As filed with the Securities and Exchange Commission on March 14, 2025

Registration No. 333-283562​

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

AMENDMENT NO. 3
to

FORM S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

AEROVATE THERAPEUTICS, INC.
(Exact Name of Registrant as Specified in Its Charter)

930 Winter Street, Suite M-500
Waltham, MA 02451
(617) 443-2400

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)​

Timothy P. Noyes
Chief Executive Officer
Aerovate Therapeutics, Inc.
930 Winter Street, Suite M-500
Waltham, MA 02451
(617) 443-2400

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)​

Copies to:

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this registration statement and the satisfaction or waiver of all other conditions under the Merger Agreement described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

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

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 7(a)(2)(B) of the Securities Act.  ☒

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this proxy statement/prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED MARCH 14, 2025

PROPOSED MERGER

YOUR VOTE IS VERY IMPORTANT

To the Stockholders of Aerovate Therapeutics, Inc. and Jade Biosciences, Inc.,

Aerovate Therapeutics, Inc., a Delaware corporation (“Aerovate”) and Jade Biosciences, Inc., a Delaware corporation (“Jade”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) on October 30, 2024, pursuant to which, among other matters, (i) Caribbean Merger Sub I, Inc., a direct, wholly owned subsidiary of Aerovate (“Merger Sub I”), will merge with and into Jade, with Jade surviving as a wholly owned subsidiary of Aerovate and the surviving corporation of the merger (the “First Merger”), and (ii) Jade will merge with and into Caribbean Merger Sub II, LLC, a direct, wholly owned subsidiary of Aerovate (“Merger Sub II”), with Merger Sub II being the surviving entity of the merger (the “Second Merger” and collectively with the First Merger, the “Merger”). Aerovate following the Merger is referred to herein as the “Combined Company.”

At the effective time of the First Merger (the “First Effective Time”), (i) each share of Jade common stock (including shares of Jade common stock issued in the Jade Pre-Closing Financing described below) will be converted into the right to receive a number of shares of Aerovate common stock equal to the exchange ratio described in more detail in the section titled “The Merger Agreement — Exchange Ratio” beginning on page 156 of the accompanying proxy statement/prospectus, referred to herein as the “Exchange Ratio,” (ii) each share of Jade Series Seed Convertible Preferred Stock, par value $0.0001 per share, will be converted into the right to receive a number of shares of Aerovate Series A Non-Voting Convertible Preferred Stock (the “Aerovate Series A Preferred Stock”) equal to the Exchange Ratio divided by 1,000, (iii) each then-outstanding option to purchase Jade common stock will be assumed by Aerovate and converted into an option to purchase shares of Aerovate common stock, subject to adjustment as set forth in the Merger Agreement, and (iv) each then-outstanding pre-funded warrant to purchase shares of Jade common stock will be converted into a pre-funded warrant to purchase shares of Aerovate common stock (each, an “Aerovate pre-funded warrant”), subject to adjustment as set forth in the Merger Agreement and the form of pre-funded warrant. If any shares of Jade common stock are unvested or subject to a repurchase option or risk of forfeiture at the First Effective Time (the “Jade Restricted Stock”), then the shares of Aerovate common stock issued in exchange for such shares will to the same extent be unvested and subject to the same repurchase option or risk of forfeiture.

In connection with the Merger, each outstanding and unexercised option to purchase shares of Jade common stock will be assumed by Aerovate and will be converted into an option to purchase shares of Aerovate’s common stock, with necessary adjustments to reflect the Exchange Ratio. See the section titled “The Merger Agreement — Treatment of Jade Options” beginning on page 158 of the accompanying proxy statement/prospectus.

Each share of Aerovate common stock that is issued and outstanding at the effective time of the Merger will remain issued and outstanding and such shares, subject to the proposed reverse stock split, will be unaffected by the Merger. Each option to acquire shares of Aerovate’s common stock with an exercise price less than or equal to the Aerovate Closing Price (the “Aerovate ITM Options”) will be cancelled and converted into the right to receive an amount in cash, without interest, less any applicable tax withholding, equal to the product obtained by multiplying (A) the excess of the Aerovate Closing Price over the exercise price per share of Aerovate common stock underlying such Aerovate option by (B) the number of shares of Aerovate common stock underlying such Aerovate option, and each option with an exercise price greater than the Aerovate Closing Price, as adjusted for the proposed special Cash Dividend (as defined below), to acquire shares of Aerovate’s common stock (the “Aerovate OTM Options”) will be cancelled for no consideration. As used herein, the “Aerovate Closing Price” means the volume weighted average closing trading price of a share of Aerovate common stock on The Nasdaq Stock Market LLC (“Nasdaq”), for the

five (5) consecutive trading days ending three (3) days immediately prior to the anticipated date for the special meeting of Aerovate stockholders. Each unvested Aerovate restricted stock unit (“Aerovate RSU”) shall be accelerated in full.

Based on Aerovate’s and Jade’s capitalization as of March 10, 2025 and taking into account Aerovate’s current cash position, each share of Jade common stock is currently estimated to be entitled to receive approximately 22.0844 shares of Aerovate common stock and each share of Jade Preferred Stock is currently estimated to be entitled to receive approximately 0.0220844 shares of Aerovate Series A Preferred Stock. This estimated Exchange Ratio does not give effect to the proposed Aerovate reverse stock split and is subject to adjustment based on Aerovate’s estimated Net Cash (as defined herein) at the closing of the First Merger as described in more detail in the section titled “The Merger Agreement — Exchange Ratio” beginning on page 156 of the accompanying proxy statement/prospectus.

Prior to the closing of the Merger (the “Closing”), certain investors have agreed to purchase shares of Jade common stock or pre-funded warrants for an aggregate purchase price of approximately $300 million, including the conversion of Jade’s previously issued $95 million convertible notes, referred to herein as the “Jade Pre-Closing Financing.” The closing of the Jade Pre-Closing Financing is conditioned upon the satisfaction or waiver of the conditions to the Closing as well as certain other conditions.

Immediately after the Merger, Aerovate securityholders as of immediately prior to the Merger are expected to own approximately 1.4% of the outstanding shares of the Combined Company on a fully-diluted basis, former Jade securityholders, excluding shares purchased in the Jade Pre-Closing Financing, are expected to own approximately 40.0% of the outstanding shares of the Combined Company on a fully-diluted basis, and shares and pre-funded warrants issued in the Jade Pre-Closing Financing are expected to represent approximately 58.6% of the outstanding shares of capital stock of the Combined Company on a fully-diluted basis, subject to certain assumptions.

Shares of Aerovate common stock are currently listed on Nasdaq under the symbol “AVTE.” Aerovate has filed an initial listing application for the Combined Company with Nasdaq. After completion of the Merger, Aerovate will be renamed “Jade Biosciences, Inc.” and it is expected that the common stock of the Combined Company will trade on Nasdaq under the symbol “JBIO.” On March 13, 2025, the last trading day before the date of the accompanying proxy statement/prospectus, the closing sale price of Aerovate common stock was $2.47 per share. Under the Merger Agreement, each of Aerovate’s and Jade’s obligation to complete the Merger is subject to the satisfaction or waiver by each of the parties of various conditions, including that the shares of Aerovate common stock to be issued in the Merger have been approved for listing (subject to official notice of issuance) on Nasdaq as of the closing of the Merger. In the event that the shares of Aerovate common stock to be issued in the Merger are not approved for listing on Nasdaq, it is possible that Aerovate and Jade may mutually agree to waive the applicable condition and nonetheless proceed with completion of the Merger. If such condition is waived, Aerovate will not recirculate an updated proxy statement/prospectus, nor will it solicit a new vote of stockholders prior to proceeding with the Merger. Accordingly, you are advised that Aerovate stockholders will not have certainty regarding the listing of the combined company’s shares at the time you are asked to vote at the special meeting described below.

The Jade Pre-Closing Financing is more fully described in the accompanying proxy statement/prospectus.

Aerovate stockholders are cordially invited to attend the special meeting in lieu of the annual meeting of Aerovate stockholders. Aerovate is holding its special meeting in lieu of the annual meeting of stockholders (the “Aerovate Special Meeting”), on April 16, 2025, at 9 a.m., Eastern Time, unless postponed or adjourned to a later date, in order to obtain the stockholder approvals necessary to complete the Merger and related matters. The Aerovate Special Meeting will be held at the offices of Goodwin Procter LLP, 100 Northern Avenue, Boston, Massachusetts 02210. Aerovate stockholders will be able to attend and participate in the Aerovate Special Meeting in person where they will be able to ask questions and vote. At the Aerovate Special Meeting, Aerovate will ask its stockholders to:

1.

Approve the issuance of shares of common stock of Aerovate (including the shares of Aerovate common stock issuable upon conversion of the Aerovate Series A Preferred Stock and exercise of the Aerovate pre-funded warrants) to stockholders of Jade pursuant to the terms of the Merger Agreement, a copy of which is attached as Annex A to the accompanying proxy statement/​prospectus, which will (i) represent more than 20% of the shares of Aerovate common stock outstanding immediately prior to the Merger under Nasdaq Listing Rule 5635(a), and (ii) result in a change of control under Nasdaq Listing Rule 5635(b) (the “Nasdaq Stock Issuance Proposal” or “Proposal No. 1”);

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2.

Approve an amendment to the amended and restated certificate of incorporation of Aerovate to effect a reverse stock split of Aerovate’s issued and outstanding common stock at a ratio determined by the Aerovate board of directors and agreed to by Jade, of one new share of Aerovate common stock for every 20 to 120 shares (or any number in between) of outstanding Aerovate common stock, in the form attached as Annex B to the accompanying proxy statement/prospectus (the “Reverse Stock Split Proposal” or “Proposal No. 2”);

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3.

Approve an amendment to the amended and restated certificate of incorporation of Aerovate to increase the number of shares of Aerovate common stock that Aerovate is authorized to issue from 150,000,000 to 300,000,000, in the form attached as Annex C (the “Authorized Share Increase Proposal” or “Proposal No. 3”);

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4.

Approve the redomestication of Aerovate from the State of Delaware to the State of Nevada by conversion (the “Redomestication Proposal” or “Proposal No. 4”);

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5.

Approve the Jade Biosciences, Inc. 2025 Stock Incentive Plan (the “Stock Plan Proposal” or “Proposal No. 5”);

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6.

Approve the Jade Biosciences, Inc. 2025 Employee Stock Purchase Plan (the “ESPP Proposal” or “Proposal No. 6”);

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7.

Elect the three Class I directors, Mark Iwicki, Timothy P. Noyes, and Donald J. Santel, to Aerovate’s board of directors and to hold office until Aerovate’s 2028 annual meeting of stockholders and until their successor has been duly elected and qualified, or until their earlier death, resignation or removal; provided that if the Merger is consummated, the approval of Proposal No. 7 will only have an effect until the completion of the Merger because the composition of Aerovate’s board of directors will be reconstituted upon completion of the Merger, in accordance with the Merger Agreement (the “Director Election Proposal” or “Proposal No. 7”);

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8.

Ratify the appointment of KPMG LLP as Aerovate’s independent registered public accounting firm for fiscal year ending December 31, 2025; provided that PricewaterhouseCoopers LLP is expected to be appointed for that fiscal year if the Merger is completed (the “Auditor Ratification Proposal” or “Proposal No. 8”);

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9.

Approve an adjournment of the Aerovate Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2 and 3 (the “Adjournment Proposal” or “Proposal No. 9”); and

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10.

Transact such other business as may properly come before the stockholders at the Aerovate Special Meeting or any adjournment or postponement thereof.

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As described in the accompanying proxy statement/prospectus, certain Aerovate stockholders who in the aggregate owned approximately 37.7% of the outstanding shares of Aerovate as of March 10, 2025, and certain Jade stockholders who in the aggregate owned approximately 99.0% of the outstanding shares of Jade capital stock as of March 10, 2025, are parties to stockholder support agreements with Aerovate and Jade, respectively, whereby such stockholders have agreed to vote in favor of the approval of the transactions contemplated therein, including, with respect to Jade stockholders, adoption of the Merger Agreement and approval of the Merger and, with respect to such Aerovate stockholders, Proposal Nos. 1 – 7, subject to the terms of the support agreements. Following the effectiveness of the registration statement on Form S-4 of which the accompanying proxy statement/prospectus is a part and pursuant to the Merger Agreement, Jade stockholders holding a sufficient number of shares of Jade capital stock to adopt the Merger Agreement and approve the Merger and related transactions will be asked to execute written consents providing for such adoption and approval.

Further, prior to the First Effective Time, the Aerovate board of directors will declare and set aside the aggregate cash amount to be paid in accordance with a pre-Closing special cash dividend (the “Cash Dividend”) to holders of record of outstanding shares of Aerovate common stock as of a record date prior to the First Effective Time, to be set by the Aerovate board of directors as close as reasonably practicable to (but not later than) the anticipated Closing. The ex-dividend date in respect of such Cash Dividend will be determined by Nasdaq. Aerovate stockholders of record who continue to hold their eligible shares of Aerovate common stock until market open on the ex-dividend date will be entitled to payment of the Cash Dividend. The Cash Dividend will be equal in the aggregate to Aerovate’s reasonable, good faith approximation of the amount by which Aerovate’s Net Cash (as determined pursuant to the Merger

Agreement) is expected to exceed $0 as of the closing of the Merger. The aggregate amount of the Cash Dividend is expected to be approximately $65.0 million.

After careful consideration, each of the Aerovate and Jade boards of directors have approved the Merger Agreement and have determined that it is advisable to consummate the Merger. Aerovate’s board of directors has approved the proposals described in the accompanying proxy statement/prospectus and recommends that its stockholders vote “FOR” the proposals described in the accompanying proxy statement/​prospectus.

More information about Aerovate, Jade, the Merger Agreement and transactions contemplated thereby and the foregoing proposals is contained in the accompanying proxy statement/prospectus. Aerovate urges you to read the accompanying proxy statement/prospectus carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER “RISK FACTORS” BEGINNING ON PAGE 27 OF THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS.

Aerovate and Jade are excited about the opportunities the Merger brings to Aerovate’s and Jade’s stockholders and thank you for your consideration and continued support. Sincerely,

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the accompanying proxy statement/​prospectus. Any representation to the contrary is a criminal offense.

The accompanying proxy statement/prospectus is dated March 14, 2025, and is first being mailed to Aerovate’s stockholders on or about March 24, 2025.

 

AEROVATE THERAPEUTICS, INC.
930 Winter Street, Suite M-500
Waltham, MA 02451
(617) 443-2400

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS

To the stockholders of Aerovate Therapeutics, Inc.:

NOTICE IS HEREBY GIVEN that a special meeting in lieu of the annual meeting of stockholders (the “Aerovate Special Meeting”), will be held on April 16, 2025, at 9:00 a.m., Eastern Time, unless postponed or adjourned to a later date. The Aerovate Special Meeting will be held at the offices of Goodwin Procter LLP, 100 Northern Avenue, Boston, Massachusetts 02210. You will be able to attend and participate in the Aerovate Special Meeting in person where you will be able to ask questions and vote.

The Aerovate Special Meeting will be held for the following purposes:

1.

To approve the issuance of shares of common stock of Aerovate Therapeutics, Inc. (“Aerovate”) (including the shares of Aerovate common stock issuable upon conversion of the Aerovate Series A Non-Voting Convertible Preferred Stock (“Aerovate Series A Preferred Stock”) and exercise of the Aerovate pre-funded warrants) to stockholders of Jade Biosciences, Inc. (“Jade”) pursuant to the terms of the Agreement and Plan of Merger among Aerovate, Jade and Caribbean Merger Sub I, Inc. (“Merger Sub I”) and Caribbean Merger Sub II, LLC (“Merger Sub II” and together with Merger Sub I, the “Merger Subs”), dated as of October 30, 2024, a copy of which is attached as Annex A to the accompanying proxy statement/prospectus, which is referred to in this notice as the “Merger Agreement,” a copy of which is attached as Annex A to the accompanying proxy statement/prospectus, which will (i) represent more than 20% of the shares of Aerovate common stock outstanding immediately prior to the Merger (as defined herein) under Nasdaq Listing Rule 5635(a), and (ii) result in a change of control under Nasdaq Listing Rule 5635(b) (the “Nasdaq Stock Issuance Proposal” or “Proposal No. 1”);

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2.

To approve an amendment to the amended and restated certificate of incorporation of Aerovate to effect a reverse stock split of Aerovate’s issued and outstanding common stock at a ratio determined by the Aerovate board of directors and agreed to by Jade, of one new share of Aerovate common stock for every 20 to 120 shares (or any number in between) of outstanding Aerovate common stock, in the form attached as Annex B to the accompanying proxy statement/prospectus (the “Reverse Stock Split Proposal” or “Proposal No. 2”);

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3.

To approve an amendment to the amended and restated certificate of incorporation of Aerovate to increase the number of shares of Aerovate common stock that Aerovate is authorized to issue from 150,000,000 to 300,000,000, in the form attached as Annex C (the “Authorized Share Increase Proposal” or “Proposal No. 3”);

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4.

To approve the redomestication of Aerovate from the State of Delaware to the State of Nevada by conversion (the “Redomestication Proposal” or “Proposal No. 4”);

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5.

To approve the Jade Biosciences, Inc. 2025 Stock Incentive Plan (the “Stock Plan Proposal” or “Proposal No. 5”);

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6.

To approve the Jade Biosciences, Inc. 2025 Employee Stock Purchase Plan (the “ESPP Proposal” or “Proposal No. 6”);

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7.

Elect the three Class I directors, Mark Iwicki, Timothy P. Noyes, and Donald J. Santel, to Aerovate’s board of directors and to hold office until Aerovate’s 2028 annual meeting of stockholders and until their successor has been duly elected and qualified, or until their earlier death, resignation or removal; provided that if the Merger is consummated, the approval of Proposal No. 7 will only have an effect until the completion of the Merger because the composition of

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Aerovate’s board of directors will be reconstituted upon completion of the Merger, in accordance with the Merger Agreement (the “Director Election Proposal” or “Proposal No. 7”);

8.

Ratify the appointment of KPMG LLP as Aerovate’s independent registered public accounting firm for fiscal year ending December 31, 2025; provided that PricewaterhouseCoopers LLP is expected to be appointed for that fiscal year if the Merger is completed (the “Auditor Ratification Proposal” or “Proposal No. 8”);

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9.

To approve an adjournment of the Aerovate Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2 and 3 (the “Adjournment Proposal” or “Proposal No. 9”); and

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10.

To transact such other business as may properly come before the stockholders at the Aerovate Special Meeting or any adjournment or postponement thereof.

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Record Date:   Aerovate’s board of directors has fixed March 14, 2025 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Aerovate Special Meeting and any adjournment or postponement thereof. Only holders of record of shares of Aerovate common stock at the close of business on the record date are entitled to notice of, and to vote at, the Aerovate Special Meeting. At the close of business on the record date, Aerovate had 28,985,019 shares of common stock outstanding and entitled to vote.

Your vote is important. The affirmative vote of a majority of the votes properly cast at the Aerovate Special Meeting, assuming a quorum is present, is required for approval of Proposal Nos. 1, 5, 6, 8 and 9. The affirmative vote of a majority of the outstanding shares of Aerovate common stock entitled to vote thereon is required for approval of Proposal Nos. 2, 3 and 4. With respect to Proposal No. 7, the directors are elected by a plurality of the votes properly cast at the Aerovate Special Meeting, and the nominees for director receiving the highest number of affirmative votes will be elected. Approval of each of Proposal No. 1, Proposal No. 2 and Proposal No. 3 is a condition to the completion of the Merger. Therefore, the Merger cannot be consummated without the approval of Proposal Nos. 1, 2 and 3.

Even if you plan to attend the Aerovate Special Meeting, Aerovate requests that you sign and return the enclosed proxy or vote by mail or online to ensure that your shares will be represented at the Aerovate Special Meeting if you are unable to attend. You may change or revoke your proxy at any time before it is voted at the Aerovate Special Meeting.

AEROVATE’S BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS FAIR TO, IN THE BEST INTERESTS OF, AND ADVISABLE TO AEROVATE AND ITS STOCKHOLDERS AND HAS APPROVED EACH SUCH PROPOSAL. AEROVATE’S BOARD OF DIRECTORS RECOMMENDS THAT AEROVATE STOCKHOLDERS VOTE “FOR” EACH SUCH PROPOSAL.

Important Notice Regarding the Availability of Proxy Materials for the Stockholders’ Meeting
to Be Held on April 16, 2025 at 9:00 a.m., Eastern Time at the offices of Goodwin Procter LLP,
100 Northern Avenue, Boston, Massachusetts 02210.

The proxy statement/prospectus and annual report to stockholders in connection with the special meeting in lieu of annual meeting are available at www.InvestorVote.com/AVTE .

By Order of Aerovate’s Board of Directors,

Timothy Noyes
Chief Executive Officer

March 14, 2025

 

 

EXPLANATORY NOTE

The issuances of (i) all shares of Aerovate common stock in exchange for each share of Jade common stock (including shares of Jade common stock issued in the Jade Pre-Closing Financing), (ii) all shares of Aerovate common stock issuable upon exercise of pre-funded warrants issued in exchange for pre-funded warrants to purchase shares of Jade common stock sold in the Jade Pre-Closing Financing, (iii) all shares of Aerovate common stock issuable upon conversion of Aerovate Series A Preferred Stock issued in exchange for each share of Jade preferred stock, (iv) all Aerovate pre-funded warrants in exchange for each Jade pre-funded warrant and (v) all shares of Aerovate Series A Preferred Stock in exchange for each share of Jade Series Seed Convertible Preferred Stock, par value $0.0001 per share (“Jade Preferred Stock”) are intended to be covered by this registration statement on Form S-4 of which this proxy statement/prospectus is a part. There is no difference between the shares of Aerovate common stock that will be issued in exchange for each share of Jade common stock issued in the Jade Pre-Closing Financing, the shares of Aerovate common stock that will be issued in exchange for each other share of Jade common stock, the shares of Aerovate common stock that will be issuable upon the exercise of pre-funded warrants that will be issued in exchange for pre-funded warrants to purchase shares of Jade common stock sold in the Jade Pre-Closing Financing, the shares of Aerovate common stock that will be issuable upon conversion of Aerovate Series A Preferred Stock that will be issued in exchange for each share of Jade Preferred Stock, the Aerovate pre-funded warrants that will be issued in exchange for each Jade pre-funded warrant and the shares of Aerovate Series A Preferred Stock that will be issued in exchange for shares of Jade Preferred Stock.

REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Aerovate Therapeutics, Inc. that is not included in or delivered with this document. You may obtain this information without charge through the Securities and Exchange Commission website (www.sec.gov) or upon your written or oral request by contacting the Corporate Secretary of Aerovate Therapeutics, Inc. by calling (617) 443-2400 or via email to Legal@AerovateTx.com.

To ensure timely delivery of these documents, any request should be made no later than April 2, 2025 to receive them before the Aerovate Special Meeting.

For additional details about where you can find information about Aerovate, please see the section titled “Where You Can Find More Information” beginning on page 403 of this proxy statement/prospectus.

 

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TABLE OF CONTENTS

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER

Except where specifically noted, the following information and all other information contained in this proxy statement/prospectus does not give effect to the proposed reverse stock split described in Proposal No. 2 of this proxy statement/prospectus.

The following section provides answers to frequently asked questions about the Merger. This section, however, provides only summary information. For a more complete response to these questions and for additional information, please refer to the cross-referenced sections.

Q:

What is the Merger?

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A:

On October 30, 2024, Aerovate, Jade, Merger Sub I and Merger Sub II entered into the Merger Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A. The Merger Agreement contains the terms and conditions of the proposed Merger. Pursuant to the Merger Agreement, Merger Sub I will merge with and into Jade, with Jade continuing as a wholly owned subsidiary of Aerovate and the surviving corporation of the First Merger. Jade will then merge with and into Merger Sub II, with Merger Sub II being the surviving entity of the Second Merger. This entire transaction is referred to in this proxy statement/prospectus as the “Merger.” In connection with the Merger, Aerovate will change its corporate name to “Jade Biosciences, Inc.”

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Q:

What will Jade securityholders receive in the Merger?

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A:

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 the Jade Pre-Closing Financing) (excluding shares to be cancelled pursuant to the Merger Agreement and excluding dissenting shares) will be converted into the right to receive a number of shares of Aerovate common stock equal to the Exchange Ratio (described in more detail in the section titled “The Merger Agreement — Exchange Ratio” beginning on page 156 of this proxy statement/​prospectus), (ii) each then-outstanding share of Jade Preferred Stock will be converted into the right to receive a number of shares of Aerovate 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, in accordance with the terms of the Merger Agreement, (iii) each then-outstanding option to purchase Jade common stock will be assumed by Aerovate and converted into an option to purchase shares of Aerovate common stock, subject to adjustment as set forth in the Merger Agreement, and (iv) each then-outstanding pre-funded warrant to purchase shares of Jade common stock will be converted into an Aerovate pre-funded warrant, subject to adjustment as set forth in the Merger Agreement and the form of pre-funded warrant.

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For a more complete description of the treatment of Jade securities in the Merger, please see the sections titled “The Merger Agreement — Merger Consideration,” and “The Merger Agreement — Exchange Ratio” beginning on pages 155 and 156, respectively, of this proxy statement/prospectus. For a description of the effect of the Jade Pre-Closing Financing on Jade’s current securityholders, please see the section titled “Agreements Related to the Merger — Subscription Agreement” beginning on page 172 of this proxy statement/prospectus.

Q:

What will Aerovate securityholders receive in the Merger?

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A:

Each share of Aerovate common stock that is issued and outstanding at the effective time of the Merger will remain issued and outstanding and such shares, subject to the proposed reverse stock split, will be unaffected by the Merger. Each option to acquire shares of Aerovate’s common stock with an exercise price less than or equal to the Aerovate Closing Price will be cancelled and converted into the right to receive an amount in cash, without interest, less any applicable tax withholding, equal to the product obtained by multiplying (A) the excess of the Aerovate Closing Price over the exercise price per share of Aerovate common stock underlying such Aerovate option by (B) the number of shares of Aerovate common stock underlying such Aerovate option, and each other option to acquire shares of Aerovate’s common stock will be cancelled for no consideration. Immediately after the Merger, Aerovate securityholders as of immediately prior to the Merger are expected to own approximately

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1

 

1.4% of the outstanding shares of the Combined Company on a fully-diluted basis, former Jade securityholders, excluding shares purchased in the Jade Pre-Closing Financing, are expected to own approximately 40.0% of the outstanding shares of the Combined Company on a fully-diluted basis, and shares and pre-funded warrants issued in the Jade Pre-Closing Financing are expected to represent approximately 58.6% of the outstanding shares of capital stock of the Combined Company on a fully-diluted basis, subject to certain assumptions, including, but not limited to, Aerovate’s Net Cash as of Closing being approximately $0.

In addition, prior to the First Effective Time, Aerovate’s board of directors expects to declare the Cash Dividend to stockholders of record of outstanding shares of Aerovate common stock as of the record date prior to the First Effective Time, to be set by Aerovate’s board of directors as close as reasonably practicable to (but not later than) the First Effective Time. The ex-dividend date in respect of such Cash Dividend will be determined by Nasdaq. Aerovate stockholders of record who continue to hold their eligible shares of Aerovate common stock until market open on the ex-dividend date will be entitled to payment of the Cash Dividend. The Cash Dividend will be equal in the aggregate to Aerovate’s reasonable, good faith approximation of the amount by which Aerovate’s Net Cash (as determined pursuant to the Merger Agreement) is expected to exceed $0. Aerovate currently estimates that the aggregate amount of cash to be distributed to stockholders of record as of the record date for the Cash Dividend will be approximately $65.0 million.

For a more complete description of the treatment of Aerovate securities in the Merger, please see the sections titled “The Merger Agreement — Merger Consideration,” “The Merger Agreement — Exchange Ratio,” and “Market Price and Dividend Information” beginning on pages 155, 156 and 26, respectively, of this proxy statement/prospectus.

Q:

Why are the two companies proposing to merge?

​

A:

Aerovate and Jade believe that combining the two companies will result in a company focused on developing biologics designed to optimize the treatment of autoimmune diseases with a strong leadership team and substantial capital resources. For a more complete description of the reasons for the Merger, please see the sections titled “The Merger — Aerovate’s Reasons for the Merger” and “The Merger — Jade’s Reasons for the Merger” beginning on pages 123 and 128, respectively, of this proxy statement/​prospectus.

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Q:

What will happen to Aerovate if, for any reason, the Merger with Jade does not close?

​

A:

Aerovate has invested significant time and incurred, and expects to continue to incur, significant expenses related to the proposed Merger with Jade. In the event the Merger does not close, Aerovate will have a limited ability to continue its current operations indefinitely. Although Aerovate’s board of directors may elect, among other things, to attempt to complete another strategic transaction if the Merger with Jade does not close, Aerovate’s board of directors may instead take steps necessary to liquidate or dissolve Aerovate’s business and assets if a viable alternative strategic transaction is not available. If Aerovate decides to dissolve and liquidate its assets, Aerovate would be required to pay all of its contractual obligations, and to set aside certain reserves for potential future claims, and there can be no assurance as to the amount of and the timing of such liquidation and distribution of available cash left to distribute to stockholders after paying the obligations of Aerovate and setting aside funds for reserves.

​

Q:

Why am I receiving this proxy statement/prospectus?

​

A:

You are receiving this proxy statement/prospectus because you have been identified as a stockholder of Aerovate as of the applicable record date, and you are entitled to vote to approve the matters set forth herein. This document serves as:

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•

a proxy statement of Aerovate used to solicit proxies for the Aerovate Special Meeting to vote on the matters set forth herein;

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•

a prospectus of Aerovate used to offer (i) shares of Aerovate common stock issued in exchange for shares of Jade common stock (including shares of Jade common stock issued in the Jade Pre-Closing

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Financing), (ii) shares of Aerovate common stock issuable upon exercise of pre-funded warrants issued in exchange for pre-funded warrants to purchase shares of Jade common stock sold in the Jade Pre-Closing Financing, and (iii) shares of Aerovate common stock issuable upon conversion of Aerovate Series A Preferred Stock issued in exchange for shares of Jade Preferred Stock in the Merger (see the section titled “EXPLANATORY NOTE” on page i of this proxy statement/prospectus); and

•

the annual report of Aerovate provided as the Aerovate Special Meeting is in lieu of Aerovate’s annual meeting.

​

Q:

What is the Jade Pre-Closing Financing?

​

A:

On October 30, 2024, concurrently with the execution and delivery of the Merger Agreement, Jade entered into the Securities Purchase Agreement with certain investors named therein, including, among others, Fairmount, Venrock Healthcare Capital Partners, and a large investment firm, with participation from Deep Track Capital, Braidwell LP, Driehaus Capital Management, Frazier Life Sciences, RA Capital Management, Great Point Partners, Soleus Capital, Avidity Partners, Blackstone Multi-Asset Investing, Logos Capital, Deerfield Management, OrbiMed, and Samsara BioCapital, pursuant to which such investors agreed to purchase shares of Jade common stock and pre-funded warrants to purchase shares of Jade common stock at an estimated purchase price of $5.9407 per share and $5.9406 per pre-funded warrant for an aggregate purchase price of approximately $300.0 million (which reflects the conversion of the previously issued $95 million of convertible notes). The conversion price of the convertible notes will be the product resulting from multiplying the price per share in the Jade Pre- Closing Financing by 0.80. Shares of Jade common stock and pre-funded warrants issued pursuant to this financing transaction will be converted into shares of Aerovate common stock and Aerovate pre-funded warrants in accordance with the Exchange Ratio and the Merger Agreement. Aerovate shareholders should not consider investments made by Jade’s existing investors as a factor when making a decision on how to vote on the proposals in this proxy statement/prospectus, since Jade’s existing investors may have had different risk tolerances.

​

Immediately after the Merger, the shares of Jade common stock and Jade pre-funded warrants issued in the Jade Pre-Closing Financing are expected to represent approximately 58.6% of the outstanding shares of common stock of the Combined Company. Aerovate, Jade and the investors participating in the Jade Pre-Closing Financing have also agreed to enter into a registration rights agreement at the closing of the Jade Pre-Closing Financing, pursuant to which, among other things, the Combined Company will agree to provide for the registration and resale of certain shares of Aerovate common stock that are held by the investors participating in the Jade Pre-Closing Financing from time to time pursuant to Rule 415. The closing of the Jade Pre-Closing Financing is conditioned upon the satisfaction or waiver of the conditions to the Closing as well as certain other conditions.

For a more complete description of the Jade Pre-Closing Financing, please see the sections titled “Agreements Related to the Merger — Subscription Agreement” and “Agreements Related to the Merger — Registration Rights Agreement” beginning on pages 172 and 174 of this proxy statement/​prospectus, respectively.

