SEC Filing | Surrozen

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐	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: 001-39635

Surrozen, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	30-1374889
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
171 Oyster Point Blvd, Suite 400, South San Francisco, California	94080
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 489-9000

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, $0.0001 par value per share	SRZN	The Nasdaq Capital Market
Redeemable warrants, each whole warrant exercisable for one share of Common Stock	SRZNW	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 November 6, 2023, there were 30,575,047 shares of common stock, par value $0.0001 per share, issued and outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022	2
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	71
Item 3.	Defaults Upon Senior Securities	71
Item 4.	Mine Safety Disclosures	71
Item 5.	Other Information	71
Item 6.	Exhibits	72
Signatures		73

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this Quarterly Report on Form 10-Q, or this Report, constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. These forward-looking statements include statements about future financial and operating results of Surrozen; statements about the plans, strategies and objectives of management for future operations of Surrozen; and statements regarding future performance. In some cases, you can identify these forward-looking statements by the use of terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words or phrases.

These statements are based upon information available to us as of the date of this Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Except to the extent required by applicable law, we are under no obligation (and expressly disclaim any such obligation) to update or revise our forward-looking statements whether as a result of new information, future events, or otherwise.

There are no guarantees that the transactions and events described will happen as described (or that they will happen at all). The forward-looking statements contained in this Report are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement.

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “company,” “Surrozen,” “we,” “us” and “our” refer to Surrozen, Inc.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

SURROZEN, INC.

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)


	September 30,			December 31,
	2023			2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	33,975		$	24,690
Accounts receivable		1,978			1,978
Short-term marketable securities		9,457			51,148
Prepaid expenses and other current assets		2,947			3,489
Total current assets		48,357			81,305

Property and equipment, net		2,483			3,630
Operating lease right-of-use assets		2,331			3,268
Restricted cash		426			405
Other assets		376			827
Total assets	$	53,973		$	89,435

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	287		$	658
Accrued and other liabilities		3,953			6,848
Lease liabilities, current portion		2,432			2,226
Total current liabilities		6,672			9,732

Lease liabilities, noncurrent portion		1,527			3,376
Warrant liabilities		243			326
Total liabilities		8,442			13,434

Commitments and contingencies (Note 8)

Stockholders’ equity:
Preferred stock, $0.0001 par value, 10,000 shares authorized; no shares issued and outstanding as of September 30, 2023 and December 31, 2022		—			—
Common stock, $0.0001 par value, 500,000 shares authorized as of September 30, 2023 and December 31, 2022; 30,575 and 30,088 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		3			3
Additional paid-in-capital		258,309			254,892
Accumulated other comprehensive income (loss)		1			(241	)
Accumulated deficit		(212,782	)		(178,653	)
Total stockholders’ equity		45,531			76,001
Total liabilities and stockholders’ equity	$	53,973		$	89,435

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

SURROZEN, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
Operating expenses:
Research and development	$	6,112		$	8,624		$	21,135		$	27,576
General and administrative		3,572			4,981			12,209			14,594
Restructuring		1,505			—			2,712			—
Total operating expenses		11,189			13,605			36,056			42,170
Loss from operations		(11,189	)		(13,605	)		(36,056	)		(42,170	)
Interest income		661			198			1,831			307
Other income, net		83			50			96			6,634
Net loss		(10,445	)		(13,357	)		(34,129	)		(35,229	)
Unrealized gain (loss) on marketable securities, net of tax		(4	)		52			242			(305	)
Comprehensive loss	$	(10,449	)	$	(13,305	)	$	(33,887	)	$	(35,534	)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.34	)	$	(0.38	)	$	(1.13	)	$	(1.01	)

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		30,497			34,968			30,182			34,926

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

SURROZEN, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands)


