0001410578-23-002337 | 10-Q | XBRL Viewer

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Subsequent Events (Details) $ in Millions	1 Months Ended
Subsequent Events (Details) $ in Millions	Oct. 31, 2023 USD ($)
Lonza milestone payment \| Subsequent Events
Subsequent Events
Annual milestone payment, due and payable	$ 0.4

Summary of Significant Accounting Policies(Policies)

9 Months Ended

Sep. 30, 2023

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The Company’s unaudited condensed consolidated financial statements (the “condensed 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 condensed consolidated financial statements as redeemable noncontrolling interest and noncontrolling interest, respectively. All intercompany balances and transactions have been eliminated in consolidation.

These condensed consolidated financial statements have been prepared in accordance with U.S. GAAP applicable to interim financial statements. These financial statements are presented in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with U.S. GAAP. As such, the information included herein should be read in conjunction with Legacy Zura’s consolidated financial statements and accompanying notes as of December 31, 2022 and for the period from January 18, 2022 (date of inception) to December 31, 2022 (the “audited consolidated financial statements”) that were included in the Company’s Form 8-K filed with the SEC on April 6, 2023. In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements, except for the impact of the recapitalization as described in Note 3, and reflect all adjustments, which include normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2023 and the results of operations for the three months ended September 30, 2023 and 2022 and for the nine months ended September 30, 2023 and the period ended September 30, 2022. The results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year ending December 31, 2023 or any other future interim or annual period.

Significant Accounting Policies

Except for the addition of the Business Combination, the addition of public warrants, private placement warrants, and pre-funded warrants (collectively, the “Warrants”), the noncontrolling interest in ZB17, and the addition of stock options with market-based performance conditions, there have been no significant changes in the Company’s significant accounting policies from those that were disclosed in Note 2, Summary of Significant Accounting Policies, included in the Company’s audited consolidated financial statements that were included in the Company’s Current Report on Form 8-K filed with the SEC on April 6, 2023.

Use of Estimates

The preparation of condensed 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 condensed 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 condensed consolidated financial statements relate to and include, but are not limited to, the fair value of Class A Ordinary Shares and other assumptions used to measure 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 fair value of the private placement warrants, and the fair value of the note payable.

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 U.S. 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.

On March 10, 2023, Silicon Valley Bank became insolvent. State regulators closed the bank and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as its receiver. The Company held deposits with this bank. As a result of the actions by the FDIC, the Company’s insured and uninsured deposits have been restored.

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.

Warrants

As part of the Business Combination, the Company assumed JATT’s public warrant and private placement warrant liabilities. The public warrants were reclassified to equity following the Business Combination.

As part of the April 2023 Private Placement, the Company sold pre-funded warrants (the “Pre-Funded Warrants”) to certain accredited investors. The Pre-Funded Warrants were classified as equity instruments.

Classification of the public and pre-funded warrants as equity instruments and the private placement warrants as liability instruments is based on management’s analysis of the guidance in ASC 815. The Company measures the private placement warrant liability at fair value each reporting period with the change in fair value recorded as other (expense) income in the condensed consolidated statements of operations. 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. See Note 8 for additional information.

Noncontrolling Interest

During April 2023, the Company’s subsidiary, ZB17, issued a share-based payment award to a third party in connection with 2023 Lilly License representing a noncontrolling interest (See Note 6 for additional information). 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 on the Company’s condensed consolidated balance sheet. The option to acquire ZB17 ownership interests do not provide the option-holder with rights to participate in the profits and losses of the subsidiary prior to the exercise of the option.

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 Class A Ordinary Shares outstanding, including Pre-Funded Warrants, during the period. Diluted net loss per share excludes the potential impact of the Company’s convertible preferred shares and options to purchase Class A Ordinary Shares because their effect would be anti-dilutive due to the Company’s net loss for the period presented. Since the Company had a net loss in the period presented, basic and diluted net loss per share are the same.

The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per share because to do so would be anti-dilutive:


	September 30,	September 30,
	2023	2022
Convertible preferred shares	—	13,510,415
Shares issuable upon exercise of the Warrants to purchase Class A Ordinary Shares	12,809,996	—
Shares issuable upon exercise of options to purchase Class A Ordinary Shares	5,681,471	383,371
Shares issuable upon exercise of Z33 Series Seed Preferred Shares call option	2,000,000	—
Restricted share units	2,213,011	—
Total	22,704,478	13,893,786

Shares issuable upon the exercise of performance-based share options (“PSOs”) are excluded from the calculation of diluted net loss per share until the Company’s management deems it probable that the performance conditions will be satisfied.

Recent Accounting Pronouncements

In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities. The Company early adopted this standard effective January 1, 2023. The adoption of this standard did not have a material effect on our condensed consolidated financial statements and related disclosures.

Share-based Compensation - Share-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		8 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2023
Share-based Compensation
Share-based compensation expense	$ 2,577	$ 12	$ 321	$ 7,261
Options
Share-based Compensation
Unrecognized share-based compensation expense	20,400			$ 20,400
Share-based compensation expense expected to be recognized over a weighted average period				1 year 9 months 18 days
Restricted share units
Share-based Compensation
Unrecognized share-based compensation expense	13,100			$ 13,100
Share-based compensation expense expected to be recognized over a weighted average period				1 year 10 months 24 days
Research and development
Share-based Compensation
Share-based compensation expense				$ 2,186
General and administrative
Share-based Compensation
Share-based compensation expense	$ 2,577	$ 12	$ 321	$ 5,075

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

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+ Details

License Agreements

9 Months Ended

Sep. 30, 2023

License Agreements

License Agreements

License Agreements

Pfizer

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 ASC 805, 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 on March 22, 2022, the Company is obligated to make 12 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”). In further consideration for the license, the Company will also pay 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 nets sales of Products. 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 is also subject to a potential multi-million dollar transaction payment if, within a certain period the Company has (a) certain changes in control, excluding an initial public offering or any business combination where the securities of the Company are listed on a stock exchange (e.g., a transaction with a special purpose acquisition company), or (b) the Company sublicenses or divests of its rights to the Products.

The Pfizer Agreement also has 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, the Company recognized expense related to these Class A Ordinary Shares based on their grant date fair value. Following the Business Combination, the anti-dilution provision is no longer in effect.

As of September 30, 2023, the Company does not owe any amounts under the Pfizer Agreement.

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.

2022 Lilly License

On December 8, 2022, the Company’s consolidated subsidiary, Z33 Bio Inc. (“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.

As consideration for the 2022 Lilly License, Lilly agreed to receive either 550,000 Class A Ordinary Shares upon the closing of the Business Combination (subject to certain lock-up provisions) or 4,702,867 shares of Z33 Series Seed Preferred Shares (the subsidiary redeemable preferred shares) if the Business Combination was not consummated. The obligation to issue shares represents contingent consideration and is classified as a liability on the consolidated balance sheet (research and development license consideration liability) as of December 31, 2022. The liability is measured at fair value on the acquisition date and remeasured to fair value at each reporting date. Upon the Closing Date of the Business Combination, the Company issued Lilly 550,000 Class A Ordinary Shares at an aggregate fair value of $4.5 million.

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 (as defined below). 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 2022 Lilly License as a component of research and development in the consolidated statement of operations during the period ended December 31, 2022.

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 is included in the measurement of the cost of the acquired asset. 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. 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. Stone Peach may exercise its option at any time between the first anniversary and the second anniversary of the transaction. 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. See Note 12 for further information. The Company and Stone Peach are renegotiating the terms of the exercise of the call option.

In addition to the consideration transferred on December 8, 2022, the Company is obligated to pay $3.0 million to Lilly upon the completion of a financing by the Company with gross proceeds exceeding $100 million. The Company is further obligated to make 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. The Company will also pay an annual earned royalty to Lilly 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. The Company will account for these contingent payments when they become due. As of September 30, 2023, none of the contingent payments were due.

2023 Lilly License

On April 26, 2023, the Company’s newly-formed subsidiary ZB17 LLC (“ZB17”) entered into a license agreement (the “2023 Lilly License” and, together with the 2022 Lilly License, 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. In addition, ZB17 will make a payment of $5.0 million upon 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 as a component of research and development in the condensed consolidated statement of operations during the nine months ended September 30, 2023.

As a finder’s fee for arranging the acquisition of the 2023 Lilly License, ZB17 granted to 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 as a component of research and development in the condensed consolidated statement of operations during the nine months ended September 30, 2023. The Stone Peach Call Right represents noncontrolling interest in the Company’s subsidiary, ZB17.

As of September 30, 2023 and December 31, 2022, the noncontrolling interest balance was $1.5 million and $-0-, respectively.

As additional consideration, Stone Peach will receive annual payments first of $0.6 million, and increasing by 10% annually, so long as the Company maintains its license for ZB-106 and beginning on May 1, 2023. The Company will account for these annual payments when they become due. The Company recognized the first $0.6 million annual payment as a component of research and development in the condensed consolidated statement of operations during the nine months ended September 30, 2023.

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 the Company’s fully diluted shares outstanding exceeded 52,500,000 shares prior to September 30, 2023, the $5.0 million fee was recorded in accounts payable and accrued expenses in the condensed consolidated balance sheet as of September 30, 2023 and within research and development in the condensed consolidated statement of operations for the nine months ended September 30, 2023.

