Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2023 | |
Document and Entity Information [Abstract] | |
Document Type | S-1 |
Entity Registrant Name | Zura Bio Ltd |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Central Index Key | 0001855644 |
Amendment Flag | false |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Jan. 18, 2022 |
Current assets: | ||||
Cash | $ 43,963 | $ 1,567 | ||
Prepaid expenses and other current assets | 422 | 209 | ||
Total current assets | 44,385 | 1,776 | ||
Deferred offering costs | 3,486 | |||
Total assets | 44,385 | 5,262 | ||
Current liabilities | ||||
Accounts payable and accrued expenses | 4,993 | 4,428 | ||
Note payable | 7,756 | |||
Research and development license consideration liability | 2,634 | |||
Total current liabilities | 4,993 | 14,818 | ||
Total liabilities | 6,530 | 14,818 | ||
Commitments and contingencies | ||||
Convertible preferred shares | ||||
Class A ordinary shares subject to possible redemption; 13,800,000 shares subject to possible redemption at $10.16 and $10.10 per share as of December 31, 2022 and December 31, 2021, respectively | 12,500 | |||
Redeemable noncontrolling interest | 10,000 | 10,000 | ||
Shareholders' deficit | ||||
Ordinary Shares, $0.001 par value per share; 17,437 shares authorized as of December 31, 2022; 3,548 shares issued and outstanding as of December 31, 2022 | 3 | |||
Additional Paid in Capital | 69,703 | |||
Accumulated deficit | (41,851) | (32,056) | ||
Total shareholders' equity (deficit) | 27,855 | (32,056) | $ (7,819) | $ 0 |
Total liabilities, convertible preferred shares, redeemable noncontrolling interest and shareholders' equity (deficit) | $ 44,385 | $ 5,262 |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) | Mar. 20, 2023 $ / shares | Mar. 16, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares | Dec. 31, 2022 £ / shares shares |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
Series A-1 convertible preferred shares, par value per share | (per share) | $ 0.001 | £ 0.001 | ||
Series A-1 convertible preferred shares, shares authorized | 125,000 | 125,000 | ||
Series A-1 convertible preferred shares, shares issued | 125,000 | 125,000 | ||
Class A common stock subject to possible redemption, outstanding (in shares) | 125,000 | 125,000 | ||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.001 | |
Ordinary shares, shares authorized | 300,000,000 | 17,437 | 17,437 | |
Ordinary shares, shares issued | 3,548 | 3,548 | ||
Number of shares outstanding | 3,548 | 3,548 |
Consolidated Statement of Opera
Consolidated Statement of Operations $ in Thousands | 11 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
Operating expenses: | |
General and administrative | $ 3,473 |
Research and development | 23,689 |
Total operating expenses | 27,162 |
Loss from operations | (27,162) |
Other expense | (171) |
Loss before income taxes | (27,333) |
Net loss attributable to redeemable noncontrolling interest | 1,595 |
Net loss | (25,738) |
Accretion of redeemable noncontrolling interest to redemption value | (6,652) |
Net loss attributable to Class A Ordinary Shareholders of Zura | $ (32,390) |
Net loss per Ordinary Share attributable to Shareholders of Zura, basic | $ / shares | $ (15,345) |
Diluted net income per ordinary share | $ / shares | $ (15,345) |
Basic weighted average ordinary shares outstanding | shares | 2,111 |
Diluted weighted average common shares outstanding | shares | 2,111 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Convertible Preferred Shares, Redeemable Noncontrolling Interest and Shareholders' Deficit - USD ($) $ in Thousands | Redeemable Noncontrolling Interest [Member] | Convertible Preferred Shares | Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance as of January 18, 2022 (date of inception) (in Shares) at Jan. 17, 2022 | 0 | |||||
Increase (Decrease) in Stockholders' Deficit | ||||||
Issuance of Class A Ordinary Share at inception (in shares) | 108 | |||||
Net loss | $ (7,819) | $ (7,819) | ||||
Balance as of March 31, 2022 (in Shares) at Mar. 31, 2022 | 108 | |||||
Balance as of March 31, 2022 at Mar. 31, 2022 | (7,819) | $ (7,819) | ||||
Balance (Shares) at Dec. 31, 2022 | 125,000 | 125,000 | ||||
Balance at Dec. 31, 2022 | $ 10,000 | $ 12,500 | $ 12,500 | |||
Balance as of January 18, 2022 (date of inception) (in Shares) at Jan. 17, 2022 | 0 | |||||
Increase (Decrease) in Stockholders' Deficit | ||||||
Issuance of Class A Ordinary Share at inception (in shares) | 3,547 | |||||
Net loss | $ (25,738) | |||||
Balance as of March 31, 2022 (in Shares) at Dec. 31, 2022 | 3,548 | 3,548 | ||||
Balance as of March 31, 2022 at Dec. 31, 2022 | $ 0 | $ 0 | (32,056) | $ (32,056) | ||
Balance (Shares) at Jan. 18, 2022 | 0 | |||||
Balance at Jan. 18, 2022 | 0 | $ 0 | ||||
Convertible Preferred Shares | ||||||
Issuance of Series A-1 convertible preferred shares for cash (in Shares) | 100,000 | |||||
Issuance of Series A-1 convertible preferred shares for cash | $ 10,000 | |||||
Issuance of Series A-1 convertible preferred shares for license (in Shares) | 25,000 | |||||
Issuance of Series A-1 convertible preferred shares for license | $ 2,500 | |||||
Issuance of Subsidiary redeemable preferred shares for license | 4,943 | |||||
Balance (Shares) at Dec. 31, 2022 | 125,000 | 125,000 | ||||
Balance at Dec. 31, 2022 | 10,000 | $ 12,500 | $ 12,500 | |||
Balance as of January 18, 2022 (date of inception) (in Shares) at Jan. 18, 2022 | 0 | |||||
Balance as of January 18, 2022 (date of inception) at Jan. 18, 2022 | $ 0 | 0 | 0 | 0 | ||
Increase (Decrease) in Stockholders' Deficit | ||||||
Issuance of Class A Ordinary Share at inception (in shares) | 1 | |||||
Exercise of stock options (in Shares) | 3,547 | |||||
Share-based compensation expense | 334 | 334 | ||||
Net loss | (1,595) | (25,738) | (25,738) | |||
Accretion of redeemable noncontrolling interest to redemption value | 6,652 | (334) | (6,318) | $ (6,652) | ||
Balance as of March 31, 2022 (in Shares) at Dec. 31, 2022 | 3,548 | 3,548 | ||||
Balance as of March 31, 2022 at Dec. 31, 2022 | $ 0 | 0 | (32,056) | $ (32,056) | ||
Increase (Decrease) in Stockholders' Deficit | ||||||
Net loss | $ (203) | (9,592) | (9,592) | |||
Balance as of March 31, 2022 at Mar. 31, 2023 | $ 69,703 | $ (41,851) | $ 27,855 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows $ in Thousands | 11 Months Ended |
Dec. 31, 2022 USD ($) | |
Cash flows from operating activities | |
Net loss | $ (27,333) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
Research and development-acquired licenses | 21,892 |
Share-based compensation expense | 334 |
Change in fair value of research and development license consideration liability | 185 |
Change in fair value of note payable | 156 |
Foreign exchange transaction loss | 23 |
Changes in operating assets and liabilities: | |
Prepaid expenses and other current assets | (209) |
Accounts payable and accrued expense | 3,750 |
Net cash used in operating activities | (1,202) |
Cash flows from investing activities | |
Purchase of research and development license | (12,000) |
Net cash used in investing activities | (12,000) |
Cash flows from financing activities | |
Proceeds from issuance of Series A-1 convertible preferred shares | 10,000 |
Proceeds from note payable | 7,600 |
Payment of deferred offering costs | (2,831) |
Net cash provided by financing activities | 14,769 |
Net increase in cash | 1,567 |
Cash, beginning of period | 0 |
Cash, end of period | 1,567 |
Supplemental disclosure of noncash investing and financing activities: | |
Issuance of subsidiary redeemable preferred shares for license | 4,943 |
Issuance of Series A-1 convertible preferred shares for license | 2,500 |
Research and development consideration liability for license | 2,449 |
Deferred offering costs included in accounts payable and accrued expenses | 655 |
Non-cash transfers to redeemable noncontrolling interest | $ 5,057 |
Organization and Description of
Organization and Description of Business Operations | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Organization and Description of Business | ||
Organization and Description of Business Operations | 1. Organization and Description of Business Zura Bio Limited, a Cayman Islands exempted company, formerly known as JATT Acquisition Corp (“JATT”), together with its subsidiaries (collectively, the “Company” 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”) and torudokimab, a high affinity monoclonal antibody, 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 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 $41.9 million and $32.1 million as of March 31, 2023 and December 31, 2022, respectively, and a net loss of $9.6 million and $7.8 million for the three months ended March 31, 2023 and the period ended March 31, 2022, respectively. The Company’s existing sources of liquidity as of March 31, 2023 includes $44.0 million in cash. 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. 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 over the next twelve months. | Note 1 — Organization and Description of Business Operations Zura Bio Limited (the “Company” or “Zura Bio”) was formed in the United Kingdom (“UK”) on January 18, 2022 (“Inception”). 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”) and torudokimab, a high affinity monoclonal antibody, which it has licensed from Eli Lilly and Company (“Lilly”). Business Combination On June 16, 2022, the Company entered into a business combination agreement (the “Business Combination Agreement”) with JATT Acquisition Corp (“JATT”), a special purpose acquisition company. On March 20, 2023 (the “Closing Date”), JATT consummated the previously announced business combination (the “Business Combination”), pursuant to the terms of 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, Holdco, and Zura Bio. Pursuant to the Business Combination Agreement, (a) before the closing of the Business Combination, Holdco was established as a new holding company of Zura Bio 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, together with the PIPE financing, the Forward Purchase Agreement, and the Redemption Backstop, generated approximately $65.0 million in gross proceeds. On March 21, 2023, Zura Bio Limited’s securities began trading on Nasdaq under the symbol “ZURA”. The Business Combination has been accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Under this method of accounting, JATT is treated as the “acquired” company for financial reporting purposes based upon the terms of the Business Combination which resulted in the following: (i) Zura Bio shareholders as a group hold the largest share of the combined company with a majority of the voting interest following the closing of the Business Combination, (ii) Zura Bio nominated 4 out of 7 Directors of the Board, (iii) all of Zura Bio’s existing management will continue in their key positions in the management team of the combined company and (iv) Zura Bio is the largest of the combining entities based on historical operating activity and has the larger employee base. Accordingly, for accounting purposes, the Business Combination is treated as the equivalent of Zura Bio issuing shares for the net assets of JATT, accompanied by a recapitalization. The net assets of JATT are stated at historical cost which approximate fair value, with no goodwill or other intangible assets recorded. 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, effective immediately. The Company’s 2022 fiscal year began at 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 and Management’s Plans 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 $32.1 million as of December 31, 2022 and a net loss of $25.7 million for the period ended December 31, 2022. To date, the Company’s operations have been funded through the sale of Series A-1 convertible preferred shares. As of December 31, 2022, the Company has $1.6 million in cash. The Company evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern over the next twelve months through March 2024. The Company’s cash requirements include, but are not limited to business combination costs, product manufacturing costs, and working capital requirements. The Company expects such operating losses and negative cash flows from operations will continue in 2023. The Company expects its cash on hand as of the date of the consolidated financial statements and gross proceeds of $65 million from the business combination will be sufficient to meet the Company’s obligations at least twelve months beyond the date of issuance of the consolidated financial statements. The Company’s future operations are highly dependent on a combination of factors, including (1) the success of its research and development programs; (2) the development of competitive therapies by other biotechnology and pharmaceutical companies, (3) the Company’s ability to manage growth of the organization; (4) the Company’s ability to protect its technology and products; and, ultimately (5) regulatory approval and market acceptance of a product. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Significant Accounting Policies | ||
Significant Accounting Policies | 2. 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 subsidiary, Z33 Bio, Inc. (“Z33”), are shown in the condensed consolidated financial statements as redeemable noncontrolling interest. 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 March 31, 2023 and the results of operations for the three months ended March 31, 2023 and the period ended March 31, 2022. The results of operations for the three months ended March 31, 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 and related public warrants and private placement warrants (collectively, the “Warrants”), 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 share-based consideration transferred for acquired assets, the fair value of contingent consideration, the fair value of public and 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 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. Classification of the public 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. 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: For the Three For the Period from Months January 18, 2022 Ended (date of inception) to March 31, March 31, 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 1,941,933 — Restricted share units 499,993 — Total 15,251,922 13,510,415 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. | Note 2 — Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The consolidated financial statements including the accounts of Zura Bio Limited, its wholly-owned subsidiary, Zura Bio, Inc., and its subsidiary, Z33 Bio, Inc. (“Z33”), have been prepared in conformity with U.S. GAAP, Other shareholders’ interests in Z33 are shown in the consolidated financial statements as noncontrolling interest. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions reflected in the consolidated financial statements relate to and include, but are not limited to, the fair value of Ordinary Shares and other assumptions used to measure share-based compensation, the fair value of share-based consideration transferred for acquired assets, the fair value of contingent consideration, 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 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. Segments Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as a single operating segment. Fair value of financial instruments Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. As of December 31, 2022, the carrying amounts of the Company’s cash and accounts payable and accrued expenses approximated their estimated fair value due to their relatively short maturities. Financial assets and liabilities are recorded at fair value on a recurring basis in the consolidated balance sheets. The carrying values of the Company’s financial assets and liabilities, including cash, prepaid and other current assets, accounts payable, and accrued expenses approximate to their fair value due to the short-term maturity of these instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. Assets and liabilities recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels are directly related to the amount of subjectivity with the inputs to the valuation of these assets or liabilities as follows: Level 1: Level 2: Level 3: Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Deferred Offering Costs The Company capitalizes offering costs consisting of direct, incremental legal, accounting and other fees in connection with the business combination. The deferred offering costs will be offset against the proceeds from the transaction upon the consummation of the business combination. Should the business combination be abandoned or not be considered probable, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statement of operations. During the period ended December 31, 2022, the Company incurred deferred offering costs of $3.5 million of which $0.7 million has not been paid and is included in accounts payable and accrued expenses in the consolidated balance sheet as of December 31, 2022. Research and Development Research and development (“R&D”) expenses consist primarily of consulting fees for medical and manufacturing advisory services and costs related to manufacturing material for preclinical studies. Expenses are recognized as an expense as the related goods are delivered or the services are performed. R&D expenses include the cost of in-process research and development (“IPR&D”) assets purchased in an asset acquisition transaction. IPR&D assets are expensed unless the assets acquired are deemed to have an alternative future use, provided that the acquired asset did not also include processes or activities that would constitute a “business” as defined under U.S. GAAP, the drug has not achieved regulatory approval for marketing and, absent obtaining such approval, has no established alternative future use. Acquired IPR&D payments are immediately expensed in the period in which they are incurred and include upfront payments, as well as transaction fees and subsequent pre-commercial milestone payments. Research and development costs incurred after the acquisition are expensed as incurred. R&D expenses also include the remeasurement of the research and development license consideration liability. Share-Based Compensation The Company accounts for all share-based payments to employees and non-employees, including grants of stock options and stock options with non-market performance conditions (“PSOs”) based on their respective grant date fair values. Stock options that vest immediately and have a nominal exercise price are valued based on the fair value of the Company’s Ordinary Shares on the date of grant. The Company estimates the fair value of stock option grants that do not have a nominal exercise price using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of share-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The Company expenses share-based compensation related to stock options over the requisite service period on a straight-line basis. The Company will record share-based compensation expense for the PSOs when the Company’s management deems it probable that the performance conditions will be satisfied. The share-based compensation costs are recorded in general and administrative expenses in the consolidated statement of operations. Forfeitures are recorded as they occur. Income Taxes Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse, and net operating loss (“NOL”) carryforwards. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has recorded a full valuation allowance to reduce its net deferred income tax assets to zero. In the event the Company were to determine that it would be able to realize some or all its deferred income tax assets in the future, an adjustment to the deferred income tax asset valuation allowance would increase income in the period such determination was made. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of December 31, 2022, the Company had no liability for income tax associated with uncertain tax positions. The Company would recognize any corresponding interest and penalties associated with its income tax positions in income tax expense. There was no income tax interest or penalties incurred for the period ended December 31, 2022. Functional Currency The Company’s functional and reporting currency is the U.S. Dollar. The Company recognizes gains and losses on cash and accounts payable that are denominated in a currency other than the Company’s functional currency. Such foreign currency transactional gains and losses are recognized within other expense in the consolidated statement of operations. For the period ended December 31, 2022, the Company had $23,000 of net foreign currency transactional losses. Comprehensive Loss Comprehensive loss is equal to net loss as presented in the consolidated statement of operations, as the Company did not have any other comprehensive income or loss for the period presented. Net Loss Per Ordinary Share Basic net loss per Ordinary Share is computed by dividing net loss by the weighted-average number of Ordinary Shares outstanding during the period. Diluted net loss per Ordinary Share excludes the potential impact of the Company’s convertible preferred shares and options to purchase 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 Ordinary Share are the same. The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per Ordinary Share because to do so would be anti-dilutive: For the Period from January 18, 2022 (date of inception) to December 31, 2022 Shares issuable upon conversion of Series A-1 convertible preferred shares 125,000 Shares issuable upon exercise of options to purchase Ordinary Shares 3,547 Total 128,547 Shares issuable upon the exercise of PSOs are excluded from the calculation of diluted net loss per Ordinary Share until the Company’s management deems it probable that the performance conditions will be satisfied. Recently Issued and Recently Adopted Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The amendments in ASU 2020-06 simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. The Company adopted on a modified prospective basis the new standard effective at inception, and noted no material impact on the consolidated financial statements and related disclosures. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Fair Value Measurements | ||
