8-K
Jade Biosciences, Inc. (JBIO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 14, 2025
Jade Biosciences, Inc.
(Exact name of Registrant as specified in its charter)
| Nevada | 001-40544 | 83-1377888 |
|---|---|---|
| (State or other jurisdiction<br> <br>of incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification No.) |
| 221 Crescent St., Building 23 | ||
| Suite 105 | ||
| Waltham, MA | 02453 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (781) 312-3013
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common Stock, $0.0001 par value per share | JBIO | The Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
INTRODUCTORY NOTE
As previously reported, on April 28, 2025 (the “Closing Date”), Jade Biosciences, Inc., a Nevada corporation (formerly known as Aerovate Therapeutics, Inc., a Delaware corporation) (prior to the Closing Date, unless context otherwise requires, “Aerovate” and, after the Closing Date, the “Company”), consummated the previously announced business combination (the “Merger”) pursuant to that certain Agreement and Plan of Merger, dated as of October 30, 2024, by and among Aerovate, Caribbean Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of Aerovate, Caribbean Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of Aerovate, and Jade Biosciences, Inc., a private Delaware corporation (prior to the Closing Date, unless context otherwise requires, “Jade”). This Current Report on Form 8-K (this “Report”) is being submitted to file (1) the unaudited condensed consolidated financial statements of Jade as of and for the three months ended March 31, 2025 and related notes thereto, and (2) Jade’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three months ended March 31, 2025. In addition, a press release announcing Jade’s financial results for the quarter ended March 31, 2025 and an updated corporate presentation for the Company are being furnished with this Report.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
|---|
Financial Information
Unaudited Financial Statements
The unaudited condensed consolidated financial statements of Jade as of and for the three months ended March 31, 2025 and related notes thereto are attached hereto as Exhibit 99.1 and incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Jade’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three months ended March 31, 2025 is attached hereto as Exhibit 99.2 and incorporated herein by reference.
Risk Factors
The risks associated with Jade’s business and operations are described in Aerovate’s definitive proxy statement/prospectus filed on Form S-4 with the U.S. Securities and Exchange Commission (the “SEC”), most recently amended on March 24, 2025 and declared effective on March 25, 2025 (as amended, the “Proxy Statement/Prospectus”), in the section entitled “Risk Factors—Risks Related to Jade” beginning on page 62 and the risks associated with the business and operations of the Company are described in the Proxy Statement/Prospectus in the section entitled “Risk Factors—Risks Related to the Combined Company” beginning on page 97, each of which are incorporated herein by reference.
Legal Proceedings
The information set forth in the section of the Proxy Statement/Prospectus entitled “Aerovate’s Business—Legal Proceedings” on page 251 and in the section of the Proxy Statement/Prospectus entitled “Jade’s Business—Legal Proceedings” on page 320 is incorporated herein by reference.
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
The information set forth in Item 2.01 and in Exhibits 99.1 and 99.2 to this Report is incorporated into this Item 2.02 by reference.
On May 14, 2025, the Company issued a press release announcing Jade’s financial results for the quarter ended March 31, 2025. A copy of the press release is furnished as Exhibit 99.3 to this Report.
This Item 2.02 and Exhibit 99.3 to this Report are being furnished to the SEC and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), regardless of any general incorporation language in such filing.
| Item 7.01. | Regulation FD Disclosure. |
|---|
On May 14, 2025, the Company made available an updated corporate presentation on the Company’s website.
A copy of the corporate presentation is furnished as Exhibit 99.4 to this Report and is incorporated by reference herein. This Item 7.01 and Exhibit 99.4 to this Report are being furnished to the SEC and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Exchange Act or the Securities Act, regardless of any general incorporation language in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(a) Financial Statements of Business Acquired
The unaudited condensed consolidated financial statements of Jade as of and for the three months ended March 31, 2025 and the related notes thereto are attached as Exhibit 99.1 and are incorporated herein by reference. Also included as Exhibit 99.2 and incorporated herein by reference is Jade’s Management’s Discussion and Analysis for the three months ended March 31, 2025.
(d) Exhibits
EXHIBIT INDEX
| Exhibit | Description |
|---|---|
| 99.1 | Unaudited condensed consolidated financial statements of Jade as of and for the three months ended March 31, 2025 and related notes thereto. |
| 99.2 | Jade’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three months ended March 31, 2025. |
| 99.3 | Press Release, issued on May 14, 2025. |
| 99.4 | Corporate Presentation, dated May 14, 2025. |
| 104 | Cover page interactive data file (embedded within the inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Jade Biosciences, Inc. | ||
|---|---|---|
| (Registrant) | ||
| Date: May 14, 2025 | By: | /s/ Tom Frohlich |
| Name: | Tom Frohlich | |
| Title: | Chief Executive Officer |
EX-99.1
Exhibit 99.1
Financial Statements.
JADEBIOSCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Inthousands, except share amounts)
| December 31,2024 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | 49,929 | $ | 69,386 | ||
| Prepaid expenses and other current assets | 775 | 268 | |||
| Total current assets | 50,704 | 69,654 | |||
| Operating lease<br>right-of-use asset | 765 | — | |||
| Other assets | 4,855 | 3,145 | |||
| Total assets | 56,324 | $ | 72,799 | ||
| Liabilities, Convertible Preferred Stock and Stockholders’ Deficit | |||||
| Current liabilities: | |||||
| Accounts payable | 4,215 | 1,290 | |||
| Accrued expenses and other current liabilities | 2,880 | 4,125 | |||
| Related party accrued expenses and other current liabilities | 6,912 | 5,504 | |||
| Warrant liability, related party | 2,042 | 1,077 | |||
| Total current liabilities | 16,049 | 11,996 | |||
| Long-term liabilities: | |||||
| Convertible Notes payable(1) | 123,000 | 107,600 | |||
| Long-term lease liability | 783 | — | |||
| Total liabilities | 139,832 | 119,596 | |||
| Commitments and contingencies (Note 12) | |||||
| Series Seed convertible preferred stock, 0.0001 par value; 20,000,000 shares authorized as of<br>each of March 31, 2025 and December 31, 2024; 20,000,000 shares issued and outstanding as of each of March 31, 2025 and December 31, 2024; liquidation preference of 2 as of each of March 31, 2025 and<br>December 31, 2024 | 2 | 2 | |||
| Stockholders’ deficit: | |||||
| Common stock, 0.0001 par value; 40,000,000 shares authorized as of each of March 31,<br>2025 and December 31, 2024; 5,819,672 shares issued and outstanding as of each of March 31, 2025 and December 31, 2024 | 1 | 1 | |||
| Additional paid-in capital | 1,637 | 179 | |||
| Accumulated deficit | (85,148 | ) | (46,979 | ) | |
| Total stockholders’ deficit | (83,510 | ) | (46,799 | ) | |
| Total liabilities, convertible preferred stock and stockholders’ deficit | 56,324 | $ | 72,799 |
All values are in US Dollars.
| (1) | Includes related party amount of $26.0 and $22.7 million at March 31, 2025 and December 31,<br>2024, respectively. |
|---|
The accompanying notes are an integral part of these condensed consolidated financial statements.
JADE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(Inthousands, except share and per share amounts)
| Three Months EndedMarch 31, 2025 | |||
|---|---|---|---|
| Operating expenses: | |||
| Research and development^(1)^ | $ | 20,023 | |
| General and administrative^(2)^ | 3,361 | ||
| Total operating expenses | 23,384 | ||
| Loss from operations | (23,384 | ) | |
| Other income (expense): | |||
| Interest income | 615 | ||
| Change in fair value of Convertible Notes<br>payable^(3)^ | (15,400 | ) | |
| Total other expense, net | (14,785 | ) | |
| Net loss and comprehensive loss | (38,169 | ) | |
| Net loss per share attributable to common stockholders, basic and diluted | $ | (12.10 | ) |
| Weighted-average shares used in computing net loss per share attributable to common stockholders,<br>basic and diluted | 3,155,500 | ||
| (1) | Includes related party amount of $7.8 million for the three months ended March 31, 2025 (see Note<br>14). | ||
| --- | --- | ||
| (2) | Includes related party amount of $0.1 million for the three months ended March 31, 2025 (see Note<br>14). | ||
| --- | --- | ||
| (3) | Includes related party amount of $3.3 million for the three months ended March 31, 2025 (see Note<br>14). | ||
| --- | --- |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
JADE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
(unaudited)
(Inthousands, except share amounts)
| Convertible Preferred Stock | Common Stock | Additional<br><br><br>Paid-In | Accumulated | Total<br><br><br>Stockholders’ | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||
| Balance at December 31, 2024 | 20,000,000 | $ | 2 | 5,819,672 | $ | 1 | $ | 179 | $ | (46,979 | ) | $ | (46,799 | ) | ||
| Stock-based compensation | — | — | — | — | 1,458 | — | 1,458 | |||||||||
| Net loss | — | — | — | — | — | (38,169 | ) | (38,169 | ) | |||||||
| Balance at March 31, 2025 | 20,000,000 | $ | 2 | 5,819,672 | $ | 1 | $ | 1,637 | $ | (85,148 | ) | $ | (83,510 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
JADE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
(Inthousands)
| Three months endedMarch 31, 2025 | |||
|---|---|---|---|
| Cash flows from operating activities: | |||
| Net loss | $ | (38,169 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | |||
| Change in fair value of Convertible Notes payable | 15,400 | ||
| Stock-based compensation | 2,423 | ||
| Amortization of<br>right-of-use asset | 8 | ||
| Changes in operating assets and liabilities: | |||
| Prepaid expenses and other current assets | (507 | ) | |
| Other assets | (60 | ) | |
| Accounts payable | 2,677 | ||
| Accrued expenses and other current liabilities | (1,948 | ) | |
| Related party accrued expenses and other current liabilities | 1,410 | ||
| Long-term lease liability | 9 | ||
| Net cash used in operating activities | (18,757 | ) | |
| Cash flows from financing activities: | |||
| Payment of deferred offering costs | (700 | ) | |
| Net cash used in financing activities | (700 | ) | |
| Net decrease in cash and cash equivalents | (19,457 | ) | |
| Cash and cash equivalents at beginning of period | 69,386 | ||
| Cash and cash equivalents at end of period | $ | 49,929 | |
| Supplemental disclosure of non-cash financing andinvesting activities: | |||
| Purchases of property and equipment in accounts payable | $ | 5 | |
| Deferred offering costs in accounts payable or accrued expenses and other current<br>liabilities | $ | 1,091 | |
| Operating lease liability arising from obtaining right-of-use asset | $ | 773 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Nature of the Business and Basis of Presentation
Background and Basis of Presentation
Jade Biosciences, Inc. (“Jade” or the “Company”) was established and incorporated under the laws of the state of Delaware on June 18, 2024. Jade is focused on developing best-in-class therapies to address critical unmet needs in autoimmune diseases. Its lead candidate, JADE101, targets the cytokine called “A PRoliferation Inducing Ligand” (“APRIL”) for the treatment of immunoglobulin A nephropathy. Jade’s pipeline also includes two undisclosed antibody discovery programs, JADE-002 and JADE-003, which are currently in preclinical development. Jade was launched based on assets licensed from Paragon Therapeutics Inc. (“Paragon”), an antibody discovery engine founded by healthcare investor Fairmount Funds Management LLC (“Fairmount”).
On October 30, 2024, the Company, Aerovate Therapeutics, Inc., a Delaware corporation (“Aerovate”), Caribbean Merger Sub I, Inc., a Delaware corporation and wholly-owned subsidiary of Aerovate (“First Merger Sub ”), and Caribbean Merger Sub II, LLC, a Delaware limited liability company and wholly-owned subsidiary of Aerovate (“Second Merger Sub”), entered into an Agreement and Plan of Merger(the “Merger Agreement”), pursuant to which, among other matters, on April 28, 2025 (the “Closing Date”), First Merger Sub merged with and into Jade, with Jade continuing as a wholly owned subsidiary of Aerovate and the surviving corporation of the merger (the “First Merger” and such time, the “First Effective Time”), and Jade merged with and into Second Merger Sub, with Second Merger Sub being the surviving entity of the merger (the “Second Merger” and, together with the First Merger, the “Merger”). In connection with the Merger, Second Merger Sub changed its corporate name to “Jade Biosciences, LLC” and Aerovate changed its name to “Jade Biosciences, Inc.” Subsequently, Jade Biosciences, LLC merged with and into Jade Biosciences, Inc. The combined company following the Merger is referred to herein as the “Combined Company.” The Combined Company is led by pre-Merger Jade’s management team and focuses on developing differentiated biologic therapies for patients living with autoimmune diseases. See Note 15 for subsequent events related to the closing of the Merger and related transactions on April 28, 2025.
Concurrently with the execution and delivery of the Merger Agreement, certain new and existing investors of pre-Merger Jade entered into a subscription agreement with pre-Merger Jade, pursuant to which such investors purchased, immediately prior to the Merger, 43,947,116 shares of pre-Merger Jade common stock and 12,305,898 pre-Merger Jade pre-funded warrants, for gross proceeds of approximately $334.2 million (which reflects the conversion of the previously issued $95.0 million of Convertible Notes, plus accrued and unpaid interest thereon) (the “Jade Pre-Closing Financing”). The Convertible Notes converted into shares of pre-Merger Jade common stock equal to the principal plus accrued and unpaid interest divided by the applicable conversion price thereunder. For purposes of the Jade Pre-Closing Financing, the conversion price was equal to the price per share sold in the Jade Pre-Closing Financing multiplied by 0.80.
The shares of pre-Merger Jade common stock and the pre-Merger Jade pre-funded warrants that were issued in the Jade Pre-Closing Financing were converted into shares of Aerovate common stock and Aerovate pre-funded warrants, respectively, in the Merger. The Aerovate pre-funded warrants have an exercise price per share equal to $0.0001 (as adjusted from time to time as provided in the form of pre-funded warrant) and may be exercised at any time and from time to time after the original issue date. The Aerovate pre-funded warrants do not expire.
Immediately prior to the consummation of the Merger on April 28, 2025, Aerovate effected a 1-for-35 reverse stock split of its common stock (the “Reverse Stock Split”). The Combined Company was re-domesticated and incorporated under the laws of the state of Nevada on April 28, 2025.
The Company is subject to risks and uncertainties common to early-stage companies in the biopharmaceutical industry, including, but not limited to, the ability to initiate and complete clinical trials, the ability to obtain regulatory approval for product candidates, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, reliance on third-party organizations, protection of proprietary technology, compliance with government regulations, product liability, uncertainty of market acceptance of products and the ability to raise additional capital to fund operations.
The Company’s potential product candidates will require approval from the U.S. Federal Food and Drug Administration or comparable foreign authorities prior to the commencement of commercial sales. There can be no assurance that the Company’s potential product candidates will receive all the required approvals or any approvals. In addition, there can be no assurance that the Company’s potential product candidates, if approved, will be accepted in the marketplace, that any future product candidates can be developed or manufactured at an acceptable cost and with appropriate performance characteristics, or that such product candidates will be successfully marketed, if at all.
5
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2025, and its results of operations and cash flows for the three months ended March 31, 2025. The condensed consolidated balance sheet at December 31, 2024 was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The accompanying condensed consolidated financial statements include accounts of the Company and its wholly owned subsidiaries Jade Biosciences Canada ULC and Jade Biosciences MA Security Corporation.
Liquidity and Going Concern
Since its inception, the Company has devoted substantially all of its resources to advancing the development of its portfolio of programs, organizing and staffing the Company, business planning, raising capital, and providing general and administrative support for these operations. Current and future programs will require significant research and development efforts, including preclinical and clinical trials, and, if the Company is successful in obtaining regulatory approval for one or more product candidates, significant commercialization efforts. Until such time as the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operating activities principally through equity offerings.
The Company has not generated any revenue from product sales or other sources and has incurred significant operating losses and negative cash flows from operations since inception. The Company has incurred a net loss of $38.2 million for the three months ended March 31, 2025. For the three months ended March 31, 2025, the Company used net cash of $18.8 million for its operating activities. As of March 31, 2025, the Company had cash and cash equivalents of $49.9 million.
The Company expects that its research and development and general and administrative costs will continue to increase significantly, including in connection with conducting future pre-clinical activities and clinical trials and manufacturing for its product candidates and providing general and administrative support for its operations, including the costs associated with operating as a public company. The Company expects that its existing cash and cash equivalents of $49.9 million as of March 31, 2025 together with the proceeds from the Jade Pre-Closing Financing, will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the date these unaudited condensed consolidated financial statements were issued.
2. Summary of Significant Accounting Policies
The Company’s significant accounting policies are disclosed in Note 2 to its audited financial statements as of December 31, 2024 and June 18, 2024 and for the period from June 18, 2024 (inception) to December 31, 2024 and the related notes thereto in Aerovate’s definitive proxy statement/prospectus filed on Form S-4 with the SEC, most recently amended on March 24, 2025 and declared effective on March 25, 2025, beginning on page F-22. Since the date of those financial statements, there have been no changes to its significant accounting policies except as noted below.
Comprehensive Loss
Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. For the three months ended March 31, 2025, the Company had a comprehensive loss of $38.2 million.
6
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
Deferred Offering Costs
The Company capitalizes certain legal, professional, accounting, and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After the consummation of an equity financing, these costs are recorded as a reduction of the proceeds from the offering, either as a reduction of the carrying value of the preferred stock or in stockholders’ deficit as a reduction of additional paid-in capital generated as a result of the offering. Should the in-process equity financing be abandoned, the deferred offering costs would be expensed immediately as a charge to operating expenses in the statement of operations and comprehensive loss. As of March 31, 2025, deferred offering costs of $4.8 million were recorded as Other assets in the balance sheet.
Leases
The Company evaluates arrangements entered into to determine whether or not it includes a lease. At the lease commencement date, when control of the underlying asset is transferred from the lessor to the Company, the Company classifies a lease as either an operating or finance lease and recognizes a right-of-use (“ROU”) asset and a current and non-current lease liability, as applicable, in the balance sheet if the lease has a term greater than one year. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise its option.
At the lease commencement date, operating lease liabilities and their corresponding ROU assets are recorded at the present value of future minimum lease payments over the expected remaining lease term. The Company determines the present value of lease payments using the implicit rate, if it is readily determinable, or the incremental borrowing rate for the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate to discount lease payments. The incremental borrowing rate represents an estimated rate of interest that the Company would have to pay to borrow equivalent funds on a collateralized basis at the lease commencement date. For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term. For finance leases, lease expense includes amortization expense of the ROU asset recognized on a straight-line basis over the lease term and interest expense recognized on the finance lease liability. In addition, certain adjustments to the ROU asset may be required for items such as lease prepayments, incentives received or initial direct costs. As of March 31, 2025, the Company has one operating lease and no finance leases.
The Company accounts for lease and non-lease components related to operating leases as a single lease component. The Company has elected that costs associated with leases having an initial term of 12 months or less are recognized in the condensed consolidated statement of operations and comprehensive loss on a straight-line basis over the lease term and are not recorded on its condensed consolidated balance sheets. Variable lease expense is recognized as incurred and consists primarily of real estate taxes, utilities, and other office space related expenses.