Q:

What proposals will be voted on at the Aerovate Special Meeting in connection with the Merger?

​

A:

Pursuant to the terms of the Merger Agreement, the following proposals must be approved by the requisite stockholder vote at the Aerovate Special Meeting in order for the Merger to close (the “Merger Proposals”):

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•

Proposal No. 1 — The Nasdaq Stock Issuance Proposal to approve the issuance of shares of common stock of Aerovate (including the shares of Aerovate common stock issuable upon conversion of the Aerovate Series A Preferred Stock and exercise of the Aerovate pre-funded warrants) to stockholders of Jade pursuant to the terms of the Merger Agreement, a copy of which is attached as Annex A to the accompanying proxy statement/prospectus, which will (i) represent more than 20% of the shares of Aerovate common stock outstanding immediately prior to the Merger under Nasdaq Listing Rule 5635(a), and (ii) result in a change of control under Nasdaq Listing Rule 5635(b);

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•

Proposal No. 2 — The Reverse Stock Split Proposal to approve an amendment to the amended and restated certificate of incorporation of Aerovate to effect a reverse stock split of Aerovate’s issued and outstanding common stock at a ratio determined by the Aerovate board of directors and agreed to by Jade, of one new share of Aerovate common stock for every 20 to 120 shares (or any number in between) of outstanding Aerovate common stock, in the form attached as Annex B to the accompanying proxy statement/prospectus; and

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•

Proposal No. 3 — The Authorized Share Increase Proposal to approve an amendment to the amended and restated certificate of incorporation of Aerovate to increase the number of shares of Aerovate common stock that Aerovate is authorized to issue from 150,000,000 to 300,000,000, in the form attached as Annex C to this proxy statement/prospectus.

​

Approval of each of Proposal Nos. 1, 2 and 3 is a condition to completion of the Merger. The issuance of Aerovate common stock, including shares of common stock issuable upon conversion of Aerovate Series A Preferred Stock, in connection with the Merger and the change of control resulting from the Merger will not take place unless Proposal No. 1 is approved by Aerovate stockholders and the Merger is consummated. The amendment to the amended and restated certificate of incorporation of Aerovate to effect a reverse stock split of Aerovate’s issued and outstanding common stock will not take place unless Proposal No. 2 is approved by the requisite Aerovate stockholders and the Merger is consummated. The amendment to the amended and restated certificate of incorporation of Aerovate to increase the number of authorized shares of Aerovate common stock will not take place unless Proposal No. 3 is approved by the requisite Aerovate stockholders and the Merger is consummated.

In addition to the requirement of obtaining Aerovate stockholder approval, the Closing is subject to the satisfaction or waiver of each of the other closing conditions set forth in the Merger Agreement. For a more complete description of the closing conditions under the Merger Agreement, please see the section titled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 168 of this proxy statement/prospectus.

The presence, in person or being represented by proxy, at the Aerovate Special Meeting of the holders of a majority of the shares of Aerovate common stock outstanding and entitled to vote at the Aerovate Special Meeting is necessary to constitute a quorum at the meeting for the purpose of approving the Merger Proposals.

Q:

What proposals are to be voted on at the Aerovate Special Meeting, other than the Merger Proposals?

​

A:

At the Aerovate Special Meeting, the holders of Aerovate common stock will also be asked to consider the following proposals:

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•

Proposal No. 4 — The Redomestication Proposal to approve the redomestication of Aerovate from the State of Delaware to the State of Nevada by conversion (the “Nevada Redomestication”);

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•

Proposal No. 5 — The Stock Plan Proposal to approve the Jade Biosciences, Inc. 2025 Stock Incentive Plan;

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•

Proposal No. 6 — The ESPP Proposal to approve the Jade Biosciences, Inc. 2025 Employee Stock Purchase Plan;

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•

Proposal No. 7 — The Director Election Proposal to elect three (3) Class I director nominees named in the accompanying proxy statement/prospectus to Aerovate’s board of directors, to serve until Aerovate’s 2028 annual meeting of stockholders or until their successor has been duly elected and qualified, or until their earlier death, resignation or removal;

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•

Proposal No. 8 — The Auditor Ratification Proposal to ratify the selection of KPMG LLP as Aerovate’s independent registered public accounting firm for the fiscal year ending December 31, 2025; and

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•

Proposal No. 9 — The Adjournment Proposal to approve an adjournment of the Aerovate Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2 and 3.

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4

 

The approvals of Proposal Nos. 4, 5, 6, 7, 8 and 9 are not conditions to the Merger.

The presence, in person or being represented by proxy, at the Aerovate Special Meeting of the holders of a majority of the shares of Aerovate common stock outstanding and entitled to vote at the Aerovate Special Meeting is necessary to constitute a quorum at the meeting for the purpose of approving the proposals.

Q:

What stockholder votes are required to approve the proposals at the Aerovate Special Meeting?

​

A:

The affirmative vote of a majority of votes properly cast at the Aerovate Special Meeting, assuming a quorum is present, is required for approval of Proposal Nos. 1, 5, 6, 8 and 9. The affirmative vote of the holders of a majority of the outstanding shares of Aerovate common stock entitled to vote thereon is required for approval of Proposal Nos. 2, 3 and 4. With respect to Proposal No. 7, directors are elected by a plurality of the votes properly cast at the Aerovate special meeting, and the nominees for director receiving the highest number of affirmative votes properly cast will be elected.

​

Votes will be counted by the inspector of election appointed for the meeting, who will separately count “FOR,” “AGAINST” and “WITHHOLD” votes, abstentions and broker non-votes. Abstentions and broker non-votes, if any, will also be treated as shares present for the purpose of determining the presence of a quorum for the transaction of business at the special meeting. Votes withheld, abstentions and broker non-votes, if any, will have no effect on Proposal Nos. 1, 5, 6, 7, 8 and 9 and will have the effect of a vote “AGAINST” Proposal Nos. 2, 3 and 4.

Q:

Why is Aerovate seeking stockholder approval to issue shares of Aerovate common stock to existing stockholders of Jade in the Merger?

​

A:

Because the Aerovate common stock is listed on Nasdaq, Aerovate is subject to the Nasdaq rules. Nasdaq Listing Rule 5635(a) requires stockholder approval with respect to the issuance of Aerovate common stock when, among other instances, (i) the shares to be issued are being issued in connection with the acquisition of the stock or assets of another company and are equal to 20% or more of the outstanding shares of Aerovate common stock before the issuance and (ii) any director, officer or “Substantial Shareholder” ​(as defined by Nasdaq Listing Rule 5635(e)(3)) of such company has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the company to be acquired or in the consideration to be paid in the transaction and the issuance of common stock could result in an increase in outstanding common shares or voting power of 5% or more. Nasdaq Listing Rule 5635(b) also requires stockholder approval when any issuance or potential issuance will result in a “change of control” of the issuer. Although Nasdaq has not adopted any rule on what constitutes a “change of control” for purposes of Rule 5635(b), Nasdaq has previously indicated that the acquisition of, or right to acquire, by a single investor or affiliated investor group, as little as 20% of the common stock (or securities convertible into or exercisable for common stock) or voting power of an issuer could constitute a change of control. Nasdaq will consider all facts and circumstances concerning a transaction, including whether there are any other relationships or agreements between the company and the investor or group. Nasdaq Listing Rule 5635(d) also requires stockholder approval for a transaction other than a public offering involving the sale, issuance or potential issuance by an issuer of common equity securities (or securities convertible into or exercisable for common equity securities) at a price that is less than market value of the stock if the number of equity securities to be issued is or may equal to 20% or more of the common equity securities, or 20% or more of the voting power, outstanding before the issuance.

​

In the case of the Merger, Aerovate expects to issue approximately 1.1 billion shares of Aerovate common stock, excluding approximately 274.1 million shares of Aerovate common stock underlying the Jade pre-funded warrants and approximately 441.7 million shares of Aerovate common stock underlying the shares of Jade Preferred Stock to be exchanged for Aerovate pre-funded warrants and shares of Aerovate Series A Preferred Stock, respectively, and Aerovate common stock to be issued pursuant to the Merger Agreement (including the shares issued to investors in the Jade Pre-Closing Financing) will represent greater than 20% of its voting stock outstanding before the issuance. Accordingly, Aerovate is seeking stockholder approval of the issuance pursuant to the Merger Agreement and the Jade Pre-Closing Financing under the Nasdaq rules.

 

5

 

Q:

Will the common stock of the Combined Company trade on an exchange?

​

A:

Shares of Aerovate common stock are currently listed on Nasdaq under the symbol “AVTE.” Aerovate has filed an initial listing application for the common stock of the Combined Company with Nasdaq. After completion of the Merger, Aerovate will be renamed “Jade Biosciences, Inc.” and it is expected that the common stock of the Combined Company will trade on Nasdaq under the symbol “JBIO.” It is a condition to the consummation of the Merger that Aerovate will receive confirmation from Nasdaq that the Combined Company has been approved for listing on Nasdaq, but there can be no assurance such listing condition will be met or that Aerovate will obtain such confirmation from Nasdaq. If such listing condition is not met or if such confirmation is not obtained, the Merger will not be consummated unless the condition is waived. The Nasdaq condition set forth in the Merger Agreement is not expected to be waived by the applicable parties; however, if such condition is waived, Aerovate will not recirculate an updated proxy statement/prospectus, nor will it solicit a new vote of stockholders prior to proceeding with the Merger. Accordingly, you are advised that Aerovate stockholders will not have certainty regarding the listing of the combined company’s shares at the time you are asked to vote at the Aerovate Special Meeting. For more information, please see the section entitled “Risk Factors —  Risks Related to the Merger — Aerovate and Jade may mutually agree to waive the condition to the Merger requiring approval for listing on Nasdaq, and if such condition is waived, the combined company’s stock may not be listed on Nasdaq following completion of the Merger.” on page 29 of this proxy statement/​prospectus.

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On March 13, 2025 the last trading day before the date of this proxy statement/prospectus, the closing sale price of Aerovate common stock was $2.47 per share.

Q:

Who will be the directors of the Combined Company following the Merger?

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A:

Immediately following the Merger, the Combined Company’s board of directors will be composed of six (6) members, all of whom have been designated by Jade. Effective as of the First Effective Time, Aerovate’s board of directors will appoint the following Jade designees: Tom Frohlich, Chris Cain, Eric Dobmeier, Lawrence Klein, Tomas Kiselak and Erin Lavelle, to the board of directors of the Combined Company and concurrently therewith, all of Aerovate’s current directors will resign from their positions as directors of Aerovate’s board of directors. Mr. Dobmeier is expected to be appointed as Chair of the board of directors of the Combined Company. The staggered structure of the Aerovate board of directors will remain in place for the Combined Company following the completion of the Merger. For additional information, please see the section titled “Management Following the Merger” beginning on page 349 of this proxy statement/prospectus.

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Q:

Who will be the executive officers of the Combined Company immediately following the Merger?

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A:

Immediately following the Merger, the executive management team of the Combined Company is expected to consist of members of the Jade executive management team prior to the Merger, including:

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​

Q:

As an Aerovate stockholder, how does Aerovate’s board of directors recommend that I vote?

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A:

Aerovate’s board of directors, in consultation with financial and legal advisors and management, evaluated the terms of the Merger Agreement and the related transactions contemplated thereby and: (i) determined that the Merger and the related transactions contemplated by the Merger Agreement are fair to, advisable and in the best interests of Aerovate and its stockholders; (ii) approved and declared

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6

 

advisable the Merger Agreement and the related transactions contemplated by the Merger Agreement and the Subscription Agreement, including the issuance of shares of Aerovate common stock, including shares of Aerovate common stock issuable upon conversion of Aerovate Series A Preferred Stock, in connection with the Merger and the Jade Pre-Closing Financing, respectively; and (iii) recommends that Aerovate’s stockholders vote “FOR” each of the Proposals.

Q:

What risks should I consider in deciding whether to vote in favor of the Merger?

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A:

You should carefully review the section titled “Risk Factors” beginning on page 27 of this proxy statement/​prospectus and the documents incorporated by reference herein, which set forth certain risks and uncertainties related to the Merger, risks and uncertainties to which the Combined Company’s business will be subject, and risks and uncertainties to which each of Aerovate and Jade, as independent companies, are subject.

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Q:

When do you expect the Merger to be consummated?

​

A:

The Merger is anticipated to close in the first half of 2025, but the exact timing cannot be predicted. For more information, please see the section titled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 168 of this proxy statement/prospectus.

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Q:

Why is Aerovate seeking approval for the Nevada Redomestication?

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A:

The Aerovate and Jade boards of directors believe that there are several reasons why the Nevada Redomestication is in the best interests of Aerovate and Aerovate’s stockholders. First, the Nevada Redomestication will eliminate the Combined Company’s obligation to pay the annual Delaware franchise tax, which Aerovate and Jade expect will result in substantial savings to the Combined Company over the long term. In addition, the Nevada Redomestication may help the Combined Company attract and retain qualified management by reducing the risk of lawsuits being filed against the Combined Company and its directors and officers. Aerovate and Jade believe that for the reasons described in this proxy statement/prospectus, in general, Nevada law will provide greater protection to the Combined Company and its directors and officers than Delaware law. The Aerovate board of directors believes that the Nevada Redomestication will give the Combined Company more flexibility and predictability in various corporation transactions.

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The Nevada Redomestication must receive a “FOR” vote from a majority of the outstanding shares of Aerovate common stock entitled to vote thereon in order to pass.

Q:

How will the Nevada Redomestication affect the rights of Combined Company stockholders?

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A:

Your rights as a stockholder currently are governed by Delaware law and the provisions of the amended and restated certificate of incorporation of Aerovate, and Aerovate’s amended and restated bylaws. As a result of the Nevada Redomestication, you will become a stockholder of the Combined Company with rights governed by Nevada law and the provisions of the articles of incorporation, in the form attached as Annex D to this proxy statement/prospectus, and the bylaws, in the form attached as Annex E to this proxy statement/prospectus, of the Combined Company, which differ in certain respects from your current rights. These important differences are discussed and summarized in this proxy statement/prospectus under “Proposal No. 4 — The Redomestication Proposal — Effects of the Nevada Redomestication — Comparison of Rights of Holders of the Delaware Corporation Capital Stock and the Nevada Corporation Capital Stock” beginning on page 209 of this proxy statement/prospectus.

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Q:

What are the U.S. federal income tax considerations of the Nevada Redomestication to the Combined Company stockholders?

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A:

Subject to the limitations and qualifications described in the section titled “Proposal No. 4 — The Redomestication Proposal — U.S. Federal Income Tax Considerations of the Nevada Redomestication” beginning on page 229 of this proxy statement/prospectus, Aerovate intends that the Nevada Redomestication qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Assuming the Nevada Redomestication so qualifies, a U.S. Holder (as defined therein) of Aerovate

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7

 

stock (as defined therein) will not recognize gain or loss upon the Nevada Redomestication. For a more detailed discussion of the U.S. federal income tax considerations of the Nevada Redomestication, see the section titled “Proposal No. 4 — The Redomestication Proposal — U.S. Federal Income Tax Considerations of the Nevada Redomestication” beginning on page 229 of this proxy statement/prospectus.

Q:

What do I need to do now?

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A:

Aerovate urges you to read this proxy statement/prospectus carefully, including the annexes and the documents incorporated by reference, and to consider how the Merger affects you.

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Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may vote in person at the Aerovate Special Meeting, vote by proxy over the telephone, vote by proxy through the Internet or vote by proxy using a proxy card, the form of which is attached as Annex F to this proxy statement/prospectus. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person even if you have already voted by proxy.

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To vote in person, come to the special meeting and we will give you a ballot when you arrive.

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To vote using the proxy card, simply complete, sign and date the proxy card that you may request or that we may elect to deliver at a later time and return it promptly in the envelope provided. If you return your signed proxy card to us before the special meeting, we will vote your shares as you direct.

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To vote over the telephone, dial toll-free 1-800-652-VOTE (8683) using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number found on the proxy card. Your vote must be received by 11:59 p.m. Eastern Time on April 15, 2025 to be counted.

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To vote through the Internet, go to www.InvestorVote.com/AVTE to complete an electronic proxy card. You will be asked to provide the company number and control number from the proxy card. Your vote must be received by 11:59 p.m. Eastern Time on April 15, 2025 to be counted.

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Beneficial Owner: Shares Registered in the Name of Broker, Bank or Other Agent

If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received voting instructions from that organization rather than from Aerovate. Simply follow the voting instructions provided to ensure that your vote is counted. You may vote by telephone or over the Internet as instructed by your broker, bank or other agent. To vote in person at the Aerovate Special Meeting, you must contact your broker, bank, or other agent and obtain a valid legal proxy in order to attend, participate in and vote at the Aerovate Special Meeting. Follow the voting instructions from your broker, bank or other agent, or contact your broker, bank or other agent for instructions.

Q:

What happens if I do not return a proxy card or otherwise vote or provide proxy instructions, as applicable?

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A:

If you are an Aerovate stockholder, the failure to return your proxy card or otherwise vote or provide proxy instructions will reduce the aggregate number of votes required to approve Proposal Nos. 1, 5, 6, 7, 8 and 9 and will have the effect of a vote “AGAINST” Proposal Nos. 2, 3 and 4.

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Q:

What if I sign and return a proxy card or otherwise vote but do not indicate specific choices?

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A:

Registered Stockholder: Shares Registered in Your Name

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The shares represented by each signed and returned proxy will be voted at the Aerovate Special Meeting by the persons named as proxies in the proxy card in accordance with the instructions indicated on the proxy card. However, if you are the registered stockholder and sign and return your proxy card without giving specific instructions, the persons named as proxies in the proxy card will vote your shares in accordance with the recommendations of the Board. Your shares will be counted toward the quorum requirement.

 

8

 

Beneficial Owner: Shares Registered in the Name of a Broker, Fiduciary or Custodian

If you are the beneficial owner and do not direct your broker, fiduciary or custodian how to vote your shares, your broker, fiduciary or custodian will only be able to vote your shares with respect to proposals considered to be “routine.” Your broker, fiduciary or custodian is not entitled to vote your shares with respect to “non-routine” proposals, resulting in a “broker non-vote” with respect to such proposals.

Q:

May I attend the Aerovate Special Meeting and vote in person?

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A:

Stockholders of record as of March 14, 2025 will be able to attend and participate in the Aerovate Special Meeting in person. Stockholders who hold their shares in street name should contact their broker, bank or other agent and obtain a “legal proxy” in order to be able to attend, participate in or vote at the Aerovate Special Meeting in person.

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Q:

Who counts the votes?

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A:

Computershare has been engaged as Aerovate’s independent agent to tabulate stockholder votes, which Aerovate refers to as the inspector of election. If you are a stockholder of record, your executed proxy card is returned directly to Computershare for tabulation. If you hold your shares through a broker, your broker returns one proxy card to Computershare on behalf of all its clients.

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Q:

How can I find out the voting results?

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A:

Final voting results will be published in a Current Report on Form 8-K to be filed with the SEC within four business days after the Aerovate Special Meeting.

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Q:

If my Aerovate shares are held in “street name” by my broker, will my broker vote my shares for me?

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A:

If you hold shares beneficially in street name and you do not instruct your broker, bank or other agent how to vote your shares, your broker, bank or other agent will only be able to vote your shares with respect to proposals considered to be “routine.” Your broker, bank or other agent is not entitled to vote your shares with respect to “non-routine” proposals, resulting in a “broker non-vote” with respect to such proposals. Accordingly, if you hold your shares beneficially in street name, please be sure to instruct your broker, bank or other agent how to vote to ensure that your vote is counted on each of the proposals, following the procedures provided by your broker, bank or other agent.

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Q:

What are broker non-votes and do they count for determining a quorum?

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A:

Generally, a “broker non-vote” occurs when shares held by a broker are not voted with respect to a particular proposal because the broker has not received voting instructions from its clients with respect to such shares on how to vote and does not have or did not exercise discretionary authority to vote on the matter.

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Broker non-votes, if any, will be treated as shares present for the purpose of determining the presence of a quorum for the transaction of business at the Aerovate Special Meeting. Broker non-votes, if any, will not be counted as “votes properly cast” or “shares entitled to vote” and will therefore have no effect on Proposal Nos. 1, 5, 6, 7, 8 and 9 and will have the effect of a vote “AGAINST” Proposal Nos. 2, 3 and 4.

Q:

May I revoke and/or change my vote after I have submitted a proxy or provided proxy instructions?

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A:

Aerovate stockholders of record, unless such stockholder’s vote is subject to a support agreement, may revoke and/or change their vote at any time before their proxy is voted at the Aerovate Special Meeting in one of four ways:

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You may submit another properly completed proxy with a later date by mail or via the internet.

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You can provide your proxy instructions via telephone at a later date.

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You may send an instrument in writing revoking the proxy or another duly executed proxy bearing a later date to Aerovate’s corporate secretary. Any written notice of revocation or subsequent proxy

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card must be received by Aerovate’s corporate secretary prior to the taking of the vote at the Aerovate Special Meeting. Such written notice of revocation or subsequent proxy card should be sent to Aerovate’s principal executive offices at Aerovate Therapeutics, Inc., 930 Winter Street, Suite M-500, Waltham, Massachusetts 02451, Attention: Corporate Secretary.

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You may attend the Aerovate Special Meeting and vote in person, although attendance at the Aerovate Special Meeting will not, by itself, revoke and/or change your proxy.

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Your signed proxy card, telephonic proxy instructions, internet proxy instructions, or written notice must be received by April 15, 2025, 11:59 p.m. Eastern Time to be counted.

If an Aerovate stockholder who owns Aerovate shares in “street name” has instructed a broker to vote its shares of Aerovate common stock, the stockholder must follow directions received from its broker to change and/or revoke those instructions.

Q:

Who is paying for this proxy solicitation?

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A:

Aerovate and Jade will share equally the cost of printing and filing of this proxy statement/prospectus and the proxy card. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of Aerovate common stock for the forwarding of solicitation materials to the beneficial owners of Aerovate common stock. Aerovate will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials. Aerovate has retained Innisfree M&A Incorporated (“Innisfree M&A”) to assist in soliciting proxies using the means referred to above. Jade will pay the fees of Innisfree M&A, which Aerovate and Jade expect to be approximately $20,000, plus reimbursement for certain out-of-pocket expenses.

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Q:

What are the material U.S. federal income tax considerations of the Merger to U.S. Holders of Aerovate capital stock?

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A:

Aerovate stockholders will not sell, exchange or dispose of any shares of Aerovate common stock as a result of the Merger. Thus, there will be no U.S. federal income tax considerations to Aerovate stockholders as a result of the Merger.

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Q:

What are the U.S. federal income tax consequences of the Merger to U.S. Holders of Aerovate ITM Options?

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A:

Holders of Aerovate ITM Options will receive a cash payment upon the cancellation of their Aerovate ITM Options. Such cash payment generally will be included in a U.S. Holder’s income as ordinary income when paid. For a more detailed discussion of the U.S. federal income tax considerations of the Merger for holders of Aerovate ITM Options, please see the section titled “The Merger — U.S. Federal Income Tax Considerations of the Merger for U.S. Holders of Aerovate ITM Options” beginning on page 149 of this proxy statement/prospectus.

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Q:

What are the U.S. federal income tax considerations of the Merger to U.S. Holders of Jade capital stock?

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A:

The Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. As a result, subject to the limitations and qualifications described in the section titled “The Merger — U.S. Federal Income Tax Considerations of the Merger” beginning on page 147 of this proxy statement/​prospectus, a U.S. Holder of Jade stock (as defined therein) will not recognize gain or loss upon the exchange of its Jade stock for Aerovate stock. For a more detailed discussion of the U.S. federal income tax considerations of the Merger, please see the section titled “The Merger — U.S. Federal Income Tax Considerations of the Merger” beginning on page 147 of this proxy statement/prospectus.

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Q:

What are the U.S. federal income tax considerations of the reverse stock split to holders of Aerovate common stock?

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A:

A holder of Aerovate common stock should not recognize gain or loss upon the reverse stock split,

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except to the extent such holder receives cash in lieu of a fractional share of Aerovate common stock, and subject to the discussion in the section titled “Proposal No. 2 — The Reverse Stock Split Proposal — U.S. Federal Income Tax Considerations of the Reverse Stock Split” beginning on page 200 of this proxy statement/prospectus. Please review the information in the section titled “Proposal No. 2 — The Reverse Stock Split Proposal — U.S. Federal Income Tax Considerations of the Reverse Stock Split” beginning on page 200 of this proxy statement/prospectus for a more complete description of the U.S. federal income tax considerations of the reverse stock split to holders of Aerovate common stock.

Q:

What are the U.S. federal income tax considerations of the Cash Dividend that Aerovate will declare and pay to holders of Aerovate common stock?

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A:

The U.S. federal income tax considerations of a holder’s receipt of the Cash Dividend generally should be treated first as a dividend to the extent of Aerovate’s current and accumulated earnings and profits, then as a non-taxable return of capital to the extent of the holder’s basis in Aerovate common stock, and then as capital gain from the sale or exchange of Aerovate common stock with respect to any remaining amount. However, there can be no assurance that it will be so treated. Please review the information in the section titled “The Merger — U.S. Federal Income Tax Considerations of the Cash Dividend” beginning on page 149 of this proxy statement/prospectus for a discussion of the U.S. federal income tax considerations of the Cash Dividend to holders of Aerovate common stock.

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Q:

Who can help answer my questions?

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A:

If you are an Aerovate stockholder and would like additional copies of this proxy statement/prospectus without charge or if you have questions about the Merger or related matters, including the procedures for voting your shares, you should contact:

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Innisfree M&A Incorporated
Banks and Brokers Call: (877) 750-8310
Stockholders Call Toll Free: (212) 750-5833

 

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Name	​	​	Age	​	​	Title	​
Executive Officers	​	​	​	​	​	​	​
Tom Frohlich	​	​	49	​	​	Chief Executive Officer and Director	​
Jonathan Quick	​	​	36	​	​	Senior Vice President, Finance and Treasurer	​
Andrew King, BVMS, Ph.D.	​	​	45	​	​	Chief Scientific Officer & Head of Research and Development	​
Hetal Kocinsky, M.D.	​	​	52	​	​	Chief Medical Officer	​
Elizabeth Balta, J.D.	​	​	55	​	​	General Counsel and Corporate Secretary	​
Non-Employee Directors	​	​	​	​	​	​	​
Eric Dobmeier, J.D.	​	​	56	​	​	Chair and Director	​
Christopher Cain, Ph.D.	​	​	41	​	​	Director	​
Tomas Kiselak	​	​	38	​	​	Director	​
Lawrence Klein, Ph.D.	​	​	42	​	​	Director	​
Erin Lavelle	​	​	47	​	​	Director	​

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MARKET PRICE AND DIVIDEND INFORMATION

The Aerovate common stock is currently listed on The Nasdaq Global Market under the symbol “AVTE.”

The closing price of the Aerovate common stock on October 30, 2024, the last day of trading prior to the announcement of the Merger, as reported on The Nasdaq Global Market, was $2.19 per share.

Because the market price of the Aerovate common stock is subject to fluctuation, the market value of the shares of the Jade common stock that the Aerovate stockholders will be entitled to receive in the Merger may increase or decrease.

Assuming approval of Proposal Nos. 1, 2 and 3 and successful application for initial listing with The Nasdaq Capital Market, following the consummation of the Merger, the Aerovate common stock will trade on The Nasdaq Capital Market under Aerovate’s new name, “Jade Biosciences, Inc.,” and new trading symbol “JBIO”.

As of March 10, 2025, the Record Date for the Special Meeting, there was one registered holder of record of the Aerovate common stock. As of March 10, 2025, Jade had five holders of record of Jade common stock and one holder of record of Jade Preferred Stock. For detailed information regarding the beneficial ownership of certain Aerovate and Jade stockholders, see the sections of this proxy statement/​prospectus titled “Principal Stockholders of Aerovate” and “Principal Stockholders of Jade”.

Dividends

Aerovate has never declared or paid any cash dividends on the Aerovate common stock and does not anticipate paying cash dividends on the Aerovate common stock for the foreseeable future, except the Cash Dividend that Aerovate will declare and pay to the holders of record of outstanding shares of Aerovate common stock as of a record date prior to the effective time of the Merger, to be set by the Aerovate board of directors as close as reasonably practicable to (but not later than) the anticipated date of Closing (the “Closing Date”). The aggregate amount of the Cash Dividend is expected to equal approximately $65.0 million, subject to certain adjustments depending on Aerovate’s Net Cash. Notwithstanding the foregoing, any determination to pay cash dividends subsequent to the Merger will be at the discretion of the Combined Company’s then-current board of directors and will depend upon a number of factors, including the Combined Company’s results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors the then-current board of directors deems relevant.

Jade has never paid or declared any cash dividends on the Jade capital stock. If the Merger does not occur, Jade does not anticipate paying any cash dividends on the Jade capital stock in the foreseeable future, and Jade intends to retain all available funds and any future earnings to fund the development and expansion of its business. Any future determination to pay dividends will be at the discretion of the Jade board of directors and will depend upon a number of factors, including its results of operations, financial condition, future prospects, contractual restrictions, and restrictions imposed by applicable laws and other factors the Jade board of directors deems relevant.

 

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RISK FACTORS

The Combined Company will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained or incorporated by reference in this proxy statement/prospectus, you should carefully consider the material risks described below before deciding how to vote your shares of Aerovate common stock. You should also read and consider the other information in this proxy statement/prospectus and additional information about Aerovate set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which is filed with the Securities and Exchange Commission (“SEC”), as updated by its Quarterly Reports on Form 10-Q, in each case incorporated by reference into this proxy statement/prospectus. Please see the section titled “Where You Can Find More Information” beginning on page 403 of this proxy statement/prospectus for further information regarding the documents incorporated by reference into this proxy statement/prospectus.

Risks Related to the Merger

Failure to complete, or delays in completing, the potential Merger with Jade, announced on October 31, 2024, could materially and adversely affect Aerovate’s or Jade’s results of operations, business, financial results and may cause a decline in the market price of Aerovate common stock.

On October 30, 2024, Aerovate entered into the Merger Agreement with Jade, pursuant to which, if all the closing conditions are satisfied or waived, Merger Sub I, a direct, wholly owned subsidiary of Aerovate, will merge with and into Jade, with Jade surviving as a wholly owned subsidiary of Aerovate and the surviving corporation of the First Merger, following which Jade will merge with and into Merger Sub II, with Merger Sub II being the surviving entity of the Second Merger. Consummation of the Merger is subject to certain closing conditions, a number of which are not within Aerovate’s control. Any failure to satisfy or, to the extent permitted by applicable law, waive these required closing conditions may prevent, delay or otherwise materially adversely affect the consummation of the Merger. Aerovate cannot predict with certainty whether or when any of the required conditions will be satisfied or, to the extent permitted by applicable law, waived, or if another uncertainty may arise and cannot assure you that Aerovate will be able to successfully consummate the Merger as currently contemplated under the Merger Agreement or at all.

Aerovate’s efforts to complete the Merger could cause substantial disruptions in, and create uncertainty surrounding, Aerovate’s business, which may materially adversely affect Aerovate’s results of operation and Aerovate’s business. Uncertainty as to whether the Merger will be completed may affect Aerovate’s ability to recruit prospective employees or to retain and motivate existing employees. Employee retention may be particularly challenging while the transaction is pending because employees may experience uncertainty about their roles following the transaction. Uncertainty as to whether the Merger will be completed could adversely affect Aerovate’s business and Aerovate’s relationship with collaborators, suppliers, vendors, regulators and other business partners. For example, vendors, collaborators and other counterparties may defer their decisions to work with Aerovate or seek to change their existing business relationships with Aerovate. Changes to, or termination of, existing business relationships could adversely affect Aerovate’s results of operations and financial condition, as well as the market price of Aerovate common stock. The adverse effects of the pendency of the transaction could be exacerbated by any delays in completion of the transaction or termination of the Merger Agreement.

The Exchange Ratio will not be adjusted based on the market price of Aerovate common stock as the Exchange Ratio depends on the Aerovate Net Cash at the Closing and not the market price of Aerovate common stock, so the Merger consideration at the Closing may have a greater or lesser value than at the time the Merger Agreement was signed.