Fair Value Measurements | 4. Fair Value Measurements The Company measures certain financial assets and liabilities at fair value on a recurring basis. The Company determines fair value based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy. These levels are: Level 1: Level 2: Level 3: Financial instruments consist of cash, 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, 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 liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022, and the fair value hierarchy of the valuation techniques utilized. March 31, 2023 Level 1 Level 2 Level 3 Total Financial liabilities: Private placement warrants $ — $ 1,537 $ — $ 1,537 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 months ended March 31, 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 Three Months Ended March 31, 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 March 31, 2023 $ — The Company recorded a loss on remeasurement of the Note of $2.2 million for the three months ended March 31, 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 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 Three Months Ended March 31, 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 March 31, 2023 $ — The Company recorded a loss on the remeasurement of the research and development license consideration liability of $1.9 million for the three months ended March 31, 2023 within research and development on the condensed consolidated statement of operations. Private Placement Warrants As of March 31, 2023, the Company has private placement warrants (see Note 9). 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: For the Three Months Ended March 31, 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 The Company recorded a gain from the change in fair value of the private placement warrants of $0.2 million for the three months ended March 31, 2023 within change in fair value of private placement warrants on the condensed consolidated statement of operations. | Note 3 — Fair Value Measurements The following table presents information about the Company’s liabilities measured at fair value on a recurring basis as of December 31, 2022, and the fair value hierarchy of the valuation techniques utilized. 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 Total $ — $ — $ 10,390 $ 10,390 There were no transfers into out The Company elected the fair value option to account for its Note payable to Hydra, LLC. Refer to Note 8 for further details on the Note. 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 two 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, 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 year, each weighted by the probability of the scenario. The Company recorded any changes in the fair value of the Note through other expense in the consolidated statement of operations. As consideration for the Lilly License (see Note 5), Lilly will receive either 550,000 shares of JATT common stock 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 is not consummated (the research and development license consideration liability). The arrangement is liability classified and remeasured at fair value at each reporting date. 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 common stock, 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 common stock 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. The Company recorded any changes in the fair value of the research and development license consideration liability within research and development on the consolidated statement of operations. Level 3 Financial Liabilities The following table summarizes the change in the fair value of the note payable for the period ended December 31, 2022: December 31, 2022 Beginning balance $ — Initial measurement of note payable 7,600 Change upon remeasurement to fair value 156 Ending balance $ 7,756 The $0.2 million change in fair value is included in other expense in the consolidated statement of operations for the period ended December 31, 2022. The following table summarizes the change in the fair value of the research and development license consideration liability for the period ended December 31, 2022: December 31, 2022 Beginning balance $ — Initial measurement of research and development license consideration 2,449 Change upon remeasurement to fair value 185 Ending balance $ 2,634 The $0.2 million change in fair value is included in research & development in the consolidated statement of operations for the period ended December 31, 2022. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Accounts Payable and Accrued Expenses | ||
Accounts Payable and Accrued Expenses | 5. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses is comprised of the following as of March 31, 2023 and December 31, 2022: March 31, 2023 December 31, 2022 Accounts payable $ 2,409 $ 2,010 Accrued payroll 651 260 Accrued bonus 916 141 Accrued offering costs 154 655 Accrued research and development costs 518 490 Accrued consulting fees 35 451 Accrued legal costs 107 308 Other accrued expenses 203 113 Total accounts payable and accrued expenses $ 4,993 $ 4,428 | Note 4 — Accounts Payable and Accrued Expenses Accounts payable and accrued expenses is comprised of the following as of December 31, 2022: December 31, 2022 Accounts payable $ 2,010 Accrued offering costs 655 Accrued research and development costs 490 Accrued consulting costs 451 Accrued legal costs 308 Accrued payroll 260 Accrued bonus 141 Other accrued expenses 113 Total accounts payable and accrued expenses $ 4,428 |
License Agreement
License Agreement | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
License Agreement | ||
License Agreement | 6. 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. Under the License Agreement with Pfizer, the Company also has an obligation to pay ongoing fees associated with the prosecution, maintenance, or filing of patents. 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 March 31, 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. Lilly License On December 8, 2022, the Company’s consolidated subsidiary, Z33 Bio Inc. (“Z33”), entered into a license agreement (the “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 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 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. See Note 12 for further information. 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 March 31, 2023, none of the contingent payments were due. | Note 5 — License Agreements On March 22, 2022, the Company entered into a License Agreement and a Series A-1 Subscription and Shareholder’s Agreement (collectively, the “Agreement”) with Pfizer. Under the Agreement, the Company acquired a license for a compound initially developed by Pfizer, in exchange for $5.0 million in cash and 25,000 shares of the Company’s Series A-1 convertible preferred shares, representing a 20% interest in the Company. In accordance with ASC 805, the 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. As of December 31, 2022, the Company does not owe any amounts under the Agreement. The Agreement also has anti-dilution provisions to allow Pfizer to maintain an 18% interest in the Company, as detailed in Note 6. 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. Lilly License On December 8, 2022, the Company’s consolidated subsidiary, Z33, entered into a license agreement 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. 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 Lilly License as a component of research and development in the consolidated statement of operations during the period ended December 31, 2022. As additional consideration for the Lilly License, Lilly will receive either 550,000 shares of JATT common stock 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 is not consummated (the research and development license consideration liability). 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). The liability is measured at fair value on the acquisition date and remeasured to fair value at each reporting date. As of December 31, 2022, the research and development license consideration liability was $2.6 million. The changes in fair value are recorded within research and development expense in the Company’s consolidated statement of operations. See Note 3 for further information on the change in fair value of the research and development license consideration liability. 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. See Note 11 for further information. 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 December 31, 2022, none of the contingent payments were due. |
Convertible Preferred Shares an
Convertible Preferred Shares and Shareholders' Deficit | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Convertible Preferred Shares and Shareholders' Equity (Deficit) | ||
Convertible Preferred Shares and Shareholders' Deficit | 7. Convertible Preferred Shares and Shareholders’ Equity (Deficit) Prior to the Business Combination, Legacy Zura was authorized to issue Class A Ordinary Shares and Series A-1 convertible preferred shares. The outstanding Class A 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 Class A 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. Series A-1 Convertible Preferred Shares Rights and Preferences Conversion Each share of Series A-1 convertible preferred shares 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 share of Series A-1 convertible preferred shares 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 March 31, 2023, no preferred shares were issued | Note 6 — Convertible Preferred Shares and Shareholders’ Deficit As of December 31, 2022, the Company was authorized to issue 17,437 Ordinary Shares with a par value of $0.001 per share and 125,000 shares of Series A-1 convertible preferred shares with a par value of $0.001 per share. The par value of the Company’s shares are stated at 0.001 GBP per share which approximates US$0.001, which is included on the Company’s consolidated balance sheet. For the period ended December 31, 2022, the Company issued 3,547 Ordinary Shares for the exercise of stock options. On March 22, 2022, the Company issued 100,000 shares of Series A-1 convertible preferred shares to Hana Immunotherapeutic LLC (“Hana”) for $10.0 million in cash and 25,000 shares of Series A-1 convertible preferred shares to Pfizer for the Agreement. See Note 5. Series A-1 Convertible Preferred Shares Rights and Preferences Conversion Each share of Series A-1 convertible preferred shares 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 share of Series A-1 convertible preferred shares 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 $20.0 million in equity, where any capital raised above this threshold is not subject to anti-dilution. The anti-dilution provision expires upon an admission of the shares to trading on a recognized investment exchange where the gross aggregate subscription amount is greater than $50.0 million. 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. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Share-based Compensation | ||
Share-Based Compensation | 9. 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 Class A Ordinary Shares available for issuance under the Option Plans, of which 383,371 Class A 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. The maximum number of Class A Ordinary Shares that may be issued under the Equity Incentive Plan are equal to 4,029,898, with 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 March 31, 2023, no shares no 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 2023 Equity Incentive Plan share options issued during the three months ended March 31, 2023: For the Three Months Ended March 31, 2023 Share price $ 8.16 Expected volatility 96.5 % Risk-free rate 3.58 % Expected life 6.1 years Expected dividend yield — % The following table summarizes the Company’s share option activity for the three months ended March 31, 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 1,558,562 1.20 — — Options outstanding at March 31, 2023 1,941,933 $ 1.13 9.6 $ 26,781 Options vested and exercisable at March 31, 2023 85,708 $ 0.84 9.2 $ 1,207 Included in the table above are 45,611 PSOs that vest upon the Company raising external capital of $75 million or more. The milestone is considered outside of the Company’s control, and accordingly the vesting of the PSOs is not considered probable until the financing event occurs. As of March 31, 2023, no share-based compensation expense has been recognized in relation to these PSOs. Restricted Share Units The Company issued RSUs to a certain Director of the Board immediately prior to the closing of the Business Combination pursuant to the Equity Incentive Plan. The fair value has been estimated based on the closing price of the stock on the Closing Date of the Business Combination. Weighted Average Number of Grant Date RSUs Fair Value RSUs at December 31, 2022 — $ — Granted 499,993 8.16 RSUs at March 31, 2023 499,993 $ 8.16 The expense recognized related to RSUs during the three months ended March 31, 2023 was immaterial. 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 months ended March 31, 2023, the Company recognized expense in the amount of $2.2 million 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 March 31, 2023 and the period ended March 31, 2022 was as follows: For the Period from For the Three January 18, 2022 Months Ended (date of inception) to March 31, March 31, 2023 2022 Research and development $ 2,186 $ — General and administrative 180 — Total share-based compensation expense $ 2,366 $ — As of March 31, 2023, there was approximately $11.9 million of total unrecognized share-based compensation expense related to options granted to employees, executives, and directors under the Company’s equity plans (excluding PSOs) that is expected to be recognized over a weighted average period of 2.1 years. As of March 31, 2023, there was approximately $4.0 million of total unrecognized share-based compensation expense related to RSUs granted to a director under the Company’s 2023 Equity Incentive Plan that is expected to be recognized over a weighted average period of 2.1 years. | Note 7 — Share-Based Compensation On June 8, 2022, the Company’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 are 13,889 shares of Ordinary Shares available for issuance under the Option Plans, of which 3,547 shares of Ordinary Shares are authorized for issuance under the US Plan (the “Authorized Shares”). As of December 31, 2022, there are 6,795 shares of Ordinary Shares available for issuance under the Option Plans. UK Plan On June 8, 2022, options to purchase 3,547 shares of the Company’s Ordinary Shares were subject to the rules of the UK Plan (the “UK Plan Options”). The UK Plan Options were granted outside of the Authorized Shares. The UK Plan Options were awarded to certain employees and directors of the Company with a par value exercise price per share, which vest upon grant and have a ten-year contractual term. The fair value of the UK Plan Options was determined to be the fair value of the underlying Ordinary Shares on the date of grant of $83.13 as the UK Plan Options were vested upon grant and have a nominal exercise price. The underlying Ordinary Shares were valued using an option pricing model to allocate fair value to each equity class from the total fair value of shareholders’ equity, which was determined based on previous preferred share transactions. The fair value also considered the timing, probability, and potential value of a potential future exit event. The Company’s stock option activity for the UK Plan for the period ended December 31, 2022 was as follows: Number of Options Weighted Average Exercise Price (per share) Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of January 18, 2022 (date of inception) — $ — — $ — Granted 3,547 — 9.4 295 Exercised (3,547) — 295 Outstanding as of December 31, 2022 — $ — — $ — Exercisable as of December 31, 2022 — $ — — $ — US Plan On June 8, 2022, options to purchase 3,547 shares of the Company’s Ordinary Shares under the US Plan (the “US Plan Options”) were awarded to certain employees and directors of the Company with an exercise price per share of $90.50, which vest within a 4-year term and have a ten-year contractual life. The fair value of US Plan Options are estimated on the date of grant using the Black-Scholes option pricing model. The Company is a private company and lacks 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 stock 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 US Stock Options for the period ended December 31, 2022: Risk-free interest rate 3.0 % Expected dividend yield — Expected term (years) 5.00 – 5.96 Expected volatility 95.1 % For the period ended December 31, 2022, the weighted-average grant date fair value of the US Options was $63.63. The Company’s stock option activity for the US Plan for the period ended December 31, 2022 was as follows: Number of Options Weighted Average Exercise Price (per share) Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of January 18, 2022 (date of inception) — $ — — $ — Granted 3,547 90.5 9.4 — Outstanding as of December 31, 2022 3,547 $ 90.5 9.4 $ 1,804 Exercisable as of December 31, 2022 601 $ 90.5 9.4 $ 306 The aggregate intrinsic value in the above table is calculated as the excess of the fair value of the Company’s Ordinary Shares above the exercise price of the stock options. As of December 31, 2022, there was approximately $0.2 million of unrecognized compensation expense related to the stock options which will be recognized over the remaining weighted-average vesting term or approximately 3.29 years. During the period ended December 31, 2022, the Company granted 422 PSOs under the US Plan, included in the table above, with a performance condition to vest upon a financing of $75.0 million or greater, excluding certain related party capital as defined in the grant agreement for the PSOs. As the performance conditions for the PSOs were not considered probable, no compensation expense related to these awards has been recorded for the period ended December 31, 2022. UK Plan and US Plan For the period ended December 31, 2022, the Company recorded share-based compensation expense of $0.3 million included in general and administrative expenses in the consolidated statement of operations. |
Note Payable
Note Payable | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
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 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. | Note 8 — 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 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 through other expense in the consolidated statement of operations. |
Income Taxes