In addition to the consideration transferred during the nine months ended September 30, 2023, the Company is obligated to make 4 development milestone payments to Lilly up to an aggregate of $155.0 million, and sales milestone payments up to an aggregate of $440 million based on respective thresholds of net sales of products developed from ZB-106. The Company is also obligated to pay Lilly over a multi-year period (twelve years, or upon the later expiration of regulatory exclusivity of ZB-106 in a country) 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. The Company is also obligated to pay BAFFX17 a fee equal to 3% of any milestone or royalty payments due to Lilly pursuant to the terms of either the 2022 Lilly License and the 2023 Lilly License with Lilly. Upon receiving written approval from the FDA, EMA, or similar regulatory authority of the Investigational New Drug (“IND”) and commencement and the commencement of a clinical trial in the applicable jurisdiction for ZB-106, Stone Peach will also receive a one-time payment of $4.5 million. Stone Peach will also receive 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. Furthermore, Stone Peach was granted a royalty of 2% of the aggregate net sales of any products developed from the Compound. The Company will account for these contingent payments when they become due. As of September 30, 2023, none of the contingent payments were due.

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"). The Cell Line License Agreement provides the Company with a non-exclusive, worldwide, sublicensable license to certain of WuXi Biologics's 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"). In consideration for the license, the

Company agreed to pay WuXi Biologics a non-refundable license fee of $150,000. Additionally, if the Company manufactures all of its commercial supplies of bulk drug product 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.

Fair Value Measurements - Private Placement Warrants (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2023
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 2,069	$ 1,537	$ 7,756	$ 7,756
Assumption of private placement warrants			1,714
Change in fair value	(119)	532	(177)
Ending balance	1,950	$ 2,069	$ 1,537	1,950
Gain from the change in fair value of the private placement warrants	(119)			236
Private placement warrants
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Gain from the change in fair value of the private placement warrants	$ 100			$ 200

Accounts Payable and Accrued Expenses

9 Months Ended

Sep. 30, 2023

Accounts Payable and Accrued Expenses

Accounts Payable and Accrued Expenses

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses is comprised of the following as of September 30, 2023 and December 31, 2022:


	September 30, 2023		December 31, 2022
Accounts payable	$	1,645	$	2,010
Accrued offering costs		—		655
Accrued payroll		358		260
Accrued 2023 Lilly License costs		10,000		—
Accrued legal costs		133		308
Accrued research and development costs		3,833		490
Accrued bonus		745		141
Other accrued expenses		121		113
Accrued consulting fees		177		451
Total accounts payable and accrued expenses	$	17,012	$	4,428

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	8 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2023
Cash flows from operating activities
Net loss before redeemable noncontrolling interest	$ (9,846)	$ (52,090)
Adjustments to reconcile net loss to net cash used in operating activities:
Research and development acquired license	7,500	27,381
Anti-dilution share issuance compensation		2,186
Share-based compensation expense	321	5,075
Change in fair value of note payable		2,244
Change in fair value of share-based payment liability		1,854
Change in fair value of private placement warrants		236
Foreign exchange transaction loss	6	6
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(211)	(524)
Accounts payable and accrued expenses	637	2,631
Net cash used in operating activities	(1,593)	(11,001)
Cash flows from investing activities
Purchase of research and development license	(5,000)	(8,000)
Net cash used in investing activities	(5,000)	(8,000)
Cash flows from financing activities
Proceeds from issuance of Series A-1 convertible preferred shares	10,000
Proceeds from issuance of 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	(358)	(1,184)
Net cash provided by financing activities	9,642	121,293
Net increase in cash and cash equivalents	3,049	102,292
Cash and cash equivalents, beginning of period		1,567
Cash and cash equivalents, ending of period	3,049	103,859
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Issuance of Series A-1 convertible preferred shares for license	2,500
Conversion of Series A-1 convertible preferred shares for Class A Ordinary Shares		14,686
Accrued 2023 Lilly License consideration		10,000
Non-cash transfers to redeemable noncontrolling interest		10,875
Issuance of Class A Ordinary shares for 2023 Lilly License		7,840
Share-based equity issuance costs		5,590
Settlement of research and development license consideration liability		4,488
Transaction costs include in accounts payable and accrued expenses	$ 1,553
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

Share-based Compensation

9 Months Ended

Sep. 30, 2023

Share-based Compensation

Share-based Compensation

Share-based Compensation

On June 8, 2022, Legacy Zura’s board of directors approved two stock 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.

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; SARs, alone or in conjunction with other awards; restricted shares and restricted share units (“RSUs”); incentive bonuses, which may be paid in cash, shares, or a combination thereof; and other share-based awards. 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. As of September 30, 2023, a maximum of 9,594,213 Class A Ordinary Shares may be issued under the Equity Incentive Plan.

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.

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 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 September 30, 2023, no shares have been issued under the ESPP.

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 are 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 three and nine months ended September 30, 2023 and the periods ended September 30, 2022:


										For the Period
										from January 18,
	For the Three Months Ended									2022 (date of
	September 30,						For the Nine Months			inception) to
	2023			2022			Ended September 30, 2023			September 30, 2022
Share price	$	—		$	—		$	6.26		$	0.77
Expected volatility		—	%		—	%		97.1	%		95.1	%
Risk-free rate		—	%		—	%		3.6	%		3.0	%
Expected life		—			—			6.1 years			5.9 years
Expected dividend yield		—	%		—	%		—	%		—	%

The following table summarizes the Company’s share option activity for the nine months ended September 30, 2023:


				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
	Number of	Exercise Price		Contractual	Value
	Options	(per share)		Life (Years)	(in thousands)
Options outstanding at December 31, 2022	3,547	$	90.50	9.4	$	1,804
Recapitalization	379,824		(89.66)	—		—
Options outstanding at December 31, 2022	383,371		0.84	9.4		1,804
Granted	5,874,144		2.16	—		—
Forfeited	(576,044)		1.20	—		—
Options outstanding at September 30, 2023	5,681,471	$	2.17	9.5	$	25,626
Options vested and exercisable at September 30, 2023	1,435,910	$	5.52	9.5	$	1,808

Included in the table above are 45,611 PSOs that vested upon the Company raising external capital of $75 million or more. The milestone was considered outside of the Company’s control, and accordingly the vesting of the PSOs were not considered probable until the financing event occurs. During the nine months ended September 30, 2023, the 45,611 PSOs became vested and an immaterial amount of share-based compensation expense was recognized in relation to these PSOs.

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.

The following table sets forth the weighted-average assumptions used at the grant date to determine the fair value of the Company’s market-based PSOs granted during the nine months ended September 30, 2023. No Market-Based Share Options were granted during the three months ended September 30, 2023:


	For the Nine
	Months Ended
	September 30,
	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

The expense recognized related to Market-Based Share Options during the three and nine months ended September 30, 2023 was approximately $0.2 million and $0.4 million, respectively.

Restricted Share Units

The Company issued RSUs to certain employees, executives, and directors pursuant to the Equity Incentive Plan. The fair value has been estimated based on the closing price of the stock on the grant date.


		Weighted
		Average
	Number of	Grant Date
	RSUs	Fair Value
Unvested RSUs at December 31, 2022	—	$	—
Granted	2,233,011		6.50
Vested	(20,000)		6.84
Unvested RSUs at September 30, 2023	2,213,011	$	6.50

The expense recognized related to RSUs during the three and nine months ended September 30, 2023 was approximately $1.0 million and $1.4 million, respectively.

Equity Award Modification

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 nine months ended September 30, 2023 related to this share option modification.

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 three and nine months ended September 30, 2023, the Company recognized expense in the amount of $-0- and $2.2 million, respectively, 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 three months ended September 30, 2023 and 2022 and for the nine months ended September 30, 2023 and the period ended September 30, 2022 was as follows:


							For the Period from
					For the Nine		January 18, 2022
	For the Three Months Ended				Months Ended		(date of inception) to
	September 30,				September 30,		September 30,
	2023		2022		2023		2022
Research and development	$	—	$	—	$	2,186	$	—
General and administrative		2,577		12		5,075		321
Total share-based compensation expense	$	2,577	$	12	$	7,261	$	321

As of September 30, 2023, there was approximately $20.4 million of total unrecognized share-based compensation expense related to options granted to employees, executives, and directors under the Company’s equity plans that is expected to be recognized over a weighted average period of 1.8 years. As of September 30, 2023, there was approximately $13.1 million of total unrecognized share-based compensation expense related to RSUs granted to certain employees, executives, and directors under the Company’s Equity Incentive Plan that is expected to be recognized over a weighted average period of 1.9 years.

Recapitalization - PIPE Investment (Details) - USD ($)		9 Months Ended
Recapitalization - PIPE Investment (Details) - USD ($)	Mar. 13, 2023	Sep. 30, 2023
Recapitalization
Ordinary shares price		$ 14,686,000
PIPE Subscription Agreement
Recapitalization
Number of Class A shares issued	2,009,950
Price per share	$ 10.00
Ordinary shares price	$ 20,099,500

Recapitalization

9 Months Ended

Sep. 30, 2023

Recapitalization

Recapitalization

Recapitalization

As discussed in Note 1, Organization and Description of Business, 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 condensed consolidated balance sheet. 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 for additional details of the Company’s shareholders’ equity (deficit) prior to and subsequent to the Business Combination.

All equity awards of Legacy Zura were assumed by the Company and converted into comparable equity awards that are settled or exercisable for 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 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 represents the right to purchase one Class A Ordinary Share upon exercise of such warrant. Refer to Note 2 and Note 8 for further details.

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 condensed 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 (as defined in Note 1) 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 Equityholders	14,058,074	52.0	%
Total shares outstanding	27,052,155	100.0	%

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.

