SEC Filing | Zura Bio Ltd

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended June 30, 2024



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission File Number 001-40598

ZURA BIO LIMITED

(Exact name of Registrant as specified in its Charter)


Cayman Islands	98-1725736
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1489 W. Warm Springs Rd. #110 Henderson, NV	89014
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (702) 757-6133

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Ordinary Shares	ZURA	The Nasdaq Stock Market LLC (The Nasdaq Capital Market)
Warrants	ZURAW	The Nasdaq Stock Market LLC (The Nasdaq Capital Market)

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

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

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


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 13, 2024, the registrant had 67,207,088 Class A Ordinary Shares and 2,025,988 Public Warrants outstanding.

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		Page
PART I	FINANCIAL INFORMATION	5
Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Changes in Convertible Preferred Shares, Redeemable Noncontrolling Interest and Shareholders’ Equity (Deficit)	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39

PART II	OTHER INFORMATION	40

Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
Signatures		42

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements include, but are not limited to, statements regarding our and our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward- looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements are based on the current expectations of the Company and its management thereof and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to:

●

our expectations regarding our product candidates and their related benefits, and our beliefs regarding competing product candidates and products both in development and approved, may not be achieved;

●

our vision and strategy may not be successful;

●

the timing of key events and initiation of our studies and release of clinical data may take longer than anticipated or may not be achieved at all;

●

expectations regarding the potential general acceptability and maintenance of our product candidates by regulatory authorities, payors, physicians, and patients may not be achieved;

●

we may be unable to attract and retain key personnel;

●

expectations with respect to our future operating expenses, capital requirements and needs for additional financing may not be achieved;

●

we have not completed any clinical trials, and have no products approved for commercial sale;

●

we have incurred significant losses since inception, and expect to incur significant losses for the foreseeable future and may not be able to achieve or sustain profitability in the future;

●

we require substantial additional capital to finance our operations, and if we are unable to raise such capital when needed or on acceptable terms, we may be forced to delay, reduce, and/or eliminate one or more of its development programs or future commercialization efforts;

●

we may be unable to renew existing contracts or enter into new contracts;

●

we rely on third-party contract development manufacturing organizations for the manufacture of clinical materials;

●

we rely on contract research organizations, clinical trial sites, and other third parties to conduct our preclinical studies and clinical trials;

●

we may be unable to obtain regulatory approval for our product candidates, and there may be related restrictions or limitations of any approved products;

●

we may be unable to successfully respond to general economic and geopolitical conditions;

●

we may be unable to effectively manage growth;

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●

we face competitive pressures from other companies worldwide;

●

we may be unable to adequately protect our intellectual property rights; and

●

other factors set forth in documents filed, or to be filed, with the SEC.

Additional discussion of the risks, uncertainties and other factors described above, as well as other risks material to our business, can be found under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can Zura assess the impact of all such risk factors on the business of Zura or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments or other transactions we may execute.

Forward-looking statements are not guarantees of performance. You should not put undue reliance on our forward-looking statements. Forward-looking statements, reflect the beliefs and opinions of Zura on the relevant subject. These statements are based upon information available to Zura as of the date of this Quarterly Report on Form 10-Q, and while Zura believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that Zura has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. All forward-looking statements attributable to Zura or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. Zura undertakes no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Zura Bio Limited

Condensed Consolidated Balance Sheets

(In thousands, except share data)


	June 30,		December 31,
	2024		2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	188,443	$	99,806
Prepaid expenses and other current assets		1,032		1,037
Total current assets		189,475		100,843
Property and equipment, net		25		—
Total assets	$	189,500	$	100,843

Liabilities, Redeemable Noncontrolling Interest and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	15,073	$	20,302
Total current liabilities		15,073		20,302
Private placement warrants		2,364		990
Total liabilities		17,437		21,292

Commitments and contingencies (Note 9)

Redeemable noncontrolling interest		14,000		18,680

Shareholders’ Equity:
Preferred shares, $0.0001 par value, 1,000,000 authorized as of June 30, 2024, and December 31, 2023; -0- issued and outstanding as of June 30, 2024, and December 31, 2023		—		—
Class A Ordinary shares, $0.0001 par value, 300,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 63,683,806 and 43,593,678 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		6		4
Additional paid-in capital		278,086		162,820
Accumulated deficit		(121,570)		(103,494)
Total Zura Bio Limited shareholders’ equity		156,522		59,330
Noncontrolling interest		1,541		1,541
Total shareholders’ equity		158,063		60,871
Total liabilities, redeemable noncontrolling interest and shareholders’ equity	$	189,500	$	100,843

See accompanying notes to unaudited condensed consolidated financial statements.