Income Taxes | 11 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | Note 9 — Income Taxes The components of loss before income taxes are as follows: For the Period from January 18, 2022 (date of inception) to December 31, 2022 U.S. operations $ (15,253) Non-U.S. operations (12,080) Total loss before income taxes $ (27,333) Provision for income taxes There is no provision for income taxes because the Company has incurred losses since its inception and maintains a full valuation allowance against its net deferred tax assets. The reported amount of income tax expense for the period differs from the amount that would result from applying the statutory tax rate to net loss before taxes primarily because of the change in valuation allowance. Effective January 1, 2022, the Tax Cuts and Jobs Act of 2017 requires the Company to capitalize, and subsequently amortize R&D expense over five years for research activities conducted in the U.S. and over fifteen years for research activities conducted outside of the U.S. Since the Company continues to be in a loss position, there is no impact to taxes payable. The state of California does not conform to the federal capitalization requirements, allowing the Company to continue to currently deduct the capitalized R&D costs in California. Deferred tax assets and valuation allowance Deferred tax assets reflect the tax effects of the Company’s loss carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. As of December 31, 2022, the Company had $6.3 million of UK loss carryforwards which can be carried forward indefinitely. As of December 31, 2022, the Company has Federal and state net operating loss carryforwards of $0.4 million and $0.6 million, respectively, The Federal losses can be carried forward indefinitely and the state losses expire in 2042. Under the Tax Cut and Jobs Act, NOL carryforwards arising in tax years beginning after December 31, 2021, are limited to 80% of taxable income. The net operating loss carry forwards are subject to review and possible adjustment by the U.S. and state tax authorities. NOL carry forwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders, as defined under Section 382 Internal Revenue Code. This could limit the amount of net operating losses that the Company can utilize annually to offset future taxable income or tax liabilities. As of December 31, 2022, the Company has not performed such an analysis evaluating the potential limitation of the Company’s net operating loss carry forwards due to the “change in ownership” provisions as defined under Sections 382 and 383 of the Internal Revenue Code. Subsequent ownership changes and proposed future changes to tax rules in respect of the utilization of losses carried forward may further affect the limitation in future years. A reconciliation of the U.S. statutory federal income tax rate to the Company’s effective tax rate was as follows: For the Period from January 18, 2022 (date of inception) to December 31, 2022 Statutory income tax rate 21.0 % Statutory income taxes, net of federal benefit 3.9 % Permanent differences (0.2) % Impact of non-U.S. earnings (1.2) % Change in valuation allowance (23.5) % Income tax provision (benefit) — % The significant components of the Company’s net deferred tax asset were as follows (in thousands): December 31, 2022 Deferred tax assets: Net operating loss carryforward $ 1,309 Accrued expenses and other 39 Capitalized research and development 51 Intangible assets acquired 5,020 Total deferred income tax assets 6,419 Valuation allowance (6,419) Total deferred income tax assets, net $ — The Company’s initial tax year was the period ended December 31, 2022, which remains open for the assessment of income taxes. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Commitments and Contingencies. | ||
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. | Note 10 — 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. |
Redeemable Noncontrolling Inter
Redeemable Noncontrolling Interest | 11 Months Ended |
Dec. 31, 2022 | |
Redeemable Noncontrolling Interest | |
Redeemable Noncontrolling Interest | Note 11 — Redeemable Noncontrolling Interest As a finder’s fee for the Lilly License, the Company’s consolidated subsidiary Z33 issued 4,900,222 shares of Z33 Series Seed Preferred Shares. 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. The redeemable noncontrolling interest is recognized at the higher of (1) its initial fair value plus accumulated earnings/losses associated with the noncontrolling interest or (2) the redemption value as of the balance sheet date. As of December 31, 2022, the redeemable noncontrolling interest balance was the redemption value of $10.0 million. |
Subsequent Events
Subsequent Events | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Subsequent Events | ||
Subsequent Events | 13. Subsequent Events 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”). The Severance Agreement provides that, so long as the COO does not revoke the Severance Agreement and meets his obligations thereunder, 59,594 of the share options previously granted to him will become vested and exercisable, with any shares purchased under the option subject to an 18-month lockup period. The COO will be able to exercise the vested option by electing a net cashless exercise for purposes of both paying the exercise price and meeting minimum required tax withholding requirements. The terms of the Severance Agreement became effective on April 15, 2023. New Lilly License Effective April 26, 2023, the Company’s newly-formed subsidiary ZB17 LLC (“ZB17”) entered into a License, Development and Commercialization Agreement (the “ZB17 License Agreement,” and, together with the Lilly Agreement, the “Lilly Agreements”) with Lilly, for an exclusive license (the “ZB-106 License”) to develop, manufacture and commercialize a certain bispecific antibody relating to IL-17 and BAFF (“ZB-106”) in exchange for an upfront cash payment of $5.8 million and 1,000,000 Class A Ordinary Shares, as well as a payment of $5.0 million payable upon the Company’s receipt of certain know-how, data, information and materials that Lilly is required to provide under the License Agreement. Under the ZB17 License Agreement, the Company is obligated to pay development and milestone payments up to an aggregate of $195 million, and up to an aggregate of $440 million based on thresholds of net sales. The Company is also obligated to pay Lilly an annual earned royalty at a marginal royalty rate in the mid-single digits to low-doubled digits, with increasing rates depending on net sales. Private Placement In April 2023, the Company entered into subscription agreements (the “Subscription Agreements”) with certain individual and institutional accredited investors (the “Subscribers”) in connection with the sale by the Company (the “Private Placement”) of Class A Ordinary Shares, par value $0.0001 per share and pre-funded warrants (the “Pre-Funded Warrants”) (collectively, the “Securities”). Pursuant to the terms of the Subscription Agreements, each Class A Ordinary Share is being sold at a price of $4.25 per Share and each Pre-Funded Warrant is being sold at a price of $4.249 per Pre-Funded Warrant. 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. The Private Placement is expected to result in gross proceeds to the Company of approximately $80.0 million, before deducting placement agent fees and other offering expenses payable by the Company. The consummation of the Private Placement will occur in two closings, the initial closing of which occurred on May 1, 2023. The second closing will occur on such date that is the second business day following the date shareholder approval is obtained. At the initial closing, Subscribers purchased an aggregate of 3,750,000 Shares for gross proceeds of approximately $15.9 million. At the second closing, Subscribers have committed to purchase an aggregate of 15,073,530 Shares (including 3,782,000 Shares issuable upon exercise of Pre-Funded Warrants) for additional gross proceeds of approximately $64.1 million. | Note 12 — Subsequent Events The Company has evaluated subsequent events and transactions that occurred up to the date that these consolidated financial statements were issued. Except for the matters disclosed below, no additional subsequent events had occurred that would require recognition or disclosure in these consolidated financial statements. Under the terms of the Note agreement with Hydra, Hydra had the right to accelerate the Note and receive an amount equal to 120% of the Principal Amount because the registration statement on Form S-4 relating to the Business Combination was not declared effective by the SEC on or before February 15, 2023. On March 8, 2023, the Company and Hydra signed a limited waiver letter under the Note, pursuant to which Hydra agreed to waive its acceleration right in consideration of Zura 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. Prior to consummation of the Business Combination in March 2023, the Company granted options to purchase 14,420 Ordinary Shares to certain employees, executives, and directors. In addition, the Company awarded 4,626 restricted stock units (“RSUs”) to a director of the Company. As a result of these transactions and the Company’s contractual commitments under an anti-dilution provision, the Company issued 2,479 Series A-1 convertible preferred shares to an existing shareholder. On March 20, 2023, the Company consummated the Business Combination pursuant to the terms of the business combination agreement, dates as of June 16, 2022 (as amended on September 20, 2022, November 14, 2022 and January 13, 2023). The Business Combination, together with the PIPE financing, the forward purchase agreement, and the sale of the backstop purchase shares, generated approximately $65.0 million. In connection with the Business Combination, all outstanding Series A-1 Convertible Preferred shares, Ordinary Shares, and options to purchase Ordinary Shares of the Company were converted into common stock, or options to purchase common stock of JATT. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Significant Accounting Policies | ||
Basis of Presentation and Principles of Consolidation | 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 subsidiary, Z33 Bio, Inc. (“Z33”), are shown in the condensed consolidated financial statements as redeemable noncontrolling interest. 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 March 31, 2023 and the results of operations for the three months ended March 31, 2023 and the period ended March 31, 2022. The results of operations for the three months ended March 31, 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. | Basis of Presentation and Principles of Consolidation The consolidated financial statements including the accounts of Zura Bio Limited, its wholly-owned subsidiary, Zura Bio, Inc., and its subsidiary, Z33 Bio, Inc. (“Z33”), have been prepared in conformity with U.S. GAAP, Other shareholders’ interests in Z33 are shown in the consolidated financial statements as noncontrolling interest. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | 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 share-based consideration transferred for acquired assets, the fair value of contingent consideration, the fair value of public and private placement warrants, and the fair value of the note payable. | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions reflected in the consolidated financial statements relate to and include, but are not limited to, the fair value of Ordinary Shares and other assumptions used to measure share-based compensation, the fair value of share-based consideration transferred for acquired assets, the fair value of contingent consideration, and the fair value of the note payable. |
Risks and Uncertainties | 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. 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. | 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. 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. |
Segments | Segments Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as a single operating segment. | |
Fair Value of Financial Instruments | Fair value of financial instruments Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. As of December 31, 2022, the carrying amounts of the Company’s cash and accounts payable and accrued expenses approximated their estimated fair value due to their relatively short maturities. Financial assets and liabilities are recorded at fair value on a recurring basis in the consolidated balance sheets. The carrying values of the Company’s financial assets and liabilities, including cash, prepaid and other current assets, accounts payable, and accrued expenses approximate to their fair value due to the short-term maturity of these instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. Assets and liabilities recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels are directly related to the amount of subjectivity with the inputs to the valuation of these assets or liabilities as follows: Level 1: Level 2: Level 3: | |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. | |
Research and Development - License Acquired | Research and Development Research and development (“R&D”) expenses consist primarily of consulting fees for medical and manufacturing advisory services and costs related to manufacturing material for preclinical studies. Expenses are recognized as an expense as the related goods are delivered or the services are performed. R&D expenses include the cost of in-process research and development (“IPR&D”) assets purchased in an asset acquisition transaction. IPR&D assets are expensed unless the assets acquired are deemed to have an alternative future use, provided that the acquired asset did not also include processes or activities that would constitute a “business” as defined under U.S. GAAP, the drug has not achieved regulatory approval for marketing and, absent obtaining such approval, has no established alternative future use. Acquired IPR&D payments are immediately expensed in the period in which they are incurred and include upfront payments, as well as transaction fees and subsequent pre-commercial milestone payments. Research and development costs incurred after the acquisition are expensed as incurred. R&D expenses also include the remeasurement of the research and development license consideration liability. | |
Share-Based Compensation | Share-Based Compensation The Company accounts for all share-based payments to employees and non-employees, including grants of stock options and stock options with non-market performance conditions (“PSOs”) based on their respective grant date fair values. Stock options that vest immediately and have a nominal exercise price are valued based on the fair value of the Company’s Ordinary Shares on the date of grant. The Company estimates the fair value of stock option grants that do not have a nominal exercise price using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of share-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The Company expenses share-based compensation related to stock options over the requisite service period on a straight-line basis. The Company will record share-based compensation expense for the PSOs when the Company’s management deems it probable that the performance conditions will be satisfied. The share-based compensation costs are recorded in general and administrative expenses in the consolidated statement of operations. Forfeitures are recorded as they occur. | |
Income Taxes | Income Taxes Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse, and net operating loss (“NOL”) carryforwards. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has recorded a full valuation allowance to reduce its net deferred income tax assets to zero. In the event the Company were to determine that it would be able to realize some or all its deferred income tax assets in the future, an adjustment to the deferred income tax asset valuation allowance would increase income in the period such determination was made. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of December 31, 2022, the Company had no liability for income tax associated with uncertain tax positions. The Company would recognize any corresponding interest and penalties associated with its income tax positions in income tax expense. There was no income tax interest or penalties incurred for the period ended December 31, 2022. | |
Functional Currency | Functional Currency The Company’s functional and reporting currency is the U.S. Dollar. The Company recognizes gains and losses on cash and accounts payable that are denominated in a currency other than the Company’s functional currency. Such foreign currency transactional gains and losses are recognized within other expense in the consolidated statement of operations. For the period ended December 31, 2022, the Company had $23,000 of net foreign currency transactional losses. | |
Comprehensive Loss | Comprehensive Loss Comprehensive loss is equal to net loss as presented in the consolidated statement of operations, as the Company did not have any other comprehensive income or loss for the period presented. | |
Net Loss Per Share | 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: For the Three For the Period from Months January 18, 2022 Ended (date of inception) to March 31, March 31, 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 1,941,933 — Restricted share units 499,993 — Total 15,251,922 13,510,415 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. | Net Loss Per Ordinary Share Basic net loss per Ordinary Share is computed by dividing net loss by the weighted-average number of Ordinary Shares outstanding during the period. Diluted net loss per Ordinary Share excludes the potential impact of the Company’s convertible preferred shares and options to purchase 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 Ordinary Share are the same. The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per Ordinary Share because to do so would be anti-dilutive: For the Period from January 18, 2022 (date of inception) to December 31, 2022 Shares issuable upon conversion of Series A-1 convertible preferred shares 125,000 Shares issuable upon exercise of options to purchase Ordinary Shares 3,547 Total 128,547 Shares issuable upon the exercise of PSOs are excluded from the calculation of diluted net loss per Ordinary Share until the Company’s management deems it probable that the performance conditions will be satisfied. |
Recently Issued and Recently Adopted Accounting Pronouncements | 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. | Recently Issued and Recently Adopted Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The amendments in ASU 2020-06 simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. The Company adopted on a modified prospective basis the new standard effective at inception, and noted no material impact on the consolidated financial statements and related disclosures. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
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 | For the Three For the Period from Months January 18, 2022 Ended (date of inception) to March 31, March 31, 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 1,941,933 — Restricted share units 499,993 — Total 15,251,922 13,510,415 | For the Period from January 18, 2022 (date of inception) to December 31, 2022 Shares issuable upon conversion of Series A-1 convertible preferred shares 125,000 Shares issuable upon exercise of options to purchase Ordinary Shares 3,547 Total 128,547 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Fair Value Measurements | ||
Schedule of liabilities measured at fair value on a recurring basis | March 31, 2023 Level 1 Level 2 Level 3 Total Financial liabilities: Private placement warrants $ — $ 1,537 $ — $ 1,537 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 | 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 Total $ — $ — $ 10,390 $ 10,390 |
Summary of change in the fair value of the liabilities | For the Three Months Ended March 31, 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 March 31, 2023 $ — For the Three Months Ended March 31, 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 March 31, 2023 $ — For the Three Months Ended March 31, 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 | |
Notes payable | ||
Fair Value Measurements | ||
Summary of change in the fair value of the liabilities | December 31, 2022 Beginning balance $ — Initial measurement of note payable 7,600 Change upon remeasurement to fair value 156 Ending balance $ 7,756 | |
Research and development license consideration | ||
Fair Value Measurements | ||