Condensed Consolidated Statements of Changes in Convertible Preferred Shares, Redeemable Noncontrolling Interest and Shareholders' Equity (Deficit) (Parenthetical) $ in Millions	9 Months Ended
	Sep. 30, 2023 USD ($) shares
Condensed Consolidated Statements of Changes in Convertible Preferred Shares, Redeemable Noncontrolling Interest and Shareholders' Equity (Deficit)
Transaction costs	$ 4.0
Issuance of shares, Transaction costs	$ 9.8
Exchange ratio for Class A ordinary shares pursuant to the business combination \| shares	108.083

Recapitalization (Tables)

9 Months Ended

Sep. 30, 2023

Recapitalization

Schedule of Class A ordinary shares issued and outstanding immediately following the business combination

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 Equityholders	14,058,074	52.0	%
Total shares outstanding	27,052,155	100.0	%

Share-based Compensation - Share option activity (Details) - USD ($)		1 Months Ended	3 Months Ended		8 Months Ended	9 Months Ended	12 Months Ended
	Mar. 16, 2023	Apr. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2023	Dec. 31, 2022
Aggregate Intrinsic Value
Share-based compensation expense			$ 2,577,000	$ 12,000	$ 321,000	$ 7,261,000
Aggregate purchase price		$ 75,800,000				$ 59,724,000
PSO
Number of Options
Exercises of stock options (in Shares)						45,611
Aggregate Intrinsic Value
Share-based compensation expense						$ 45,611,000
Aggregate purchase price						$ 75,000,000
Equity Incentive Plan 2023
Number of Options
Beginning balance						383,371
Granted	8,059,796					5,874,144
Forfeited						(576,044)
Ending balance			5,681,471			5,681,471	383,371
Options vested and exercisable			1,435,910			1,435,910
Weighted Average Exercise Price
Beginning balance						$ 0.84
Granted						2.16
Forfeited						1.20
Ending balance			$ 2.17			2.17	$ 0.84
Options vested and exercisable			$ 5.52			$ 5.52
Weighted Average Remaining Contractual Life
Options outstanding						9 years 6 months	9 years 4 months 24 days
Options vested and exercisable						9 years 6 months
Aggregate Intrinsic Value
Options outstanding			$ 25,626,000			$ 25,626,000	$ 1,804,000
Options vested and exercisable			$ 1,808,000			$ 1,808,000
Equity Incentive Plan 2023 \| Recapitalization
Number of Options
Beginning balance						3,547
Recapitalization							379,824
Ending balance							3,547
Weighted Average Exercise Price
Beginning balance						$ 90.50
Recapitalization							$ (89.66)
Ending balance							$ 90.50
Weighted Average Remaining Contractual Life
Options outstanding							9 years 4 months 24 days
Aggregate Intrinsic Value
Options outstanding							$ 1,804,000

Condensed Consolidated Statements of Cash Flows (Parenthetical) $ in Millions	9 Months Ended
	Sep. 30, 2023 USD ($)
Condensed Consolidated Statements of Cash Flows
Transaction costs	$ 4.2

Fair Value Measurements - Research and development license consideration (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended			9 Months Ended	12 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Fair Value Measurements
Aggregate fair value of the shares issued				$ 4,488
Summary of changes in the estimated fair value
Beginning balance	$ 2,069	$ 1,537	$ 7,756	7,756
Remeasurement of the Note to settlement value upon the Closing of the Business Combination	(119)	532	(177)
Settlement of the liability				(10,000)
Ending balance	$ 1,950	$ 2,069	1,537	1,950	$ 7,756
Loss on the remeasurement of the research and development license consideration liability				$ 1,900
Research and development license consideration
Fair Value Measurements
Number of Class A ordinary shares agreed to issue upon the closing of the business combination	550,000			550,000
Aggregate fair value of the shares issued				$ 4,500
Fair value per issued share				$ 8.16
Summary of changes in the estimated fair value
Beginning balance			$ 2,634	$ 2,634
Remeasurement of the Note to settlement value upon the Closing of the Business Combination				1,854
Settlement of the liability				$ (4,488)
Ending balance					$ 2,634
Research and development license consideration \| Shares issuable upon exercise of Z33 Series Seed Preferred Shares call option
Fair Value Measurements
Issuance of Z33 series seed preferred shares if the business combination was not consummated				4,702,867
Fair value per share					$ 0.15
Research and development license consideration \| JATT Acquisition Corp \| Class A Ordinary shares
Fair Value Measurements
Fair value per share					$ 7.66

License Agreements - 2022 Lilly License (Details) - USD ($)			9 Months Ended	12 Months Ended
	Apr. 24, 2023	Dec. 08, 2022	Sep. 30, 2023	Dec. 31, 2022
License Agreements
Aggregate fair value of the shares issued			$ 4,488,000
Selling price per share			$ 2.040724
Shares issuable upon exercise of Z33 Series Seed Preferred Shares call option
License Agreements
Number of shares transferred			4,900,222
Stone Peach Properties, LLC
License Agreements
Right but not the obligation for purchase of issued shares, maximum percentage			50.00%
Purchase price per share			$ 2.448869
Threshold period from the date of agreement for purchase of issued shares			2 years
Right but not the obligation to sell the issued shares, maximum percentage			50.00%
Stone Peach Properties, LLC \| Shares issuable upon exercise of Z33 Series Seed Preferred Shares call option
License Agreements
Number of shares transferred			4,900,222
Right but not the obligation for purchase of issued shares, maximum percentage			50.00%
Purchase price per share			$ 2.448869
Threshold period from the date of agreement for purchase of issued shares			2 years
Right but not the obligation to sell the issued shares, maximum percentage			50.00%
Selling price per share			$ 2.040724
Stone Peach Properties, LLC \| Class A Ordinary shares
License Agreements
Number of Shares Issued on Exercise of Call Option	2,000,000
License agreement with Lilly
License Agreements
Amount of cash transferred		$ 7,000,000.0
Number of Class A ordinary shares agreed to issue upon the closing of the business combination				550,000
Issuance of ordinary shares to settle research and development license consideration liability				550,000
Aggregate fair value of the shares issued				$ 4,500,000
Amount of obligation to pay upon the completion of financing		3,000,000.0
Minimum gross proceeds from financing for obligation to pay		$ 100,000,000
Maximum amount of development and regulatory milestone payments				155,000,000.0
Maximum amount of sales milestone payments				$ 440,000,000.0
Maximum annual earned royalty at a marginal royalty rate		20.00%
Contingent payments due			$ 0
License agreement with Lilly \| Shares issuable upon exercise of Z33 Series Seed Preferred Shares call option
License Agreements
Issuance of Z33 series seed preferred shares if the business combination was not consummated				4,702,867
License agreement with Lilly \| Stone Peach Properties, LLC
License Agreements
Contingent payments due			$ 0

Warrants

9 Months Ended

Sep. 30, 2023

Warrants

Warrants

Warrants

As the accounting acquirer, Zura Bio is deemed to have assumed 5,910,000 private placement warrants to purchase Class A Ordinary Shares that were held by JATT Ventures, L.P. (the “Sponsor”) at an exercise price of $11.50 and 6,899,996 public warrants to purchase Class A Ordinary Shares that were held by JATT’s public shareholders at an exercise price of $11.50. The public and private placement warrants will expire five years after the completion of the Business Combination, or earlier upon redemption or liquidation.

Public Warrants

The public warrants became exercisable into Class A Ordinary Shares commencing 30 days after the Business Combination and expire five years from the date of the Business Combination, or earlier upon redemption or liquidation. Each warrant entitles 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 Company may redeem, with 30 days written notice, each whole outstanding public warrant for cash at a price of $0.01 per warrant if the Reference Value (as defined below) equals or exceeds $18.00 per share, subject to certain adjustments. The warrant holders have 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 calls the public warrants for redemption, the Company will have the option to require all holders that wish 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.

Private Placement Warrants

The private placement warrants were identical to the public warrants, except that the private placement warrants are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally,

the private placement warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the private placement warrants are held by someone other than the initial purchasers or their permitted transferees, then such warrants will be redeemable by the Company and exercisable by the warrant holders on the same basis as the public warrants.

Pre-Funded Warrants

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. Each 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.

As of September 30, 2023, no Warrants have been exercised or redeemed.

Note Payable (Details) - Note payable - USD ($) $ in Millions	Dec. 08, 2022	Mar. 08, 2023
Note Payable
Percentage of interest rate	9.00%
Maturity term	12 months
Number of days after the date of business combination for maturity term	5 days
Percentage of the face amount including accrued interest payable if the business combination not consummated	120.00%
Hydra
Note Payable
Proceeds form issuance of note	$ 7.6
Face amount of note	$ 8.0	$ 10.0
Percentage of principal amount payable for waiving the acceleration right in consideration		125.00%

Share-based Compensation (Details)					3 Months Ended	8 Months Ended	9 Months Ended
Share-based Compensation (Details)	Jan. 01, 2024 shares	Jun. 01, 2023 shares	Mar. 16, 2023 shares	Jun. 08, 2022 Options shares	Sep. 30, 2022	Sep. 30, 2022 $ / shares	Sep. 30, 2023 $ / shares shares	Mar. 20, 2023 shares
Share-based Compensation
Exchange ratio for Class A ordinary shares pursuant to the business combination			108.083				108.083	108.083
UK Plan
Share-based Compensation
Number of stock option plans approved \| Options				2
Number of Class A Ordinary Shares available for issuance				1,501,165
US Plan
Share-based Compensation
Number of Class A Ordinary Shares available for issuance				383,371
Equity Incentive Plan 2023
Share-based Compensation
Number of shares issued			8,059,796				5,874,144
Percentage of discount for eligible employees			5.00%
Weighted-average assumptions used to estimate the fair value
Share price \| $ / shares						0.77	6.26
Expected volatility						95.10%	97.10%
Risk-free rate						3.00%	3.60%
Expected life					5 years 10 months 24 days	5 years 10 months 24 days	6 years 1 month 6 days
Equity Incentive Plan 2023 \| Class A Ordinary shares
Share-based Compensation
Share based compensation arrangement		5,564,315
Equity Incentive Plan 2023 \| Class A Ordinary shares \| Maximum
Share-based Compensation
Share based compensation arrangement							9,594,213
Employee Stock Purchase Plan
Share-based Compensation
Number of shares issued	4,029,898						0
Percentage of discount for eligible employees			15.00%

Organization and Description of Business (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		8 Months Ended	9 Months Ended
	Apr. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Organization and Description of Business
Accumulated deficit		$ 95,021			$ 95,021		$ 32,056
Net loss		8,270	$ 1,102	$ 9,846	51,887	$ 9,800
Cash and cash equivalents		$ 103,900			103,900
Proceeds from issuance of ordinary shares upon closing of business combination					56,683
Aggregate purchase price	$ 75,800				$ 59,724

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(g)(1)(ii))
-Publisher FASB
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 3
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 36: http://www.xbrl.org/2003/role/disclosureRef
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Reference 37: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483589/942-220-S99-1

+ Details

- Definition

Amount of accumulated undistributed earnings (deficit).

