Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management including our Chief Executive Officer, Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of December 31, 2024, our Chief Executive Officer and Chief Financial Officer carried out an evaluation with the participation of management of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2024.
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Management’s Report on Internal Controls Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2024.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Securities Exchange Act of 1934 that occurred during the quarter ended December 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Internal Controls
A control system, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. In addition, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
No Attestation Report of Registered Public Accounting Firm
This Annual Report does not contain an attestation report of our registered public accounting firm due to an exemption for “emerging growth companies.”
ITEM 9B. OTHER INFORMATION
Our Board has set May 21, 2025 as the date for its 2025 annual general meeting of shareholders (the “Annual Meeting”). In accordance with the requirements set forth in our MAA, any shareholder seeking to raise a proposal or to make a nomination for consideration at the Annual Meeting must comply with the requirements set forth in our MAA and the requirements of Rule 14a-8 of the Exchange Act, including by delivering a notice of their proposal or nomination to the Company’s Secretary at 1489 W. Warm Springs Rd. #110, Henderson, NV 89014, no later than the close of business on April 4, 2025. In addition, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide in their notice any additional information required by Rule 14a-19(b) under the Exchange Act.
During the quarter ended December 31, 2024, n o directors or executive officers entered into, modified or terminated, contracts, instructions or written plans for the sale or purchase of the Company’s securities that were intended to satisfy the affirmative defense conditions of Rule 10b5-1.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable.
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PART III
ITEM 10 . DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
The information required by this item will be included in the definitive proxy statement to our 2025 Annual General Meeting of Shareholders and is incorporated herein by reference.
Our Code of Ethics (the “Code”), which applies to all directors, officers and employees, is available on our Investor Relations website, investors.zurabio.com. We intend to satisfy the disclosure requirements regarding any applicable amendment to or waiver from the Code by posting such information on our Investor Relations website rather than by filing a Current Report on Form 8-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will be included in the definitive proxy statement to our 2025 Annual General Meeting of Shareholders and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The information required by this item will be included in the definitive proxy statement to our 2025 Annual General Meeting of Shareholders and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item will be included in the definitive proxy statement to our 2025 Annual General Meeting of Shareholders and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item will be included in the definitive proxy statement to our 2025 Annual General Meeting of Shareholders and is incorporated herein by reference.
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PART IV
ITEM 15 . EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this Form 10-K:
(1) Financial Statements: The financial statements as set forth under Item 8 of this Annual Report are incorporated herein.
(2) Financial Statement Schedules:
All schedules have been omitted because they are not required, not applicable, not present in amounts sufficient to require submission of the schedule, or the required information is otherwise included in our consolidated financial statements and related notes.
(3) Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Annual Report.
Exhibit
Description
2.1
Business Combination Agreement, dated as of June 16, 2022, by and among JATT, Merger Sub, Merger Sub 2, Holdco and Zura Bio Limited (incorporated by reference to Exhibit 2.1 of JATT’s Current Report on Form 8-K (File No. 001-40598), filed with the SEC on June 17, 2022).
2.2
First Amendment dated as of September 20, 2022 to the Business Combination Agreement by and among JATT, Merger Sub, Merger Sub 2 and Holdco and Zura Bio Limited (incorporated by reference to Exhibit 2.2 of JATT’s Form S-4/A (File No. 333-267005), filed with the SEC on October 25, 2022).
2.3
Second Amendment dated as of November 14, 2022 to the Business Combination Agreement by and among JATT, Merger Sub, Merger Sub 2, Holdco and Zura Bio Limited (incorporated by reference to Exhibit 2.2 of JATT’s Current Report on Form 8-K (File No. 001-40598), filed with the SEC on November 15, 2022).
2.4
Third Amendment dated as of January 13, 2023 to the Business Combination Agreement by and among JATT Acquisition Corp, JATT Merger Sub, JATT Merger Sub 2, Zura Holdings, Ltd. and Zura Bio Limited (incorporated by reference to Exhibit 2.1 of JATT’s Current Report on Form 8-K (File No. 001-40598), filed with the SEC on January 19, 2023).
3.1
Second Amended and Restated Memorandum and Articles of Association of Zura Bio Limited (incorporated by reference to Exhibit 3.1 to Zura’s Form 8-K (File No. 001-40598), filed with the SEC on March 24, 2023).
4.1
Specimen Share Certificate of Zura (incorporated by reference to Exhibit 4.5 of JATT’s Form S-4 (File No. 333-267005) filed with the SEC on August 19, 2022).
4.2
Specimen Warrant Certificate of Zura (incorporated by reference to Exhibit 4.6 of JATT’s Form S-4 (File No. 333-267005) filed with the SEC on August 19, 2022).
4.3
Form of Pre-Funded Warrant to Purchase Ordinary Shares (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 3, 2023).
4.4
Form of Pre-Funded Warrant to Purchase Ordinary Shares (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 21, 2024).
4.5
Form of Pre-Funded Warrant to purchase Ordinary Shares (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 23, 2024).
4.6*
Description of Registrant’s securities.
10.1+
License Agreement between Zura Bio Limited and Lonza Sales AG, dated July 22, 2022 (incorporated by reference to Exhibit 10.17 of JATT’s Form S-4/A (File No. 333-267005) filed with the SEC on February 17, 2023).
10.2+
License, Development and Commercialization Agreement, dated as of December 8, 2022, by and between Eli Lilly and Company and Z33 Bio Inc (incorporated by reference to Exhibit 10.22 of JATT’s Form S-4/A (File No. 333-267005) filed with the SEC on February 17,2023).
10.3†
Zura Bio Limited 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.29 of JATT’s Form S-4/A (File No. 333-267005) filed with the SEC on February 2, 2023).
10.4
Form of Subscription Agreement by and among Zura Bio Limited and the other parties signatories thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Issuer with the SEC on May 3, 2023).
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10.5†
Severance and General Release Agreement, dated April 7, 2023, by and between Zura Bio Limited and Preston Klassen (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Issuer with the SEC on April 7, 2023).
10.6
Form of Employment Agreement for Someit Sidhu (incorporated by reference to Exhibit 10.31 of JATT’s Form S-4/A (File No. 333-267005) filed with the SEC on February 8, 2023).
10.7
Form of Second PIPE Subscription Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Issuer with the SEC on May 2, 2023).
10.8
Share Option Award Agreement (incorporated by reference to Annex C of the Definitive Proxy Statement on Schedule 14A filed by the Issuer with the SEC on May 19, 2023).
10.9††+
License, Development and Commercialization Agreement between ZB17 LLC and Eli Lilly and Company, dated April 26, 2023 (incorporated by reference to Exhibit 10.38 to the Registration Statement filed by the Issuer with the SEC on August 25, 2023)
10.10†
Service Agreement, dated as of April 7, 2023, by and between the Company and Dr. Someit Sidhu (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Issuer with the SEC on April 10, 2023).
10.11†
Service Agreement, dated as of April 7, 2023, by and between the Company and Verender Badial (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Issuer with the SEC on April 10, 2023).
10.12†
Offer Letter, dated March 2, 2023, to Amit Munshi, (incorporated by reference to Exhibit 10.28 of JATT’s Form 10-Q (File No. 001-40598) filed with the SEC on May 12, 2023).
10.13†††+
Service Agreement between Zura Bio Limited and Kiran Nistala (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Issuer with the SEC on December 6, 2023).
10.14†
Employment Agreement between Zura Bio Limited and Robert Lisicki (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Issuer with the SEC on January 8, 2023).
10.15†
Settlement Agreement by and between Zura Bio Limited and Someit Sidhu dated July 24, 2024 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Issuer with the SEC on July 25, 2024).
10.16
Amendment to Warrant Agreement, by and between Zura Bio Limited and Continental Stock Transfer & Trust Company, dated August 12, 2024 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Issuer with the SEC on August 12, 2024).
10.17
Share Surrender and Warrant Agreement, dated as of August 15, 2024, by and among the Company and certain investors party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Issuer with the SEC on August 21, 2024).
10.18
Form of Subscription Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Issuer with the SEC on April 23, 2024).
10.19
Sales Agreement, by and between Zura Bio Limited and Leerink Partners LLC, dated September 3, 2024 (incorporated by reference to Exhibit 1.2 to the Registration Statement on Form S-3 filed by the Issuer with the SEC on September 3, 2024).
10.20
Amended and Restated Registration Rights Agreement dated March 20, 2023, by and among the Company, the Sponsor and the parties thereto (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K (File No. 001-40598) filed with the SEC on March 24, 2023).
10.21
Form of Indemnity Agreement (incorporated by reference to Exhibit 10.13 of Zura’s Current Report on Form 8-K (File No. 001-40598) filed with the SEC on March 24, 2023).
10.22†
Zura Bio Limited 2023 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.12 of the Company’s Current Report on Form 8-K (File No. 001 40598), filed with the SEC on March 24, 2023).
10.23†
Share Option Award Agreement (incorporated by reference to Annex C of the Definitive Proxy Statement on Schedule 14A filed by the Issuer with the SEC on May 19, 2023).
10.24†
Letter Agreement, dated as of December 8, 2022, by and among Zura Bio Limited and Stone Peach Properties LLC (incorporated by reference to Exhibit 10.27 of JATT’s Form S-4/A (File No. 333-267005) filed with the SEC on December 14, 2022).
10.25
Offer Letter Agreement with Kim Davis, dated November 22, 2022 (incorporated by reference to Exhibit 10.39 to the Form S-1/A filed by the Issuer with the SEC on August 11, 2023).
16.1
Letter dated February 23, 2024 from Marcum LLP to the Securities and Exchange Commission regarding change in Certifying Accountant of the Company (incorporated by reference to Exhibit 16.1 to the Current Report on Form 8-K filed by the Issuer with the SEC on February 23, 2024).
19.1*
Insider Trading Policy.
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21.1
List of Subsidiaries of Zura Bio Limited (incorporated by reference to Exhibit 21.2 of JATT’s Form S-4/A (File No. 333-267005) filed with the SEC on October 25, 2022).
23*
Consent of WithumSmith+Brown, PC, independent registered public accounting firm of Zura.
24.1*
Power of Attorney (included on signature page).
31.1*
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97.1
Clawback Policy (incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K filed on March 28, 2024).
101.INS
XBRL Instance Document.
101.SCH
XBRL Taxonomy Extension Schema Document.
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
†
Indicates management contract or compensatory plan or arrangement.
††
The Registrant has redacted provisions or terms of this Exhibit pursuant to Regulation S-K Item 601(b)(10)(iv). While portions of the Exhibits have been omitted, these Exhibits include a prominent statement on the first page of each redacted Exhibit that certain identified information has been excluded from the exhibit because it is both not material and is the type that the Registrant treats as private or confidential. The Registrant agrees to furnish an unredacted copy of the Exhibit to the SEC upon its request.
#
Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601. The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.
+ Portions of this Exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K.
* Filed herewith.
** Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Zura Bio Limited
Date: March 25, 2025
By:
/s/ Robert Lisicki
Robert Lisicki
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Verender S. Badial and Kim Davis, and each of them, as his or her true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this registration statement, and any registration statement relating to the offering covered by this registration statement and filed pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents, or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Name
Title
Date
/s/ Robert Lisicki
Chief Executive Officer and Director
March 25, 2025
Robert Lisicki
(Principal Executive Officer)
/s/ Verender Badial
Chief Financial Officer
March 25, 2025
Verender Badial
(Principal Financial and Accounting Officer)
/s/ Amit Munshi
Director, Chairman of the Board
March 25, 2025
Amit Munshi
/s/ Someit Sidhu
Director
March 25, 2025
Someit Sidhu
/s/ Arnout Ploos van Amstel
Director
March 25, 2025
Arnout Ploos van Amstel
/s/ Steve Schoch
Director
March 25, 2025
Steve Schoch
/s/ Jennifer Jarrett
Director
March 25, 2025
Jennifer Jarrett
/s/ Neil Graham
Director
March 25, 2025
Neil Graham
/s/ Parvinder Thiara
Director
March 25, 2025
Parvinder Thiara
/s/ Sandeep Kulkarni
Director
March 25, 2025
Sandeep Kulkarni
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ZURA BIO LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets
F-3
Consolidated Statements of Operations
F-4
Consolidated Statements of Changes in in Redeemable Noncontrolling Interest, Convertible Preferred Shares, and Shareholders’ Equity (Deficit)
F-5
Consolidated Statements of Cash Flows
F-6
Notes to Consolidated Financial Statements
F-7 to F-29
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Zura Bio Limited:
Opinion on the Consolidated financial statements
We have audited the accompanying consolidated balance sheets of Zura Bio Limited (the “Company”) as of December 31, 2024 and 2023, and the related consolidated financial statements of operations, changes in redeemable noncontrolling interest, convertible preferred shares, and shareholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2024, and the related consolidated notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2022.