Summary of change in the fair value of the liabilities | December 31, 2022 Beginning balance $ — Initial measurement of research and development license consideration 2,449 Change upon remeasurement to fair value 185 Ending balance $ 2,634 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Accounts Payable and Accrued Expenses | ||
Schedule of accounts payable and accrued expenses | March 31, 2023 December 31, 2022 Accounts payable $ 2,409 $ 2,010 Accrued payroll 651 260 Accrued bonus 916 141 Accrued offering costs 154 655 Accrued research and development costs 518 490 Accrued consulting fees 35 451 Accrued legal costs 107 308 Other accrued expenses 203 113 Total accounts payable and accrued expenses $ 4,993 $ 4,428 | December 31, 2022 Accounts payable $ 2,010 Accrued offering costs 655 Accrued research and development costs 490 Accrued consulting costs 451 Accrued legal costs 308 Accrued payroll 260 Accrued bonus 141 Other accrued expenses 113 Total accounts payable and accrued expenses $ 4,428 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Schedule of company's stock option activity of Option plans | 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 1,558,562 1.20 — — Options outstanding at March 31, 2023 1,941,933 $ 1.13 9.6 $ 26,781 Options vested and exercisable at March 31, 2023 85,708 $ 0.84 9.2 $ 1,207 | |
Schedule of weighted-average assumptions used to estimate the fair value of the Stock Options | For the Three Months Ended March 31, 2023 Share price $ 8.16 Expected volatility 96.5 % Risk-free rate 3.58 % Expected life 6.1 years Expected dividend yield — % | |
UK Plan | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Schedule of company's stock option activity of Option plans | Number of Options Weighted Average Exercise Price (per share) Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of January 18, 2022 (date of inception) — $ — — $ — Granted 3,547 — 9.4 295 Exercised (3,547) — 295 Outstanding as of December 31, 2022 — $ — — $ — Exercisable as of December 31, 2022 — $ — — $ — | |
US Plan | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Schedule of company's stock option activity of Option plans | Number of Options Weighted Average Exercise Price (per share) Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of January 18, 2022 (date of inception) — $ — — $ — Granted 3,547 90.5 9.4 — Outstanding as of December 31, 2022 3,547 $ 90.5 9.4 $ 1,804 Exercisable as of December 31, 2022 601 $ 90.5 9.4 $ 306 | |
Schedule of weighted-average assumptions used to estimate the fair value of the Stock Options | Risk-free interest rate 3.0 % Expected dividend yield — Expected term (years) 5.00 – 5.96 Expected volatility 95.1 % |
Income Taxes (Tables)
Income Taxes (Tables) | 11 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of components of loss before income taxes | For the Period from January 18, 2022 (date of inception) to December 31, 2022 U.S. operations $ (15,253) Non-U.S. operations (12,080) Total loss before income taxes $ (27,333) |
Schedule of reconciliation of the U.S. statutory federal income tax rate to effective tax rate | For the Period from January 18, 2022 (date of inception) to December 31, 2022 Statutory income tax rate 21.0 % Statutory income taxes, net of federal benefit 3.9 % Permanent differences (0.2) % Impact of non-U.S. earnings (1.2) % Change in valuation allowance (23.5) % Income tax provision (benefit) — % |
Schedule of significant components of net deferred tax asset | December 31, 2022 Deferred tax assets: Net operating loss carryforward $ 1,309 Accrued expenses and other 39 Capitalized research and development 51 Intangible assets acquired 5,020 Total deferred income tax assets 6,419 Valuation allowance (6,419) Total deferred income tax assets, net $ — |
Organization and Description _2
Organization and Description of Business Operations (Details) $ in Thousands | 2 Months Ended | 3 Months Ended | 11 Months Ended | |||
Jun. 16, 2022 USD ($) | Mar. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) director | Dec. 31, 2022 USD ($) | |
Organization and Description of Business | ||||||
Net loss | $ (7,819) | $ (9,592) | $ 7,800 | $ (25,738) | $ (25,738) | |
Accumulated deficit | (41,851) | (32,056) | (32,056) | |||
Cash and cash equivalents | $ 44,000 | $ 1,600 | $ 1,600 | |||
Gross proceeds | $ 65,000 | |||||
Number of directors of the board | director | 7 | |||||
Number of directors nominated | director | 4 | |||||
Proceeds from business combination | $ 65,000 |
Significant Accounting Polici_4
Significant Accounting Policies - Income Taxes (Details) | 11 Months Ended |
Dec. 31, 2022 USD ($) | |
Liability for income tax associated with uncertain tax positions | $ 0 |
Income tax interest or penalties incurred | 0 |
Deferred offering costs | 3,486,000 |
Net foreign currency transactional losses | 23,000 |
Accounts payable and accrued expenses | |
Deferred offering costs | $ 700,000 |
Significant Accounting Polici_5
Significant Accounting Policies - Net Loss Per Share (Details) - shares | 2 Months Ended | 3 Months Ended | 11 Months Ended |
Mar. 31, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Potentially dilutive securities not included in the calculation of the diluted net loss per common share because to do so would be anti-dilutive | |||
Total | 13,510,415 | 15,251,922 | 128,547 |
Shares issuable upon conversion of Series A-1 convertible preferred shares | |||
Potentially dilutive securities not included in the calculation of the diluted net loss per common share because to do so would be anti-dilutive | |||
Total | 13,510,415 | 125,000 | |
Shares issuable upon exercise of options to purchase Ordinary Shares | |||
Potentially dilutive securities not included in the calculation of the diluted net loss per common share because to do so would be anti-dilutive | |||
Total | 1,941,933 | 3,547 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring $ in Thousands | Dec. 31, 2022 USD ($) |
Fair Value Measurements | |
Financial liabilities, fair value | $ 10,390 |
Level 3 | |
Fair Value Measurements | |
Financial liabilities, fair value | 10,390 |
Notes payable | |
Fair Value Measurements | |
Financial liabilities, fair value | 7,756 |
Notes payable | Level 3 | |
Fair Value Measurements | |
Financial liabilities, fair value | 7,756 |
Research and development license consideration | |
Fair Value Measurements | |
Financial liabilities, fair value | 2,634 |
Research and development license consideration | Level 3 | |
Fair Value Measurements | |
Financial liabilities, fair value | $ 2,634 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Financial Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Change in the fair value of Level 3 financial liabilities | ||
Beginning balance | $ 7,756 | |
Remeasurement of the Note to settlement value upon the Closing of the Business Combination | (177) | |
Ending balance | 1,537 | $ 7,756 |
Notes payable | ||
Change in the fair value of Level 3 financial liabilities | ||
Beginning balance | 7,756 | |
Initial measurement | 7,600 | |
Remeasurement of the Note to settlement value upon the Closing of the Business Combination | 156 | |
Ending balance | $ 7,756 | |
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Expenses | |
Research and development license consideration | ||
Change in the fair value of Level 3 financial liabilities | ||
Beginning balance | $ 2,634 | |
Initial measurement | $ 2,449 | |
Remeasurement of the Note to settlement value upon the Closing of the Business Combination | 185 | |
Ending balance | $ 2,634 | |
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Expenses |
Fair Value Measurements - Addit
Fair Value Measurements - Additional information (Details) $ / shares in Units, $ in Thousands | 11 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
Z33 Bio Inc | Series Seed preferred shares | |
Fair Value Measurements | |
Shares issued | shares | 4,702,867 |
Fair value price per share | $ / shares | $ 0.15 |
J A T T Acquisition Corp | |
Fair Value Measurements | |
Number of shares to be issued | shares | 550,000 |
Fair value price per share | $ / shares | $ 7.66 |
Level 3 | |
Fair Value Measurements | |
Financial assets, transfers into level 3 | $ 0 |
Financial assets, transfers out of level 3 | 0 |
Financial liabilities, transfers into level 3 | 0 |
Financial liabilities, transfers out of level 3 | $ 0 |
Weighted average discount rate | |
Fair Value Measurements | |
Financial liability, measurement input | 0.090 |
Weighted average time to repayment | |
Fair Value Measurements | |
Financial liability, measurement input | 0.6 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accounts Payable and Accrued Expenses | ||
Accounts payable | $ 2,409 | $ 2,010 |
Accrued offering costs | 154 | 655 |
Accrued research and development costs | 518 | 490 |
Accrued consulting costs | 35 | 451 |
Accrued legal costs | 107 | 308 |
Accrued payroll | 651 | 260 |
Accrued bonus | 916 | 141 |
Other accrued expenses | 203 | 113 |
Total accounts payable and accrued expenses | $ 4,993 | $ 4,428 |
License Agreement (Details)
License Agreement (Details) $ in Millions | 3 Months Ended | |
Mar. 22, 2022 USD ($) payment shares | Mar. 31, 2023 | |
License Agreement | ||
Number of shares transferred | shares | 2,702,083 | |
Agreement with Pfizer | ||
License Agreement | ||
Amount of cash transferred | $ 5 | |
Number of shares transferred | shares | 25,000 | |
Percentage of interest | 20% | |
Value allocated to in-process research and development | $ 7.5 | |
Number of development and regulatory milestone payments | payment | 12 | |
Maximum amount of development and regulatory milestone payments | $ 70 | |
Maximum amount of sales milestone payments | $ 525 | |
Maximum annual earned royalty at a marginal royalty rate | 20% | |
Percentage of anti-dilution provisions to be maintained | 18% | 18% |
License Agreement - Lilly Licen
License Agreement - Lilly License (Details) $ / shares in Units, $ in Millions | 11 Months Ended | |
Dec. 08, 2022 USD ($) installment | Dec. 31, 2022 USD ($) $ / shares shares | |
Stone Peach [Member] | ||
License Agreement | ||
Percentage of right to sell | 50% | |
Sale price per share | $ / shares | $ 2.040724 | |
Series Seed preferred shares | Stone Peach [Member] | ||
License Agreement | ||
Percentage of right to repurchase | 50% | |
Price per share | $ / shares | $ 2.448869 | |
Period for share repurchases | 2 years | |
Series Seed preferred shares | Z33 Bio Inc | Stone Peach [Member] | ||
License Agreement | ||
Shares issued | shares | 4,900,222 | |
Lilly license | ||
License Agreement | ||
Upfront cash payment | $ 7 | |
Research and development license consideration liability | $ 2.6 | |
Percentage of right to sell | 50% | |
Sale price per share | $ / shares | $ 2.040724 | |
Amount obligated to pay | 3 | |
Gross proceeds from financing | $ 100 | |
Number of commercial, development and regulatory milestone payments | installment | 10 | |
Aggregate amount of commercial, development and regulatory milestone payments | $ 155 | |
Maximum amount of sales milestone payments | $ 440 | |
Maximum annual earned royalty at a marginal royalty rate | 20% | |
Lilly license | Z33 Bio Inc | Stone Peach [Member] | ||
License Agreement | ||
Percentage of right to repurchase | 50% | |
Price per share | $ / shares | $ 2.448869 | |
Period for share repurchases | 2 years | |
Lilly license | Series Seed preferred shares | ||
License Agreement | ||
Number of shares to be issued | shares | 4,702,867 | |
Lilly license | Series Seed preferred shares | Z33 Bio Inc | Stone Peach [Member] | ||
License Agreement | ||
Shares issued | shares | 4,900,222 | |
Lilly license | JATT Common stock | ||
License Agreement | ||
Number of shares to be issued | shares | 550,000 |
Convertible Preferred Shares _2
Convertible Preferred Shares and Shareholders' Deficit (Details) $ / shares in Units, $ in Thousands | 11 Months Ended | ||||
Mar. 22, 2022 USD ($) Vote $ / shares shares | Dec. 31, 2022 $ / shares shares | Mar. 20, 2023 $ / shares | Mar. 16, 2023 $ / shares shares | Dec. 31, 2022 £ / shares shares | |
Convertible Preferred Shares and Shareholders' Equity (Deficit) | |||||
Ordinary shares, shares authorized | shares | 17,437 | 300,000,000 | 17,437 | ||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.0001 | $ 0.0001 | ||
Series A-1 convertible preferred shares, shares authorized | shares | 125,000 | 125,000 | |||
Series A-1 convertible preferred shares, par value per share | (per share) | $ 0.001 | £ 0.001 | |||
Number of Series A-1 convertible preferred shares issued for cash | shares | 100,000 | ||||
Value of Series A-1 convertible preferred shares issued for cash | $ | $ 10,000 | ||||
Issuance of Series A-1 convertible preferred shares for license (in Shares) | shares | 25,000 | ||||
Number of Class A shares issued | shares | 3,547 | ||||
Series A-1 convertible preferred shares, minimum gross aggregate subscription with respect to new Ordinary Shares required for conversion | $ | $ 50,000 | ||||
Anti-Dilution, percentage of ownership interest to be maintained | 18% | ||||
Anti-Dilution, minimum equity to be raised | $ | $ 20,000 | ||||
Anti-Dilution, minimum gross aggregate subscription amount required for expiration of provision | $ | 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 |
Share-Based Compensation - Sche
Share-Based Compensation - Schedule of company's stock option activity of Option plans (Details) - USD ($) $ / shares in Units, $ in Thousands | 11 Months Ended |
Dec. 31, 2022 | |
UK Plan | |
Number of Options | |
Number of shares issued | 3,547 |
Exercises of stock options (in Shares) | (3,547) |
Weighted Average Remaining Contractual Life | |
Granted | 9 years 4 months 24 days |
Exercised | 295 years |
Aggregate Intrinsic Value | |
Granted | $ 295 |
US Plan | |
Number of Options | |
Beginning balance | |
Number of shares issued | 3,547 |
Ending balance | 3,547 |
Exercisable as of December 31, 2022 | 601 |
Weighted Average Exercise Price | |
Beginning balance | |
Granted | $ 90.5 |
Ending balance | 90.5 |
Exercisable as of December 31, 2022 | $ 90.5 |
Weighted Average Remaining Contractual Life | |
Granted | 9 years 4 months 24 days |
Outstanding as of September 30, 2022 | 9 years 4 months 24 days |
Exercisable as of September 30, 2022 | 9 years 4 months 24 days |
Aggregate Intrinsic Value | |
Outstanding as of January 18, 2022 | |
Outstanding as of December 31, 2022 | $ 1,804 |
Exercisable as of December 31, 2022 | $ 306 |
Share-Based Compensation - Sc_2
Share-Based Compensation - Schedule of weighted-average assumptions used to estimate the fair value of the Stock Options (Details) - US Plan | 11 Months Ended |
Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Risk-free interest rate | 3% |
Expected dividend yield | 0% |
Expected volatility | 95.10% |
Minimum | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Expected term (years) | 5 years |
Maximum | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Expected term (years) | 5 years 11 months 15 days |
Share-Based Compensation (Detai
Share-Based Compensation (Details) | 3 Months Ended | 11 Months Ended | |
Jun. 08, 2022 Option $ / shares shares | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) Options $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of stock option plans approved | Option | 2 | ||
Number of shares authorized for issuance under the option plans | shares | 13,889 | ||
Number of shares available for issuance under the option plans | shares | 6,795 | ||
Recorded share based compensation expense | $ 2,366,000 | $ 300,000 | |
Performance Shares [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Recorded share based compensation expense | $ 45,611,000 | ||
UK Plan | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of shares awarded to employees and directors | shares | 3,547 | ||
Contractual term of options awarded | 10 years | ||
Fair value of share on the date of grant | $ / shares | $ 83.13 | ||
US Plan | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of shares awarded to employees and directors | shares | 3,547 | ||
Contractual term of options awarded | 10 years | ||
Fair value of share on the date of grant | $ / shares | $ 63.63 | ||
Exercise price per shares issued | $ / shares | $ 90.50 | ||
Stock option vesting period | 4 years | 3 years 3 months 14 days | |
Expected dividend yield | 0% | ||
Unrecognized compensation expense | $ 200,000 | ||
Number of PSO's granted | Options | 422 | ||
Value of options expected to vest based on performance | $ 75,000,000 | ||
Recorded share based compensation expense | $ 0 |
Note Payable (Details)
Note Payable (Details) - Hydra, LLC - USD ($) $ in Millions | 11 Months Ended | |
Dec. 08, 2022 | Dec. 31, 2022 | |
Note Payable | ||
Percentage of redemption of the face amount of the Note, plus accrued interest | 120% | |
Notes payable | ||
Note Payable | ||
Net proceeds | $ 7.6 | |
Loan, principal amount | $ 8 | |
Interest rate per annum | 9% | |
Maturity term | 12 months | |
Maturity period after consummation of business acquisition | 5 days | |
Percentage of redemption of the face amount of the Note, plus accrued interest | 120% |
Income Taxes - Components Of Lo
Income Taxes - Components Of Loss Before Taxes (Details) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 11 Months Ended |
Mar. 31, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Loss before income taxes | $ (7,819) | $ (9,795) | $ (27,333) |
U.S. operations | |||
Loss before income taxes | (15,253) | ||
Non-U.S. operations | |||
Loss before income taxes | $ (12,080) |
Income Taxes - U.S. statutory f
Income Taxes - U.S. statutory federal income tax rate (Details) | 11 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Statutory income tax rate | 21% |
Statutory income taxes, net of federal benefit | 3.90% |
Permanent differences | (0.20%) |
Impact of non-U.S. earnings | (1.20%) |
Change in valuation allowance | 23.50% |
Income Taxes - Net Deferred Tax
Income Taxes - Net Deferred Tax Assets (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Income Taxes | |
Net operating loss carryforward | $ 1,309 |
Accrued expenses and other | 39 |
Capitalized research and development | 51 |
Intangible assets acquired | 5,020 |
Total deferred income tax assets | 6,419 |
Valuation allowance | $ (6,419) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) $ in Thousands | 11 Months Ended |
Dec. 31, 2022 USD ($) | |
Operating Loss Carryforwards [Line Items] | |
Provision for income taxes | $ 0 |
Percentage of limitation of use on taxable income | 80% |
UK | |
Operating Loss Carryforwards [Line Items] | |
Amortization period of R&D expenses under Tax Cuts and Jobs Act | 15 years |
NOL carryforwards | $ 6,300 |
Federal | |
Operating Loss Carryforwards [Line Items] | |
Amortization period of R&D expenses under Tax Cuts and Jobs Act | 5 years |
NOL carryforwards | $ 400 |
State | |
Operating Loss Carryforwards [Line Items] | |
NOL carryforwards | $ 600 |
Redeemable Noncontrolling Int_2
Redeemable Noncontrolling Interest (Details) - USD ($) $ / shares in Units, $ in Millions | 11 Months Ended | |
Dec. 31, 2022 | Mar. 31, 2023 | |
Redeemable Noncontrolling Interest | ||
Redemption value | $ 10 | $ 10 |
Stone Peach | ||
Redeemable Noncontrolling Interest | ||
Percentage of right to sell | 50% | |
Sale price per share | $ 2.040724 | |
Series Seed preferred shares | Stone Peach | ||
Redeemable Noncontrolling Interest | ||
Percentage of right to repurchase | 50% | |
Price per share | $ 2.448869 | |
Period for share repurchases | 2 years | |
Series Seed preferred shares | Z33 Bio Inc | Stone Peach | ||
Redeemable Noncontrolling Interest | ||
Shares issued | 4,900,222 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 11 Months Ended | |||
Mar. 20, 2023 | Mar. 08, 2023 | Jun. 16, 2022 | Mar. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |
Subsequent Events | ||||||
Repayment of notes payable | $ 10,000 | |||||
Number of Class A shares issued | 3,547 | |||||
Gross proceeds | $ 65,000 | |||||
Hydra, LLC | ||||||
Subsequent Events | ||||||
Percentage of redemption of the face amount of the Note, plus accrued interest | 120% | |||||
Subsequent Events | ||||||
Subsequent Events | ||||||
Granted | 14,420 | |||||
Gross proceeds | $ 65,000 | |||||
Subsequent Events | Series A one convertible preferred shares | ||||||
Subsequent Events | ||||||
Number of Class A shares issued | 2,479 | |||||
Subsequent Events | Restricted stock units ("RSUs") | ||||||
Subsequent Events | ||||||
Awards granted | 4,626 | |||||
Subsequent Events | Hydra, LLC | ||||||
Subsequent Events | ||||||
Percentage of repayment on waiving of acceleration right | 125% | |||||
Repayment of notes payable | $ 10,000 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 43,963 | $ 1,567 |
Prepaid expenses and other current assets | 422 | 209 |
Total current assets | 44,385 | 1,776 |