+ References + Details

Condensed Consolidated Statements of Changes in Convertible Preferred Shares, Redeemable Noncontrolling Interest and Shareholders' Equity (Deficit) - USD ($)
$ in Thousands

Noncontrolling interest

Class A Ordinary Shares

Recapitalization

Class A Ordinary Shares

Private Placement

Class A Ordinary Shares

License agreement with Lilly

Class A Ordinary Shares

Additional Paid-in Capital

Private Placement

Additional Paid-in Capital

Pre-Funded Warrants

Additional Paid-in Capital

License agreement with Lilly

Additional Paid-in Capital

Accumulated Deficit

Recapitalization

Accumulated Deficit

Redeemable Noncontrolling Interest

Recapitalization

Redeemable Noncontrolling Interest

Convertible Preferred Shares

Recapitalization

Convertible Preferred Shares

Recapitalization

Private Placement

Pre-Funded Warrants

License agreement with Lilly

Total

Balance (Shares) at Jan. 17, 2022

Balance at Jan. 17, 2022

$ 0

^[1]

$ 0

^[1]

$ 0

Convertible Preferred Shares

Issuance of Series A-1 convertible preferred shares for cash

^[1]

$ 10,000

Issuance of Series A-1 convertible preferred shares for cash (in Shares)

10,808,332

Issuance of Series A-1 convertible preferred shares as license compensation

^[1]

$ 2,500

Issuance of Series A-1 convertible preferred shares as license compensation (in shares)

2,702,083

Exercises of stock options (in Shares)

383,372

Issuance of Series A-1 convertible preferred shares as license compensation

^[1]

$ 2,500

Share-based compensation

321

Balance at Sep. 30, 2022

^[1]

$ 12,500

Balance (Shares) at Sep. 30, 2022

13,510,415

Increase (Decrease) in Stockholders' Deficit

Issuance of shares (in shares)

108

Net loss

(9,846)

Ending Balance (in Shares) at Sep. 30, 2022

383,480

Balance at Sep. 30, 2022

321

(9,846)

(9,525)

Balance at Jun. 30, 2022

309

Convertible Preferred Shares

Share-based compensation

Balance at Sep. 30, 2022

^[1]

$ 12,500

Balance (Shares) at Sep. 30, 2022

13,510,415

Beginning Balance (in shares) at Jun. 30, 2022

383,480

Balance at Jun. 30, 2022

(8,744)

(8,435)

Increase (Decrease) in Stockholders' Deficit

Net loss

(1,102)

Ending Balance (in Shares) at Sep. 30, 2022

383,480

Balance at Sep. 30, 2022

321

(9,846)

$ (9,525)

Convertible Preferred Shares

Recapitalization

13,385,415

Balance after recapitalization (in shares)

13,510,415

Recapitalization

276,172

Balance (Shares) at Dec. 31, 2022

125,000

13,510,415

Balance at Dec. 31, 2022

$ 10,000

10,000

$ 12,500

^[1]

$ 12,500

^[1]

Convertible Preferred Shares

Issuance of Series A-1 convertible preferred shares as license compensation

^[1]

$ 2,186

Issuance of Series A-1 convertible preferred shares as license compensation (in shares)

267,939

Conversion of Series A-1 convertible preferred shares to Class A Ordinary Shares in connection with Business Combination

$ (2)

^[1]

(14,684)

$ 14,686

^[1]

$ (14,686)

Conversion of Series A-1 convertible preferred shares to Class A Ordinary Shares in connection with Business Combination (in shares)

(13,778,354)

13,778,354

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

$ 1

^[1]

48,350

48,351

Issuance of Class A Ordinary Shares in connection with Business Combination, including PIPE Investment, Forward Purchase Investment, and Backstop Shares (in shares)

12,444,081

Issuance of Class A Ordinary Shares to settle research and development license consideration liability

4,488

Issuance of Class A Ordinary Shares to settle research and development license consideration liability (in shares)

550,000

Reclassification of public warrant liability to equity

2,001

Accretion of redeemable noncontrolling interest to redemption value

(203)

203

(203)

Stone Peach Call Right issued to noncontrolling interest

1,541

Deemed dividend to redeemable noncontrolling interest

(10,875)

10,875

(10,875)

Issuance of Series A-1 convertible preferred shares as license compensation

^[1]

$ 2,186

Share-based compensation

10,665

$ 10,665

Balance at Sep. 30, 2023

20,875

Balance (Shares) at Sep. 30, 2023

Beginning Balance (in shares) at Dec. 31, 2022

3,548

279,720

383,480

Balance at Dec. 31, 2022

$ (32,056)

(32,056)

$ (32,056)

Increase (Decrease) in Stockholders' Deficit

Issuance of shares (in shares)

15,041,530

1,000,000

Issuance of shares

$ 1

^[1]

$ 54,133

$ 16,070

$ 7,840

$ 54,134

$ 16,070

$ 7,840

Net loss

(51,887)

(203)

$ (51,887)

Ending Balance (in Shares) at Sep. 30, 2023

43,093,685

Balance at Sep. 30, 2023

1,541

$ 4

^[1]

158,231

(95,021)

$ 64,755

Balance at Jun. 30, 2023

1,541

20,875

Convertible Preferred Shares

Share-based compensation

2,577

$ 2,577

Balance at Sep. 30, 2023

$ 20,875

Balance (Shares) at Sep. 30, 2023

Beginning Balance (in shares) at Jun. 30, 2023

43,093,685

Balance at Jun. 30, 2023

$ 4

^[1]

155,654

(86,751)

$ 70,448

Increase (Decrease) in Stockholders' Deficit

Net loss

(8,270)

$ (8,270)

Ending Balance (in Shares) at Sep. 30, 2023

43,093,685

Balance at Sep. 30, 2023

$ 1,541

$ 4

^[1]

$ 158,231

$ (95,021)

$ 64,755

[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

Share-based Compensation - Restricted Share Units (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		8 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2023
Weighted Average Grant Date Fair Value
Expense recognized	$ 2,577	$ 12	$ 321	$ 7,261
Restricted share units
Number of RSUs
Granted				2,233,011
Vested				(20,000)
Ending balance	2,213,011			2,213,011
Weighted Average Grant Date Fair Value
Granted				$ 6.50
Vested				6.84
Ending balance	$ 6.50			$ 6.50
Expense recognized	$ 1,000			$ 1,400

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 103,859	$ 1,567
Prepaid expenses and other current assets	733	209
Total current assets	104,592	1,776
Deferred offering costs		3,486
Total assets	104,592	5,262
Current liabilities:
Accounts payable and accrued expenses	17,012	4,428
Note payable		7,756
Research and development license consideration liability		2,634
Total current liabilities	17,012	14,818
Private placement warrants	1,950
Total liabilities	18,962	14,818
Commitments and contingencies (Note 11)
Convertible preferred shares
Series A-1 convertible preferred shares, $0.001 par value, -0- and 13,510,415 shares authorized, issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		12,500
Redeemable noncontrolling interest	20,875	10,000
Shareholders' Equity (Deficit):
Preferred Shares, $0.0001 par value, 1,000,000 and -0- authorized as of September 30, 2023 and December 31, 2022, respectively; -0- issued and outstanding as of September 30, 2023 and December 31, 2022
Class A Ordinary Shares, $0.0001 par value, 300,000,000 authorized, 43,093,685 issued and outstanding as of September 30, 2023; 1,884,649 authorized, 383,480 issued and outstanding as of December 31, 2022	4
Additional paid-in capital	158,231
Accumulated deficit	(95,021)	(32,056)
Total Zura Bio Limited shareholders' equity (deficit)	63,214	(32,056)
Noncontrolling interest	1,541	0
Total shareholders' equity (deficit)	64,755	(32,056)
Total liabilities, convertible preferred shares, redeemable noncontrolling interest and shareholders' equity (deficit)	$ 104,592	$ 5,262

Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2023	Dec. 31, 2022
Fair Value Measurements
Transfers between level 1 and level 2	$ 0	$ 0	$ 0
Transfers level 2 and level 3	0	0	0
Transfers into or out of level 3	0	0	0
Private placement warrants
Fair Value Measurements
Financial liabilities	1,950	1,950
Note payable
Fair Value Measurements
Financial liabilities			7,756
Research and development license consideration
Fair Value Measurements
Financial liabilities			2,634
Cash equivalents
Fair Value Measurements
Financial assets	101,950	101,950
Level 1 \| Cash equivalents
Fair Value Measurements
Financial assets	101,950	101,950
Level 2 \| Private placement warrants
Fair Value Measurements
Financial liabilities	$ 1,950	$ 1,950
Level 3 \| Note payable
Fair Value Measurements
Financial liabilities			7,756
Level 3 \| Research and development license consideration
Fair Value Measurements
Financial liabilities			$ 2,634

Redeemable Noncontrolling Interest (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	9 Months Ended
	Apr. 30, 2023	Sep. 30, 2023	Dec. 31, 2022
Redeemable Noncontrolling Interest
Selling price per share		$ 2.040724
Accretion of redeemable noncontrolling interest to redemption value		$ 20,900	$ 10,000
Deemed dividend to redeemable noncontrolling interest		$ (10,875)
Z33 issued
Redeemable Noncontrolling Interest
Number of shares transferred		4,900,222
Stone Peach
Redeemable Noncontrolling Interest
Right but not the obligation for purchase of issued shares, maximum percentage		50.00%
Purchase price per share		$ 2.448869
Threshold period from the date of agreement for purchase of issued shares		2 years
Right but not the obligation to sell the issued shares, maximum percentage		50.00%
Percentage of call option exercised	50.00%
Deemed dividend to redeemable noncontrolling interest	$ 10,900
Stone Peach \| Z33 issued
Redeemable Noncontrolling Interest
Number of shares transferred		4,900,222
Right but not the obligation for purchase of issued shares, maximum percentage		50.00%
Purchase price per share		$ 2.448869
Threshold period from the date of agreement for purchase of issued shares		2 years
Right but not the obligation to sell the issued shares, maximum percentage		50.00%
Selling price per share		$ 2.040724
Stone Peach \| Class A Ordinary shares
Redeemable Noncontrolling Interest
Number of Class A shares issued	2,000,000

Share-based Compensation - Market-Based Performance Share Options (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended		8 Months Ended	9 Months Ended
	Mar. 20, 2023	Mar. 16, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2023
Share-based Compensation
Expense recognized			$ 2,577	$ 12	$ 321	$ 7,261
Equity Incentive Plan 2023
Share-based Compensation
Number of shares issued		8,059,796				5,874,144
Exercise price of shares granted						$ 2.16
Expected volatility					95.10%	97.10%
Risk-free rate					3.00%	3.60%
Expected life				5 years 10 months 24 days	5 years 10 months 24 days	6 years 1 month 6 days
Market-Based Share Options
Share-based Compensation
Number of shares issued	306,373
Period of volume weighted average trading price ("VWAP")	20 days
Minimum price per share for vesting awards	$ 30
Threshold period from grant date for vesting awards	5 years
Exercise price of shares granted	$ 8.16
Expiration term (in years)	10 years
Expected volatility						80.00%
Risk-free rate						3.60%
Expected life						2 years 2 months 12 days
Fair value per Market-Based Share Options						$ 4.66
Expense recognized			$ 200			$ 400

Organization and Description of Business

9 Months Ended

Sep. 30, 2023

Organization and Description of Business

Organization and Description of Business

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” or “Zura” or “Zura Bio”), is a clinical-stage biotechnology company advancing immunology assets into Phase 2 development programs, including ZB-168, a fully anti-IL7Ra monoclonal antibody, which it has licensed from Pfizer, Inc. (“Pfizer”), as well as torudokimab, a high affinity monoclonal antibody, and ZB-106, a bispecific antibody relating to IL-17 and BAFF, which it has licensed from Eli Lilly and Company (“Lilly”). The Company’s accounting predecessor, Zura Bio Limited (herein referred to as “Legacy Zura”), was formed in the United Kingdom (“UK”) on January 18, 2022 (“Inception”).

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, 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 unaudited condensed 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.

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. See Note 3, Recapitalization for additional details.

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.

Change in Fiscal Year End

On November 18, 2022, the Board of Directors approved a change in the Company’s fiscal year end from March 31 to December 31. The Company’s 2022 fiscal year began at the Company’s inception on January 18, 2022, and ended on December 31, 2022.

The change in fiscal year end also applies retrospectively to all previously issued financial statements for the periods ended March 31, 2022, June 30, 2022, and September 30, 2022.

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 $95.0 million and $32.1 million as of September 30, 2023 and December 31, 2022, respectively, a net loss of $8.3 million and $1.1 million for the three months ended September 30, 2023 and 2022, and a net loss of $51.9 million and $9.8 million for the nine months ended September 30, 2023 and the period ended September 30, 2022, respectively. The Company’s existing sources of liquidity as of September 30, 2023 includes $103.9 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 $75.8 million in net cash proceeds in connection with April 2023 Private Placement. The Company’s cash requirements include, but are not limited to, 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.

Share-based Compensation - Equity Award Modification (Details) - USD ($) $ in Thousands	3 Months Ended		8 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2023	Apr. 07, 2023
Share-based Compensation
Share-based compensation expense	$ 2,577	$ 12	$ 321	$ 7,261
Severance agreement
Share-based Compensation
Options vested and exercisable					59,594
Share-based compensation expense				$ 600

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Fair Value Measurements

Fair Value Measurements

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, note payable, private placement warrants, and research and development license consideration. The carrying values of the Company’s cash and cash equivalents, 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 September 30, 2023 and December 31, 2022, and the fair value hierarchy of the valuation techniques utilized.


	September 30, 2023
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents	$	101,950	$	—	$	—	$	101,950
Financial liabilities:
Private placement warrants	$	—	$	1,950	$	—	$	1,950


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Financial liabilities:
Note payable	$	—	$	—	$	7,756	$	7,756
Research and development license consideration	$	—	$	—	$	2,634	$	2,634

There were no transfers into or out of Level 1, Level 2, or Level 3 during the three and nine months ended September 30, 2023 and the period ended December 31, 2022.

Note payable

The Company elected the fair value option to account for its Note payable to Hydra, LLC (see Note 10). The fair value of the Note payable at issuance was measured as the cash proceeds from the Note. The fair value of the Note payable subsequent to issuance was estimated using the probability-weighted expected return method (“PWERM”), whereby the total settlement obligation under the Note was determined based on the amounts payable to Hydra under various scenarios. The PWERM’s output is determined based on inputs not observable in the market, which represented a Level 3 measurement within the fair value hierarchy. The PWERM contemplated three scenarios: i) the Company consummates the Business Combination without triggering an event of default, ii) the Company triggers an event of default, and consummates the Business Combination, and iii) the Company does not consummate the Business Combination. The settlement value of each scenario was determined using a discounted cash flow model. Significant estimates in the cash flow model include the discount rate and time to repayment. As of December 31, 2022, the weighted average discount rate was 9.0%, and the weighted average time to repayment was 0.6 years, each weighted by the probability of the scenario. 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. The following table provides a summary of changes in the estimated fair value of the Note:


	For the Nine
	Months Ended
	September 30, 2023
Balance at December 31, 2022	$	7,756
Remeasurement of the Note to settlement value upon the Closing of the Business Combination		2,244
Settlement of the Note		(10,000)
Balance at September 30, 2023	$	—

The Company recorded a loss on remeasurement of the Note of $2.2 million for the nine months ended September 30, 2023 within change in fair value of note payable on the condensed consolidated statement of operations.

Research and development license consideration

As consideration for the 2022 Lilly License (see Note 6), Lilly agreed to receive either 550,000 Zura Class A Ordinary Shares upon the closing of the Business Combination (subject to certain lock-up provisions) or 4,702,867 shares of Z33 Series Seed Preferred Shares (the subsidiary redeemable preferred shares) if the Business Combination was not consummated. As of December 31, 2022, the arrangement was liability classified and remeasured at fair value at each reporting date (the research and development license consideration liability). The fair value of the research and development license consideration liability was estimated using the PWERM, whereby the total settlement obligation was determined based upon the fair value of the JATT Class A Ordinary Shares, the Z33 Series Seed Preferred Shares, and the probability of the consummation of the Business Combination. As certain of the inputs to the PWERM are not observable in the market, the research and development license consideration liability represented a Level 3 measurement within the fair value hierarchy. As of December 31, 2022, the fair value of JATT Class A Ordinary Shares was determined to be $7.66 per share, a discount to the trading price due to the shares being subject to a lock-up provision. As of December 31, 2022, the fair value of Z33 Series Seed Preferred Shares was determined to be $0.15 per share.

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. The following table provides a summary of changes in the estimated fair value of the liability:


	For the Nine
	Months Ended
	September 30, 2023
Balance at December 31, 2022	$	2,634
Remeasurement of the liability to settlement value upon the Closing of the Business Combination		1,854
Settlement of the liability		(4,488)
Balance at September 30, 2023	$	—

The Company recorded a loss on the remeasurement of the research and development license consideration liability of $1.9 million for the nine months ended September 30, 2023 within research and development on the condensed consolidated statement of operations.