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Zura Bio Limited

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share data)


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Operating expenses:
Research and development	$	5,539	$	28,230	$	9,132	$	33,114
General and administrative		6,220		5,675		11,006		8,510
Total operating expenses		11,759		33,905		20,138		41,624
Loss from operations		(11,759)		(33,905)		(20,138)		(41,624)
Other (income)/expense, net:
Other (income)/expense		(2)		(7)		(25)		3
Interest income		(2,196)		—		(3,411)		(1)
Dividend income		—		(405)		—		(405)
Change in fair value of private placement warrants		768		532		1,374		355
Change in fair value of note payable		—		—		—		2,244
Total other (income)/expense, net		(1,430)		120		(2,062)		2,196
Loss before income taxes		(10,329)		(34,025)		(18,076)		(43,820)
Income tax benefit		—		—		—		—
Net loss before redeemable noncontrolling interest		(10,329)		(34,025)		(18,076)		(43,820)
Net loss attributable to redeemable noncontrolling interest		—		—		—		203
Net loss		(10,329)		(34,025)		(18,076)		(43,617)
Accretion of redeemable noncontrolling interest to redemption value		(2,337)		—		(2,337)		(203)
Deemed dividend to redeemable noncontrolling interest		—		(10,875)		—		(10,875)
Adjustment of redeemable noncontrolling interest from redemption value to carrying value		—		—		7,017		—
Net loss attributable to Class A Ordinary Shareholders of Zura	$	(12,666)	$	(44,900)	$	(13,396)	$	(54,695)
Net loss per share attributable to Class A Ordinary Shareholders of Zura, basic and diluted	$	(0.17)	$	(1.31)	$	(0.22)	$	(2.88)
Weighted-average Class A Ordinary Shares used in computing net loss per share attributable to Class A Ordinary Shareholders of Zura, basic and diluted		74,947,369		34,303,125		60,930,956		19,012,464

See accompanying notes to unaudited condensed consolidated financial statements.

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Zura Bio Limited

Condensed Consolidated Statements of Changes in Redeemable Noncontrolling Interest, Convertible Preferred Shares and Shareholders’ Equity (Deficit)

(Unaudited)

(In thousands, except share data)


	Redeemable		Convertible Preferred			Class A			Additional						Total
	Noncontrolling		Shares⁽¹⁾			Ordinary Shares⁽¹⁾			Paid-in		Accumulated		Noncontrolling		Shareholders’
	Interest		Shares	Amount		Shares	Amount		Capital		Deficit		Interest		Equity (Deficit)
Balance as of December 31, 2023	$	18,680	—		—	43,593,678		4		162,820		(103,494)		1,541		60,871

Issuance of Class A Ordinary Shares in connection with April 2024 Private Placement, net of $7.2 million of transaction costs		—	—		—	20,090,128		2		55,221		—		—		55,223
Issuance of Pre-Funded Warrants in connection with April 2024 Private Placement		—	—		—	—		—		50,030		—		—		50,030
Share-based compensation		—	—		—	—		—		5,335		—		—		5,335
Adjustment of redeemable noncontrolling interest from redemption value to carrying value		(7,017)	—		—	—		—		7,017		—		—		7,017
Accretion of redeemable noncontrolling interest to redemption value		2,337	—		—	—		—		(2,337)		—		—		(2,337)
Net loss		—	—		—	—		—		—		(18,076)		—		(18,076)
Balance as of June 30, 2024	$	14,000	—		—	63,683,806		6		278,086		(121,570)		1,541		158,063

Balance as of December 31, 2022	$	10,000	13,510,415	$	12,500	279,720	$	—	$	—	$	(32,056)	$	—	$	(32,056)

Issuance of Series A-1 convertible preferred shares as license compensation		—	267,939		2,186	—		—		—		—		—		—
Conversion of Series A-1 convertible preferred shares to Class A Ordinary Shares in connection with Business Combination		—	(13,778,354)		(14,686)	13,778,354		2		14,684		—		—		14,686
Issuance of Class A Ordinary Shares in connection with Business Combination, including PIPE Investment, Forward Purchase Investment, and Backstop Shares, net of $4.0 million of transaction costs		—	—		—	12,444,081		1		48,350		—		—		48,351
Issuance of Class A Ordinary Shares to settle research and development license consideration liability		—	—		—	550,000		—		4,488		—		—		4,488
Reclassification of public warrant liability to equity		—	—		—	—		—		2,001		—		—		2,001
Issuance of Class A Ordinary Shares in connection with April 2023 Private Placement, net of $9.8 million of transaction costs		—	—		—	15,041,530		1		54,133		—		—		54,134
Issuance of Pre-Funded Warrants in connection with April 2023 Private Placement		—	—		—	—		—		16,070		—		—		16,070
Issuance of Class A Ordinary Shares to Lilly in connection with 2023 Lilly License		—	—		—	1,000,000		—		7,840		—		—		7,840
Issuance of Restricted share awards						499,993
Share-based compensation		—	—		—	—		—		8,088		—		—		8,088
Net loss		(203)	—		—	—		—		—		(43,617)		—		(43,617)
Accretion of redeemable noncontrolling interest to redemption value		203	—		—	—		—		—		(203)		—		(203)
Stone Peach Call Right issued to noncontrolling interest		—	—		—	—		—		—		—		1,541		1,541
Deemed dividend to redeemable noncontrolling interest		10,875	—		—	—		—		—		(10,875)		—		(10,875)
Balance as of June 30, 2023	$	20,875	—	$	—	43,593,678	$	4	$	155,654	$	(86,751)	$	1,541	$	70,448