Net Loss per Share Attributable to CommonStockholders
Basic and diluted net loss attributable to stockholders per share is presented in conformity with the two-class method required for participating securities (the Series Seed Convertible Preferred Stock, par value $0.0001 per share (“Convertible Preferred Stock”)). Basic earnings per share is computed by dividing net income available to each class of shares by the weighted-average number of shares of common stock and participating securities outstanding during the period.
Net loss is allocated to common stock based on its proportional ownership on an as-converted basis. Net loss is not allocated to participating securities as they do not have an obligation to fund losses. The weighted-average number of shares outstanding of common stock reflects changes in ownership over the periods presented.
Diluted net loss per share is computed by dividing the net loss attributable to stockholders adjusted for income (expenses), net of tax, related to any diluted securities, by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of this calculation, stock options to purchase common stock, and unvested shares of restricted stock awards (“RSAs”) are considered potentially dilutive securities.
The Company generated a net loss for the periods presented. Accordingly, basic and diluted net loss per share is the same because the inclusion of the potentially dilutive securities would be anti-dilutive.
7
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income TaxDisclosures. This ASU expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding taxes paid both in the U.S. and foreign jurisdictions. This update is effective beginning with the Company’s 2025 fiscal year annual reporting period. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting ComprehensiveIncome-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). The amendments in ASU 2024-03 require public entities to disclose specified information about certain costs and expenses. ASU 2024-03 is effective for the Company’s annual reporting period beginning after December 15, 2026 and interim reporting periods beginning after December 27, 2027. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
3. Fair Value Measurements
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine the fair value (in thousands):
| March 31, 2025 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total | |||||
| Assets: | ||||||||
| Money market funds | $ | 48,739 | $ | — | $ | — | $ | 48,739 |
| Total assets | $ | 48,739 | $ | — | $ | — | $ | 48,739 |
| Liabilities | ||||||||
| Convertible Notes payable, noncurrent | $ | — | $ | — | $ | 123,000 | $ | 123,000 |
| Total liabilities | $ | — | $ | — | $ | 123,000 | $ | 123,000 |
| December 31, 2024 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Level 1 | Level 2 | Level 3 | Total | |||||
| Assets: | ||||||||
| Money market funds | $ | 65,000 | $ | — | $ | — | $ | 65,000 |
| Total assets | $ | 65,000 | $ | — | $ | — | $ | 65,000 |
| Liabilities | ||||||||
| Convertible Notes payable, noncurrent | $ | — | $ | — | $ | 107,600 | $ | 107,600 |
| Total liabilities | $ | — | $ | — | $ | 107,600 | $ | 107,600 |
Cash equivalents consist of money market funds, which were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy. The Convertible Notes payable are revalued at each remeasurement date using inputs that are generally unobservable and reflect management’s estimates of assumptions that market participants would use in pricing the liability, which represent a Level 3 measurement within the fair value hierarchy. For the three months ended March 31, 2025 and the period from June 18, 2024 (inception) to December 31, 2024, there were no transfers between Level 1, Level 2 and Level 3.
8
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
The following table presents the changes in the fair value of the Level 3 Convertible Notes payable (in thousands):
| Amounts | ||
|---|---|---|
| Balance as of December 31, 2024 | 107,600 | |
| Change in fair value of Convertible Notes payable | 15,400 | |
| Balance as of March 31, 2025 | $ | 123,000 |
The Convertible Notes payable in the table above consists of the fair value of an aggregate principal amount of $95.0 million, and a fair value adjustment of $28.0 million, which includes accrued interest of $7.5 million, in Convertible Notes which the Company issued and sold to certain investors. Each holder of Convertible Notes is expected to contribute the principal amount and all accrued interest under the applicable Convertible Note in exchange for the Company’s common stock or non-voting preferred stock in connection with a financing event under the Convertible Notes (see Note 5). The Company’s valuation of the Convertible Notes payable utilizes a scenario-based valuation analysis, which incorporated assumptions and estimates to value the Convertible Notes and a probability assessment of the achievement of the Next Equity Financing (as defined in the Convertible Notes). The Company assesses these assumptions and estimates on a quarterly basis as additional information impacting the assumptions is obtained.
The Convertible Notes were issued on July 24, 2024 and September 30, 2024. The following table presents the significant assumptions related to the change in fair value for the period ending March 31, 2025:
| Time from Convertible Notes issuance to Next Equity Financing (in years) | 0.58 - 0.77 | |
|---|---|---|
| Probability of Next Equity Financing | 90.0 | % |
| Time from Convertible Notes issuance to Next Equity Financing / prior to trade sale (in<br>years) | 0.75 - 0.93 | |
| Probability of Next Equity Financing / prior to trade sale | 10.0 | % |
| Interest rate | 12.0 | % |
| Discount rate | 67.0 | % |
4. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
| March 31,2025 | December 31,2024 | |||
|---|---|---|---|---|
| Accrued research and development contract costs | $ | 1,029 | $ | 2,791 |
| Accrued employee compensation and benefits | 729 | 804 | ||
| Accrued professional and consulting | 1,122 | 530 | ||
| $ | 2,880 | $ | 4,125 |
5. Convertible Notes Payable
In July 2024, the Company entered into the Purchase Agreement with a series of investors, pursuant to which the Company issued the Convertible Notes with an initial principal amount of $80.0 million (of which $20.0 million is from a related party). In September 2024, the Company received an additional $15.0 million in gross proceeds from issuing additional Convertible Notes to additional investors. Under the terms of the Notes, the principal amount and all accrued interest of the Convertible Notes would automatically convert into the Company’s common stock or preferred stock in connection with the closing of a Next Equity Financing or other events (e.g., a sale of substantially all Company assets, a merger, etc.). The Convertible Notes accrued interest at a rate of 12.0% per annum, compounded annually. All unpaid interest and principal are scheduled to mature on December 31, 2026 (the “Maturity Date”). Prepayment is not permitted without prior written consent of the majority of the holders of the Convertible Notes. The principal payment along with the accrued interest on each Convertible Note is due in full on the Maturity Date. As of March 31, 2025, the Company had outstanding borrowings of $95.0 million under its Convertible Notes.
9
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
In connection with the automatic conversions described above, the Convertible Notes were convertible into a number of shares of common stock equal to the quotient obtained by dividing the initial purchase price plus accrued and unpaid interest by the conversion price of the Convertible Notes, which is the product resulting from multiplying the price per share in the Next Equity Financing by 80%.
The Convertible Notes were recorded at the fair value of $95.0 million on the respective issuance dates and were remeasured to the fair value of $107.6 million as of December 31, 2024 and the fair value of $123.0 million at March 31, 2025. For the three months ended March 31, 2025, the change in fair value of $15.4 million, which includes accrued interest of $2.8 million, was recorded within other expense, net in the Company’s condensed consolidated statement of operations and comprehensive loss. There was less than $0.1 million of debt issuance cost incurred in connection with the Convertible Notes which was recognized in the financial statements for the period ended December 31, 2024.
6. Convertible Preferred Stock
On June 18, 2024, the Company issued 20,000,000 shares of the Convertible Preferred Stock to a related party, Fairmount Healthcare Fund II L.P., an affiliate fund of Fairmount, at a purchase price of $0.0001 per share for gross proceeds of less than $0.1 million.
Upon the issuance of the Convertible Preferred Stock, the Company assessed the embedded conversion and liquidation features of the securities as described below and determined that such features did not require the Company to separately account for these features as embedded derivatives.
As of March 31, 2025 and December 31, 2024, Convertible Preferred Stock consisted of the following (in thousands, except share amounts):
| March 31, 2025 and December 31,2024 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| PreferredStockAuthorized | PreferredStock IssuedandOutstanding | CarryingValue | LiquidationPreference | CommonStockIssuableUponConversion | ||||||
| Series Seed Preferred Stock | 20,000,000 | 20,000,000 | $ | 2 | $ | 2 | 2 | |||
| 20,000,000 | 20,000,000 | $ | 2 | $ | 2 | 2 |
The holders of the Convertible Preferred Stock have the following rights and preferences:
Voting
The holders of Convertible Preferred Stock are entitled to vote, together with the holders of the Company’s common stock, on all matters submitted to stockholders for a vote. Each holder of outstanding shares of Convertible Preferred Stock is entitled to the number of votes equal to the number of shares of common stock into which the shares of preferred stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. A majority vote of the holders of Convertible Preferred Stock is required to liquidate or dissolve the Company, amend the certificate of incorporation or bylaws in a manner that adversely affects the rights of the Convertible Preferred Stock, reclassify common stock or establish another class of capital stock (unless the same ranks junior to the Convertible Preferred Stock with respect to its rights), create shares that would rank senior to or authorize additional shares of Convertible Preferred Stock, declare a dividend or make a distribution.
In addition, the holders of shares of Convertible Preferred Stock are entitled to elect one director of the Company. The holders of shares of common stock and any other class or series of voting stock (including Convertible Preferred Stock), exclusively and voting together as a single class, are entitled to elect the balance of the total number of directors of the Company.
10
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
Conversion
Each share of Convertible Preferred Stock is convertible into common shares at the option of the holder, at any time, and without the payment of additional consideration by the holder. Additionally, in the event of a mandatory conversion, such as the Merger, each share of Convertible Preferred Stock will be automatically converted into shares of newly created non-voting preferred stock at the applicable conversion ratio then in effect upon (i) the closing of a firm-commitment underwritten public offering of the Company’s common stock at a price of at least $1.00 per share resulting in at least $50.0 million of gross proceeds to the Company, net of the underwriting discount and commissions, and (ii) the vote or written consent of the holders of a majority of the outstanding shares of preferred stock, voting as a single class. The rights, privileges, duties and obligations relating to the non-voting preferred stock are to be determined at the time of a mandatory conversion.
The conversion ratio of Convertible Preferred Stock is determined by dividing the original issue price by the conversion price in effect at the time of conversion. The original issue price is $0.0001 per share for Convertible Preferred Stock (in each case subject to appropriate adjustment in the event of any stock split, stock dividend, combination or other similar recapitalization and other adjustments as set forth in the Company’s certificate of incorporation, as amended and restated). The conversion price is $0.0001 per share for Convertible Preferred Stock. As of March 31, 2025, each outstanding share of Convertible Preferred Stock was convertible into common stock on a one-for-one basis.
Dividends
The Company may not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Company (other than dividends on shares of common stock payable in shares of common stock) unless the holders of the Convertible Preferred Stock then outstanding first receive, or simultaneously receive, a dividend on each outstanding share of Convertible Preferred Stock in an amount at least equal to (i) in the case of a dividend being distributed to common stock or any class or series that is convertible into common stock, the equivalent dividend on an as-converted basis or (ii) in the case of a dividend on any class or series that is not convertible into common stock, a dividend equal to a dividend rate on Convertible Preferred Stock calculated based on the respective original issue price of Convertible Preferred Stock of $0.0001 per share. Dividends are non-cumulative. As of March 31, 2025, no cash dividends had been declared or paid by the Company.
Liquidation
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or upon the occurrence of a Deemed Liquidation Event (as defined in the Company’s Certificate of Incorporation), the holders of shares of Convertible Preferred Stock then outstanding are entitled to be paid out of the assets or funds of the Company available for distribution to stockholders before any payment is made to the holders of common stock. The holders of Convertible Preferred Stock are entitled to an amount equal to the greater of (i) the applicable original issue price per share of the Convertible Preferred Stock, plus any declared but unpaid dividends thereon, or (ii) the amount per share that would have been payable had all shares of Convertible Preferred Stock been converted into common stock immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event. If upon any such liquidation event, the assets or funds of the Company available for distribution to stockholders are insufficient to pay the full amount to which they are entitled, then the holders of shares of Convertible Preferred Stock in preference to any distributions to common stock will share ratably in any distribution of the assets or funds available for distribution in proportion to the respective amounts which would otherwise be payable if it were paid in full.
Unless the holders of a majority in voting power of the then outstanding shares of Convertible Preferred Stock elect otherwise, a Deemed Liquidation Event shall include a merger or consolidation (other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation) or sale, lease, transfer, exclusive license or other disposition of all or substantially all of the Company’s assets.
Redemption
The Convertible Preferred Stock does not have redemption rights, except for the contingent redemption upon the occurrence of a Deemed Liquidation Event.
11
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
7. Common Stock
As of March 31, 2025, the Company has the authority to issue a total of 40,000,000 shares of common stock at a par value of $0.0001 per share. As of March 31, 2025, 5,000,000 shares of common stock were issued and outstanding and 819,672 RSAs were issued and outstanding. Both the shares of common stock and RSAs were issued at par value in exchange for nominal cash. Each share of common stock entitles the holder to one vote, together with the holders of Convertible Preferred Stock, on all matters submitted to the stockholders for a vote. The holders of common stock are entitled to receive dividends, if any, as declared by the Company’s board of directors (the “Board of Directors”), subject to the preferential dividend rights of the holders of Convertible Preferred Stock.
As of March 31, 2025, there were 32,585,509 shares of common stock reserved for issuance for the potential conversion of shares of Convertible Preferred Stock into common stock and the exercise of outstanding stock options for common stock under the 2024 Plan (as defined below).
8. Stock-Based Compensation
2024 Equity IncentivePlan
On June 18, 2024, the Board of Directors approved the 2024 Equity Incentive Plan (the “2024 Plan”), under which the Company may grant stock options, restricted stock awards, restricted stock units, or other stock-based awards to its employees, officers, directors, consultants, and advisors. The 2024 Plan is administered by the Board of Directors, or, at the discretion of the Board of Directors, by a committee of the Board of Directors. The exercise prices, vesting and other restrictions are determined at the discretion of the Board of Directors, or its committee, if so delegated. Stock options granted under the 2024 Plan generally vest over four years, subject to the participant’s continued service, and expire after ten years. As of March 31, 2025, the total number of shares of common stock reserved for issuance under the 2024 Plan was 12,783,695, with 198,186 shares of common stock available for future grants.
Stock Option Valuation
The fair value of each stock option grant is estimated on the grant date using the Black-Scholes option-pricing model. The Company has historically been a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. For stock options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” stock options. 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. The expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future.
The following table summarizes the weighted-average assumptions used in calculating the fair value of the awards for the three months ended March 31, 2025:
| Three months endedMarch 31, 2025 | |||
|---|---|---|---|
| Expected volatility | 95.5 | % | |
| Expected term (in years) | 6.1 | ||
| Risk-free interest rate | 4.5 | % | |
| Expected dividend yield | — | % |
12
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
Stock Options
The following table summarizes the stock option activity for the three months ended March 31, 2025:
| Number ofOptions | Weighted-AverageExercisePrice | Weighted-AverageRemainingContractualTerm(Years) | AggregateIntrinsicValue(in thousands) | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Balance as of December 31, 2024 | 3,791,419 | $ | 1.14 | 9.8 | $ | 10,993 | |||
| Granted | 8,820,790 | 3.80 | |||||||
| Exercised | — | — | |||||||
| Forfeited | (26,700 | ) | 3.28 | ||||||
| Outstanding at March 31, 2025 | 12,585,509 | $ | 3.00 | 9.7 | $ | 10,977 | |||
| Options vested and exercisable as of March 31, 2025 | 91,269 | $ | 3.59 | 9.8 | $ | 10 |
The weighted average grant-date fair value of stock options granted for the three months ended March 31, 2025 was $3.01. The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had an exercise price lower than the fair value of the Company’s common stock.
Restricted Stock Awards
On June 18, 2024, the Board of Directors issued a total of 819,672 RSAs outside of the 2024 Plan to an employee, a director, and a consultant at a price of $0.0001 per share, the par value of the common stock. Of the 819,672 RSAs issued on June 18, 2024, 136,612 RSAs were issued to a consultant in exchange for regulatory and strategic services provided to the Company and the issuance was determined to be a related party transaction (see Note 14). Such RSAs have service-based vesting conditions only and vest over a four-year period, during which time all unvested shares are subject to forfeiture by the Company in the event the holder’s service with the Company voluntarily or involuntarily terminates.
In September 2024, the Company cancelled 136,612 RSAs previously granted to a board member and concurrently regranted 136,612 RSAs to the board member at a nominal purchase price and a fair value of $0.31 per share.
The following table summarizes the RSA activity for the three months ended March 31, 2025:
| Number of RSAs | Weighted AverageGrant Date Fair Value | |||
|---|---|---|---|---|
| Unvested balance as of December 31, 2024 | 819,672 | $ | — | |
| Granted | — | — | ||
| Unvested balance as of March 31, 2025 | 819,672 | $ | — |
Parade Warrant Obligation
In July 2024, the Company entered into the Paragon Option Agreement (as defined below) with Paragon and Parade Biosciences Holding, LLC (“Parade”). Under the terms of the Paragon Option Agreement, Parade will be entitled to grants of warrants to purchase a number of shares equal to 1.00% of the then outstanding shares of the Company’s stock, on a fully diluted basis, on December 31, 2025 and December 31, 2026, at the fair market value determined by the Board of Directors (the “Parade Warrant Obligation”). The grant dates for the issuance of warrants are expected to be December 31, 2025 and December 31, 2026, as all terms of the award, including number of shares and exercise price, will be known by all parties. Parade’s research and discovery related activities has a service inception period for the grant preceding the grant date, with the full award being vested as of the grant date with no post-grant date service requirement. As of March 31, 2025, the estimated fair value of warrants to be granted on December 31, 2025 was $4.3 million. For the three months ended March 31, 2025, $1.0 million was recognized as stock-based compensation expense related to the Parade Warrant Obligation. The warrants expected to be granted to Parade are liability-classified and after the initial recognition, the liability is adjusted to fair value at the end of each reporting period, with changes in fair value recorded in the condensed consolidated statement of operations and comprehensive loss.
13
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
The following table summarizes the assumptions used in calculating the fair value of the warrant obligation for the three months ended March 31, 2025 and for the period June 18 (inception) to December 31, 2024:
| As of March 31, 2025 | As of December 31, 2024 | |||||
|---|---|---|---|---|---|---|
| Expected volatility | 93.5 | % | 93.3 | % | ||
| Expected term (in years) | 10.0 | 10.0 | ||||
| Risk-free interest rate | 4.2 | % | 4.6 | % | ||
| Expected dividend yield | — | % | — | % |
Stock-Based Compensation Expense
The following table summarizes the classification of the Company’s stock-based compensation expense in the condensed consolidated statement of operations and comprehensive loss (in thousands):
| Three months endedMarch 31, 2025 | ||
|---|---|---|
| Research and development | $ | 1,666 |
| General and administrative | 757 | |
| Total | $ | 2,423 |
As of March 31, 2025, total unrecognized compensation cost related to the unvested stock options was $28.3 million, which is expected to be recognized over a weighted average period of approximately 3.7 years. As of March 31, 2025, total unrecognized compensation cost related to the unvested RSAs was less than less than $0.1 million, which is expected to be recognized over a weighted average period of 3.3 years. As of March 31, 2025, the unrecognized compensation cost related to the Parade Warrant Obligation was $2.2 million, which is expected to be recognized over a weighted average period of 0.8 years.