At the First Effective Time, as described in the Merger Agreement, outstanding shares of Jade capital stock will be converted into shares of Aerovate common stock. Based on Aerovate’s and Jade’s capitalization as of March 10, 2025, the Exchange Ratio is estimated to be equal to approximately 22.0844 shares of Aerovate common stock for each share of Jade common stock and 0.022084 shares of Aerovate Series A Preferred Stock for each share of Jade Preferred Stock. After applying the Exchange Ratio, the former Jade securityholders immediately before the Merger, excluding shares purchased in the Jade Pre-Closing Financing, are expected to own approximately 40.0% of the aggregate number of shares of Aerovate

 

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common stock on a fully-diluted basis, shares issued in the Jade Pre-Closing Financing are expected to represent approximately 58.6% of the outstanding shares of Aerovate common stock on a fully-diluted basis and Aerovate securityholders immediately before the Merger are expected to own approximately 1.4% of the aggregate number of shares of Aerovate common stock on a fully-diluted basis, subject to certain assumptions, including, but not limited to, Aerovate’s Net Cash as of Closing being no less than $0. In the event Aerovate’s Net Cash is below $0, the Exchange Ratio will be adjusted such that the number of shares issued to Jade’s pre-Closing securityholders will be increased, and Aerovate stockholders will own a smaller percentage of the Combined Company.

Any changes in the market price of Aerovate common stock before the completion of the Merger will not affect the Exchange Ratio or the number of shares Jade stockholders will be entitled to receive pursuant to the Merger Agreement. Therefore, if before the completion of the Merger, the market price of Aerovate common stock increases from the market price on the date of the Merger Agreement, then Jade stockholders could receive Merger consideration with substantially more value for their shares of Jade capital stock than the parties had negotiated when they established the Exchange Ratio. Similarly, if before the completion of the Merger the market price of Aerovate common stock declines from the market price on the date of the Merger Agreement, then Jade stockholders could receive Merger consideration with substantially lower value than the parties negotiated when they established the Exchange Ratio. The Merger Agreement does not include a price-based termination right.

The issuance of Aerovate common stock to Jade stockholders pursuant to the Merger Agreement and the resulting change in control from the Merger must be approved by Aerovate stockholders, and the Merger Agreement and transactions contemplated thereby must be approved by the Jade stockholders. Failure to obtain these approvals would prevent the Closing.

Before the Merger can be completed, Aerovate stockholders must approve, among other things, the issuance of Aerovate common stock to Jade stockholders pursuant to the Merger Agreement and the resulting change in control from the Merger, and Jade stockholders must adopt the Merger Agreement and approve the Merger and the related transactions. Failure to obtain the required stockholder approvals may result in a material delay in, or the abandonment of, the Merger. Any delay in completing the Merger may materially adversely affect the timing and benefits that are expected to be achieved from the Merger.

Failure to complete the Merger may result in either Aerovate or Jade paying a termination fee to the other party, and could harm the common stock price of Aerovate and future business and operations of each company.

If the Merger is not completed, Aerovate and Jade are subject to the following risks:

•

if the Merger Agreement is terminated under specified circumstances, Aerovate could be required to pay Jade a termination fee of $2.34 million, or Jade could be required to pay Aerovate a termination fee of $5.25 million;

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the price of Aerovate common stock may decline and could fluctuate significantly; and

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substantial costs related to the Merger may be incurred by either party, such as financial advisor, legal and accounting fees, a majority of which must be paid even if the Merger is not completed.

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If the Merger Agreement is terminated and the board of directors of Aerovate or Jade determines to seek another business combination, there can be no assurance that either Aerovate or Jade will be able to find another third party to transact a business combination with, yielding comparable or greater benefits.

If the conditions to the Merger are not satisfied or waived, the Merger may not occur.

Even if the Merger is approved by the stockholders of Jade and Proposal Nos. 1, 2 and 3 as described in this proxy statement/prospectus are approved by the Aerovate stockholders, specified conditions must be satisfied or, to the extent permitted by applicable law, waived to complete the Merger. These conditions are set forth in the Merger Agreement and each material condition to the completion of the Merger is described in the section titled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 168 of this proxy statement/prospectus. Aerovate and Jade cannot assure you that all of the

 

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conditions to the consummation of the Merger will be satisfied or waived. If the conditions are not satisfied or waived, the Merger may not occur or the Closing may be delayed.

Aerovate and Jade may mutually agree to waive the condition to the Merger requiring approval for listing on Nasdaq, and if such condition is waived, the combined company’s stock may not be listed on Nasdaq following completion of the Merger.

Pursuant to the Merger Agreement, Aerovate agreed, to the extent required by the rules and regulations of Nasdaq, to use its commercially reasonable efforts to cause the shares of Aerovate common stock being issued in the Merger to be approved for listing on Nasdaq at or prior to the Effective Time. Additionally, under the Merger Agreement, each of Aerovate’s and Jade’s obligation to complete the Merger is subject to the satisfaction or waiver by each of the parties of various conditions, including that the shares of Aerovate common stock to be issued in the Merger have been approved for listing (subject to official notice of issuance) on Nasdaq as of the closing of the Merger. In the event that the shares of Aerovate common stock to be issued in the Merger are not approved for listing on Nasdaq, it is possible that Aerovate and Jade may mutually agree to waive the applicable condition and nonetheless proceed with completing the Merger. If such condition is waived, Aerovate will not recirculate an updated proxy statement/prospectus, nor will it solicit a new vote of stockholders prior to proceeding with the Merger. If Aerovate proceeds with the Merger in these circumstances, the combined company’s stock may not be listed on Nasdaq.

If the combined company’s stock is not listed on Nasdaq following completion of the Merger, trading of the shares could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event, it is likely that there would be significantly less liquidity in the trading of the common stock of the combined company; decreases in institutional and other investor demand for the shares, coverage by securities analysts, market making activity and information available concerning trading prices and volume; and fewer broker dealers willing to execute trades in the common stock of the combined company. Also, it may be difficult for the combined company to raise additional capital if the combined company’s common stock is not listed on a major exchange. The occurrence of any of these events could result in a further decline in the market price of the common stock of the combined company and could have a material adverse effect on the combined company.

The Merger may be completed even though a material adverse effect may result from the announcement of the Merger, industry-wide changes or other causes.

In general, neither Aerovate nor Jade is obligated to complete the Merger if there is a material adverse effect affecting the other party between October 30, 2024, the date of the Merger Agreement, and the Closing. However, certain types of events and/or causes are excluded from the concept of a “material adverse effect.” Such exclusions include, but are not limited to, changes in general economic or political conditions, industry wide changes, changes resulting from the announcement of the Merger, natural disasters, pandemics (including the COVID-19 pandemic), other public health events, other force majeure events, acts or threat of terrorism or war and changes in U.S. GAAP. Therefore, if any of these events were to occur and adversely affect Aerovate or Jade, the other party would still be obligated to consummate the Closing notwithstanding such material adverse effects. If any such adverse effects occur and Aerovate and Jade consummates the Closing, the stock price of the Combined Company may suffer. This, in turn, may reduce the value of the Merger to the stockholders of Aerovate, Jade or both. For a more complete discussion of what constitutes a material adverse effect on Aerovate or Jade, please see the section titled “The Merger Agreement — Representations and Warranties” beginning on page 160 of this proxy statement/prospectus.

If Aerovate and Jade complete the Merger, the Combined Company will need to raise additional capital by issuing equity securities or additional debt or through licensing arrangements, which may cause significant dilution to the Combined Company’s stockholders or restrict the Combined Company’s operations.

On October 30, 2024, Jade entered into a securities purchase agreement with certain investors, including existing investors of Jade, pursuant to which Jade agreed to sell, and the investors agreed to purchase, immediately prior to the consummation of the Merger, shares of Jade common stock and pre-funded warrants for an aggregate purchase price of approximately $300.0 million in the Jade Pre-Closing Financing. The

 

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closing of the Jade Pre-Closing Financing is conditioned upon the satisfaction or waiver of the conditions to the Closing as well as certain other conditions. The shares of Jade common stock issued in the Jade Pre-Closing Financing will result in dilution to all securityholders of the Combined Company (i.e., both the pre-Merger Aerovate securityholders and former pre-Merger Jade securityholders). The Jade Pre-Closing Financing is more fully described under the section titled “Agreements Related to the Merger — Subscription Agreement” beginning on page 172 of this proxy statement/prospectus.

Additional financing may not be available to the Combined Company when it is needed or may not be available on favorable terms. To the extent that the Combined Company raises additional capital by issuing equity securities, such financing will cause additional dilution to all securityholders of the Combined Company, including Aerovate’s pre-Merger securityholders and Jade’s former securityholders. It is also possible that the terms of any new equity securities may have preferences over the Combined Company’s common stock. Any debt financing the Combined Company enters into may involve covenants that restrict its operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of the Combined Company’s assets, as well as prohibitions on its ability to create liens, pay dividends, redeem its stock or make investments. In addition, if the Combined Company raises additional funds through licensing arrangements, it may be necessary to grant licenses on terms that are not favorable to the Combined Company.

Some Aerovate and Jade directors and executive officers have interests in the Merger that are different from yours.

Directors and executive officers of Aerovate and Jade may have interests in the Merger that are different from, or in addition to, the interests of other Aerovate stockholders generally. These interests with respect to Aerovate’s directors and executive officers may include, among others, acceleration of stock option or restricted stock unit vesting, retention bonus payments, extension of exercisability periods of previously issued stock option grants, severance payments if employment is terminated in a qualifying termination in connection with the Merger and rights to continued indemnification, expense advancement and insurance coverage. These interests with respect to Jade’s directors and executive officers may include, among others, certain of Jade’s directors and executive officers have options, subject to vesting, to purchase shares of Jade common stock which, after the effective time of the Merger, will be converted into and become options to purchase shares of the common stock of the Combined Company; Jade’s executive officers are expected to continue as executive officers of the Combined Company after the effective time of the Merger; and all of Jade’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement. In addition, certain of Aerovate’s directors and Jade’s directors are affiliated with investment funds which hold an interest in the other party, and are participating in the Jade Pre-Closing Financing. Further, current members of Jade’s board of directors will continue as directors of the Combined Company after the effective time of the Merger, and, following the Closing, will be eligible to be compensated as non-employee directors of the Combined Company pursuant to the Aerovate non-employee director compensation policy that is expected to remain in place following the effective time of the Merger. The directors and executive officers own options and/or, with respect to Aerovate, restricted stock units, to purchase the shares of their respective companies.

The Aerovate and Jade boards considered the interests in the Merger that the respective directors and officers may have that are different than yours, among other matters, in reaching their decisions to approve and adopt the Merger Agreement, approve the Merger, and recommend the approval of the Merger Agreement to Aerovate and Jade stockholders.

For more information regarding the interests of Aerovate and Jade directors and executive officers in the Merger, please see the sections titled “The Merger — Interests of Aerovate Directors and Executive Officers in the Merger” and “The Merger — Interests of Jade Directors and Executive Officers in the Merger” beginning on pages 140 and 142, respectively, of this proxy statement/prospectus.

Aerovate stockholders and Jade stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger, including the conversion of Jade common stock issued in the Jade Pre-Closing Financing.

If the Combined Company is unable to realize the full strategic and financial benefits currently anticipated from the Merger, Aerovate stockholders and Jade stockholders will have experienced substantial

 

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dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the Combined Company is able to realize only part of the strategic and financial benefits currently anticipated from the Merger.

If the Merger is not completed, Aerovate’s stock price may decline significantly.

The market price of Aerovate common stock is subject to significant fluctuations. Market prices for securities of pharmaceutical, biotechnology and other life science companies have historically been particularly volatile. In addition, the market price of Aerovate common stock will likely be volatile based on whether stockholders and other investors believe that Aerovate can complete the Merger or otherwise raise additional capital to support Aerovate’s operations if the Merger is not consummated and another strategic transaction cannot be identified, negotiated and consummated in a timely manner, if at all. The volatility of the market price of Aerovate common stock is exacerbated by low trading volume. Additional factors that may cause the market price of Aerovate common stock to fluctuate include:

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the entry into, or termination of, key agreements, including commercial partner agreements;

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announcements by commercial partners or competitors of new commercial products, clinical progress or lack thereof, significant contracts, commercial relationships or capital commitments;

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the loss of key employees;

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future sales of its common stock;

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general and industry-specific economic conditions that may affect its research and development expenditures;

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the failure to meet industry analyst expectations; and

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period-to-period fluctuations in financial results.

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Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of Aerovate common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies.

Aerovate and Jade securityholders will generally have a reduced ownership and voting interest in, and will exercise less influence over the management of, the Combined Company following the completion of the Merger as compared to their current ownership and voting interests in the respective companies.

After the completion of the Merger, the current stockholders of Aerovate and Jade will generally own a smaller percentage of the Combined Company than their ownership of their respective companies prior to the Merger. Immediately after the Merger, Aerovate stockholders as of immediately prior to the Merger are expected to own approximately 1.4% of the outstanding shares of the Combined Company on a fully-diluted basis, former Jade securityholders, excluding shares purchased in the Jade Pre-Closing Financing, are expected to own approximately 40.0% of the outstanding shares of the Combined Company on a fully-diluted basis and shares issued in the Jade Pre-Closing Financing are expected to represent approximately 58.6% of the outstanding shares of capital stock of the Combined Company on a fully-diluted basis, subject to certain assumptions, including, but not limited to, Aerovate’s Net Cash as of Closing being $0. The Chief Executive Officer of Jade will serve as the Chief Executive Officer of the Combined Company following the completion of the Merger.

During the pendency of the Merger, Aerovate and Jade may not be able to enter into a business combination with another party on more favorable terms because of restrictions in the Merger Agreement, which could adversely affect their respective business prospects.

Covenants in the Merger Agreement impede the ability of Aerovate and Jade to make acquisitions during the pendency of the Merger, subject to specified exceptions. As a result, if the Merger is not completed, the parties may be at a disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, seeking, initiating or knowingly

 

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encouraging, inducing or facilitating the communication, making, submission or announcement of any acquisition proposal or acquisition inquiry or taking any action that could reasonably be expected to lead to certain transactions involving a third party, including a merger, sale of assets or other business combination, subject to specified exceptions. Any such transactions could be favorable to such party’s stockholders, but the parties may be unable to pursue them. For more information, please see the section titled “The Merger Agreement — Non-Solicitation” beginning on page 164 of this proxy statement/prospectus.

Certain provisions of the Merger Agreement may discourage third parties from submitting competing proposals, including proposals that may be superior to the transactions contemplated by the Merger Agreement.

The terms of the Merger Agreement prohibit each of Aerovate and Jade from soliciting competing proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances as described in further detail in the sections titled “The Merger Agreement — Non-Solicitation” beginning on page 164 of this proxy statement/prospectus. In addition, if Aerovate terminates the Merger Agreement under specified circumstances, Aerovate could be required to pay Jade a termination fee of $2.34 million, or Jade could be required to pay Aerovate a termination fee of $5.25 million. This termination fee may discourage third parties from submitting competing proposals to Aerovate, Jade or their respective stockholders, and may cause the Aerovate or Jade board of directors to be less inclined to recommend a competing proposal.

Because the lack of a public market for Jade’s capital stock makes it difficult to evaluate the fair market value of Jade’s capital stock, the value of the Aerovate common stock to be issued to Jade stockholders may be more or less than the fair market value of Jade’s capital stock.

The outstanding capital stock of Jade is privately held and is not traded in any public market. The lack of a public market makes it difficult to determine the fair market value of Jade’s capital stock. Because the percentage of Aerovate equity to be issued to Jade stockholders was determined based on negotiations between the parties, it is possible that the value of the Aerovate common stock and Aerovate Series A Non-Voting Convertible Preferred Stock (the “Aerovate Series A Preferred Stock”) to be issued to Jade stockholders will be more or less than the fair market value of Jade’s capital stock.

Lawsuits may be filed against Aerovate, Jade, or any of the members of their respective boards of directors arising out of the Merger, which may delay or prevent the Merger.

Putative stockholder complaints, including stockholder class action complaints, and other complaints may be filed against Aerovate, the Aerovate board of directors, Jade, the Jade board of directors and others in connection with the transactions contemplated by the Merger Agreement. The outcome of litigation is uncertain, and Aerovate or Jade may not be successful in defending against any such future claims. Lawsuits that may be filed against Aerovate, the Aerovate board of directors, Jade, or the Jade board of directors could delay or prevent the Merger, divert the attention of Aerovate’s or Jade’s management and employees from their day-to-day business and otherwise adversely affect Aerovate and Jade financially.

Aerovate is substantially dependent on Aerovate’s remaining employees to facilitate the consummation of the Merger.

As of March 10, 2025, Aerovate had only four full-time employees. Aerovate’s ability to successfully complete the Merger depends in large part on Aerovate’s ability to retain certain remaining personnel. Despite Aerovate’s efforts to retain these employees, one or more employees may terminate their employment with Aerovate on short notice. The loss of the service of certain employees could potentially harm Aerovate’s ability to consummate the Merger and run Aerovate’s day-to-day business operations, as well as fulfill Aerovate’s reporting obligations as a public company.

Risks Related to the Proposed Reverse Stock Split

The reverse stock split may not increase the Combined Company’s stock price over the long-term.

The principal purpose of the reverse stock split is to increase the per-share market price of Aerovate’s common stock above the minimum bid price requirement under the Nasdaq rules so that the listing of

 

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Aerovate and the shares of Aerovate common stock being issued in the Merger on Nasdaq will be approved. It cannot be assured, however, that the reverse stock split will accomplish this objective for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of Aerovate’s common stock, it cannot be assured that the reverse stock split will increase the market price of its common stock by a multiple of the reverse stock split ratio mutually agreed by Aerovate and Jade, or result in any permanent or sustained increase in the market price of Aerovate’s common stock, which is dependent upon many factors, including Aerovate’s business and financial performance, general market conditions and prospects for future success. Thus, while the stock price of Aerovate might meet the listing requirements for Nasdaq initially, it cannot be assured that it will continue to do so.

The reverse stock split may decrease the liquidity of the Combined Company’s common stock.

Although the Aerovate board believes that the anticipated increase in the market price of the Combined Company’s common stock resulting from the proposed reverse stock split could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the reverse stock split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for the Combined Company’s common stock. In addition, the reverse stock split may not result in an increase in the Combined Company’s stock price necessary to satisfy Nasdaq’s initial listing requirements for the Combined Company.

The reverse stock split may lead to a decrease in the Combined Company’s overall market capitalization.

Should the market price of the Combined Company’s common stock decline after the reverse stock split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the reverse stock split. A reverse stock split is often viewed negatively by the market and, consequently, can lead to a decrease in the Combined Company’s overall market capitalization. If the per share market price does not increase in proportion to the reverse stock split ratio, then the value of the Combined Company, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of the Combined Company’s common stock will remain the same after the reverse stock split is effected, or that the reverse stock split will not have an adverse effect on the Combined Company’s stock price due to the reduced number of shares outstanding after the reverse stock split.

Risks Related to Aerovate

Aerovate may not be successful in consummating the Merger.

In June 2024, based upon 24-week topline results from the Phase 2b portion of Aerovate’s clinical trial evaluating AV-101 for the treatment of PAH, Aerovate announced its decision to halt enrollment and shut down the Phase 3 portion of the trial as well as the long-term extension study. In July 2024, Aerovate announced that it was undertaking a comprehensive review of strategic alternatives focused on maximizing shareholder value, which may include but are not limited to, the Merger or an alternative transaction or liquidation. Aerovate has and expects to continue to devote substantial time and resources to exploring strategic alternatives that its board of directors believes will maximize stockholder value. There can be no assurances that the Merger will be successfully consummated or lead to increased stockholder value or that Aerovate will make any additional cash distributions to its stockholders.

The process of completing the Merger may be very costly, time-consuming and complex and Aerovate has incurred, and may in the future incur, significant costs related to the Merger, including legal and accounting fees and expenses and other related charges. Aerovate may also incur additional unanticipated expenses in connection with the Merger, which will be incurred regardless of whether the Merger is completed. These expenses will decrease the remaining cash available for use in Aerovate’s business.

Aerovate is not currently pursuing further clinical development of AV-101. Resuming the development of AV-101 and any potential commercialization would require substantial additional cash to fund the costs

 

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associated with conducting the necessary preclinical and clinical testing and obtaining regulatory approval. Consequently, if the Merger is completed, Jade may choose not to spend additional resources to continue development of AV-101 and may attribute little or no value, in the Merger to AV-101. The Merger could have a variety of negative consequences, or yield unexpected results that adversely affects Aerovate’s business and decreases the remaining cash available for use in Aerovate’s business or the execution of its strategic plan. The completion of the Merger is dependent on a number of factors that may be beyond Aerovate’s control, including, among other things, market conditions, industry trends and obtaining stockholder approval. Any failure of the Merger could significantly impair Aerovate’s ability to enter into any future strategic transactions and may significantly diminish or delay any future distributions to Aerovate’s stockholders.

If the Merger is not completed in a timely fashion, this may cause reputational harm with Aerovate’s stockholders and the value of Aerovate’s securities may be adversely impacted. In addition, speculation regarding the completion of the Merger and perceived uncertainties related to the future of Aerovate could cause Aerovate’s stock price to fluctuate significantly.

If Aerovate is successful in completing a strategic transaction, Aerovate may be exposed to other operational and financial risks.

Although there can be no assurance that the Merger will be completed, the negotiation and consummation of the Merger will require significant time on the part of Aerovate’s management, and the diversion of management’s attention may disrupt Aerovate’s business.

The negotiation and consummation of the Merger may also require more time or greater cash resources than Aerovate anticipates and expose Aerovate to other operational and financial risks, including:

•

increased near-term and long-term expenditures;

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exposure to unknown liabilities;

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higher than expected acquisition or integration costs;

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incurrence of substantial debt or dilutive issuances of equity securities to fund future operations;

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•

write-downs of assets or goodwill or incurrence of non-recurring, impairment or other charges;

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increased amortization expenses;

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•

inability to retain key employees of Aerovate to complete the Merger; and

​

•

possibility of future litigation.

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Any of the foregoing risks could have a material adverse effect on Aerovate’s business, financial condition and prospects.

If the Merger is not completed, Aerovate’s board of directors may decide to pursue a dissolution and liquidation. In such an event, the amount of cash available for distribution to Aerovate’s stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.

If the Merger is not completed, Aerovate’s board of directors may decide to pursue a dissolution and liquidation. In such an event, the amount of cash available for distribution to Aerovate’s stockholders will depend heavily on the timing of such decision and, with the passage of time the amount of cash available for distribution will be reduced as Aerovate continues to fund its operations. In addition, if Aerovate’s board of directors were to approve and recommend, and Aerovate’s stockholders were to approve, a dissolution and liquidation, Aerovate would be required under Delaware corporate law to pay its outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to Aerovate’s stockholders. As a result of this requirement, a portion of Aerovate’s assets may need to be reserved pending the resolution of such obligations and the timing of any such resolution is uncertain. In addition, Aerovate may be subject to litigation or other claims related to a dissolution and liquidation. If a dissolution and liquidation were pursued, Aerovate’s board of directors, in consultation with its advisors, would need to evaluate these matters and make a determination about a

 

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reasonable amount to reserve. Accordingly, holders of Aerovate’s common stock could lose all or a significant portion of their investment in the event of a liquidation, dissolution or winding up.

Aerovate’s ability to consummate the Merger depends on its ability to retain its employees required to consummate such transaction.

Aerovate’s ability to consummate the Merger depends upon Aerovate’s ability to retain its employees required to consummate such a transaction, the loss of whose services may adversely impact the ability to consummate such transaction. In connection with the evaluation of strategic alternatives and in order to extend resources, Aerovate implemented workforce reduction plan, which resulted in the termination of nearly all of Aerovate’s workforce (the “Workforce Reduction Plan”). Under the Workforce Reduction Plan, approximately 92% of Aerovate’s workforce was terminated as of December 31, 2024. The Merger process is supported by Aerovate’s deep and broad experience at the board of directors, executive management and supporting staff levels. Aerovate’s cash conservation activities may yield unintended consequences, such as attrition beyond Aerovate’s Workforce Reduction Plan and reduced employee morale, which may cause remaining employees to seek alternative employment. Aerovate’s ability to successfully complete the Merger depends in large part on its ability to retain certain of its remaining personnel. If Aerovate is unable to successfully retain its remaining personnel, Aerovate is at risk of a disruption to the Merger process as well as business operations.

Aerovate’s cash preservation activities, including the Workforce Reduction Plan, may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt Aerovate’s business.

In June 2024, Aerovate implemented its Workforce Reduction Plan. In connection with the Workforce Reduction Plan, Aerovate incurred costs of approximately $6.7 million, which are primarily one-time severance benefits. Aerovate may not realize, in full or in part, the anticipated benefits, savings and improvements in its cost structure from its restructuring efforts due to unforeseen difficulties, delays or unexpected costs. If Aerovate is unable to realize the expected operational efficiencies and cost savings from the restructuring, its operating results and financial condition would be adversely affected. Furthermore, Aerovate’s Workforce Reduction Plan may be disruptive to its operations. For example, headcount reductions could yield unanticipated consequences, such as increased difficulties in implementing Aerovate’s business strategy, including retention of remaining employees.

Due to Aerovate’s limited resources, Aerovate may not be able to effectively manage its operations, which may result in weaknesses in Aerovate’s infrastructure, risks that Aerovate may not be able to comply with legal and regulatory requirements, and loss of employees and reduced productivity among remaining employees. For example, Aerovate’s limited resources and workforce reduction may negatively impact efforts to winddown Aerovate’s clinical trial activities or expose Aerovate to cybersecurity risks, which could result in unexpected costs and expenses and have a material adverse effect on Aerovate’s business, financial condition and prospects.

Aerovate may become involved in litigation, including securities class action litigation, that could divert management’s attention and harm Aerovate’s business, and insurance coverage may not be sufficient to cover all costs and damages.

In the past, litigation, including securities class action litigation, has often followed certain significant business transactions, such as a merger, or the announcement of negative events, such as negative results from clinical trials. These events may also result in investigations by the SEC. Aerovate may be exposed to such litigation in connection with the Merger even if no wrongdoing occurred.

Furthermore, the stock market in general, and Nasdaq and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. The market price of Aerovate’s common stock may be volatile, and Aerovate may be the target of this type of litigation in the future.

 

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Litigation is usually expensive and diverts management’s attention and resources from other business concerns, which could adversely affect Aerovate’s business and cash resources and its ability to consummate the Merger or the ultimate value Aerovate’s stockholders receive in any such transaction.

Risks Related to Aerovate’s Limited Operating History, Financial Position and Capital Requirements

Aerovate is a biopharmaceutical company with a limited operating history.

Aerovate is a biopharmaceutical company established in July 2018 with a limited operating history. Since its inception, Aerovate had devoted substantially all of its efforts to organizing and staffing Aerovate, research and development of AV-101, Aerovate’s only product candidate, business planning, raising capital, and providing general and administrative support for these operations. Aerovate has limited experience and has not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the pharmaceutical industry. In June 2024, Aerovate announced its decision to halt enrollment and shut down the Phase 3 portion of its IMPAHCT clinical trial for AV-101 in adults with PAH as well as the long-term extension study. Aerovate does not intend to resume development of AV-101 or conduct research on additional product candidates at this time. Aerovate has no products approved for commercial sale and therefore has never generated any revenue from product sales, and does not expect to in the foreseeable future. Aerovate has no other experience as a company conducting clinical trials, submitting applications for regulatory approvals, such as a New Drug Application (“NDA”), or commercializing any products.

Aerovate has incurred significant operating losses since its inception and anticipates that it will continue to incur losses for the foreseeable future. Aerovate may never achieve or maintain profitability.

Aerovate has incurred significant operating losses in each year since its incorporation in July 2018, does not expect to become profitable in the near future, and may never achieve profitability. Aerovate’s net losses were $69.6 million and $75.5 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, Aerovate had an accumulated deficit of $233.1 million. Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. Aerovate has no products approved for commercial sale, has not generated any revenue from product sales and has incurred losses in each year since its inception in July 2018. Substantially all of its operating losses have resulted from costs incurred in connection with its research and development program of AV-101 and from general and administrative costs associated with its operations. Aerovate does not intend to resume development of AV-101 or conduct research on additional product candidates at this time. As a public company, Aerovate continues to incur additional costs associated with operating that it did not incur as a private company. In addition, Aerovate expects to continue to incur costs and expenditures in connection with the process of winding down its clinical trial of AV-101 and the Merger. As a result, Aerovate expects to continue to incur significant expenses and operating losses for the foreseeable future. Because of the numerous risks and uncertainties associated with the Merger process, Aerovate is unable to predict the extent of any future losses. Aerovate’s prior losses, combined with expected future losses, have had and will continue to have an adverse effect on its stockholders’ deficit and working capital.

The amount of Aerovate’s future losses is uncertain and its quarterly and annual operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause its stock price to fluctuate or decline. Aerovate’s quarterly and annual operating results may fluctuate significantly in the future due to a variety of factors, many of which are outside of Aerovate’s control and may be difficult to predict, including the following:

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the timing and outcome of the Merger;

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the experience of any delays or any issues with winding down Aerovate’s clinical trial activities for AV-101;

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Aerovate’s ability to retain necessary personnel;

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potential litigation, including securities class action litigation;

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•

the changing and volatile United States and global economic conditions; and

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•

future accounting pronouncements or changes in Aerovate’s accounting policies.

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The cumulative effects of these factors could result in large fluctuations and unpredictability in Aerovate’s quarterly and annual operating results. As a result, comparing Aerovate’s operating results on a period-to-period basis may not be meaningful. This variability and unpredictability could also result in Aerovate failing to meet the expectations of industry or financial analysts or investors for any period. If Aerovate’s revenue or operating results fall below the expectations of analysts or investors or below any forecasts Aerovate may provide to the market, or if the forecasts Aerovate provides to the market are below the expectations of analysts or investors, the price of Aerovate’s common stock could decline substantially. Such a stock price decline could occur even when Aerovate has met any previously publicly stated guidance it may provide.

Aerovate has no products approved for commercial sale and has not generated any revenue from product sales.

Aerovate’s ability to become profitable depends upon its ability to generate revenue. To date, Aerovate has not generated revenue, and does not expect to generate any revenue in the near future. Aerovate does not intend to resume development of AV-101 or conduct research on additional product candidates at this time.

Aerovate may require additional capital to finance its operations, which may not be available on acceptable terms, or at all. If Aerovate is unable to raise capital when needed, Aerovate would be forced to delay, reduce or terminate its product development or commercialization efforts.

Since its inception, Aerovate had invested substantially all of its efforts and financial resources in the development of AV-101 to address the core disease processes of PAH. Aerovate does not intend to resume development of AV-101 or conduct research on additional product candidates at this time.

As of December 31, 2024, Aerovate had cash and cash equivalents and short-term investments of $78.6 million. Aerovate expects its existing cash and cash equivalents and short-term investments will be sufficient to fund its planned operations for at least twelve months from the date of filing this proxy statement/​prospectus based upon its current operating plans. However, Aerovate’s operating plans may change as a result of many factors currently unknown to Aerovate, and Aerovate may need to seek additional funds sooner than planned. In addition, Aerovate may seek additional capital due to favorable market conditions or strategic considerations even if it believes it has sufficient funds for its current or future operating plans.

To date, Aerovate has funded its operations through private placements of convertible preferred stock, convertible notes and proceeds from its initial public offering (“Aerovate’s IPO”). Aerovate will be required to seek additional funding in the future and currently intends to do so through public or private equity offerings or debt financings, credit or loan facilities or a combination of one or more of these funding sources.

If Aerovate raises additional funds by issuing equity securities, its stockholders will suffer dilution and the terms of any financing may adversely affect the rights of its stockholders. In addition, as a condition to providing additional funds to Aerovate, future investors may demand, and may be granted, rights superior to those of existing stockholders. Debt financing, if available, is likely to involve restrictive covenants limiting Aerovate’s flexibility in conducting future business activities, and, in the event of insolvency, debt holders would be repaid before holders of Aerovate’s equity securities would receive any distribution of Aerovate’s corporate assets. Additionally, global economic instability, higher interest rates and diminished credit availability may limit Aerovate’s ability to obtain debt financing on favorable terms.

Aerovate’s ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond Aerovate’s control. Fundraising efforts may divert Aerovate’s management from their day-to-day activities, which may adversely affect Aerovate’s ability to develop and commercialize such product candidates. Disruptions in the financial markets in general, and due to public health crises, geopolitical conflicts and economic instability, may make equity and debt financing more difficult to obtain, and may have a material adverse effect on Aerovate’s ability to meet its fundraising needs. Aerovate cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to Aerovate, if at all.

 

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Risks Related to Aerovate’s Research and Development Activities

The results of earlier studies and trials may not be predictive of future trial results.

Product candidates in later stages of clinical trials may fail to show the desired pharmacological properties or safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. For example, in June 2024, Aerovate announced the discontinuation of the Phase 3 portion of IMPAHCT as well as the long-term extension study, despite prior positive results in preclinical studies and initial clinical trials of AV-101.

