Overview

Surrozen, Inc. (NASDAQ:SRZN) is a clinical-stage biotechnology company at the forefront of developing innovative therapies that selectively modulate the Wnt pathway, a critical mediator of tissue repair and regeneration. With a robust pipeline and a unique approach to harnessing the power of Wnt signaling, Surrozen is positioned to make a significant impact in the treatment of a wide range of severe diseases.

Financials

For the fiscal year ended December 31, 2023, Surrozen reported an annual net loss of $43,042,000 and no revenue. The company's annual operating cash flow was -$40,363,000, and its annual free cash flow was -$40,761,000. These financial results reflect Surrozen's continued investment in research and development to advance its pipeline of promising product candidates.

In the first quarter of 2024, Surrozen reported a net loss of $8,830,000 and no revenue. The company's operating cash flow for the quarter was -$8,746,000, and its free cash flow was -$8,753,000. These quarterly results demonstrate Surrozen's ongoing commitment to its research and development efforts.

Business Overview

Surrozen was founded in 2015 with the goal of harnessing the power of Wnt signaling to develop novel therapies for a wide range of severe diseases. The company's proprietary platform technologies, including its SWEETS™ and SWAP technologies, enable the selective activation and modulation of Wnt signaling in a tissue-specific manner.

Lead Product Candidates

Surrozen's lead product candidate, SZN-043, is a hepatocyte-specific R-spondin mimetic bispecific fusion protein that is being developed for the treatment of severe alcohol-associated hepatitis (severe AH). In the company's recently completed Phase 1a clinical trial, SZN-043 demonstrated acceptable safety and tolerability, with evidence of target engagement and Wnt signal activation. Surrozen is now actively initiating a Phase 1b clinical trial for SZN-043 in patients with severe AH and anticipates potential proof-of-concept data in the first half of 2025.

The company's second lead product candidate, SZN-413, is a Fzd4-targeted bispecific antibody being developed for the treatment of retinal vascular-associated diseases. In preclinical studies, SZN-413 has shown the ability to stimulate Wnt signaling and induce normal retinal vessel regrowth while suppressing pathological vessel growth. In October 2022, Surrozen entered into a collaboration and licensing agreement with Boehringer Ingelheim International GmbH (BI) to research, develop, and commercialize Fzd4 bispecific antibodies, including SZN-413. Surrozen anticipates the potential to nominate the lead Fzd-4 targeted Wnt agonist development candidate in 2024, which would trigger a $10.0 million milestone payment to the company.

Strategy and Potential Applications

Surrozen's unique approach to Wnt modulation has the potential to address a wide range of severe diseases, including certain diseases that affect the intestine, liver, retina, cornea, lung, kidney, cochlea, skin, pancreas, and central nervous system. The company's strategy is to identify disease states responsive to Wnt modulation, design tissue-selective therapeutics, and advance candidates into clinical development in targeted indications with high unmet need.

Risks and Challenges

As a clinical-stage biotechnology company, Surrozen faces several risks and challenges. The development of biologic drug candidates is a complex and capital-intensive process, and the company's ability to successfully advance its product candidates through clinical trials and obtain regulatory approval is subject to significant uncertainty. Additionally, Surrozen's reliance on third-party manufacturers and service providers for the production and testing of its product candidates introduces risks related to supply chain disruptions and quality control.

The company also faces competition from other entities developing novel treatments and therapeutic platforms for the same or similar indications as its product candidates. Surrozen's ability to maintain its competitive position will depend on its continued investment in research and development, as well as its ability to successfully navigate the regulatory landscape and secure strategic partnerships.

Liquidity

As of March 31, 2024, Surrozen had cash and cash equivalents of $27,290,000. The company's current cash position, combined with the gross proceeds of approximately $17,600,000 received in April 2024 from a private placement, may not be sufficient to fund its operations for at least the next 12 months based on the reported quarterly cash burn rate.

Surrozen's balance sheet reflects its ongoing investment in research and development, with property and equipment, net, of $1,584,000 and other assets of $897,000 as of March 31, 2024. The company's current liabilities, including accounts payable, accrued and other liabilities, and lease liabilities, totaled $6,179,000 as of the same date.

Surrozen's liquidity position is further bolstered by its access to additional financing sources, including a $50,000,000 equity line of credit with Lincoln Park Capital and a $23,000,000 at-the-market sales agreement with Guggenheim Securities. The company may need to raise additional capital in the future to support the continued development of its product candidates and its overall business operations.

Outlook

Surrozen has not provided specific financial guidance for the full year 2024. However, the company has stated that it expects to continue to incur significant operating expenses as it advances the clinical development of SZN-043 and SZN-413, as well as its other research and discovery programs.

The company's near-term focus is on the ongoing Phase 1b clinical trial for SZN-043 in patients with severe AH and the potential nomination of the lead Fzd-4 targeted Wnt agonist development candidate for SZN-413 in 2024. Surrozen anticipates potential proof-of-concept data from the SZN-043 Phase 1b trial in the first half of 2025.

Surrozen's long-term strategy is to continue leveraging its proprietary Wnt modulation platform to identify and develop novel therapies for a broad range of severe diseases. The company's ability to successfully execute on its clinical and strategic objectives will be critical to its future growth and value creation for shareholders.

Conclusion

Surrozen is a promising clinical-stage biotechnology company with a unique approach to selectively modulating the Wnt pathway. The company's lead product candidates, SZN-043 and SZN-413, have demonstrated promising results in preclinical and early clinical studies, and Surrozen's collaboration with BI for SZN-413 further validates the potential of its technology.

While Surrozen faces the typical risks and challenges associated with the development of biologic drug candidates, the company's financial position, access to additional financing sources, and focused strategy position it to continue advancing its pipeline and creating value for shareholders. As Surrozen progresses its clinical trials and continues to execute on its strategic objectives, investors will be closely watching the company's ability to deliver on its promising potential.