/s/ WithumSmith+Brown, PC
East Brunswick, New Jersey
March 24, 2025
PCAOB ID Number 100
F-2
Table of Contents
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Zura Bio Limited
Consolidated Balance Sheets
(In thousands, except share data)
December 31,
2024
2023
Assets
Current assets
Cash and cash equivalents
$
176,498
$
99,806
Prepaid expenses and other current assets
2,246
1,037
Total current assets
178,744
100,843
Property and equipment, net
91
—
Other assets
698
—
Total assets
$
179,533
$
100,843
Liabilities, Redeemable Noncontrolling Interest and Shareholders' Equity
Current liabilities
Accounts payable and accrued expenses
$
19,514
$
20,302
Total current liabilities
19,514
20,302
Private placement warrants
—
990
Total liabilities
19,514
21,292
Commitments and contingencies (Note 11)
Redeemable noncontrolling interest
11,663
18,680
Shareholders’ Equity
Preferred shares, $ 0.0001 par value, 1,000,000 authorized as of December 31, 2024 and 2023; no shares issued and outstanding as of December 31, 2024 and 2023
—
—
Class A Ordinary Shares, $ 0.0001 par value; 300,000,000 shares authorized as of December 31, 2024 and 2023; 65,297,530 and 43,593,678 shares issued and outstanding as of December 31, 2024 and 2023, respectively
7
4
Additional paid-in capital
302,705
162,820
Accumulated deficit
( 155,897 )
( 103,494 )
Total Zura Bio Limited shareholders' equity
146,815
59,330
Noncontrolling interest
1,541
1,541
Total shareholders’ equity
148,356
60,871
Total liabilities, redeemable noncontrolling interest and shareholders' equity
$
179,533
$
100,843
See accompanying notes to consolidated financial statements.
F-3
Table of Contents
Zura Bio Limited
Consolidated Statements of Operations
(In thousands, except share and per share data)
For the Years Ended December 31,
2024
2023
Operating expenses:
Research and development
$
24,401
$
43,999
General and administrative
30,788
18,639
Total operating expenses
55,189
62,638
Loss from operations
( 55,189 )
( 62,638 )
Other (income)/expense, net
Interest income
( 7,998 )
( 2,186 )
Change in fair value of private placement warrants
5,240
( 724 )
Change in fair value of note payable
—
2,244
Dividend income
—
( 1,392 )
Other income, net
( 28 )
( 17 )
Total other income, net
( 2,786 )
( 2,075 )
Loss before income taxes
( 52,403 )
( 60,563 )
Income tax benefit
—
—
Net loss before redeemable noncontrolling interest
( 52,403 )
( 60,563 )
Net loss attributable to redeemable noncontrolling interest
—
203
Net loss
( 52,403 )
( 60,360 )
Adjustment of redeemable noncontrolling interest from redemption value to carrying value
7,017
—
Accretion of redeemable noncontrolling interest to redemption value
—
( 7,220 )
Deemed contribution from redeemable noncontrolling interest
—
9,212
Deemed dividend to redeemable noncontrolling interest
—
( 10,875 )
Net loss attributable to Class A Ordinary Shareholders of Zura
$
( 45,386 )
$
( 69,243 )
Net loss per share attributable to Class A Ordinary Shareholders of Zura, basic and diluted
$
( 0.60 )
$
( 2.09 )
Weighted-average Class A Ordinary Shares used in computing net loss per share attributable to Class A Ordinary Shareholders of Zura, basic and diluted
75,070,761
33,064,036
See accompanying notes to consolidated financial statements.
F-4
Table of Contents
Zura Bio Limited
Consolidated Statements of Changes in Redeemable Noncontrolling Interest, Convertible Preferred Shares, and Shareholders’ Equity (Deficit)
(In thousands, except share data)
Redeemable
Convertible Preferred
Class A
Additional
Total
Noncontrolling
Shares (1)
Ordinary Shares (1)
Paid-in
Accumulated
Noncontrolling
Shareholders’
Interest
Shares
Amount
Shares
Amount
Capital
Deficit
Interest
Equity (Deficit)
Balance as of December 31, 2022
$
10,000
13,510,415
$
12,500
279,720
$
—
$
—
$
( 32,056 )
$
—
$
( 32,056 )
Issuance of Series A-1 convertible preferred shares as license compensation
—
267,939
2,186
—
—
—
—
—
—
Conversion of Series A-1 convertible preferred shares to Class A Ordinary Shares in connection with Business Combination
—
( 13,778,354 )
( 14,686 )
13,778,354
2
14,684
—
—
14,686
Issuance of Class A Ordinary Shares in connection with Business Combination, including PIPE Investment, Forward Purchase Investment, and Backstop Shares, net of $ 4.0 million of transaction costs
—
—
—
12,444,081
1
48,350
—
—
48,351
Issuance of Class A Ordinary Shares to settle research and development license consideration liability
—
—
—
550,000
—
4,488
—
—
4,488
Reclassification of public warrant liability to equity
—
—
—
—
—
2,001
—
—
2,001
Issuance of Class A Ordinary Shares in connection with April 2023 Private Placement, net of $ 9.8 million of transaction costs
—
—
—
15,041,530
1
54,133
—
—
54,134
Issuance of Pre-Funded Warrants in connection with April 2023 Private Placement
—
—
—
—
—
16,070
—
—
16,070
Issuance of Class A Ordinary Shares to Lilly in connection with 2023 Lilly License
—
—
—
1,000,000
—
7,840
—
—
7,840
Issuance of restricted share awards
—
—
—
499,993
—
—
—
—
—
Share-based compensation
—
—
—
—
—
13,059
—
—
13,059
Net loss
( 203 )
—
—
—
—
—
( 60,360 )
—
( 60,360 )
Accretion of redeemable noncontrolling interest to redemption value
7,220
—
—
—
—
( 7,017 )
( 203 )
—
( 7,220 )
Stone Peach Call Right issued to noncontrolling interest
—
—
—
—
—
—
—
1,541
1,541
Deemed contribution from redeemable noncontrolling interest
( 9,212 )
—
—
—
—
9,212
—
—
9,212
Deemed dividend to redeemable noncontrolling interest
10,875
—
—
—
—
—
( 10,875 )
—
( 10,875 )
Balance as of December 31, 2023
$
18,680
—
$
—
43,593,678
$
4
$
162,820
$
( 103,494 )
$
1,541
$
60,871
Issuance of Class A Ordinary Shares in connection with April 2024 Private Placement, net of $ 7.2 million of transaction costs
—
—
—
20,090,128
2
55,221
—
—
55,223
Issuance of Pre-Funded Warrants in connection with April 2024 Private Placement
—
—
—
—
—
50,030
—
—
50,030
Issuance of Pre-Funded Warrants in exchange for Class A Ordinary Shares
—
—
—
( 4,000,000 )
—
—
—
—
—
Issuance of Class A Ordinary Shares in exchange for Private Placement Warrants
—
—
—
1,718,108
—
6,230
—
—
6,230
Issuance of Class A Ordinary Shares in exchange for Public Warrants
—
—
—
2,064,082
—
—
—
—
—
Issuance of Class A Ordinary Shares in connection with a sale under the ATM, net of $ 0.2 million of commissions
—
—
—
1,500,000
1
5,533
—
—
5,534
ATM transaction costs
—
—
—
—
—
( 626 )
—
—
( 626 )
Issuance of Class A Ordinary Shares for restricted stock units, net of shares withheld for taxes
—
—
—
331,534
—
( 318 )
—
—
( 318 )
Share-based compensation
—
—
—
—
—
16,798
—
—
16,798
Adjustment of redeemable noncontrolling interest from redemption value to carrying value
( 7,017 )
—
—
—
—
7,017
—
—
7,017
Net loss
—
—
—
—
—
—
( 52,403 )
—
( 52,403 )
Balance as of December 31, 2024
$
11,663
—
$
—
65,297,530
$
7
$
302,705
$
( 155,897 )
$
1,541
$
148,356
(1) The Company’s convertible preferred shares and Class A Ordinary Shares prior to the closing of the Business Combination (as defined in Note 1) have been retroactively restated to reflect the exchange ratio of approximately 108.083 established in the Business Combination Agreement as described in Note 3 .
See accompanying notes to consolidated financial statements.
F-5
Table of Contents
Zura Bio Limited
Consolidated Statements of Cash Flows
(In thousands)
For the Years Ended December 31,
2024
2023
Cash flows from operating activities
Net loss before redeemable noncontrolling interest
$
( 52,403 )
$
( 60,563 )
Adjustments to reconcile net loss before redeemable noncontrolling interest to net cash used in operating activities
Research and development acquired license
—
27,381
Anti-dilution share issuance compensation
—
2,186
Share-based compensation expense
16,798
7,469
Change in fair value of note payable
—
2,244
Change in fair value of research and development license consideration liability
—
1,854
Change in fair value of private placement warrants
5,240
( 724 )
Depreciation and amortization
9
—
Foreign exchange transaction gain
( 27 )
( 17 )
Changes in operating assets and liabilities:
Prepaid expenses and other current assets
( 1,209 )
( 828 )
Other assets
( 698 )
—
Accounts payable and accrued expenses
4,214
5,944
Net cash used in operating activities
( 28,076 )
( 15,054 )
Cash flows from investing activities
Purchase of fixed assets
( 75 )
—
Purchase of research and development license
( 5,000 )
( 8,000 )
Net cash used in investing activities
( 5,075 )
( 8,000 )
Cash flows from financing activities
Proceeds from issuance of Ordinary Shares in connection with April 2024 Private Placement, net of $ 7.2 million of transaction costs
55,223
—
Proceeds from issuance of Pre-Funded Warrants in connection with April 2024 Private Placement
50,030
—
Proceeds from issuance of Class A Ordinary Shares in connection with a sale under the ATM, net of $ 0.2 million of commissions
5,534
—
ATM transaction costs
( 626 )
—
Restricted stock units withheld to pay employee withholding taxes
( 318 )
—
Proceeds from issuance of Class A Ordinary Shares in connection with April 2023, Private Placement, net of $ 4.2 million of transaction costs
—
59,724
Proceeds from issuance of Class A Ordinary Shares upon Closing of Business Combination
—
56,683
Proceeds from issuance of Pre-Funded Warrants in connection with April 2023 Private Placement
—
16,070
Settlement of note payable
—
( 10,000 )
Payment of deferred transaction costs
—
( 1,184 )
Net cash provided by financing activities
109,843
121,293
Net increase in cash and cash equivalents
76,692
98,239
Cash and cash equivalents, beginning of period
99,806
1,567
Cash and cash equivalents, ending of period
$
176,498
$
99,806
Supplemental Disclosure
Cash paid for taxes
$
—
$
—
Cash paid for interest
$
—
$
—
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Issuance of Class A Ordinary Shares in exchange for private placement warrants
$
6,230
$
—
Adjustments to redeemable noncontrolling interest from redemption value to carrying value
$
7,017
$
—
Purchase of property and equipment included in accounts payable and accrued expenses
$
25
$
—
Issuance of Series A-1 convertible preferred shares for license
$
—
$
—
Conversion of Series A-1 convertible preferred stock for Class A Ordinary Shares
$
—
$
14,686
Deemed dividend to redeemable noncontrolling interest
$
—
$
10,875
Accrued 2023 Lilly License consideration
$
—
$
10,000
Deemed contribution from redeemable noncontrolling interest
$
—
$
9,212
Issuance of Class A Ordinary shares for 2023 Lilly License
$
—
$
7,840
Accretion of redeemable noncontrolling interest to redemption value
$
—
$
7,220
Share-based equity issuance costs
$
—
$
5,590
Settlement of research and development license consideration liability
$
—
$
4,488
Reclassification of deferred offering costs to additional paid-in capital
$
—
$
4,015
Assumption of public and private placement warrants in connection with Business Combination
$
—
$
3,715
Reclassification of public warrant liability to equity
$
—
$
2,001
Issuance of Call Right to noncontrolling interest
$
—
$
1,541
See accompanying notes to consolidated financial statements.