Interim, topline and preliminary results from preclinical studies and clinical trials that Aerovate may announce or publish from time to time may change as more data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, Aerovate has publicly disclosed preliminary, interim or topline data from its preclinical studies and clinical trials. These interim updates are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. Aerovate also makes assumptions, estimations, calculations and conclusions as part of its analyses of data, and Aerovate may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline results that Aerovate reports may differ from future results of the same studies or trials, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data Aerovate previously published. As a result, topline data should be viewed with caution until the final data are available. In addition, Aerovate may report interim analyses of only certain endpoints rather than all endpoints. Interim data from clinical trials that Aerovate may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse changes between interim data and final data could significantly harm Aerovate’s business and prospects. Further, additional disclosure of interim data by Aerovate or by its competitors in the future could result in volatility in the price of Aerovate’s common stock.

In addition, the information Aerovate chooses to publicly disclose regarding a particular study or trial is typically selected from a more extensive amount of available information. Investors may not agree with what Aerovate determines is the material or otherwise appropriate information to include in Aerovate’s disclosure, and any information Aerovate determines not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product candidate or Aerovate’s business. If the preliminary or topline data that Aerovate reports differ from late, final or actual results, or if others, including regulatory authorities, disagree with the conclusions reached, Aerovate’s ability to obtain approval for, and commercialize, any of its product candidates may be harmed, which could harm Aerovate’s business, financial condition, results of operations and prospects.

Risks Related to Aerovate’s Intellectual Property

Aerovate has six issued U.S. patents, and many pending patent applications with respect to AV-101. Aerovate can provide no assurance that any of its other current or future patent applications will result in issued patents. If Aerovate cannot protect its patent rights or its other proprietary rights, others may develop products similar or identical to Aerovate’s, and Aerovate may not be able to compete effectively in its market or successfully commercialize any product candidates Aerovate may develop.

Aerovate’s success has depended to a significant degree upon Aerovate continuing to secure, enforce and defend intellectual property rights that protect its AV-101 product candidate, and to operate Aerovate’s business without infringing, misappropriating or otherwise violating the intellectual property rights of others. If Aerovate is unable to obtain and maintain sufficient intellectual property protection for AV-101, or if the scope of the intellectual property protection obtained is not sufficiently broad, Aerovate’s competitors and other third parties could develop and commercialize product candidates similar or identical to Aerovate’s, and Aerovate’s ability to successfully commercialize AV-101 may be impaired. In June 2024,

 

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Aerovate announced its decision to halt enrollment and shut down the Phase 3 portion of IMPAHCT as well as the long-term extension study of AV-101 in PAH, and Aerovate does not intend to continue to seek or maintain intellectual property protection on the technology underlying AV-101.

Aerovate owns six issued U.S. patents with respect to AV-101, and can provide no assurance that any of its other current or future patent applications will result in issued patents or that any issued patents will provide Aerovate with any competitive advantage. Failure to obtain additional issued patents could have a material adverse effect on Aerovate’s ability to develop and commercialize its product candidates. Furthermore, other parties may successfully challenge, invalidate or circumvent Aerovate’s issued patents so that Aerovate’s patent rights do not create an effective competitive barrier or revenue source.

Aerovate has sought to protect its proprietary position by, among other things, filing patent applications in the United States and abroad related to Aerovate’s proprietary technologies, development programs and product candidates. The patent prosecution process is expensive and time-consuming, and Aerovate may not be able to file and prosecute all necessary or desirable patent applications or to maintain, defend and enforce any patents that may issue from such patent applications at a reasonable cost or in a timely manner. It is also possible that Aerovate will fail to identify patentable aspects of its research and development output before it is too late to obtain patent protection.

Further, any of Aerovate’s non-provisional patent applications may fail to result in issued patents with claims that cover its proprietary products and technology, including its AV-101 product candidate or any other product candidate in the United States or in other foreign countries, in whole or in part. Although Aerovate enters into non-disclosure and confidentiality agreements with parties who have access to patentable aspects of its research and development output, such as its employees, corporate collaborators, outside scientific collaborators, contract research organizations, contract manufacturers, consultants, advisors and other third parties, any of these parties may breach these agreement and disclose such results before a patent application is filed, thereby jeopardizing Aerovate’s ability to seek patent protection.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal, technological and factual questions and has, in recent years, been the subject of much debate and litigation throughout the world. In addition, the laws of foreign countries may not protect Aerovate’s rights to the same extent as the laws of the United States, or vice versa. As a result, the issuance, scope, validity, enforceability, and commercial value of Aerovate’s patent rights are highly uncertain. The subject matter claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Therefore, Aerovate’s pending and future patent applications may not result in patents being issued in relevant jurisdictions that protect Aerovate’s product candidates, in whole or in part, or which effectively prevent others from commercializing competitive product candidates, and even if Aerovate’s patent applications issue as patents in relevant jurisdictions, they may not issue in a form that will provide Aerovate with any meaningful protection for its product candidates or technology, prevent competitors from competing with Aerovate or otherwise provide Aerovate with any competitive advantage. Additionally, Aerovate’s competitors may be able to circumvent Aerovate’s patents by developing similar or alternative product candidates or technologies in a non-infringing manner.

In the United States, the natural expiration of a patent is generally 20 years after it is filed. Various extensions may be available; however, the life of a patent, and the protection it affords, is limited. Without patent protection for Aerovate’s current or future product candidates, Aerovate may be open to competition from generic versions of such products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, Aerovate’s patent portfolio may not provide Aerovate with sufficient rights to exclude others from commercializing products similar or identical to Aerovate.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and Aerovate’s patents may be challenged in the courts or patent offices in the United States and abroad. Aerovate may be subject to a third-party pre-issuance submission of prior art to the United States Patent and Trademark Office (“USPTO”), or become involved in opposition, derivation, revocation, reexamination, inter partes review, post-grant review or interference proceedings challenging Aerovate’s patent rights or the patent rights of others, or other proceedings in the USPTO or applicable foreign offices that challenge

 

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priority of invention or other features of patentability. An adverse determination in any such submission, proceeding or litigation could result in loss of exclusivity or freedom to operate, patent claims being narrowed, invalidated or held unenforceable, in whole or in part, limit the scope or duration of the patent protection of AV-101 or any other product candidates that Aerovate may identify, all of which could limit Aerovate’s ability to stop others from using or commercializing similar or identical product candidates or technology to compete directly with Aerovate, without payment to Aerovate, or result in Aerovate’s inability to manufacture or commercialize product candidates or approved products (if any) without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by Aerovate’s patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with Aerovate to license, develop or commercialize current or future product candidates, or could have a material adverse effect on Aerovate’s ability to raise funds necessary to continue its research programs or clinical trials. Such proceedings also may result in substantial cost and require significant time from Aerovate’s scientists and management, even if the eventual outcome is favorable to Aerovate.

Aerovate cannot be certain that the USPTO and courts in the United States or the patent offices and courts in foreign countries will consider the claims in Aerovate’s patents and applications covering its AV-101 product candidate and possible future product candidates as patentable. Method-of-use patents protect the use of a product for the specified method. This type of patent does not prevent a competitor from making and marketing a product that is identical to Aerovate’s product for an indication that is outside the scope of the patented method. Moreover, even if competitors do not actively promote their product for Aerovate’s targeted indications, physicians may prescribe these products off-label. Although off-label prescriptions may infringe or contribute to the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent, including through legal action.

Intellectual property litigation could cause Aerovate to spend substantial resources and prevent Aerovate from pursuing its programs.

From time to time Aerovate may have to defend its intellectual property rights. If Aerovate is involved in an intellectual property dispute, Aerovate may need to litigate to defend its rights or assert them against others. Disputes can involve arbitration, litigation or proceedings declared by the USPTO or the International Trade Commission or foreign patent authorities. Even if resolved in Aerovate’s favor, litigation or other legal proceedings relating to intellectual property claims may cause Aerovate to incur significant expenses, and could distract Aerovate’s technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of Aerovate’s common stock. Such litigation or proceedings could substantially increase Aerovate’s operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. Aerovate may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of Aerovate’s competitors may be able to sustain the costs of such litigation or proceedings more effectively than Aerovate can because of their greater financial resources and more mature and developed intellectual property portfolios.

If Aerovate were to initiate legal proceedings against a third party to enforce a patent covering Aerovate’s product candidate, the defendant could counterclaim that Aerovate’s patent is invalid or unenforceable. In patent litigation in the United States and in Europe, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, for example, lack of novelty, obviousness or non-enablement. Third parties might allege unenforceability of Aerovate’s patents because during prosecution of the patent an individual connected with such prosecution withheld relevant information or made a misleading statement. The outcome of proceedings involving assertions of invalidity and unenforceability during patent litigation is unpredictable. With respect to the validity of patents, for example, Aerovate cannot be certain that there is no invalidating prior art of which Aerovate’s and the patent examiner were unaware during prosecution, but that an adverse third party may identify and submit in support of such assertions of invalidity. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, Aerovate would lose at least part, and perhaps all, of the patent protection on its product candidate. Aerovate’s patents and other intellectual property rights also will not protect Aerovate’s technology if competitors design around Aerovate’s protected technology without infringing Aerovate’s patents or other intellectual property rights.

 

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Because of the expense and uncertainty of litigation, Aerovate may not be in a position to enforce its intellectual property rights against third parties.

Because of the expense and uncertainty of litigation, Aerovate may conclude that even if a third party is infringing Aerovate’s issued patent, any patents that may be issued as a result of Aerovate’s pending or future patent applications or other intellectual property rights, the risk-adjusted cost of bringing and enforcing such a claim or action may be too high or not in the best interest of Aerovate or its stockholders. In such cases, Aerovate may decide that the more prudent course of action is to simply monitor the situation or initiate or seek some other non-litigious action or solution.

Third parties may initiate or threaten legal proceedings alleging that Aerovate is infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of Aerovate’s business.

Aerovate’s commercial success depends upon its ability and the ability of its strategic partners to develop, manufacture, market and sell its drugs and use its proprietary technologies without infringing the proprietary rights and intellectual property of third parties. Extensive litigation regarding patents and other intellectual property rights is common in the biotechnology and pharmaceutical industries. Aerovate may in the future become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to Aerovate’s drugs and technology, including interference, derivation, reexamination, post-grant review, opposition, cancellation or similar proceedings before the USPTO or its foreign counterparts. Third parties may assert infringement claims against Aerovate based on existing patents or patents that may be granted in the future, resulting in payment of damages. These damages potentially include increased damages and attorneys’ fees if Aerovate is found to have infringed such rights willfully. Parties making claims against Aerovate may seek and obtain injunctive or other equitable relief, which could effectively block Aerovate’s ability to further develop and commercialize its product candidates. Aerovate may not be aware of all such intellectual property rights potentially relating to its drugs and their uses. If a third party claims that Aerovate’s AV-101 product candidate, any other product candidates that Aerovate may identify, or Aerovate’s technology infringes its patents or other intellectual property rights, Aerovate or its partners may have to discontinue an important product or product line, alter products and processes, pay license fees or cease certain activities. Aerovate could be required to obtain a license from such third party in order to continue developing and commercializing AV-101 or other product candidates. However, Aerovate may not be able to obtain a license to needed intellectual property on commercially reasonable terms, if at all. Even if a license can be obtained on reasonable terms, the rights may be nonexclusive, which would give Aerovate’s competitors access to the same intellectual property rights. Aerovate might also be forced to redesign or modify its product candidates so that Aerovate no longer infringes the third-party intellectual property rights, which may result in significant cost or delay to Aerovate, or which redesign or modification could be impossible or technically infeasible. There are many patents issued or applied for in the biotechnology industry, and Aerovate may not be aware of patents or patent applications held by others that relate to its business. This is especially true since patent applications in the United States are filed confidentially for the first 18 months. Moreover, the validity and breadth of biotechnology patents involve complex legal and factual questions for which important legal issues remain. Thus, Aerovate does not know with certainty that its drugs or the intended commercialization thereof, does and will not infringe or otherwise violate any third party’s intellectual property.

If Aerovate does not obtain additional protection under the Hatch-Waxman Amendments and similar foreign legislation cannot be obtained to extend the patent protection for a product candidate, business operations may be materially harmed.

Depending upon the timing, duration and specifics of the first FDA marketing authorization of a product candidate, a United States patent may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments allow the owner of an approved product to extend patent protection for up to five years as compensation for patent term lost during product development and the FDA regulatory review process. During this period of extension, the scope of protection is limited to the approved product and approved uses.

 

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Patent term restoration for products may not succeed if, for example, there is a failure to apply within applicable deadlines, failure to apply prior to expiration of relevant patents or otherwise a failure to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than requested. Failure to obtain patent term restoration, or if the term of any such patent restoration is less than requested, competitors may enter the market and compete sooner than anticipated, and the ability to generate revenue could be materially adversely affected.

Aerovate may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent which might adversely affect Aerovate’s ability to develop, manufacture and market its product candidate.

Aerovate cannot guarantee that any of its patent searches or analyses, including but not limited to the identification of relevant patents, analysis of the scope of relevant patent claims or determination of the expiration of relevant patents, are complete or thorough, nor can Aerovate be certain that it has identified each and every third-party patent and pending application in the United States, Europe and elsewhere that is relevant to or necessary for the commercialization of AV-101 or any other product candidates that Aerovate may identify in any jurisdiction. For example, in the United States, applications filed before November 29, 2000 and certain applications filed after that date that will not be filed outside the United States remain confidential until patents issue. Patent applications in the United States, EU and elsewhere are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering Aerovate’s product candidates could be filed by others without Aerovate’s knowledge. Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover AV-101 or any other product candidates that Aerovate may identify or the use of AV-101 or any other product candidates that Aerovate may identify. After issuance, the scope of patent claims remains subject to construction as determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. Aerovate’s interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact Aerovate’s ability to market its product candidates. Aerovate may incorrectly determine that AV-101 or any other product candidates that Aerovate may identify is not covered by a third-party patent or may incorrectly predict whether a third party’s pending application will issue with claims of relevant scope. Aerovate’s determination of the expiration date of any patent in the United States, the EU or elsewhere that Aerovate considers relevant may be incorrect, which may negatively impact Aerovate’s ability to develop and market AV-101 or any other product candidates that Aerovate may identify. Aerovate’s failure to identify and correctly interpret relevant patents may negatively impact Aerovate’s ability to develop and market AV-101 or any other product candidates that Aerovate may identify.

If Aerovate fails to correctly identify or interpret relevant patents, Aerovate may be subject to infringement claims. Aerovate cannot guarantee that it will be able to successfully settle or otherwise resolve such infringement claims. If Aerovate fails in any such dispute, in addition to being forced to pay monetary damages, Aerovate may be temporarily or permanently prohibited from commercializing AV-101 or any other product candidates that Aerovate may identify. Aerovate might, if possible, also be forced to redesign AV-101 or any other product candidates that Aerovate may identify in a manner that no longer infringes third-party intellectual property rights. Any of these events, even if Aerovate were ultimately to prevail, could require Aerovate to divert substantial financial and management resources that would otherwise be able to be devoted to Aerovate’s business.

Changes in patent law could diminish the value of patents in general, thereby impairing the ability to protect product candidates.

Recent court rulings, including rules from the United States Supreme Court, have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to the ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken the ability to obtain new patents or to enforce existing patents and patents that might be obtained in the future.

 

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In addition, the America Invents Act (“AIA”), which was passed in September 2011, resulted in significant changes to the U.S. patent system. An important change introduced by the AIA is that, as of March 16, 2013, the United States transitioned from a “first-to-invent” to a “first-to-file” system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention. Under a “first-to-file” system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to a patent on the invention regardless of whether another inventor had made the invention earlier.

Among some of the other changes introduced by the AIA are changes that limit where a patentee may file a patent infringement suit and providing opportunities for third parties to challenge any issued patent in the USPTO. This applies to all U.S. patents, even those issued before March 16, 2013. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S. federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.

Accordingly, a third party may attempt to use the USPTO procedures to invalidate patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. It is not clear what, if any, impact the AIA will have on the operation of Aerovate’s business. However, the AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents.

Aerovate may become involved in opposition, interference, derivation, inter partes review or other proceedings challenging Aerovate’s patent rights, and the outcome of any proceedings are highly uncertain. An adverse determination in any such proceeding could reduce the scope of, or invalidate, Aerovate’s patent rights, allow third parties to commercialize Aerovate’s technology or products and compete directly with Aerovate, without payment to Aerovate, or result in Aerovate’s inability to manufacture or commercialize products without infringing third-party patent rights.

There may be significant pressure on the U.S. government and international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns.

Further, a new court system recently became operational in the European Union. The Unified Patent Court (“UPC”) began accepting patent cases on June 1, 2023. The UPC is a common patent court with jurisdiction over patent infringement and revocation proceedings effective for multiple member states of the European Union. The broad geographic reach of the UPC could enable third parties to seek revocation of any of Aerovate’s European patents in a single proceeding at the UPC rather than through multiple proceedings in each of the individual European Union member states in which the European patent is validated. Under the UPC, a successful revocation proceeding for a European patent under the UPC would result in loss of patent protection in those European Union countries. Accordingly, a single proceeding under the UPC could result in the partial or complete loss of patent protection in numerous European Union countries. Such a loss of patent protection could have a material adverse impact on Aerovate’s business and ability to commercialize its technology and product candidates and, resultantly, on Aerovate’s business, financial condition, prospects and results of operations. Moreover, the controlling laws and regulations of the UPC will develop over time and Aerovate cannot predict what the outcomes of cases tried before the UPC will be. The case law of the UPC may adversely affect Aerovate’s ability to enforce or defend the validity of its European patents. Patent owners have the option to opt-out their European patents from the jurisdiction of the UPC, defaulting to pre-UPC enforcement mechanisms. Aerovate decided to opt out certain European patents and patent applications from the UPC. However, if certain formalities and requirements are not met, Aerovate’s European patents and patent applications could be subject to the jurisdiction of the UPC. Aerovate cannot be certain that its European patents and patent applications will avoid falling under the jurisdiction of the UPC, if Aerovate decides to opt out of the UPC.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and Aerovate’s patent protection could be reduced or eliminated for non-compliance with these requirements.

The USPTO and European and other patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In addition,

 

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periodic maintenance and annuity fees on any issued patent are due to be paid to the USPTO and European and other patent agencies over the lifetime of a patent. While an inadvertent failure to make payment of such fees or to comply with such provisions can in many cases be cured by additional payment of a late fee or by other means in accordance with the applicable rules, there are situations in which non-compliance with such provisions will result in the abandonment or lapse of the patent or patent application, and the partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents within prescribed time limits.

In June 2024, Aerovate announced its decision to halt enrollment and shut down the Phase 3 portion of IMPAHCT as well as the long-term extension study of AV-101 in PAH, and Aerovate does not intend to continue to seek or maintain intellectual property protection on the technology underlying AV-101. If Aerovate fails to maintain the patents and patent applications covering AV-101 or if Aerovate otherwise allows its patents or patent applications to be abandoned or lapse, it will result in partial or complete loss of patent rights.

Aerovate may be subject to claims challenging the inventorship or ownership of its patents and other intellectual property.

Aerovate generally enters into confidentiality and intellectual property assignment agreements with its employees, consultants, and contractors. These agreements generally provide that inventions conceived by the party in the course of rendering services to Aerovate will be Aerovate’s exclusive property. However, those agreements may not be honored and may not effectively assign intellectual property rights to Aerovate. Moreover, there may be some circumstances, where Aerovate is unable to negotiate for such ownership rights. Disputes regarding ownership or inventorship of intellectual property can also arise in other contexts, such as collaborations and sponsored research. If Aerovate is subject to a dispute challenging its rights in or to patents or other intellectual property, such a dispute could be expensive and time consuming. If Aerovate were unsuccessful, Aerovate could lose valuable rights in intellectual property that it regards as its own. The issuance of a patent is not conclusive as to its inventorship.

Aerovate may be subject to claims that its employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.

Aerovate could in the future be subject to claims that Aerovate or its employees have inadvertently or otherwise used or disclosed alleged trade secrets or other confidential information of former employers or competitors. Although Aerovate tries to ensure that its employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for Aerovate, Aerovate may become subject to claims that it caused an employee to breach the terms of his or her non-competition or non-solicitation agreement, or that Aerovate or these individuals have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of a former employer or competitor.

While Aerovate may litigate to defend itself against these claims, even if Aerovate is successful, litigation could result in substantial costs and could be a distraction to management. If Aerovate’s defenses to these claims fail, in addition to requiring Aerovate to pay monetary damages, a court could prohibit Aerovate from using technologies or features that are essential to its product candidates, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers. Moreover, any such litigation or the threat thereof may adversely affect Aerovate’s reputation, its ability to form strategic alliances or sublicense its rights to collaborators, engage with scientific advisors or hire employees or consultants, each of which would have an adverse effect on Aerovate’s business, results of operations and financial condition.

If Aerovate is unable to protect the confidentiality of its trade secrets, Aerovate’s business and competitive position would be harmed.

Aerovate relies on trade secrets and confidentiality agreements to protect its unpatented know-how, technology and other proprietary information and to maintain its competitive position. Trade secrets and

 

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know-how can be difficult to protect. Aerovate seeks to protect these trade secrets and other proprietary technology, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as Aerovate’s employees, collaborators consultants, advisors and other third parties. Aerovate also enters into confidentiality and invention or patent assignment agreements with its employees and consultants. Aerovate cannot guarantee that it has entered into such agreements with each party that may have or has had access to Aerovate’s trade secrets or proprietary technology and processes. Despite these efforts, any of these parties may breach the agreements and disclose Aerovate’s proprietary information, including its trade secrets, and Aerovate may not be able to obtain adequate remedies for such breaches. Unauthorized parties may also attempt to copy or reverse engineer certain aspects of Aerovate’s product candidates that Aerovate considers proprietary. Monitoring unauthorized uses and disclosures is difficult, and Aerovate does not know whether the steps it has taken to protect its proprietary information will be effective.

Aerovate also seeks to preserve the integrity and confidentiality of its confidential proprietary information by maintaining physical security of its premises and physical and electronic security of its information technology systems, but it is possible that these security measures could be breached. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of Aerovate’s trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, Aerovate would have no right to prevent them from using that technology or information to compete with Aerovate. If any of Aerovate’s trade secrets were to be disclosed to or independently developed by a competitor or other third party, Aerovate’s competitive position would be materially and adversely harmed.

If Aerovate and its partners do not adequately protect the trademarks and trade names for Aerovate’s products, then Aerovate and its partners may not be able to build name recognition in Aerovate’s markets of interest and Aerovate’s business may be adversely affected.

Aerovate’s competitors or other third parties may challenge, infringe or circumvent the trademarks or trade names for its products. Aerovate and its partners may not be able to protect these trademarks and trade names. In addition, if the trademarks or trade names for one of Aerovate’s products infringe the rights of others, Aerovate or its partners may be forced to stop using the trademarks or trade names, which Aerovate needs for name recognition in its markets of interest. If Aerovate cannot establish name recognition based on its trademarks and trade names, Aerovate and its partners may not be able to compete effectively and Aerovate’s business may be adversely affected.

Risks Related to Government Regulation

Aerovate may be unable to obtain regulatory approval under applicable regulatory requirements. The denial or delay of any such approval would delay commercialization of any product candidates and adversely impact Aerovate’s potential to generate revenue, its business and its results of operations.

Aerovate has not previously submitted an NDA or any other marketing application to the FDA or similar filings to comparable foreign regulatory authorities. An NDA or other similar regulatory filing requesting approval to market a product candidate must include extensive preclinical and clinical data and supporting information to establish that the product candidate is safe, effective, pure and potent for each desired indication. The NDA or other similar regulatory filing must also include significant information regarding the chemistry, manufacturing and controls for the product.

The research, testing, manufacturing, labeling, approval, sale, marketing and distribution of pharmaceutical products are subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries, and such regulations differ from country to country. Product candidates cannot be marketed in the United States or in any foreign countries until receiving the requisite approval from the applicable regulatory authorities of such jurisdictions.

The FDA or any foreign regulatory bodies can delay, limit or deny approval of product candidates for many reasons, including:

 

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the inability to demonstrate to the satisfaction of the FDA or the applicable foreign regulatory body that a product candidate is safe and effective for the requested indication;

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the FDA’s or the applicable foreign regulatory agency’s disagreement with trial protocol or the interpretation of data from preclinical studies or clinical trials;

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the inability to demonstrate that the clinical and other benefits of a product candidate outweigh any safety or other perceived risks;

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the FDA’s or the applicable foreign regulatory agency’s requirement for additional preclinical studies or clinical trials;

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the FDA’s or the applicable foreign regulatory agency’s non-approval of the formulation, labeling or specifications for a product candidate;

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the FDA’s or the applicable foreign regulatory agency’s failure to approve manufacturing processes and facilities or the facilities of third-party manufacturers relied upon; or

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the potential for approval policies or regulations of the FDA or the applicable foreign regulatory agencies to significantly change in a manner rendering clinical data insufficient for approval.

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Of the large number of pharmaceutical products in development, only a small percentage successfully complete the FDA or other regulatory bodies’ approval processes and are commercialized.

Even if Aerovate eventually completes clinical testing and receives approval from the FDA or applicable foreign agencies for any product candidates, the FDA or the applicable foreign regulatory agency may grant approval contingent on the performance of costly additional clinical trials which may be required after approval. The FDA or the applicable foreign regulatory agency also may approve a product candidate for a more limited indication or a narrower patient population than originally requested, and the FDA, or applicable foreign regulatory agency, may not approve it with the labeling that is necessary or desirable for the successful commercialization.

Should Aerovate in the future conduct clinical trials outside the United States, the FDA, EMA and applicable foreign regulatory authorities may not accept data from such trials.

The acceptance of trial data from clinical trials conducted outside the United States by the FDA, EMA, or applicable foreign regulatory authority may be subject to certain conditions. In cases where data from foreign clinical trials are intended to serve as the basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the United States population and United States medical practice; (ii) the trials were performed by clinical investigators of recognized competence and pursuant to good clinical practice (“GCP”) regulations; and (iii) the data may be considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means. Additionally, the FDA’s clinical trial requirements, including sufficient size of patient populations and statistical powering, must be met. Many foreign regulatory bodies have similar approval requirements.

In addition, such foreign trials will be subject to the applicable local laws of the foreign jurisdictions where the trials are conducted. There can be no assurance that the FDA, EMA, or any applicable foreign regulatory authority will accept data from trials conducted outside of the United States. If the FDA, EMA, or any applicable foreign regulatory authority does not accept such data, it would result in the need for additional trials, which would be costly and time-consuming and delay the business plan, and which may result in a product candidate not receiving approval or clearance for commercialization in the applicable jurisdiction.

Even if Aerovate obtains regulatory approval for a product candidate, Aerovate will be subject to ongoing regulatory requirements, which may result in significant additional expenses. If approved, Aerovate’s product candidates could be subject to labeling and other restrictions, and Aerovate may be subject to penalties if it fails to comply with regulatory requirements or experience unanticipated problems with any product candidates.

Aerovate does not intend to resume development of AV-101 or commence development of any other product candidates. However, if Aerovate has a product candidate approved by the FDA or a comparable

 

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foreign regulatory authority, it will be subject to extensive and ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies, and submission of safety, efficacy, and other post-market information, including both federal and state requirements in the United States and requirements of comparable foreign regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, establishment registration and listing, as well as continued compliance with current Good Manufacturing Practices (“current GMPs”) and Good Manufacturing Practices for any clinical trials that Aerovate conducts post-approval. Any regulatory approvals that Aerovate receives for its product candidates may also be subject to limitations on the approved indicated uses, including the duration of use, for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing studies, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the product. The FDA may also require a Risk Evaluation and Mitigation Strategy (“REMS”), in order to approve a product candidate, which could entail requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

Manufacturers and manufacturers’ facilities are required to comply with extensive FDA and comparable foreign regulatory authority requirements, including ensuring that quality control and manufacturing procedures conform to current GMP regulations and implementing tracking and tracing requirements for certain prescription pharmaceutical products. As such, Aerovate and its contract manufacturers will be subject to continual review and inspections to assess compliance with current GMP and adherence to commitments made in any approved marketing application. Accordingly, Aerovate and others with whom Aerovate works must continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production, and quality control.

In the event any future product candidates are approved, Aerovate would have to comply with requirements concerning advertising and promotion. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label. As such, Aerovate may not promote a product candidate for indications or uses for which it does not have approval. However, companies may share truthful and not misleading information that is otherwise consistent with a product’s FDA approved labeling. Aerovate also must submit new or supplemental applications and obtain approval for certain changes to product labeling, or manufacturing process.

If Aerovate discovers previously unknown problems with any product candidate, such as adverse events of unanticipated severity or frequency, or problems with the facility where a product candidate is manufactured, or if the FDA disagrees with the promotion, marketing or labeling, the FDA may impose restrictions on such product candidate or Aerovate, including requiring withdrawal of it from the market. If Aerovate fails to comply with applicable regulatory requirements, the FDA and other regulatory authorities may, among other things:

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issue warning letters or other regulatory enforcement action;

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impose injunctions, fines or civil or criminal penalties;

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suspend or withdraw regulatory approval;

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suspend any clinical studies;

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refuse to approve pending applications or supplements to approved applications;

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require revisions to the labeling, including limitations on approved uses or the addition of additional warnings, contraindications or other safety information, including boxed warnings;

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impose a REMS which may include distribution or use restrictions;

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require the conduct of an additional post-market clinical trial or trials to assess the safety of the product;

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impose restrictions on Aerovate’s operations, including closing its contract manufacturers’ facilities where regulatory inspections identify observations of noncompliance requiring remediation; or

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restrict the marketing of the product, require a product recall, seizure or detention, or refuse to permit the import or export of the product.

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Any government action or investigation of alleged violations of law could require Aerovate to expend significant time and resources in response, and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect Aerovate’s ability to commercialize and generate revenue. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of Aerovate and its operating results will be adversely affected.

Moreover, the policies of the FDA and of other regulatory authorities may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of any product candidates. Aerovate cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. In addition, if Aerovate is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if Aerovate is not able to maintain regulatory compliance, Aerovate may be subject to enforcement action and may not achieve or sustain profitability.

Aerovate has received orphan drug designation from the FDA and EMA for AV-101 for treatment of PAH, but Aerovate may be unable to obtain additional designations or to maintain the benefits associated with orphan drug status, including the potential for non-patent market exclusivity.

Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a drug or biologic as an orphan drug if it is a product intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the United States, or a patient population of 200,000 or more in the United States where there is no reasonable expectation that the cost of developing the product will be recovered from sales in the United States. In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers.

Similarly, in the European Union, the European Commission, upon the recommendation of the EMA’s Committee for Orphan Medicinal Products, may grant orphan designation in respect of products that are intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating conditions and either (i) such condition affects not more than five in 10,000 persons in the European Union when the application is made or (ii) without incentives, it is unlikely that the marketing of the product would generate sufficient return in the European Union to justify the necessary investment in its development, and, in each case, for which no satisfactory method of diagnosis, prevention, or treatment has been authorized (or the product would be a significant benefit to those affected). In the European Union, orphan designation entitles a party to financial incentives such as reduction of fees or fee waivers.

Generally, if a product with an orphan drug designation subsequently receives the first regulatory approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA or the EMA from approving another marketing application for the same product and indication for that time period, except in limited circumstances. Any competitor developing imatinib in the same indication with orphan drug designation may block Aerovate’s ability to obtain orphan drug exclusivity in the future if the competitor receives marketing approval before Aerovate does. The applicable exclusivity period is seven years in the United States and ten years in the European Union. The European Union exclusivity period can be reduced to six years if, at the end of the fifth year, it is established that a product no longer meets the criteria for orphan drug designation, including if the product is sufficiently profitable so that market exclusivity is no longer justified. Legislation has been proposed by the European Commission that, if implemented, has the potential in some cases to shorten the ten-year period of orphan drug exclusivity.

Aerovate previously obtained orphan drug designation for AV-101 in the United States from the FDA and in the European Union from the EMA for the treatment of PAH. Even with orphan drug exclusivity, that exclusivity may not effectively protect a product from competition because different products can be approved for the same condition. Even after an orphan drug is approved, the FDA or EMA can subsequently approve the same product for the same condition if the FDA or EMA concludes that the later product is

 

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clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care. In addition, a designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. Moreover, orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the product to meet the needs of patients with the rare disease or condition or if another product with the same active moiety is determined to be safer, more effective, or represents a major contribution to patient care. Orphan drug designation neither shortens the development time or regulatory review time of a product nor gives the product any advantage in the regulatory review or approval process.

Even if FDA approval in the United States is obtained, it does not guarantee approval for or successful commercialization of a product candidate outside of the United States, which would limit the ability to realize its full market potential.