Deferred offering costs | 3,486 | |
Total assets | 44,385 | 5,262 |
Current liabilities: | ||
Accounts payable and accrued expenses | 4,993 | 4,428 |
Note payable | 7,756 | |
Research and development license consideration liability | 2,634 | |
Total current liabilities | 4,993 | 14,818 |
Private placement warrants | 1,537 | |
Total liabilities | 6,530 | 14,818 |
Commitments and contingencies | ||
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 March 31, 2023 and December 31, 2022 | 12,500 | |
Redeemable noncontrolling interest | 10,000 | 10,000 |
Shareholders' Equity (Deficit): | ||
Preferred shares, $0.0001 par value, 1,000,000 and -0- authorized as of March 31, 2023 and December 31, 2022, respectively; -0- issued and outstanding as of March 31, 2023 and December 31, 2022 | ||
Class A Ordinary shares, $0.0001 par value, 300,000,000 authorized, 27,052,155 issued and outstanding as of March 31, 2023; $0.0001 par value, 1,884,649 authorized, 383,479 issued and outstanding as of December 31, 2022 | 3 | |
Additional paid-in capital | 69,703 | |
Accumulated deficit | (41,851) | (32,056) |
Total shareholders' equity (deficit) | 27,855 | (32,056) |
Total liabilities, convertible preferred shares, redeemable noncontrolling interest and shareholders' equity (deficit) | $ 44,385 | $ 5,262 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) | Mar. 31, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares |
Series A-1 convertible preferred shares, par value per share | (per share) | $ 0.001 | |
Series A-1 convertible preferred shares authorized | 125,000 | |
Series A-1 convertible preferred shares issued | 125,000 | |
Series A-1 convertible preferred shares outstanding | 125,000 | |
Preferred shares, par value per share | $ / shares | $ 0.0001 | $ 0.0001 |
Preferred shares authorized | 1,000,000 | 0 |
Preferred shares issued | 0 | 0 |
Preferred shares outstanding | 0 | 0 |
Class A ordinary shares, par value per share | $ / shares | $ 0.001 | |
Class A ordinary shares authorized | 17,437 | |
Class A ordinary shares issued | 3,548 | |
Class A ordinary shares outstanding | 3,548 | |
Class A Ordinary shares | ||
Class A ordinary shares, par value per share | $ / shares | $ 0.0001 | |
Class A ordinary shares authorized | 300,000,000 | 1,884,649 |
Class A ordinary shares issued | 27,052,155 | 383,479 |
Class A ordinary shares outstanding | 27,052,155 | 383,479 |
Series A one convertible preferred shares | ||
Series A-1 convertible preferred shares, par value per share | $ / shares | $ 0.001 | $ 0.001 |
Series A-1 convertible preferred shares authorized | 0 | 13,510,415 |
Series A-1 convertible preferred shares issued | 0 | 13,510,415 |
Series A-1 convertible preferred shares outstanding | 0 | 13,510,415 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended |
Mar. 31, 2022 | Mar. 31, 2023 | |
Operating expenses: | ||
Research and development | $ 7,500 | $ 4,884 |
General and administrative | 319 | 2,835 |
Total operating expenses | 7,819 | 7,719 |
Loss from operations | (7,819) | (7,719) |
Other expense/(income), net: | ||
Other expense, net | 9 | |
Change in fair value of private placement warrants | (177) | |
Change in fair value of note payable | 2,244 | |
Total other expense/(income), net | 2,076 | |
Loss before income taxes | (7,819) | (9,795) |
Net loss before redeemable noncontrolling interest | (7,819) | (9,795) |
Net loss attributable to redeemable noncontrolling interest | 203 | |
Net loss | (7,819) | (9,592) |
Accretion of redeemable noncontrolling interest to redemption value | (203) | |
Net loss attributable to Class A Ordinary Shareholders of Zura | $ (7,819) | $ (9,795) |
Net loss per share attributable to Class A Ordinary Shareholders of Zura, basic | $ (72,395.48) | $ (2.76) |
Net loss per share attributable to Class A Ordinary Shareholders of Zura, diluted | $ (72,395.48) | $ (2.76) |
Weighted-average Class A Ordinary Shares used in computing net loss per Ordinary Share attributable to Shareholders of Zura, basic | 108 | 3,551,906 |
Weighted-average Class A Ordinary Shares used in computing net loss per Ordinary Share attributable to Shareholders of Zura, diluted | 108 | 3,551,906 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED SHARES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Redeemable Noncontrolling Interest Recapitalization | Redeemable Noncontrolling Interest | Convertible Preferred Shares Recapitalization | Convertible Preferred Shares | Class A Ordinary Shares Recapitalization Common Class A [Member] | Class A Ordinary Shares Common Class A [Member] | Class A Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit Recapitalization | Accumulated Deficit | Recapitalization | Common Class A [Member] | Total | ||||
Convertible Preferred Shares | |||||||||||||||||
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 | ||||||||||||||||
Issuance of Series A-1 convertible preferred shares for cash (in Shares) | 10,808,332 | ||||||||||||||||
Issuance of Series A-1 convertible preferred shares for cash | [1] | $ 10,000 | |||||||||||||||
Issuance of Series A-1 convertible preferred shares for license | [1] | 2,500 | |||||||||||||||
Balance at Mar. 31, 2022 | [1] | 12,500 | |||||||||||||||
Balance at Jan. 17, 2022 | [1] | $ 0 | |||||||||||||||
Balance as of January 18, 2022 (date of inception) (in Shares) at Jan. 17, 2022 | 0 | 0 | |||||||||||||||
Increase (Decrease) in Stockholders' Deficit | |||||||||||||||||
Issuance of Class A Ordinary Share at inception (in shares) | 108 | ||||||||||||||||
Net loss | $ (7,819) | $ (7,819) | |||||||||||||||
Balance as of March 31, 2022 (in Shares) at Mar. 31, 2022 | 13,510,415 | 108 | |||||||||||||||
Balance as of March 31, 2022 at Mar. 31, 2022 | (7,819) | (7,819) | |||||||||||||||
Convertible Preferred Shares | |||||||||||||||||
Accretion of redeemable noncontrolling interest to redemption value | $ (6,652) | ||||||||||||||||
Balance (Shares) at Dec. 31, 2022 | 125,000 | 13,510,415 | 125,000 | ||||||||||||||
Balance at Dec. 31, 2022 | $ 10,000 | $ 12,500 | [1] | $ 12,500 | [1] | $ 12,500 | |||||||||||
Balance at Jan. 17, 2022 | [1] | $ 0 | |||||||||||||||
Balance as of January 18, 2022 (date of inception) (in Shares) at Jan. 17, 2022 | 0 | 0 | |||||||||||||||
Increase (Decrease) in Stockholders' Deficit | |||||||||||||||||
Issuance of Class A Ordinary Share at inception (in shares) | 3,547 | ||||||||||||||||
Net loss | $ (25,738) | ||||||||||||||||
Balance as of March 31, 2022 (in Shares) at Dec. 31, 2022 | 3,548 | 279,720 | 3,548 | 383,479 | 3,548 | ||||||||||||
Balance as of March 31, 2022 at Dec. 31, 2022 | $ 0 | $ 0 | $ (32,056) | (32,056) | $ (32,056) | $ (32,056) | |||||||||||
Balance (Shares) at Dec. 31, 2022 | 125,000 | 13,510,415 | 125,000 | ||||||||||||||
Balance at Dec. 31, 2022 | 10,000 | $ 12,500 | [1] | $ 12,500 | [1] | $ 12,500 | |||||||||||
Balance at Jan. 18, 2022 | 0 | ||||||||||||||||
Balance as of January 18, 2022 (date of inception) (in Shares) at Jan. 18, 2022 | 0 | ||||||||||||||||
Balance as of January 18, 2022 (date of inception) at Jan. 18, 2022 | $ 0 | 0 | 0 | 0 | |||||||||||||
Increase (Decrease) in Stockholders' Deficit | |||||||||||||||||
Issuance of Class A Ordinary Share at inception (in shares) | 1 | ||||||||||||||||
Net loss | (1,595) | (25,738) | $ (25,738) | ||||||||||||||
Balance as of March 31, 2022 (in Shares) at Dec. 31, 2022 | 3,548 | 279,720 | 3,548 | 383,479 | 3,548 | ||||||||||||
Balance as of March 31, 2022 at Dec. 31, 2022 | $ 0 | 0 | $ (32,056) | (32,056) | $ (32,056) | $ (32,056) | |||||||||||
Convertible Preferred Shares | |||||||||||||||||
Redeemable noncontrolling interest | $ 10,000 | 10,000 | 10,000 | ||||||||||||||
Recapitalization | 13,385,415 | ||||||||||||||||
Recapitalization | 276,172 | ||||||||||||||||
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 | $ (14,686) | [1] | $ 2 | [1] | 14,684 | 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 | 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 | 2,001 | |||||||||||||||
Share-based compensation expense | 180 | 180 | |||||||||||||||
Accretion of redeemable noncontrolling interest to redemption value | 203 | (203) | (203) | ||||||||||||||
Issuance of Series A-1 convertible preferred shares for license | [1] | $ 2,186 | |||||||||||||||
Balance at Dec. 31, 2022 | 10,000 | $ 12,500 | [1] | $ 12,500 | [1] | 12,500 | |||||||||||
Increase (Decrease) in Stockholders' Deficit | |||||||||||||||||
Net loss | (203) | (9,592) | (9,592) | ||||||||||||||
Balance as of March 31, 2022 (in Shares) at Mar. 31, 2023 | 27,052,155 | 27,052,155 | |||||||||||||||
Balance as of March 31, 2022 at Mar. 31, 2023 | $ 3 | [1] | $ 69,703 | $ (41,851) | 27,855 | ||||||||||||
Convertible Preferred Shares | |||||||||||||||||
Redeemable noncontrolling interest | $ 10,000 | $ 10,000 | |||||||||||||||
[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 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED SHARES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY (DEFICIT) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 20, 2023 | Mar. 16, 2023 | Mar. 31, 2023 | |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED SHARES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY (DEFICIT) | |||
Transaction costs | $ 4 | ||
Exchange ratio for Class A ordinary shares pursuant to the business combination | 108.083 | 108.083 | 108.083 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Cash flows from operating activities | |
Net loss before redeemable noncontrolling interest | $ (9,795) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
Anti-dilution share issuance compensation | 2,186 |
Share-based compensation | 180 |
Change in fair value of share-based payment liability | 1,854 |
Change in fair value of note payable | 2,244 |
Change in fair value of private placement warrants | (177) |
Foreign exchange transaction loss | 9 |
Changes in operating assets and liabilities: | |
Prepaid expenses and other current assets | (213) |
Accounts payable and accrued expenses | 455 |
Net cash used in operating activities | (3,257) |
Cash flows from financing activities | |
Settlement of note payable | (10,000) |
Proceeds from issuance of Class A Ordinary Shares upon Closing of Business Combination | 56,683 |
Payment of deferred transaction costs | (1,030) |
Net cash provided by financing activities | 45,653 |
Net increase in cash | 42,396 |
Cash, beginning of period | 1,567 |
Cash, end of period | 43,963 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | |
Conversion of Series A-1 convertible preferred shares for Class A Ordinary Shares | 14,686 |
Assumption of public and private placement warrants in connection with Business Combination | 3,715 |
Reclassification of public warrant liability to equity | 2,001 |
Settlement of research and development license consideration liability | 4,488 |
Transaction costs include in accounts payable | 154 |
Reclassification of deferred transaction costs to additional paid-in capital | $ 4,015 |
Organization and Description _3
Organization and Description of Business | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Organization and Description of Business | ||
Organization and Description of Business | 1. Organization and Description of Business Zura Bio Limited, a Cayman Islands exempted company, formerly known as JATT Acquisition Corp (“JATT”), together with its subsidiaries (collectively, the “Company” 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”) and torudokimab, a high affinity monoclonal antibody, 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 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 $41.9 million and $32.1 million as of March 31, 2023 and December 31, 2022, respectively, and a net loss of $9.6 million and $7.8 million for the three months ended March 31, 2023 and the period ended March 31, 2022, respectively. The Company’s existing sources of liquidity as of March 31, 2023 includes $44.0 million in cash. 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. 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 over the next twelve months. | Note 1 — Organization and Description of Business Operations Zura Bio Limited (the “Company” or “Zura Bio”) was formed in the United Kingdom (“UK”) on January 18, 2022 (“Inception”). 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”) and torudokimab, a high affinity monoclonal antibody, which it has licensed from Eli Lilly and Company (“Lilly”). Business Combination On June 16, 2022, the Company entered into a business combination agreement (the “Business Combination Agreement”) with JATT Acquisition Corp (“JATT”), a special purpose acquisition company. On March 20, 2023 (the “Closing Date”), JATT consummated the previously announced business combination (the “Business Combination”), pursuant to the terms of 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, Holdco, and Zura Bio. Pursuant to the Business Combination Agreement, (a) before the closing of the Business Combination, Holdco was established as a new holding company of Zura Bio 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, together with the PIPE financing, the Forward Purchase Agreement, and the Redemption Backstop, generated approximately $65.0 million in gross proceeds. On March 21, 2023, Zura Bio Limited’s securities began trading on Nasdaq under the symbol “ZURA”. The Business Combination has been accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Under this method of accounting, JATT is treated as the “acquired” company for financial reporting purposes based upon the terms of the Business Combination which resulted in the following: (i) Zura Bio shareholders as a group hold the largest share of the combined company with a majority of the voting interest following the closing of the Business Combination, (ii) Zura Bio nominated 4 out of 7 Directors of the Board, (iii) all of Zura Bio’s existing management will continue in their key positions in the management team of the combined company and (iv) Zura Bio is the largest of the combining entities based on historical operating activity and has the larger employee base. Accordingly, for accounting purposes, the Business Combination is treated as the equivalent of Zura Bio issuing shares for the net assets of JATT, accompanied by a recapitalization. The net assets of JATT are stated at historical cost which approximate fair value, with no goodwill or other intangible assets recorded. 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, effective immediately. The Company’s 2022 fiscal year began at 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 and Management’s Plans 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 $32.1 million as of December 31, 2022 and a net loss of $25.7 million for the period ended December 31, 2022. To date, the Company’s operations have been funded through the sale of Series A-1 convertible preferred shares. As of December 31, 2022, the Company has $1.6 million in cash. The Company evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern over the next twelve months through March 2024. The Company’s cash requirements include, but are not limited to business combination costs, product manufacturing costs, and working capital requirements. The Company expects such operating losses and negative cash flows from operations will continue in 2023. The Company expects its cash on hand as of the date of the consolidated financial statements and gross proceeds of $65 million from the business combination will be sufficient to meet the Company’s obligations at least twelve months beyond the date of issuance of the consolidated financial statements. The Company’s future operations are highly dependent on a combination of factors, including (1) the success of its research and development programs; (2) the development of competitive therapies by other biotechnology and pharmaceutical companies, (3) the Company’s ability to manage growth of the organization; (4) the Company’s ability to protect its technology and products; and, ultimately (5) regulatory approval and market acceptance of a product. |
Significant Accounting Polici_6
Significant Accounting Policies | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Significant Accounting Policies | ||
Significant Accounting Policies | 2. 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 subsidiary, Z33 Bio, Inc. (“Z33”), are shown in the condensed consolidated financial statements as redeemable noncontrolling interest. 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 March 31, 2023 and the results of operations for the three months ended March 31, 2023 and the period ended March 31, 2022. The results of operations for the three months ended March 31, 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 and related public warrants and private placement warrants (collectively, the “Warrants”), 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 share-based consideration transferred for acquired assets, the fair value of contingent consideration, the fair value of public and 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 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. Classification of the public 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. 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: For the Three For the Period from Months January 18, 2022 Ended (date of inception) to March 31, March 31, 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 1,941,933 — Restricted share units 499,993 — Total 15,251,922 13,510,415 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. | Note 2 — Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The consolidated financial statements including the accounts of Zura Bio Limited, its wholly-owned subsidiary, Zura Bio, Inc., and its subsidiary, Z33 Bio, Inc. (“Z33”), have been prepared in conformity with U.S. GAAP, Other shareholders’ interests in Z33 are shown in the consolidated financial statements as noncontrolling interest. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions reflected in the consolidated financial statements relate to and include, but are not limited to, the fair value of Ordinary Shares and other assumptions used to measure share-based compensation, the fair value of share-based consideration transferred for acquired assets, the fair value of contingent consideration, 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 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. Segments Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as a single operating segment. Fair value of financial instruments Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. As of December 31, 2022, the carrying amounts of the Company’s cash and accounts payable and accrued expenses approximated their estimated fair value due to their relatively short maturities. Financial assets and liabilities are recorded at fair value on a recurring basis in the consolidated balance sheets. The carrying values of the Company’s financial assets and liabilities, including cash, prepaid and other current assets, accounts payable, and accrued expenses approximate to their fair value due to the short-term maturity of these instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. Assets and liabilities recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels are directly related to the amount of subjectivity with the inputs to the valuation of these assets or liabilities as follows: Level 1: Level 2: Level 3: Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Deferred Offering Costs The Company capitalizes offering costs consisting of direct, incremental legal, accounting and other fees in connection with the business combination. The deferred offering costs will be offset against the proceeds from the transaction upon the consummation of the business combination. Should the business combination be abandoned or not be considered probable, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statement of operations. During the period ended December 31, 2022, the Company incurred deferred offering costs of $3.5 million of which $0.7 million has not been paid and is included in accounts payable and accrued expenses in the consolidated balance sheet as of December 31, 2022. Research and Development Research and development (“R&D”) expenses consist primarily of consulting fees for medical and manufacturing advisory services and costs related to manufacturing material for preclinical studies. Expenses are recognized as an expense as the related goods are delivered or the services are performed. R&D expenses include the cost of in-process research and development (“IPR&D”) assets purchased in an asset acquisition transaction. IPR&D assets are expensed unless the assets acquired are deemed to have an alternative future use, provided that the acquired asset did not also include processes or activities that would constitute a “business” as defined under U.S. GAAP, the drug has not achieved regulatory approval for marketing and, absent obtaining such approval, has no established alternative future use. Acquired IPR&D payments are immediately expensed in the period in which they are incurred and include upfront payments, as well as transaction fees and subsequent pre-commercial milestone payments. Research and development costs incurred after the acquisition are expensed as incurred. R&D expenses also include the remeasurement of the research and development license consideration liability. Share-Based Compensation The Company accounts for all share-based payments to employees and non-employees, including grants of stock options and stock options with non-market performance conditions (“PSOs”) based on their respective grant date fair values. Stock options that vest immediately and have a nominal exercise price are valued based on the fair value of the Company’s Ordinary Shares on the date of grant. The Company estimates the fair value of stock option grants that do not have a nominal exercise price using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of share-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The Company expenses share-based compensation related to stock options over the requisite service period on a straight-line basis. The Company will record share-based compensation expense for the PSOs when the Company’s management deems it probable that the performance conditions will be satisfied. The share-based compensation costs are recorded in general and administrative expenses in the consolidated statement of operations. Forfeitures are recorded as they occur. Income Taxes Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse, and net operating loss (“NOL”) carryforwards. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has recorded a full valuation allowance to reduce its net deferred income tax assets to zero. In the event the Company were to determine that it would be able to realize some or all its deferred income tax assets in the future, an adjustment to the deferred income tax asset valuation allowance would increase income in the period such determination was made. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of December 31, 2022, the Company had no liability for income tax associated with uncertain tax positions. The Company would recognize any corresponding interest and penalties associated with its income tax positions in income tax expense. There was no income tax interest or penalties incurred for the period ended December 31, 2022. Functional Currency The Company’s functional and reporting currency is the U.S. Dollar. The Company recognizes gains and losses on cash and accounts payable that are denominated in a currency other than the Company’s functional currency. Such foreign currency transactional gains and losses are recognized within other expense in the consolidated statement of operations. For the period ended December 31, 2022, the Company had $23,000 of net foreign currency transactional losses. Comprehensive Loss Comprehensive loss is equal to net loss as presented in the consolidated statement of operations, as the Company did not have any other comprehensive income or loss for the period presented. Net Loss Per Ordinary Share Basic net loss per Ordinary Share is computed by dividing net loss by the weighted-average number of Ordinary Shares outstanding during the period. Diluted net loss per Ordinary Share excludes the potential impact of the Company’s convertible preferred shares and options to purchase 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 Ordinary Share are the same. The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per Ordinary Share because to do so would be anti-dilutive: For the Period from January 18, 2022 (date of inception) to December 31, 2022 Shares issuable upon conversion of Series A-1 convertible preferred shares 125,000 Shares issuable upon exercise of options to purchase Ordinary Shares 3,547 Total 128,547 Shares issuable upon the exercise of PSOs are excluded from the calculation of diluted net loss per Ordinary Share until the Company’s management deems it probable that the performance conditions will be satisfied. Recently Issued and Recently Adopted Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The amendments in ASU 2020-06 simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. The Company adopted on a modified prospective basis the new standard effective at inception, and noted no material impact on the consolidated financial statements and related disclosures. |
Recapitalization
Recapitalization | 3 Months Ended |
Mar. 31, 2023 | |
Recapitalization | |
Recapitalization | 3. 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 – 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. |
Fair Value Measurements_2
Fair Value Measurements | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Fair Value Measurements | ||
Fair Value Measurements | 4. Fair Value Measurements The Company measures certain financial assets and liabilities at fair value on a recurring basis. The Company determines fair value based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy. These levels are: Level 1: Level 2: Level 3: Financial instruments consist of cash, 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, 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 liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022, and the fair value hierarchy of the valuation techniques utilized. March 31, 2023 Level 1 Level 2 Level 3 Total Financial liabilities: Private placement warrants $ — $ 1,537 $ — $ 1,537 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 months ended March 31, 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 Three Months Ended March 31, 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 March 31, 2023 $ — The Company recorded a loss on remeasurement of the Note of $2.2 million for the three months ended March 31, 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 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 Three Months Ended March 31, 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 March 31, 2023 $ — The Company recorded a loss on the remeasurement of the research and development license consideration liability of $1.9 million for the three months ended March 31, 2023 within research and development on the condensed consolidated statement of operations. Private Placement Warrants As of March 31, 2023, the Company has private placement warrants (see Note 9). 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: For the Three Months Ended March 31, 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 The Company recorded a gain from the change in fair value of the private placement warrants of $0.2 million for the three months ended March 31, 2023 within change in fair value of private placement warrants on the condensed consolidated statement of operations. | Note 3 — Fair Value Measurements The following table presents information about the Company’s liabilities measured at fair value on a recurring basis as of December 31, 2022, and the fair value hierarchy of the valuation techniques utilized. 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 Total $ — $ — $ 10,390 $ 10,390 There were no transfers into out The Company elected the fair value option to account for its Note payable to Hydra, LLC. Refer to Note 8 for further details on the Note. 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 two 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, 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 year, each weighted by the probability of the scenario. The Company recorded any changes in the fair value of the Note through other expense in the consolidated statement of operations. As consideration for the Lilly License (see Note 5), Lilly will receive either 550,000 shares of JATT common stock 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 is not consummated (the research and development license consideration liability). The arrangement is liability classified and remeasured at fair value at each reporting date. 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 common stock, 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 common stock 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. The Company recorded any changes in the fair value of the research and development license consideration liability within research and development on the consolidated statement of operations. Level 3 Financial Liabilities The following table summarizes the change in the fair value of the note payable for the period ended December 31, 2022: December 31, 2022 Beginning balance $ — Initial measurement of note payable 7,600 Change upon remeasurement to fair value 156 Ending balance $ 7,756 The $0.2 million change in fair value is included in other expense in the consolidated statement of operations for the period ended December 31, 2022. The following table summarizes the change in the fair value of the research and development license consideration liability for the period ended December 31, 2022: December 31, 2022 Beginning balance $ — Initial measurement of research and development license consideration 2,449 Change upon remeasurement to fair value 185 Ending balance $ 2,634 The $0.2 million change in fair value is included in research & development in the consolidated statement of operations for the period ended December 31, 2022. |
Accounts Payable and Accrued _4
Accounts Payable and Accrued Expenses | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Accounts Payable and Accrued Expenses | ||
Accounts Payable and Accrued Expenses | 5. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses is comprised of the following as of March 31, 2023 and December 31, 2022: March 31, 2023 December 31, 2022 Accounts payable $ 2,409 $ 2,010 Accrued payroll 651 260 Accrued bonus 916 141 Accrued offering costs 154 655 Accrued research and development costs 518 490 Accrued consulting fees 35 451 Accrued legal costs 107 308 Other accrued expenses 203 113 Total accounts payable and accrued expenses $ 4,993 $ 4,428 | Note 4 — Accounts Payable and Accrued Expenses Accounts payable and accrued expenses is comprised of the following as of December 31, 2022: December 31, 2022 Accounts payable $ 2,010 Accrued offering costs 655 Accrued research and development costs 490 Accrued consulting costs 451 Accrued legal costs 308 Accrued payroll 260 Accrued bonus 141 Other accrued expenses 113 Total accounts payable and accrued expenses $ 4,428 |
License Agreement_2
License Agreement | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
License Agreement | ||
License Agreement | 6. 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. Under the License Agreement with Pfizer, the Company also has an obligation to pay ongoing fees associated with the prosecution, maintenance, or filing of patents. 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 March 31, 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. Lilly License On December 8, 2022, the Company’s consolidated subsidiary, Z33 Bio Inc. (“Z33”), entered into a license agreement (the “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 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 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. See Note 12 for further information. 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 March 31, 2023, none of the contingent payments were due. | Note 5 — License Agreements On March 22, 2022, the Company entered into a License Agreement and a Series A-1 Subscription and Shareholder’s Agreement (collectively, the “Agreement”) with Pfizer. Under the Agreement, the Company acquired a license for a compound initially developed by Pfizer, in exchange for $5.0 million in cash and 25,000 shares of the Company’s Series A-1 convertible preferred shares, representing a 20% interest in the Company. In accordance with ASC 805, the 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. As of December 31, 2022, the Company does not owe any amounts under the Agreement. The Agreement also has anti-dilution provisions to allow Pfizer to maintain an 18% interest in the Company, as detailed in Note 6. 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. Lilly License On December 8, 2022, the Company’s consolidated subsidiary, Z33, entered into a license agreement 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. 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 Lilly License as a component of research and development in the consolidated statement of operations during the period ended December 31, 2022. As additional consideration for the Lilly License, Lilly will receive either 550,000 shares of JATT common stock 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 is not consummated (the research and development license consideration liability). 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). The liability is measured at fair value on the acquisition date and remeasured to fair value at each reporting date. As of December 31, 2022, the research and development license consideration liability was $2.6 million. The changes in fair value are recorded within research and development expense in the Company’s consolidated statement of operations. See Note 3 for further information on the change in fair value of the research and development license consideration liability. 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. See Note 11 for further information. 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 December 31, 2022, none of the contingent payments were due. |
Convertible Preferred Shares _3
Convertible Preferred Shares and Shareholders' Equity (Deficit) | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Convertible Preferred Shares and Shareholders' Equity (Deficit) | ||
Convertible Preferred Shares and Shareholders' Equity (Deficit) | 7. Convertible Preferred Shares and Shareholders’ Equity (Deficit) Prior to the Business Combination, Legacy Zura was authorized to issue Class A Ordinary Shares and Series A-1 convertible preferred shares. The outstanding Class A 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 Class A 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. Series A-1 Convertible Preferred Shares Rights and Preferences Conversion Each share of Series A-1 convertible preferred shares 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 share of Series A-1 convertible preferred shares 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 March 31, 2023, no preferred shares were issued | Note 6 — Convertible Preferred Shares and Shareholders’ Deficit As of December 31, 2022, the Company was authorized to issue 17,437 Ordinary Shares with a par value of $0.001 per share and 125,000 shares of Series A-1 convertible preferred shares with a par value of $0.001 per share. The par value of the Company’s shares are stated at 0.001 GBP per share which approximates US$0.001, which is included on the Company’s consolidated balance sheet. For the period ended December 31, 2022, the Company issued 3,547 Ordinary Shares for the exercise of stock options. On March 22, 2022, the Company issued 100,000 shares of Series A-1 convertible preferred shares to Hana Immunotherapeutic LLC (“Hana”) for $10.0 million in cash and 25,000 shares of Series A-1 convertible preferred shares to Pfizer for the Agreement. See Note 5. Series A-1 Convertible Preferred Shares Rights and Preferences Conversion Each share of Series A-1 convertible preferred shares 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 share of Series A-1 convertible preferred shares 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 $20.0 million in equity, where any capital raised above this threshold is not subject to anti-dilution. The anti-dilution provision expires upon an admission of the shares to trading on a recognized investment exchange where the gross aggregate subscription amount is greater than $50.0 million. 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. |
Warrants
Warrants | 3 Months Ended |
Mar. 31, 2023 | |
Warrants | |
Warrants | 8. Warrants As the accounting acquirer, Zura Bio is deemed to have assumed 5,910,000 private placement warrants to purchase Class A 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 Warrants will expire five years after the completion of the Business Combination, or earlier upon redemption or liquidation. As of March 31, 2023, no warrants have been exercised or redeemed. Public Warrants The public warrants become 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 Private Placement Warrants The private placement warrants are 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. |
Share-based Compensation_2
Share-based Compensation | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Share-based Compensation | ||
Share-based Compensation | 9. 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 Class A Ordinary Shares available for issuance under the Option Plans, of which 383,371 Class A 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. The maximum number of Class A Ordinary Shares that may be issued under the Equity Incentive Plan are equal to 4,029,898, with 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 March 31, 2023, no shares no 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 2023 Equity Incentive Plan share options issued during the three months ended March 31, 2023: For the Three Months Ended March 31, 2023 Share price $ 8.16 Expected volatility 96.5 % Risk-free rate 3.58 % Expected life 6.1 years Expected dividend yield — % The following table summarizes the Company’s share option activity for the three months ended March 31, 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 1,558,562 1.20 — — Options outstanding at March 31, 2023 1,941,933 $ 1.13 9.6 $ 26,781 Options vested and exercisable at March 31, 2023 85,708 $ 0.84 9.2 $ 1,207 Included in the table above are 45,611 PSOs that vest upon the Company raising external capital of $75 million or more. The milestone is considered outside of the Company’s control, and accordingly the vesting of the PSOs is not considered probable until the financing event occurs. As of March 31, 2023, no share-based compensation expense has been recognized in relation to these PSOs. Restricted Share Units The Company issued RSUs to a certain Director of the Board immediately prior to the closing of the Business Combination pursuant to the Equity Incentive Plan. The fair value has been estimated based on the closing price of the stock on the Closing Date of the Business Combination. Weighted Average Number of Grant Date RSUs Fair Value RSUs at December 31, 2022 — $ — Granted 499,993 8.16 RSUs at March 31, 2023 499,993 $ 8.16 The expense recognized related to RSUs during the three months ended March 31, 2023 was immaterial. 