F-6
Table of Contents
Zura Bio Limited
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
1. Organization and Description of Business
Zura Bio Limited, a Cayman Islands exempted company, formerly known as JATT Acquisition Corp (“JATT”), together with its subsidiaries (collectively, the “Company”, “Zura” or “Zura Bio”), is a clinical-stage, multi-asset immunology company dedicated to developing novel dual-pathway antibodies for a range of autoimmune and inflammatory diseases with unmet needs. The Company’s strategic focus is to harness dual-pathway biology to provide broader and deeper clinical benefits to patients with these conditions. The Company is currently developing one clinical-stage product candidate in ongoing Phase 2 trials while actively evaluating development opportunities for its pipeline of clinical-stage assets, focusing on indications with unmet needs and commercial potential.
The Company is currently developing tibulizumab (ZB - 106), an immunoglobulin G (IgG)-single-chain variable fragment (scFv) bispecific dual-antagonist antibody engineered by the fusion of TALTZ® (ixekizumab) and tabalumab to neutralize interleukin-17A (IL - 17A) and B-cell activating factor (BAFF). In December 2024, the Company initiated TibuSURE, a global Phase 2 study evaluating tibulizumab in adults with systemic sclerosis (SSc). TibuSURE is a randomized, double-blind, placebo-controlled study designed to assess the safety, tolerability, and efficacy of tibulizumab in approximately 80 participants with early diffuse cutaneous systemic sclerosis (dcSSc).
Additionally, the Company is actively assessing the competitive landscape and evaluating potential therapeutic indications for crebankitug and torudokimab.
● Crebankitug (ZB-168) is a fully human, high affinity monoclonal antibody that binds and neutralizes the interleukin-7 receptor (IL - 7R) alpha chain. IL - 7Rα sits at the nexus of two key immune pathways, IL - 7 and thymic stromal lymphopoietin (TSLP), thus IL - 7Rα has the potential to block activation through either of these pathways. As a result, the Company believes crebankitug could be therapeutically relevant in a broad set of indications where the IL - 7 or TSLP pathways may be involved.
● Torudokimab (ZB - 880) is a fully human, high affinity monoclonal antibody that neutralizes interleukin-33 (IL - 33), preventing ST2 - dependent and ST2 - independent (e.g., RAGE) inflammation. The IL - 33/ST2 axis stands as a validated therapeutic target for conditions such as chronic obstructive pulmonary disease (“COPD”) and asthma.
Business Combination
On March 20, 2023 (the “Closing Date”), the Company consummated the previously announced business combination (the “Business Combination”), pursuant to the terms of a business combination agreement (the “Business Combination Agreement”), dated as of June 16, 2022 (as amended on September 20, 2022, November 14, 2022, and January 13, 2023), by and among JATT, JATT Merger Sub, JATT Merger Sub 2, Zura Bio Holdings Ltd. (“Holdco”), and Legacy Zura. Pursuant to the Business Combination Agreement, (a) before the closing of the Business Combination, Holdco was established as a new holding company of Legacy Zura and became a party to the Business Combination Agreement; and (b) on the Closing Date, in sequential order: (i) Merger Sub merged with and into Holdco, with Holdco continuing as the surviving company and a wholly owned subsidiary of JATT; (ii) immediately following the Merger, Holdco merged with and into Merger Sub 2, with Merger Sub 2 continuing as the surviving company and a wholly owned subsidiary of JATT; and (iii) JATT changed its name to “Zura Bio Limited”.
The Business Combination has been accounted for as a reverse recapitalization, with Legacy Zura being the accounting acquirer and JATT as the acquired company for accounting purposes. Accordingly, all historical financial information presented in the consolidated financial statements represent the accounts of Legacy Zura. The shares and net loss per share attributable to ordinary shareholders of Legacy Zura prior to the Closing Date have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination Agreement.
F-7
Table of Contents
Prior to the Business Combination, JATT’s public shares, public warrants, and public units were listed on the New York Stock Exchange (“NYSE”) under the symbols “JATT,” “JATT.WS,” and “JATT.U,” respectively. On March 20, 2023, the Company’s Class A ordinary shares (“Class A Ordinary Shares”) and public warrants began trading on the Nasdaq under the symbols “ZURA” and “ZURAW,” respectively. On August 27, 2024, the Public Warrants (as defined herein) were no longer listed on the Nasdaq in connection with the completion of the Warrant Exchange (as defined herein). See Note 8.
Emerging Growth Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use the extended transition period for complying with new or revised accounting standards, and as a result of this election, the consolidated financial statements may not be comparable to companies that comply with public company Financial Accounting Standards Board (“FASB”) standards’ effective dates. The Company may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of an offering or such earlier time that it is no longer an emerging growth company. The Company expects to no longer be an emerging growth company effective December 31, 2026.
Liquidity
The Company has incurred operating losses since inception and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The Company has an accumulated deficit of $ 155.9 and $ 103.5 million as of December 31, 2024 and 2023, respectively, and a net loss of $ 52.4 million and $ 60.4 million for the years ended December 31, 2024 and 2023, respectively. The Company’s existing sources of liquidity as of December 31, 2024 includes $ 176.5 million in cash and cash equivalents.
Prior to the Business Combination, the Company historically funded operations primarily with issuances of convertible preferred shares and a promissory note. Upon the closing of the Business Combination, the Company received $ 56.7 million in net cash proceeds. Additionally, the Company received $ 4.9 million, $ 105.3 million and $ 75.8 million, respectively, in net cash proceeds in connection with the ATM (as defined herein), April 2024 Private Placement (as defined herein) and April 2023 Private Placement (as defined herein). The Company’s cash requirements include, but are not limited to, clinical development, product manufacturing costs and working capital requirements. The Company expects such operating losses and negative cash flows from operations will continue but has sufficient liquidity to fund its operations over the next twelve months.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The Company’s consolidated financial statements (the “consolidated financial statements”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of its consolidated subsidiaries. Other shareholders’ interests in the Company’s subsidiaries, Z33 Bio, Inc. (“Z33”) and ZB17 LLC (“ZB17”), are shown in the consolidated financial statements as redeemable noncontrolling interest and noncontrolling interest, respectively. All intercompany balances and transactions have been eliminated in consolidation.
Significant Accounting Policies
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions reflected in the consolidated financial statements relate to and include, but are not limited to, the fair value of share-based compensation, the fair value of redeemable noncontrolling interest, the fair value of share-based consideration transferred for acquired assets, the fair value of contingent consideration, the valuation allowance of deferred tax assets resulting from net operating losses and the fair value of the private placement warrants.
F-8
Table of Contents
Risks and Uncertainties
The Company is subject to risks common to early-stage companies in the biotechnology industry, including, but not limited to, development by the Company or its competitors of technological innovations, risks of failure of clinical studies, dependence on key personnel, protection of proprietary technology, compliance with government regulations, and ability to transition from preclinical manufacturing to commercial production of products.
The Company’s future product candidates will require approvals from the United States Food and Drug Administration (“FDA”) and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions. There can be no assurance that any product candidates will receive the necessary approvals. If the Company was denied approval, approval was delayed or the Company was unable to maintain approval for any product candidate, it could have a material adverse impact on the Company.
The Company has significant cash balances at financial institutions which throughout the year regularly exceed the federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.
Segments
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company’s CODM is the Chief Executive Officer. The Company and the CODM views its operations and manages its business in one operating segment, developing novel medicines for immune and inflammatory disorders. The Company has business activities in different regions that are managed on a consolidated basis.
The accounting policies of the Company’s segment are the same as those described within this footnote. The CODM uses net loss, that is reported in the consolidated statements of operations to assess performance for the Company’s segment and decide how to allocate resources. The significant expenses within net loss are separately presented in the Company’s consolidated statement of operations. The CODM monitors budget versus actual results using operating loss which is a component of net loss. The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. The Company had $ 170.7 million and $ 97.9 million in cash equivalents as of December 31, 2024 and 2023, respectively.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is recognized using the straight-line method over the estimated useful life of each asset. Computer and office equipment are depreciated over three years . Expenditures for repairs and maintenance are recorded to expense as incurred.
Research and Development
Research and development (“R&D”) expenses consist of all direct and indirect operating expenses supporting the processes and manufacturing in development, including consulting fees for clinical and manufacturing advisory services, contract research organization (“CRO”) costs, costs related to manufacturing material for preclinical studies, payroll and benefits, which includes share-based compensation for research and development employees, licensing fees, and data and study acquisition costs. Expenses are recognized as an expense as the related goods are delivered or the services are performed.
R&D expenses include the cost of in-process research and development (“IPR&D”) assets purchased in an asset acquisition transaction. IPR&D assets are expensed provided that the acquired asset did not also include processes or activities that would constitute a “business” as defined under U.S. GAAP, the drug has not achieved regulatory approval for marketing and, absent obtaining such approval, has no established alternative future use. Acquired IPR&D payments, including upfront payments, transaction fees and subsequent pre-commercial milestone payments, are immediately expensed in the period in which they are incurred. Research and development costs incurred after the acquisition are expensed as incurred.
F-9
Table of Contents
R&D expenses also include the remeasurement of the research and development license consideration liability.
Share-Based Compensation
The Company accounts for all share-based payments to employees and non-employees, including grants of share options, share options with non-market performance conditions (“PSOs”), share options with market-based performance conditions, restricted share units (“RSUs”), and restricted share awards (“RSAs”) based on their respective grant date fair values. RSUs, RSAs and share options that vest immediately and have a nominal exercise price are valued based on the fair value of the Company’s Class A Ordinary Shares on the date of grant. The Company estimates the fair value of share option grants using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of share-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.
The Company expenses share-based compensation related to share options with only service conditions over the requisite service period on a straight-line basis. The Company records share-based compensation expense for the PSOs when the Company’s management deems it probable that the performance conditions will be satisfied. The Company estimates the fair value of share option grants with market-based performance conditions using a Monte-Carlo simulation model. For share option grants with market-based performance conditions, the Company recognizes share-based compensation expense as the requisite service is rendered by the employee, regardless of when, if ever, the market-based performance conditions are satisfied. The share-based compensation costs are recorded in research and development and general and administrative expenses in the consolidated statements of operations based upon the respective employee’s or non-employee’s role within the Company. Forfeitures are recorded as they occur.
Income Taxes
Income taxes are recorded in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company does not have any material uncertain tax positions for any of the reporting periods presented. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of income tax expense.
Warrants
In connection with the Business Combination, the Company assumed JATT’s public warrant and private placement warrant liabilities. As a result of the recapitalization, the settlement provisions of the Public Warrants (as defined herein) no longer preclude equity classification and the Public Warrants were reclassified to equity following the Business Combination. The Public Warrants and Private Placement Warrants (as defined herein) were exchanged for Class A Ordinary Shares during the year ended December 31, 2024 (the “Warrant Exchange”). See Note 8.
In connection with each of the April 2024 Private Placement and April 2023 Private Placement (each as defined herein), the Company issued pre-funded warrants instruments.
Classification of the Public Warrants and Pre-Funded Warrants (as defined herein) as equity instruments and the Private Placement Warrants as liability instruments is based on management’s analysis of the guidance in ASC 815, Derivatives and Hedging . The Company measured the private placement warrant liability at fair value each reporting period and at settlement value, based on the fair value of the Class A Ordinary Shares exchanged, upon the Warrant Exchange, with the change in fair value recorded as other (expense) income in the consolidated statements of operations. Upon completion of the Warrant Exchange, the warrant liability was extinguished and the Class A Ordinary Shares were recorded at fair value in shareholders’ equity. The Company measured the Public Warrants at the fair value of the equity instruments as of the Closing Date of the Business Combination. The Company measured the Pre-Funded Warrants at the fair value of the equity instruments as of the date of the April 2023 Private Placement, the April 2024 Private Placement or the Share Exchange (as defined herein), as applicable. See Note 8.