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	Redeemable		Convertible			Class A			Additional						Total
	Noncontrolling		Preferred Shares⁽¹⁾			Ordinary Shares⁽¹⁾			Paid-in		Accumulated		Noncontrolling		Shareholders’
	Interest		Shares	Amount		Shares	Amount		Capital		Deficit		Interest		Equity (Deficit)
Balance as of March 31, 2024	$	11,663	—		—	43,593,678		4		172,246		(111,241)		1,541		62,550

Issuance of Class A Ordinary Shares in connection with April 2024 Private Placement, net of $7.2 million of transaction costs		—	—		—	20,090,128		2		55,221		—		—		55,223
Issuance of Pre-Funded Warrants in connection with April 2024 Private Placement		—	—		—	—		—		50,030		—		—		50,030
Share-based compensation		—	—		—	—		—		2,926		—		—		2,926
Accretion of redeemable noncontrolling interest to redemption value		2,337	—		—	—		—		(2,337)		—		—		(2,337)
Net loss			—		—	—		—				(10,329)		—		(10,329)
Balance as of June 30, 2024	$	14,000	—		—	63,683,806		6		278,086		(121,570)		1,541		158,063

Balance as of March 31, 2023	$	10,000	—		—	27,052,155		3		69,703		(41,851)		—		27,855

Issuance of Class A Ordinary Shares in connection with April 2023 Private Placement, net of $9.8 million of transaction costs		—	—		—	15,041,530		1		54,133		—		—		54,134
Issuance of Pre-Funded Warrants in connection with April 2023 Private Placement		—	—		—	—		—		16,070		—		—		16,070
Issuance of Class A Ordinary Shares to Lilly in connection with 2023 Lilly License		—	—		—	1,000,000		—		7,840		—		—		7,840
Issuance of Restricted share awards		—	—		—	499,993		—		—		—		—
Share-based compensation		—	—		—	—		—		7,908		—		—		7,908
Net loss		—	—		—	—		—		—		(34,025)		—		(34,025)
Stone Peach Call Right issued to noncontrolling interest		—	—		—	—		—		—		—		1,541		1,541
Deemed dividend to redeemable noncontrolling interest		10,875	—		—	—		—		—		(10,875)		—		(10,875)
Balance as of June 30, 2023	$	20,875	—	$	—	43,593,678	$	4	$	155,654	$	(86,751)	$	1,541	$	70,448

⁽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 6.

See accompanying notes to unaudited condensed consolidated financial statements.

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Zura Bio Limited

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	For the Six
	Months Ended
	June 30,
	2024		2023
Cash flows from operating activities
Net loss before redeemable noncontrolling interest	$	(18,076)	$	(43,820)
Adjustments to reconcile net loss to net cash used in operating activities:
Research and development acquired license		—		27,381
Anti-dilution share issuance compensation		—		2,186
Share-based compensation expense		5,335		2,498
Change in fair value of note payable		—		2,244
Change in fair value of research and development license consideration liability		—		1,854
Change in fair value of private placement warrants		1,374		355
Depreciation and amortization		1		—
Foreign exchange transaction (gain)/loss		(25)		6
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		5		(321)
Accounts payable and accrued expenses		(213)		(813)
Net cash used in operating activities		(11,599)		(8,430)
Cash flows from investing activities
Purchase of fixed assets		(17)		—
Purchase of research and development license		(5,000)		(5,750)
Net cash used in investing activities		(5,017)		(5,750)
Cash flows from financing activities
Proceeds from issuance of Ordinary Shares in connection with April 2024 Private Placement, net of $7.2 million of transaction costs		55,223		—
Proceeds from issuance of Pre-Funded Warrants in connection with April 2024 Private Placement		50,030		—
Proceeds from issuance of Ordinary Shares in connection with April 2023 Private Placement, net of $0.1 million of transaction costs		—		63,846
Proceeds from issuance of Class A Ordinary Shares upon Closing of Business Combination		—		56,683
Proceeds from issuance of Pre-Funded Warrants in connection with April 2023 Private Placement		—		16,070
Settlement of note payable		—		(10,000)
Payment of deferred transaction costs		—		(1,184)
Net cash provided by financing activities		105,253		125,415
Net increase in cash and cash equivalents		88,637		111,235
Cash and cash equivalents, beginning of period		99,806		1,567
Cash and cash equivalents, ending of period	$	188,443	$	112,802