Private Placement Warrants

As of September 30, 2023, the Company has private placement warrants assumed in connection with the Business Combination (see Note 8). Such warrants are 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. The following table provides a summary of changes in the estimated fair value of the private placement warrants:


Balance at December 31, 2022	$	—
Assumption of private placement warrants		1,714
Change in fair value		(177)
Balance at March 31, 2023		1,537
Change in fair value		532
Balance at June 30, 2023	$	2,069
Change in fair value		(119)
Balance at September 30, 2023	$	1,950

The Company recorded a gain from the change in fair value of the private placement warrants of $0.1 million for the three months ended September 30, 2023 and a loss of $0.2 million for the nine months ended September 30, 2023, within change in fair value of private placement warrants on the condensed consolidated statement of operations.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Recapitalization (Details) $ / shares in Units, $ in Thousands		9 Months Ended
	Mar. 20, 2023 USD ($) director $ / shares shares	Sep. 30, 2023 USD ($) $ / shares shares	Mar. 16, 2023 $ / shares shares	Dec. 31, 2022 $ / shares
Recapitalization
Transaction costs related to business combination		$ 4,000
Proceeds from issuance of ordinary shares upon closing of business combination		$ 56,683
Exchange ratio for Class A ordinary shares pursuant to the business combination \| shares	108.083	108.083	108.083
Class A ordinary shares, par value per share (in dollars per share) \| $ / shares	$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001
Legacy Zura
Recapitalization
Class A ordinary shares, par value per share (in dollars per share) \| $ / shares	$ 0.001
Legacy Zura \| JATT Acquisition Corp
Recapitalization
Percentage of ownership interest acquired	100.00%
Transaction costs related to business combination	$ 56,700
Proceeds from issuance of ordinary shares upon closing of business combination	$ 4,000
Exchange ratio for Class A ordinary shares pursuant to the business combination \| shares	108.083
Class A ordinary shares, par value per share (in dollars per share) \| $ / shares	$ 0.0001
Number of Class A ordinary shares upon exercise of each warrant \| shares	1
Number of directors appointed from the combined board \| director	4
Total number of directors in the combined board of directors \| director	7

Convertible Preferred Shares and Shareholders' Equity (Deficit) (Details) $ / shares in Units, $ in Thousands	Mar. 22, 2022 USD ($) Vote $ / shares	Sep. 30, 2023 $ / shares shares	Mar. 20, 2023 $ / shares shares	Mar. 16, 2023 $ / shares shares	Dec. 31, 2022 $ / shares shares
Convertible Preferred Shares and Shareholders' Equity (Deficit)
Number of Class A ordinary shares on conversion			267,939
Class A ordinary shares, par value per share (in dollars per share) \| $ / shares		$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001
Exchange ratio for Class A ordinary shares pursuant to the business combination		108.083	108.083	108.083
Class A ordinary shares authorized (in shares)		300,000,000		300,000,000	1,884,649
Preferred shares, shares authorized		1,000,000		1,000,000	0
Preferred shares, par value per share (in dollars per share) \| $ / shares		$ 0.0001		$ 0.0001	$ 0.0001
Series A-1 convertible preferred shares, minimum gross aggregate subscription with respect to new Ordinary Shares required for conversion \| $	$ 50,000
Series A-1 convertible preferred shares, dividends declared \| $	$ 0
Series A-1 convertible preferred shares, liquidation preference per share \| $ / shares	$ 131
Series A-1 convertible preferred shares, number of votes per share \| Vote	1
Preferred shares, shares issued		0			0
Preferred shares, shares outstanding		0			0
Legacy Zura
Convertible Preferred Shares and Shareholders' Equity (Deficit)
Class A ordinary shares, par value per share (in dollars per share) \| $ / shares			$ 0.001
License Agreement and a Series A-1 Subscription and Shareholder's Agreement with Pfizer [Member]
Convertible Preferred Shares and Shareholders' Equity (Deficit)
Anti-Dilution, percentage of ownership interest to be maintained	18.00%
Minimum value of capital to be raised for not being subject to anti-dilution \| $	$ 30,000

Note Payable

9 Months Ended

Sep. 30, 2023

Note Payable

Note Payable

10.

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 Note accrues interest at 9% per annum. The maturity date of the Note is the earlier of (i) twelve months from the date of the Note or (ii) five business dates after the date on which the Company consummates the Business Combination. The proceeds from the Note were used to acquire the 2022 Lilly License. If the registration statement on Form S-4 relating to the Business Combination had not been declared effective by the SEC by February 15, 2023, or if the Business Combination was not consummated by March 31, 2023, Hydra had the right to accelerate the Note and receive an amount equal to 120% of the face amount of the Note, plus accrued interest. On March 8, 2023, the Company signed a limited waiver letter under the Note, pursuant to which Hydra agreed to waive its acceleration right in consideration of the Company paying to Hydra 125% of the principal amount (equal to $10.0 million in the aggregate). The Note was repaid on March 20, 2023, upon the consummation of the Business Combination.

The Company elected to account for the Note at fair value (Note 4). The Company recorded any changes in the fair value of the Note during the period through other expense in the condensed consolidated statement of operations.

Recapitalization - Shares outstanding (Details)	Mar. 20, 2023 shares
Recapitalization
Class A ordinary shares issued and outstanding (in shares)	27,052,155
Percentage on outstanding shares	100.00%
JATT Public shareholders
Recapitalization
Class A ordinary shares issued and outstanding (in shares)	182,498
Percentage on outstanding shares	0.70%
Zura shares issued - 2022 Lilly license
Recapitalization
Class A ordinary shares issued and outstanding (in shares)	550,000
Percentage on outstanding shares	2.00%
Redemption Backstop
Recapitalization
Class A ordinary shares issued and outstanding (in shares)	1,301,633
Percentage on outstanding shares	4.80%
Redemption Backstop Consideration
Recapitalization
Class A ordinary shares issued and outstanding (in shares)	2,500,000
Percentage on outstanding shares	9.20%
JATT Founders
Recapitalization
Class A ordinary shares issued and outstanding (in shares)	3,450,000
Percentage on outstanding shares	12.80%
PIPE Investment
Recapitalization
Class A ordinary shares issued and outstanding (in shares)	2,009,950
Percentage on outstanding shares	7.40%
Forward Purchase Agreement
Recapitalization
Class A ordinary shares issued and outstanding (in shares)	3,000,000
Percentage on outstanding shares	11.10%
Legacy Zura Equityholders
Recapitalization
Class A ordinary shares issued and outstanding (in shares)	14,058,074
Percentage on outstanding shares	52.00%

Share-based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]

Schedule of restricted Share Units


		Weighted
		Average
	Number of	Grant Date
	RSUs	Fair Value
Unvested RSUs at December 31, 2022	—	$	—
Granted	2,233,011		6.50
Vested	(20,000)		6.84
Unvested RSUs at September 30, 2023	2,213,011	$	6.50

Schedule of share-based Compensation Expense


							For the Period from
					For the Nine		January 18, 2022
	For the Three Months Ended				Months Ended		(date of inception) to
	September 30,				September 30,		September 30,
	2023		2022		2023		2022
Research and development	$	—	$	—	$	2,186	$	—
General and administrative		2,577		12		5,075		321
Total share-based compensation expense	$	2,577	$	12	$	7,261	$	321

Equity Incentive Plan 2023

Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]

Schedule of weighted-average assumptions were used to estimate the fair value


	For the Nine
	Months Ended
	September 30,
	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

Market-Based Share Options

Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]

Schedule of weighted-average assumptions were used to estimate the fair value


										For the Period
										from January 18,
	For the Three Months Ended									2022 (date of
	September 30,						For the Nine Months			inception) to
	2023			2022			Ended September 30, 2023			September 30, 2022
Share price	$	—		$	—		$	6.26		$	0.77
Expected volatility		—	%		—	%		97.1	%		95.1	%
Risk-free rate		—	%		—	%		3.6	%		3.0	%
Expected life		—			—			6.1 years			5.9 years
Expected dividend yield		—	%		—	%		—	%		—	%

Schedule of company's share option activity


				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
	Number of	Exercise Price		Contractual	Value
	Options	(per share)		Life (Years)	(in thousands)
Options outstanding at December 31, 2022	3,547	$	90.50	9.4	$	1,804
Recapitalization	379,824		(89.66)	—		—
Options outstanding at December 31, 2022	383,371		0.84	9.4		1,804
Granted	5,874,144		2.16	—		—
Forfeited	(576,044)		1.20	—		—
Options outstanding at September 30, 2023	5,681,471	$	2.17	9.5	$	25,626
Options vested and exercisable at September 30, 2023	1,435,910	$	5.52	9.5	$	1,808

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Recapitalization - Forward Purchase Agreement and Redemption Backstop (Details)	Mar. 20, 2023 USD ($) $ / shares shares	Jan. 27, 2022 USD ($) $ / shares shares
Forward Purchase Agreement \| FPA Investors
Recapitalization
Issuance of shares (in shares)		3,000,000
Price per share \| $ / shares		$ 10
Issuance of shares \| $		$ 30,000,000
Number of additional shares issued in consideration for the FPA Investors entering into the latest amendment	2,500,000
Monetary consideration of additional shares issued in consideration for the FPA Investors entering into the latest amendment \| $	$ 0
Forward Purchase Agreement \| FPA Investors \| Class A
Recapitalization
Price per share \| $ / shares	$ 10
Maximum number of shares issued as public share redemptions were greater than 90% at the time of the business combination		15,000,000
Number of shares issued as public share redemptions were greater than 90% at the time of the business combination	1,301,633
Aggregate value of shares issued as public share redemptions were greater than 90% at the time of the business combination \| $	$ 13,016,330
Amended Forward Purchase Agreements Member
Recapitalization
Minimum shareholders redemptions with business combination		90