The following table summarizes the award types of the Company’s stock-based compensation expense in the condensed consolidated statement of operations and comprehensive loss (in thousands):
| Three months endedMarch 31, 2025 | ||
|---|---|---|
| Parade warrant obligation | $ | 965 |
| Stock options | 1,458 | |
| Total | $ | 2,423 |
9. Income Taxes
The Company records a provision or benefit for income taxes on pre-tax income or loss based on its estimated effective tax rate for the year. Given the Company’s uncertainty regarding future taxable income, the Company maintains a full valuation allowance on its deferred tax assets. There is no income tax expense recorded for the three months ended March 31, 2025.
10. Paragon Option Agreement
Paragon Option Agreement
In July 2024, the Company entered into an Antibody Discovery and Option Agreement with Paragon and Parade (the “Paragon Option Agreement”) for the selected target, APRIL, for the Company’s initial research program, JADE-001. The Paragon Option Agreement, was amended in September 2024 to add two additional undisclosed targets for additional research programs named JADE-002 and JADE-003. Under the Paragon Option Agreement, Jade has the exclusive option (an “Option”), on a Research Program-by-Research Program (as defined
14
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
below) basis, to enter into a separate agreement with Paragon consistent with a set of terms that are pre-negotiated and attached to the Paragon Option Agreement as an exhibit (a “License Agreement”). If the Company exercises its options and finalizes the related license agreement, it will be required to make non-refundable milestone payments to Paragon of up to $12.0 million under each respective agreement upon the achievement of certain clinical development milestones, up to $10.0 million under each respective agreement upon the achievement of certain regulatory milestones, as well as tiered royalty payments in the low-to-mid single-digits beginning on the first commercial sale of each developed product. From time to time, the Company can choose to add additional targets to the Paragon Option Agreement by mutual agreement with Paragon.
Under the terms of the Paragon Option Agreement, Paragon agreed to perform certain research activities to discover, generate, identify, and characterize one or more antibody candidates directed to certain mutually agreed therapeutic targets of interest to Jade (each, a “Research Program”). The Option with respect to each Research Program is exercisable at Jade’s sole discretion at any time during the period beginning on the initiation of activities under the associated Research Program and ending a specified number of days following the delivery of the data package from Paragon related to the results of the Research Program (an “Option Period”). The Paragon Option Agreement requires Jade, Paragon, and Parade to develop a research plan for each target that includes design, modeling, synthesis, evaluation, and other mutually agreed activities (each, a “Research Plan”), which activities may include performing preclinical studies. Paragon will perform the activities set forth in each Research Plan on the timelines set forth in such Research Plan and in compliance with a mutually agreed budget. Each Research Program will be overseen and coordinated by a joint development committee consisting of two employees from Jade and two employees from Paragon, with Jade and Paragon each having one vote with respect to decisions of the committee. When Paragon and Parade have produced an antibody against a selected target, and upon the completion of each Research Program, Paragon and Parade will deliver to Jade a data package that includes sequence information for all then-existing antibodies and information directed to such target. Jade, Paragon and Parade have developed a Research Plan for JADE-001 consistent with the foregoing, and Paragon and Parade have delivered an antibody against APRIL in accordance with such Research Plan.
Any License Agreement entered into with respect to a given Research Program is expected to be consistent with pre-negotiated terms attached to the Paragon Option Agreement and shall contain the same milestone payment obligations as the Paragon Option Agreement, provided that any milestone set in the Paragon Option Agreement that has not yet been achieved and is duplicated in such License Agreement shall no longer be achievable and payable under the terms of the Paragon Option Agreement and shall only be achievable under the terms of the License Agreement. For the avoidance of doubt, if a milestone is achieved and paid by Jade pursuant to the Paragon Option Agreement for a certain Research Program, then there shall be no milestone payment due for the achievement of such milestone under a subsequently executed License Agreement for such Research Program. Further, under a License Agreement, Jade would also be required to make royalty payments to Paragon in the low single-digit percentage range based on net sales of products, subject to certain reductions. The royalty term will terminate on a product-by-product and country-by-country basis upon the later of the expiration of the last-to-expire valid claim within the relevant patent rights or the twelfth anniversary of the first commercial sale of such product in such country.
Unless terminated earlier, the Paragon Option Agreement shall continue in force on a Research Program-by-Research Program basis until the later of: (i) the end of the Option Period for such Research Program, as applicable, if such Option is not exercised by the Company; (ii) if the Company exercises its Option with respect to a Research Program, but the parties are unable to finalize and execute a License Agreement within 30 days, the expiration of such 30-day period (subject to any mutually agreed extension of such period); and (iii) the expiration of the applicable Research Term (as defined under the Paragon Option Agreement). The Company may terminate the Paragon Option Agreement or any Research Program at any time for any or no reason upon 30 days’ prior written notice to Paragon, provided that the Company must pay certain unpaid fees due to Paragon upon such termination, as well as any non-cancellable obligations reasonably incurred by Paragon in connection with its activities under any terminated Research Program. Paragon may terminate the Paragon Option Agreement or a Research Program immediately upon written notice to the Company if, as a result of any action or failure to act by the Company or its affiliates, such Research Program or all material activities under the applicable Research Plan are suspended, discontinued or otherwise delayed for a certain consecutive number of months. Each party has the right to terminate the Paragon Option Agreement or any Research Program upon (i) 30 days’ prior written notice of the other party’s material breach that remains uncured for the 30-day period and (ii) the other party’s bankruptcy.
15
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
Under the Paragon Option Agreement, the Company is responsible for any additional development costs incurred by Paragon, which from January 1, 2025 to March 31, 2025 totaled $1.4 million, of which $1.3 million was recognized as research and development expense in the Company’s condensed consolidated statement of operations and comprehensive loss during the three months ended March 31, 2025. A total of $1.4 million related to APRIL remains in the Company’s related party accrued expenses and other current liabilities balance as of March 31, 2025.
Additionally, the Company is responsible to reimburse Paragon for development costs related to JADE-002 which from January 1, 2025 to March 31, 2025 totaled $3.3 million and was recognized as research and development expense in the Company’s condensed consolidated statement of operations and comprehensive loss during the three months ended March 31, 2025. The Company is also obligated to pay Paragon $1.5 million following the nomination of a development candidate for JADE-002 which occurred in March 2025. A total of $4.8 million related to JADE-002 remains in the Company’s related party accrued expenses and other current liabilities balance, as of March 31, 2025. The Company is also responsible for any subsequent development costs related to JADE-002.
The Company is also obligated to reimburse Paragon for development costs related to JADE-003 for the period of January 1, 2025 to March 31, 2025 totaling $0.7 million relating to research and development costs, as well as for subsequent development costs related to JADE-003. These amounts were recognized as research and development expense in the Company’s condensed consolidated statement of operations and comprehensive loss during the period from January 1, 2025 to March 31, 2025. An amount of $0.7 million is included in related party accrued expenses and other current liabilities as of March 31, 2025.
Additionally, as part of the Paragon Option Agreement, on each of December 31, 2025 and December 31, 2026, Jade will grant Parade warrants to purchase a number of shares equal to 1.00% of Jade’s outstanding capital stock as of the date of the grant on a fully-diluted basis, with an exercise price equal to the fair market value of the underlying shares of Jade common stock on each respective grant date. Parade is an entity formed by Paragon as a vehicle to hold equity in Jade in order to share profits with certain employees of Paragon and will not perform any substantive role under the Paragon Option Agreement other than to receive such warrants. The warrants are liability-classified and after the initial recognition, the liability is adjusted to fair value at the end of each reporting period, with changes in fair value recorded in the condensed consolidated statement of operations and comprehensive loss (see Note 8).
The Company expenses the fees incurred under the Paragon Option Agreement as the associated costs are incurred when the underlying services are rendered. Such amounts are classified within research and development expenses in the accompanying condensed consolidated statement of operations and comprehensive loss.
The Company concluded that the rights obtained under the Paragon Option Agreement represent an asset acquisition whereby the underlying assets comprise in-process research and development assets with no alternative future use. The Paragon Option Agreement did not qualify as a business combination because substantially all of the fair value of the assets acquired was concentrated in the exclusive license options, which represent a group of similar identifiable assets. The research initiation fees represent a one-time cost on a research program-by research program basis for accessing research services or resources with benefits that are expected to be consumed in the near term, therefore the amounts paid are expensed as part of research and development costs immediately. Amounts paid as reimbursements of on-going development cost, monthly development cost fee and additional development expenses incurred by Paragon due to work completed for selected targets prior to the effective date of the Paragon Option Agreement and Amendment to the Paragon Option Agreement that associated with services being rendered under the related Research Programs is recognized as research and development expense when incurred.
JADE-001 License Agreement
On October 30, 2024, Jade entered into a License Agreement with Paragon for all antibodies discovered, generated, identified or characterized by Paragon in the course of performing the JADE-001 research program directed to APRIL, antibodies created by Jade derived from the licensed antibodies and directed to APRIL, and products that comprise the foregoing (the “JADE-001 License Agreement”) consistent with the pre-negotiated terms agreed to upon execution of the Paragon Option Agreement, pursuant to which Paragon granted Jade a royalty-bearing, worldwide, exclusive and sublicensable license with respect to certain inventions, patent rights, sequence information and other intellectual property rights related to monospecific antibodies directed at the APRIL target (the “Licensed Antibody Technology”) to use, make, sell, import, export and otherwise exploit certain monospecific
16
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
antibodies and products targeting APRIL in the field of prophylaxis, palliation, treatment and diagnosis of human disease and disorders in all therapeutic areas (the “field”) and worldwide (the “territory”). Under the terms of the JADE-001 License Agreement, Jade is obligated to pay Paragon up to $22.0 million based on specific development and regulatory milestones, including a $1.5 million fee for nomination of a development candidate, which was paid in December 2024, and a further milestone payment of $2.5 million upon the first dosing of a human patient in a Phase 1 trial. Following the execution of the JADE-001 License Agreement, Jade is solely responsible for, and has sole authority and control over, all aspects of the development, manufacturing and commercialization of product candidates under the JADE-001 program, including regulatory strategy, communications, filings and activities (including clinical trials). Paragon also granted Jade a royalty-bearing, worldwide, non-exclusive, sublicensable right and license under the Licensed Antibody Technology to use, make, sell, import, export, or otherwise exploit certain multispecific antibodies and products targeting APRIL. In addition, the following summarizes other key terms of the JADE-001 License Agreement:
| • | Paragon will not conduct any new campaigns that generate APRIL monospecific antibodies in the field for at least<br>five years. |
|---|---|
| • | Paragon may pursue the development and commercialization of multispecific antibodies and products directed at the<br>APRIL target in the field and in the territory, and Jade has a right of first negotiation for any such multispecific antibodies and products proposed by Paragon for a period of five years from the execution of the<br>JADE-001 License Agreement. If Jade does not exercise its right of first negotiation, or if the parties are unable to agree on a definitive agreement, Paragon may proceed without any obligations to Jade with<br>respect to the right of first negotiation, and Jade’s non-exclusive license will exclude any multispecific antibodies and products that were the subject of the right of first negotiation.<br> |
| --- | --- |
| • | Jade will pay Paragon a<br>low-to-mid single-digit percentage royalty based on annual net sales of the products in the field and in the territory, and a mid single-digit percentage royalty based<br>on annual net sales of the multispecific products in the field and in the territory, subject to a 30% reduction if there is no valid patent covering the product in the country. |
| --- | --- |
| • | The royalty term ends on the later of (i) the twelfth anniversary of such date or (ii) the expiration<br>of the last-to- expire valid patent covering the product or the multispecific product in the country at issue. |
| --- | --- |
| • | The JADE-001 License Agreement may be terminated on 60 days’ notice<br>by Jade, upon material breach without cure; and to the extent permitted by law, upon a party’s insolvency or bankruptcy. |
| --- | --- |
| • | With respect to patents licensed to Jade under the JADE-001 License<br>Agreement that have been filed as of the effective date of the JADE-001 License Agreement, Jade will control the preparing, filing, prosecuting and maintenance of such patents. With respect to patents filed<br>after the effective date of the JADE-001 License Agreement, Paragon will control the preparing, filing, prosecuting and maintaining of such patents until the final deliverable for the relevant research program<br>is delivered to Jade, after which Jade will control the preparing, filing, prosecuting and maintain of such patents. |
| --- | --- |
| • | Jade shall have the right to grant sublicenses under the JADE-001 License<br>Agreement, provided that (i) any sublicense agreement is consistent with all relevant terms, conditions and restrictions of the JADE-001 License Agreement, (ii) Jade provides Paragon with a copy of<br>each sublicense agreement and any amendments thereto within 30 days following execution thereof and (iii) Jade remains responsible for all payments and obligations due under the JADE-001 License<br>Agreement. |
| --- | --- |
| • | On a product-by-product basis,<br>Jade is obligated to pay sublicensing fees of up to approximately $20.1 million, mainly upon the achievement of commercial milestones. Jade has the option, during specified periods, to pay a<br>non-refundable lump-sum buyout payment on a product-by-product basis to extinguish future<br>milestone payment obligations with respect to such product. |
| --- | --- |
In December 2024, Jade completed its selection of its development candidate for the JADE-001 program, which is called JADE101, and Jade paid Paragon the related $1.5 million milestone payment and recorded the payment as research and development expense. In December 2024, Jade recorded a $0.1 million nonrefundable sublicensee fee under the JADE-001 License Agreement as research and development expense.
17
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
Cell Line License Agreement
On February 3, 2025, the Company entered into an amended and restated cell line license agreement (the “Cell Line License Agreement”) with WuXi Biologics Ireland Limited (“WuXi Biologics Ireland”). Under the Cell Line License Agreement, the Company received a non-exclusive, worldwide, sublicensable license to certain of WuXi Biologics Ireland’s patent rights, know-how, cell line, biological materials and media and feeds to develop, manufacture, have manufactured, make, have made, import, sell, keep, commercialize and otherwise deal in, use and exploit certain therapeutic products produced through the use of the cell lines licensed by WuXi Biologics Ireland under the Cell Line License Agreement (the “WuXi Biologics Ireland Licensed Products”). JADE-001 is, and Jade anticipates that any future product candidates under the JADE-001 and JADE-002 programs will be, manufactured using a cell line licensed under the Cell Line License Agreement. A cell line has not yet been selected for the JADE-003 program.
In consideration for the license, the Company incurred a non-refundable license fee of $0.2 million in November 2024 which was recorded as research and development expense, and may incur additional non-refundable license fees up to $0.1 million. Additionally, if the Company manufactures all of its commercial supplies of bulk drug product for a particular product with a manufacturer other than WuXi Biologics Ireland or its affiliates, it is required to make royalty payments to WuXi Biologics Ireland in an amount equal to a fraction of a single digit percentage of global net sales of the WuXi Biologics Ireland Licensed Products manufactured by a third-party manufacturer (the “Royalty”). If the Company manufactures part of its commercial supplies of the WuXi Biologics Ireland Licensed Products with WuXi Biologics Ireland or its affiliates, then the Royalty will be reduced accordingly on a pro rata basis. The Company has the option, at any time, to pay WuXi Biologics Ireland a non-refundable lump-sum royalty buyout payment on a drug product-by-drug product basis to extinguish future Royalty obligations with respect to such drug product.
The Cell Line License Agreement will continue indefinitely unless terminated (i) by the Company upon six months’ prior written notice and its payment of all undisputed amounts due to WuXi Biologics Ireland through the effective date of termination, (ii) by either party for a material breach by the other party that remains uncured for 60 days after written notice, (iii) by WuXi Biologics Ireland if the Company fails to make a payment and such failure continues for 30 days after receiving notice of such failure, or (iv) by either party upon the other party’s bankruptcy.
11. Leases
In February 2025, the Company entered into a noncancelable operating lease agreement for office space located in Vancouver, Canada. The lease commencement date is March 1, 2025, with an initial term of 67 months. The rent commencement date is October 1, 2025. The total lease payment is expected to be $1.2 million including $0.4 million of interest payments over the initial lease term. Lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate when measuring operating lease liabilities as discount rates were not implicit or readily determinable.
As of March 31, 2025, the Company had $0.8 million of operating lease ROU asset and long term lease liability of $0.8 million on its condensed consolidated balance sheets. As of March 31, 2025, the operating lease arrangement had a remaining lease term of 66 months and a discount rate of 14.24%. For the three months ended March 31, 2025, the Company recorded operating lease expense of less than $0.1 million in general and administrative expenses in its condensed consolidated statements of operations and comprehensive loss. No lease payments were made during the period ended March 31, 2025.
18
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
As of March 31, 2025, the total remaining operating lease payments included in the measurement of lease liabilities was as follows (in thousands):
| Period ended December 31, | |||
|---|---|---|---|
| 2025 (remaining 9 months) | $ | 56 | |
| 2026 | 226 | ||
| 2027 | 231 | ||
| 2028 | 236 | ||
| 2029 | 240 | ||
| Thereafter | 183 | ||
| Total maturities | $ | 1,172 | |
| Less: Imputed interest | (389 | ) | |
| Total present value of operating lease liability | $ | 783 |
12. Commitments and Contingencies
Indemnification Agreements
In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with each of its directors and executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or executive officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not aware of any indemnification arrangements that could have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of March 31, 2025.
Legal Proceedings
From time to time, the Company may become involved in legal proceedings or other litigation relating to claims arising in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. Significant judgment is required to determine both probability and estimated exposure amount. Legal fees and other costs associated with such proceedings are expensed as incurred. As of March 31, 2025, the Company was not a party to any material legal proceedings or claims.
13. Net Loss per Share
Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):
| Three Months EndedMarch 31, 2025 | |||
|---|---|---|---|
| Numerator: | |||
| Net Loss attributable to common stockholders | (38,169 | ) | |
| Denominator | |||
| Weighted-average shares used in computing net loss per share attributable to common stockholders,<br>basic and diluted | 3,155,500 | ||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (12.10 | ) |
In accordance with ASC 260, Earnings Per Share, the Company recast its basic and diluted earnings per share computations for the effect of the exchange ratio of 0.6311 on its outstanding common stock during the three months ended March 31, 2025 resulting from the close of the Merger which occurred on April 28, 2025.
19
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
For the computation of basic net loss per share attributable to common stockholders, the amount of weighted-average common shares outstanding excludes all shares of unvested restricted common stock as such shares are not considered outstanding for accounting purposes until vested.
