Zai is a related party because Zenas's CEO and Chairman is a member of Zai's board of directors.
• InnoCare Pharma Inc.: The company obtained exclusive rights from InnoCare to develop, manufacture, and commercialize orelabrutinib, ZB021, and ZB022. InnoCare is a related party due to the issuance of 5,000,000 shares of common stock and 2,000,000 shares to be issued to InnoCare. As of December 31, 2025, InnoCare held less than 10% of the company's outstanding common stock.

Stakeholder Impact

• Shareholders: Potential for significant dilution from future equity raises; volatility in stock price due to clinical trial results, regulatory approvals, and financial performance; risk of substantial losses due to going concern warning and accumulated deficit; potential for long-term value creation if product candidates are successfully commercialized.
• Employees: Compensation philosophy aims to attract, motivate, retain, and reward; stock-based compensation and employee stock purchase plan offer incentives; potential for job security and growth if product candidates succeed; risk of job insecurity if financial challenges persist or development programs fail.
• Customers (Patients): Potential for transformative immunology-based therapies for unmet medical needs in autoimmune diseases; access to new treatments if product candidates are approved; safety and efficacy of new drugs are paramount.
• Suppliers/CMOs: Continued reliance on third-party manufacturers, particularly WuXi Biologics and InnoCare, for drug substance and product; potential for increased business if products are commercialized; risk of contract termination or supply chain disruption due to geopolitical factors or performance issues.
• Creditors (Pharmakon, Royalty Pharma): Debt obligations and royalty payments are tied to company performance and milestone achievements; security interests in company assets provide some protection; risk of default if financial condition deteriorates.
• Regulatory Authorities (FDA, EMA): Ongoing engagement for clinical trial approvals, BLA/MAA submissions, and post-market surveillance; compliance with regulations is critical for product development and commercialization.

Next Steps

• Submit obexelimab BLA to FDA for IgG4-RD in Q2 2026.
• Submit obexelimab MAA to EMA for IgG4-RD in H2 2026.
• Report topline results, including biomarker data, from the SunStone trial (SLE) in Q4 2026.
• Potentially initiate a Phase 3 program in SLE in H1 2027, based on SunStone trial outcome.
• Initiate a second global Phase 3 Monarch trial for orelabrutinib in non-active SPMS in Q1 2026.
• Initiate Phase 1 clinical study for ZB021 in 2026.
• Submit IND application for ZB022 and initiate Phase 1 clinical study in 2026, subject to IND-enabling study results.
• Evaluate the path forward for ZB004 development after ongoing Phase 1 study results.
• Potentially seek a partner to advance ZB002 in subsequent trials if Phase 1b MAD study results are favorable.
• Continue to build commercialization infrastructure in the U.S. and Europe for approved products.
• Negotiate and enter into a clinical supply agreement and related quality agreement with InnoCare within 90 days after the Effective Date (October 7, 2025).
• Negotiate and enter into a commercial supply agreement and related quality agreement with InnoCare at Zenas's reasonable request.
• Develop and agree on worldwide safety and pharmacovigilance procedures for Orelabrutinib Products no later than 90 days after the Effective Date (October 7, 2025).
• Develop and agree on worldwide safety and pharmacovigilance procedures for each ICP Preclinical Compound 90 days after submission of the first IND Application in the Zenas Territory.
• Office of Management and Budget to publish a list of entities that satisfy the definition of a biotechnology company of concern (BCC) no later than December 18, 2026, under the BIOSECURE Act.

Key Dates

Recommendation

Zenas BioPharma presents a high-risk, high-reward profile. The positive Phase 3 data for obexelimab in IgG4-RD and promising Phase 2 RMS data are significant catalysts, indicating potential for future revenue streams and addressing unmet medical needs. However, the substantial net losses, accumulated deficit, and the explicit 'going concern' warning from the auditor highlight severe financial instability and a critical need for further capital. The partial clinical hold on orelabrutinib's RMS trial and the reliance on foreign single-source manufacturers add to the operational risks. While the long-term potential of its pipeline is notable, the immediate financial challenges and regulatory hurdles warrant a cautious 'hold' recommendation. Investors should monitor the company's ability to secure additional financing, progress its clinical pipeline, and navigate regulatory and manufacturing complexities.

Keywords

Immunology, Inflammation, Autoimmune Diseases, Obexelimab, IgG4-RD, Multiple Sclerosis, SLE, Orelabrutinib, BTK Inhibitor, ZB021, IL-17 Inhibitor, ZB022, TYK2 Inhibitor, Biopharmaceutical, Clinical Stage, SEC Filing, 10-K, Drug Development, Regulatory Approval, Clinical Trials, Nasdaq, ZBIO, Pharmakon, Royalty Pharma, InnoCare, Xencor, FDA, EMA