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Condensed Consolidated Balance Sheets
Series A-1 convertible preferred shares, par value per share (in dollars per share)	$ 0.001	$ 0.001
Series A-1 convertible preferred shares authorized (in shares)	0	13,510,415
Series A-1 convertible preferred shares issued (in shares)	0	13,510,415
Series A-1 convertible preferred shares outstanding (in shares)	0	13,510,415
Preferred shares, par value per share (in dollars per share)	$ 0.0001	$ 0.0001
Preferred shares authorized (in shares)	1,000,000	0
Preferred shares issued (in shares)	0	0
Preferred shares outstanding (in shares)	0	0
Class A ordinary shares, par value per share (in dollars per share)	$ 0.0001	$ 0.0001
Class A ordinary shares authorized (in shares)	300,000,000	1,884,649
Class A ordinary shares issued (in shares)	43,093,685	383,480
Class A ordinary shares outstanding (in shares)	43,093,685	383,480

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Measurements

Schedule of financial assets and liabilities measured at fair value on a recurring basis


	September 30, 2023
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents	$	101,950	$	—	$	—	$	101,950
Financial liabilities:
Private placement warrants	$	—	$	1,950	$	—	$	1,950


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Financial liabilities:
Note payable	$	—	$	—	$	7,756	$	7,756
Research and development license consideration	$	—	$	—	$	2,634	$	2,634

Schedule of changes in the estimated fair value


	For the Nine
	Months Ended
	September 30, 2023
Balance at December 31, 2022	$	7,756
Remeasurement of the Note to settlement value upon the Closing of the Business Combination		2,244
Settlement of the Note		(10,000)
Balance at September 30, 2023	$	—


	For the Nine
	Months Ended
	September 30, 2023
Balance at December 31, 2022	$	2,634
Remeasurement of the liability to settlement value upon the Closing of the Business Combination		1,854
Settlement of the liability		(4,488)
Balance at September 30, 2023	$	—


Balance at December 31, 2022	$	—
Assumption of private placement warrants		1,714
Change in fair value		(177)
Balance at March 31, 2023		1,537
Change in fair value		532
Balance at June 30, 2023	$	2,069
Change in fair value		(119)
Balance at September 30, 2023	$	1,950

Fair Value Measurements - Note payable (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)	Dec. 31, 2022
Fair Value Measurements
Settlement of note payable	$ 10,000
Summary of changes in the estimated fair value
Beginning balance	7,756
Remeasurement of the Note to settlement value upon the Closing of the Business Combination	2,244
Settlement of the Note	(10,000)
Ending balance	1,950
Change in fair value of note payable	$ 2,244
Weighted average discount rate
Fair Value Measurements
Measurement input		0.090
Weighted average time to repayment
Fair Value Measurements
Measurement input		0.006

Subsequent Events

9 Months Ended

Sep. 30, 2023

Subsequent Events

Subsequent Events

13.

Subsequent Events

Lonza Milestone Payment

During October 2023, the Company began drug substance manufacturing with a third-party. As a result of manufacturing with a third-party other than Lonza, under the terms of the Lonza License the first annual milestone payment of $0.4 million became due and payable.

Convertible Preferred Shares and Shareholders' Equity (Deficit) - April 2023 Private Placement (Details) - USD ($)			1 Months Ended	9 Months Ended
	Apr. 26, 2023	Mar. 13, 2023	Apr. 30, 2023	Sep. 30, 2023	Mar. 20, 2023	Mar. 16, 2023	Dec. 31, 2022
Convertible Preferred Shares and Shareholders' Equity (Deficit)
Class A ordinary shares, par value per share (in dollars per share)				$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001
Proceeds from Issuance of Private Placement			$ 75,800,000	$ 59,724,000
PIPE Subscription Agreement
Convertible Preferred Shares and Shareholders' Equity (Deficit)
Number of Class A shares issued		2,009,950
Sale price per share		$ 10.00
PIPE Subscription Agreement \| "April 2023 Private Placement"
Convertible Preferred Shares and Shareholders' Equity (Deficit)
Proceeds from Issuance of Private Placement	$ 80,000,000.0
PIPE Subscription Agreement \| "April 2023 Private Placement" \| Class A Ordinary shares
Convertible Preferred Shares and Shareholders' Equity (Deficit)
Number of Class A shares issued	15,041,530
Class A ordinary shares, par value per share (in dollars per share)	$ 0.0001
Sale price per share	4.25
PIPE Subscription Agreement \| "April 2023 Private Placement" \| Class A Ordinary shares \| Pre-Funded Warrants
Convertible Preferred Shares and Shareholders' Equity (Deficit)
Sale price per warrant	$ 4.249		$ 4.249
PIPE Subscription Agreement \| "April 2023 Private Placement" \| Class A Ordinary shares \| Pre-Funded Warrants \| Maximum
Convertible Preferred Shares and Shareholders' Equity (Deficit)
Number of warrants issued to purchase shares	3,782,000		3,782,000

Accounts Payable and Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2023

Accounts Payable and Accrued Expenses

Schedule of accounts payable and accrued expenses


	September 30, 2023		December 31, 2022
Accounts payable	$	1,645	$	2,010
Accrued offering costs		—		655
Accrued payroll		358		260
Accrued 2023 Lilly License costs		10,000		—
Accrued legal costs		133		308
Accrued research and development costs		3,833		490
Accrued bonus		745		141
Other accrued expenses		121		113
Accrued consulting fees		177		451
Total accounts payable and accrued expenses	$	17,012	$	4,428

Convertible Preferred Shares and Shareholders' Equity (Deficit)

9 Months Ended

Sep. 30, 2023

Convertible Preferred Shares and Shareholders' Equity (Deficit)

Convertible Preferred Shares and Shareholders' Equity (Deficit)

Convertible Preferred Shares and Shareholders’ Equity (Deficit)

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 balance sheet and on the statement of changes in convertible preferred shares, redeemable noncontrolling interest and shareholders’ deficit for the annual period ended December 31, 2022.

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.

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 is 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.

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 for further information on the Pre-Funded Warrants.

Series A-1 Convertible Preferred Shares Rights and Preferences

Conversion

Each Series A-1 convertible preferred share is 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 will automatically be 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 will rank pari passu with the existing Ordinary Shares at the time of conversion.

Anti-Dilution

If the Company issues equity securities, other than pursuant to a share option plan, the Company shall 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 raises in excess of $30.0 million in equity, where any capital raised above this threshold is not subject to anti-dilution.

Dividends

The holders of shares of Series A-1 convertible preferred shares are 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 are entitled to receive a liquidation preference prior to any distribution to the holders of Ordinary Shares in the amount $131 per share.

Voting Rights

The holders of the Series A-1 convertible preferred shares are 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 are entitled to any anti-dilution shares, in which case the holders of Series A-1 convertible preferred shares are 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 are not mandatorily redeemable at the option of the holder.

As of September 30, 2023, no convertible preferred shares were issued and outstanding.

Redeemable Noncontrolling Interest

9 Months Ended

Sep. 30, 2023

Redeemable Noncontrolling Interest

Redeemable Noncontrolling Interest

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. 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”). Stone Peach may exercise its option at any time between the first anniversary and the second anniversary of the transaction. 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 on the condensed consolidated statement of operations. The Company and Stone Peach are renegotiating the terms of the exercise of the call option.

As of September 30, 2023 and December 31, 2022, the redeemable noncontrolling interest balance was $20.9 million and $10.0 million, respectively.

Warrants (Details) $ / shares in Units, $ in Thousands		1 Months Ended	9 Months Ended
Warrants (Details) $ / shares in Units, $ in Thousands	Apr. 26, 2023 $ / shares shares	Apr. 30, 2023 USD ($) $ / shares shares	Sep. 30, 2023 USD ($) D $ / shares shares
Warrants
Public Warrants expiration term			5 years
Aggregate purchase price \| $			$ 16,070
Public warrants
Warrants
Exercise price of warrants			$ 11.50
Public Warrants expiration term			5 years
Warrants exercisable term from the completion of business combination			30 days
Number of Class A ordinary shares upon exercise of each warrant \| shares			1
Minimum threshold written notice period for redemption of public warrants			30 days
Fair value per share			$ 0.01
Stock price trigger for redemption of public warrants			18.00
Redemption price per public warrant (in dollars per share)			$ 11.50
Threshold trading days for redemption of public warrants			20 days
Threshold number of business days before sending notice of redemption to warrant holders \| D			30
Public warrants \| JATT
Warrants
Warrants outstanding \| shares			6,899,996
Exercise price of warrants			$ 11.50
Private placement warrants
Warrants
Threshold period for not to transfer, assign or sell any of their shares or warrants after the completion of the initial business combination			30 days
Private placement warrants \| JATT
Warrants
Warrants outstanding \| shares			5,910,000
Exercise price of warrants			$ 11.50
Private Placement \| Pre-Funded Warrants \| Subscription Agreement
Warrants
Number of warrants exercised \| shares			0
Number of warrants redeemed \| shares			0
Private Placement \| Class A Ordinary shares \| Pre-Funded Warrants \| Subscription Agreement
Warrants
Exercise price of warrants		$ 0.001
Number of Class A ordinary shares upon exercise of each warrant \| shares		1
Sale price per warrant	$ 4.249	$ 4.249
Aggregate purchase price \| $		$ 16,100
Private Placement \| Class A Ordinary shares \| Pre-Funded Warrants \| Subscription Agreement \| Maximum [Member]
Warrants
Number of warrants issued to purchase shares \| shares	3,782,000	3,782,000

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

Significant Accounting Policies

Use of Estimates

for acquired assets, the fair value of contingent consideration, the fair value of the private placement warrants, and the fair value of the note payable.