To market product candidates outside of the United States requires obtaining marketing authorizations and comply with numerous and varying regulatory requirements of other countries regarding quality, safety and efficacy. Clinical trials conducted in one country may not be accepted by foreign regulatory authorities, and regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval processes vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatory approval could result in difficulties and costs and require additional non-clinical studies or clinical trials, which could be costly and time consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of a product candidate in those countries. Aerovate, as a company, does not have experience in obtaining regulatory approval in international markets. Failing to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approval in international markets is delayed, the target market will be reduced and the full market potential of such product candidate could not be realized.

Aerovate’s business operations and relationships with investigators, healthcare professionals, consultants, third-party payors, patient organizations and customers have been subject to applicable healthcare regulatory laws, which could expose Aerovate to penalties.

Aerovate’s business operations and arrangements with investigators, healthcare professionals, consultants, third-party payors, patient organizations and customers, may expose Aerovate to broadly applicable fraud and abuse and other healthcare laws, including, without limitation, the federal Anti-Kickback Statute, the federal civil and criminal False Claims Act and Physician Payments Sunshine Act and regulations. These laws may constrain the business or financial arrangements and relationships through which Aerovate conducts its operations, including how Aerovate researches, markets, sells and distributes product candidates, if approved. For more information, please see the section titled “Aerovate’s Business — Government Regulation — Healthcare Laws and Regulation” beginning on page 271 of this proxy statement/prospectus.

Ensuring that any internal operations and business arrangements with third parties comply with applicable healthcare laws and regulations involves substantial costs. It is possible that governmental authorities will conclude that business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws. If operations are found to be in violation of any of the laws described above or any other governmental laws that may apply, it may result in significant penalties, including civil, criminal and administrative penalties, damages, fines, exclusion from government-funded healthcare programs, such as Medicare and Medicaid or similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, disgorgement, imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or restructuring of operations. If any of the physicians or other providers or entities with which business is done are found to not be in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs and imprisonment, which could affect the ability to operate its business. Further, defending against any such actions can be costly, time-consuming and may require significant personnel resources.

 

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Healthcare legislative reform measures may have a material adverse effect on Aerovate’s business and results of operations.

The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that could prevent or delay regulatory approval of product candidates, restrict or regulate post-approval activities and affect the ability to profitably sell a product for which regulatory approval is obtained. Changes in regulations, statutes or the interpretation of existing regulations could impact manufacturing arrangements, require additions or modifications to product labeling, result in the recall or discontinuation of products or result in additional record-keeping requirements. If any such changes were to be imposed, they could adversely affect business operations. For more information, please see the section titled “Aerovate’s Business — Government Regulation — Pricing and Reimbursement” beginning on page 270 of this proxy statement/prospectus.

Revenue prospects could be affected by changes in healthcare spending and policy in the United States and abroad. Healthcare is a highly regulated industry and new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or decisions, related to healthcare availability, the method of delivery or payment for healthcare products and services could negatively impact business, operations and financial condition.

There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. Aerovate cannot predict the initiatives that may be adopted in the future, including repeal, replacement or significant revisions to the Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act (“ACA”). Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors, which may adversely affect future profitability.

Inadequate funding for the FDA, the SEC and other government agencies, including from government-shutdowns, or other disruptions to these agencies’ operations, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of Aerovate’s business may rely, which could negatively impact Aerovate’s business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. Disruptions at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which would adversely affect business operations of regulated entities. In addition, government funding of the SEC and other government agencies on which Aerovate’s operations may rely is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies. For example, over the last several years the United States government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities. Future government shutdowns could impact the ability to access the public markets and obtain necessary capital in order to properly capitalize and continue Aerovate’s operations.

Risks Related to Aerovate’s Employee Matters

Aerovate’s insurance policies may be inadequate and potentially expose Aerovate to unrecoverable risks.

Aerovate has limited director and officer insurance and product liability insurance policies. Any significant insurance claims would have a material adverse effect on Aerovate’s business, financial condition and results of operations. Insurance availability, coverage terms, including deductibles and pricing, continue to vary with market conditions. Aerovate endeavors to obtain appropriate insurance coverage for insurable risks that it identifies; however, Aerovate may fail to correctly anticipate or quantify insurable risks,

 

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Aerovate may not be able to obtain appropriate insurance coverage, and insurers may not respond as Aerovate intends to cover insurable events that may occur. Aerovate has observed rapidly changing conditions in the insurance markets relating to nearly all areas of traditional corporate insurance. Such conditions have resulted in higher premium costs, higher policy deductibles and lower coverage limits. For some risks, Aerovate may not have or maintain insurance coverage because of cost or availability.

Aerovate may be unable to adequately protect its information systems and infrastructure from cyberattacks and other cybersecurity incidents, which could result in the disclosure or compromise of confidential or proprietary information, including personal data, damage to Aerovate’s reputation, and subject Aerovate to significant financial and legal exposure.

Aerovate relies on information technology systems that Aerovate or its third-party providers operate to process, transmit and store electronic information in its day-to-day operations. In connection with Aerovate’s product discovery efforts, Aerovate may collect and use a variety of personal data, such as names, mailing addresses, email addresses, phone numbers and clinical trial information. A successful cyberattack or other cybersecurity incident could result in the theft or destruction of this personal data, intellectual property, other data, or other misappropriation of assets, or otherwise compromise Aerovate’s confidential or proprietary information and disrupt Aerovate’s operations. Cybersecurity incidents are increasing in their frequency, sophistication, level of persistence and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise. Cyberattacks could include wrongful conduct by hostile foreign governments, industrial espionage, wire fraud and other forms of cyber fraud, the deployment of harmful malware, denial-of-service, ransomware, social engineering fraud or other means to threaten data security, confidentiality, integrity and availability. Aerovate may also face increased cybersecurity risks due to its reliance on internet technology and the number of Aerovate’s employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities. Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, Aerovate may be unable to anticipate these techniques or implement adequate preventative measures. Aerovate may also experience cybersecurity incidents that may remain undetected for an extended period. A successful cyberattack could cause serious negative consequences for Aerovate, including, without limitation, the disruption of operations, the misappropriation of confidential business information, including financial information, trade secrets, financial loss and the disclosure of corporate strategic plans. Although Aerovate devotes resources to protect its information systems, Aerovate realizes that cybersecurity incidents are a threat, and there can be no assurance that its efforts will prevent cybersecurity incidents that would result in business, legal, financial or reputational harm to Aerovate, or would have a material adverse effect on Aerovate’s results of operations and financial condition. Aerovate maintains cybersecurity insurance in the event of a cybersecurity incident; however, the coverage may not be sufficient to cover all financial losses. Any failure to prevent or mitigate cybersecurity incidents or improper access to, use of, or disclosure or compromise of Aerovate’s clinical data or patients’ personal data could result in significant liability under state (e.g., state breach notification laws), federal, and international law and may cause a material adverse impact to Aerovate’s reputation, affect Aerovate’s ability to conduct new studies and potentially disrupt Aerovate’s business.

Aerovate relies on its third-party providers to implement effective security measures and identify and correct for any such failures, deficiencies or breaches. If Aerovate or its third-party providers fail to maintain or protect Aerovate’s information technology systems and data integrity effectively or fail to anticipate, plan for or manage significant disruptions to Aerovate’s information technology systems, Aerovate or its third-party providers could have difficulty preventing, detecting and controlling such cyber-attacks and any such incidents could result in the losses described above as well as disputes with physicians, patients and partners, regulatory sanctions or penalties, increases in operating expenses, other expenses or lost revenues or other adverse consequences, any of which could have a material adverse effect on Aerovate’s business, results of operations, financial condition, prospects and cash flows. Any failure by such third parties to prevent or mitigate cybersecurity incidents or improper access to or disclosure or compromise of such information could have similarly adverse consequences for Aerovate. If Aerovate is unable to prevent or mitigate the impact of such cybersecurity incidents, Aerovate could be exposed to litigation and governmental investigations, which could lead to a potential disruption to Aerovate’s business. By way of example, the California Consumer Privacy Act as amended by the California Privacy Rights Act (“CCPA”), provides a private right of action for data breaches impacting California residents.

 

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Risks Related to Ownership of Aerovate’s Common Stock

Aerovate’s ability to utilize its net operating loss carryforwards and certain other tax attributes may be limited.

Under Section 382 of the Code, if a corporation undergoes an “ownership change” ​(generally defined as a greater than 50 percentage point change (by value) in the ownership of its equity over a three year period), the corporation’s ability to use its pre-change net operating loss carryforwards and certain other pre-change tax attributes to offset its post-change income may be limited. Aerovate may have experienced such ownership changes in the past, and Aerovate may experience ownership changes in the future or subsequent shifts in Aerovate’s stock ownership, some of which are outside Aerovate’s control. As of December 31, 2024, Aerovate had federal net operating loss (“NOL”) carryforwards of approximately $95.7 million and are accruing additional net operating losses in calendar year 2025, which will be added to the net operating loss carryover balance once the current year is completed. Aerovate’s ability to utilize its net operating loss carryforwards could be limited by an “ownership change” as described above, which could result in increased tax liability to Aerovate. Furthermore, Aerovate’s ability to utilize its NOLs or credits is conditioned upon Aerovate’s attaining profitability and generating U.S. federal and state taxable income. As a result, the amount of the net operating loss and tax credit carryforwards presented in Aerovate’s financial statements could be limited and may expire unutilized. Federal net operating loss carryforwards generated since Aerovate’s incorporation in July 2018 will not be subject to expiration. However, any such net operating loss carryforwards may only offset 80% of Aerovate’s annual taxable income.

Changes in tax law may adversely affect Aerovate or its investors.

The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the U.S. Internal Revenue Service (“IRS”) and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect Aerovate or holders of its common stock. In recent years, many changes have been made and changes are likely to continue to occur in the future. For example, under Section 174 of the Code, in taxable years beginning after December 31, 2021, expenses that are incurred for research and development in the U.S. are capitalized and amortized, which may have an adverse effect on Aerovate’s cash flow. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation.

It cannot be predicted whether, when, in what form, or with what effective dates, new tax laws may be enacted, or regulations and rulings may be enacted, promulgated or issued under existing or new tax laws, which could result in an increase in Aerovate’s or its stockholders’ tax liability or require changes in the manner in which Aerovate operates in order to minimize or mitigate any adverse effects of changes in tax law or in the interpretation thereof.

Anti-takeover provisions in the Aerovate Charter and under Delaware law could make an acquisition of Aerovate, which may be beneficial to Aerovate’s stockholders, more difficult and may prevent attempts by Aerovate’s stockholders to replace or remove Aerovate’s current management.

The Aerovate Charter and amended and Aerovate’s restated bylaws contain provisions that could delay or prevent a change of control of Aerovate or changes in Aerovate’s board of directors that Aerovate’s stockholders might consider favorable. Some of these provisions include:

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a board of directors divided into three classes serving staggered three-year terms, such that not all members of the board of directors will be elected at one time;

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a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of Aerovate’s stockholders;

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a requirement that special meetings of the stockholders may be called only by the board of directors acting pursuant to a resolution approved by the affirmative vote of a majority of the directors then in office, and special meetings of stockholders may not be called by any other person or persons;

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advance notice requirements for stockholder proposals and nominations for election to Aerovate’s board of directors;

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a requirement that no member of Aerovate’s board of directors may be removed from office by Aerovate’s stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds (2/3) of all outstanding shares of Aerovate’s voting stock then entitled to vote in the election of directors;

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a requirement of approval of not less than a majority of all outstanding shares of Aerovate’s voting stock to amend any bylaws by stockholder action and not less than two-thirds (2/3) of all outstanding shares of Aerovate’s voting stock to amend specific provisions of the Aerovate Charter; and

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the authority of the board of directors to issue preferred stock on terms determined by the board of directors without stockholder approval, which preferred stock may include rights superior to the rights of the holders of common stock.

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In addition, because Aerovate is incorporated in Delaware, Aerovate is governed by the provisions of Section 203 of the Delaware General Corporate Law, which may prohibit certain business combinations with stockholders owning 15% or more of Aerovate’s outstanding voting stock. These anti-takeover provisions and other provisions in the Aerovate Charter and amended and restated bylaws could make it more difficult for stockholders or potential acquirers to obtain control of Aerovate’s board of directors or initiate actions that are opposed by the then-current board of directors and could also delay or impede a merger, tender offer or proxy contest involving Aerovate. These provisions could also discourage proxy contests and make it more difficult for Aerovate’s stockholders to elect directors of their choosing or cause Aerovate to take other corporate actions that Aerovate’s stockholders desire. Any delay or prevention of a change of control transaction or changes in Aerovate’s board of directors could cause the market price of Aerovate’s common stock to decline.

Aerovate’s amended and restated bylaws designate certain courts as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Aerovate’s stockholders, which could limit Aerovate’s stockholders’ ability to obtain a favorable judicial forum for disputes with Aerovate or its directors, officers, or employees.

Aerovate’s amended and restated bylaws provide that, unless Aerovate consents in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any state law claim for (i) any derivative action or proceeding brought on Aerovate’s behalf, (ii) any action asserting a claim of breach of fiduciary duty owed by any of Aerovate’s directors, officers, and employees to Aerovate’s or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, the Aerovate Charter or Aerovate’s amended and restated bylaws (including the interpretation, validity or enforceability thereof) or (iv) any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein (the “Delaware Forum Provision”). The Delaware Forum Provision will not apply to any causes of action arising under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Aerovate’s amended and restated bylaws further provide that, unless Aerovate consents in writing to the selection of an alternative forum, the federal district courts of the United States shall be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act (the “Federal Forum Provision”). In addition, Aerovate’s bylaws provide that any person or entity purchasing or otherwise acquiring any interest in shares of Aerovate’s common stock is deemed to have notice of and consented to the foregoing provisions; provided, however, that stockholders cannot and will not be deemed to have waived Aerovate’s compliance with the federal securities laws and the rules and regulations thereunder.

Aerovate recognizes that the Delaware Forum Provision in Aerovate’s amended and restated bylaws may impose additional litigation costs on stockholders in pursuing any such claims, particularly if the stockholders do not reside in or near the State of Delaware. Additionally, the forum selection clauses in Aerovate’s amended and restated bylaws may limit Aerovate’s stockholders’ ability to bring a claim in a forum that they find favorable for disputes with Aerovate or its directors, officers or employees, which may discourage such lawsuits against Aerovate and its directors, officers and employees even though an action, if successful, might benefit Aerovate’s stockholders. In addition, while the Delaware Supreme Court ruled in March 2020 that federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court were “facially valid” under Delaware law, there is uncertainty as to whether other

 

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courts will enforce Aerovate’s Federal Forum Provision. If the Federal Forum Provision is found to be unenforceable, Aerovate may incur additional costs associated with resolving such matters. The Federal Forum Provision may also impose additional litigation costs on stockholders who assert that the provision is not enforceable or invalid. The Court of Chancery of the State of Delaware and the federal district courts of the United States may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to Aerovate than Aerovate’s stockholders.

Aerovate’s General Risk Factors

Unfavorable global economic or political conditions could adversely affect Aerovate’s business, financial condition or results of operations.

Aerovate’s results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. A global financial crisis or a global or regional political disruption could cause extreme volatility in the capital markets and lead to diminished liquidity and credit availability, higher interest rates, declines in consumer confidence and economic growth, increases in unemployment rates and uncertainty about economic stability. For instance, the COVID-19 pandemic led to a period of considerable uncertainty and volatility and interest rates in the United States have recently increased to levels not seen in decades. In addition, the impact of geopolitical tension, such as a deterioration in the bilateral relationship between the United States and China or the ongoing war in Ukraine and the conflict in the Middle East, including any resulting sanctions, export controls or other restrictive actions, also could lead to disruption, instability, and volatility in the global markets, as well as disruptions to Aerovate’s business. A severe or prolonged economic downturn or political disruption could result in a variety of risks to Aerovate’s business, strategic prospects and ability to raise additional capital as needed on acceptable terms, if at all. Any of the foregoing could harm Aerovate’s business and Aerovate cannot anticipate all of the ways in which the political or economic climate and financial market conditions could adversely impact Aerovate’s business.

Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect Aerovate’s current and projected business operations and its financial condition and results of operations.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank (“SVB”), was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership; since then, additional financial institutions have experienced similar failures and have been placed into receivership. It is possible that other banks will face similar difficulty in the future. Aerovate had no exposure to the SVB closure and did not experience any adverse impact to its liquidity or to its current and projected business operations, financial condition or results of operations. However, uncertainty remains over liquidity concerns in the broader financial services industry, and there may be additional impacts to Aerovate’s business and industry that Aerovate cannot predict at this time. Similar impacts have occurred in the past, such as during the 2008-2010 financial crisis.

Although Aerovate assesses its banking and customer relationships as it believes necessary or appropriate, Aerovate’s access to funding sources and other credit arrangements in amounts adequate to finance or capitalize Aerovate’s current and projected future business operations could be significantly impaired by factors that affect Aerovate, the financial institutions with which Aerovate has credit agreements or arrangements directly, or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry. These factors could involve financial institutions or financial

 

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services industry companies with which Aerovate has financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.

The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on Aerovate’s current and projected business operations and Aerovate’s financial condition and results of operations. These could include, but may not be limited to, the following:

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delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets;

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delayed or lost access to, or reductions in borrowings available under revolving existing credit facilities or other working capital sources and/or delays, inability or reductions in Aerovate’s ability to refund, roll over or extend the maturity of, or enter into new credit facilities or other working capital resources;

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potential or actual breach of contractual obligations that require Aerovate to maintain letters of credit or other credit support arrangements; or

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termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements.

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Any decline in available funding or access to Aerovate’s cash and liquidity resources could, among other risks, adversely impact Aerovate’s ability to meet Aerovate’s operating expenses, financial obligations or fulfill Aerovate’s other obligations, result in breaches of Aerovate’s financial and/or contractual obligations or result in violations of federal or state wage and hour laws. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on Aerovate’s liquidity and current and/or projected business operations and financial condition and results of operations.

In addition, any further deterioration in the macroeconomic economy or financial services industry could lead to losses or defaults by Aerovate’s suppliers, which in turn, could have a material adverse effect on Aerovate’s current and/or projected business operations and results of operations and financial condition. For example, a supplier may determine that it will no longer deal with Aerovate as a customer or a supplier could be adversely affected by any of the liquidity or other risks that are described above as factors that could result in material adverse impacts on Aerovate, including but not limited to delayed access or loss of access to uninsured deposits or loss of the ability to draw on existing credit facilities involving a troubled or failed financial institution. Any supplier bankruptcy or insolvency, or the failure of any customer to make payments when due, or any breach or default by a supplier, or the loss of any significant supplier relationships, could result in material losses to Aerovate and may have a material adverse impact on Aerovate’s business.

Aerovate’s business is affected by macroeconomic conditions, including rising inflation, interest rates and supply chain constraints.

Various macroeconomic factors could adversely affect Aerovate’s business and results of operations and financial condition, including changes in inflation, interest rates and overall economic conditions and uncertainties such as those resulting from the current and future conditions in the global financial markets. For instance, recent supply chain constraints have led to higher inflation, which if sustained could have a negative impact on Aerovate’s development of future product candidates, as well as Aerovate’s business and results of operations. If inflation or other factors were to significantly increase Aerovate’s business costs, ability to develop its current pipeline and new therapeutic products may be negatively affected. Interest rates, the liquidity of the credit markets and the volatility of the capital markets could also affect the operation of Aerovate’s business and ability to raise capital on favorable terms, or at all, in order to fund its operations.

Aerovate’s employees and independent contractors, including principal investigators, consultants, commercial collaborators, service providers and other vendors, may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have an adverse effect on Aerovate’s results of operations.

Aerovate is exposed to the risk that its employees and independent contractors, including principal investigators, consultants, any future commercial collaborators, service providers and other vendors may

 

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engage in misconduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or other unauthorized activities that violate the laws and regulations of the FDA and other similar regulatory bodies, including those laws that require the reporting of true, complete and accurate information to such regulatory bodies; manufacturing standards; United States federal and state fraud and abuse laws, data privacy and security laws and other similar non-United States laws; or laws that require the true, complete and accurate reporting of financial information or data. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials, the creation of fraudulent data in Aerovate’s preclinical studies or clinical trials, or illegal misappropriation of product, which could result in regulatory sanctions and cause serious harm to Aerovate’s reputation. It is not always possible to identify and deter misconduct by employees and other third-parties, and the precautions Aerovate takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Aerovate from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. In addition, Aerovate is subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against Aerovate, and Aerovate is not successful in defending itself or asserting its rights, those actions could have a significant impact on Aerovate’s business and financial results, including, without limitation, the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other United States federal healthcare programs or healthcare programs in other jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings and curtailment of Aerovate’s operations, any of which could adversely affect Aerovate’s ability to operate its business and its results of operations.

Actual or perceived failures to comply with United States and foreign privacy and data protection laws, regulations and standards may adversely affect Aerovate’s business, operations and financial performance.

Aerovate is subject to or affected by numerous federal, state and foreign laws and regulations, as well as regulatory guidance, governing the collection, use, disclosure, retention, and security of personal information, such as information that Aerovate collects about patients and healthcare providers in connection with clinical trials in the United States and abroad. The global data protection landscape is rapidly evolving, and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. This evolution may create uncertainty in Aerovate’s business, affect Aerovate’s or any service providers’, contractors’ or future collaborators’ ability to operate in certain jurisdictions or to collect, store, transfer, use and share personal information, necessitate the acceptance of more onerous obligations in Aerovate’s contracts, result in liability or impose additional costs on Aerovate. The cost of compliance with these laws, regulations and standards is high and is likely to increase in the future. Any failure or perceived failure by Aerovate or its collaborators, service providers and contractors to comply with federal, state or foreign laws or regulations, Aerovate’s internal policies and procedures or Aerovate’s contracts governing processing of personal information could result in negative publicity, diversion of management time and effort and proceedings against Aerovate by governmental entities or others. In many jurisdictions, enforcement actions and consequences for noncompliance are rising.

As Aerovate’s operations and business grow, Aerovate may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities. In the United States, HIPAA imposes, among other things, certain standards relating to the privacy, security, transmission and breach reporting of individually identifiable health information. Certain states have also adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for Aerovate and its future customers and strategic partners. For example, the CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches. The CCPA may increase Aerovate’s compliance costs and potential liability. Following the amendment of the CCPA by the California Privacy Rights Act (“CPRA”), the CCPA is implemented and enforced by a new California data protection agency, which may result in increased regulatory scrutiny of California businesses in the areas of data

 

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protection and security. The effects of the CCPA, as amended by the CPRA, are potentially significant and may require Aerovate to modify its data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase Aerovate’s potential exposure to regulatory enforcement and/or litigation.

Certain other state laws impose similar privacy obligations and Aerovate also anticipates that more states will increasingly enact legislation similar to the CCPA. Already, laws similar to the CCPA have been passed in numerous other states. While these laws incorporate many similar concepts of the CCPA, there are also several key differences in the scope, application, and enforcement of the laws that will change the operational practices of regulated entities. In addition, Washington state recently passed a comprehensive health information privacy law. Proposed and newly enacted legislation may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.

Aerovate’s operations abroad may also be subject to increased scrutiny or attention from data protection authorities. Many countries in these regions have established or are in the process of establishing privacy and data security legal frameworks with which Aerovate, its collaborators, service providers, including its contract research organizations (“CROs”), and contractors must comply. For example, the European Union General Data Protection Regulation (with regards to the European Economic Area (“EEA”)) and the UK GDPR (with regards to the UK), as well as applicable national data protection legislation and requirements. In this document, GDPR refers to both EU GDPR and the UK GDPR, unless specified otherwise. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal information, including requirements relating to having a legal basis for processing personal data, stricter requirements relating to the processing of sensitive data (such as health sensitive data), where required by GDPR obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, requirements to conduct data protection impact assessments for high risk processing and taking certain measures when engaging third-party processors. Failure to comply with the requirements of the GDPR may result in warning letters, mandatory audits, orders to cease/change the use of data, and financial penalties, including fines of up to 4% of global revenues, or 20,000,000 Euro (£17.5 million for the UK), whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR.

The GDPR provides that EEA member states may make their own further laws and regulations in relation to the processing of genetic, biometric or health data, which could result in differences between member states, limit Aerovate’s ability to use and share personal data or could cause Aerovate’s costs to increase, and harm Aerovate’s business and financial condition.

The GDPR also includes restrictions on cross-border transfers of personal data to countries outside the EEA and UK that are not considered by the European Commission or UK government as providing adequate protection to personal data, including the United States, unless a valid GDPR mechanism (for example, the European Commission approved Standard Contractual Clauses (“SCCs”), and the UK International Data Transfer Agreement/Addendum (“UK IDTA”)) has been put in place. Where relying on the SCCs or UK IDTA for data transfers, Aerovate may also be required to carry out transfer impact assessments to assess whether the recipient is subject to local laws which allow public authority access to personal data. Further, the EU and United States have adopted its adequacy decision for the EU-U.S. Data Privacy Framework (the “Framework”), which entered into force on July 11, 2023. This Framework provides that the protection of personal data transferred between the EU and the United States is comparable to that offered in the EEA. This provides a further avenue to ensuring transfers to the United States are carried out in line with GDPR. There has been an extension to the Framework to cover UK transfers to the United States. The Framework could be challenged like its predecessor frameworks. The international transfer obligations under the EEA and UK data protection regimes will require significant effort and cost, and may result in Aerovate needing to make strategic considerations around where EEA and UK personal data is transferred and which service providers Aerovate can utilize for the processing of EEA and UK

 

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personal data. Although the UK is regarded as a third country under the EU GDPR, the European Commission has issued a decision recognizing the UK as providing adequate protection under the EU GDPR (“UK Adequacy Decision”) and, therefore, transfers of personal data originating in the EEA to the UK remain unrestricted. The UK government has confirmed that personal data transfers from the UK to the EEA remain free flowing. The UK government has also now introduced a Data Protection and Digital Information Bill (“UK Bill”) into the UK legislative process. The aim of the UK Bill is to reform the UK’s data protection regime following Brexit. If passed, the final version of the UK Bill will have the effect of further altering the similarities between the UK and EEA data protection regime and threaten the UK Adequacy Decision from the European Commission. This may lead to additional compliance costs and could increase Aerovate’s overall risk. The respective provisions and enforcement of the EU GDPR and UK GDPR may further diverge in the future and create additional regulatory challenges and uncertainties.

In addition, many jurisdictions outside of Europe are also considering and/or enacting comprehensive data protection legislation. For example, as of August 2020, the Brazilian General Data Protection Law imposes stringent requirements similar to GDPR with respect to personal information collected from individuals in Brazil.

In China, there have also been recent significant developments concerning privacy and data security. On June 10, 2021, the Standing Committee of the PRC National People’s Congress published the Data Security Law of the People’s Republic of China (the “Data Security Law”) which took effect on September 1, 2021. The Data Security Law requires data processing (which includes the collection, storage, use, processing, transmission, provision and publication of data), to be conducted in a legitimate and proper manner. The Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data processing activities and also introduces a data classification and hierarchical protection system based on the importance of data in economic and social development and the degree of harm it may cause to national security, public interests, or legitimate rights and interests of individuals or organizations if such data are tampered with, destroyed, leaked, illegally acquired or illegally used. The appropriate level of protection measures is required to be taken for each respective category of data.

Also in China, on August 20, 2021, the Standing Committee of the National People’s Congress of the PRC promulgated the Personal Information Protection Law (“PIPL”), which took effect on November 1, 2021. PIPL raises the protection requirements for processing personal information, and many specific requirements of the PIPL remain to be clarified. Fines for PIPL violations range from $7.7 million to up to 5% of the infringing company’s previous year’s revenues. Aerovate may be required to make further significant adjustments to Aerovate’s business practices to comply with the personal information protection laws and regulations in China.

Although Aerovate works to comply with applicable laws, regulations and standards, Aerovate’s contractual obligations and other legal obligations, because the interpretation and application of many privacy and data protection laws (including the GDPR), commercial frameworks, and standards are uncertain, it is possible that these laws, frameworks, and standards may be interpreted and applied in a manner that is inconsistent with Aerovate’s existing data management practices and policies. If so, in addition to the possibility of fines, lawsuits, breach of contract claims, and other claims and penalties, Aerovate could be required to fundamentally change its business activities and practices or modify Aerovate’s solutions, which could have an adverse effect on Aerovate’s business. Any inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable privacy and security or data security laws, regulations, and policies, could result in additional cost and liability to Aerovate, damage Aerovate’s reputation, inhibit Aerovate’s ability to conduct trials, and adversely affect Aerovate’s business and results of operations.

Aerovate is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and a “smaller reporting company” as defined in the Exchange Act, and will be able to avail itself of reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies, which could make Aerovate’s common stock less attractive to investors and adversely affect the market price of Aerovate’s common stock.

Aerovate is an “emerging growth company,” as defined in the JOBS Act. Aerovate will remain an emerging growth company until the earlier of (i) the last day of the fiscal year in which Aerovate has total

 

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annual gross revenues of $1.235 billion or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of the completion of Aerovate’s IPO; (iii) the date on which Aerovate has issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which Aerovate is deemed to be a large accelerated filer under the rules of the SEC, which means the market value of Aerovate’s common stock that is held by non-affiliates exceeds $700 million as of June 30th. For so long as Aerovate remains an emerging growth company, Aerovate is permitted and intends to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

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not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404;

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not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

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providing only two years of audited financial statements in addition to any required unaudited interim financial statements and a correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

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the requirement to provide detailed compensation discussion and analysis in proxy statements and reports filed under the Exchange Act and instead provide a reduced level of disclosure regarding executive compensation; and

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exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved and some of the disclosure requirements of the Dodd-Frank Act relating to compensation of executive officers.

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Although Aerovate is still evaluating the JOBS Act, Aerovate currently intends to take advantage of some, but not all, of the available exemptions available to Aerovate so long as Aerovate qualifies as an “emerging growth company.” Aerovate has taken advantage of reduced reporting burdens in this proxy statement/prospectus. In particular, Aerovate has provided only two years of audited financial statements and has not included all of the executive compensation information that would be required if Aerovate were not an emerging growth company. Aerovate cannot predict whether investors will find its common stock less attractive if Aerovate relies on these exemptions. If some investors find Aerovate’s common stock less attractive as a result, there may be a less active trading market for Aerovate’s common stock and Aerovate’s stock price may be more volatile.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Aerovate has elected to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, Aerovate will adopt the new or revised standard at the time public companies adopt the new or revised standard.

As a result, changes in rules of United States generally accepted accounting principles or their interpretation, the adoption of new guidance or the application of existing guidance to changes in Aerovate’s business could significantly affect Aerovate’s financial position and results of operations. In addition, Aerovate’s independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of Aerovate’s internal control over financial reporting so long as Aerovate qualifies as an “emerging growth company,” which may increase the risk that material weaknesses in Aerovate’s internal control over financial reporting go undetected. Likewise, so long as Aerovate qualifies as an “emerging growth company,” Aerovate may elect not to provide Aerovate’s stockholders with certain information, including certain financial information and certain information regarding compensation of Aerovate’s executive officers, that Aerovate would otherwise have been required to provide in filings Aerovate makes with the SEC, which may make it more difficult for investors and securities analysts to evaluate Aerovate. Aerovate cannot predict if investors will find its common stock less attractive because Aerovate

 

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may rely on these exemptions. If some investors find Aerovate’s common stock less attractive as a result, there may be a less active trading market for Aerovate’s common stock, and Aerovate’s stock price may be more volatile and may decline.

Even after Aerovate no longer qualifies as an emerging growth company, Aerovate may still qualify as a “smaller reporting company,” which would allow Aerovate to continue to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in Aerovate’s periodic reports and proxy statements. Aerovate cannot predict if investors will find its common stock less attractive because Aerovate may rely on these exemptions. If some investors find Aerovate’s common stock less attractive as a result, there may be a less active trading market for Aerovate’s common stock and Aerovate’s stock price may be more volatile.

Aerovate may not pay any cash dividends on its capital stock in the foreseeable future, other than the Cash Dividend in connection with the Merger, and capital appreciation, if any, will be Aerovate’s stockholders’ sole source of gain.

Aerovate has never declared or paid cash dividends on its capital stock. Aerovate intends to declare and pay to the holders of record of outstanding shares of Aerovate common stock as of a record date prior to the Effective Time of the Merger, to be set by the Aerovate board of directors as close as reasonably practicable to (but not later than) the anticipated Closing Date. Otherwise, Aerovate may retain all of its future earnings, if any, to finance the growth and development of Aerovate’s business. In addition, the terms of any future debt agreements may preclude Aerovate from paying dividends. As a result, capital appreciation, if any, of Aerovate’s common stock will be Aerovate’s stockholders’ sole source of gain for the foreseeable future.