						Additional		Accumulated other						Total
	Common stock					paid-in		comprehensive			Accumulated			stockholders’
	Shares			Amount		capital		income (loss)			deficit			equity
Balance at December 31, 2022		30,088		$	3	$	254,892	$	(241	)	$	(178,653	)	$	76,001
Repurchase of early exercised stock options		(9	)		—		—		—			—			—
Vesting of early exercised stock options		—			—		13		—			—			13
Stock-based compensation expense		—			—		1,129		—			—			1,129
Other comprehensive income		—			—		—		191			—			191
Net loss		—			—		—		—			(14,297	)		(14,297	)
Balance at March 31, 2023		30,079			3		256,034		(50	)		(192,950	)		63,037
Issuance of common stock under employee stock purchase plan		492			—		187		—			—			187
Vesting of early exercised stock options		—			—		8		—			—			8
Stock-based compensation expense		—			—		1,158		—			—			1,158
Other comprehensive income		—			—		—		55			—			55
Net loss		—			—		—		—			(9,387	)		(9,387	)
Balance at June 30, 2023		30,571			3		257,387		5			(202,337	)		55,058
Issuance of common stock upon option exercises		6			—		3		—			—			3
Repurchase of early exercised stock options		(2	)		—		—		—			—			—
Vesting of early exercised stock options		—			—		6		—			—			6
Stock-based compensation expense		—			—		913		—			—			913
Other comprehensive loss		—			—		—		(4	)		—			(4	)
Net loss		—			—		—		—			(10,445	)		(10,445	)
Balance at September 30, 2023		30,575		$	3	$	258,309	$	1		$	(212,782	)	$	45,531

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

SURROZEN, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands)


						Additional		Accumulated other						Total
	Common stock					paid-in		comprehensive			Accumulated			stockholders’
	Shares			Amount		capital		loss			deficit			equity
Balance at December 31, 2021		35,034		$	4	$	252,464	$	(119	)	$	(142,649	)	$	109,700
Issuance of common stock under Equity Purchase Agreement		100			—		273		—			—			273
Repurchase of early exercised stock options		(8	)		—		—		—			—			—
Vesting of early exercised stock options		—			—		30		—			—			30
Stock-based compensation expense		—			—		916		—			—			916
Other comprehensive loss		—			—		—		(310	)		—			(310	)
Net loss		—			—		—		—			(7,947	)		(7,947	)
Balance at March 31, 2022		35,126			4		253,683		(429	)		(150,596	)		102,662
Repurchase of early exercised stock options		(2	)		—		—		—			—			—
Vesting of early exercised stock options		—			—		27		—			—			27
Stock-based compensation expense		—			—		979		—			—			979
Other comprehensive loss		—			—		—		(47	)		—			(47	)
Net loss		—			—		—		—			(13,925	)		(13,925	)
Balance at June 30, 2022		35,124			4		254,689		(476	)		(164,521	)		89,696
Repurchase of early exercised stock options		(1	)		—		—		—			—			—
Vesting of early exercised stock options		—			—		23		—			—			23
Stock-based compensation expense		—			—		1,077		—			—			1,077
Other comprehensive loss		—			—		—		52			—			52
Net loss		—			—		—		—			(13,357	)		(13,357	)
Balance at September 30, 2022		35,123		$	4	$	255,789	$	(424	)	$	(177,878	)	$	77,491

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

SURROZEN, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Nine Months Ended September 30,
	2023			2022
Operating activities:
Net loss	$	(34,129	)	$	(35,229	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,460			1,477
Stock-based compensation		3,200			2,972
Non-cash operating lease expense		937			1,024
Amortization of (discount) premium on marketable securities, net		(688	)		270
Change in fair value of warrant liabilities		(83	)		(6,969	)
Other expense related to the commitment shares issued to Lincoln Park		—			273
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		955			(885	)
Other assets		38			(398	)
Accounts payable		(371	)		(2,365	)
Accrued and other liabilities		(2,728	)		(2,433	)
Operating lease liabilities		(1,643	)		(1,677	)
Net cash used in operating activities		(33,052	)		(43,940	)

Investing activities:
Purchases of property and equipment		(398	)		(580	)
Purchases of marketable securities		(28,044	)		(20,894	)
Proceeds from maturities of marketable securities		70,665			57,870
Net cash provided by investing activities		42,223			36,396

Financing activities:
Proceeds from issuance of common stock upon exercise of stock options		3			—
Proceeds from issuance of common stock upon employee stock plan purchases		187			—
Repurchase of early exercised stock options		(55	)		(16	)
Net cash provided by (used in) financing activities		135			(16	)
Net increase (decrease) in cash, cash equivalents and restricted cash