The Company’s potentially dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded potentially dilutive securities from the computation of diluted net loss per share attributable to common stockholders for the period presented because including them would have had an anti-dilutive effect:
| Three Months EndedMarch 31, 2025 | ||
|---|---|---|
| Convertible preferred stock (as converted to common stock) | 20,000,000 | |
| Unvested RSAs | 819,672 | |
| Stock options to purchase common stock | 12,585,509 | |
| 33,405,181 |
14. Related Party Transactions
On June 18, 2024, the Board of Directors issued 136,612 RSAs to a consultant in exchange for regulatory and strategic services provided to the Company. The consultant is an employee of Fairmount, which is a related party of the Company.
Paragon and Parade each currently beneficially own more than 5% of the Company’s capital stock through their respective common stock holdings. For the three months ended March 31, 2025, the Company recognized $7.8 million of expenses, as research and development expense in the Company’s condensed consolidated statement of operations and comprehensive loss, in connection with services provided by Paragon and Parade under the Paragon Option Agreement and JADE-001 License Agreement. For the three months ended March 31, 2025, the Company recognized $0.1 million of expenses, recognized as general and administrative expense in the Company’s condensed consolidated statement of operations and comprehensive loss, in connection with services provided by Paragon and Parade under the Paragon Option Agreement. As of March 31, 2025, the Company had $6.9 million in related party accrued expenses pertaining to services provided by Paragon and Parade under the Paragon Option Agreement and reimbursements of legal and intellectual property-related fees on its condensed consolidated balance sheets. In addition, under the terms of the Paragon Option Agreement, Parade will be entitled to grants of warrants to purchase a number of shares equal to 1.00% of outstanding shares of the Company’s common stock, on a fully diluted basis, as of the date of the grants (see Note 8). The Company exercised its option for JADE-001 in October 2024. Under the terms of the JADE-001 License Agreement, Jade is obligated to pay Paragon up to $22.0 million based on specific development and regulatory milestones, including a $1.5 million fee for nomination of a development candidate, which was paid in December 2024, and a further milestone payment of $2.5 million upon the first dosing of a human patient in a Phase 1 trial. If the Company exercises its options for JADE-002 and JADE-003, it will be required to make non-refundable milestone payments to Paragon of up to $12.0 million under each respective agreement upon the achievement of certain clinical development milestones, up to $10.0 million under each respective agreement upon the achievement of certain regulatory milestones, as well as tiered royalty payments in the low-to-mid single-digits beginning on the first commercial sale of each product developed.
Fairmount beneficially owns more than 5% of the Company’s capital, currently has two representatives appointed to the Board of Directors, and beneficially owns more than 5% of Paragon. In June 2024, the Company issued and sold an aggregate of 20,000,000 shares of Convertible Preferred Stock to Fairmount, at a purchase price of $0.0001 per share, for gross proceeds of less than $0.1 million (see Note 6). In July 2024, Fairmount entered into the Purchase Agreement with the Company and holds a Convertible Note with an initial principal amount of $20.0 million (see Note 5).
20
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
The following is a summary of related party accrued expenses and other current liabilities (in thousands):
| March 31,2025 | December 31,2024 | |||
|---|---|---|---|---|
| Reimbursable fees under the terms of the Paragon Option Agreement | $ | 6,820 | $ | 5,430 |
| Paragon reimbursable legal fees | 92 | 74 | ||
| $ | 6,912 | $ | 5,504 |
15. Segment Reporting
The Company has one reportable segment relating to the research and development of its research programs, JADE-001, JADE-002, and JADE-003. The Company’s CODM, its Chief Executive Officer, manages the Company’s operations on a consolidated basis and uses consolidated net loss for the allocation of resources and the assessment of performance. Although the Company’s financial reporting package that is reviewed and approved by the CODM disaggregates significant expenses such as program-level external research and development costs, personnel costs, including stock-based compensation expense, and professional and consulting fees, all decisions made by the CODM are based upon reviewing operating metrics and performance indications at the Company-wide consolidated level and consolidated net loss. The CODM uses consolidated net loss to evaluate loss generated from the Company’s business activities in deciding how to allocate company resources and in monitoring budget versus actual results. Assets are also managed on a Company-wide consolidated basis.
The table below is a summary of the significant expenses categories regularly provided to the CODM (in thousands):
| Three Months EndedMarch 31, 2025 | ||
|---|---|---|
| Operating expenses: | ||
| JADE-001 external research and development costs | $ | 9,767 |
| JADE-002 external research and development costs | 5,154 | |
| JADE-003 external research and development costs | 733 | |
| Research and development personnel-related costs (including stock-based compensation) | 3,952 | |
| Other research and development costs | 417 | |
| General and administrative personnel-related costs (including stock-based compensation) | 1,713 | |
| Professional and consulting fees | 1,493 | |
| Other general and administrative costs | 155 | |
| Total operating expenses | $ | 23,384 |
16. Subsequent Events
The Company has evaluated events and transactions occurring subsequent to March 31, 2025 through May 14, 2025, the date at which the condensed consolidated financial statements were issued.
Reverse Recapitalization andPre-Closing Financing
On April 28, 2025, the Company completed the Merger with Aerovate in accordance with terms of the Merger Agreement pursuant to which, among other matters, Merger Sub I merged with and into the Company, with the Company surviving as a wholly owned subsidiary of Aerovate and the surviving corporation of the First Merger, and, immediately following the First Merger and as part of the same overall transaction, the Company merged with
21
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued
(unaudited)
and into Merger Sub II, with Merger Sub II being the surviving entity of the Second Merger. Merger Sub II changed its corporate name to “Jade Biosciences, LLC” and Aerovate changed its name to “Jade Biosciences, Inc.” Subsequently, Jade Biosciences, LLC merged with and into the Combined Company, with the Combined Company surviving the merger. The Combined Company is led by pre-Merger Jade’s management team and remains focused on developing differentiated biologic therapies for patients living with autoimmune diseases.
At the First Effective Time, upon the terms and subject to the conditions set forth in the Merger Agreement, (i) each then-outstanding share of Jade common stock (including shares of Jade common stock issued in connection with the Jade Pre-Closing Financing) was converted into the right to receive a number of shares of Aerovate common stock equal to the Exchange Ratio, (ii) each then-outstanding share of Convertible Preferred Stock was converted into the right to receive a number of shares of Aerovate Series A Non-voting Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), which are each convertible into 1,000 shares of Aerovate common stock, equal to the Exchange Ratio divided by 1,000, (iii) each then-outstanding option to purchase Jade common stock was assumed by Aerovate and was converted into an option to purchase shares of Aerovate common stock, and (iv) each then-outstanding pre-funded warrant to purchase shares of Jade common stock was converted into a pre-funded warrant to purchase shares of Aerovate common stock.
The Exchange Ratio is calculated as 0.6311 shares of Aerovate common stock for each share of Jade common stock (and 0.0006311 shares of Series A Preferred Stock for each share of Convertible Preferred Stock) on the Closing Date, which gives effect to the Reverse Stock Split. After the closing of the Merger, former Jade stockholders immediately before the First Effective Time, including those that purchased shares and pre-funded warrants in the Jade Pre-Closing Financing, own approximately 98.6% of the outstanding common stock of the Combined Company and the stockholders of Aerovate immediately before the First Effective Time own 1.4% of the outstanding common stock of the Combined Company, which give effect to (a) Aerovate’s Net Cash (as defined in the Merger Agreement) as of the closing being approximately $0, (b) the Jade Pre-Closing Financing for an aggregate purchase price of approximately $300.0 million, which reflects the conversion of the previously issued $95.0 million of Convertible Notes, (c) a valuation for Aerovate equal to its Net Cash as of the business day immediately prior to the Closing Date, plus $8.0 million, and (d) a valuation for Jade equal to $175.0 million, in each case as further described in the Merger Agreement.
22
EX-99.2
Exhibit 99.2
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
On April 28, 2025, Caribbean Merger Sub I, Inc. merged with and into Jade Biosciences, Inc.(“Pre-Merger Jade”), with Pre-Merger Jade continuing as a wholly owned subsidiary of Aerovate Therapeutics, Inc. (“Aerovate”) and the survivingcorporation of the merger (the “First Merger”), and Pre-Merger Jade merged with and into Caribbean Merger Sub II, LLC (“Second Merger Sub”), with Second Merger Sub being the survivingentity of the merger (the “Second Merger” and, together with the First Merger, the “Merger”). In connection with the completion of the Merger, Second Merger Sub changed its corporate name to “Jade Biosciences OperatingCompany, LLC” and Aerovate changed its name to “Jade Biosciences, Inc.” (the “Company”) and Jade Biosciences Operating Company, LLC merged with and into the Company, with the Company surviving the Merger.
You should read the following discussion and analysis of our financial condition and results of operations together with the condensedconsolidated financial statements and the related notes thereto included as Exhibit 99.1 to the Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”)on May 14, 2025 (the “Current Report on Form 8-K”) of which this Exhibit 99.2 is a part, as well as our audited consolidated financial statements and the related notes theretobeginning on page F-22 of Aerovate’s Registration Statement on Form S-4 most recently amended on March 24, 2025 and declared effective on March 25, 2025(the “Registration Statement”). The following discussion contains forward-looking statements that reflect our current plans, forecasts, estimates and beliefs and involve risks and uncertainties. Our historical results are not necessarilyindicative of the results that may be expected for any period in the future. Our actual results, outcomes and the timing of events could differ materially from those discussed in the forward-looking statements. Forward-looking statements are nothistorical facts, reflect our current views with respect to future events, and apply only as of the date made. We do not intend, and undertake no obligation, to update these forward-looking statements, except as required by law. References to“we,” “us,” “our,” “Jade” or “the Company” refer to Jade Biosciences, Inc. and its consolidated subsidiaries after the Merger, unless context otherwise requires.
Overview
We are a biopharmaceutical company developing potentially differentiated biologic therapies for patients living with autoimmune diseases with the goal of improving upon the existing treatment paradigm through the delivery of improved dosing and convenience, a comparable safety profile, and potentially increased clinical activity. Our approach is to discover and efficiently develop biologics that address emerging targets supported by third-party clinical data and that overcome shortcomings of existing product candidates in development, such as potency, bioavailability, formulation, and pharmacokinetic properties. Our initial program, JADE-001, is targeting a cytokine called “A PRoliferation Inducing Ligand” (“APRIL”) that modulates plasma cell survival and immunoglobulin production. As part of the JADE-001 program, we are developing our lead candidate, JADE101, a monoclonal antibody targeting APRIL that we plan to initially develop for the treatment of IgA nephropathy, with initiation of a first-in-human clinical trial planned in the second half of 2025 and interim data expected in the first half of 2026. In addition to JADE-001, we are conducting pre-clinical research with respect to two other programs in serious, systemic autoimmune indications with high unmet need, JADE-002 and JADE-003.
Since our inception in June 2024, we have devoted substantially all of our resources to raising capital, organizing and staffing the company, business and scientific planning, conducting discovery and research activities, establishing arrangements with third parties, and providing general and administrative support for these operations. We do not have any programs approved for sale and have not generated any revenue from product sales. To date, we have funded our operations primarily with proceeds from the issuance of our Convertible Notes (as defined below), from which we received gross proceeds of $80.0 million in July 2024 and $15.0 million in September 2024 and with the proceeds from our Pre-Closing Financing (as defined in “Recent Developments” below).
We have incurred operating losses since inception. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of JADE101 and any future product candidates we may develop. We have generated net losses of $38.2 million for the three months ended March 31, 2025. As of March 31, 2025, we had an accumulated deficit of $85.1 million. We expect to continue to incur significantly increased expenses for the foreseeable future if and as we:
| • | advance our existing and future research and development and discovery-related development of our JADE-001, JADE-002 and JADE-003 programs, including potential expansion into additional indications; |
|---|---|
| • | seek and identify additional research programs and product candidates and initiate discovery related activities<br>and preclinical studies for those programs; |
| --- | --- |
| • | complete future preclinical studies for our pipeline; |
| --- | --- |
| • | pursue investigational new drug applications or comparable foreign applications that allow commencement of our<br>planned clinical trials or future clinical trials for any programs we may develop; |
| --- | --- |
| • | initiate enrollment and successfully complete clinical trials; |
| --- | --- |
| • | pursue positive results from our future clinical trials that support a finding of safety and effectiveness, an<br>acceptable risk-benefit profile in the intended populations and a competitive efficacy, safety and half-life profile; |
| --- | --- |
| • | hire research and development, clinical, manufacturing and commercial personnel; |
| --- | --- |
| • | add operational, financial and management information systems and personnel; |
| --- | --- |
| • | experience any delays, challenges, or other issues associated with the preclinical and clinical development of<br>our programs, including with respect to our regulatory strategies; |
| --- | --- |
| • | develop, maintain and enhance a sustainable, scalable, reproducible and transferable clinical and<br>commercial-scale current good manufacturing practices (“cGMP”) capabilities through a third-party or our own manufacturing facility for the programs we may develop; |
| --- | --- |
| • | seek, obtain and maintain regulatory approvals for any product candidates for which we successfully complete<br>clinical trials; |
| --- | --- |
| • | ultimately establish a sales, marketing and distribution infrastructure to commercialize any programs for which<br>we may obtain regulatory approval; |
| --- | --- |
| • | generate revenue from commercial sales of product candidates for which we receive regulatory approval, if any;<br> |
| --- | --- |
| • | maintain safety, tolerability and efficacy profile of any product we may develop in additional indications<br>following approval in one indication; |
| --- | --- |
| • | maintain, expand, enforce, defend and protect our intellectual property portfolio and other intellectual property<br>protection or regulatory exclusivity for any products we may develop and defend any intellectual property-related claims; |
| --- | --- |
| • | further acquire or in-licenses product candidates or programs,<br>intellectual property and technologies; |
| --- | --- |
| • | maintain our current collaboration and establish and maintain any future collaborations, including making<br>milestone, royalty or other payments thereunder; and |
| --- | --- |
| • | incur additional costs of operating as a public company, including increased costs of audit, legal, regulatory<br>and tax-related services associated with maintaining compliance with an exchange listing and SEC requirements, director and officer insurance premiums and investor and public relations costs.<br> |
| --- | --- |
Any changes in the outcome of any of these variables with respect to the development of programs that we may identify could mean a significant change in the costs and timing associated with the development of such programs. For example, if the U.S. Food and Drug Administration or another comparable regulatory authority were to require us to conduct clinical trials beyond those that we currently anticipate will be required to complete clinical development and obtain regulatory approval of one or more product candidates, or if we experience significant delays in our preclinical studies or clinical trials, we would be required to expend significant additional financial resources and time to advance and complete clinical development. We may never obtain regulatory approval for any of our product candidates.
We will not generate revenue from product sales unless and until we successfully initiate and complete clinical development and obtain regulatory approval for any product candidates. If we obtain regulatory approval for any of our product candidates and do not enter into a commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, manufacturing, marketing, and distribution.
As a result of all the foregoing, we expect to need substantial additional funding to support our continued operations and growth strategy. Until such a time we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our programs.
Because of the numerous risks associated with product development, we are unable to accurately predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
As of March 31, 2025, we had cash and cash equivalents of $49.9 million. We expect that our existing cash and cash equivalents, together with the proceeds from the Pre-Closing Financing (as defined in “Recent Developments” below), will be sufficient to fund our operating plans for at least twelve months from the date of our condensed consolidated financial statements for the three months ended March 31, 2025 were issued. We expect to continue to incur substantial losses for the foreseeable future, and our transition to profitability will depend upon successful development, approval and commercialization of our product candidates and upon achievement of sufficient revenues to support our cost structure. See “— Liquidity and Capital Resources”.
The Merger and Pre-Closing Financing
On October 30, 2024, Aerovate and Pre-Merger Jade entered into an Agreement and Plan of Merger (the “Merger Agreement”). On April 28, 2025 (the “Closing Date”), the parties completed the Merger in accordance with the terms of the Merger Agreement, pursuant to which, among other matters, Caribbean Merger Sub I, a Delaware corporation and a wholly owned subsidiary of Aerovate, merged with and into Pre-Merger Jade, with Pre-Merger Jade continuing as a wholly owned subsidiary of Aerovate and the surviving corporation of the First Merger, and Pre-Merger Jade merged with and into Second Merger Sub, with Second Merger Sub being the surviving entity of the Second Merger continuing as a wholly owned subsidiary of Aerovate. In connection with the Merger, Aerovate changed its name to “Jade Biosciences, Inc.” Subsequently, Jade Biosciences, LLC merged with and into Jade Biosciences, Inc. The Company is led by Pre-Merger Jade’s management team and remains focused on developing differentiated biologic therapies for patients living with autoimmune diseases. Immediately prior to the completion of the Merger, Pre-Merger Jade issued and sold, and certain new and existing investors purchased, 27,734,991 shares of common stock of Pre-Merger Jade and 7,776,247 Pre-Merger Jade pre-funded warrants, exercisable for 7,776,247 shares of Pre-Merger Jade common stock, at a purchase price of $5.9407 per share or a purchase price of $5.9406 per pre-funded warrant , for an aggregate amount of $334.2 million, which includes $95.0 million of proceeds previously received from the issuance of Convertible Notes (as defined herein) and accrued interest of $7.5 million on such Convertible Notes and the related conversion of the Convertible Notes into 21,745,501 shares of Jade common stock (the “Pre-Closing Financing” and, together with the Merger, the “Transactions”).
In accordance with an exchange ratio determined in accordance with the terms of the Merger Agreement (the “Exchange Ratio”), at the effective time of the First Merger (the “First Effective Time”), (i) each share of Pre-Merger Jade common stock outstanding, including shares of Pre-Merger Jade common stock issued in the Pre-Closing Financing, was converted into the right to receive a number of shares of Aerovate common stock equal to the Exchange Ratio, (ii) each share of Pre-Merger Jade restricted stock was converted into the right to receive a number of shares of Aerovate common stock equal to the Exchange Ratio, which were subject to the same vesting provisions as those immediately prior to the Merger, (iii) each share of Pre-Merger Jade Series Seed Convertible Preferred Stock, par value $0.0001 per share (the “Jade Preferred Stock”) was converted into the right to receive a number of shares of Aerovate Series A Non-Voting Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), which are each convertible into 1,000 shares of Aerovate common stock, equal to the Exchange Ratio divided by 1,000 (iv) each option to purchase shares of Pre-Merger Jade common stock was converted into the right to receive an option to purchase shares of Aerovate common stock equal to the Exchange Ratio, which options are subject to the same vesting provisions as those immediately prior to the Merger, and (v) each pre-funded warrant to purchase shares of Pre-Merger Jade common stock issued in the Pre-Closing Financing was converted into the right to receive a number of pre-funded warrants to purchase shares of Aerovate common stock equal to the Exchange Ratio.