Aerovate incurs increased costs as a result of operating as a public company, and Aerovate’s management is required to devote substantial time to new compliance initiatives.

As a public company, and particularly after Aerovate is no longer an “emerging growth company,” Aerovate will continue to incur significant legal, accounting and other expenses that Aerovate did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002 and rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Aerovate’s management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase Aerovate’s legal and financial compliance costs and will make some activities more time-consuming and costly. For example, Aerovate expects that these rules and regulations may make it more difficult and more expensive for Aerovate to maintain director and officer liability insurance.

Pursuant to Section 404, Aerovate is required to furnish a report by Aerovate’s management on its internal control over financial reporting. Management’s certification under Section 404 of the Sarbanes-Oxley Act was provided with Aerovate’s annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 25, 2024. However, while Aerovate remains an emerging growth company, it will not be required to include an attestation report on internal control over financial reporting issued by Aerovate’s independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, Aerovate has engaged in a process to document and evaluate Aerovate’s internal control over financial reporting, which is both costly and challenging. In this regard, Aerovate has been and will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite Aerovate’s efforts, there is a risk that neither Aerovate nor its independent registered public accounting firm will be able to conclude within the prescribed timeframe that Aerovate’s internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of Aerovate’s financial

 

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statements. In addition, if Aerovate is not able to continue to meet these requirements, Aerovate may not be able to remain listed on Nasdaq.

If Aerovate fails to establish and maintain proper and effective internal control over financial reporting, Aerovate’s operating results and ability to operate its business could be harmed.

Ensuring that Aerovate has adequate internal financial and accounting controls and procedures in place so that Aerovate can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Aerovate’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. In connection with Aerovate’s IPO, Aerovate began the process of documenting, reviewing and improving its internal controls and procedures for compliance with Section 404 of the Sarbanes-Oxley Act, which will require annual management assessment of the effectiveness of Aerovate’s internal control over financial reporting.

Implementing any appropriate changes to Aerovate’s internal controls may distract Aerovate’s officers and employees, entail substantial costs to modify Aerovate’s existing processes, and take significant time to complete. These changes may not, however, be effective in maintaining the adequacy of Aerovate’s internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase Aerovate’s operating costs and harm its business. In addition, investors’ perceptions that Aerovate’s internal controls are inadequate or that Aerovate is unable to produce accurate financial statements on a timely basis may harm Aerovate’s stock price.

Aerovate’s disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

Aerovate is subject to the periodic reporting requirements of the Exchange Act. Aerovate designed its disclosure controls and procedures to reasonably assure that information Aerovate must disclose in reports it files or submits under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Aerovate believes that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in Aerovate’s control system, misstatements due to error or fraud may occur and not be detected.

If securities analysts do not publish research or reports about Aerovate’s business or if they publish negative evaluations of Aerovate’s stock, the price of Aerovate’s stock could decline.

The trading market for Aerovate’s common stock will rely in part on the research and reports that industry or financial analysts publish about Aerovate or its business. Aerovate does not have control over these analysts. There can be no assurance that existing analysts will continue to provide research coverage or that new analysts will begin to provide research coverage. Although Aerovate has obtained analyst coverage, if one or more of the analysts covering Aerovate’s business downgrade their evaluations of Aerovate’s stock, the price of Aerovate’s stock could decline. If one or more of these analysts cease to cover Aerovate’s stock, Aerovate’s could lose visibility in the market for its stock, which in turn could cause Aerovate’s stock price to decline.

 

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Risks Related to Jade

Risks Related to Jade’s Limited Operating History, Financial Position and Capital Requirements

Jade is a preclinical stage biotechnology company with a limited operating history on which to assess its business; Jade has not initiated, conducted or completed any clinical trials, and Jade has no products approved for commercial sale, which may make it difficult for you to evaluate its current business and likelihood of success and viability.

Jade is a preclinical stage biotechnology company with limited operating history. Since its inception in June 2024, Jade has incurred operating losses with no corresponding revenue and has utilized substantially all of its resources to identify, license and develop JADE-001, initiate discovery efforts with respect to its JADE-002 and JADE-003 programs, organize and staff its company and provide other general and administrative support for its operations. Jade has no significant experience as a company in initiating, conducting or completing preclinical studies or clinical trials. In part because of this lack of experience, Jade cannot be certain that its preclinical studies or clinical trials will begin or be completed on time, if at all. In addition, Jade has not yet demonstrated an ability to obtain regulatory approvals, manufacture a clinical or commercial-scale product or arrange for a third party to do so on its behalf, or conduct sales, marketing and distribution activities necessary for successful product commercialization. Consequently, any predictions you make about Jade’s future success or viability may not be as accurate as they could be if Jade had a longer operating history.

In addition, as Jade’s business grows, it may encounter unforeseen expenses, restrictions, difficulties, complications, delays and other known and unknown factors. Jade will need to transition at some point from a company with an early research and development focus to a company capable of supporting larger scale clinical trials and eventually commercial activities. Jade may not be successful in such a transition.

Even if the Merger and the Jade Pre-Closing Financing are successful, Jade will require substantial additional capital to finance its operations in the future, which raises substantial doubt about its ability to continue as a going concern. If Jade is unable to raise such capital when needed, or on acceptable terms, Jade may be forced to delay, reduce and/or eliminate one or more of its development programs or future commercialization efforts.

Developing biotechnology products is a very long, time-consuming, expensive and uncertain process that takes years to complete. Jade expects its expenses to increase in connection with its ongoing activities, particularly as Jade conducts preclinical studies, clinical trials of, and seeks regulatory approval for JADE-001, advances discovery efforts with respect to its JADE-002 and JADE-003 programs, and advances any future programs and product candidates that it may license. Even if one or more of the programs that Jade develops is approved for commercial sale, Jade anticipates incurring significant costs associated with sales, marketing, manufacturing and distribution activities to launch any such product. Jade’s expenses could increase beyond expectations if it is required by the FDA or other regulatory agencies to perform preclinical studies or clinical trials in addition to or more expansive than those that Jade currently anticipates. Because the design and outcome of Jade’s planned and anticipated clinical trials are highly uncertain, it cannot reasonably estimate the actual amount of funding that will be necessary to successfully complete the development and commercialization of any program Jade develops. Jade’s future capital requirements depend on many factors, including but not limited to:

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the scope, progress, results and costs of discovery, preclinical and clinical development for Jade’s product candidates;

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the cost and timing of completion of clinical and commercial-scale manufacturing activities;

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the costs and timing of preparing, filing and prosecuting patent applications, maintaining, defending and enforcing Jade’s intellectual property and proprietary rights, and defending intellectual property-related claims, including claims of infringement, misappropriation or other violations of third-party intellectual property;

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the costs, timing and outcome of the regulatory review of Jade’s product candidates and obtaining the requisite regulatory approvals;

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•

the costs of Jade’s future commercialization activities, either by itself or in collaboration with others, including product sales, marketing, manufacturing, and distribution for any product candidate for which Jade receives regulatory approval;

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the revenue, if any, received from commercial sales of product candidates for which Jade receives regulatory approval;

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the success of Jade’s current or future collaborations, including its collaboration with Paragon pursuant to the Paragon Option Agreement and any future license agreements Jade enters into with Paragon;

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Jade’s ability to establish and maintain additional collaborations on favorable terms, if at all;

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the extent to which Jade acquires or in-licenses products, intellectual property and technologies;

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the costs of operational, financial and management information systems and associated personnel; and

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the costs of operating as a public company.

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Accordingly, Jade will require substantial additional funding to continue its operations. As of December 31, 2024, Jade had $69.4 million of cash. Even if the Merger and the Jade Pre-Closing Financing be successful, Jade will still need to raise additional capital to continue to fund its operations in the future. If Jade is unable to raise additional capital when needed, that could raise substantial doubt about Jade’s ability to continue as a going concern.

Jade has concluded there is substantial doubt about its ability to continue as a going concern for at least 12 months from the date its financial statements as of December 31, 2024 were issued. In light of these concerns, Jade’s independent registered public accounting firm included in its opinion on the financial statements an explanatory paragraph expressing substantial doubt about Jade’s ability to continue as a going concern beyond 12 months from the date its financial statements were issued.

Jade may be required to seek additional funds sooner than planned through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources, and adequate additional financing may not be available to it on acceptable terms, or at all. Such financing may dilute Jade’s stockholders or the failure to obtain such financing may restrict its operating activities. Any additional fundraising efforts may divert Jade’s management from their day-to-day activities, which may adversely affect its business. To the extent that Jade raises additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences and anti-dilution protections that adversely affect your rights as a stockholder. Debt financing may result in the imposition of debt covenants, increased fixed payment obligations or other restrictions that may affect Jade’s business. If Jade raises additional funds through upfront payments or milestone payments pursuant to current or future collaborations with third parties, Jade may have to relinquish valuable rights to its product candidates, or grant licenses on terms that are not favorable to it. Jade’s ability to raise additional capital may be adversely impacted by global macroeconomic conditions and volatility in the credit and financial markets in the United States and worldwide. Jade’s failure to raise capital as and when needed or on acceptable terms would have a negative impact on its financial condition and its ability to pursue its business strategy, and Jade may have to delay, reduce the scope of, suspend or eliminate one or more of its product candidates, clinical trials or future commercialization efforts or cease its operations.

Jade has incurred losses since inception, and Jade expects to incur losses for the foreseeable future and may not be able to achieve or sustain profitability in the future. Jade has no products approved for sale, has not generated any revenue from its product candidates and may never generate revenue or become profitable.

Investment in biotechnology product development is a highly speculative undertaking and entails substantial upfront capital expenditures and significant risks that any product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval and become commercially viable. Jade has no products approved for commercial sale, has not generated any revenue from product sales to date, and continues to incur significant research and development and other expenses related to its ongoing operations. Jade does not expect to generate product revenue unless or until it

 

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successfully completes preclinical and clinical development and obtains regulatory approval of, and then successfully commercializes, at least one of its product candidates. Jade may never succeed in these activities and, even if it does, may never generate revenues that are significant or large enough to achieve profitability. If Jade is unable to raise sufficient additional capital to advance a product candidate to commercialization or generate sufficient revenue through the sale of any approved products, Jade may be unable to continue operations without additional funding.

Jade has incurred significant net losses in each period since it commenced operations in June 2024. Jade generated net losses of $46.2 million for the period from June 18, 2024 (inception) to December 31, 2024. As of December 31, 2024, Jade had an accumulated deficit of $46.2 million, and Jade has concluded that there is substantial doubt about its ability to continue as a going concern for at least 12 months from the date its financial statements for the period June 18, 2024 (inception) to December 31, 2024 were issued. Jade expects to continue to incur losses for the foreseeable future. Jade’s operating expenses and net losses may fluctuate significantly from quarter to quarter and year to year. Jade anticipates that its expenses will increase substantially if and as it:

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advances its existing and future product candidates through preclinical and clinical development, including potential expansion into additional indications;

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seeks to identify additional product candidates;

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maintains, expands, enforces, defends and protects its intellectual property portfolio;

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seeks, obtains and maintains regulatory and regulatory approvals for its product candidates;

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seeks to identify, establish and maintain additional collaborations and license agreements;

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makes milestone payments to Paragon under the Paragon Option Agreement and JADE-001 License Agreement, and under any additional future collaboration or license agreements that Jade enters into;

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ultimately establishes a sales, marketing and distribution infrastructure to commercialize any drug products for which Jade may obtain regulatory approval, either by itself or in collaboration with others;

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generates revenue from commercial sales of product candidates for which Jade receives regulatory approval, if any;

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hires additional personnel including research and development, clinical and commercial personnel;

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adds operational, financial and management information systems and personnel, including personnel to support its product development;

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acquires or in-licenses products, intellectual property and technologies;

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establishes clinical and commercial-scale current good manufacturing practices (“cGMP”) capabilities through a third-party or its own manufacturing facility; and

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operates as a public company.

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In addition, Jade’s expenses will increase if, among other things, it is required by the FDA or other regulatory authorities to perform clinical trials or studies in addition to, or different than, those that Jade currently anticipates, there are any delays in completing its clinical trials or the development of any of its product candidates, or there are any third-party challenges to Jade’s intellectual property or Jade needs to defend against any intellectual property-related claim.

Even if Jade obtains regulatory approval for, and is successful in commercializing, one or more of its product candidates, Jade expects to incur substantial additional research and development and other expenditures to develop and market additional product candidates and/or to expand the approved indications of any marketed product. Jade may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect its business. The size of Jade’s future net losses will depend, in part, on the rate of future growth of its expenses and its ability to generate revenue.

 

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Jade’s failure to become profitable would decrease Jade’s value and could impair its ability to raise capital, maintain its research and development efforts, expand its business and/or continue its operations. A decline in Jade’s value of could also cause you to lose all or part of your investment.

Risks Related to Jade’s Discovery, Development and Commercialization

Jade faces competition from entities that have developed or may develop product candidates for the diseases addressed by its product candidates.

The development and commercialization of drugs is highly competitive. Jade’s product candidates, if approved, will face significant competition and Jade’s failure to effectively compete may prevent it from achieving significant market penetration. Jade competes with a variety of multinational biopharmaceutical companies, specialized biotechnology companies and emerging biotechnology companies, including Calliditas Therapeutics, AB, Climb Bio, Inc., Novartis AG, Otsuka Pharmaceutical Co., Ltd., Travere Therapeutics, Vera Therapeutics, Inc., and Vertex Pharmaceuticals Incorporated, as well as academic institutions, governmental agencies, and public and private research institutions, among others. Many of the companies with which Jade is currently competing or will compete against in the future have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and regulatory approved products than Jade does, and are further along in the clinical development and/or commercialization process. Mergers and acquisitions in the pharmaceutical and biotechnology industry may result in even more resources being concentrated among a smaller number of Jade’s competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with Jade in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites, raising capital, patient registration for clinical trials, establishing and defending rights to intellectual property, as well as in acquiring technologies complementary to, or necessary for, Jade’s product candidates.

Jade’s competitors have developed or are developing, and may in the future develop, product candidates or products competitive with Jade’s product candidates. Competitive therapeutic treatments include those that have already been approved and accepted by the medical community and any potential new treatments, including those currently under clinical development. Jade’s success will depend partially on its ability to develop and commercialize products that have a competitive safety, efficacy, dosing and/or presentation profile. Jade’s commercial opportunity and success will be reduced or eliminated if competing products are safer, more effective, have a more attractive dosing profile or presentation or are less expensive than the products Jade develops, or if Jade’s competitors develop competing products or biosimilars that enter the market more quickly than Jade does and are able to gain market acceptance. Conversely, the lack of commercial success of other competing therapies may raise concerns about the financial viability of Jade’s product candidates. Please see the section titled “Jade’s Business — Competition” beginning on page 297 of this proxy statement/prospectus for a more detailed description of Jade’s competitors and the factors that may affect the success of Jade’s product candidates.

In addition, because of the competitive landscape for autoimmune indications, including IgA nephropathy (“IgAN”), Jade may also face competition for establishing trial sites and clinical trial enrollment. Patient enrollment will depend on many factors, including if potential clinical trial patients choose to undergo treatment with approved products or enroll in competitors’ ongoing clinical trials for product candidates that are under development for the same indications as Jade’s product candidates. An increase in the number of approved products for the indications Jade is targeting with its product candidates will likely further exacerbate this competition. Jade’s inability to enroll a sufficient number of patients could, among other impacts, delay its development timeline, which may further harm Jade’s competitive position.

JADE-001 is in the preclinical stage of development and may fail in development or suffer delays that materially and adversely affect its viability. If Jade or its current or future collaborators are unable to complete development of or commercialize Jade’s product candidates, or experience significant delays in doing so, Jade’s business will be materially harmed.

Jade has no commercially approved products, and JADE-001 and Jade’s additional programs are in the preclinical stage of development and have not been tested in humans. As a result, Jade expects it will be

 

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many years before it commercializes any product candidate, if ever. Jade’s ability to achieve and sustain profitability depends on obtaining regulatory approvals for, and successfully commercializing, Jade’s product candidates, either alone or with third parties, and Jade cannot guarantee you that it will ever obtain regulatory approval for any of its product candidates. Jade has not yet demonstrated its ability to initiate or complete any clinical trials, obtain regulatory approvals, manufacture a clinical development or commercial scale product or arrange for a third party to do so on its behalf, or conduct sales and marketing activities necessary for successful product commercialization. Before obtaining regulatory approval for the commercial distribution of any product candidate, Jade or an existing or future collaborator must conduct extensive preclinical tests and clinical trials to demonstrate the safety and efficacy in humans of the product candidate.

Jade or its collaborators may experience delays in initiating or completing preclinical studies or clinical trials. Jade or its collaborators also may experience numerous unforeseen events during, or as a result of, any future preclinical studies or clinical trials that Jade could conduct that could delay or prevent its ability to receive regulatory approval or commercialize its product candidates, including:

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regulators, such as the FDA, institutional review boards (“IRBs”) or comparable foreign regulatory authorities may not authorize, Jade or its investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

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Jade may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and prospective CROs, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

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clinical trial sites may deviate from the trial protocol, fail to conduct trials in a compliant manner or drop out of a trial, which may require that Jade add new clinical trial sites or investigators or otherwise negatively impact the timing or integrity of Jade’s clinical trial(s);

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clinical trials of any product candidates may fail to show safety or efficacy, produce negative or inconclusive results and Jade may decide, or regulators may require it, to conduct additional preclinical studies or clinical trials or Jade may decide to abandon a product development program;

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the number of subjects required for clinical trials of any product candidates may be larger than Jade anticipates, especially if regulatory bodies require completion of non-inferiority or superiority trials, enrollment in these clinical trials may be slower than Jade anticipates or subjects may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than Jade anticipates;

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Jade’s third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to Jade in a timely manner, or at all, or may deviate from the clinical trial protocol or suffer other quality or performance issues that negatively impact the timing or integrity of Jade’s clinical trial(s);

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Jade may elect to, or regulators, IRBs or ethics committees may require that Jade or its investigators, suspend or terminate clinical research or trials for various reasons, including noncompliance with regulatory requirements or a finding that the participants in Jade’s clinical trials are being exposed to unacceptable health risks;

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the cost of clinical trials of any of Jade’s product candidates may be greater than Jade anticipates;

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the quality of Jade’s product candidates or other materials necessary to conduct clinical trials of its product candidates may be inadequate to initiate or successfully complete a given clinical trial;

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Jade may be unable to manufacture sufficient quantities of its product candidates for use in clinical trials;

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reports from clinical testing of other therapies may raise safety or efficacy concerns about Jade’s product candidates;

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Jade may fail to establish an appropriate safety profile for a product candidate based on clinical or preclinical data for such product candidates as well as data emerging from other therapies in the same class as its product candidates; and

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the FDA or other regulatory authorities may require Jade to submit additional data such as long-term toxicology studies, or impose other requirements before permitting Jade to initiate a clinical trial.

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Commencing clinical trials in the United States is subject to acceptance by the FDA of an IND and finalizing the trial design based on discussions with the FDA. Commencing clinical trials in jurisdictions outside of the United States, such as New Zealand, is similarly subject to acceptance by the applicable regulatory authority of clinical trial documentation following discussions with such authority. In the event that the FDA or other applicable regulatory authority requires Jade to complete additional preclinical studies or Jade is required to satisfy other FDA or foreign regulatory authority requests, respectively, prior to commencing clinical trials, the start of Jade’s first clinical trials may be delayed. Even after Jade receives and incorporates guidance from these regulatory authorities, the FDA or other regulatory authorities could disagree as to whether Jade has satisfied their requirements to commence any clinical trial or change their position on the acceptability of Jade’s trial design or the clinical endpoints selected, which may require Jade to complete additional preclinical studies or clinical trials, delay the enrollment of Jade’s clinical trials or impose stricter approval conditions than Jade currently expects. There are analogous processes and risks applicable to clinical trial applications in other countries, including countries in the EU.

Jade may not have the financial resources to continue development of its product candidates if Jade experiences any issues that delay or prevent regulatory approval of, or Jade’s ability to commercialize, its product candidates. Jade or its current or future collaborators’ inability to complete development of, or commercialize Jade’s product candidates, or significant delays in doing so, could have a material and adverse effect on Jade’s business, financial condition, results of operations and prospects.

Jade is substantially dependent on the success of JADE-001, and Jade’s anticipated clinical trials of such program may not be successful.

Jade’s future success is substantially dependent on its ability to timely obtain regulatory approval for, and then successfully commercialize, JADE-001. Jade is initially investing a majority of its efforts and financial resources into the research and development of this program. Jade anticipates initiating a Phase 1 clinical trial of JADE-001 in healthy volunteers in New Zealand in the second half of 2025. The success of JADE-001 is dependent on observing suppression of IgA levels and improved pharmacokinetic properties compared to other anti-APRIL monoclonal antibody product candidates in clinical development. This is based in part on the assumption that the increased in vitro potency and improved pharmacokinetics observed in non-human primates (“NHPs”) will translate into a suppression of IgA levels and improved pharmacokinetic properties of JADE-001 in humans, resulting in a more convenient dosing regimen. To the extent Jade does not observe this suppression of IgA levels or improved pharmacokinetic properties when Jade doses humans with its product candidates, it would significantly and adversely affect the clinical and commercial potential of JADE-001.

Jade’s product candidates will require additional clinical development, evaluation of clinical, preclinical and manufacturing activities, regulatory approval in multiple jurisdictions, substantial investment and significant marketing efforts before Jade generates any revenues from product sales. Jade is not permitted to market or promote these product candidates, or any other product candidates, before it receives regulatory approval from the FDA and comparable foreign regulatory authorities, and Jade may never receive such regulatory approvals.

The success of Jade’s product candidates will depend on a variety of factors. Jade does not have complete control over many of these factors, including certain aspects of clinical development and the regulatory submission process, potential threats to Jade’s intellectual property rights, potential threats from the intellectual property rights of third parties and the manufacturing, marketing, distribution and sales efforts of any current or future collaborator. Accordingly, Jade cannot assure you that Jade will ever be able to generate revenue through the sale of these product candidates, even if approved. If Jade is not successful in obtaining regulatory approval and commercializing JADE-001 or other future product candidates, or is significantly delayed in doing so, Jade’s business will be materially harmed.

If Jade does not achieve its projected development goals in the time frames it announces and expects, the commercialization of Jade’s product candidates may be delayed and its expenses may increase and, as a result, its stock price may decline.

From time to time, Jade estimates the timing of the anticipated accomplishment of various scientific, clinical, regulatory and other product development goals, which Jade sometimes refers to as milestones.

 

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These milestones may include the commencement or completion of scientific studies and clinical trials, such as the expected timing for the initiation of Jade’s Phase 1 clinical trial of JADE-001 in healthy volunteers and generation of mechanistic clinical proof-of-concept data, as well as the timing for receipt of clinical data and submission of regulatory filings. From time to time, Jade may publicly announce the expected timing of some of these milestones. All of these milestones are and will be based on numerous assumptions. The actual timing of these milestones can vary dramatically compared to Jade’s estimates, in many cases for reasons beyond its control. If Jade does not meet these milestones as publicly announced, or at all, Jade’s prospects and reputation may be adversely affected and Jade’s stock price may decline. Additionally, delays relative to Jade’s projected timelines are likely to cause overall expenses to increase, which may require Jade to raise additional capital sooner than expected and prior to achieving targeted development milestones.

The target patient population for the treatment of IgAN is small and has not been definitively determined, and if Jade’s estimates of the number of treatable patients is lower than expected, Jade’s potential revenues from sales of its product candidates, if approved, and Jade’s ability to achieve profitability would be compromised.

Jade’s estimates of both the number of patients who have IgAN, as well as the subset of patients with these diseases in a position to receive treatment from JADE-001 (i.e., those with proteinuria > 0.5g/day), if approved, are based on Jade’s beliefs, and these estimates may prove to be incorrect. These estimates have been derived from a variety of sources, including scientific literature, input from physicians that treat patients with the diseases Jade is targeting, patient foundations and secondary market research databases. For example, Jade’s estimates of the prevalence of IgAN in certain geographies are based in part on the published prevalence of IgAN among patient populations in the United States split across ethnicities, and Jade’s own analyses of prevalence in Europe, and on published disease incidence rates for certain geographies and estimated for the populations of such geographies. Further, new studies may change the estimated incidence or prevalence of IgAN, and any regulatory approvals that Jade may receive for JADE-001 may include limitations for use or contraindications that decrease the addressable patient population. Accordingly, Jade’s target patient populations may turn out to be lower than expected, in which case the potential revenues from sales of its product candidates, if approved, would be lower than expected.

Jade’s approach to the discovery and development of its product candidates is unproven, and Jade may not be successful in its efforts to build a pipeline of product candidates with commercial value.

Jade’s approach to the discovery and development of its product candidates leverages well-established mechanisms of action and incorporates advanced antibody engineering to optimize half-life and other properties designed to overcome limitations of existing therapies, including increased binding affinity. Jade’s product candidates are purposefully designed to improve upon existing product candidates and products while maintaining the same, well-established mechanisms of action. However, the scientific research that forms the basis of Jade’s efforts to develop product candidates using half-life extension technologies and to enhance efficacy through improved binding affinity, including monoclonal antibodies, is ongoing and may not result in viable product candidates. Jade has limited clinical data on product candidates utilizing monoclonal antibody half-life extension technologies, especially in autoimmune indications, demonstrating whether they are safe or effective for long-term treatment in humans. Jade also has no clinical data to indicate whether its modifications to enhance binding affinity translate into improved efficacy in humans. The long-term safety and efficacy of Jade’s product candidates compared to currently approved products is unknown.

Jade may ultimately discover that utilizing half-life extension technologies for Jade’s specific targets and indications and any product candidates resulting therefrom do not possess certain properties required for therapeutic effectiveness. Jade currently has only preclinical data regarding the increased half-life properties of Jade’s product candidates and the same results may not be seen in humans. In addition, product candidates using half-life extension technologies may demonstrate different chemical and pharmacological properties in patients than they do in laboratory studies. This technology and any product candidates resulting therefrom may not demonstrate the same chemical and pharmacological properties in humans and may interact with human biological systems in unforeseen, ineffective or harmful ways. Many product candidates that appeared highly promising in preclinical studies or in early-stage clinical trials have failed when advanced into, or further in, clinical development.

 

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In addition, other companies are developing drug products that utilize half-life extension technology in other targets and indications. The failure of those companies to demonstrate the safety and efficacy of their product candidates may be harmful to Jade’s business, financial condition, results of operations and prospects.

In addition, Jade may in the future seek to discover and develop product candidates that are based on novel targets and technologies that are unproven. If Jade’s discovery or business development activities fail to identify novel targets or technologies for drug development, or such targets or technologies prove to be unsuitable for treating human disease, Jade may not be able to develop viable additional product candidates. Jade and its existing or future collaborators may never receive approval to market and commercialize any product candidate. Even if Jade or an existing or future collaborator obtains regulatory approval, the approval may be for targets, disease indications or patient populations that are not as broad as Jade intended or desired or may require labeling that includes significant use or distribution restrictions or safety warnings. If the products resulting from Jade’s product candidates prove to be ineffective, unsafe or commercially unviable, its product candidates and pipeline would have little, if any, value, which would have a material and adverse effect on Jade’s business, financial condition, results of operations and prospects.

Preclinical and clinical development involves a lengthy and expensive process that is subject to delays and with uncertain outcomes, and results of earlier studies and trials may not be predictive of future clinical trial results. If Jade’s preclinical studies and clinical trials are not sufficient to support regulatory approval of any of its product candidates, Jade may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development of such product candidate.

Before obtaining regulatory approval from regulatory authorities for the sale of any product candidate, Jade must complete preclinical studies and then conduct extensive clinical trials to demonstrate the safety and efficacy of its product candidate in humans. Jade’s clinical trials may not be conducted as planned or completed on schedule, if at all, and failure can occur at any time during the preclinical study or clinical trial process. For example, Jade depends on the availability of NHPs to conduct certain preclinical studies that Jade is required to complete prior to submitting an IND and initiating clinical development. There is currently a global shortage of NHPs available for drug development. While Jade currently does not anticipate that this shortage will materially impact its costs or timelines, a continuing or future shortage could cause the cost of obtaining NHPs for Jade’s future preclinical studies to increase significantly or result in delays to its development timelines. Furthermore, a failure of one or more clinical trials can occur at any clinical trial phase. The outcome of preclinical studies and early-stage clinical trials may not be predictive of the success of later clinical trials. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain regulatory approval of their product candidates. In addition, Jade expects to rely on patients to provide feedback on measures such as measures of disease and quality of life, which are subjective and inherently difficult to evaluate. These measures can be influenced by factors outside of Jade’s control, and can vary widely from day to day for a particular patient, and from patient to patient and from site to site within a clinical trial.

Jade cannot be sure that the FDA or comparable foreign regulatory authorities will agree with its clinical development plan. Jade plans to use the data from its planned Phase 1 trial of JADE-001 in healthy volunteers to support Phase 2 trials in other indications. However, there is no guarantee the data from such Phase 1 trial will support a Phase 2 trial in any indication. If the FDA or comparable foreign regulatory authorities require Jade to conduct additional trials or enroll additional patients, Jade’s development timelines may be delayed. Jade cannot be sure that submission of an IND or similar foreign application will result in the FDA or comparable foreign regulatory authorities, as applicable, allowing clinical trials to begin in a timely manner, if at all. Moreover, even if these trials begin, issues may arise that could cause regulatory authorities to suspend or terminate such clinical trials. Events that may prevent successful or timely initiation or completion of clinical trials include: inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation or continuation of clinical trials; delays in reaching a consensus with regulatory authorities on study design or implementation of the clinical trials; delays or failure in obtaining regulatory authorization to commence a trial; delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites; delays in identifying, recruiting and

 

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training suitable clinical investigators; delays in obtaining required IRB approval or positive ethics committee opinions at each clinical trial site; delays in manufacturing, testing, releasing, validating or importing/​exporting sufficient stable quantities of Jade’s product candidates for use in clinical trials or the inability to do any of the foregoing; failure by Jade’s CROs, other third parties or Jade to adhere to clinical trial protocols; failure to perform in accordance with the FDA’s or any other regulatory authority’s GCP requirements or regulatory guidelines; changes to the clinical trial protocols; clinical sites deviating from trial protocol or dropping out of a trial; changes in regulatory requirements, guidance or clinical trial plans that require amending or submitting new clinical protocols; selection of clinical endpoints that require prolonged periods of observation or analyses of resulting data; transfer of manufacturing processes to larger-scale facilities and delays or failure by Jade’s contract manufacturing organizations (“CMOs”) or Jade to make any necessary changes to such manufacturing process; and third parties being unwilling or unable to satisfy their contractual obligations to Jade.

Jade could also encounter delays if a clinical trial is suspended or terminated by Jade, by the IRBs or ethics committees of the institutions in which such clinical trials are being conducted, by the Data Safety Monitoring Board, if any, for such clinical trial or by the FDA or comparable foreign regulatory authorities. Such authorities may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or Jade’s clinical trial protocols, inspection of the clinical trial operations or trial site by the FDA or comparable foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from the product candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. If Jade is required to conduct additional clinical trials or other testing of Jade’s product candidates beyond those that it currently contemplates, if Jade is unable to successfully complete clinical trials of its product candidates, if the results of these trials are not positive or are only moderately positive or if there are safety concerns, Jade’s business and results of operations would be adversely affected.

Jade may find it difficult to enroll patients in its clinical trials given the relatively small patient population and significant competition for patients who have the diseases for which JADE-001 is being developed. If Jade encounters difficulties enrolling patients in its JADE-001 clinical trials or future clinical trials, Jade’s clinical development activities could be delayed or otherwise adversely affected.

Jade may experience difficulties in patient enrollment in its future clinical trials for a variety of reasons. The timely completion of clinical trials in accordance with their protocols depends, among other things, on Jade’s ability to enroll a sufficient number of patients who remain in the trial until its conclusion. In particular, as a result of the inherent difficulties in diagnosing IgAN, an indication with relatively small patient populations, and the significant competition for recruiting patients with IgAN in clinical trials, there may be delays in enrolling the patients Jade needs to complete clinical trials on a timely basis, or at all. In addition, because Jade is initially focused on developing product candidates for indications for which there is significant competition for recruiting patients, Jade may encounter similar challenges for patient enrollment when it commences clinical programs for additional product candidates in the future. Further, there are three recently approved products for the treatment of IgAN, and patients may decide, or physicians may recommend, to use such approved treatments instead of enrolling in clinical trials.