F-10
Table of Contents
Noncontrolling Interest
During April 2023, ZB17, a consolidated subsidiary of the Company, issued a share-based payment award to a third party in connection with 2023 Lilly License representing a noncontrolling interest. See Note 6. A noncontrolling interest in a subsidiary is considered an ownership interest in a majority-owned subsidiary that is not attributable to the parent. The Company includes noncontrolling interest as a component of total shareholders’ equity in the Company’s consolidated balance sheets. The option to acquire ZB17 ownership interests does not provide the option-holder with rights to participate in the profits and losses of the subsidiary prior to the exercise of the option.
Redeemable Noncontrolling Interest
In 2022, Z33, a consolidated subsidiary of the Company, issued 4,900,222 shares of Z33 Series Seed Preferred Shares to Stone Peach representing a redeemable noncontrolling interest. See Note 12. The Z33 Series Seed Preferred Shares issued to Stone Peach contain put features and are considered redeemable until the exercise or the expiration of the put features. The redeemable noncontrolling interests are classified outside of permanent equity in the consolidated balance sheets. The redeemable noncontrolling interest is measured at the end of each reporting period as the higher of (1) its initial carrying amount, increased or decreased for the noncontrolling interest’s share of Z33’s net income or loss, or (2) the redemption price, with any changes included in accretion of noncontrolling interest to redemption value in the consolidated statements of operations.
Net Loss Per Share
Basic net loss per share is computed by dividing net loss attributable to Class A Ordinary Shareholders by the weighted-average number of both Class A Ordinary Shares and Pre-Funded Warrants outstanding during the period. As the Company has a net loss, basic and diluted net loss per share was the same for each period presented as the inclusion of all potentially dilutive securities outstanding would have been anti-dilutive.
As of the periods presented, potentially dilutive securities not included in the calculation of diluted net loss per share, because to do so would be anti-dilutive, were as follows:
December 31,
2024
2023
Shares issuable upon exercise of options to purchase Class A Ordinary Shares
10,175,633
5,791,065
Shares issuable upon exercise of Z33 Series Seed Preferred Shares Put Right
2,000,000
2,000,000
Shares issuable upon vesting of restricted share units
859,923
1,543,018
Restricted share awards
374,995
499,993
Shares issuable upon exercise of warrants to purchase Class A Ordinary Shares
—
12,809,996
Total
13,410,551
22,644,072
Recently Adopted Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (“ASU 2023-07”). ASU 2023-07 requires enhanced segment disclosures, including disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss. The enhanced disclosures are required for all entities, including entities that have only a single reportable segment, and will be applied retrospectively. The Company adopted this standard for the year ended December 31, 2024 which resulted in additional segment disclosures (see “—Segments” above).
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in the ASU address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 will be effective for the Company in the annual period beginning on January 1, 2025, although early adoption is permitted. The Company is currently evaluating the presentational effect that ASU 2023-09 will have on the Company's consolidated financial statements and disclosures, but the Company expects considerable changes to the Company’s income tax disclosures.
F-11
Table of Contents
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). This ASU requires disclosure, in the notes to financial statements, of the nature of certain expenses included in the income statement. ASU 2024-03 will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2024-03 and expects to adopt it for the year ending December 31, 2027.
3. Recapitalization
As discussed in Note 1, on the Closing Date, JATT completed the acquisition of Legacy Zura and acquired 100 % of Legacy Zura’s shares and Legacy Zura received proceeds of $ 56.7 million which includes proceeds from issuance of Class A Ordinary Shares upon the consummation of the Business Combination, including the Redemption Backstop shares (as defined below), proceeds from the PIPE investment (as defined below), and proceeds from the Forward Purchase Agreement (as defined below). The Company recorded $ 4.0 million of transaction costs, which consisted of legal, accounting, and other professional services directly related to the Business Combination. These costs were included in additional paid-in capital on the Company’s consolidated balance sheets. On the Closing Date, each holder of Legacy Zura’s ordinary shares received approximately 108.083 shares of the Company’s Class A Ordinary Shares, par value $ 0.0001 per share. See Note 7.
All equity awards of Legacy Zura were assumed by the Company and converted into comparable equity awards that are exercisable for or settled in shares of the Company’s Class A Ordinary Shares. As a result, each outstanding share option was converted into an option exercisable for the Company’s Class A Ordinary Shares based on an exchange ratio of approximately 108.083 and each outstanding restricted share unit was converted into restricted share units of the Company that, upon vesting, will be settled for the Company’s Class A Ordinary Shares based on an exchange ratio of approximately 108.083 .
Each public and private placement warrant of JATT that was unexercised at the time of the Business Combination was assumed by the Company and represented the right to purchase one Class A Ordinary Share upon exercise of such warrant. See Notes 2 and 8.
The Business Combination was accounted for as a reverse recapitalization with Legacy Zura as the accounting acquirer and JATT as the acquired company for accounting purposes. Legacy Zura was determined to be the accounting acquirer since Legacy Zura’s shareholders as a group prior to the Business Combination held the majority voting interest in the combined entity, Legacy Zura’s shareholders appointed 4 out of the 7 directors of the combined Board of Directors, Legacy Zura’s management holds certain key positions in the management of the combined entity, and Legacy Zura is the largest of the combining entities based on historical operating activity and comprises all of the ongoing operations. Accordingly, all historical financial information presented in these consolidated financial statements represents the accounts of Legacy Zura. Net assets were stated at historical cost consistent with the treatment of the transaction as a reverse recapitalization of Legacy Zura. The Company’s convertible preferred shares and Class A Ordinary Shares prior to the closing of the Business Combination have been retroactively restated to reflect the exchange ratio of approximately 108.083 established in the Business Combination Agreement.
The number of Class A Ordinary Shares issued and outstanding immediately following the Business Combination on March 20, 2023 was:
Shares
%
JATT Public shareholders
182,498
0.7
%
Zura shares issued – 2022 Lilly license
550,000
2.0
%
Redemption Backstop
1,301,633
4.8
%
Redemption Backstop Consideration
2,500,000
9.2
%
JATT Founders
3,450,000
12.8
%
PIPE Investment
2,009,950
7.4
%
Forward Purchase Agreement
3,000,000
11.1
%
Legacy Zura equity holders
14,058,074
52.0
%
Total shares outstanding
27,052,155
100.0
%
F-12
Table of Contents
PIPE Investment
Concurrently with the execution of the Business Combination Agreement, JATT entered into subscription agreements with certain “accredited investors” (as defined by Rule 501 of Regulation D) (the “PIPE Investors”) on June 16, 2022, as amended on November 25, 2022, (the “Ewon PIPE Subscription Agreement”) and March 13, 2023 (the “Eugene PIPE Subscription Agreement”), pursuant to which the PIPE Investors collectively subscribed for and agreed to purchase an aggregate of 2,009,950 JATT Class A Ordinary Shares at a purchase price of $ 10.00 per share for $ 20,099,500 .
Forward Purchase Agreement and Redemption Backstop
On January 27, 2022, JATT entered into an Amended Forward Purchase Agreement (the “Forward Purchase Agreement”) with two institutional investors (the “FPA Investors”) providing that at the Closing of the Business Combination: (i) the purchasers will purchase an aggregate of 3,000,000 Class A Ordinary Shares at $ 10 per share for $ 30,000,000 ; and (ii) the purchase of, in a binding redemption backstop (the “Redemption Backstop”), up to an additional $ 15 million of Class A Ordinary Shares in the event that public Class A Ordinary Share redemptions are greater than 90 % in connection with the Business Combination (the “Excess Redemptions”). On the Closing Date, FPA Investors purchased 1,301,633 JATT Class A Ordinary Shares at $ 10 per share for $ 13,016,330 . In addition, the FPA Investors were issued an additional 2,500,000 Class A Ordinary Shares (“Redemption Backstop Consideration”) for no additional consideration.
4. Fair Value Measurements
The Company measures certain financial assets and liabilities at fair value on a recurring basis. The Company determines fair value based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy. These levels are:
Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
Level 2: Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities 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 related assets or liabilities; and
Level 3: Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.
Financial instruments consist of cash and cash equivalents, prepaid and other current assets, accounts payable and accrued expenses and private placement warrants. The carrying values of the Company’s cash, prepaid and other current assets, and accounts payable and accrued expenses approximate their fair value due to the short-term maturity of these instruments.
The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2023, and the fair value hierarchy of the valuation techniques utilized:
December 31, 2024
Level 1
Level 2
Level 3
Total
Financial assets:
Cash equivalents
$
170,743
$
—
$
—
$
170,743
December 31, 2023
Level 1
Level 2
Level 3
Total
Financial assets:
Cash equivalents
$
97,913
$
—
$
—
$
97,913
Financial liabilities:
Private placement warrants
$
—
$
990
$
—
$
990
There were no transfers into or out of Level 1, Level 2, or Level 3 during the year ended December 31, 2024 and 2023.
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Private Placement Warrants
In August 2024, pursuant to the Warrant Exchange, the Company exchanged all of the outstanding Private Placement Warrants for Class A Ordinary Shares. The Private Placement Warrants were originally assumed in connection with the Business Combination in 2023. See Note 8. The Private Placement Warrants were measured at fair value on a recurring basis. Because the transfer of Private Placement Warrants to non-permitted transferees would result in the Private Placement Warrants having substantially the same terms as the Public Warrants, the Company determined that the fair value of each Private Placement Warrant is consistent with that of a Public Warrant. Accordingly, the Private Placement Warrants are classified as Level 2 financial instruments. Upon completion of the Warrant Exchange, the Private Placement Warrants were remeasured to settlement value which was determined based on the fair value of the Class A Ordinary Shares issued in exchange for the Private Placement Warrants. The following table provides a summary of changes in the estimated fair value of the Private Placement Warrants:
For the Year Ended December 31,
2024
2023
Balance, beginning of year
$
990
$
—
Assumption of private placement warrants
—
1,714
Change in fair value
5,240
( 724 )
Exchange of private placement warrants for Class A Ordinary Shares
( 6,230 )
—
Balance, end of year
$
—
$
990
For the years ended December 31, 2024 and 2023, the Company recorded a loss of $ 5.2 million and a gain of $ 0.7 million, respectively, from the change in fair value of the Private Placement Warrants in change in fair value of private placement warrants in the consolidated statements of operations.
Financial Instruments Settled Upon Business Combination
The Company had two level three classified financial instruments, note payable and research and development license consideration, that were measured at fair value on a recurring basis during 2023 and settled prior to December 31, 2023. The following table provides a summary of changes in the estimated fair value of the note payable and research and development license consideration liability:
Research and
Development
License
Consideration
Note Payable
Liability
Balance as of December 31, 2022
$
7,756
$
2,634
Remeasurement to settlement value upon closing of the Business Combination
2,244
1,854
Settlement of liability
( 10,000 )
( 4,488 )
Balance as of December 31, 2023
$
—
$
—
Note payable
On December 8, 2022, the Company received $ 7.6 million in net proceeds from the issuance of a promissory note (the “Note”) issued to Hydra, LLC (“Hydra”) with a face amount of $ 8.0 million. The Company elected to account for the Note at fair value. Upon the Closing Date of the Business Combination, the Note was remeasured to the settlement value and subsequently repaid for a total of $ 10.0 million. For the year ended December 31, 2023, the Company recorded a loss on the remeasurement of the Note of $ 2.2 million in change in fair value of note payable in the consolidated statement of operations. The Note was no longer outstanding as of December 31, 2024 and 2023.
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Research and development license consideration
As consideration for the 2022 Lilly License (defined below), Lilly received 550,000 Class A Ordinary Shares upon the closing of the Business Combination (subject to certain lock-up provisions). See Note 6. The arrangement was liability classified and remeasured at fair value at each reporting date prior to the Business Combination (the research and development license consideration liability).