The Exchange Ratio is calculated as 0.6311 shares of Aerovate common stock for each share of Pre-Merger Jade common stock (and 0.0006311 shares of Series A Preferred Stock for each share of Jade Preferred Stock) on the Closing Date, which gives effect to a one-for-35 reverse stock split of Aerovate common shares immediately prior to the Merger. After the Merger, Pre-Merger Jade stockholders immediately before the First Effective Time, including those purchasing shares and pre-funded warrants in the Pre-Closing Financing, own approximately 98.6% of the outstanding common stock of the Company, and Aerovate stockholders immediately before the First Effective Time own 1.4% of the outstanding common stock of the Company, which gives effect to (a) Aerovate’s Net Cash (as defined in the Merger Agreement) as of the closing of the Merger being approximately $0, (b) the Pre-Closing Financing for an aggregate purchase price of approximately $300.0 million, which reflects the conversion of the previously issued $95.0 million of Convertible Notes, (c) a valuation for Aerovate equal to its Net Cash (as defined in the Merger Agreement) as of the business day immediately prior to the Closing Date, plus $8.0 million, and (d) a valuation for Pre-Merger Jade equal to $175.0 million, in each case as further described in the Merger Agreement.
Impact of General Economic Risk Factors on Our Operations
Uncertainty in the global economy presents significant risks to our business. We are subject to continuing risks and uncertainties in connection with the current macroeconomic environment, including increases in inflation, fluctuating interest rates, new or increased tariffs and other barriers to trade, changes to fiscal and monetary policy or government budget dynamics (particularly in the pharmaceutical and biotech areas), recent bank failures, geopolitical factors, including the ongoing conflicts between Russia and Ukraine and in the Middle East and the responses thereto, and supply chain disruptions. While we are closely monitoring the impact of the current macroeconomic and geopolitical conditions on all aspects of our business, including the impacts on participants in any future clinical trials and our employees, suppliers, vendors and business partners and our future access to capital, the ultimate extent of the impact on our business remains highly uncertain and will depend on future developments and factors that continue to evolve. Most of these developments and factors are outside our control and could exist for an extended period of time. We will continue to evaluate the nature and extent of the potential impacts to our business, results of operations, liquidity and capital resources. For additional information, see the section titled “Risk Factors — Risks Related to Jade’s Business and Operations.”
Components of Results of Operations
Revenue
To date, we have not generated revenue from any sources, including product sales, and do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, we may generate revenue in the future from product sales or payments from future collaboration or license agreements that we may enter into with third parties, or any combination thereof. We cannot predict if, when, or to what extent we will generate revenue from the commercialization and sale of our product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates.
Operating Expenses
Our operating expenses consist of (i) research and development expenses and (ii) general and administrative expenses.
Research and Development
Research and development expenses consist primarily of costs incurred in connection with the research and development of our programs. These expenses include:
| • | costs of funding research performed by third parties, including Paragon Therapeutics, Inc. (“Paragon”),<br>that conduct research and development activities on our behalf and services rendered under the Paragon Option Agreement (as defined below) and the JADE-001 License Agreement (as defined below) for the selected<br>target APRIL (JADE-001), and our JADE-002 and JADE-003 programs, which have currently undisclosed targets; |
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| • | expenses incurred in connection with continuing our current research programs and discovery- phase development of<br>any programs we may identify, including under future agreements with third parties, such as consultants and contractors; and |
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| • | personnel-related expenses, including recruiting costs, salaries, bonuses, benefits and equity-based compensation<br>expense. |
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We expense research and development costs as incurred. For the three months ended March 31, 2025, we recognized $7.8 million of expenses in connection with services provided by Paragon under the Paragon Option Agreement and the JADE-001 License Agreement in our condensed consolidated statement of operations and comprehensive loss. See the section titled “Contractual Obligations and Commitments” below for further details on our research plans.
General and Administrative
General and administrative expenses consist primarily of personnel-related expenses, including recruiting costs, salaries, bonuses, benefits, and equity-based compensation, for individuals in our executive, finance, operations, human resources, business development and other administrative functions. Other significant general and administrative expenses include legal fees relating to corporate matters and patent-related activities, insurance costs, information technology, and professional and consulting fees associated with accounting, audit, tax and investor and public relations.
We expect that our general and administrative expenses will increase substantially for the foreseeable future as we increase our headcount and establish office space to support our expected growth. We also incurred and expect to continue to incur increased expenses associated with the Transactions and becoming a public company, including transactional costs and increased costs of accounting, audit, legal, regulatory and tax related services associated with maintaining compliance with SEC requirements, additional director and officer insurance costs, and investor and public relations costs. We also expect to incur additional intellectual property-related expenses as we file patent applications to protect innovations arising from our research and development activities.
Other Income (Expense)
Other income primarily relates to interest income. Change in fair value of convertible notes payable primarily relates to the fair value adjustment related to our Convertible Notes.
Income Taxes
We have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date, as we believe it is not more likely than not that the benefit will be realized due to our cumulative losses generated to date and expectation of future losses.
Results of Operations for the Three Months Ended March 31, 2025
The following table summarizes our interim condensed consolidated statement of operations and comprehensive loss for the period presented (in thousands):
| Three Months EndedMarch 31, 2025 | |||
|---|---|---|---|
| Operating expenses | |||
| Research and development^(1)^ | $ | 20,023 | |
| General and administrative^(2)^ | 3,361 | ||
| Total operating expenses | 23,384 | ||
| Loss from operations | (23,384 | ) | |
| Other income / (expense): | |||
| Interest income | 615 | ||
| Change in fair value of convertible notes<br>payable^(3)^ | (15,400 | ) | |
| Total other expense, net | (14,785 | ) | |
| Net loss and comprehensive loss | (38,169 | ) | |
| (1) | Includes related party amount of $7.8 million for the three months ended March 31, 2025.<br> | ||
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| (2) | Includes related party amount of $0.1 million for the three months ended March 31, 2025.<br> | ||
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| (3) | Includes related party amount of $3.3 million for the three months ended March 31, 2025.<br> | ||
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Research and Development Expenses
The following table summarizes our research and development expenses incurred for the period presented (in thousands):
| Three Months EndedMarch 31, 2025 | ||
|---|---|---|
| External research and development costs: | ||
| JADE-001 external research and development costs^(1)^ | $ | 9,767 |
| JADE-002 external research and development costs^(2)^ | 5,154 | |
| JADE-003 external research and development costs^(3)^ | 733 | |
| Other research and development costs: | ||
| Personnel-related (including stock-based compensation)^(4)^ | 3,952 | |
| Other | 417 | |
| Total research and development expenses | $ | 20,023 |
| (1) | Includes related party amount of $1.3 million for the three months ended March 31, 2025.<br> | |
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| (2) | Includes related party amount of $4.8 million for the three months ended March 31, 2025.<br> | |
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| (3) | Includes related party amount of $0.7 million for the three months ended March 31, 2025.<br> | |
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| (4) | Includes related party amount of $1.0 million for the three months ended March 31, 2025.<br> | |
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Research and development expenses were $20.0 million for the three months ended March 31, 2025 and consisted primarily of the following:
| • | $1.3 million of research and development expense related to services rendered by Paragon under the Paragon<br>Option Agreement and the JADE-001 License Agreement for JADE-001; |
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| • | $4.8 million of research and development expense related to services rendered by Paragon under the Paragon<br>Option Agreement for JADE-002, including $1.5 million for achievement of the nomination of a development candidate milestone; |
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| • | $0.7 million of research and development expense related to services rendered by Paragon under the Paragon<br>Option Agreement for JADE-003; |
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| • | $4.0 million of personnel-related costs related to recruiting costs, salaries, benefits, and other<br>compensation-related costs, of which $0.7 million related to stock-based compensation expense, and $1.0 million related to stock-based compensation expense related to the Parade Warrants (as defined below); |
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| • | $5.7 million of chemistry, manufacturing and controls related costs to manufacture our raw materials and for<br>developing drug product for our future clinical trial; |
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| • | $3.0 million related to toxicology studies; and |
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| • | $0.5 million of other research and development expenses. |
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General and Administrative Expenses
The following table summarizes our total general and administrative expenses for the period presented (in thousands):
| Three Months EndedMarch 31, 2025 | ||
|---|---|---|
| Professional and consulting fees | $ | 1,493 |
| Personnel-related (including stock-based compensation) | 1,713 | |
| Legal fees related to patent<br>filings^(1)^ | 139 | |
| Other | 16 | |
| Total general and administrative expenses | $ | 3,361 |
| (1) | Includes related party amount of $0.1 million for the three months ended March 31, 2025.<br> | |
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General and administrative expenses were $3.4 million for three months ended March 31, 2025 and consisted primarily of the following:
| • | $1.5 million of professional and consulting fees associated with accounting, audit, investor and public<br>relations and legal fees due to an increase in our business activity and as we prepared to become a public company; |
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| • | $1.7 million of personnel-related costs related to recruiting costs, salaries, benefits and other<br>compensation-related costs, including stock-based compensation of $0.7 million; |
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| • | $0.1 million of legal fees related to patent-related activities; and |
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| • | Less than $0.1 million of other business expenses. |
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Liquidity and Capital Resources
Sources ofLiquidity
Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we continue the preclinical development of our programs and commence clinical development of JADE-001. We have not yet commercialized any products and we do not expect to generate revenue from sales of products for several years, if at all. To date, we have funded our operations primarily with proceeds from the sale of our Convertible Notes and the Pre-Close Financing. In July 2024, we received $80.0 million in gross proceeds from the issuance of our Convertible Notes, in September 2024 we received $15.0 million in gross proceeds for the issuance of additional Convertible Notes, and in April 2025 we received $205 million gross proceeds from the Pre-Close Financing. As of March 31, 2025, we had cash and cash equivalents of $49.9 million.
Cash Flows
The following table summarizes our cash flows for the period presented (in thousands):
| Three Months EndedMarch 31, 2025 | |||
|---|---|---|---|
| Net cash used in operating activities | $ | (18,757 | ) |
| Net cash used in financing activities | (700 | ) | |
| Net decrease in cash and cash equivalents | $ | (19,457 | ) |
Net Cash Used in Operating Activities
For the three months ended March 31, 2025, net cash used in operating activities was $18.8 million, which was primarily attributable to a net loss of $38.2 million, partially offset by non-cash charges of $17.8 million and changes in operating assets and liabilities of $1.6 million. Non-cash charges consisted of a $15.4 million increase in the fair value of convertible notes payable and $2.4 million increase in stock-based compensation expense. Net cash provided by changes in our operating activities consisted of a $2.7 million increase in accounts payable and a change of $1.4 million in amounts due to related parties, offset by a $2.0 million decrease in accrued expenses and other current liabilities and amounts due to related parties and a $0.5 million increase in prepaid expenses. The increase in accounts payable, accrued expenses and other current liabilities was primarily due to an increase in our business activity and vendor invoicing and payments. The increase in prepaid expenses and other current assets was primarily due to prepaid research and development expenses with our contract research organization.
Net Cash Used in Financing Activities
For the three months ended March 31, 2025, net cash used in financing activities was $0.7 million, consisting of payments for deferred offering costs in connection with the Transactions.
Future Funding Requirements
To date, we have not generated any revenue from product sales. We do not expect to generate revenue from product sales unless and until we successfully complete preclinical and clinical development of, receive regulatory approval for, and commercialize a product candidate. We do not know when, or if, that will occur. We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and studies and initiate clinical trials. In addition, if we obtain regulatory approval for any programs, we expect to incur significant expenses related to product sales, marketing, and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. Additionally, in conjunction with the Merger and going public, we expect to incur additional costs associated with operating as a public company.
Our funding requirements and timing and amount of our operating expenditures will depend on many factors, including, but not limited to:
| • | the rate of progress in the development of our existing and future research and development and discovery-related<br>development of our JADE-001, JADE-002 and JADE-003 programs, including potential expansion into additional indications;<br> |
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| • | the scope, progress, results and costs of additional research programs and product candidates and<br>discovery-related activities and preclinical studies for those programs; |
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| • | our ability to successfully file investigational new drug applications or comparable foreign applications and<br>obtain authorization to commence our planned clinical trials or future clinical trials for any programs we may develop; |
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| • | the costs of enrollment and successful completion of clinical trials; |
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| • | the costs necessary to pursue positive results from our future clinical trials that support a finding of safety<br>and effectiveness, an acceptable risk-benefit profile in the intended populations and a competitive efficacy, safety and half-life profile; |
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| • | the costs of hiring research and development, clinical, manufacturing and commercial personnel;<br> |
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| • | the costs of adding operational, financial and management information systems and personnel;<br> |
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| • | the costs necessary to obtain regulatory approvals, if any, for any approved products in the United States and<br>other jurisdictions, and the costs of post-marketing studies that could be required by regulatory authorities in jurisdictions where approval is obtained; |
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| • | the costs of developing, maintaining and enhancing sustainable, scalable, reproducible and transferable clinical<br>and commercial-scale cGMP capabilities through a third-party or our own manufacturing facility for the programs we may develop; |
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| • | the costs and timing of future commercialization activities, including establishing sales, marketing and<br>distribution infrastructure to commercialize any programs, for any of our product candidates for which we receive regulatory approval; |
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| • | the revenue, if any, received from commercial sales of our product candidates for which we receive marketing<br>approval; |
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| • | the costs and timing of preparing, maintaining, expanding, enforcing, defending and protecting our intellectual<br>property rights and protection or regulatory exclusivity for any products we may develop and defending any intellectual property-related claims; |
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| • | the timing and payment of milestone, royalty or other payments we must make pursuant to our existing and<br>potential future collaborations and licensing arrangements with third parties; |
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| • | the costs we incur in maintaining business operations; |
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| • | the costs associated with being a public company, including costs of audit, legal, regulatory and tax- related services associated with maintaining compliance with an exchange listing and SEC requirements, director and officer insurance premiums and investor and public relations costs; |
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| • | the effect of competing technological and market developments; and |
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| • | the extent to which we acquire or invests in businesses, products and technologies, including entering into<br>licensing or collaboration arrangements for programs. |
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Identifying potential programs and product candidates and conducting preclinical studies and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our programs, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.
Adequate additional funds may not be available to us on acceptable terms, or at all. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders. Additional debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring debt, making capital expenditures or declaring dividends and may require the issuance of warrants, which could potentially dilute ownership interests.
If we raise additional funds through strategic collaborations or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates to third parties that we would otherwise prefer to develop and market ourself.
As of March 31, 2025 we had cash and cash equivalents of $49.9 million. We expect that our existing cash and cash equivalents, together with the proceeds from the Pre-Closing Financing, will be sufficient to fund our operating plans for at least twelve months from the issuance of the condensed consolidated financial statements for the three months ended March 31, 2025. We expect to continue to incur substantial losses for the foreseeable future, and our transition to profitability will depend upon successful development, approval and commercialization of our product candidates and upon achievement of sufficient revenues to support our cost structure.
Contractual Obligations and Other Commitments
Paragon Option Agreement
In July 2024, we entered into an Antibody Discovery and Option Agreement (the “Paragon Option Agreement”) with Paragon and Parade Biosciences Holding LLC (“Parade”) for the selected target, APRIL, for our initial research program, JADE-001. The Paragon Option Agreement was amended in September 2024 to add two additional undisclosed targets for JADE-002 and JADE-003. Under the Paragon Option Agreement, we have the exclusive option (an “Option”), on a Research Program-by-Research Program (as defined below) basis, to enter into a separate agreement with Paragon consistent with a set of terms that are pre-negotiated and attached to the Paragon Option Agreement as an exhibit (a “License Agreement”). Each License Agreement will include (a) an exclusive, worldwide license to all of Paragon’s right, title, and interest in and to the intellectual property resulting from the applicable Research Program to develop, manufacture, and commercialize the monospecific antibodies and products directed to the selected target(s), (b) a non-exclusive, worldwide license to all of Paragon’s right, title, and interest in and to the intellectual property resulting from the applicable Research Program to develop, manufacture, and commercialize multispecific antibodies and products direct to the selected target(s), and (c) a right of first negotiation for a set period of time after the execution of the License Agreement with regard to any multispecific antibodies or products comprised of (i) the licensed antibody or a derivative antibody and (ii) one or more antibodies directed at an additional target other than the selected target that are developed by Paragon. There is no payment due upon exercise of an Option pursuant to the Paragon Option Agreement. Activities under a Research Plan (as defined below) may continue past the exercise of an Option or entry into a License Agreement. If we exercise our Options and finalize the related License Agreement, we will be required to make non-refundable milestone payments to Paragon of up to $12.0 million under each respective agreement upon the achievement of certain clinical development milestones and up to $10.0 million under each respective agreement upon the achievement of certain regulatory milestones, as well as tiered royalty payments in the low-to-mid single-digits beginning on the first commercial sale of each developed product. From time to time, we can choose to add additional targets to the Paragon Option Agreement by mutual agreement with Paragon.
Under the terms of the Paragon Option Agreement, Paragon agreed to perform certain research activities to discover, generate, identify, and characterize one or more antibody candidates directed to certain mutually agreed therapeutic targets of interest us (each, a “Research Program”). The Option with respect to each Research Program is exercisable at our sole discretion at any time during the period beginning on the initiation of activities under the associated Research Program and ending a specified number of days following the delivery of the data package from Paragon related to the results of the Research Program (an “Option Period”). The Paragon Option Agreement requires us, Paragon, and Parade to develop a research plan for each target that includes design, modeling, synthesis, evaluation, and other mutually agreed activities (each, a “Research Plan”), which activities may include performing preclinical studies. Paragon will perform the activities set forth in each Research Plan on the timelines set forth in such Research Plan and in compliance with a mutually agreed budget. Each Research Program will be overseen and coordinated by a joint development committee consisting of two of our employees and two employees from Paragon, with us and Paragon each having one vote with respect to decisions of the committee. When Paragon and Parade have produced an antibody against a selected target, and upon the completion of each Research Program, Paragon and Parade will deliver to us a data package that includes sequence information for all then-existing antibodies and information directed to such target. We, Paragon and Parade have developed a Research Plan for JADE-001 consistent with the foregoing, and Paragon and Parade have delivered an antibody against APRIL in accordance with such Research Plan.
Upon exercise of an Option with respect to a Research Program, the parties are obligated to use reasonable efforts to finalize and execute a License Agreement within 30 days. Under the terms of a License Agreement, we expect that we will have sole authority over and control of the development, regulatory approval, manufacturing and commercialization of such in-licensed intellectual property worldwide. In addition, we expect to have sole authority over and control of the application for and issuance of all regulatory approvals related to such in-licensed intellectual property. Prior to entry into a License Agreement, Paragon is responsible for the prosecution, defense, maintenance and enforcement of patents related to the Research Program. Following entry into a License Agreement, we expect to control prosecution, defense, maintenance and enforcement of patents licensed under such License Agreement.
Any License Agreement entered into with respect to a given Research Program is expected to be consistent with pre-negotiated terms attached to the Paragon Option Agreement and shall contain the same milestone payment obligations as the Paragon Option Agreement, provided that any milestone set in the Paragon Option Agreement that has not yet been achieved and is duplicated in such License Agreement shall no longer be achievable and payable under the terms of the Paragon Option Agreement and shall only be achievable under the terms of the License Agreement. For the avoidance of doubt, if a milestone is achieved and paid by us pursuant to the Paragon Option Agreement for a certain Research Program, then there shall be no milestone payment due for the achievement of such milestone under a subsequently executed License Agreement for such Research Program. Further, under a License Agreement, we would also be required to make royalty payments to Paragon in the low single-digit percentage range based on net sales of products, subject to certain reductions. The royalty term will terminate on a product-by-product and country-by-country basis upon the later of the expiration of the last-to-expire valid claim within the relevant patent rights or the twelfth anniversary of the first commercial sale of such product in such country.