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 months ended March 31, 2023, the Company recognized expense in the amount of $2.2 million 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 March 31, 2023 and the period ended March 31, 2022 was as follows: For the Period from For the Three January 18, 2022 Months Ended (date of inception) to March 31, March 31, 2023 2022 Research and development $ 2,186 $ — General and administrative 180 — Total share-based compensation expense $ 2,366 $ — As of March 31, 2023, there was approximately $11.9 million of total unrecognized share-based compensation expense related to options granted to employees, executives, and directors under the Company’s equity plans (excluding PSOs) that is expected to be recognized over a weighted average period of 2.1 years. As of March 31, 2023, there was approximately $4.0 million of total unrecognized share-based compensation expense related to RSUs granted to a director under the Company’s 2023 Equity Incentive Plan that is expected to be recognized over a weighted average period of 2.1 years. | Note 7 — Share-Based Compensation On June 8, 2022, the Company’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 are 13,889 shares of Ordinary Shares available for issuance under the Option Plans, of which 3,547 shares of Ordinary Shares are authorized for issuance under the US Plan (the “Authorized Shares”). As of December 31, 2022, there are 6,795 shares of Ordinary Shares available for issuance under the Option Plans. UK Plan On June 8, 2022, options to purchase 3,547 shares of the Company’s Ordinary Shares were subject to the rules of the UK Plan (the “UK Plan Options”). The UK Plan Options were granted outside of the Authorized Shares. The UK Plan Options were awarded to certain employees and directors of the Company with a par value exercise price per share, which vest upon grant and have a ten-year contractual term. The fair value of the UK Plan Options was determined to be the fair value of the underlying Ordinary Shares on the date of grant of $83.13 as the UK Plan Options were vested upon grant and have a nominal exercise price. The underlying Ordinary Shares were valued using an option pricing model to allocate fair value to each equity class from the total fair value of shareholders’ equity, which was determined based on previous preferred share transactions. The fair value also considered the timing, probability, and potential value of a potential future exit event. The Company’s stock option activity for the UK Plan for the period ended December 31, 2022 was as follows: Number of Options Weighted Average Exercise Price (per share) Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of January 18, 2022 (date of inception) — $ — — $ — Granted 3,547 — 9.4 295 Exercised (3,547) — 295 Outstanding as of December 31, 2022 — $ — — $ — Exercisable as of December 31, 2022 — $ — — $ — US Plan On June 8, 2022, options to purchase 3,547 shares of the Company’s Ordinary Shares under the US Plan (the “US Plan Options”) were awarded to certain employees and directors of the Company with an exercise price per share of $90.50, which vest within a 4-year term and have a ten-year contractual life. The fair value of US Plan Options are estimated on the date of grant using the Black-Scholes option pricing model. The Company is a private company and lacks 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 stock 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 US Stock Options for the period ended December 31, 2022: Risk-free interest rate 3.0 % Expected dividend yield — Expected term (years) 5.00 – 5.96 Expected volatility 95.1 % For the period ended December 31, 2022, the weighted-average grant date fair value of the US Options was $63.63. The Company’s stock option activity for the US Plan for the period ended December 31, 2022 was as follows: Number of Options Weighted Average Exercise Price (per share) Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of January 18, 2022 (date of inception) — $ — — $ — Granted 3,547 90.5 9.4 — Outstanding as of December 31, 2022 3,547 $ 90.5 9.4 $ 1,804 Exercisable as of December 31, 2022 601 $ 90.5 9.4 $ 306 The aggregate intrinsic value in the above table is calculated as the excess of the fair value of the Company’s Ordinary Shares above the exercise price of the stock options. As of December 31, 2022, there was approximately $0.2 million of unrecognized compensation expense related to the stock options which will be recognized over the remaining weighted-average vesting term or approximately 3.29 years. During the period ended December 31, 2022, the Company granted 422 PSOs under the US Plan, included in the table above, with a performance condition to vest upon a financing of $75.0 million or greater, excluding certain related party capital as defined in the grant agreement for the PSOs. As the performance conditions for the PSOs were not considered probable, no compensation expense related to these awards has been recorded for the period ended December 31, 2022. UK Plan and US Plan For the period ended December 31, 2022, the Company recorded share-based compensation expense of $0.3 million included in general and administrative expenses in the consolidated statement of operations. |
Note Payable_2
Note Payable | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
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 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. | Note 8 — 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 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 through other expense in the consolidated statement of operations. |
Commitments and Contingencies_2
Commitments and Contingencies | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Commitments and Contingencies. | ||
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. | Note 10 — 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. |
Redeemable Noncontrolling Int_3
Redeemable Noncontrolling Interest | 3 Months Ended |
Mar. 31, 2023 | |
Redeemable Noncontrolling Interest | |
Redeemable Noncontrolling Interest | 12. Redeemable Noncontrolling Interest As a finder’s fee for the 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. The redeemable noncontrolling interest is recognized at the redemption value as of the balance sheet date. As of March 31, 2023 and December 31, 2022, the redeemable noncontrolling interest balance was the redemption value of $10.0 million. |
Subsequent Events_2
Subsequent Events | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Subsequent Events | ||
Subsequent Events | 13. Subsequent Events 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”). The Severance Agreement provides that, so long as the COO does not revoke the Severance Agreement and meets his obligations thereunder, 59,594 of the share options previously granted to him will become vested and exercisable, with any shares purchased under the option subject to an 18-month lockup period. The COO will be able to exercise the vested option by electing a net cashless exercise for purposes of both paying the exercise price and meeting minimum required tax withholding requirements. The terms of the Severance Agreement became effective on April 15, 2023. New Lilly License Effective April 26, 2023, the Company’s newly-formed subsidiary ZB17 LLC (“ZB17”) entered into a License, Development and Commercialization Agreement (the “ZB17 License Agreement,” and, together with the Lilly Agreement, the “Lilly Agreements”) with Lilly, for an exclusive license (the “ZB-106 License”) to develop, manufacture and commercialize a certain bispecific antibody relating to IL-17 and BAFF (“ZB-106”) in exchange for an upfront cash payment of $5.8 million and 1,000,000 Class A Ordinary Shares, as well as a payment of $5.0 million payable upon the Company’s receipt of certain know-how, data, information and materials that Lilly is required to provide under the License Agreement. Under the ZB17 License Agreement, the Company is obligated to pay development and milestone payments up to an aggregate of $195 million, and up to an aggregate of $440 million based on thresholds of net sales. The Company is also obligated to pay Lilly an annual earned royalty at a marginal royalty rate in the mid-single digits to low-doubled digits, with increasing rates depending on net sales. Private Placement In April 2023, the Company entered into subscription agreements (the “Subscription Agreements”) with certain individual and institutional accredited investors (the “Subscribers”) in connection with the sale by the Company (the “Private Placement”) of Class A Ordinary Shares, par value $0.0001 per share and pre-funded warrants (the “Pre-Funded Warrants”) (collectively, the “Securities”). Pursuant to the terms of the Subscription Agreements, each Class A Ordinary Share is being sold at a price of $4.25 per Share and each Pre-Funded Warrant is being sold at a price of $4.249 per Pre-Funded Warrant. 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. The Private Placement is expected to result in gross proceeds to the Company of approximately $80.0 million, before deducting placement agent fees and other offering expenses payable by the Company. The consummation of the Private Placement will occur in two closings, the initial closing of which occurred on May 1, 2023. The second closing will occur on such date that is the second business day following the date shareholder approval is obtained. At the initial closing, Subscribers purchased an aggregate of 3,750,000 Shares for gross proceeds of approximately $15.9 million. At the second closing, Subscribers have committed to purchase an aggregate of 15,073,530 Shares (including 3,782,000 Shares issuable upon exercise of Pre-Funded Warrants) for additional gross proceeds of approximately $64.1 million. | Note 12 — Subsequent Events The Company has evaluated subsequent events and transactions that occurred up to the date that these consolidated financial statements were issued. Except for the matters disclosed below, no additional subsequent events had occurred that would require recognition or disclosure in these consolidated financial statements. Under the terms of the Note agreement with Hydra, Hydra had the right to accelerate the Note and receive an amount equal to 120% of the Principal Amount because the registration statement on Form S-4 relating to the Business Combination was not declared effective by the SEC on or before February 15, 2023. On March 8, 2023, the Company and Hydra signed a limited waiver letter under the Note, pursuant to which Hydra agreed to waive its acceleration right in consideration of Zura 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. Prior to consummation of the Business Combination in March 2023, the Company granted options to purchase 14,420 Ordinary Shares to certain employees, executives, and directors. In addition, the Company awarded 4,626 restricted stock units (“RSUs”) to a director of the Company. As a result of these transactions and the Company’s contractual commitments under an anti-dilution provision, the Company issued 2,479 Series A-1 convertible preferred shares to an existing shareholder. On March 20, 2023, the Company consummated the Business Combination pursuant to the terms of the business combination agreement, dates as of June 16, 2022 (as amended on September 20, 2022, November 14, 2022 and January 13, 2023). The Business Combination, together with the PIPE financing, the forward purchase agreement, and the sale of the backstop purchase shares, generated approximately $65.0 million. In connection with the Business Combination, all outstanding Series A-1 Convertible Preferred shares, Ordinary Shares, and options to purchase Ordinary Shares of the Company were converted into common stock, or options to purchase common stock of JATT. |
Significant Accounting Polici_7
Significant Accounting Policies (Policies) | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Significant Accounting Policies | ||
Basis of Presentation and Principles of Consolidation | 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 subsidiary, Z33 Bio, Inc. (“Z33”), are shown in the condensed consolidated financial statements as redeemable noncontrolling interest. 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 March 31, 2023 and the results of operations for the three months ended March 31, 2023 and the period ended March 31, 2022. The results of operations for the three months ended March 31, 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. | Basis of Presentation and Principles of Consolidation The consolidated financial statements including the accounts of Zura Bio Limited, its wholly-owned subsidiary, Zura Bio, Inc., and its subsidiary, Z33 Bio, Inc. (“Z33”), have been prepared in conformity with U.S. GAAP, Other shareholders’ interests in Z33 are shown in the consolidated financial statements as noncontrolling interest. All intercompany balances and transactions have been eliminated in consolidation. |
Significant of Accounting Policies | Significant Accounting Policies Except for the addition of the Business Combination and related public warrants and private placement warrants (collectively, the “Warrants”), 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 | 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 share-based consideration transferred for acquired assets, the fair value of contingent consideration, the fair value of public and private placement warrants, and the fair value of the note payable. | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions reflected in the consolidated financial statements relate to and include, but are not limited to, the fair value of Ordinary Shares and other assumptions used to measure share-based compensation, the fair value of share-based consideration transferred for acquired assets, the fair value of contingent consideration, and the fair value of the note payable. |
Risks and Uncertainties | 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. 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. | 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. 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 | 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. Classification of the public 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. | |
Net Loss Per Share | 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: For the Three For the Period from Months January 18, 2022 Ended (date of inception) to March 31, March 31, 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 1,941,933 — Restricted share units 499,993 — Total 15,251,922 13,510,415 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. | Net Loss Per Ordinary Share Basic net loss per Ordinary Share is computed by dividing net loss by the weighted-average number of Ordinary Shares outstanding during the period. Diluted net loss per Ordinary Share excludes the potential impact of the Company’s convertible preferred shares and options to purchase 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 Ordinary Share are the same. The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per Ordinary Share because to do so would be anti-dilutive: For the Period from January 18, 2022 (date of inception) to December 31, 2022 Shares issuable upon conversion of Series A-1 convertible preferred shares 125,000 Shares issuable upon exercise of options to purchase Ordinary Shares 3,547 Total 128,547 Shares issuable upon the exercise of PSOs are excluded from the calculation of diluted net loss per Ordinary Share until the Company’s management deems it probable that the performance conditions will be satisfied. |
Recent Accounting Pronouncements | 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. | Recently Issued and Recently Adopted Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The amendments in ASU 2020-06 simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. The Company adopted on a modified prospective basis the new standard effective at inception, and noted no material impact on the consolidated financial statements and related disclosures. |
Significant Accounting Polici_8
Significant Accounting Policies (Tables) | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
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 | For the Three For the Period from Months January 18, 2022 Ended (date of inception) to March 31, March 31, 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 1,941,933 — Restricted share units 499,993 — Total 15,251,922 13,510,415 | For the Period from January 18, 2022 (date of inception) to December 31, 2022 Shares issuable upon conversion of Series A-1 convertible preferred shares 125,000 Shares issuable upon exercise of options to purchase Ordinary Shares 3,547 Total 128,547 |
Recapitalization (Tables)
Recapitalization (Tables) | 3 Months Ended |
Mar. 31, 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 – 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 % |
Fair Value Measurements (Tabl_2
Fair Value Measurements (Tables) | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Fair Value Measurements | ||
Schedule of liabilities measured at fair value on a recurring basis | March 31, 2023 Level 1 Level 2 Level 3 Total Financial liabilities: Private placement warrants $ — $ 1,537 $ — $ 1,537 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 | 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 Total $ — $ — $ 10,390 $ 10,390 |
Schedule of changes in the estimated fair value | For the Three Months Ended March 31, 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 March 31, 2023 $ — For the Three Months Ended March 31, 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 March 31, 2023 $ — For the Three Months Ended March 31, 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 |
Accounts Payable and Accrued _5
Accounts Payable and Accrued Expenses (Tables) | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Accounts Payable and Accrued Expenses | ||
Schedule of accounts payable and accrued expenses | March 31, 2023 December 31, 2022 Accounts payable $ 2,409 $ 2,010 Accrued payroll 651 260 Accrued bonus 916 141 Accrued offering costs 154 655 Accrued research and development costs 518 490 Accrued consulting fees 35 451 Accrued legal costs 107 308 Other accrued expenses 203 113 Total accounts payable and accrued expenses $ 4,993 $ 4,428 | December 31, 2022 Accounts payable $ 2,010 Accrued offering costs 655 Accrued research and development costs 490 Accrued consulting costs 451 Accrued legal costs 308 Accrued payroll 260 Accrued bonus 141 Other accrued expenses 113 Total accounts payable and accrued expenses $ 4,428 |
Share-based Compensation (Tab_2
Share-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-based Compensation | |
Schedule of weighted-average assumptions used to estimate the fair value | For the Three Months Ended March 31, 2023 Share price $ 8.16 Expected volatility 96.5 % Risk-free rate 3.58 % Expected life 6.1 years Expected dividend yield — % |
Schedule of 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 1,558,562 1.20 — — Options outstanding at March 31, 2023 1,941,933 $ 1.13 9.6 $ 26,781 Options vested and exercisable at March 31, 2023 85,708 $ 0.84 9.2 $ 1,207 |
Schedule of restricted Share units activity | Weighted Average Number of Grant Date RSUs Fair Value RSUs at December 31, 2022 — $ — Granted 499,993 8.16 RSUs at March 31, 2023 499,993 $ 8.16 |
Schedule of allocation of share-based compensation expense | For the Period from For the Three January 18, 2022 Months Ended (date of inception) to March 31, March 31, 2023 2022 Research and development $ 2,186 $ — General and administrative 180 — Total share-based compensation expense $ 2,366 $ — |
Organization and Description _4
Organization and Description of Business (Details) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 11 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2022 | |
Organization and Description of Business | |||||
Accumulated deficit | $ (41,851) | $ (32,056) | $ (32,056) | ||
Net loss | $ (7,819) | (9,592) | $ 7,800 | (25,738) | (25,738) |
Cash and cash equivalents | 44,000 | $ 1,600 | $ 1,600 | ||
Proceeds from issuance of ordinary shares upon closing of business combination | $ 56,683 |
Significant Accounting Polici_9
Significant Accounting Policies - Net loss per share (Details) - shares | 2 Months Ended | 3 Months Ended | 11 Months Ended |
Mar. 31, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Potentially dilutive securities not included in the calculation of the diluted net loss per common share because to do so would be anti-dilutive | |||
Restricted share units | 13,510,415 | 15,251,922 | 128,547 |
Total | 13,510,415 | 15,251,922 | 128,547 |
Convertible preferred shares | |||
Potentially dilutive securities not included in the calculation of the diluted net loss per common share because to do so would be anti-dilutive | |||
Restricted share units | 13,510,415 | 125,000 | |
Total | 13,510,415 | 125,000 | |
Warrants | |||
Potentially dilutive securities not included in the calculation of the diluted net loss per common share because to do so would be anti-dilutive | |||
Restricted share units | 12,809,996 | ||
Total | 12,809,996 | ||
Options | |||
Potentially dilutive securities not included in the calculation of the diluted net loss per common share because to do so would be anti-dilutive | |||
Restricted share units | 1,941,933 | 3,547 | |
Total | 1,941,933 | 3,547 | |
Restricted share units | |||
Potentially dilutive securities not included in the calculation of the diluted net loss per common share because to do so would be anti-dilutive | |||
Restricted share units | 499,993 | ||
Total | 499,993 |
Recapitalization (Details)
Recapitalization (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | ||||
Mar. 20, 2023 USD ($) director $ / shares shares | Mar. 16, 2023 $ / shares shares | Mar. 13, 2023 USD ($) | Mar. 31, 2023 USD ($) shares | Dec. 31, 2022 $ / shares | |
Recapitalization | |||||
Transaction costs related to business combination | $ 4,000 | ||||
Proceeds from issuance of Class A 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 | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.001 | ||
Conversion of ordinary shares | $ 14,686 | ||||
PIPE Subscription Agreement | |||||
Recapitalization | |||||