Upon the Closing Date of the Business Combination, the liability was remeasured to its settlement value and subsequently settled through the issuance of 550,000 Class A Ordinary Shares of Zura. The aggregate fair value of the Class A Ordinary Shares of Zura issued to Lilly was determined to be $ 4.5 million, or $ 8.16 per share. For the year ended December 31, 2023, the Company recorded a loss on the remeasurement of the research and development license consideration liability of $ 1.9 million in research and development in the consolidated statement of operations. The research and development license consideration liability was no longer outstanding as of December 31, 2024 and 2023.
5. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses are composed of the following as of December 31, 2024 and 2023:
December 31,
2024
2023
Accrued research and development costs
$
7,100
$
6,091
Accrued 2023 Lilly License costs
9,500
10,000
Accrued bonus
1,713
1,201
Accounts payable
733
2,749
Accrued professional fees
318
150
Other accrued expenses
150
111
Total accounts payable and accrued expenses
$
19,514
$
20,302
6. License Agreements
2023 Lilly License
On April 26, 2023, the Company’s consolidated subsidiary ZB17 LLC (“ZB17”) entered into a license agreement (the “2023 Lilly License” and, together with the 2022 Lilly License (as defined below), the “Lilly Licenses”) with Lilly, for an exclusive license to develop, manufacture and commercialize a certain bispecific antibody relating to IL-17 and BAFF (“ZB-106”) in exchange for an upfront payment consisting of $ 5.8 million as well as 1,000,000 Class A Ordinary Shares issued at a fair value of $ 7.84 per Class A Ordinary Share. During 2024, ZB17 made an additional payment of $ 5.0 million to Lilly in connection with the receipt of certain know-how, data, information and materials that Lilly is required to provide under the license agreement.
The acquisition was accounted for as an asset acquisition as substantially all of the fair value of the assets acquired is concentrated in a group of similar identifiable IPR&D assets. On the acquisition date, the compound licensed had not yet received regulatory approval and the in-process research and development did not have an alternative use. Accordingly, the Company expensed the entire cost of the 2023 Lilly License in research and development in the consolidated statement of operations during the year ended December 31, 2023.
As a finder’s fee for arranging the acquisition of the 2023 Lilly License, ZB17 granted Stone Peach the right, but not the obligation, to purchase 4.99 % of the fully diluted equity of ZB17 for $ 1.0 million (the “Stone Peach Call Right”). The Stone Peach Call Right is not exercisable until after the last patient is dosed in any single next clinical trial with ZB-106 and expires one year from the date of first indication approval for ZB-106 by the FDA or the European Medicines Agency (“EMA”). The Company recognized the Stone Peach Call Right at a grant-date fair value of $ 1.5 million in research and development in the consolidated statement of operations during the year ended December 31, 2023. The Stone Peach Call Right represents noncontrolling interest in the Company’s consolidated subsidiary, ZB17. As of December 31, 2024 and 2023, the noncontrolling interest balance was $ 1.5 million in the consolidated balance sheets.
As additional consideration, beginning on May 1, 2023, Stone Peach receives an annual payment of $ 0.6 million initially, and increasing by 10 % annually, so long as the Company maintains its license for tibulizumab, to be paid on May 1st of each year. The Company records expense for these annual payments when they become due. For the years ended December 31, 2024 and 2023, the Company recorded $ 0.7 million and $ 0.6 million, respectively, in research and development in the consolidated statement of operations for the annual payments.
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The Company recorded a one-time payment of $ 4.5 million for additional consideration due to Stone Peach upon approval from the FDA for its Investigational New Drug (“IND”) and commencement of the clinical trial for tibulizumab in research and development in the consolidated statement of operations for the years ended December 31, 2024 and in accounts payable and accrued expenses as of December 31, 2024.
As a finder’s fee for arranging the acquisition of the 2023 Lilly License, the Company agreed to make a one-time milestone payment of $ 5.0 million to BAFFX17, Ltd (“BAFFX17”) upon the occurrence of either: (i) a change of control transaction, (ii) the closing of an issuance of equity or equity-linked securities by the Company of at least $ 100.0 million, (iii) the consummation of a sale of assets resulting in net proceeds in excess of $ 100.0 million, or (iv) the Company’s fully diluted shares outstanding exceed 52,500,000 shares (on a split adjusted basis) as measured on April 24th of each year. As the Company’s fully diluted shares outstanding exceeded 52,500,000 shares prior to December 31, 2023, the $ 5.0 million fee was recorded in research and development in the consolidated statement of operations for the year ended December 31, 2023, and is included in accounts payable and accrued expenses in the consolidated balance sheets as of December 31, 2024 and December 31, 2023.
In addition to the consideration paid and/or earned during the years ended December 31, 2024 and 2023, the Company is obligated to make payments (a) to Lilly for four (4) development milestone payments up to an aggregate of $ 155.0 million, and sales milestone payments up to an aggregate of $ 440.0 million based on respective thresholds of net sales of products developed from tibulizumab; (b) to Lilly over a multi-year period ( twelve years , or upon the later expiration of regulatory exclusivity of ZB-106 in a country) for an annual earned royalty at a marginal royalty rate in the mid-single digits to low-double digits, with increasing rates depending on net sales in the respective calendar year, based on a percentage of sales within varying thresholds for a certain period of years; (c) to BAFFX17 for a fee equal to 3 % of any milestone or royalty payments due to Lilly pursuant to the terms of either the 2022 Lilly License or the 2023 Lilly License; (d) to Stone Peach for a one-time milestone payment of $ 25 million upon either (i) certain equity-related transactions, or (ii) the receipt of regulatory approval from the applicable regulatory authority for any new indication in the applicable jurisdiction; (e) to Stone Peach for a royalty of 2 % of the aggregate net sales of any products developed from the Compound (collectively, the “2023 Lilly Contingent Payments”). As of December 31, 2024, none of the 2023 Lilly Contingent Payments are due and accordingly will not be recorded in the Company’s financial statements until they are due.
2022 Lilly License
On December 8, 2022, the Company’s consolidated subsidiary, Z33, entered into a license agreement (the “2022 Lilly License”) with Lilly pursuant to which Lilly granted Z33 an exclusive (even as to Lilly), royalty-bearing global license to develop, manufacture, and commercialize certain intellectual property owned by Lilly relating to its IL-33 compound. As consideration, the Company paid Lilly an upfront fee of $ 7.0 million during 2022 and issued 550,000 Class A Ordinary Shares upon the closing of the Business Combination (subject to certain lock-up provisions) (the “Lilly License Fee”). During 2022 the Company recorded expense for the entire cost of the Lilly License Fee. Prior to the Business Combination, the obligation to issue shares represented contingent consideration and was classified as a liability in the consolidated balance sheet (research and development license consideration liability), which was settled upon the issuance of shares upon the closing of the Business Combination. See Note 4.
As a finder’s fee in connection with arranging the acquisition, Z33 issued to Stone Peach Properties, LLC (“Stone Peach”) 4,900,222 shares of Z33 Series Seed Preferred Shares, which was included in the measurement of the cost of the acquired asset. The Company has the right, but not the obligation to purchase up to 50 % of the Series Seed Preferred Shares issued to Stone Peach at a price per share of $ 2.448869 for a period of two years from the date of the agreement (the “Call Option”). Stone Peach has the right, but not the obligation to sell up to 50 % of the Series Seed Preferred Shares issued to Stone Peach to the Company for a price per share of $ 2.040724 (the “Put Option”). In April 2023, the Company agreed to exercise its Call Option and the Company amended the settlement terms to settle the Call Option by issuing 2,000,000 Class A Ordinary Shares (the “Amended Terms”). In November 2023, the Amended Terms were voided and the Company’s rights and obligations under the Call Option reverted to those in the original agreement (the “Second Amended Terms”). In connection with the Second Amended Terms, the Company also provided Stone Peach with the right, but not the obligation to sell up to 50 % of the Series Seed Preferred Shares issued to Stone Peach to the Company in exchange for 2,000,000 Class A Ordinary Shares (the “Put Right”). Stone Peach may exercise its Put Option and Put Right at any time between April 24, 2024 and April 24, 2028 under the new agreement. See Note 12. Each of the Amended Terms and the Second Amended Terms were considered an extinguishment and reissuance of the Z33 Series Seed Preferred Shares, and the Z33 Series Seed Preferred Shares are remeasured to the greater of the redemption value or the initial fair value, less noncontrolling shareholder’s interest in net loss of Z33, at each subsequent reporting period. The Z33 Series Seed Preferred Shares represent redeemable noncontrolling interest in the Company’s consolidated subsidiary, Z33.
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In addition to the consideration paid in 2022 and shares issued in 2023, the Company is also obligated to make payments to Lilly for (a) for $ 3.0 million upon the completion of a financing by Z33 with gross proceeds exceeding $ 100 million; (b) 10 commercial, development and regulatory milestone payments up to an aggregate of $ 155.0 million and sales milestone payments up to an aggregate of $ 440.0 million based on respective thresholds of net sales of products developed from the licensed compound, if any; and (c) an annual earned royalty at a marginal royalty rate between in the mid-single to low-double digits (less than 20 %), with increasing rates based on net sales in the respective calendar year, based on a percentage of sales within varying thresholds for a certain period of the year, if any year (collectively, the “2022 Lilly Contingent Payments”). The Company will account for these contingent milestone payments when they become due. As of December 31, 2024, none of the 2022 Lilly Contingent Payments are due and accordingly will not be recorded in the Company’s financial statements until they are due.
Pfizer Agreement
On March 22, 2022, the Company entered into a license agreement and a Series A - 1 Subscription and Shareholder’s Agreement (collectively, the “Pfizer Agreement”) with Pfizer. Under the Pfizer Agreement, the Company acquired a license for a compound initially developed by Pfizer, in exchange for $ 5.0 million in cash and 2,702,083 shares (as adjusted by the exchange ratio established in the Business Combination Agreement) of the Company’s Series A - 1 convertible preferred shares, representing a 20 % interest in the Company. In accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations , the Pfizer Agreement is accounted for as an asset acquisition, as substantially all of the $ 7.5 million value transferred to the Company was allocated to in-process research and development. On the acquisition date, the compound licensed had not yet received regulatory approval and the in-process research and development did not have an alternative use.
In addition to the consideration transferred during 2022, the Company is obligated to make payments to Pfizer for (a) twelve (12) future development and regulatory milestone payments aggregating up to $ 70.0 million and sales milestone payments up to an aggregate of $ 525.0 million based on respective thresholds of net sales of products (developed from the licensed compound) (the “Products”), if any; and (b) an annual earned royalty at a marginal royalty rate in the mid-single digits to low double digits (less than 20 %), based on thresholds of net sales of the Company’s Products, if any (collectively, the “Pfizer Contingent Payments”). Royalties are payable on a country-by-country basis for a certain period of years or upon the later expiration of regulatory exclusivity of the Company’s Products in a country.
The Company recorded the first $ 1.0 million development milestone, included in the Pfizer Contingent Payments, as a component of research and development in the consolidated statement of operations during the year ended December 31, 2023. This amount was fully paid to Pfizer during the year ended December 31, 2024. As of December 31, 2024, no additional Pfizer Contingent Payments are due and accordingly no additional Pfizer Contingent Payments will be recorded in the Company’s financial statements until they are due.
The Pfizer Agreement also had an anti-dilution provision to allow Pfizer to maintain an 18 % interest in the Company, as detailed in Note 7. Immediately prior to the Closing Date of the Business Combination, additional share options and restricted share units were issued to certain employees, executives, and directors that would result in the dilution of Pfizer’s ownership in the Company. In accordance with the anti-dilution provision of the Pfizer Agreement, Pfizer was issued additional Series A-1 convertible preferred shares upon the closing of the Business Combination that were immediately converted to 267,939 Class A Ordinary Shares. In accordance with ASC 718, Compensation – Stock Compensation , the Company recorded expense related to these Class A Ordinary Shares based on their grant date fair value. See Note 9. Following the Business Combination, the anti-dilution provision is no longer in effect.