Supplemental Disclosure
Cash paid for taxes	$	—	$	—
Cash paid for interest	$	—	$	—

Supplemental Disclosure of Non-Cash Investing and Financing Activities
Conversion of Series A-1 convertible preferred shares for Class A Ordinary Shares	$	—	$	14,686
Accrued 2023 Lilly License consideration	$	—	$	12,250
Deemed dividend to redeemable noncontrolling interest	$	—	$	10,875
Issuance of Class A Ordinary shares for 2023 Lilly License	$	—	$	7,840
Adjustments to redeemable noncontrolling interest from redemption value to carrying value	$	7,017	$	—
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	$	—	$	4,122
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
Accretion of redeemable noncontrolling interest to redemption value	$	2,337	$	—
Reclassification of public warrant liability to equity	$	—	$	2,001
Issuance of Call Right to noncontrolling interest	$	—	$	1,541
Purchase of property and equipment included in accounts payable and accrued expenses	$	9	$	—

See accompanying notes to unaudited condensed consolidated financial statements.

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Zura Bio Limited

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except share and per share data)

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 crebankitug (ZB-168), a fully anti-IL7Ra monoclonal antibody, which it has licensed from Pfizer, Inc. (“Pfizer”), as well as torudokimab (ZB-880), a high affinity monoclonal antibody, and tibulizumab (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.

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use the extended transition period for complying with new or revised accounting standards, and as a result of this election, the consolidated financial statements may not be comparable to companies that comply with public company Financial Accounting Standards Board (“FASB”) standards’ effective dates. The Company may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of an offering or such earlier time that it is no longer an emerging growth company. The Company expects to no longer be an emerging growth company effective December 31, 2026.

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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. If necessary, reclassification of amounts previously reported have been made in the accompanying condensed consolidated financial statements in order to conform to current presentation.

These condensed consolidated financial statements have been prepared in accordance with U.S. GAAP applicable to interim financial statements. These condensed consolidated 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 the Company’s consolidated financial statements and accompanying notes as of and for the year ended December 31, 2023 (the “audited consolidated financial statements”) that were included in the Company’s Form 10-K filed with the SEC on March 28, 2024. In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, which include normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2024 and the results of operations for the three months ended June 30, 2024 and 2023 and for the six months ended June 30, 2024 and 2023. The results of operations for the six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year ending December 31, 2024 or any other future interim or annual period.

Significant Accounting Policies

Except for the addition of property and equipment, 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 consolidated financial statements in Form 10-K filed with the SEC on March 28, 2024.

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, and the fair value of public and private placement warrants.

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 and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions. There can be no assurance that any product candidates will receive the necessary approvals. If the Company was denied approval, approval was delayed or the Company was unable to maintain approval for any product candidate, it could have a material adverse impact on the Company.

The Company has significant cash balances at financial institutions which throughout the year regularly exceed the federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.

Table of Contents

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is recognized using the straight-line method over the estimated useful life of each asset. Computer and office equipment are depreciated over three years. Expenditures for repairs and maintenance are recorded to expense as incurred.

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 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:


	June 30,	June 30,
	2024	2023
Shares issuable upon exercise of the public and private placement to purchase Class A Ordinary Shares	12,809,996	12,809,996
Shares issuable upon exercise of options to purchase Class A Ordinary Shares	9,975,424	5,681,471
Shares issuable upon exercise of Z33 Series Seed Preferred Shares Put Right	2,000,000	—
Restricted share units	1,131,970	898,018
Restricted share awards	374,995	499,993
Shares issuable upon exercise of Z33 Series Seed Preferred Shares call option	—	2,000,000
Total	26,292,385	21,889,478

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position, results of operations, or cash flows upon adoption.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss. This guidance will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. The Company does not expect implementation of the new guidance to have a material impact on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires annual disclosures of specific categories in the rate reconciliation, additional information for reconciling items that meet a quantitative threshold and a disaggregation of income taxes paid, net of refunds. ASU 2023-09 also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. ASU 2023-09 is effective for the Company beginning with the 2025 Annual Report on Form 10-K. Early adoption is permitted. ASU 2023-09 should be applied prospectively. Retrospective adoption is permitted. The Company is currently assessing the impact this standard will have on the Company’s consolidated financial statements.