The enrollment of patients in future trials for any of Jade’s product candidates will depend on many factors, including:

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size and nature of the patient population; severity of the disease under investigation;

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availability and efficacy of approved drugs for the disease under investigation;

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patient eligibility and exclusion criteria for the trial in question;

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patients’ and clinicians’ perceived risks and benefits of the product candidate under study;

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if patients choose to enroll in clinical trials, rather than using approved products, or if Jade’s competitors have ongoing clinical trials for product candidates that are under development for the same indications as Jade’s product candidates, and patients instead enroll in such clinical trials;

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efforts to facilitate timely enrollment in clinical trials;

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patient referral practices of physicians;

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the ability to monitor patients adequately during and after treatment;

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proximity and availability of clinical trial sites for prospective patients; and

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continued enrollment of prospective patients by clinical trial sites.

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Additionally, the number of patients required for clinical trials of Jade’s product candidates may be larger than Jade anticipates, especially if regulatory bodies require the completion of non-inferiority or superiority trials. Even if Jade is able to enroll a sufficient number of patients for its future clinical trials, Jade may have difficulty maintaining patients in its clinical trials. Jade’s inability to enroll or maintain a sufficient number of patients would result in significant delays in completing clinical trials or receipt of regulatory approvals and increased development costs or may require Jade to abandon one or more clinical trials altogether, which could cause Jade’s value to decline, limit its ability to obtain additional financing and otherwise harm its prospects.

Preliminary, “topline” or interim data from Jade’s clinical trials that it announces or publishes from time to time may change as more patient data become available and are subject to audit and verification procedures.

From time to time, Jade may publicly disclose preliminary or topline data from its preclinical studies and clinical trials, which are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data. Jade also makes assumptions, estimations, calculations and conclusions as part of its analyses of these data without the opportunity to fully and carefully evaluate complete data. As a result, the preliminary or topline results that Jade reports may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated or subsequently made subject to audit and verification procedures.

Any preliminary or topline data should be viewed with caution until the final data are available. From time to time, Jade may also disclose interim data from its preclinical studies and clinical trials. Interim data are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available or as patients from Jade’s clinical trials continue other treatments. Further, others, including regulatory authorities, may not accept or agree with Jade’s assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular product candidate, the approvability or commercialization of the particular product candidate and of Jade as a company. In addition, the information Jade chooses to publicly disclose regarding a particular preclinical study or clinical trial is based on what is typically extensive information, and you or others may not agree with what Jade determines is material or otherwise appropriate information to include in its disclosure. As a result, you or others may have reached different conclusions based on such extensive information in comparison to Jade’s publicly disclosed conclusion regarding a particular preclinical study or clinical trial. If the preliminary, topline or interim data that Jade reports differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, Jade’s ability to obtain approval for, and commercialize, its product candidates may be harmed, which could harm Jade’s business, operating results, prospects or financial condition.

Jade’s future clinical trials or those of its current or future collaborators may reveal significant adverse events or undesirable side effects not seen in Jade’s preclinical studies and may result in a safety profile that could halt clinical development, inhibit regulatory approval or limit commercial potential or market acceptance of any of Jade’s product candidates.

Results of Jade’s clinical trials could reveal a high or unacceptable severity and prevalence of side effects, adverse events or unexpected characteristics. Jade has not yet initiated any clinical trials in humans. If significant adverse events or other side effects are observed in any of its future clinical trials, Jade may have difficulty recruiting patients to such trials, patients may drop out of its trials, or Jade may be required to abandon the trials or its development efforts of one or more product candidates altogether. For example, although anti-APRIL monoclonal antibodies have been generally well tolerated in clinical trials to date, two cases of decreased Immunoglobulin G (“IgG”) levels to a threshold requiring dosing interruption mandated

 

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by the protocol were reported by Chinook Therapeutics in the ADU-CL-19 study, an ongoing phase 1/2 trial investigating BION-1301 (zigakibart) in patients with IgAN (NCT03945318). Infections were not reported in the patients with low IgG levels; however, low IgG levels are a known risk factor for increased infection risk. Because JADE-001 will have a similar mechanism of action, it is possible that patients in Jade’s future clinical trials could exhibit decreased IgG levels, which could lead to infections. Jade, the FDA or other applicable regulatory authorities, or an IRB or ethics committee, may suspend any clinical trials of any product candidate at any time for various reasons, including a belief that subjects or patients in such trials are being exposed to unacceptable health risks or adverse side effects. Some potential products developed in the biotechnology industry that initially showed therapeutic promise in early-stage studies and trials have later been found to cause side effects that prevented their further development. Other potential products have shown side effects in preclinical studies, which side effects do not present themselves in clinical trials in humans. Even if the side effects do not preclude the product candidate from obtaining or maintaining regulatory approval, undesirable side effects may inhibit market acceptance of the approved product due to its tolerability versus other therapies. In addition, an extended half-life could prolong the duration of undesirable side effects, which could also inhibit market acceptance. Treatment-emergent adverse events could also affect patient recruitment or the ability of enrolled subjects to complete Jade’s clinical trials or could result in potential product liability claims. Potential side effects associated with Jade’s product candidates may not be appropriately recognized or managed by the treating medical staff, as toxicities resulting from Jade’s product candidates may not be normally encountered in the general patient population and by medical personnel. Any of these occurrences could harm Jade’s business, financial condition, results of operations and prospects significantly.

In addition, even if Jade successfully advances its product candidates or any future product candidate through clinical trials, such trials will only include a limited number of patients and limited duration of exposure to Jade’s product candidates. As a result, Jade cannot be assured that adverse effects of its product candidates will not be uncovered when a significantly larger number of patients are exposed to the product candidate after approval. Further, any clinical trials may not be sufficient to determine the effect and safety consequences of using Jade’s product candidates over a multi-year period.

If any of the foregoing events occur or if one or more of Jade’s product candidates prove to be unsafe, its entire pipeline could be affected, any of which would have a material adverse effect on Jade’s business, financial condition, results of operations and prospects.

Jade may expend its limited resources to pursue a particular program and fail to capitalize on programs that may be more profitable or for which there is a greater likelihood of success.

Because Jade has limited financial and managerial resources, it focuses its research and development efforts on certain selected programs. For example, Jade is initially focused primarily on its initial program, JADE-001. As a result, Jade may forgo or delay pursuit of opportunities with other programs that later prove to have greater commercial potential. Jade’s resource allocation decisions may cause Jade to fail to capitalize on viable commercial products or profitable market opportunities. Jade’s spending on current and future research and development product candidates for specific indications may not yield any commercially viable product candidates. If Jade does not accurately evaluate the commercial potential or target market for a particular product candidate, Jade may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for Jade to retain sole development and commercialization rights to such product candidate. In addition, Jade selects product candidates amongst a variety of potential product candidates from Paragon, and the product candidates it selects may fail to be viable commercial products or the product candidates it does not select may have a greater likelihood of success.

Any approved products resulting from Jade’s current programs or any future program may not achieve adequate market acceptance among clinicians, patients, healthcare third-party payors and others in the medical community necessary for commercial success and Jade may not generate any future revenue from the sale or licensing of such products.

Even if regulatory approval is obtained for a product candidate resulting from one of Jade’s current or future programs, it may not gain market acceptance among physicians, healthcare professionals, patients,

 

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healthcare payors or the medical community. Jade may not generate or sustain revenue from sales of the product due to factors such as whether the product can be sold at a competitive cost and whether it will otherwise be accepted in the market. There are three recently approved products and product candidates in later stages of development for the treatment of IgAN, including Tarpeyo® and Filspari®, both of which lead to modest benefits on kidney function. Similarly, results from Fabhalta® provide support for the ability of anti-inflammatory drugs to reduce the rate of IgAN kidney damage. However, JADE-001 is designed to block the activity of APRIL and incorporate advanced antibody engineering to optimize half-life of antibodies targeting IgAN; to date, no such disease-modifying therapy that depletes pathogenic IgA and stabilizes kidney function has been approved by the FDA for the treatment of IgAN, though several such agents are in advanced clinical development. Market participants with significant influence over acceptance of new treatments, such as clinicians and third-party payors, may not adopt a biologic that incorporates anti-APRIL antibodies and half-life extension for Jade’s targeted indications, and Jade may not be able to convince the medical community and third-party payors to accept and use, or to provide favorable reimbursement for, any programs developed by Jade or Jade’s existing or future collaborators. An extended half-life may make it more difficult for patients to change treatments and there is a perception that half-life extension could exacerbate side effects, each of which may adversely affect Jade’s ability to gain market acceptance. Market acceptance of Jade’s product candidates may be negatively impacted by potential poor performance of its competitors, including the occurrence of serious adverse events in such competitors’ clinical trials or failure by such competitors to obtain and maintain regulatory approval for their product candidates. Additionally, although Jade believes that the improved dosing and convenience it expects its product candidates to provide will improve market acceptance of such product candidates and that its candidates will have a competitive efficacy profile, Jade’s predictions may not be accurate and other competitive products may instead gain and hold the applicable market. Sales of medical products also depend on the willingness of clinicians to prescribe the treatment. Jade cannot predict whether clinicians, clinicians’ organizations, hospitals, other healthcare providers, government agencies or private insurers will determine that Jade’s product is safe, therapeutically effective, cost effective or less burdensome as compared with competing treatments. If any current or future product candidate is approved but does not achieve an adequate level of acceptance by such parties, Jade may not generate or derive sufficient revenue from that product candidate and may not become or remain profitable. Market acceptance of Jade’s product candidates will depend on many factors, including factors that are not within its control.

Certain of Jade’s programs may compete with its other programs, which could negatively impact Jade’s business and reduce its future revenue.

Jade is developing JADE-001 for the treatment of IgAN and intends to develop its JADE-002 and JADE-003 programs for other autoimmune indications, and may in the future develop programs for additional autoimmune indications. However, developing multiple product candidates for autoimmune indications may negatively impact Jade’s business if the product candidates compete with each other. For example, if multiple product candidates are conducting clinical trials at the same time, they could compete for the enrollment of patients. In addition, if multiple product candidates are approved for the same indication, they may compete for market share, which could limit Jade’s future revenue.

Jade plans to conduct clinical trials for product candidates at sites outside the United States, and the FDA may not accept data from trials conducted in such locations.

Jade currently intends to conduct its Phase 1 clinical trial of JADE-001 in New Zealand, and Jade may choose to conduct one or more of its future clinical trials outside the United States in whole or in part. Although the FDA may accept data from clinical trials conducted outside the United States, acceptance of this data is subject to conditions imposed by the FDA. For example, the clinical trial must be well designed and conducted and performed by qualified investigators in accordance with ethical principles. The trial population must also adequately represent the U.S. population, and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful. In addition, while these clinical trials are subject to the applicable local laws, FDA acceptance of the data will depend on its determination that the trials also complied with all applicable U.S. laws and regulations. Many foreign regulatory authorities have similar requirements for clinical data gathered outside of their respective jurisdictions. In addition, such foreign trials would be subject to the applicable local laws of the foreign jurisdictions where the trials are conducted. There can be no assurance that the FDA or any comparable

 

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foreign regulatory authority will accept data from trials conducted outside of the United States, New Zealand or the relevant jurisdiction, as applicable. If the FDA or any comparable foreign regulatory authority does not accept such data, it would likely result in the need for additional trials, which would be costly and time-consuming and would delay or permanently halt Jade’s development of the applicable product candidates or delay or prevent regulatory approval for commercialization in the applicable jurisdiction. Even if the FDA or any comparable foreign regulatory authority accepted such data, it could require Jade to modify Jade’s planned clinical trials to receive clearance to initiate such trials in the United States, New Zealand or the relevant jurisdiction, as applicable, or to continue such trials once initiated.

Further, conducting international clinical trials presents additional risks that may delay completion of Jade’s clinical trials. These risks include the failure of enrolled patients in foreign countries to adhere to clinical protocol as a result of differences in healthcare services or cultural customs that could restrict or limit Jade’s ability to conduct its clinical trials, the administrative burdens of conducting clinical trials under multiple sets of foreign regulations, foreign exchange fluctuations, diminished protection of intellectual property in some countries, as well as political and economic risks relevant to foreign countries.

Risks Related to Jade’s Reliance on Third Parties

Jade relies on collaborations and licensing arrangements with third parties, including its collaboration with Paragon pursuant to the Paragon Option Agreement and the JADE-001 License Agreement. If Jade is unable to maintain these collaborations or licensing arrangements, or if these collaborations or licensing arrangements are not successful, its business could be negatively impacted.

Jade relies on its collaboration with a third party, Paragon, for a substantial portion of its discovery capabilities and for the rights necessary to develop and commercialize Jade’s product candidates. In the future, Jade could also rely on additional licensing arrangements with third parties. For example, on October 30, 2024, Jade entered into a license agreement for JADE-001 with Paragon. However, Paragon could terminate the agreement under certain circumstances, including Jade’s failure to make any payments owed to Paragon under the agreement or any uncured material breach of the JADE-001 License Agreement by Jade, in which event Jade may lose intellectual property rights and may not be able to develop or commercialize the products covered by that agreement, including JADE-001.

Jade considers Paragon to be a related party because, prior to the Merger and Jade Pre-Closing Financing, Paragon beneficially owned approximately 9.7% of Jade’s outstanding common stock. Fairmount, which beneficially owns more than 5% of Paragon, beneficially owns more than 5% of Jade’s capital stock. Please see the section titled “Certain Relationships and Related Party Transactions of the Combined Company — Jade Transactions — Jade’s Relationships with Paragon, Parade and Fairmount” beginning on page 358 of this proxy statement/prospectus for additional information.

Collaborations or licensing arrangements that Jade enters into may not be successful, and any success will depend heavily on the efforts and activities of such collaborators or licensors. If any of Jade’s collaborators or licensors experiences delays in performance of, or fails to perform, its obligations under its agreement with Jade, disagrees with Jade’s interpretation of the terms of such agreement or terminates their agreement with Jade, Jade’s pipeline and product candidates and development timeline could be adversely affected. If Jade fails to comply with any of the obligations under its collaborations or license agreements, including payment terms and diligence terms, Jade’s collaborators or licensors may have the right to terminate such agreements, in which event Jade may lose intellectual property rights and may not be able to develop, manufacture, market or sell the products covered by its agreements or may face other penalties under its agreements. Jade’s collaborators and licensors may also fail to properly maintain or defend the intellectual property Jade has licensed from them, if required by Jade’s agreement with them, leading to the potential invalidation of Jade’s intellectual property, or they may even infringe upon Jade’s intellectual property rights, any of which could subject Jade to litigation or arbitration, which would be time-consuming and expensive and could harm Jade’s ability to commercialize its product candidates. In addition, collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with Jade’s product candidates and products if the collaborators believe that the competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours.

 

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As part of its strategy, Jade plans to evaluate additional opportunities to enhance its capabilities and expand its development pipeline or add development or commercialization capabilities. Jade may not realize the benefits of such collaborations, alliances or licensing arrangements. Any of these relationships may require Jade to incur non-recurring and other charges, increase Jade’s near and long-term expenditures, issue securities that dilute Jade’s existing stockholders or disrupt Jade’s management and business.

Jade may face significant competition in attracting appropriate collaborators, and more established companies may also be pursuing strategies to license or acquire third-party intellectual property rights that Jade considers attractive. These companies may have a competitive advantage over Jade due to their size, financial resources and greater clinical development and commercialization capabilities. In addition, companies may be unwilling to assign or license rights to Jade, whether they perceive Jade to be a competitor or for other reasons. Whether Jade reaches a definitive agreement for a collaboration will depend, among other things, upon Jade’s assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Collaborations are complex and time-consuming to negotiate, document and execute. In addition, consolidation among large pharmaceutical and biotechnology companies has reduced the number of potential future collaborators. Jade may not be able to negotiate additional collaborations on a timely basis, on acceptable terms or at all. If Jade fails to enter into collaborations and does not have sufficient funds or expertise to undertake the necessary development and commercialization activities, it may not be able to further develop Jade’s product candidates or bring them to market.

Risks associated with the in-licensing or acquisition of product candidates could cause substantial delays in the preclinical and clinical development of Jade’s product candidates.

Jade has relied and continues to rely on Paragon, and expects to rely on Jade’s future licensing partners, to (i) conduct research and development in accordance with the applicable protocol, legal, regulatory and scientific standards, (ii) accurately report the results of all preclinical trials conducted prior to Jade’s licensing or acquisition of the relevant product candidates and (iii) correctly collect and interpret the data from these trials. If the research and development processes or the results of the development programs prior to Jade’s licensing or acquisition of its product candidates prove to be unreliable, this could result in increased costs and delays in the development of Jade’s product candidates, which could adversely affect any future revenue from such product candidates, if approved.

Jade may also acquire or in-license additional product candidates for preclinical or clinical development in the future as it continues to build its pipeline. The risks associated with acquiring or in-licensing product candidates could result in delays in the commencement or completion of Jade’s preclinical studies and clinical trials, if ever, and Jade’s ability to generate revenues from its product candidates may be delayed. Please see the section titled “Risk Factors — Risks Related to Jade’s Intellectual Property — If Jade is unable to obtain or maintain necessary rights to its programs through acquisitions and in-licenses, its business may be materially harmed” beginning on page 83 of this proxy statement/prospectus for additional information regarding such risks.

Jade currently relies, and plans to rely in the future, on third parties to conduct and support its preclinical studies and clinical trials. If these third parties do not properly and successfully carry out their contractual duties or meet expected deadlines, Jade may not be able to obtain regulatory approval of or commercialize its product candidates.

Jade has utilized and plans to continue to utilize and depend upon independent investigators and collaborators, such as medical institutions, CROs, contract testing labs and strategic partners, to conduct and support its preclinical studies and clinical trials under agreements with Jade. Jade will rely heavily on these third parties over the course of its preclinical studies and clinical trials, and Jade controls only certain aspects of their activities. As a result, Jade will have less direct control over the conduct, timing and completion of these preclinical studies and clinical trials and the management of data developed through preclinical studies and clinical trials than would be the case if Jade were relying entirely upon its own staff. Nevertheless, Jade is responsible for ensuring that each of its studies and trials is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and its reliance on these third parties does not relieve Jade of its regulatory responsibilities. Jade and Jade’s third-party contractors and

 

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CROs are required to comply with GCP, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for all of Jade’s product candidates in clinical development. If Jade or any of these third parties fail to comply with applicable GCP regulations, the clinical data generated in Jade’s clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require Jade to perform additional clinical trials before approving Jade’s marketing applications. Jade cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of its clinical trials comply with GCP. In addition, Jade’s clinical trials must be conducted with products manufactured in accordance with cGMP. Jade’s failure to comply with these requirements may require Jade to repeat clinical trials, which would delay the regulatory approval process. Moreover, Jade’s business may be implicated if any of these third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws, and foreign equivalents.

Any third parties conducting Jade’s clinical trials will not be Jade’s employees and, except for remedies available to Jade under its agreements with such third parties, Jade cannot control whether they devote sufficient time and resources to its programs. These third parties may encounter challenges hiring and retaining sufficient qualified personnel or they may be involved in mergers, acquisitions or similar transactions and may have relationships with other commercial entities, including Jade’s competitors, for whom they may also be conducting clinical trials or other product development activities, which could negatively affect their performance on Jade’s behalf and the timing thereof and could lead to products that compete directly or indirectly with Jade’s current or future product candidates. If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to Jade’s clinical protocols or regulatory requirements or for other reasons, Jade’s clinical trials may be extended, delayed or terminated and Jade may not be able to complete development of, obtain regulatory approval of or successfully commercialize Jade’s product candidates.

In addition, Jade plans to rely on foreign CROs and CMOs, including WuXi Biologics (Hong Kong) Limited (“WuXi Biologics (Hong Kong)”), for formulation and manufacturing of Jade’s Phase 1 clinical trial materials, and will likely continue to rely on foreign CROs and CMOs in the future. WuXi Biologics (Hong Kong) is a subsidiary or affiliate of WuXi Biologics, which is identified in the U.S. legislation proposed in 2024 known as the BIOSECURE Act as a biotechnology “company of concern.” The BIOSECURE Act as it was introduced in the House of Representatives in 2024 would have prohibited federal agencies from entering into procurement contracts with, as well as providing grants and loans to, an entity that uses biotechnology equipment or services from a biotechnology company of concern, and includes a grandfathering provision allowing biotechnology equipment and services provided or produced by named “biotechnology companies of concern” under a contract or agreement entered into before the effective date until January 1, 2032. It is uncertain whether the BIOSECURE Act will be proposed again in 2025. Depending on whether the BIOSECURE Act becomes law, what the final language of the BIOSECURE Act includes, and how the law is interpreted by U.S. federal agencies, Jade could be potentially restricted from pursuing U.S. federal government business or grants in the future if Jade continues to use WuXi Biologics (Hong Kong) or other parties identified as “biotechnology companies of concern” beyond the grandfathering period. Foreign CMOs may be the target of U.S. legislation, including a new version of the BIOSECURE Act, trade restrictions and other foreign regulatory requirements which could increase the cost or reduce the supply of material available to Jade, delay the procurement or supply of such material, restrict or even prohibit Jade’s ability to work with such CMOs, or have an adverse effect on Jade’s ability to secure significant commitments from governments to purchase potential therapies.

For example, the biopharmaceutical industry in China is strictly regulated by the Chinese government. Changes to Chinese regulations or government policies affecting biopharmaceutical companies are unpredictable and may have a material adverse effect on Jade’s collaborators in China which could have an adverse effect on Jade’s business, financial condition, results of operations and prospects. In addition, the United States government has imposed a 10% additional tariff on imports from China and may impose more restrictions on goods, including biologically derived substances, manufactured in or imported from China or impose other restrictions on companies’ ability to work with Chinese biotech companies. Evolving changes in China’s public health, economic, political, and social conditions and the uncertainty around China’s relationship with other governments, such as the United States and the UK, could also negatively impact Jade’s ability to manufacture its product candidates for its planned clinical trials or have an adverse

 

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effect on its ability to secure government funding, which could adversely affect Jade’s financial condition and cause it to delay its clinical development programs. Furthermore, if the BIOSECURE Act is again proposed in 2025 and becomes law, and one or more of Jade’s collaborators or vendors in China, including WuXi Biologics (Hong Kong), is deemed to be a biotechnology company of concern, Jade’s operations and financial condition may be negatively impacted as a result of any delays or increased costs arising from the trade restrictions and other foreign regulatory requirements affecting such collaborators. In addition, while Jade has established relationships with CROs and CMOs outside of China, moving to those suppliers in the event of a geopolitical instability affecting Jade’s collaborators in China could introduce delays into the development program.

Jade relies on the use of third-party CMOs to manufacture Jade’s product candidates, and Jade expects to continue to rely on third-party CMOs to produce its products, if approved. Jade’s business could be adversely affected if it is unable to use third-party manufacturing suites or if the third-party manufacturers encounter difficulties in production.

Jade does not currently own any facility that may be used as its clinical-scale manufacturing and processing facility and must rely on CMOs to manufacture its product candidates. Jade has not yet caused its product candidates to be manufactured on a commercial scale and may not be able to do so for any of its product candidates, if approved. Jade expects to have a sole source relationship for its supply of JADE-001. If there should be any disruption in such supply arrangement, including any adverse events affecting its sole supplier, it could have a negative effect on the clinical development of Jade’s product candidates and other operations while Jade works to identify and qualify an alternate supply source. Jade has limited control over the manufacturing process of, and may be dependent on, its contract manufacturing partners for compliance with cGMP requirements and any other regulatory requirements of the FDA or comparable foreign regulatory authorities for the manufacture of Jade’s product candidates. Beyond periodic audits, Jade has limited control over the ability of its CMOs to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or another applicable regulatory authority does not approve these facilities for the manufacture of Jade’s product candidates or withdraws any approval in the future, Jade may need to find alternative manufacturing facilities, which would require the incurrence of significant additional costs and delays and materially adversely affect Jade’s ability to develop, obtain regulatory approval for or market its product candidates, if approved. Jade, or its future contract manufacturers, any current or future collaborators and their contract manufacturers could be subject to periodic unannounced inspections by the FDA, competent authorities of member states of the European Union (“EU Member States”) or other comparable foreign regulatory authorities, to monitor and ensure compliance with cGMP. Despite Jade’s efforts to audit and verify regulatory compliance, one or more of its third-party manufacturing vendors may be found on regulatory inspection by the FDA, competent authorities of EU Member States or other comparable foreign regulatory authorities to be noncompliant with cGMP regulations. Jade’s failure, or the failure of its CMOs, to comply with applicable regulations could result in sanctions being imposed on Jade, including fines, injunctions, civil penalties, delays, suspension, variation or withdrawal of approvals, license revocation, seizures or recalls of product candidates or drugs, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of Jade’s product candidates or products, if approved, and harm its business and results of operations.

Moreover, Jade’s CMOs may experience manufacturing difficulties due to resource constraints, supply chain issues, intellectual property disputes or as a result of labor disputes or unstable political environments. If any CMOs on which Jade will rely fail to manufacture quantities of its product candidates at quality levels necessary to meet regulatory requirements and at a scale sufficient to meet anticipated demand at a commercially reasonable cost, Jade’s business, financial condition and prospects could be materially and adversely affected. In addition, Jade’s CMOs are responsible for transporting temperature-controlled materials that can be inadvertently degraded during transport due to several factors, rendering certain batches unsuitable for trial use for failure to meet, among others, Jade’s integrity and purity specifications. Jade and any of its CMOs may also face product seizure or detention or refusal to permit the import or export of products. Jade’s business could be materially adversely affected by business disruptions to its third-party providers that could materially adversely affect Jade’s anticipated timelines, potential future revenue and financial condition and increase Jade’s costs and expenses. Each of these risks could delay or prevent the completion of Jade’s preclinical studies and clinical trials or the approval of any of its product candidates by the FDA or comparable foreign regulatory authorities, result in higher costs or adversely impact

 

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commercialization of Jade’s product candidates. Please see the section titled “Jade’s Business — Manufacturing and Supply” beginning on page 298 of this proxy statement/prospectus for a more detailed description of Jade’s manufacturing plans and assumptions and the factors that may affect the success of Jade’s programs.

Risks Related to Jade’s Business and Operations

In order to successfully implement its plans and strategies, Jade will need to grow the size of its organization and it may experience difficulties in managing this growth.

Jade expects to experience significant growth in the number of its employees and the scope of its operations, particularly in the areas of preclinical and clinical drug development, technical operations, clinical operations and regulatory affairs. To manage its anticipated future growth, Jade must continue to implement and improve its managerial, operational and financial personnel and systems, expand its facilities and continue to recruit and train additional qualified personnel. Due to Jade’s limited financial resources and the limited experience of its management team working together in managing a company with such anticipated growth, Jade may not be able to effectively manage the expansion of its operations or recruit and train additional qualified personnel.

Jade is highly dependent on its key personnel and anticipate hiring new key personnel. If Jade is not successful in attracting and retaining highly qualified personnel, it may not be able to successfully implement its business strategy.

Jade’s ability to compete in the highly competitive biotechnology and pharmaceutical industries depends upon its ability to attract and retain highly qualified managerial, scientific and medical personnel. Jade is highly dependent on its managerial, scientific and medical personnel, including its Chief Executive Officer, Chief Scientific Officer and other key members of its leadership team. Although Jade has entered into employment agreements with its executive officers, each of them may terminate their employment with Jade at any time. Jade does not maintain “key person” insurance for any of its executives or other employees. The loss of the services of Jade’s executive officers or other key employees could impede the achievement of its research, development and commercialization objectives and seriously harm its ability to successfully implement its business strategy. Furthermore, replacing executive officers and key personnel may be difficult and may take an extended period of time. If Jade does not succeed in attracting and retaining qualified personnel, it could materially adversely affect Jade’s business, financial condition and results of operations. Jade could in the future have difficulty attracting and retaining experienced personnel and may be required to expend significant financial resources in Jade’s employee recruitment and retention efforts.

Jade’s future growth may depend, in part, on its ability to operate in foreign markets, where Jade would be subject to additional regulatory burdens and other risks and uncertainties.

Jade’s future growth may depend, in part, on its ability to develop and commercialize its product candidates, if approved, in foreign markets for which Jade may rely on collaboration with third parties. Jade is not permitted to market or promote any of its product candidates before Jade receives regulatory approval from the applicable foreign regulatory authority, and may never receive such regulatory approval for any of its product candidates. To obtain separate regulatory approval in many other countries, Jade must comply with numerous and varying regulatory requirements of such countries regarding safety and efficacy and governing, among other things, clinical trials and commercial sales, pricing and distribution of Jade’s product candidates, if approved, and Jade cannot predict success in these jurisdictions. If Jade fails to comply with the regulatory requirements in international markets and receive applicable regulatory approvals, Jade’s target market will be reduced and its ability to realize the full market potential of its product candidates will be harmed and its business will be adversely affected. Moreover, even if Jade obtains approval of its product candidates and ultimately commercializes its product candidates in foreign markets, Jade would be subject to the risks and uncertainties, including the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements and reduced protection of intellectual property rights in some foreign countries.

 

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Jade’s estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the markets in which Jade competes achieve the forecasted growth, its business may not grow at similar rates, or at all.

Jade’s market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates which may not prove to be accurate. Jade’s estimates and forecasts relating to size and expected growth of its target market may prove to be inaccurate. Even if the markets in which Jade competes meet Jade’s size estimates and growth forecasts, Jade’s business may not grow at similar rates, or at all. Jade’s growth is subject to many factors, including its success in implementing its business strategy, which is subject to many risks and uncertainties.

Jade’s revenue will be dependent, in part, upon the size of the markets in the territories for which it gains regulatory approval, the accepted price for the product, the ability to obtain coverage and reimbursement and whether Jade owns the commercial rights for that territory. If the number of Jade’s addressable patients is not as significant as it estimates, the indication approved by regulatory authorities is narrower than it expects or the treatment population is narrowed by competition, physician choice or treatment guidelines, Jade may not generate significant revenue from sales of such products, even if approved.

Jade’s employees, independent contractors, consultants, commercial collaborators, principal investigators, CROs, CMOs, suppliers and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

Jade is exposed to the risk that its employees, independent contractors, consultants, commercial collaborators, principal investigators, CROs, CMOs, suppliers and vendors acting for or on Jade’s behalf may engage in misconduct or other improper activities. Misconduct by these parties could include intentional, reckless or negligent conduct or disclosure of unauthorized activities to Jade that violates FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA, manufacturing standards, federal and state healthcare laws and regulations, and laws that require the true, complete and accurate reporting of financial information or data. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Misconduct by these parties could also involve the improper use of individually identifiable information, including, without limitation, information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to Jade’s reputation. Jade will adopt a code of conduct, which will become effective as of the Closing, but it is not always possible to identify and deter misconduct by these parties and the precautions Jade takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Jade from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.

Jade’s internal information technology systems, or those of any of Jade’s CROs, manufacturers, other contractors or consultants, third party service providers, or existing or future collaborators, may fail or suffer security or data privacy breaches or other unauthorized or improper access to, use of, or destruction of Jade’s proprietary or confidential data, employee data or personal data, which could result in additional costs, loss of revenue, significant liabilities, harm to Jade’s brand and material disruption of its operations.

In the ordinary course of its business, Jade and the third parties upon which Jade relies collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, “Process”) proprietary, confidential, and sensitive data, including personal data, intellectual property, trade secrets, and other sensitive data (collectively, “Sensitive Information”).

Despite the implementation of security measures in an effort to protect systems that store Jade’s information, given their size and complexity and the increasing amounts of information maintained on Jade’s internal information technology systems and those of Jade’s third-party CROs, other contractors (including sites performing Jade’s clinical trials), third party service providers and supply chain companies, and consultants, these systems are potentially vulnerable to breakdown or other damage or interruption from service interruptions, system malfunction, natural disasters, terrorism, war and telecommunication and

 

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electrical failures, as well as security breaches from inadvertent or intentional actions by Jade’s employees, contractors, consultants, business partners and/or other third parties, or from cyber-attacks by malicious third parties, which may compromise Jade’s system infrastructure or lead to the loss, destruction, alteration or dissemination of, or damage to, Jade’s data.

Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, Jade, and the third parties upon which Jade relies, may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt Jade’s systems and operations. In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in Jade’s operations, loss of sensitive data and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but Jade may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.

To the extent that any disruption or security breach were to result in loss, destruction, unavailability, alteration or dissemination of, or damage to, Jade’s data or applications, or for it to be believed or reported that any of these occurred, Jade could incur liability and reputational damage and the development and commercialization of Jade’s product candidates could be delayed. Further, Jade’s insurance policies may not be adequate to compensate Jade for the potential losses arising from any such disruption in, or failure or security breach of, Jade’s systems or third-party systems where information important to Jade’s business operations or commercial development is stored.

Jade’s remote workforce may create additional risks for its information technology systems and data because its employees work remotely and utilize network connections, computers, and devices working at home, while in transit and in public locations. Additionally, business transactions (such as acquisitions or integrations) could expose Jade to additional cybersecurity risks and vulnerabilities, as Jade’s systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.