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Lonza
In July 2022, the Company entered into a license agreement (the “Lonza License”) with Lonza Sales AG (“Lonza”) for a worldwide non-exclusive license for Lonza’s gene expression system in exchange for varying considerations depending on a number of factors such as whether the Company enters further into manufacturing agreements with Lonza or with a third party, and whether the Company enters into sublicense agreements with third parties (including up to middle six-figure annual payments per sublicense upon commencement of a sublicense, as well as royalties of up to low-single digit percentages of net sales of certain products over a commercially standard double-digit multi-year term). The Lonza License will remain in effect until terminated. The Company is free to terminate the Lonza License at any time upon 60 days’ notice, with or without cause. Lonza may terminate the Lonza License for cause upon a breach by the Company or for other commercially standard reasons.
During October 2023, the Company began drug substance manufacturing with another third party. As a result of manufacturing with a third party other than Lonza, under the terms of the Lonza License the Company had a license fee of $ 0.4 million due to Lonza in the fourth quarter of 2023 and annually thereafter. The Company recorded $ 0.4 million for the Lonza License in research and development in the consolidated statements of operations for the years ended December 31, 2024 and 2023. During the year ended December 31, 2024, $ 0.4 million was paid for the Lonza License and the remaining $ 0.4 million is included in accounts payable and accrued expenses in the consolidated balance sheet as of December 31, 2024.
WuXi Biologics License
In July 2023, the Company entered into a cell line license agreement (the “Cell Line License Agreement”) with WuXi Biologics and its Affiliates (“WuXi Biologics”) for certain of WuXi Biologics’ know-how, cell line, and biological materials (the “WuXi Biologics Licensed Technology”) to manufacture, have manufactured, use, sell and import certain products produced through the use of the cell line licensed by WuXi Biologics under the Cell Line License Agreement (the “WuXi Biologics Licensed Products”). If the Company manufactures all of its commercial supplies of bulk drug product for WuXi Biologics Licensed Products with a manufacturer other than WuXi Biologics or its affiliates, the Company is required to make royalty payments to WuXi Biologics in an amount equal to a fraction of a single digit percentage of global net sales of WuXi Biologics Licensed Products manufactured by a third-party manufacturer (the “Royalty”). If the Company manufactures part of its commercial supplies of the WuXi Biologics Licensed Products with WuXi Biologics or its affiliates, then the Royalty will be reduced accordingly on a pro rata basis. The Cell Line License Agreement will continue indefinitely unless terminated (i) by the Company upon three months’ prior written notice and its payment of all undisputed amounts due to WuXi Biologics through the effective date of termination, (ii) by WuXi Biologics for a material breach by the Company that remains uncured for 30 days after written notice, or (iii) by WuXi Biologics if the Company fails to make a payment and such failure continues for 30 days after receiving notice of such failure. As of December 31, 2024, there are no payments currently due under the Cell Line License Agreement.
7. Convertible Preferred Shares and Shareholders’ Equity
Business Combination
Immediately prior to the Closing Date of the Business Combination, Pfizer was issued additional Series A-1 convertible preferred shares upon the closing of the Business Combination that were immediately converted to 267,939 Class A Ordinary Shares. The shares were issued in accordance with the anti-dilution provision of the Pfizer Agreement. See Note 9.
On the Closing Date and in accordance with the terms and subject to the conditions of the Business Combination, each Ordinary Share of Legacy Zura, par value $ 0.001 per share, Series A-1 convertible preferred share, outstanding option (whether vested or unvested), and restricted share unit (whether vested or unvested) were canceled and converted into a comparable number of awards that consisted of either the rights to receive or acquire the Company’s Class A Ordinary Shares, par value $ 0.0001 per share, as determined by the exchange ratio pursuant to the Business Combination Agreement. The exchange ratio was approximately 108.083 .
On March 16, 2023, in connection with the closing of the Business Combination and effective upon the Closing Date, the Company authorized 300,000,000 Class A Ordinary Shares, par value of $ 0.0001 and 1,000,000 preferred shares, par value of $ 0.0001 .
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Shelf Registration and ATM Program
The Company filed a shelf registration statement on Form S-3 (the “Shelf Registration Statement”), which was declared effective on September 17, 2024. Pursuant to the Shelf Registration Statement, the Company may offer and sell ordinary shares, preference shares, debt securities, warrants and or units having an aggregate public offering price of up to $ 300.0 million. In connection with the filing of the Shelf Registration Statement, the Company also entered into a sales agreement (the “Sales Agreement”) with Leerink Partners LLC (“Leerink Partners”), relating to the sale of the Company’s Class A Ordinary Shares having an aggregate gross sales price of up to $ 125.0 million, from time to time through Leerink Partners, acting as sales agent (the “ATM”). The Company incurred $ 0.6 million of offering expenses in connection with establishing the ATM that reduced additional paid-in capital as of December 31, 2024.
On September 18, 2024, the Company sold 1,500,000 Class A Ordinary Shares at a price of $ 3.80 per share under the ATM, for net proceeds of $ 5.5 million, after placement agent commissions. See Note 14.
Warrant Exchange
In connection with the Warrant Exchange, the Company issued 3,782,190 Class A Ordinary Shares. See Note 8.
Exchange of Class A Ordinary Shares
On August 15, 2024, the Company entered into a share surrender and warrant agreement (the “Share Exchange Agreement”) with certain affiliated shareholders (the “Shareholders”), pursuant to which (i) the Shareholders surrendered an aggregate of 4,000,000 Class A Ordinary Shares owned by the Shareholders, for no consideration, which were immediately cancelled and retired, upon surrender; and (ii) the Company issued pre-funded warrants to purchase an aggregate of 4,000,000 Ordinary Shares, with an exercise price of $ 0.001 per share (the “Share Exchange Warrants”) (the “Share Exchange”).
April 2024 Private Placement
On April 18, 2024, the Company entered into subscription agreements (the “Investor Agreements”) with certain institutional and other accredited investors (the “Investors”), whereby the Company agreed to issue 18,732,301 Class A Ordinary Shares at a price of $ 3.108 per share and pre-funded warrants to purchase up to 16,102,348 Class A Ordinary Shares (the “2024 Pre-Funded Warrants”) at a price of $ 3.107 per 2024 Pre-Funded Warrant for an aggregate purchase price of $ 108.3 million. See Note 8 for further information about the 2024 Pre-Funded Warrants.
On April 18, 2024, the Company also entered into subscription agreements (the “Insider Agreements” and together with the Investor Agreements, the “April 2024 Private Placement”) with certain officers, directors and affiliates of the Company (“Insiders” and together with the Investors, the “Subscribers”), whereby the Company issued 1,357,827 Class A Ordinary Shares at a price of $ 3.13 per share for an aggregate purchase price of $ 4.2 million.
The April 2024 Private Placement closed on April 22, 2024, from which the Company received total gross proceeds of approximately $ 112.5 million, before deducting transaction costs of $ 7.2 million.
April 2023 Private Placement
On April 26, 2023, the Company entered into its second PIPE subscription agreement (the “April 2023 Private Placement”) with certain accredited investors (the “Subscribers”), whereby the Company issued 15,041,530 Class A Ordinary Shares, par value $ 0.0001 per share and pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 3,782,000 Class A Ordinary Shares. Each Class A Ordinary Share was sold at a price of $ 4.25 per Class A Ordinary Share and each Pre-Funded Warrant was sold at a price of $ 4.249 per Pre-Funded Warrant for an aggregate purchase price of $ 80.0 million. See Note 8.
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Class A Ordinary Shares Reserved for Issuance
The summary of shares reserved for issuance as of December 31, 2024 is summarized below:
December 31, 2024
Shares issuable upon exercise of warrants to purchase Class A Ordinary Shares
23,884,348
Shares issuable upon exercise of options to purchase Class A Ordinary Shares
12,217,747
Shares available for grant under 2023 Equity Incentive Plan and ESPP
1,863,283
Shares issuable upon exercise of Z33 Put Right
2,000,000
Shares issuable upon release of restricted share units
876,923
Total shares reserved for issuance
40,842,301
Legacy Zura Ordinary Shares and Series A-1 Convertible Preferred Shares
Prior to the Business Combination, Legacy Zura was authorized to issue Ordinary Shares and Series A-1 convertible preferred shares. The outstanding Ordinary Shares and Series A-1 convertible preferred shares of Legacy Zura are presented on the consolidated statement of changes in redeemable noncontrolling interest, convertible preferred shares, and shareholders’ equity (deficit) as of December 31, 2022, prior to the recapitalization (see Note 3).
As of December 31, 2024 and 2023, no Legacy Zura Ordinary Shares and no convertible preferred shares were issued and outstanding.
Series A-1 Convertible Preferred Shares Rights and Preferences
Conversion
Each Series A-1 convertible preferred share was convertible, at the option of the holder thereof, at any time after the date of issuance of such share, into such number shares of the Company’s Ordinary Shares, subject to adjustment.
Each Series A-1 convertible preferred share would have automatically converted into a share of the Company’s Ordinary Shares, subject to adjustment, immediately upon the occurrence of an initial public offering with a gross aggregate subscription with respect to new Ordinary Shares of greater than $ 50.0 million. The Ordinary Shares resulting from this conversion would have ranked pari passu with the existing Ordinary Shares at the time of conversion.
Anti-Dilution
When the Company issued equity securities, other than pursuant to a share option plan, the Company was required to issue such number of Series A-1 convertible preferred shares to Pfizer as necessary to maintain Pfizer’s ownership interest of 18 %, until the Company raised in excess of $ 30.0 million in equity, where any capital raised above this threshold is not subject to anti-dilution. Upon the closing of the Business Combination, the anti-dilution provision was no longer in effect.
Dividends
The holders of shares of Series A-1 convertible preferred shares were entitled to receive dividends, of profits available for distribution as determined by the Company’s board of directors with the consent of the majority of the shareholders, payable on a pro rata, pari passu basis. No dividends have been declared by the Company’s board of directors.
Liquidation
In the event of any voluntary or involuntary liquidation or return of capital (other than a conversion, redemption or purchase of shares) of the Company, the holders of the Series A-1 convertible preferred shares were entitled to receive a liquidation preference prior to any distribution to the holders of Ordinary Shares in the amount of $ 131 per share.
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Voting Rights
The holders of the Series A-1 convertible preferred shares were entitled to one vote per share, unless the Series A-1 shares are convertible into a greater number of Ordinary Shares or the holders of Series A-1 convertible preferred shares were entitled to any anti-dilution shares, in which case the holders of Series A-1 convertible preferred shares were entitled to the number of votes that the holder would be entitled upon conversion to Ordinary Shares or after the issuance of the anti-dilution shares, respectively.
Redemption Rights
The Series A-1 convertible preferred shares were not mandatorily redeemable at the option of the holder.
8. Warrants
Warrant Exchange
On July 12, 2024, the Company commenced an exchange offer (the “Exchange Offer”) and consent solicitation (the “Consent Solicitation”) relating to its outstanding warrants that it assumed in connection with the business combination, including (i) public warrants to purchase 5,910,000 Class A Ordinary Shares (the “Public Warrants”) that were held by JATT, and (ii) private placement warrants to purchase 6,899,996 Class A Ordinary Shares (the “Private Placement Warrants”) that were held by JATT shareholders (together with the Public Warrants, the “IPO warrants”). The Company offered to all holders of the IPO warrants the opportunity to receive 0.30 Class A ordinary shares in exchange for each outstanding IPO warrant tendered by the holder and exchanged pursuant to the Exchange Offer. Concurrently with the Exchange Offer, the Company also solicited consents from holders of the IPO warrants to amend that certain warrant agreement, dated as of July 16, 2021, by and between the Company and Continental Stock Transfer & Trust Company (“CST”), as warrant agent (the “Warrant Agreement”) to permit the Company to require that each IPO warrant outstanding upon the closing of the Exchange Offer be exchanged for 0.27 Class A ordinary shares, which is a ratio 10 % less than the exchange ratio applicable to the Exchange Offer. Pursuant to the terms of the Warrant Agreement, all except certain specified modifications or amendments required the vote or written consent of holders of at least a majority of the outstanding public warrants and a majority of the outstanding private placement warrants.