Risks and Uncertainties

Warrants

Noncontrolling Interest

Net Loss Per Share

The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per share because to do so would be anti-dilutive:


	September 30,	September 30,
	2023	2022
Convertible preferred shares	—	13,510,415
Shares issuable upon exercise of the Warrants to purchase Class A Ordinary Shares	12,809,996	—
Shares issuable upon exercise of options to purchase Class A Ordinary Shares	5,681,471	383,371
Shares issuable upon exercise of Z33 Series Seed Preferred Shares call option	2,000,000	—
Restricted share units	2,213,011	—
Total	22,704,478	13,893,786

Recent Accounting Pronouncements

Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Accounts Payable and Accrued Expenses
Accounts payable	$ 1,645	$ 2,010
Accrued offering costs		655
Accrued payroll	358	260
Accrued 2023 Lilly License costs	10,000
Accrued legal costs	133	308
Accrued research and development costs	3,833	490
Accrued bonus	745	141
Other accrued expenses	121	113
Accrued consulting fees	177	451
Total accounts payable and accrued expenses	$ 17,012	$ 4,428

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2023	Nov. 13, 2023
Document Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-40598
Entity Registrant Name	ZURA BIO LIMITED
Entity Incorporation, State or Country Code	E9
Entity Tax Identification Number	98-1725736
Entity Address, Address Line One	1489 W. Warm Springs Rd. #110
Entity Address, City or Town	Henderson
Entity Address State Or Province	NV
Entity Address, Postal Zip Code	89014
City Area Code	702
Local Phone Number	757-6133
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		43,593,678
Entity Central Index Key	0001855644
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false
Class A Ordinary Shares
Document Information
Title of 12(b) Security	Class A Ordinary Shares
Trading Symbol	ZURA
Security Exchange Name	NASDAQ
Warrants
Document Information
Title of 12(b) Security	Warrants
Trading Symbol	ZURAW
Security Exchange Name	NASDAQ

Summary of Significant Accounting Policies - Net loss per share (Details) - shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Summary of Significant Accounting Policies
Restricted share units	22,704,478	13,893,786
Convertible preferred shares
Summary of Significant Accounting Policies
Restricted share units		13,510,415
Shares issuable upon exercise of the Warrants to purchase Class A Ordinary Shares
Summary of Significant Accounting Policies
Restricted share units	12,809,996
Shares issuable upon exercise of options to purchase Class A Ordinary Shares
Summary of Significant Accounting Policies
Restricted share units	5,681,471	383,371
Shares issuable upon exercise of Z33 Series Seed Preferred Shares call option
Summary of Significant Accounting Policies
Restricted share units	2,000,000
Restricted share units
Summary of Significant Accounting Policies
Restricted share units	2,213,011

License Agreements (Details)		1 Months Ended	9 Months Ended
License Agreements (Details)	Mar. 22, 2022 USD ($) payment shares	Jul. 31, 2023 USD ($)	Sep. 30, 2023 shares	Dec. 31, 2022 shares
License Agreements
Series A-1 convertible preferred shares authorized (in shares) \| shares			0	13,510,415
Payments of non-refundable license fee		$ 150,000
Agreement with Pfizer
License Agreements
Amount of cash transferred	$ 5,000,000.0
Number of shares transferred \| shares	2,702,083
Percentage of interest	20.00%
Value allocated to in-process research and development	$ 7,500,000
Number of development and regulatory milestone payments \| payment	12
Maximum amount of development and regulatory milestone payments	$ 70,000,000.0
Maximum amount of sales milestone payments	$ 525,000,000.0
Maximum annual earned royalty at a marginal royalty rate	20.00%
Percentage of anti-dilution provisions to be maintained			18.00%
Series A-1 convertible preferred shares authorized (in shares) \| shares			267,939

Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies.

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.

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Summary of Significant Accounting Policies

Schedule of potentially dilutive securities not included in the calculation of the diluted net loss per common share because to do so would be anti-dilutive


	September 30,	September 30,
	2023	2022
Convertible preferred shares	—	13,510,415
Shares issuable upon exercise of the Warrants to purchase Class A Ordinary Shares	12,809,996	—
Shares issuable upon exercise of options to purchase Class A Ordinary Shares	5,681,471	383,371
Shares issuable upon exercise of Z33 Series Seed Preferred Shares call option	2,000,000	—
Restricted share units	2,213,011	—
Total	22,704,478	13,893,786

License Agreements - 2023 Lilly License (Details)				9 Months Ended	12 Months Ended
License Agreements - 2023 Lilly License (Details)	Apr. 26, 2023 USD ($) $ / shares shares	Apr. 24, 2023 shares	Dec. 08, 2022 USD ($)	Sep. 30, 2023 USD ($) payment shares	Dec. 31, 2022 USD ($) shares
License Agreements
Value of issued call right				$ 1,541,000
Noncontrolling interest balance				1,541,000	$ 0
ZB17 LLC
License Agreements
Upfront cash payment	$ 5,800,000
Issuance of ordinary shares to settle research and development license consideration liability \| shares	1,000,000
Fair value per share \| $ / shares	$ 7.84
Amount payable upon receipt of certain know-how, data, information and materials	$ 5,000,000.0
Stone Peach Properties, LLC \| Shares issuable upon exercise of Z33 Series Seed Preferred Shares call option
License Agreements
Percentage of the call options exercised		50.00%
Stone Peach Properties, LLC \| Class A Ordinary shares
License Agreements
Number of Shares Issued on Exercise of Call Option \| shares		2,000,000
License agreement with Lilly
License Agreements
Upfront cash payment			$ 7,000,000.0
Issuance of ordinary shares to settle research and development license consideration liability \| shares					550,000
Maximum amount of development and regulatory milestone payments					$ 155,000,000.0
Maximum amount of sales milestone payments					$ 440,000,000.0
Contingent payments due				$ 0
License agreement with Lilly \| BAFFX17, Ltd
License Agreements
Number of development and regulatory milestone payments \| payment				4
Maximum amount of development and regulatory milestone payments				$ 155,000,000.0
Maximum amount of sales milestone payments				$ 440,000,000
Period for payment of milestone payment				12 years
Percentage of royalty fee				3.00%
License agreement with Lilly \| Accounts Payable and Accrued Liabilities \| BAFFX17, Ltd
License Agreements
One-time milestone payment on achievement of conditions				$ 5,000,000.0
Minimum value of closing of an issuance of equity for milestone payment				100,000,000.0
Minimum net proceeds from sale of assets for one-time milestone payment				$ 100,000,000.0
Minimum fully diluted shares outstanding for milestone payment \| shares				52,500,000
Fully diluted shares exceeded the minimum limit for milestone payment \| shares				52,500,000
License agreement with Lilly \| Stone Peach Properties, LLC
License Agreements
One-time milestone payment on achievement of conditions				$ 25,000,000
Percentage of royalty fee				2.00%
One-time milestone payment				$ 4,500,000
Contingent payments due				$ 0
License agreement with Lilly \| Stone Peach Properties, LLC \| ZB17 LLC
License Agreements
Issued call right to purchase, percentage of fully-diluted equity				4.99%
Value of issued call right				$ 1,000,000.0
Expiry term from the date of regulatory approval milestone				1 year
Fair value of call right at grant date				$ 1,500,000
Annual amount of payment				$ 600,000
Percentage of annual increase in payment				10.00%
License agreement with Lilly \| Stone Peach Properties, LLC \| Research and development \| ZB17 LLC
License Agreements
Annual amount of payment				$ 600,000

Share-based Compensation - Other share-based compensation (Details) - USD ($) $ in Thousands	3 Months Ended		8 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2023	Mar. 20, 2023
Share-based Compensation
Number of Class A ordinary shares on conversion					267,939
Share-based compensation expense	$ 2,577	$ 12	$ 321	$ 7,261
Series A-1 convertible preferred shares
Share-based Compensation
Number of Class A ordinary shares on conversion	267,939			267,939
Share-based compensation expense	$ 0			$ 2,200

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		8 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2023
Operating expenses:
Research and development	$ 3,965	$ 415	$ 8,000	$ 37,079
General and administrative	6,222	653	1,814	14,732
Total operating expenses	10,187	1,068	9,814	51,811
Loss from operations	(10,187)	(1,068)	(9,814)	(51,811)
Other expense/(income), net:
Other expense, net	4	34	32	7
Interest income	(815)			(816)
Dividend income	(987)			(1,392)
Change in fair value of private placement warrants	119			(236)
Change in fair value of note payable				2,244
Total other expense/(income), net	(1,917)	34	32	279
Loss before income taxes	(8,270)	(1,102)	(9,846)	(52,090)
Income tax benefit
Net loss before redeemable noncontrolling interest	(8,270)	(1,102)	(9,846)	(52,090)
Net loss attributable to redeemable noncontrolling interest				203
Net loss	(8,270)	(1,102)	(9,846)	(51,887)
Adjustment to Zura subsidiary's preferred stock to redemption				(203)
Deemed dividend to redeemable noncontrolling interest				(10,875)
Net loss attributable to Class A Ordinary Shareholders of Zura	$ (8,270)	$ (1,102)	$ (9,846)	$ (62,965)
Net loss per share attributable to Class A Ordinary Shareholders of Zura, basic (in dollars per share)	$ (0.18)	$ (2.87)	$ (57.14)	$ (2.22)
Net loss per share attributable to Class A Ordinary Shareholders of Zura, diluted (in dollars per share)	$ (0.18)	$ (2.87)	$ (57.14)	$ (2.22)
Weighted-average Class A Ordinary Shares used in computing net loss per share attributable to Class A Ordinary Shareholders of Zura, basic (in shares)	46,876,344	383,480	172,326	28,402,487
Weighted-average Class A Ordinary Shares used in computing net loss per share attributable to Class A Ordinary Shareholders of Zura, diluted (in shares)	46,876,344	383,480	172,326	28,402,487