We exercised the Option to acquire the intellectual property rights to JADE-001 on October 7, 2024 and entered into a License Agreement for all antibodies discovered, generated, identified or characterized by Paragon in the course of performing the JADE-001 Research Program directed to APRIL, antibodies created by the company derived from the licensed antibodies and directed to APRIL, and products that comprise the foregoing with Paragon on October 30, 2024. Our Option to acquire the intellectual property rights to certain other Research Programs under the Paragon Option Agreement, including JADE-002 and JADE-003, currently remain unexercised.
Unless terminated earlier, the Paragon Option Agreement shall continue in force on a Research Program-by-Research Program basis until the later of: (i) the end of the Option Period for such Research Program, as applicable, if such Option is not exercised by us; (ii) if we exercise our Option with respect to a Research Program, but the parties are unable to finalize and execute a License Agreement within 30 days, the expiration of such 30-day period (subject to any mutually agreed extension of such period); and (iii) the expiration of the applicable Research Term (as defined in the Paragon Option Agreement). We may terminate the Paragon Option Agreement or any Research Program at any time for any or no reason upon 30 days’ prior written notice to Paragon, provided that we must pay certain unpaid fees due to Paragon upon such termination, as well as any non-cancellable obligations reasonably incurred by Paragon in connection with its activities under any terminated Research Program. Paragon may terminate the Paragon Option Agreement or a Research Program immediately upon written notice to us if, as a result of any action or failure to act by us or our affiliates, such Research Program or all material activities under the applicable Research Plan are suspended, discontinued or otherwise delayed for a certain consecutive number of months. Each party has the right to terminate the Paragon Option Agreement or any Research Program upon (i) 30 days’ prior written notice of the other party’s material breach that remains uncured for the 30-day period and (ii) the other party’s bankruptcy.
Upon entering into the Paragon Option Agreement, we were required to pay Paragon an upfront amount of $5.6 million. This amount reflects the actual historical direct costs incurred by Paragon as well as a 20% mark-up on the direct costs to approximate the indirect costs incurred by Paragon from the inception of the APRIL program to the entry into the Paragon Option Agreement. Substantially all of the costs reflected in the upfront amount were incurred by Paragon between January 1, 2024 and the parties’ entry into the Paragon Option Agreement, and the remainder of the costs were incurred in the year ended December 31, 2023. Such direct costs were related to research and development activities. Of these upfront research and development costs, a total of $5.5 million was included in our audited consolidated statement of operations as research and development expense during the period from June 18, 2024 (inception) to December 31, 2024. Paragon had no investments, intangibles, debt, or other assets or liabilities related to the APRIL program aside from standard operating liabilities that were included in the upfront amount paid by us to Paragon. Paragon’s cash flows related to the APRIL program were operating cash flows and this categorization is consistent with the presentation of R&D expense related cash flows, as presented on our condensed consolidated statement of cash flows.
Under the Paragon Option Agreement, we are responsible for any additional development costs incurred by Paragon, which from January 1, 2025 to March 31, 2025 totaled $1.4 million, of which $1.3 million was recognized as research and development expense in our condensed consolidated statement of operations and comprehensive loss during the three months ended March 31, 2025. A total of $1.4 million related to APRIL remains in our related party accrued expenses and other current liabilities balance as of March 31, 2025.
Additionally, we are responsible to reimburse Paragon for development costs related to JADE-002 which from January 1, 2025 to March 31, 2025 totaled $3.3 million and was recognized as research and development expense in our condensed consolidated statement of operations and comprehensive loss during the three months ended March 31, 2025. We are also obligated to pay Paragon $1.5 million following the nomination of a development candidate for JADE-002, which occurred in March 2025. A total of $4.8 million related to JADE-002 remains in our related party accrued expenses and other current liabilities balance as of March 31, 2025. We are also responsible for any subsequent development costs related to JADE-002.
We are also obligated to reimburse Paragon for development costs related to JADE-003 for the period of January 1, 2025 to March 31, 2025 totaling $0.7 million relating to research and development costs, as well as for subsequent development costs related to JADE-003. These amounts were recognized as research and development expense in our condensed consolidated statement of operations and comprehensive loss during the period from January 1, 2025 to March 31, 2025. An amount of $0.7 million is included in related party accrued expenses and other current liabilities as of March 31, 2025.
Additionally, as part of the Paragon Option Agreement, on each of December 31, 2025 and December 31, 2026, we will grant Parade warrants to purchase a number of shares equal to 1.00% of our outstanding capital stock as of the date of the grant on a fully-diluted basis, with an exercise price equal to the fair market value of the underlying shares of our common stock on each respective grant date (the “Parade Warrants”). Parade is an entity formed by Paragon as a vehicle to hold equity in Jade in order to share profits with certain employees of Paragon and will not perform any substantive role under the Paragon Option Agreement other than to receive such warrants.
We consider Paragon and Fairmount to be related parties. See the section titled “Certain Relationships and Related Party Transactions of the Combined Company — Jade’s Relationships with Paragon, Parade and Fairmount” in the Registration Statement.
JADE-001 License Agreement
On October 30, 2024, we entered into a License Agreement with Paragon for all antibodies discovered, generated, identified or characterized by Paragon in the course of performing the JADE-001 research program directed to APRIL, antibodies created by us derived from the licensed antibodies and directed to APRIL, and products that comprise the foregoing (the “JADE-001 License Agreement”) consistent with the pre-negotiated terms agreed to upon execution of the Paragon Option Agreement, pursuant to which Paragon granted us a royalty-bearing, worldwide, exclusive and sublicensable license with respect to certain inventions, patent rights, sequence information and other intellectual property rights related to monospecific antibodies directed at the APRIL target (the “Licensed Antibody Technology”) to use, make, sell, import, export and otherwise exploit certain monospecific antibodies and products targeting APRIL in the field of prophylaxis, palliation, treatment and diagnosis of human disease and disorders in all therapeutic areas (the “field”) and worldwide (the “territory”). Under the terms of the JADE-001 License Agreement, we are obligated to pay Paragon up to $22.0 million based on specific development and regulatory milestones, including a $1.5 million fee for the nomination of a development candidate, which was paid in December 2024, and a further milestone payment of $2.5 million upon the first dosing of a human patient in a Phase 1 trial. Following the execution of the JADE-001 License Agreement, we are solely responsible for, and have sole authority and control over, all aspects of the development, manufacturing and commercialization of the product candidates under the JADE-001 program, including regulatory strategy, communications, filings and activities (including clinical trials). Paragon also granted us a royalty-bearing, worldwide, non-exclusive, sublicensable right and license under the Licensed Antibody Technology to use, make, sell, import, export or otherwise exploit certain multispecific antibodies and products targeting APRIL. In addition, the following summarizes other key terms of the JADE-001 License Agreement.
| • | Paragon will not conduct any new campaigns that generate APRIL monospecific antibodies in the field for at least<br>five years. |
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| • | Paragon may pursue the development and commercialization of multispecific antibodies and products directed at the<br>APRIL target in the field and in the territory, and we have a right of first negotiation for any such multispecific antibodies |
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| <br>and products proposed by Paragon for a period of five years from the execution of the JADE-001 License Agreement. If we do not exercise our right of first<br>negotiation, or if the parties are unable to agree on a definitive agreement, Paragon may proceed without any obligations to us with respect to the right of first negotiation, and our non-exclusive license<br>will exclude any multispecific antibodies and products that were the subject of the right of first negotiation. | |
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| • | We will pay Paragon a low-to-mid<br>single-digit percentage royalty based on annual net sales of the products in the field and in the territory, and a mid-single-digit percentage royalty based on annual net sales of the multispecific products in<br>the field and in the territory, subject to a 30% reduction if there is no valid patent covering the product in the country. |
| --- | --- |
| • | The royalty term ends on the later of (i) the twelfth anniversary of such date or (ii) the expiration<br>of the last-to-expire valid patent covering the product or the multispecific product in the country at issue. |
| --- | --- |
| • | The JADE-001 License Agreement may be terminated on 60 days’ notice<br>by us, upon material breach without cure; and to the extent permitted by law, upon a party’s insolvency or bankruptcy. |
| --- | --- |
| • | With respect to patents licensed to us under the JADE-001 License<br>Agreement that have been filed as of the effective date of the JADE-001 License Agreement, we will control the preparing, filing, prosecuting and maintenance of such patents. With respect to patents filed<br>after the effective date of the JADE-001 License Agreement, Paragon will control the preparing, filing, prosecuting and maintaining of such patents until the final deliverable for the relevant research program<br>is delivered to us, after which we will control the preparing, filing, prosecuting and maintain of such patents. |
| --- | --- |
| • | We shall have the right to grant sublicenses under the JADE-001 License<br>Agreement, provided that (i) any sublicense agreement is consistent with all relevant terms, conditions and restrictions of the JADE-001 License Agreement, (ii) we provides Paragon with a copy of<br>each sublicense agreement and any amendments thereto within 30 days following execution thereof and (iii) we remain responsible for all payments and obligations due under the JADE-001 License Agreement.<br> |
| --- | --- |
| • | On a product-by-product basis, we<br>are obligated to pay sublicensing fees of up to approximately $20.1 million, mainly upon the achievement of commercial milestones. We have the option, during specified periods, to pay a non-refundable lump-sum buyout payment on a product-by-product basis to extinguish future milestone payment obligations with respect to such product.<br> |
| --- | --- |
In December 2024, we completed our selection of our development candidate for the JADE-001 program, which is called JADE101, and we paid Paragon the related $1.5 million milestone payment and recorded the payment as research and development expense. In December 2024, we recorded a $0.1 million nonrefundable sublicensee fee under the JADE-001 License Agreement as research and development expense. In March 2025, we completed our selection of our development candidate for the JADE-002 program and recorded a $1.5 milestone expense as research and development expense in our condensed consolidated statements of operations and comprehensive loss during the period ended March 31, 2025. This $1.5 million relating to the selection of the development candidate for JADE-001 is included within related party accrued expenses and other current liabilities as of March 31, 2025.
Biologics Master Services Agreement
On February 3, 2025, we entered into an amended and restated biologics master services agreement (the “WuXi Biologics MSA”) with WuXi Biologics (Hong Kong) Limited (“WuXi Biologics (Hong Kong)”). The WuXi Biologics MSA governs certain development activities and GMP manufacturing and testing for the JADE-001 program, as well as future programs, on a non-exclusive, work order basis. Under the WuXi Biologics MSA, we are obligated to pay WuXi Biologics (Hong Kong) a service fee and all non-cancellable obligations in the amount specified in each work order associated with the agreement for the provision of services. WuXi Biologics (Hong Kong) is obligated to, among other things, (i) perform manufacturing services in accordance with applicable standards and law using personnel with appropriate qualifications, and to manufacture product in accordance with cGMP, (ii) comply with confidentiality and invention assignment provisions, (iii) notify us of regulatory visits or inspections and provide redacted copies of any report or written communication received from such authorities in connection therewith and (iv) assign to us all right, title and interest in to all intellectual property created or developed in connection with the provision of the services, and all intellectual property relating to such inventions, subject to certain exceptions.
The WuXi Biologics MSA terminates on the later of (i) February 3, 2030, or (ii) the completion of services under all work orders executed by the parties prior to February 3, 2030, unless terminated earlier. The term of each work order terminates upon completion of the services under such work order, unless terminated earlier. We can terminate the WuXi Biologics MSA or any work order (i) at any time upon 30 days’ prior written notice, (ii) immediately upon written notice if WuXi Biologics (Hong Kong) fails to obtain or maintain required material governmental licenses or approvals and (iii) immediately upon written notice in the event that any law is enacted that has, or could be reasonably expected to have, a material adverse effect on us or any product of ours that is the subject of the WuXi Biologics MSA, in each case, as a result of WuXi Biologics (Hong Kong) providing services under the WuXi Biologics MSA or us being a party to the Wuxi Biologics MSA. Either party may terminate a work order (i) at any time upon six months’ prior notice with reasonable cause, provided however that if WuXi Biologics (Hong Kong) terminates a work order in such manner, no termination or cancellation fees shall be paid by us and (ii) immediately for cause upon (a) the other party’s material breach that remains uncured for 30 days after notice of such breach, (b) the other party’s bankruptcy or (c) a force majeure event that prevents performance for a period of at least 90 days.
Cell Line License Agreement
On February 3, 2025, we entered into an amended and restated cell line license agreement (the “Cell Line License Agreement”) with WuXi Biologics Ireland Limited (“WuXi Biologics Ireland”). Under the Cell Line License Agreement, we received a non-exclusive, worldwide, sublicensable license to certain of WuXi Biologics Ireland’s patent rights, know-how, cell line, biological materials and media and feeds to develop, manufacture, have manufactured, make, have made, import, sell, keep, commercialize and otherwise deal in, use and exploit certain therapeutic products produced through the use of the cell lines licensed by WuXi Biologics Ireland under the Cell Line License Agreement (the “WuXi Biologics Ireland Licensed Products”). JADE-001 is, and we anticipate that any future product candidates under the JADE-001 or JADE-002 programs will be, manufactured using a cell line licensed under the Cell Line License Agreement. A cell line has not yet been selected for the JADE-003 program.
In consideration for the license, we incurred a non-refundable license fee of $0.2 million and may incur additional non-refundable license fees up to $0.1 million. Additionally, if we manufacture all of our commercial supplies of bulk drug product for a particular product with a manufacturer other than WuXi Biologics Ireland or its affiliates, we are required to make royalty payments to WuXi Biologics Ireland in an amount equal to a fraction of a single digit percentage of global net sales of the WuXi Biologics Ireland Licensed Products manufactured by a third-party manufacturer (the “Royalty”). If we manufacture part of our commercial supplies of the WuXi Biologics Ireland Licensed Products with WuXi Biologics Ireland or its affiliates, then the Royalty will be reduced accordingly on a pro rata basis. We have the option, at any time, to pay WuXi Biologics Ireland a non-refundable lump sum royalty buyout payment on a drug product-by-drug product basis to extinguish future Royalty obligations with respect to such drug product.
The Cell Line License Agreement will continue indefinitely unless terminated (i) by us upon six months’ prior written notice and our payment of all undisputed amounts due to WuXi Biologics Ireland through the effective date of termination, (ii) by either party for a material breach by the other party that remains uncured for 60 days after written notice, (iii) by WuXi Biologics Ireland if we fail to make a payment and such failure continues for 30 days after receiving notice of such failure, or (iv) by either party upon the other party’s bankruptcy.
Convertible Notes
In July and September 2024, we issued and sold to certain investors an aggregate principal amount of $80.0 million and $15.0 million, respectively, in convertible notes at an interest rate of 12% per annum (the “Convertible Notes”). Upon a “Next Equity Financing” (as defined in the Convertible Notes) the principal amount and all accrued interest under each Convertible Note will convert into a number of shares of our common stock equal to the quotient obtained by dividing the purchase price by the conversion price in connection with the Next Equity Financing. In a conversion pursuant to a Next Equity Financing, the conversion price of the Convertible Notes is the product resulting from multiplying the price per share in the financing transaction by 80%. All unpaid interest and principal is scheduled to mature on December 31, 2026. As of March 31, 2025, the aggregate principal amount of outstanding borrowings was $95.0 million.
Immediately prior to the closing of the Merger, the Convertible Notes were converted into 21,745,501 shares of Pre-Merger Jade common stock based on the aggregate principal amount of $95.0 million plus unpaid accrued interest divided by the conversion price in connection with the Pre-Closing Financing.
Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenues recognized and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2 to our audited consolidated financial statements and the related notes thereto beginning on page F-22 of the Registration Statement and in Exhibit 99.1 furnished within this Form 8-K, we believe the following accounting policies used in the preparation of our condensed consolidated financial statements require the most significant judgments and estimates.
Research and Development Contract Costs Accruals
We record the costs associated with research studies and manufacturing development as incurred. These costs are a significant component of our research and development expenses, with a substantial portion of our ongoing research and development activities conducted by third-party service providers, including contract research organizations and contract manufacturing organizations, and our related party, Paragon.
We accrue for expenses resulting from obligations under Paragon Option Agreement between Paragon, Parade, and us and agreements with Contract Research Organizations (“CROs”), Contract Manufacturing Organizations (“CMOs”), and other outside service providers for which payment flows do not match the periods over which materials or services are provided to us. Accruals are recorded based on estimates of services received and efforts expended pursuant to agreements established with Paragon, CROs, CMOs, and other outside service providers. These estimates are typically based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of the services. We make significant judgments and estimates in determining the accrual balance in each reporting period. In the event advance payments are made to Paragon, a CRO, CMO, or outside service provider, the payments will be recorded as a prepaid asset which will be expensed as the contracted services are performed. Changes in these estimates that result in material changes to our accruals could materially affect our results of operations. As of March 31, 2025, we have not experienced any material deviations between accrued and actual research and development expenses.
Stock-Based Compensation
We measure stock-based awards granted to employees, directors, and non-employees in the form of stock options to purchase shares of our common stock, based on their fair value on the date of the grant using the Black-Scholes model. We measure restricted common stock awards using the difference, if any, between the purchase price per share of the award and the fair value of our common stock at the date of grant. Compensation expense for those awards is recognized using the straight-line method over the requisite service period, which is generally the vesting period of the respective award for employees. Compensation expense for awards to non-employees with service-based vesting conditions is recognized in the same manner as if we had paid cash in exchange for the goods or services, which is generally over the vesting period of the award. We account for forfeitures as they occur. We classify our stock-based compensation expenses in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.
The Black-Scholes model uses inputs that are determined by our board of directors on the date of grant and assumptions we make for the volatility of stock-based awards, the expected term of stock-based awards, the risk-free interest rate for a period that approximates the expected term of our stock-based awards and our expected dividend yield. We have historically been a private company and lack company-specific historical and implied volatility information of our stock. Therefore, we estimate our expected stock volatility based on the historical volatility of a representative group of public companies in the biotechnology industry for a term equal to the remaining time of the expected term. The expected term of our stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” stock options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the options on the date of measurement. We have estimated a 0% dividend yield based on the expected dividend yield and the fact that we have never paid, and do not expect to pay, any cash dividends in the foreseeable future. See Note 2 to our audited consolidated financial statements and the related notes thereto beginning on page F-22 of the Registration Statement for information concerning certain of the specific assumptions we used in applying the Black-Scholes model to determine the estimated fair value of our stock options granted in the periods presented.