On August 12, 2024, the Company completed the Exchange Offer and Consent Solicitation and issued 2,011,017 Class A Ordinary Shares in exchange for 6,703,428 Public Warrants and 1,224,167 Class A Ordinary Shares in exchange for 4,080,580 Private Placement Warrants. In connection with its completion of the Exchange Offer, the Company entered into an amendment, dated August 12, 2024 (the “Warrant Amendment”), to the Warrant Agreement to provide the Company with the right to mandatorily exchange the Company’s remaining outstanding IPO warrants for Class A ordinary shares at an exchange ratio of 0.27 Class A ordinary shares for each IPO warrant. On August 27, 2024, in accordance with the Warrant Amendment, the Company issued 547,006 Class A Ordinary Shares in exchange for the 196,568 outstanding Public Warrants and 1,829,420 outstanding Private Placement Warrants. As a result, there are no outstanding IPO warrants as of December 31, 2024. In connection with the Warrant Exchange, the Company paid out a de minimis amount of cash in lieu of fractional shares.
The Company incurred approximately $ 1.6 million of costs directly related to the Warrant Exchange, consisting primarily of dealer manager fees and professional, legal, filing, regulatory, and other costs, which are included in general and administrative expenses for the year ended December 31, 2024.
Public Warrants
The Public Warrants became exercisable into Class A Ordinary Shares commencing 30 days after the Business Combination with an exercise price of $ 11.50 per share, subject to certain adjustments and would have expired five years from the date of the Business Combination, or earlier upon redemption or liquidation. Each warrant entitled the holder to purchase one share of the Company’s Class A Ordinary Shares at a price of $ 11.50 per share, subject to certain adjustments.
The Public Warrants were redeemable, with 30 days written notice, for cash at a price of $ 0.01 per warrant if the Reference Value (as defined below) equaled or exceeded $ 18.00 per share, subject to certain adjustments. The warrant holders had the right to exercise their outstanding warrants prior to the scheduled redemption date at $ 11.50 per share, subject to certain adjustments. If the Company called the public warrants for redemption, the Company would have the option to require all holders that wished to exercise the Public Warrants to do so on a “cashless basis”, as described in the warrant agreement. For purposes of the redemption, “Reference Value” shall mean the last reported sales price of the Company’s Class A Ordinary Shares for any twenty trading days within the thirty trading-day period ending on the third trading day prior to the date on which notice of the redemption is given.
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The Public Warrants are no longer outstanding as of December 31, 2024. See “—Warrant Exchange” above.
Private Placement Warrants
The Private Placement Warrants were identical to the Public Warrants, except that the Private Placement Warrants were not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, Private Placement Warrants held by the initial purchasers or their permitted transferees were exercisable on a cashless basis and were non-redeemable.
The Private Placement Warrants are no longer outstanding as of December 31, 2024. See “—Warrant Exchange” above.
Pre-Funded Warrants
On August 15, 2024, in conjunction with the Share Exchange Agreement, the Company issued the 4,000,000 Share Exchange Warrants with an exercise price of $ 0.001 per share and no expiration date. The Share Exchange Warrants are exercisable immediately, are exercisable until such Share Exchange Warrants are exercised in full and have substantially identical terms to the form of 2024 Pre-Funded Warrant (see below). A holder of the Share Exchange Warrants (together with its affiliates and other attribution parties) may not exercise any portion of a Share Exchange Warrant to the extent that immediately prior to or after giving effect to such exercise the holder would beneficially own more than 9.99 % of the Company’s outstanding Class A Ordinary Shares immediately after exercise, which percentage may be increased or decreased to any other percentage specified not in excess of 9.99 % at the holder’s election upon 61 days ’ notice to the Company subject to the terms of the Share Exchange Warrants. See Note 7.
In connection with the April 2023 Private Placement, the Company sold to accredited investors pre-funded warrants to purchase up to 3,782,000 Class A Ordinary Shares at a price of $ 4.249 per pre-funded warrant for an aggregate purchase price of approximately $ 16.1 million (the “2023 Pre-Funded Warrants”). Each 2023 Pre-Funded Warrant has an exercise price of $ 0.001 per Class A Ordinary Share and is exercisable for one Class A Ordinary Share at any time or times on or after April 26, 2023 until exercised in full.
In connection with the April 2024 Private Placement (see Note 7), the Company sold to accredited investors the 2024 Pre-Funded Warrants to purchase up to 16,102,348 Class A Ordinary Shares. Each 2024 Pre-Funded Warrant has an exercise price of $ 0.001 per Class A Ordinary Share and is exercisable for one Class A Ordinary Share at any time or times on or after April 22, 2024, until exercised in full.
The following table presents the number of warrants outstanding, their exercise price, and expiration dates as of December 31, 2024 and 2023:
As of December 31, 2024
Warrants Issued
Exercise Price
Expiration Date
23,884,348
$
0.001
N/A
As of December 31, 2023
Warrants Issued
Exercise Price
Expiration Date
6,899,996
$
11.5
Mar-28
5,910,000
$
11.5
Mar-28
3,782,000
$
0.001
N/A
9.
Share-Based Compensation
On March 16, 2023, JATT’s board of directors approved the Zura Bio Limited 2023 Equity Incentive Plan (the “Equity Incentive Plan”) which became effective on the day immediately preceding the Closing Date of the Business Combination. The Equity Incentive Plan allows for the grant of share options, both incentive and nonqualified share options; stock appreciation rights (“SARS”), alone or in conjunction with other awards; restricted share awards (“RSAs”) and restricted share units (“RSUs”); incentive bonuses, which may be paid in cash, shares, or a combination thereof; and other share-based awards to employees, officers, non-employee directors and other service providers. The Company has granted share options, RSUs and RSAs that generally vest over four years and expire after 10 years . On June 1, 2023, the Company’s board of directors approved an increase to the number of Class A Ordinary Shares that may be issued under the Equity Incentive Plan by an additional 5,564,315 Class A Ordinary Shares. See Note 14.
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The Class A Ordinary Shares issuable under the Equity Incentive Plan are subject to an annual increase on January 1st of each calendar year beginning on January 1, 2024 and ending on and including January 1, 2029, equal to the lesser of (i) 5.0 % of the aggregate number of Class A Ordinary Shares outstanding on the final day of the immediately preceding calendar year, (ii) 8,059,796 Class A Ordinary Shares or (iii) such smaller number of shares as is determined by the board. As of January 1, 2024, the Company's board of directors decided not to apply an increase to the Class A Ordinary Shares issuable under the Equity Incentive Plan for the 2024 calendar year.
On March 16, 2023, JATT’s board of directors approved the Zura Bio Limited 2023 Employee Stock Purchase Plan (the “ESPP”) which became effective on the day immediately preceding the Closing Date of the Business Combination. The maximum number of Class A Ordinary Shares that may be issued under the ESPP is 4,029,898 , plus an aggregate number of Class A Ordinary Shares that are automatically added under the Equity Incentive Plan on January 1st of each calendar year, beginning on January 1, 2024 and ending on and including January 1, 2029, as discussed above. The ESPP enables eligible employees of the Company and designated affiliates to purchase Class A Ordinary Shares at a discount of 15 %. As of December 31, 2024, the Company has no t activated the ESPP.
As of December 31, 2024, a maximum of 13,624,111 Class A Ordinary Shares were authorized for issuance under either the Equity Incentive Plan and ESPP, collectively.
Legacy Zura Option Plans Conversions
On June 8, 2022, Legacy Zura’s board of directors approved two share option plans, the UK Plan (the “UK Plan”) and the US Plan (the “US Plan”) (collectively, the “Option Plans”) which permit the granting of nonqualified share options to certain employees and directors. There were 1,501,165 Ordinary Shares available for issuance under the Option Plans, of which 383,371 Ordinary Shares were authorized for issuance under the US Plan. Upon closing of the Business Combination, all equity awards of Legacy Zura that were issued and outstanding under the Option Plans were converted into comparable equity awards that are settled or exercisable for shares of the Company’s Class A Ordinary Shares under the Equity Incentive Plan. As a result, each of Legacy Zura’s equity awards were converted into an option to purchase Class A Ordinary Shares of the Company based on an exchange ratio of approximately 108.083 .
Equity Incentive Plan
Share Options
The fair value of Equity Incentive Plan share options is estimated on the date of grant using the Black-Scholes option pricing model. The Company lacks significant company-specific historical and implied volatility information. Therefore, it estimates its expected share volatility based on the historical volatility of a publicly traded set of peer companies. Due to the lack of historical exercise history, the expected term of the Company’s share options has been determined using the “simplified” method for awards. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.
The following weighted-average assumptions were used to estimate the fair value of the Equity Incentive Plan share options issued during the years ended December 31, 2024 and 2023:
For the Year Ended December 31,
2024
2023
Share price
$
3.35
$
6.25
Expected volatility
101.1
%
97.1
%
Risk-free rate
4.2
%
3.6
%
Expected life
6.0 years
6.1 years
Expected dividend yield
—
%
—
%
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The following table summarizes the Company’s share option activity for the year ended December 31, 2024:
Weighted
Weighted
Average
Aggregate
Average
Remaining
Intrinsic
Number of
Exercise Price
Contractual
Value
Options
(per share)
Life (Years)
(in thousands)
Options outstanding as of December 31, 2023
5,791,065
$
2.12
9.3
$
17,752
Granted
7,164,948
$
3.45
Forfeited
( 738,266 )
$
2.49
Options outstanding as of December 31, 2024
12,217,747
$
2.88
8.9
$
8,388
Options vested and exercisable as of December 30, 2024
$
3,672,393
$
1.50
8.2
$
6,080
Included in options outstanding as of December 31, 2024 and 2023 in the table above are 2,165,369 and 2,483,135 , respectively, options to purchase Class A Ordinary Shares issued to certain directors, executives, and employees outside of the Equity Incentive Plan.
In December 2024, the Company granted 1,053,000 PSOs, included in the table above, that will vest upon the earlier of achieving a one year service condition or upon the Company’s Annual General Meeting (“AGM”). The Company is recording expense over one year as the Company’s management has not deemed it probable that the AGM will be earlier than one year.
The weighted average grant date fair value of options granted during the years ended December 31, 2024 and 2023 was $ 2.71 and $ 5.79 , respectively.
Market-Based Share Options
On March 20, 2023, the Company granted 306,373 options to purchase Class A Ordinary Shares (“Market-Based Share Options”) to a certain Director of the Board. These awards will vest only to the extent that the 20 -day volume weighted average trading price (“VWAP”) of the Class A Ordinary Shares is over $ 30 per Class A Ordinary Share at any time prior to the fifth anniversary of the grant date. These awards have an exercise price of $ 8.16 and become exercisable when vested and the market condition is satisfied. These awards expire 10 years from the date of grant. The fair value of these Market-Based Share Options were estimated using a Monte Carlo valuation method for the year ended December 31, 2023. No Market-Based Share Options were granted during the year ended December 31, 2024.
The following table includes the weighted-average assumptions used at the grant date to determine the fair value of the Company’s Market-Based Share Options granted during the year ended December 31, 2023.
For the Year
Ended
December 31,
2023
Expected volatility
80.0
%
Risk-free rate
3.6
%
Expected life
2.2 years
Expected dividend yield
—
%
Fair value per Market-Based Share Options
$
4.66
For the years ended December 31, 2024 and 2023, the Company recorded expense related to Market-Based Share Options of $ 0.7 million and $ 0.5 million, respectively.
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Restricted Share Units
The following table summarizes the Company’s RSU activity for the year ended December 31, 2024:
Weighted
Number of
Average
Options
Grant Date FV
Unvested RSUs outstanding as of December 31, 2023
1,563,018
$
5.93
Granted
5,000
$
3.59
Forfeited
( 297,342 )
$
5.77
Vested and issued
( 393,753 )
$
5.77
Vested and unissued
( 2,000 )
$
5.39
Unvested RSUs as of December 31, 2024
874,923
$
5.99
For the years ended December 31, 2024 and 2023, the Company recorded expense related to RSUs of $ 2.0 million and $ 1.6 million, respectively.
Restricted Share Awards
During the year ended December 31, 2023, the Company converted RSUs granted to a certain director pursuant to the Equity Incentive Plan into RSAs. The following table summarizes the Company’s RSA activity for the year ended December 31, 2024:
Weighted
Average
Number of
Grant Date
Options
Fair Value
Unvested RSAs outstanding as of December 31, 2023
499,993
8.16
Vested
( 124,998 )
8.16
Unvested RSAs outstanding as of December 31, 2024
374,995
$
8.16
For the years ended December 31, 2024 and 2023, the Company recorded expense related to RSAs of $ 1.0 million and $ 0.6 million, respectively.