Conversion of ordinary shares | $ 20,099,500 | ||||
Legacy Zura | |||||
Recapitalization | |||||
Class A ordinary shares, par value per share | $ / shares | $ 0.001 | ||||
Legacy Zura | JATT Acquisition Corp | |||||
Recapitalization | |||||
Percentage of ownership interest acquired | 100% | ||||
Transaction costs related to business combination | $ 56,700 | ||||
Proceeds from issuance of Class A 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 | $ / 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 |
Recapitalization - Shares outst
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% |
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% |
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% |
JATT Public shareholders | |
Recapitalization | |
Class A Ordinary Shares issued and outstanding (in shares) | 182,498 |
Percentage on outstanding shares | 0.70% |
Zura shares issued - Lilly license | |
Recapitalization | |
Class A Ordinary Shares issued and outstanding (in shares) | 550,000 |
Percentage on outstanding shares | 2% |
JATT Founders | |
Recapitalization | |
Class A Ordinary Shares issued and outstanding (in shares) | 3,450,000 |
Percentage on outstanding shares | 12.80% |
Legacy Zura Equityholders | |
Recapitalization | |
Class A Ordinary Shares issued and outstanding (in shares) | 14,058,074 |
Percentage on outstanding shares | 52% |
Recapitalization - PIPE Investm
Recapitalization - PIPE Investment (Details) - $ / shares | 11 Months Ended | |
Mar. 13, 2023 | Dec. 31, 2022 | |
Recapitalization | ||
Number of Class A shares issued | 3,547 | |
PIPE Subscription Agreement | ||
Recapitalization | ||
Number of Class A shares issued | 2,009,950 | |
Price per share | $ 10 |
Recapitalization - Forward Purc
Recapitalization - Forward Purchase Agreement and Redemption Backstop (Details) $ / shares in Units, $ in Thousands | 11 Months Ended | ||
Mar. 20, 2023 USD ($) $ / shares shares | Jan. 27, 2022 USD ($) $ / shares shares | Dec. 31, 2022 shares | |
Recapitalization | |||
Issuance of Class A Ordinary Share at inception (in shares) | 3,547 | ||
Forward Purchase Agreement | FPA Investors | |||
Recapitalization | |||
Issuance of Class A Ordinary Share at inception (in shares) | 3,000,000 | ||
Price per share | $ / shares | $ 10 | ||
Issuance of Class A Ordinary Share at inception | $ | $ 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 | 0.90 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | |
Fair Value Measurements | |||
Transfers between level 1 and level 2 | $ 0 | $ 0 | |
Transfers level 2 and level 3 | 0 | 0 | |
Transfers into or out of level 3 | $ 0 | 0 | |
Recurring | |||
Fair Value Measurements | |||
Financial liabilities | 10,390 | ||
Private placement warrants | |||
Fair Value Measurements | |||
Financial liabilities | $ 1,537 | ||
Note payable | |||
Fair Value Measurements | |||
Financial liabilities | 7,756 | ||
Research and development license consideration | |||
Fair Value Measurements | |||
Financial liabilities | 2,634 | ||
Level 2 | Private placement warrants | |||
Fair Value Measurements | |||
Financial liabilities | $ 1,537 | ||
Level 3 | Recurring | |||
Fair Value Measurements | |||
Financial liabilities | 10,390 | ||
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 |
Fair Value Measurements - Note
Fair Value Measurements - Note payable (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 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 | $ 1,537 | |
Weighted average discount rate | ||
Fair Value Measurements | ||
Measurement input | 9 | |
Weighted average time to repayment | ||
Fair Value Measurements | ||
Measurement input | 0.006 |
Fair Value Measurements - Resea
Fair Value Measurements - Research and development license consideration (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares | |
Fair Value Measurements | ||
Aggregate fair value of the shares issued | $ 4,488 | |
Summary of changes in the estimated fair value | ||
Beginning balance | 1,537 | $ 7,756 |
Remeasurement of the Note to settlement value upon the Closing of the Business Combination | (177) | |
Settlement of the liability | (10,000) | |
Ending balance | 1,537 | 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 | shares | 550,000 | |
Aggregate fair value of the shares issued | $ 4,500 | |
Fair value per issued share | $ / shares | $ 8.16 | |
Summary of changes in the estimated fair value | ||
Beginning balance | 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 | Z33 Series Seed Preferred Shares | ||
Fair Value Measurements | ||
Issuance of Z33 series seed preferred shares if the business combination was not consummated | shares | 4,702,867 | |
Fair value per share | $ / shares | $ 0.15 | |
Research and development license consideration | JATT Acquisition Corp | Class A Ordinary shares | ||
Fair Value Measurements | ||
Fair value per share | $ / shares | $ 7.66 |
Fair Value Measurements - Priva
Fair Value Measurements - Private Placement Warrants (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 7,756 |
Assumption of private placement warrants | 1,714 |
Change in fair value | (177) |
Ending balance | 1,537 |
Gain from the change in fair value of the private placement warrants | (177) |
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 | $ 200 |
Accounts Payable and Accrued _6
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accounts Payable and Accrued Expenses | ||
Accounts payable | $ 2,409 | $ 2,010 |
Accrued payroll | 651 | 260 |
Accrued bonus | 916 | 141 |
Accrued offering costs | 154 | 655 |
Accrued research and development costs | 518 | 490 |
Accrued consulting fees | 35 | 451 |
Accrued legal costs | 107 | 308 |
Other accrued expenses | 203 | 113 |
Total accounts payable and accrued expenses | $ 4,993 | $ 4,428 |
License Agreement (Details)_2
License Agreement (Details) $ in Millions | 3 Months Ended | ||
Mar. 22, 2022 USD ($) payment shares | Mar. 31, 2023 shares | Dec. 31, 2022 shares | |
License Agreement | |||
Number of shares transferred | shares | 2,702,083 | ||
Series A-1 convertible preferred shares authorized | shares | 125,000 | ||
Agreement with Pfizer | |||
License Agreement | |||
Amount of cash transferred | $ | $ 5 | ||
Number of shares transferred | shares | 25,000 | ||
Percentage of interest | 20% | ||
Value allocated to in-process research and development | $ | $ 7.5 | ||
Number of development and regulatory milestone payments | payment | 12 | ||
Maximum amount of development and regulatory milestone payments | $ | $ 70 | ||
Maximum amount of sales milestone payments | $ | $ 525 | ||
Maximum annual earned royalty at a marginal royalty rate | 20% | ||
Percentage of anti-dilution provisions to be maintained | 18% | 18% | |
Series A-1 convertible preferred shares authorized | shares | 267,939 |
License Agreement - Lilly Lic_2
License Agreement - Lilly License (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 08, 2022 | Mar. 22, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
License Agreement | ||||
Aggregate fair value of the shares issued | $ 4,488,000 | |||
Number of shares transferred | 2,702,083 | |||
Selling price per share | $ 2.040724 | |||
Z33 Series Seed Preferred Shares | ||||
License Agreement | ||||
Number of shares transferred | 4,900,222 | |||
Stone Peach Properties, LLC | ||||
License Agreement | ||||
Right but not the obligation for purchase of issued shares, maximum percentage | 50% | |||
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% | |||
Stone Peach Properties, LLC | Z33 Series Seed Preferred Shares | ||||
License Agreement | ||||
Number of shares transferred | 4,900,222 | |||
Right but not the obligation for purchase of issued shares, maximum percentage | 50% | |||
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% | |||
Selling price per share | $ 2.040724 | |||
License agreement with Lilly | ||||
License Agreement | ||||
Amount of cash transferred | $ 7,000,000 | |||
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 | |||
Minimum gross proceeds from financing for obligation to pay | $ 100,000,000 | |||
Maximum amount of development and regulatory milestone payments | 155,000,000 | |||
Maximum amount of sales milestone payments | $ 440,000,000 | |||
Maximum annual earned royalty at a marginal royalty rate | 20% | |||
Contingent payments due | $ 0 | |||
License agreement with Lilly | Z33 Series Seed Preferred Shares | ||||
License Agreement | ||||
Issuance of Z33 series seed preferred shares if the business combination was not consummated | 4,702,867 |
Convertible Preferred Shares _4
Convertible Preferred Shares and Shareholders' Equity (Deficit) (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | ||||
Mar. 20, 2023 $ / shares shares | Mar. 16, 2023 $ / shares shares | Mar. 22, 2022 USD ($) Vote $ / shares | Mar. 31, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares | |
Asset Acquisition [Line Items] | |||||
Number of Class A ordinary shares on conversion | 267,939 | ||||
Class A ordinary shares, par value per share | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.001 | ||
Exchange ratio for Class A ordinary shares pursuant to the business combination | 108.083 | 108.083 | 108.083 | ||
Class A ordinary shares authorized | 300,000,000 | 17,437 | |||
Preferred shares, shares authorized | 1,000,000 | 1,000,000 | 0 | ||
Preferred shares, par value per share | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Preferred shares, shares issued | 0 | 0 | |||
Preferred shares, shares outstanding | 0 | 0 | |||
Series A-1 convertible preferred shares, minimum gross aggregate subscription with respect to new Ordinary Shares required for conversion | $ | $ 50,000 | ||||
Anti-Dilution, percentage of ownership interest to be maintained | 18% | ||||
Anti-Dilution, minimum equity to be raised | $ | $ 20,000 | ||||
Anti-Dilution, minimum gross aggregate subscription amount required for expiration of provision | $ | 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 | ||||
Legacy Zura | |||||
Asset Acquisition [Line Items] | |||||
Class A ordinary shares, par value per share | $ / shares | $ 0.001 | ||||
License Agreement and a Series A-1 Subscription and Shareholder's Agreement with Pfizer [Member] | |||||
Asset Acquisition [Line Items] | |||||
Anti-Dilution, percentage of ownership interest to be maintained | 18% | ||||
Minimum value of capital to be raised for not being subject to anti-dilution | $ | $ 30,000 |
Warrants (Details)
Warrants (Details) | 3 Months Ended |
Mar. 31, 2023 D $ / shares shares | |
Warrants | |
Public Warrants expiration term | 5 years |
Number of warrants exercised or redeemed | shares | 0 |
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 |
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 Acquisition Corp | |
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 Acquisition Corp | |
Warrants | |
Warrants outstanding | shares | 5,910,000 |
Exercise price of warrants | $ 11.50 |
Share-based Compensation (Det_2
Share-based Compensation (Details) | 3 Months Ended | |||||
Jan. 01, 2024 shares | Mar. 31, 2023 $ / shares shares | Mar. 20, 2023 shares | Mar. 16, 2023 shares | Jun. 08, 2022 Option Options shares | Mar. 31, 2023 $ / shares shares | |
Share-based Compensation | ||||||
Number of stock option plans approved | Option | 2 | |||||
Number of Class A Ordinary Shares available for issuance | 13,889 | |||||
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 | ||||||
Share-based Compensation | ||||||
Percentage of discount for eligible employees | 5% | |||||
Number of shares issued | 4,029,898 | 8,059,796 | 1,558,562 | |||
Weighted-average assumptions used to estimate the fair value | ||||||
Share price | $ / shares | $ 8.16 | $ 8.16 | ||||
Expected volatility | 96.50% | |||||
Risk-free rate | 3.58% | |||||
Expected life | 6 years 1 month 6 days | |||||
Employee Stock Purchase Plan | ||||||
Share-based Compensation | ||||||
Percentage of discount for eligible employees | 15% | |||||
Number of shares issued | 0 | 4,029,898 |
Share-based Compensation - Shar
Share-based Compensation - Share option activity (Details) | 3 Months Ended | 11 Months Ended | 12 Months Ended | ||
Jan. 01, 2024 shares | Mar. 16, 2023 shares | Mar. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | |
Aggregate Intrinsic Value | |||||
Share-based compensation expense | $ | $ 2,366,000 | $ 300,000 | |||
PSO | |||||
Aggregate Intrinsic Value | |||||
Share-based compensation expense | $ | 45,611,000 | ||||
Amount of external capital raised | $ | $ 75,000,000 | ||||
Equity Incentive Plan | |||||
Number of Options | |||||
Beginning balance | shares | 383,371 | ||||
Granted | shares | 4,029,898 | 8,059,796 | 1,558,562 | ||
Ending balance | shares | 1,941,933 | 383,371 | 383,371 | ||
Options vested and exercisable | shares | 85,708 | ||||
Weighted Average Exercise Price | |||||
Beginning balance | $ / shares | $ 0.84 | ||||
Granted | $ / shares | 1.20 | ||||
Ending balance | $ / shares | 1.13 | $ 0.84 | $ 0.84 | ||
Options vested and exercisable | $ / shares | $ 0.84 | ||||
Weighted Average Remaining Contractual Life | |||||
Outstanding | 9 years 7 months 6 days | 9 years 4 months 24 days | |||
Options vested and exercisable | 9 years 2 months 12 days | ||||
Aggregate Intrinsic Value | |||||
Outstanding | $ | $ 26,781,000 | $ 1,804,000 | $ 1,804,000 | ||
Options vested and exercisable | $ | $ 1,207,000 | ||||
Equity Incentive Plan | Recapitalization | |||||
Number of Options | |||||
Beginning balance | shares | 3,547 | ||||
Recapitalization | shares | 379,824 | ||||
Ending balance | shares | 3,547 | 3,547 | |||
Weighted Average Exercise Price | |||||
Beginning balance | $ / shares | $ 90.50 | ||||
Recapitalization | $ / shares | $ (89.66) | ||||
Ending balance | $ / shares | $ 90.50 | $ 90.50 | |||
Weighted Average Remaining Contractual Life | |||||
Outstanding | 9 years 4 months 24 days | ||||
Aggregate Intrinsic Value | |||||
Outstanding | $ | $ 1,804,000 | $ 1,804,000 |
Share-based Compensation - Rest
Share-based Compensation - Restricted Share Units (Details) - Restricted share units | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Number of RSUs | |
Granted | shares | 499,993 |
Ending balance | shares | 499,993 |
Weighted Average Grant Date Fair Value | |
Granted | $ / shares | $ 8.16 |
Ending balance | $ / shares | $ 8.16 |
Share-based Compensation - Othe
Share-based Compensation - Other share-based compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 11 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | Mar. 20, 2023 | |
Share-based Compensation | |||
Number of Class A ordinary shares on conversion | 267,939 | ||
Share-based compensation expense | $ 2,366 | $ 300 | |
Series A-1 convertible preferred shares | |||
Share-based Compensation | |||
Number of Class A ordinary shares on conversion | 267,939 | ||
Share-based compensation expense | $ 2,200 |
Share-based Compensation - Sh_2
Share-based Compensation - Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 11 Months Ended |
Mar. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |
Share-based Compensation | |||
Share-based compensation expense | $ 2,366 | $ 300 | |
Options | |||
Share-based Compensation | |||
Unrecognized share-based compensation expense | $ 11,900 | 11,900 | |
Share-based compensation expense expected to be recognized over a weighted average period | 2 years 1 month 6 days | ||
Restricted share units | |||
Share-based Compensation | |||
Unrecognized share-based compensation expense | $ 4,000 | 4,000 | |
Share-based compensation expense expected to be recognized over a weighted average period | 2 years 1 month 6 days | ||
Research and development | |||
Share-based Compensation | |||
Share-based compensation expense | 2,186 | ||
General and administrative | |||
Share-based Compensation | |||
Share-based compensation expense | $ 180 |
Note Payable (Details)_2
Note Payable (Details) - Note payable - USD ($) $ in Millions | Dec. 08, 2022 | Mar. 08, 2023 |
Note Payable | ||
Percentage of interest rate | 9% | |
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% | |
Hydra | ||
Note Payable | ||
Proceeds form issuance of note | $ 7.6 | |
Face amount of note | $ 8 | $ 10 |
Percentage of principal amount payable for waiving the acceleration right in consideration | 125% |
Redeemable Noncontrolling Int_4
Redeemable Noncontrolling Interest (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 22, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Redeemable Noncontrolling Interest | |||
Number of shares transferred | 2,702,083 | ||
Selling price per share | $ 2.040724 | ||
Accretion of redeemable noncontrolling interest to redemption value | $ 10 | $ 10 | |
Z33 Series Seed Preferred Shares | |||
Redeemable Noncontrolling Interest | |||
Number of shares transferred | 4,900,222 | ||
Stone Peach Properties, LLC [Member] | |||
Redeemable Noncontrolling Interest | |||
Right but not the obligation for purchase of issued shares, maximum percentage | 50% | ||
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% | ||
Stone Peach Properties, LLC [Member] | Z33 Series Seed Preferred Shares | |||
Redeemable Noncontrolling Interest | |||
Number of shares transferred | 4,900,222 | ||
Right but not the obligation for purchase of issued shares, maximum percentage | 50% | ||
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% | ||
Selling price per share | $ 2.040724 |
Subsequent Events (Details)_2
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | 11 Months Ended | |||||
Apr. 26, 2023 | Dec. 08, 2022 | Jun. 08, 2022 | Mar. 22, 2022 | Dec. 31, 2022 | Apr. 07, 2023 | |
Subsequent Events | ||||||
Number of shares available for issuance under the option plans | 6,795 | |||||
Number of shares transferred | 2,702,083 | |||||
UK Plan | ||||||
Subsequent Events | ||||||
Number of shares awarded to employees and directors | 3,547 | |||||
US Plan | ||||||
Subsequent Events | ||||||
Number of shares awarded to employees and directors | 3,547 | |||||
Exercise price per shares issued | $ 90.50 | |||||
Stock option vesting period | 4 years | 3 years 3 months 14 days | ||||
J A T T Acquisition Corp | ||||||
Subsequent Events | ||||||
Number of shares issued on business combination | 550,000 | |||||
License agreement with Lilly | ||||||
Subsequent Events | ||||||
Upfront cash payment | $ 7 | |||||
Maximum amount of development and regulatory milestone payments | $ 155 | |||||
Maximum amount of sales milestone payments | $ 440 | |||||
Subsequent Events | Severance agreement with Chief operating officer | ||||||
Subsequent Events | ||||||
Options vested and exercisable | 59,594 | |||||
Subsequent Events | License agreement with Lilly | ||||||
Subsequent Events | ||||||
Upfront cash payment | $ 5.8 | |||||
Number of shares transferred | 1,000,000 | |||||
Amount payable upon receipt of certain know-how, data, information and materials | $ 5 | |||||
Maximum amount of development and regulatory milestone payments | 195 | |||||
Maximum amount of sales milestone payments | $ 440 |
Subsequent Events - Private Pla
Subsequent Events - Private Placement (Details) - USD ($) $ / shares in Units, $ in Millions | 2 Months Ended | 11 Months Ended | ||||
May 01, 2023 | Apr. 26, 2023 | Mar. 13, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2022 | |
Subsequent Events | ||||||
Number of Class A shares issued | 3,547 | |||||
Class A Ordinary Shares | ||||||
Subsequent Events | ||||||
Number of Class A shares issued | 108 | 1 | ||||
PIPE Subscription Agreement | ||||||
Subsequent Events | ||||||
Sale price per share | $ 10 | |||||
Number of Class A shares issued | 2,009,950 | |||||
Subsequent Events | Private Placement | ||||||
Subsequent Events | ||||||
Gross proceeds from private placement | $ 80 | |||||
Subsequent Events | Private Placement | Initial closing | ||||||
Subsequent Events | ||||||
Gross proceeds from private placement | $ 15.9 | |||||
Number of Class A shares issued | 3,750,000 | |||||
Subsequent Events | Private Placement | Second closing | ||||||
Subsequent Events | ||||||
Gross proceeds from private placement | $ 64.1 | |||||
Number of Class A shares issued | 15,073,530 | |||||
Subsequent Events | Private Placement | Pre-Funded Warrants | ||||||
Subsequent Events | ||||||
Exercise price of warrants | $ 0.001 | |||||
Subsequent Events | Private Placement | Pre-Funded Warrants | Second closing | ||||||
Subsequent Events | ||||||
Number of Class A shares issuable upon exercise of warrants | 3,782,000 | |||||
Subsequent Events | PIPE Subscription Agreement | Private Placement | Class A Ordinary Shares | ||||||
Subsequent Events | ||||||
Sale price per share | 0.0001 | |||||
Subsequent Events | PIPE Subscription Agreement | Private Placement | Pre-Funded Warrants | ||||||
Subsequent Events | ||||||
Price per warrant | 4.25 | |||||
Exercise price of warrants | $ 4.249 |