Determination of Fair Value of Common Stock
As there has been no public market for the Pre-Merger Jade common stock from June 18, 2024 (inception) to March 31, 2025, the estimated fair value of stock-based awards has been determined by our board of directors as of the date of grant, with input from management, and with consideration of additional objective and subjective factors that we believed were relevant. All options to purchase shares of our common stock are intended to be granted with an exercise price per share no less than the estimated fair value per share of the common stock underlying those options on the date of grant, based on the information known to us on the date of grant. The third-party valuations of the common stock were performed using methodologies, approaches, and assumptions consistent with the American Institute of Certified Public Accountants, Audit and Accounting Practice Aid Series: Valuation of Privately Held Company Equity Securities Issued as Compensation. In addition, the board of directors considered various objective and subjective factors to determine the fair value of our share-based awards as of each grant date, including:
| • | the prices at which we sold shares of Jade Preferred Stock and preferences of the Jade Preferred Stock relative<br>to its stock-based awards at the time of each grant; |
|---|---|
| • | our common stock valuations; |
| --- | --- |
| • | the progress of our research and development programs, including the status of discovery-phase studies for our<br>product candidates; |
| --- | --- |
| • | our stage of development and business strategy; |
| --- | --- |
| • | external market conditions affecting the biotechnology industry and trends within the biotechnology industry;<br> |
| --- | --- |
| • | our financial position, including cash on hand, and our historical and forecasted performance and operating<br>results; and |
| --- | --- |
| • | the lack of an active public market for our common stock and Jade Preferred Stock at the grant dates.<br> |
| --- | --- |
Our common stock valuations were prepared by a third-party valuation firm using a hybrid method, including an option pricing method (“OPM”). The OPM treats common stock and preferred stock as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, the common stock has value only if the funds available for distribution to stockholders exceed the value of the preferred stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger. The hybrid method is a probability-weighted expected return method (“PWERM”), where the equity value in one or more of the scenarios is calculated using an OPM. The PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for a company, assuming various outcomes. The common stock value is based on the probability-weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of each class of stock. The future value of the common stock under each outcome is discounted back to the valuation date at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value for the common stock. A discount for lack of marketability of the common stock is then applied to arrive at an indication of value for the common stock. Our independent third party valuations were used, in part, by our board of directors to determine the price per share of common stock and by management to determine the estimated fair value of the common stock.
Once a public trading market for our common stock has been established in connection with the completion of the Merger, it is no longer necessary for the board of directors to estimate the fair value of our stock-based awards in connection with our accounting for granted stock-based awards or other such awards we may grant, as the fair value of our common stock and share-based awards is determined based on the quoted market price of our common stock.
Convertible Notes
As of March 31, 2025, we had issued $95.0 million in Convertible Notes to certain investors. We account for our Convertible Notes under Accounting Standard Codification (“ASC”) No. 815, Derivatives and Hedging (“ASC 815”). Under ASC 815, the election can be made at the inception of a financial instrument to account for the instrument under ASC No. 825, Fair Value Measurements and Disclosures (Including the Fair Value Option) (“ASC 825” and the “Fair Value Option”). We performed an analysis of all of the terms and features of the Convertible Notes and have elected to address simplification and cost-benefit considerations to use the Fair Value Option to account for the Convertible Notes as we have identified embedded derivatives, such as automatic conversion upon closing of the Next Equity Financing and automatic conversion upon the event of a Corporate Transaction, both of which would require bifurcation and separate accounting. The Convertible Notes are and will be remeasured at fair value at each balance sheet date until repayment or conversion. Changes to the fair value of the Convertible Notes will be recorded in other expense in the condensed consolidated statement of operations and comprehensive loss. Any changes in fair value caused by instrument-specific credit risk, if any, are presented separately in other comprehensive loss. The analysis of the fair value of the Convertible Notes contains inherent assumptions related to the market interest rate, instrument-specific credit risk, the probability of alternate financing, change of control, initial public offering, maturity extension, and payment at original maturity. Due to the use of significant unobservable inputs, the overall fair value measurement of the Convertible Notes is classified as Level 3.
Immediately prior to the completion of the Merger in connection with the Pre-Closing Financing, the Convertible Notes were converted into 21,745,501 shares of Pre-Merger Jade common stock based on the aggregate principal amount of $95.0 million, plus any unpaid accrued interest, divided by the conversion price.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact Jade’s financial position, results of operations or cash flows is disclosed in Note 2 to our condensed consolidated financial statements as of March 31, 2025 included in Exhibit 99.1 of this Current Report on Form 8-K of which this Exhibit 99.2 is a part.
Off-Balance Sheet Arrangements
As of March 31, 2025, we did not have any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
The Convertible Notes bear interest until December 2026 at a fixed rate per annum equal to 12%. An immediate 10% change in the prime rate would not have a material impact on our debt-related obligations, financial position or results of operations.
Inflation Risk
Our results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe the effects of inflation, if any, on our business, results of operations, financial condition or condensed consolidated financial statements have been immaterial. We cannot assure you our business will not be affected in the future by inflation.
EX-99.3
Exhibit 99.3
Jade Biosciences Reports First Quarter 2025 Financial Results and Provides Corporate Update
Completed reverse merger and commenced trading on Nasdaq as JBIO
Closed financing, raising approximately $300 million to date, providing cash runway through 2027
Lead candidate JADE101 expected to enter the clinic in second half of 2025, with interim biomarker-rich data expected in first half of 2026
SAN FRANCISCO and VANCOUVER, British Columbia – May 14, 2025 – Jade Biosciences, Inc. (“Jade”) (Nasdaq: JBIO), a biotechnology company focused on developing best-in-class therapies for autoimmune diseases, today announced financial results for the quarter ending March 31, 2025, and provided a corporate update.
“The start to 2025 marked a defining period for Jade Biosciences as we successfully completed our reverse merger, commenced trading as JBIO on Nasdaq, and closed a significant private financing led by a premier syndicate of healthcare investors,” said Tom Frohlich, Chief Executive Officer of Jade. “With a strong balance sheet, we are well-positioned to advance our pipeline of potentially best-in-class therapies for autoimmune diseases. We’re especially excited to become a clinical-stage company later this year, with JADE101 on track to begin first-in-human studies in the second half of 2025. This represents a meaningful step toward delivering differentiated treatment options for patients living with chronic and underserved autoimmune conditions.”
Corporate and Pipeline Updates
Corporate
| • | Completed the previously announced reverse merger with Aerovate Therapeutics, Inc., concurrently closed a private<br>placement and began trading on Nasdaq under the ticker symbol JBIO. |
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JADE101: potentially best-in-class anti-APRIL monoclonal antibody for IgAN
| • | First-in-human clinical trial<br>anticipated to begin in the second half of 2025 with interim data expected in the first half of 2026. Anti-APRIL mechanism of action provides biomarker-rich data in healthy volunteers that is expected to be predictive of clinical efficacy and will<br>define the dose and schedule designed to fully suppress APRIL throughout the dosing interval in IgAN patients. |
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JADE201: adevelopment candidate from the JADE-002 antibody discovery program
| • | Nominated a development candidate from the JADE-002 program, named<br>JADE201. |
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First Quarter 2025 Financial Results
| • | Cash Position: As of March 31, 2025, Jade had available cash and cash equivalents of<br>$49.9 million. Net cash used in operating activities was $18.8 million for the first quarter of 2025. On April 28, 2025, the Company completed its reverse merger and closed on approximately $205 million of gross proceeds in<br>conjunction with the transaction. The Company expects this cash to provide runway through 2027. |
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| • | Research and Development (R&D) expenses: R&D expenses totaled $20.0 million for the first<br>quarter of 2025. These expenses include $1.7 million of non-cash stock-based compensation. During the first quarter of 2025, the Company incurred $10.0 million in development of JADE101 excluding<br>personnel-related charges. |
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| • | General and Administrative (G&A) expenses: G&A expenses totaled $3.4 million for the first<br>quarter of 2025. These expenses include $1.7 million of personnel-related costs, including $0.7 million of non-cash stock-based compensation related to equity awards to employees and service<br>providers, and $1.5 million for professional, consulting, and other costs to operate a public company and support R&D activities. |
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| • | Other expense: Other expense, net for the first quarter of 2025 was $14.8 million. This reflects<br>$15.4 million of expense on the change in fair value of convertible notes before their conversion to common stock, partially offset by interest earned on the Company’s investment in money market funds of $0.6 million for the first<br>quarter of 2025. |
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| • | Net loss: Net loss totaled $38.2 million for the first quarter of 2025, which includes non-cash stock-based compensation of $2.4 million. |
| --- | --- |
| • | Shares Outstanding: Subsequent to the merger, Jade has approximately 40,002,173 shares of common stock and<br>common stock equivalents issued and outstanding, and 12,622,000 shares of common stock underlying Company Series A Preferred Stock issued and outstanding. |
| --- | --- |
About JADE101
JADE101 is an investigational anti-APRIL (A Proliferation-Inducing Ligand) monoclonal antibody being developed for the treatment of IgA nephropathy (IgAN), a chronic autoimmune kidney disease characterized by the deposition of pathogenic IgA-containing immune complexes in the kidneys. These deposits can lead to proteinuria, declining kidney function, and potentially end-stage kidney disease requiring dialysis or transplantation. By targeting APRIL, a protein involved in the overproduction of IgA, JADE101 aims to reduce the levels of disease-driving IgA, decrease proteinuria, and preserve kidney function. Engineered with half-life extension technology, JADE101 is designed for dosing at intervals of at least eight weeks, offering the potential for durable clinical activity and improved patient convenience, particularly important for a condition often diagnosed in young adulthood and potentially requiring life-long treatment.
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About Jade Biosciences, Inc.
Jade Biosciences is focused on developing best-in-class therapies to address critical unmet needs in autoimmune diseases. Its lead candidate, JADE101, targets the cytokine APRIL for the treatment of immunoglobulin A nephropathy, with initiation of a first-in-human clinical trial expected in the second half of 2025. Jade’s pipeline also includes a second development candidate, JADE201, and an undisclosed antibody discovery program, JADE-003, both currently in preclinical development. Jade was launched based on assets licensed from Paragon Therapeutics, an antibody discovery engine founded by Fairmount. For more information, visit JadeBiosciences.com and follow the Company on LinkedIn.
Forward-Looking Statements
Certain statements in this communication, other than purely historical information, may constitute “forward-looking statements” within the meaning of the federal securities laws, including for purposes of the “safe harbor” provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, express or implied statements relating to Jade’s expectations, hopes, beliefs, intentions or strategies regarding the future of its pipeline and business including, without limitation, Jade’s ability to achieve the expected benefits or opportunities with respect to JADE101, JADE201 and the JADE-003 program, including the expected timelines for JADE101 entering the clinic and interim data from such trial, the potential for such data to be predictive of clinical efficacy and to define a dose and schedule to fully suppress APRIL throughout the dosing interval in IgAN patients, the potential of Jade’s product candidates to become best-in-class therapies and the potential for Jade’s cash to provide runway through 2027. The words “opportunity,” “potential,” “milestones,” “pipeline,” “can,” “goal,” “strategy,” “target,” “anticipate,” “achieve,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “plan,” “possible,” “project,” “should,” “will,” “would” and similar expressions (including the negatives of these terms or variations of them) may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are based on current expectations and beliefs concerning future developments and their potential effects. There can be no assurance that future developments affecting Jade will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond Jade’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the risks that the planned trial of JADE101 and any future clinical trials may not demonstrate safety and/or efficacy; Jade may experience unanticipated costs, difficulties or delays in the product development process; Jade’s product candidates may fail in development, may not receive required regulatory approvals, or may be delayed to a point where they are not commercially viable; regulatory agencies may impose additional requirements or delay the initiation of clinical trials; risks associated with Jade’s dependence on third-party vendors for the development, manufacture and supply of JADE101; and the other risks, uncertainties and factors more fully described in Jade’s most recent filings with the Securities and Exchange Commission (including its definitive proxy statement/prospectus filed on Form S-4, most recently amended on March 24, 2025 and declared effective on March 25, 2025), as well as risk factors associated with companies, such as Jade, that operate in the biopharma industry. Should one or more of these risks or uncertainties materialize, or should any of Jade’s assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved.
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You should not place undue reliance on forward-looking statements in this communication, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. Jade does not undertake or accept any duty to release publicly any updates or revisions to any forward-looking statements. This communication does not purport to summarize all of the conditions, risks and other attributes of an investment in Jade.
Jade Biosciences Contacts
Media
Priyanka Shah
Email: Media@JadeBiosciences.com
Phone: 908-447-6134
Investors
Email: IR@JadeBiosciences.com
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JADE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share amounts)
| EndedMarch 31, 2025 | |||
|---|---|---|---|
| Operating expenses: | |||
| Research and development(1) | $ | 20,023 | |
| General and administrative(2) | 3,361 | ||
| Total operating expenses | 23,384 | ||
| Loss from operations | (23,384 | ) | |
| Other income (expense): | |||
| Interest income | 615 | ||
| Change in fair value of Convertible Notes payable(3) | (15,400 | ) | |
| Total other expense, net | (14,785 | ) | |
| Net loss and comprehensive loss | (38,169 | ) | |
| Net loss per share attributable to common stockholders, basic and diluted | $ | (12.10 | ) |
| Weighted-average shares used in computing net loss per share attributable to common stockholders,<br>basic and diluted | 3,155,500 | ||
| (1) | Includes related party amount of $7.8 million for the three months ended March 31, 2025.<br> | ||
| --- | --- | ||
| (2) | Includes related party amount of $0.1 million for the three months ended March 31, 2025.<br> | ||
| --- | --- | ||
| (3) | Includes related party amount of $3.3 million for the three months ended March 31, 2025.<br> | ||
| --- | --- |
JADE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
| March 31,2025 | December 31,2024 | |||||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | $ | 49,929 | $ | 69,386 | ||
| Other assets | 6,395 | 3,413 | ||||
| Total assets | $ | 56,324 | $ | 72,799 | ||
| Total liabilities | $ | 139,832 | $ | 119,596 | ||
| Total convertible preferred stock and stockholders’ deficit | (83,508 | ) | (46,797 | ) | ||
| Total liabilities, convertible preferred stock and stockholders’ deficit | $ | 56,324 | $ | 72,799 |
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EX-99.4
May 2025 Company Overview NASDAQ: JBIO Exhibit 99.4
Forward Looking Statements Certain statements in this presentation, other than purely historical information, may constitute "forward-looking statements" within the meaning of the federal securities laws, including for purposes of the "safe harbor" provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, express or implied statements relating to the expectations, hopes, beliefs, intentions or strategies of Jade Biosciences, Inc. (“Jade”) regarding the future of its pipeline and business including, without limitation, the expectation that current funding will support operations through 2027, Jade’s ability to achieve the expected benefits or opportunities with respect to JADE101, JADE201 and JADE-003, the expected timelines for JADE101 entering the clinic and initial data from such trial, the potential of surrogate endpoints to support IgAN approval, the potential of JADE101, JADE201 and any product candidate from the JADE-003 program to become best-in-class drugs and their potential therapeutic uses, efficacy, dosing, safety and market opportunities . The words "opportunity," "potential," "milestones," "pipeline," "can," "goal," "strategy," "target," "anticipate," "achieve," "believe," "contemplate," "continue," "could," "estimate," "expect," "intends," "may," "plan," "possible," "project," "should," "will," "would" and similar expressions (including the negatives of these terms or variations of them) may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are based on current expectations and beliefs concerning future developments and their potential effects. There can be no assurance that future developments affecting Jade will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond Jade's control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the risks that the planned trial of JADE101 and any future clinical trials may not demonstrate safety and/or efficacy; Jade may experience unanticipated costs, difficulties or delays in the product development process; Jade’s product candidates may fail in development, may not receive required regulatory approvals, or may be delayed to a point where they are not commercially viable; regulatory agencies may impose additional requirements or delay the initiation of clinical trials; risks associated with Jade’s dependence on third-party vendors for the development, manufacture and supply of JADE101; and the other risks, uncertainties and factors more fully described in Jade’s most recent filings with the Securities and Exchange Commission (including its definitive proxy statement/prospectus filed on Form S-4, most recently amended on March 24, 2025 and declared effective on March 25, 2025), as well as risk factors associated with companies, such as Jade, that operate in the biopharma industry. Should one or more of these risks or uncertainties materialize, or should any of Jade's assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this communication, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. Jade does not undertake or accept any duty to release publicly any updates or revisions to any forward-looking statements. This communication does not purport to summarize all of the conditions, risks and other attributes of an investment in Jade. Market and Industry Data Certain information contained in this presentation and statements made orally during this presentation relate to or are based on studies, publications and other data obtained from third-party sources as well as our own internal estimates and research. While we believe these third-party sources to be reliable as of the date of this presentation, we have not independently verified, and make no representation as to the adequacy, fairness, accuracy or completeness of, any information obtained from third party sources. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this presentation. Statements as to our market and competitive position data are based on market data currently available to us, as well as management’s internal analyses and assumptions regarding the Company, which involve certain assumptions and estimates. These internal analyses have not been verified by any independent sources and there can be no assurance that the assumptions or estimates are accurate. While we are not aware of any misstatements regarding our industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors. As a result, we cannot guarantee the accuracy or completeness of such information contained in this presentation. Disclaimers
Notes: Jade has entered into an exclusive JADE101 license agreement with Paragon Therapeutics. Jade holds an exclusive option to license JADE201 and JADE-003 from Paragon. Jade has not yet entered into a license agreement with respect to JADE201 or JADE-003. MOA – mechanism of action; FIH – First-In-Human; IgAN - IgA nephropathy; AI - autoimmune Jade Biosciences is advancing potentially best-in-class therapies for autoimmune diseases Current funding expected to support operations through 2027, well beyond biomarker-rich JADE101 healthy volunteer data MOA Program Candidate Discovery IND-enabling Planned Clinical FIH Planned Interim FIH Data Potential Indications JADE-001 JADE101 2H25 1H26 IgAN JADE-002 JADE201 1H26 Multiple systemic AI diseases JADE-003 __ 1H27 Undisclosed anti-APRIL Undisclosed Undisclosed Assets designed to maximize clinical responses Patient friendly, infrequent dosing Development candidates licensed from Paragon
JADE101: a potentially best-in-class anti-APRIL mAb for IgAN
HV – healthy volunteer, mAb – monoclonal antibody, PoC – proof of concept Jade is developing a potentially best-in-class anti-APRIL mAb Estimated $10B+ branded market Current treatments do not adequately address the need for long-term disease-modifying therapy in a typically young IgAN patient population Mechanism has potential to be disease modifying, reducing pathogenic IgA and proteinuria, stabilizing kidney function Anti-APRIL class poised to be frontline treatment for IgAN Potentially best-in-class profile Efficient path to PoC and market JADE101 is designed to have superior potency and an extended half-life for maximal efficacy & convenient dosing Biomarker-rich and highly translational HV data expected in 1H26; potential for surrogate endpoints in future trials to support IgAN approval
*Per KDIGO guidelines, treatment should be initiated in all cases where patients have proteinuria ≥0.5 g/day. Notes: U.S. prevalence estimate from FDA; EU prevalence estimate from EMA; Japan / China prevalence estimates from a Novartis presentation. Estimated pricing of ~$120K-$150K per year based on Filspari and Tarpeyo. Sources: 2023 Pitcher (CJASN); FDA Reviews for Filspari / Tarpeyo; EMA; Novartis; 2018 Schena (Seminars in Nephrology); Reuters ~169K+ IgAN patients in the U.S. with majority requiring treatment*, representing potential $10B+ market ~169K+ patients with IgAN in the U.S., with 60-75% requiring treatment per international guidelines ~1M+ global patients, significant potential ex-U.S. market potential ’000 Patients IgAN is an autoimmune kidney disease, typically diagnosed in 20- to 30-year-olds, requiring life-long therapy. IgAN patients with persistent proteinuria are at risk of kidney failure There is a high unmet need for disease-modifying treatments that are safe, well-tolerated, and convenient particularly considering that IgAN is often diagnosed in young adults and requires lifelong care
Expanding Patient Population Kidney biopsy recommended in all adults with proteinuria ≥0.5 g/d where IgAN is a possible diagnosis Recommends additional treatment should be initiated in all cases where patients have proteinuria ≥0.5 g/d Lower Proteinuria Targets Establishes new treatment goal: proteinuria maintained at <0.5 g/day, preferably <0.3 g/day Redefining Treatment Strategies New guidelines direct the use of treatments that have been proven to reduce pathogenic forms of IgA Sources: KDIGO Guidelines Public Review Draft; 2023 Mathur (NEJM); Jade analysis KDIGO – Kidney Disease Improving Global Outcomes Proposed updates to KDIGO guidelines support the frontline therapeutic potential of the anti-APRIL class in IgAN Drivers of nephron loss In all patients these should be addressed simultaneously Reduce pathogenic forms of IgA and IgA immune complex formation Treatment strategies IgAN patients at risk of progressive kidney function loss Manage the IgAN-specific drivers for nephron loss Manage the generic response to IgAN-induced nephron loss Cardio-vascular risk reduction Reduce glomerular hyperfiltration and the impact of proteinuria on the tubulointerstitium Blood pressure control Reduce glomerular inflammation KDIGO updates anticipated to increase IgAN diagnosis, expand at-risk patient population requiring treatment, lower proteinuria target to clinical remission, and require targeted therapies that reduce pathogenic IgA.