Equity Award Modification
On July 24, 2024, the Company entered into a settlement agreement with Someit Sidhu (“Settlement Agreement”) in connection with the Chief Executive Officer (“CEO”) transition. Pursuant to the Settlement Agreement, 1,700,000 share options became fully vested and immediately exercisable and the remaining 250,000 share options will vest annually over three years on the anniversary of the Settlement Agreement. Accordingly, for the year ended December 31, 2024, the Company recorded $ 5.9 million of share-based compensation expense, in general and administrative expense in the consolidated statement of operations, for the remaining grant date fair value of the 1,700,000 share options and the grant date fair value of the 250,000 share options is being recorded to compensation expense over the revised vesting period. The Company determined that the Settlement Agreement did not result in any incremental expense.
On January 10, 2024, the Company and its Chief Medical Officer (the “CMO”) entered into an agreement regarding the CMO’s departure from the Company (the “Severance Agreement”). In connection with the Severance Agreement, 67,525 of the share options previously granted to the CMO became fully vested and exercisable and 40,515 of the RSUs previously granted to the CMO became fully vested. All remaining share options and RSUs not vested were forfeited and cancelled. During the year ended December 31, 2024, the Company recognized a reversal of approximately $ 0.1 million of share-based compensation expense related to this modification in research and development expense in the consolidated statement of operations.
On April 7, 2023, the Company and its President and Chief Operating Officer (the “COO”) entered into an agreement regarding the COO’s departure from the Company (the “Severance Agreement”). In connection with Severance Agreement, 59,594 of the share options previously granted to the COO became fully vested and exercisable, with any shares purchased under the option subject to an 18-month lockup period. The Company recognized approximately $ 0.6 million of incremental share-based compensation during the year ended December 31, 2023 related to this share option modification.
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Other Share-based Compensation
In accordance with the anti-dilution provisions of the Pfizer Agreement, Pfizer was issued additional Series A-1 convertible preferred shares upon the closing of the Business Combination that were immediately converted to 267,939 Class A Ordinary Shares. During the year ended December 31, 2023, the Company recorded expense of $ 2.2 million in research and development in the consolidated statement of operations, related to these Class A Ordinary Shares based on their grant-date fair value.
Share-based Compensation Expense
Share-based compensation expense for all equity arrangements for the year ended December 31, 2024 and 2023 was as follows:
For the Year Ended December 31,
2024
2023
Research and development
$
2,223
$
2,978
General and administrative
14,575
6,677
Total share-based compensation expense
$
16,798
$
9,655
As of December 31, 2024, unrecognized compensation costs related to the unvested share options were $ 21.2 million, which the Company expects to recognize over a weighted-average period of 2.8 years. As of December 31, 2024, unrecognized compensation costs related to the unvested RSUs were $ 4.1 million which the Company expects to recognize over a weighted-average period of 2.2 years. As of December 31, 2024, unrecognized compensation costs related to the unvested RSAs were $ 2.3 million which the Company expects to recognize over a weighted-average period of 2.4 years.
10. Income Taxes
The components of loss before income taxes were as follows:
For the Year Ended December 31,
2024
2023
U.S. operations
$
( 41,837 )
$
( 36,842 )
Non-U.S. operations
( 10,566 )
( 23,721 )
Loss before income taxes
$
( 52,403 )
$
( 60,563 )
Provision For Income Taxes
There is no provision for income taxes because the Company has incurred losses since its inception and maintains a full valuation allowance against its net deferred tax assets.
A reconciliation of the expected income tax (benefit) computed using the federal statutory income tax rate to the Company’s effective income tax rate is as follows:
December 31,
2024
2023
Income tax at federal statutory rate
21.0
%
21.0
%
State income tax expense, net of federal tax effect
0.5
%
( 1.7 )
%
Impact of non-U.S. earnings
( 7.1 )
%
( 0.3 )
%
Change in valuation allowance
( 14.3 )
%
( 18.9 )
%
Non-deductible share-based compensation
( 0.3 )
%
( 0.6 )
%
Permanent differences
( 0.1 )
%
( 0.6 )
%
Other
0.3
%
—
%
Change in deferred tax rate
—
%
1.1
%
—
%
—
%
The difference between the United States (“U.S.”) statutory federal income tax rate and the Company’s effective tax rate in 2024 and 2023 is primarily attributable to no tax benefit being provided on pre-tax operating losses as the Company maintains a full valuation allowance against its deferred tax assets.
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Deferred Tax Assets and Valuation Allowance
The significant components of the Company’s net deferred tax assets were as follows:
December 31,
2024
2023
Deferred tax assets:
Net operating loss carryforward
$
6,008
$
6,947
Intangible assets acquired
10,833
9,496
Capitalized research and development
5,838
619
Share-based compensation
1,985
831
Capitalized start-up costs
764
—
Accrued expenses and other
233
—
Total deferred income tax assets
25,661
17,893
Valuation allowance
( 25,661 )
( 17,893 )
Total deferred income tax assets, net
$
—
$
—
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that the deferred tax assets will be realized. The ultimate realization of deferred tax assets is based on the assessment of available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the utilization of existing deferred tax assets. The Company considered all positive and negative evidence when determining the amount of the net deferred tax assets that are more likely than not to be realized. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. A significant piece of objective negative evidence evaluated was the cumulative loss incurred since the Company’s inception. Such objective evidence limits the ability to consider subjective evidence such as the Company’s projections for future growth. Based on this assessment, the Company maintained a full valuation allowance against the Company’s net deferred tax assets as of December 31, 2024, and 2023. If these estimates and assumptions change in the future, the Company may be required to reduce the Company’s existing valuation allowance resulting in less income tax expense. The Company’s overall valuation allowance increased by $ 7.8 million during 2024 resulting from current year losses for which no tax benefit was provided.
As of December 31, 2024, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $ 12.4 million which may be carried forward indefinitely but are only available to offset 80 % of future taxable income. In addition, the Company had $ 31.1 million of foreign net operating loss carryforwards of which $ 12.8 million was generated in the United Kingdom and $ 18.3 million was generated in the Cayman Islands. The NOLs generated in the United Kingdom can be carried forward indefinitely. The NOLs generated in the Cayman Islands have no value as the Cayman Islands do not impose any income tax on corporations. In addition, the Company also has approximately $ 12.2 million in state net operating loss carryforwards of which the Florida NOL of $ 0.4 million can be carried forward 20 years and the Virginia NOL of $ 11.8 may be carried forward indefinitely but is only available to offset 80 % of future taxable income.
The net operating loss carryforwards are subject to review and possible adjustment by the U.S. and state tax authorities. Net operating loss carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders, as defined under Section 382 of the Internal Revenue Code. This could limit the amount of NOLs that the Company could use on an annual basis to offset future taxable income or tax liabilities. As of December 31, 2024, the Company had not performed an analysis to determine whether any of the Company’s net operating loss carryforwards are subject to limitation under Sections 382 of the Internal Revenue Code.
The Company applies the applicable authoritative guidance which prescribes a comprehensive model for the manner in which a company should recognize, measure, present and disclose in its consolidated financial statements all material uncertain tax positions that the Company has taken or expects to take on a tax return. As of December 31, 2024, the Company had no uncertain tax positions. There are no uncertain tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within twelve months of December 31, 2024.
The Company files income tax returns in the United States, the United Kingdom and certain state jurisdictions. The U.S federal tax years open to examination by the Internal Revenue Service are 2021 to 2024. The Company’s state and United Kingdom tax years that are open to tax examination are 2020 to 2024.
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11.
Commitments and Contingencies
Litigation
The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. From time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities.
12.
Redeemable Noncontrolling Interest
As a finder’s fee for the 2022 Lilly License, the Company’s consolidated subsidiary Z33 issued 4,900,222 shares of Z33 Series Seed Preferred Shares to Stone Peach. Zura has the right, but not the obligation to purchase up to 50 % of the Series Seed Preferred Shares issued to Stone Peach at a price per share of $ 2.448869 for a period of two years from the date of the agreement (the “Call Option”). Stone Peach has the right, but not the obligation to sell up to 50 % of the Series Seed Preferred Shares issued to Stone Peach to Zura for a price per share of $ 2.040724 (the “Put Option”). As it is not possible to specifically identify the shares that may be redeemed by exercising the Put Option, and the applicable unit of account is each share, the Company assessed that each share must be considered redeemable until the exercise or the expiration of the Put Option. Accordingly, the Z33 Series Seed Preferred Shares issued to Stone Peach represents redeemable noncontrolling interest.
In April 2023, the Company agreed to, within six months of April 24, 2023, exercise its Call Option on 50 % of the Z33 Series Seed Preferred Shares previously issued to Stone Peach. The Company agreed to settle its Call Option by issuing 2,000,000 Class A Ordinary Shares. The amended settlement terms represented an extinguishment and reissuance of the Z33 Series Seed Preferred Shares. The $ 10.9 million difference between the estimated fair value of the new instrument issued and the carrying value of the Z33 Series Seed Preferred Shares was recorded as a deemed dividend to the redeemable noncontrolling interest and as an adjustment to net loss to arrive at net loss attributable to Class A ordinary shareholders in the consolidated statement of operations.
In November 2023, the Company and Stone Peach amended the terms of the agreement, voiding the Company’s obligation to exercise its Call Option, and instead reverting the Company’s rights and obligations under the Call Option back to that of the original agreement. Stone Peach, in addition to the existing Put Option, was granted the right, but not the obligation to sell up to 50 % of the Series Seed Preferred Shares issued to Stone Peach to Zura in exchange for 2,000,000 Class A Ordinary Shares (the “Put Right”). Stone Peach may exercise its Put Option and Put Right at any time between April 24, 2024 and April 24, 2028 under the new agreement. The amended settlement terms represented an extinguishment and reissuance of the Z33 Series Seed Preferred Shares. The $ 9.2 million difference between the estimated fair value of the new instrument issued and the carrying value of the Z33 Series Seed Preferred Shares was recorded as a deemed contribution from the redeemable noncontrolling interest and as an adjustment to net loss to arrive at net loss attributable to Class A ordinary shareholders, in the consolidated statement of operations. On December 31, 2023, the redeemable noncontrolling interest was accreted to its redemption value and the difference was recorded as an adjustment to net loss to arrive at net loss attributable to Class A ordinary shareholders for the year ended December 31, 2023 in the consolidated statement of operations. On December 31, 2024, the redeemable noncontrolling interest was remeasured from its redemption price to its initial carry amount, decreased for the noncontrolling interest’s share of Z33’s net loss, and the difference was recorded as an adjustment to net loss to arrive at net loss attributable to Class A ordinary shareholders for the year ended December 31, 2024 in the consolidated statement of operations.
As of December 31, 2024 and 2023, the redeemable noncontrolling interest balance was $ 11.7 million and $ 18.7 million, respectively.
13.
Defined Contribution Plans
The Company maintains a 401(k) defined contribution retirement plan (the “401(k) Plan”) for all of its U.S. employees. For the 401(k) Plan, the Company makes a matching contribution up to a maximum of 6 % of an employee’s annual salary. For U.K. employees, the Company contributes up to 6 % of an employee’s annual salary to defined contribution retirement pension plans. Contributions made by the Company vest 100 % upon contribution. For the year-ended December 31, 2024 and 2023, the Company recorded expense of $ 0.3 million and $ 0.1 million, respectively for the defined contribution plans.
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Table of Contents
14.
Subsequent Events
On January 1, 2025, the Class A Ordinary Shares reserved for future issuances under the Equity Incentive Plan and ESPP were each increased by the annual automatic increase of 5 % of outstanding Class A Ordinary Shares as of December 31, 2024, or 3,264,877 Class A Ordinary Shares.
In the first quarter of 2025, the Company sold 3,000,000 Class A Ordinary Shares at a price of $ 1.75 per share under the ATM, for net proceeds of $ 5.1 million, after placement agent commissions.
In February 2025, the Company granted options to purchase 3,572,790 Class A Ordinary Shares to employees under the Equity Incentive Plan. The share options vest over four years .
F-29
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.