APRIL dependency HSC Pro B cell Large pre-B cell Small pre-B cell Immature B cell Mature Naïve B cell Memory B cell Plasma cell Bone marrow Mucosa Mucosa & bone marrow CD20 expression BAFF dependency *Gradient indicates level of receptor expression Sources: 2024 Cheung (Front Nephrol); 2023 Mathur (J Clin Med) Reducing pathogenic IgA production by plasma cells is a potentially disease-modifying approach for IgAN Broad B-cell depletion is ineffective in IgAN… …while targeted plasma cell modulation is highly effective. B-cell depletion with rituximab (anti-CD20) failed to reduce Gd-IgA1, anti-Gd-IgA1 autoantibody, or proteinuria and did not impact eGFR. BAFF neutralization (blisibimod) did not reduce IgA or proteinuria. APRIL and dual APRIL/BAFF neutralization result in significant and sustained depletion of Gd-IgA1, reduction in proteinuria, and eGFR stabilization. APRIL APRIL blocking therapy Plasma cell differentiation Antibody class-switching HIT 1 Production of galactose-deficient IgA1 (Gd-IgA1) HIT 2 Synthesis of anti-Gd-IgA1 autoantibodies HIT 3 Autoantibodies bind Gd-IgA1 to form pathogenic immune complexes HIT 4 Deposition of immune complexes in the mesangium and initiation of kidney injury Neutralizing APRIL depletes Gd-IgA1, reduces proteinuria, and preserves eGFR, providing a disease-modifying treatment of IgAN without impacting B-cell development and maturation.
Selectively targeting APRIL potentially provides disease modification without added immunosuppression of BAFF inhibition Sources: 2024 Cheung (Front Nephrol); Chinook 2022 CKD3 Presentation; 2004 Castigli (PNAS); 2001 Schiemann (Science) GWAS - Genome-Wide Association Studies, KO – knockout APRIL BAFF Risk variant in IgAN GWAS ✓ ✗ Elevated in IgAN patients and associated with disease severity ✓ ✓/✗ Promotes excess secretion of Gd-IgA1 in IgAN patient lymphocytes ex vivo ✓ No data Drives IgA class switching via TACI in vivo ✓ ✗ Overexpression in mouse model leads to glomerular IgA deposition ✓ ✓ KO mouse model decreases IgA levels / IgA+ plasma cells in small intestine ✓ ✗ Selective inhibition demonstrates preclinical / clinical efficacy in IgAN ✓ ✗ APRIL is the plasma cell survival factor critically linked to IgAN pathogenesis and disease activity Targeting APRIL selectively modulates plasma cells, maintaining pool of mature B cells Existing genomic, mechanistic, IgAN model, and clinical data support the importance of APRIL over BAFF in IgAN, and APRIL-only blockade avoids the potential for unnecessary immunosuppression
Reductions in proteinuria and IgA in IgAN clinical studies indicate APRIL inhibition is the driving force behind TACI-Fc efficacy Notes: Cross-trial comparisons are inherently limited and presented for hypothesis-generating purposes only. Data digitized from graphs where publications did not provide specific values. Values only included if N > 5. Blisibimod W52 data is from W60. Sources: Anthera 2017 10-K; 2023 Mathur (NEJM); 2023 Barratt (ERA Poster); 2024 Lafayette (KI Reports); 2024 Tumlin (WCN Presentation); 2024 Madan (ASN Presentation) % Weeks 24h UPCR Δ from Baseline (%) % Weeks IgA Δ from Baseline (%) TACI-Fc fusion proteins inhibit APRIL & BAFF
Sibeprenlimab Zigakibart Atacicept Povetacicept MoA anti-APRIL anti-APRIL TACI-Fc Engineered TACI-Fc Status P3 P3 P3 P3 Δ from baseline in critical disease markers (W36 timepoint*) N=79 (4/8 mg/kg pooled) N=35 (600 mg) N=32 (150 mg) N=9 (80 mg) GFR stabilization ✓ (12 months) ✓ (18 months) ✓ (24 months) ✓ (12 months) Hematuria resolution ✓ No data ✓ ✓ Safety ✓ Well-tolerated, no overall ↑ infections, slight ↑ in URTIs vs. pbo ✓ Well-tolerated (no pbo), no drug discontinuations ✓ Well-tolerated, slight ↑ in infections (& URTIs) vs. pbo ✓ Well-tolerated (no pbo) 240 mg ↑ infections P3 Dosing 400 mg SC, Q4W 600 mg SC, Q2W 150 mg SC, QW 80 mg SC, Q4W Notes: Cross-trial comparisons are inherently limited and presented for hypothesis-generating purposes only. Zigakibart IgA / Gd-IgA data at W40; UPCR data at W52 (only timepoint available); change from baseline is not pbo-controlled; N represents patients on dose(s) for which data is shown. Atacicept infections/URTIs placebo - (32%/0%), 25 mg (38%/0%), 75 mg (49%/9%), 150 mg (39%/6%). Povetacicept infection rates: Grade 1/2/≥3 – 80 mg 10%/5%/0%, 240 mg 18%/27%/3%. Sibeprenlimab infections/URTIs placebo - (55%/0%), 2 mg/kg (39.5%/8%), 4 mg/kg (56%/12%), 8 mg /kg (53%/5%). Sources: 2023 Mathur (NEJM); 2024 Barratt (ERA Presentation); VERA January 2024 R&D Day; ALPN 2024 WCN Investor Update; 2024 Madan (ASN Presentation) No clinical evidence that inhibiting BAFF provides additional efficacy beyond APRIL alone in IgAN 65% 59%
Sources: 2022 Struemper (Lupus Sci Med); Barratt ASN 2024 BAFF inhibition is accompanied by the potential for significant long-term B cell depletion Long-term BAFF inhibition significantly depletes all B cell populations… … whereas chronic APRIL inhibition does not impact circulating lymphocytes 109/L ~7-year belimumab data in SLE shows continuous BAFF inhibition lowers B cell populations from ~50% to ~99%, with most populations decreasing >80%. Long-term BAFF suppression, in an otherwise young and healthy patient population, is unnecessary given equivalent efficacy in IgAN from anti-APRILs and TACI-Fcs observed to date.
Highest rates of clinical remission (proteinuria <0.3 g/day) for sibeprenlimab was accompanied by the deepest levels of APRIL suppression. Safety profile consistent across dose levels, with no increase in overall infections. Potential for anti-APRILs with higher affinity and increased systemic exposure to provide more complete APRIL neutralization throughout the dosing interval and maximize clinical remission rates. Note: Estimated sibeprenlimab P3 dose (400 mg SC) based on average 85 kg IgAN patient (95% CI ~50-120 kg) and 75% bioavailability. Source: 2023 Mathur (NEJM) Deeper APRIL suppression drives superior clinical efficacy fAPRIL Est. P3 AVG equivalent dose (3.5 mg/kg IV) Proteinuria < 0.3 g/day (% patients @12 mths) JADE101 has potential to demonstrate superior clinical activity by maximizing remission rates in significantly more patients than other anti-APRIL programs in development.
Sibeprenlimab dosed as a single 400mg SC injection Q4W in ongoing global Phase 3 VISIONARY trial. 400 mg SC Q4W equates to ~3.5 mg/kg IV for average IgAN patient (2.5-6 mg/kg). Estimated Phase 3 equivalent dose range demonstrated lower efficacy on key UPCR endpoints in Phase 2 ENVISION trial. ~50% of HV in P1 SAD showed positive antidrug antibody activity following single SC dose, which may further impact PK, efficacy, and safety profile in Phase 3. Notes: Estimated sibeprenlimab P3 dose based on average 85 kg IgAN patient (95% CI ~50-120 kg) and 75% bioavailability. Sources: 2023 Mathur (NEJM); 2023 Zhang (Clin Pharm) HV – healthy volunteers; ADA+ – antidrug antibody positive Sibeprenlimab is potentially under-dosed in ongoing Phase 3 trial Other anti-APRILs do not inhibit APRIL fully through the dosing interval IV IV IV 2 mg/kg dose did not stabilize eGFR at 1 year, while higher doses did Annualized eGFR slope (mL/min/1.73m2, baseline to W52) Est. P3 AVG equivalent dose (3.5 mg/kg IV) Est. P3 AVG equivalent dose (3.5 mg/kg IV) Potential under-dosing of sibeprenlimab creates additional opportunity for JADE101 to demonstrate potentially best-in-class clinical activity for patients.
Potentially best-in-class profile of JADE101 Potentially best-in-class efficacy APRIL inhibitors demonstrate greater proteinuria reduction and increased clinical remission rates with higher exposures and more complete APRIL suppression Infrequent Q8W+ dosing Avoids unnecessary immunosuppression Selectively targeting APRIL provides disease modifying impact while avoiding B-cell depletion associated with BAFF inhibition Femtomolar APRIL Affinity + Half Life Extension Minimizes burden in a typically young IgAN patient population potentially requiring life-long therapy (≤ 6 injections/year)
Notes; Paragon has filed provisional patent applications covering the subject matter of JADE101, which we have exclusively licensed from Paragon. No head-to-head clinical trials have been conducted between JADE101 and the referenced drug candidates. Cross-trial comparisons are inherently limited and presented for hypothesis-generating purposes only. fM – femtomolar Potentially best-in-class properties of JADE101 Effector-null human IgG1 Fc Half-life extension through validated YTE Fc modification Longer exposure intended to maximize efficacy and reduce dosing frequency De novo antibody discovery campaign pursued to achieve fully-human, potentially best-in-class mAb Novel IP for composition of matter into mid-2040s Ultra-high (fM) APRIL binding affinity Binds APRIL to neutralize activity Greater APRIL binding affinity than sibeprenlimab, zigakibart, povetacicept and atacicept
Source: Internal data; Benchmarks manufactured based on publicly available sequences. Atacicept APRIL KD 672 pM (Vera internal data). IgA EC50 estimates calculated using compartmental PK models linked to indirect response models to describe IgA kinetics built using published PK and IgA concentration-time profiles for each molecule. Sibeprenlimab: Mathur, 2022 and Zhang, 2023; Ziga: ASN, 2021/2022 and WCN, 2021; Povetacicept: Davies, 2024; Ataci: Willen, 2020, Nestorov, 2008/2010, Munafo, 2007). These data are derived from different trials at different points in time, with differences in trial design and populations. As a result, cross-trial comparisons cannot be made, and no head-to-head clinical trials of JADE101 and other agents have been conducted. JADE101 has femtomolar affinity and a slow off-rate that is superior to other anti-APRILs currently in development APRIL affinity by SPR is highly predictive of in vivo potency to lower serum IgA in humans
>3X increased half-life compared to sibeprenlimab in NHPs coupled with successful mitigation of TMDD … … which is accompanied by deep and prolonged IgA reduction in NHPs following a single, saturating dose PHARMACOKINETICS PHARMACODYNAMICS JADE101 (30 mpk) t1/2 ~ 27 days Sibeprenlimab (30 mpk) t1/2 ~ 7 days JADE101 (4 mpk) JADE101 has the potential to extend dosing interval through low clearance via half-life extension, target-mediated drug disposition mitigation & ultra-high (fM) human affinity. Sibeprenlimab and JADE101 dosed at 30 mg/kg and 4 mg/kg (single dose), N=4 per group. Comparison agent manufactured based on available sequences from patents / company releases. Study duration shorter for lower dose. ADA+ samples excluded from analysis. Source: Internal data. No head-to-head clinical studies of JADE101 and other agents have been conducted. JADE101 exhibits a highly differentiated NHP PK/PD profile from sibeprenlimab
Anticipated 1H26 HV data potentially positions JADE101 for accelerated development MOA Program IND Enabling Phase 1 Initiation Interim Healthy Volunteer Data Potential Indications anti-APRIL JADE101 Ongoing 2H 2025 1H 2026 IgAN Anti-APRIL MOA provides biomarker rich data predictive of clinical efficacy Consistent PK/PD relationships in HV and IgAN patients HV PK highly predictive of IgAN PK and directly linked to fAPRIL suppression HV IgA reduction expected to highly correlate with IgAN IgA reduction Early IgA response expected to highly correlate with future UPCR reduction in IgAN PK, fAPRIL and IgA HV data expected in 1H 2026 and will define the dose and schedule designed to fully suppress fAPRIL throughout the dosing interval in IgAN patients. Healthy Volunteers (HV) IgAN Patients PK fAPRIL IgA UPCR anti-APRIL fAPRIL – Free A Proliferation-Inducing Ligand Sources: Zigakibart: (ASN 2021/2022 and WCN2021). Sibeprenlimab: Mathur 2022 (KI Reports) for Phase 1. Chan 2023 (KI Reports) for Phase 2 IgA; Mathur 2024 (NEJM) for Phase 2 UPCR. Povetacicept: Davies 2024 (Clin Transl Sci) for Phase 1. Madan 2024 (ASN) for Phase 2. Atacicept: Willen 2020 (European Journal of Drug Metabolism and Pharmacokinetics) for Phase 1. Zigakibart: Lo 2020 (ASN) for Phase 1. Barratt 2023 (ERA) for Phase 2 IgA, Barratt 2024 (ASN abstract) for Phase 2 UPCR. Floege 2024 (ERA) for Phase 2. Mezagitamab: December 2024 Takeda SEC from 6-K for Phase 2.
Notes: Sibeprenlimab IgAN IgA reductions (LHS) are average of 4 mg/kg and 8 mg/kg cohorts (HV data is from 6 mg/kg cohort); the two cohorts saw effectively equivalent IgA reduction at W4 and W8. Zigakibart UPCR data is at 52W. Atacicept IgAN W8 is average of W4 and W12 datapoints. Trend lines are best linear fit. Sources: 2022 Mathur (KI Reports); 2023 Mathur (NEJM); 2020 Lo (ASN Presentation); 2023 Barratt (ERA Poster); 2024 Barratt (ERA Presentation); 2022 Dillon (ASN Poster); 2024 Tumlin (WCN Presentation); Anthera 2017 10-K; 2024 Lafayette (KI Reports); 2024 Madan (ASN Presentation) Biomarker-rich, directly translational HV data supports the potential to accelerate clinical development IgA reduction in HVs is highly correlated with IgA reduction in IgAN patients at multiple time points… …and early IgA reduction further correlates with W36 UPCR reduction, the anticipated endpoint for accelerated approval Healthy Volunteers IgAN Patients IgAN IgA Δ from baseline (%, W8) IgAN Patients wk4 wk4 wk4 wk4 wk2 wk6 wk8 R2=0.86 wk2 wk4 wk6 wk8 wk4 wk2 wk4 wk6 wk8 wk2 wk4 wk8 wk2 wk4 wk8 R2=0.79 vs
Pipeline beyond JADE101
Additional Jade programs expected to focus on best-in-class product profiles in high-value autoimmune indications Autoimmune indications with significant market opportunity Potentially best-in-class and best-in-indication product profile Potential rapid path to clinical PoC Limited competition expected Jade team expertise Evaluating additional opportunities to build pipeline of potentially best-in-class autoimmune therapies.
Notes: Jade has entered into an exclusive JADE101 license agreement with Paragon Therapeutics. Jade holds an exclusive option to license JADE201 and JADE-003 from Paragon. Jade has not yet entered into a license agreement with respect to JADE201 or JADE-003. MOA – mechanism of action; FIH – First-In-Human; IgAN - IgA nephropathy; AI - autoimmune Jade Biosciences is advancing potentially best-in-class therapies for autoimmune diseases Current funding expected to support operations through 2027, well beyond biomarker-rich JADE101 healthy volunteer data MOA Program Candidate Discovery IND-enabling Planned Clinical FIH Planned Interim FIH Data Potential Indications JADE-001 JADE101 2H25 1H26 IgAN JADE-002 JADE201 1H26 Multiple systemic AI diseases JADE-003 __ 1H27 Undisclosed anti-APRIL Undisclosed Undisclosed Assets designed to maximize clinical responses Patient friendly, infrequent dosing Development candidates licensed from Paragon
Capitalization following close of merger with Aerovate Number of Shares Shares outstanding 32,235,926 Preferred stock (as converted to common stock) 12,622,000 Pre-funded warrants 7,766,247 Notes: Number of shares are on an as-converted basis and following the 1:35 reverse stock split effected in connection with the merger. The pro forma, post-split fully diluted share count, which includes equity incentives such as employee stock options, is approximately 60.6 million shares. Refer to AVTE and JBIO SEC filings for additional information. Common stock Common stock equivalents Common stock & common stock equivalents $49.9M cash as of March 31, 2025 +$192.7M net proceeds from PIPE on April 28, 2025 52,624,173 Total outstanding
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