While Jade has implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective. Jade may be unable in the future to detect vulnerabilities in its information technology systems because such threats and techniques change frequently, are often sophisticated in nature, and may not be detected until after a security incident has occurred. Further, Jade may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities. Applicable data privacy and security obligations may require Jade to notify relevant stakeholders of security incidents. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences.

Jade relies on third-party service providers and technologies to operate critical business systems to Process Sensitive Information in a variety of contexts. Jade’s ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. If Jade’s third-party service providers experience a security incident or other interruption, Jade could experience adverse consequences. While Jade may be entitled to damages if its third-party service providers fail to satisfy their privacy or security-related obligations to Jade, any award may be insufficient to cover its damages, or Jade may be unable to recover such award. In addition, supply-chain attacks have increased in frequency and severity, and Jade cannot guarantee that third parties’ infrastructure in its supply chain or its third-party partners’ supply chains have not been compromised.

If Jade (or a third party upon whom Jade relies) experiences a security incident or are perceived to have experienced a security incident, Jade may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on Processing Sensitive Information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in Jade’s operations (including availability of data); financial loss; and other similar harms. Security incidents and attendant consequences may cause stakeholders (including investors and potential customers) to stop supporting Jade’s platform, deter new customers from products, and negatively impact Jade’s ability to grow and operate its business.

 

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Jade’s contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in Jade’s contracts are sufficient to protect Jade from liabilities, damages, or claims related to its data privacy and security obligations. Jade cannot be sure that its insurance coverage will be adequate or sufficient to protect Jade from or to mitigate liabilities arising out of its privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.

Jade is subject to stringent and changing laws, regulations and standards, and contractual obligations relating to privacy, data protection, and data security. The actual or perceived failure to comply with such obligations could lead to government enforcement actions (which could include civil or criminal penalties), fines and sanctions, private litigation and/or adverse publicity and could negatively affect Jade’s operating results and business.

Jade, and third parties who Jade works with are or may become subject to numerous domestic and foreign laws, regulations, and standards relating to privacy, data protection, and data security, the scope of which is changing, subject to differing applications and interpretations, and may be inconsistent among countries, or conflict with other rules. In addition, Jade is or may become subject to the terms of contractual obligations related to privacy, data protection, and data security. Jade’s obligations may also change or expand as its business grows. The actual or perceived failure by Jade or third parties related to Jade to comply with such laws, regulations and obligations could increase Jade’s compliance and operational costs, expose Jade to regulatory scrutiny, actions, fines and penalties, result in reputational harm, lead to a loss of customers, result in litigation and liability, and otherwise cause a material adverse effect on Jade’s business, financial condition, and results of operations. Please see the section titled “Jade’s Business — Government Regulation — Data Privacy and Security” beginning on page 306 of this proxy statement/prospectus for a more detailed description of the laws that may affect Jade’s ability to operate.

If Jade fails to comply with environmental, health and safety laws and regulations, it could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of Jade’s business.

Jade is subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Jade’s operations may involve the use of hazardous and flammable materials, including chemicals and biological and radioactive materials. In addition, Jade may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair Jade’s research, development or commercialization efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Jade may be subject to adverse legislative or regulatory tax changes that could negatively impact its financial condition.

The rules governing U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect Jade’s stockholders or Jade. Jade assesses the impact of various tax reform proposals and modifications to existing tax treaties in all jurisdictions where Jade has operations to determine the potential effect on Jade’s business and any assumptions it has made about Jade’s future taxable income. Jade cannot predict whether any specific proposals will be enacted, the terms of any such proposals or what effect, if any, such proposals would have on Jade’s business if they were to be enacted. For example, the United States enacted the Inflation Reduction Act of 2022, which implements, among other changes, a 1% excise tax on certain stock buybacks. In addition, beginning in 2022, the Tax Cuts and JOBS Act eliminated the previously available option to deduct research and development expenditures and requires taxpayers to amortize them generally over five years for research activities conducted in the United States and over 15 years for research activities conducted outside the United States. The U.S. Congress is considering legislation that would restore the current deductibility of research and development expenditures; however, Jade has no assurance that the provision will be repealed or otherwise modified. Such changes, among others, may adversely affect Jade’s effective tax rate, results of operation and general business condition.

 

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Jade may acquire businesses, product candidates or products, or form strategic alliances, in the future, and may not realize the benefits of such acquisitions.

Jade may acquire additional businesses or products, form strategic alliances, or create joint ventures with third parties that Jade believes will complement or augment its existing business. If Jade acquires businesses with promising markets or technologies, it may not be able to realize the benefit of acquiring such businesses if Jade is unable to successfully integrate them with its existing operations and company culture. Jade may encounter numerous difficulties in developing, manufacturing and marketing any new product candidates or products resulting from a strategic alliance or acquisition that delay or prevent Jade from realizing their expected benefits or enhancing Jade’s business. There is no assurance that, following any such acquisition, Jade will achieve the synergies expected in order to justify the transaction, which could result in a material adverse effect on Jade’s business and prospects.

Jade maintains its cash at financial institutions, often in balances that exceed federally-insured limits. The failure of financial institutions could adversely affect Jade’s ability to pay its operational expenses or make other payments.

Jade’s cash held in non-interest-bearing and interest-bearing accounts exceeds the FDIC insurance limits. If such banking institutions were to fail, Jade could lose all or a portion of those amounts held in excess of such insurance limitations. For example, the FDIC took control of Silicon Valley Bank on March 10, 2023. The Federal Reserve subsequently announced that account holders would be made whole. However, the FDIC may not make all account holders whole in the event of future bank failures. In addition, even if account holders are ultimately made whole with respect to a future bank failure, account holders’ access to their accounts and assets held in their accounts may be substantially delayed. Any material loss that Jade may experience in the future or inability for a material time period to access Jade’s cash and cash equivalents could have an adverse effect on its ability to pay its operational expenses or make other payments, which could adversely affect Jade’s business.

Risks Related to Jade’s Intellectual Property

Jade does not currently own any issued patents or pending patent applications, and, as of October 30, 2024, it in-licenses its rights to JADE-001. Therefore, Jade’s ability to obtain and protect its patent rights, and protect other proprietary rights, is uncertain, exposing Jade to the possible loss of competitive advantage.

Jade will rely upon a combination of patents, trademarks, trade secret protection, copyrights and confidentiality agreements and the Paragon Option Agreement to protect the intellectual property related to Jade’s programs and technologies and to prevent third parties from competing unfairly with Jade. Jade’s success depends in large part on its ability to obtain and maintain patent protection for its product candidates and their uses, as well as Jade’s ability to operate without infringing on or violating the proprietary rights of others. Jade does not currently own any patents, but has licensed certain patent rights from Paragon under the JADE-001 License Agreement, and expects to in the future prosecute underlying intellectual property for some or all of the in-licensed or owned product candidates that it develops. Paragon has filed provisional patent applications and intends to file one or more additional provisional patent applications directed to anti-APRIL monoclonal antibodies, including applications covering composition of matter, pharmaceutical formulations, and methods of using such antibodies, including JADE-001. However, Jade may not be able to obtain or protect its intellectual property rights throughout the world and the legal systems in certain countries may not favor enforcement or protection of at least certain patents, trade secrets or other intellectual property. Filing, prosecuting, maintaining and defending patents on product candidates and other related inventions worldwide would be expensive and Jade’s intellectual property rights in some foreign jurisdictions can be less extensive than those in the United States; the reverse may also occur. As such, Jade may not have patents in all countries or all major markets and may not be able to obtain patents in all jurisdictions even if Jade or its licensor files patent applications to obtain such rights. Jade’s competitors may operate in countries where Jade does not have patent protection and may be able to freely use Jade’s technologies and discoveries in such countries, at least to the extent not forbidden by law.

Jade’s intellectual property portfolio is at an early stage. Jade does not currently own any issued patents or pending patent applications, and in-licenses its rights to JADE-001. Jade’s currently licensed or future

 

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optioned in-licensed or owned patent applications may not result in patents being issued. Any issued patents may not afford sufficient protection of Jade’s product candidates or their intended uses against competitors, nor can there be any assurance that the patents issued will not be infringed, designed around, invalidated by third parties, or effectively prevent others from commercializing competitive technologies, products or product candidates. Even if these patents are granted, they may be difficult to enforce. Further, any issued patents that Jade may license or own covering its product candidates could be narrowed or found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad, including the USPTO. If Jade does not obtain patent coverage for the work it is conducting, or if Jade obtains such rights but they are invalidated or rendered unenforceable, it may be unable to exclude competitors from pursuing and marketing the same or similar product candidates. Other risks Jade faces if it is not able to obtain and maintain patent coverage for its product candidates are the reduction in valuation of Jade’s product candidates, and ultimately of Jade as a company, by potential investors, and Jade’s inability to assert claims for infringement against third parties or counterclaim against such third parties or negotiate more advantageous settlement parameters. Further, if Jade encounters delays in its clinical trials or delays in obtaining regulatory approval, the period of time during which Jade could market its product candidates under patent protection would be reduced. Thus, the patents that Jade may own or license may not afford Jade any meaningful exclusivity period or competitive advantage.

In addition to seeking patents for some of its technology and product candidates, Jade may also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain its competitive position. Any disclosure, either intentional or unintentional, by Jade’s employees, the employees of third parties with whom Jade shares its facilities or third-party consultants and vendors that Jade engages to perform research, clinical trials or manufacturing activities, or misappropriation by third parties (such as through a cybersecurity breach) of its trade secrets or proprietary information could enable competitors to duplicate or surpass its technological achievements, thus eroding Jade’s competitive position in its market. In order to protect its proprietary technology and processes, Jade relies in part on confidentiality agreements with its collaborators, employees, consultants, outside scientific collaborators and sponsored researchers and other advisors. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Jade may need to share its proprietary information, including trade secrets, with future business partners, collaborators, contractors and others located in countries at heightened risk of theft of trade secrets, including through direct intrusion by private parties or state actors and those affiliated with or controlled by state actors. In addition, while Jade undertakes reasonable efforts to protect its trade secrets and other confidential information from disclosure, others may independently discover trade secrets and proprietary information, and in such cases, Jade may not be able to assert any trade secret rights against such party. Costly and time-consuming litigation could be necessary to enforce and determine the scope of Jade’s proprietary rights and failure to obtain or maintain trade secret protection could adversely affect its competitive business position.

Lastly, if Jade’s trademarks and trade names are not registered or adequately protected, then Jade may not be able to build name recognition in its markets of interest and its business may be adversely affected.

If Jade is unable to obtain or maintain necessary rights to its programs through acquisitions and in-licenses, its business may be materially harmed.

Because Jade’s development programs currently do and may in the future require the use of proprietary rights held by third parties, the growth of its business will depend in part on its ability to acquire, in-license, or use these third-party proprietary rights. Jade may be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights from third parties that Jade identifies as necessary for its programs. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies may pursue strategies to license or acquire third-party intellectual property rights that Jade may consider attractive or necessary. These established companies may have a competitive advantage over Jade due to their size, capital resources and greater clinical development and commercialization capabilities. In addition, companies that perceive Jade to be a competitor may be unwilling to assign or license rights to Jade. Jade also may be unable to license or acquire third-party intellectual property rights on terms that would allow Jade to make an appropriate return on its investment or at all. If Jade is unable to successfully obtain rights to required third-party intellectual

 

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property rights or maintain intellectual property rights it obtains in the future, Jade may have to abandon development of the relevant program, which could have a material adverse effect on Jade’s business, financial condition, results of operations, and prospects.

While Jade has the right to control prosecution, defense, maintenance and enforcement of patents in-licensed under the JADE-001 License Agreement, once the trigger for transfer of prosecution control is met, there may be times when rights for patents and patent applications relating to Jade’s product candidates are controlled by its future licensors or collaboration partners. For example, Paragon currently has the right to file patent applications and control prosecution with respect to any inventions that may fall within the Paragon Option Agreement, including those that may apply to JADE-002 and JADE-003. If Jade, Paragon or any of its future licensors or collaboration partners fail to prosecute, defend, maintain and enforce such patents and patent applications in a manner consistent with the best interests of Jade, including by payment of all applicable fees for patents covering its product candidates, Jade could lose its rights to the intellectual property or its exclusivity with respect to those rights, its ability to develop and commercialize those product candidates may be adversely affected and Jade may not be able to prevent competitors from making, using and selling competing products. In addition, even if Jade has the right to control patent prosecution of patents and patent applications Jade has licensed to and from third parties, including under the JADE-001 License Agreement following the point at which such control is assumed, Jade may still be adversely affected or prejudiced by actions or inactions of Paragon, additional licensees, or licensors and their counsel prior to the date upon which Jade assumes control over patent prosecution. For example, prior to entering into the JADE-001 License Agreement, Paragon was responsible for the prosecution, defense, maintenance and enforcement of patents related to JADE-001. Subsequent to entering into such license agreement, Jade will control patent prosecution over JADE-001 following the trigger for transfer of prosecution control to Jade.

Jade’s future licensors may not be the sole and exclusive owners of all rights in the patents Jade may in-license. If other third parties have rights to Jade’s future in-licensed patents, they may be able to license such patents to its competitors, and its competitors could market competing products and technology. This could have a material adverse effect on Jade’s competitive position, business, financial condition, results of operations, and prospects.

It is possible that Jade may be unable to obtain licenses at a reasonable cost or on reasonable terms, if at all. Even if Jade is able to obtain a license, it may be non-exclusive, thereby giving its competitors access to the same technologies licensed to Jade. In that event, Jade may be required to expend significant time and resources to redesign its product candidates, or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis. If Jade is unable to do so, it may be unable to develop or commercialize the affected product candidates, which could harm Jade’s business, financial condition, results of operations, and prospects significantly. Jade cannot provide any assurances that third-party patents do not exist which might be enforced against Jade’s product candidates, manufacturing methods or future products or methods resulting in either an injunction prohibiting Jade’s manufacture or future sales, or, with respect to Jade’s future sales, an obligation on Jade’s part to pay royalties and/or other forms of compensation to third parties, which could be significant.

Disputes may arise between Jade and Jade’s future licensors regarding intellectual property subject to a license agreement, including (but not limited to): the scope of rights granted under the license agreement and other interpretation-related issues; whether and the extent to which Jade’s technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; Jade’s right to sublicense patents and other rights to third parties; Jade’s right to transfer or assign the license; the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by Jade’s future licensors and Jade and its partners; and the priority of invention of patented technology. If Jade or its future licensors breach the terms of its license agreements, such breach may have a material adverse effect on Jade’s business and the commercialization efforts for Jade’s programs.

Jade may be subject to patent infringement claims or may need to file claims to protect Jade’s intellectual property, which could result in substantial costs and liability and prevent Jade from commercializing Jade’s potential products.

Because the intellectual property landscape in the biotechnology industry is rapidly evolving and interdisciplinary, it is difficult to conclusively assess Jade’s freedom to operate and guarantee that Jade can

 

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operate without infringing on or violating third party rights. If certain of Jade’s product candidates are ultimately granted regulatory approval, patent rights held by third parties could be alleged to render one or more of Jade’s product candidates infringing. If a third party successfully brings a claim against Jade, and its rights are not held invalid or unenforceable, Jade may be required to pay substantial damages, be forced to abandon any affected product candidate and/or seek a license from the patent holder. In addition, any intellectual property claims (e.g., patent infringement or trade secret misappropriation) brought against Jade, whether or not successful, may cause Jade to incur significant legal expenses and divert the attention of Jade’s management and key personnel from other business concerns. Jade cannot be certain that future patents, if filed and issued, owned or licensed by Jade will not be challenged by others, whether in the course of litigation or in agencies like the USPTO. Some of Jade’s competitors may be able to sustain the costs of complex intellectual property litigation more effectively than Jade can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on Jade’s ability to raise funds.

Competitors may infringe or otherwise violate Jade’s future patents, trademarks, copyrights or other intellectual property. To counter infringement or other violations, Jade may be required to file claims, which can be expensive and time-consuming. Any such claims could provoke these parties to assert counterclaims against Jade, including claims alleging that Jade infringes their patents or other intellectual property rights. In addition, in a patent infringement proceeding, a court or administrative body may decide that one or more of the patents Jade asserts is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly or refuse to prevent the other party from using the technology at issue on the grounds that Jade’s patents do not cover the technology. Similarly, if Jade asserts trademark infringement claims, a court or administrative body may determine that the marks Jade has asserted are invalid or unenforceable or that the party against whom Jade has asserted trademark infringement has superior rights to the marks in question. In such a case, Jade could ultimately be forced to cease use of such marks. In any intellectual property litigation, even if Jade is successful, any award of monetary damages or other remedy it receives may not be commercially valuable.

Further, Jade may be required to protect its future patents, if filed and issued, through procedures created to attack the validity of a patent at the USPTO. An adverse determination in any such submission or proceeding could reduce the scope or enforceability of, or invalidate, Jade’s patent rights, which could adversely affect its competitive position. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.

In addition, if Jade’s product candidates are found to infringe the intellectual property rights of third parties, these third parties may assert infringement claims against Jade’s future licensees or customers and other parties with whom Jade has business relationships and Jade may be required to indemnify those parties for any damages they suffer as a result of these claims, which may require Jade to initiate or defend protracted and costly litigation on behalf of licensees or other parties regardless of the merits of such claims. If any of these claims succeed, Jade may be forced to pay damages on behalf of those parties or may be required to obtain licenses for the products they use.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or other legal proceedings relating to Jade’s intellectual property rights, there is a risk that some of its confidential information could be compromised by disclosure during this type of litigation or other proceedings.

Jade’s success will depend in part on its and its future licensors’ ability to obtain, maintain and enforce patent protection for its licensed intellectual property.

Jade’s success will depend in part on its and its future licensors’ (including Paragon’s) ability to obtain, maintain and enforce patent protection for its licensed intellectual property. After entry into the JADE-001 License Agreement and once the trigger for transfer of prosecution control is met, Jade will control the prosecution, maintenance, enforcement and defense of JADE-001. Prior to entering into the license agreement, Paragon held such rights. Jade, Paragon and Jade’s future licensors may not successfully prosecute

 

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the patent applications that cover Jade’s product candidates. Even if patents are issued in respect of these patent applications, Jade and its future licensors (including Paragon) may fail to maintain these patents, may determine not to pursue litigation against other companies that are infringing these patents, or may pursue such litigation less aggressively than Jade would. Without protection for any in-licensed intellectual property, other companies might be able to offer substantially identical products for sale, which could adversely affect Jade’s competitive business position and harm its business prospects.

Jade may be subject to claims that it has wrongfully hired an employee from a competitor or that its employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.

As is common in the biotechnology industry, in addition to its employees, Jade engages the services of consultants to assist Jade in the development of its product candidates. Many of these consultants, and many of Jade’s employees, were previously employed at, or may have previously provided or may be currently providing consulting services to, other biotechnology or pharmaceutical companies including Jade’s competitors or potential competitors. Jade could in the future be subject to claims that Jade or its employees have inadvertently or otherwise used or disclosed alleged trade secrets or other confidential information of former employers or competitors. Although Jade tries to ensure that its employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for Jade, Jade may become subject to claims that it caused an employee to breach the terms of his or her non-competition or non-solicitation agreement, or that Jade or these individuals have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of a former employer or competitor.

While Jade may litigate to defend itself against these claims, even if Jade is successful, litigation could result in substantial costs and could be a distraction to management and other employees. If Jade’s defenses to these claims fail, in addition to requiring Jade to pay monetary damages, a court could prohibit Jade from using technologies or features that are essential to Jade’s product candidates, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers. Moreover, any such litigation or the threat thereof may adversely affect Jade’s reputation, Jade’s ability to form strategic alliances or sublicense Jade’s rights to collaborators, engage with scientific advisors or hire employees or consultants, each of which would have an adverse effect on Jade’s business, results of operations and financial condition. Even if Jade is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

Changes to patent laws in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing Jade’s ability to protect its products.

Changes in either the patent laws or interpretation of patent laws in the United States, including patent reform legislation such as the Leahy-Smith America Invents Act (the “Leahy-Smith Act”) could increase the uncertainties and costs surrounding the prosecution of Jade’s owned and in-licensed patent applications and the maintenance, enforcement or defense of Jade’s owned and in-licensed issued patents. The Leahy-Smith Act includes a number of significant changes to United States patent law. These changes include provisions that affect the way patent applications are prosecuted, redefine prior art, provide more efficient and cost-effective avenues for competitors to challenge the validity of patents, and enable third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent at USPTO-administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings. Assuming that other requirements for patentability are met, prior to March 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. After March 2013, under the Leahy-Smith Act, the United States transitioned to a first-to-file system in which, assuming that the other statutory requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. As such, the Leahy-Smith Act and its implementation increased the uncertainties and costs surrounding the prosecution of Jade’s patent applications and the enforcement or defense of Jade’s issued patents, all of which could have a material adverse effect on Jade’s business, financial condition, results of

 

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operations and prospects. Additionally, there have been proposals for additional changes to the patent laws of the United States and other countries that, if adopted, could impact Jade’s ability to enforce its proprietary technology.

In addition, the patent positions of companies in the development and commercialization of biologics and pharmaceuticals are particularly uncertain. U.S. Supreme Court and U.S. Court of Appeals for the Federal Circuit rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations, including in the antibody arts. For example, the United States Supreme Court in Amgen, Inc. v. Sanofi (“Amgen”) recently held that Amgen’s patent claims to a class of antibodies functionally defined by their ability to bind a particular antigen were invalid for lack of enablement where the patent specification provided 26 exemplary antibodies, but the claimed class of antibodies covered a “vast number” of additional antibodies not disclosed in the specification. The Court stated that if patent claims are directed to an entire class of compositions of matter, then the patent specification must enable a person skilled in the art to make and use the entire class of compositions. This decision makes it unlikely that Jade will be granted U.S. patents with composition of matter claims as broad as Amgen’s directed to antibodies functionally defined by their ability to bind a particular antigen. Even if Jade is granted claims directed to functionally defined antibodies, it is possible that a third party may challenge Jade’s patents, when issued, relying on the reasoning in Amgen or other precedential court decisions. This combination of events has created uncertainty with respect to the validity and enforceability of patents once obtained. Depending on future actions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could have a material adverse effect on Jade’s patent rights and its ability to protect, defend and enforce Jade’s patent rights in the future.

In addition, the U.S. Supreme Court’s July 2024 decision to overturn established case law giving deference to regulatory agencies’ interpretations of ambiguous statutory language has introduced uncertainty regarding the extent to which the FDA’s regulations, policies and decisions may become subject to increasing legal challenges, delays, and/or changes. Jade cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. Geopolitical instability in the United States and in foreign countries could increase the uncertainties and costs surrounding the prosecution or maintenance of patent applications and the maintenance, enforcement or defense of issued patents. In addition, the UPC entered into force on June 1, 2023. The UPC is a common patent court that hears patent infringement and revocation proceedings effective for EU Member States. This could enable third parties to seek revocation of a European patent in a single proceeding at the UPC rather than through multiple proceedings in each of the jurisdictions in which the European patent is validated.

Although Jade does not currently own any European patents or applications, if Jade obtains or licenses such patents and applications in the future, any such revocation and loss of patent protection could have a material adverse impact on Jade’s business and its ability to commercialize or license its technology and products. Moreover, the controlling laws and regulations of the UPC will develop over time, and may adversely affect Jade’s ability to enforce or defend the validity of any European patents Jade may obtain. Jade may decide to opt out from the UPC any future European patent applications that Jade may file and any patents it may obtain. If certain formalities and requirements are not met, however, such European patents and patent applications could be challenged for non-compliance and brought under the jurisdiction of the UPC. Jade cannot be certain that future European patents and patent applications will avoid falling under the jurisdiction of the UPC, if it decides to opt out of the UPC.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submissions, fee payment and other requirements imposed by governmental patent agencies, and Jade’s patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuities fees and various other governmental fees on patents and/or patent applications are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent and/or patent application. The USPTO and various foreign governmental patent agencies also require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations

 

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in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If Jade fails to maintain any future patents and patent applications, if filed and issued, covering Jade’s product candidates, Jade’s competitive position would be adversely affected.

Jade may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect Jade’s ability to develop and market its products.

Jade cannot guarantee that any of its patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough, nor can Jade be certain that it has identified each and every third-party patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of Jade’s product candidates in any jurisdiction. The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent, the patent’s prosecution history and in some cases certain extrinsic evidence of the meaning of terms in a claim. Jade’s interpretation of the relevance or the scope of a patent or a pending application may be incorrect. For example, Jade may incorrectly determine that its products are not covered by a third-party patent or may incorrectly predict whether a third-party’s pending application will issue with claims of relevant scope. Jade’s determination of the expiration date of any patent in the United States or abroad that Jade considers relevant may be incorrect. Jade’s failure to identify and correctly interpret relevant patents may negatively impact its ability to develop and market its products.

In addition, because some patent applications in the United States may be maintained in secrecy until the patents are issued, patent applications in the United States and many foreign jurisdictions are typically not published until 18 months after filing, and publications in the scientific literature often lag behind actual discoveries, Jade cannot be certain that others have not filed patent applications for technology covered by Jade’s future issued patents or Jade’s pending applications, if filed, or that Jade was the first to invent the technology. Jade’s competitors may have filed, and may in the future file, patent applications covering Jade’s products or technology similar to ours. Any such patent application may have priority over Jade’s future patent applications or patents, if filed and issued, which could require Jade to obtain rights to issued patents covering such technologies.

Jade may become subject to claims challenging the inventorship or ownership of Jade’s patents, if issued, and other intellectual property.

Jade may be subject to claims that former employees, collaborators or other third parties have an interest in Jade’s future patents, if filed and issued, or other intellectual property as an inventor or co-inventor. The failure to name the proper inventors on a patent application can result in the patents issuing thereon being invalid or unenforceable. Inventorship disputes may arise from conflicting views regarding the contributions of different individuals named as inventors, the effects of foreign laws where foreign nationals are involved in the development of the subject matter of the patent, conflicting obligations of third parties involved in developing Jade’s programs or as a result of questions regarding co-ownership of potential joint inventions. Litigation may be necessary to resolve these and other claims challenging inventorship and/or ownership. Alternatively, or additionally, Jade may enter into agreements to clarify the scope of Jade’s rights in such intellectual property. If Jade fails in defending any such claims, in addition to paying monetary damages, it may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on Jade’s business. Even if Jade is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Jade’s current or future licensors may have relied on third-party consultants or collaborators or on funds from third parties, such as the U.S. government, such that Jade’s licensors are not the sole and exclusive owners of the patents Jade in-licensed. If other third parties have ownership rights or other rights to Jade’s in-licensed patents, they may be able to license such patents to Jade’s competitors, and its competitors could market competing products and technology. This could have a material adverse effect on Jade’s competitive position, business, financial condition, results of operations, and prospects.

 

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Patent terms may be inadequate to protect Jade’s competitive position of its product candidates for an adequate amount of time.

Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering Jade’s product candidates are obtained, once the patent life has expired, Jade may be open to competition from competitive products, including generics or biosimilars. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized. As a result, Jade’s owned and licensed patent portfolio may not provide Jade with sufficient rights to exclude others from commercializing products similar or identical to ours.

Jade’s technology licensed from various third parties may be subject to retained rights.

Jade’s future licensors may retain certain rights under the relevant agreements with Jade, including the right to use or license the licensed technology outside of the scope of Jade’s license, use the underlying technology for noncommercial academic and research use, to publish general scientific findings from research related to the technology, and to make customary scientific and scholarly disclosures of information relating to the technology. It is difficult to monitor whether Jade’s licensors limit their use of the technology to these uses, and Jade could incur substantial expenses to enforce its rights to its licensed technology in the event of misuse. In addition, while there are certain restrictions on Paragon’s ability to develop products that could be competitive with Jade’s as more fully described in the section titled “Jade’s Business — Jade’s Collaboration, License and Services Agreements — JADE-001 License Agreement” beginning on page 295 of this proxy statement/prospectus, these restrictions may not prevent the possible future license or development by Paragon of certain technology that could lead to product candidates competitive with Jade’s. This could have a material adverse effect on Jade’s competitive position, business, financial condition, results of operations, and prospects.

Risks Related to Government Regulation

The regulatory approval processes of the FDA and other comparable foreign regulatory authorities are lengthy, time-consuming and inherently unpredictable. If Jade is not able to obtain, or if there are delays in obtaining, required regulatory approvals for its product candidates, Jade will not be able to commercialize, or will be delayed in commercializing, its product candidates, and its ability to generate revenue will be materially impaired.

The process of obtaining regulatory approvals, both in the United States and abroad, is unpredictable, expensive and typically takes many years following commencement of clinical trials, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Jade cannot commercialize product candidates in the United States without first obtaining regulatory approval from the FDA. Similarly, Jade cannot commercialize product candidates outside of the United States without obtaining regulatory approval from comparable foreign regulatory authorities. Before obtaining regulatory approvals for the commercial sale of Jade’s product candidates, including JADE-001, Jade must demonstrate through lengthy, complex and expensive preclinical studies and clinical trials that Jade’s product candidates are both safe and effective for each targeted indication. Securing regulatory approval also requires the submission of information about the drug manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Further, Jade’s product candidates may not be effective, may be only moderately effective, may prove to have undesirable or unintended side effects, toxicities or other characteristics, or may fail to improve on the applicable standard of care, any of which may preclude Jade’s obtaining regulatory approval. The FDA and comparable foreign regulatory authorities have discretion in the approval process and may refuse to accept any application or may decide that Jade’s data are insufficient for approval and require additional preclinical, clinical or other data. Jade’s product candidates could be delayed in receiving, or fail to receive, regulatory approval for many reasons, including: the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of Jade’s clinical trials; Jade may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication; the results of clinical trials may not meet the level of statistical significance

 

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required by the FDA or comparable foreign regulatory authorities for approval; serious and unexpected drug-related side effects may be experienced by participants in Jade’s clinical trials or by individuals using drugs similar to its product candidates; Jade may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; the FDA or comparable foreign regulatory authorities may disagree with Jade’s interpretation of data from preclinical studies or clinical trials; the data collected from clinical trials of Jade’s product candidates may not be acceptable or sufficient to support the submission of a BLA or other submission or to obtain regulatory approval in the United States or elsewhere, and Jade may be required to conduct additional clinical trials; the FDA or the applicable foreign regulatory authority may disagree regarding the formulation, labeling and/or the specifications of Jade’s product candidates; the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which Jade contracts for clinical and commercial supplies; and the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering Jade’s clinical data insufficient for approval.

Of the large number of drugs in development, only a small percentage successfully complete the FDA or applicable foreign regulatory approval processes and are commercialized. The lengthy approval process as well as the unpredictability of future clinical trial results may result in Jade’s failing to obtain regulatory approval to market Jade’s product candidates, which would significantly harm Jade’s business, results of operations and prospects.

If Jade were to obtain approval, regulatory authorities may approve any of Jade’s product candidates for fewer or more limited indications than Jade requests, including failing to approve the most commercially promising indications, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. If Jade is not able to obtain, or if there are delays in obtaining, required regulatory approvals for Jade’s product candidates, it will not be able to commercialize, or will be delayed in commercializing, this could have a material adverse effect on Jade’s competitive position, business, financial condition, results of operations, and prospects.

Jade may not be able to meet requirements for the chemistry, manufacturing and control of its product candidates.

In order to receive approval of Jade’s products by the FDA and comparable foreign regulatory authorities, Jade must show that Jade and its contract manufacturing partners are able to characterize, control and manufacture Jade’s drug products safely and in accordance with regulatory requirements. This includes manufacturing the active ingredient, developing an acceptable formulation, manufacturing the drug product, performing tests to adequately characterize the formulated product, documenting a repeatable manufacturing process, and demonstrating that Jade’s drug products meet stability requirements. Meeting these chemistry, manufacturing and control requirements is a complex task that requires specialized expertise. If Jade is not able to meet the chemistry, manufacturing and control requirements, it may not be successful in getting Jade’s products approved.

Jade’s product candidates for which Jade intends to seek approval as biologics may face competition from biosimilars sooner than anticipated.

The ACA includes a subtitle called the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, an application for a highly similar or “biosimilar” product may not be submitted to the FDA until four years following the date that the reference product was first approved by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first approved. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product.

Jade believes that any of its product candidates approved as biologics under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider Jade’s product candidates to be reference

 

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products for competing products, potentially creating the opportunity for competition sooner than anticipated. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. Moreover, the extent to which a biosimilar, once approved, will be substituted for any reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.

Even if Jade receives regulatory approval of its product candidates, Jade will be subject to extensive ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and Jade may be subject to penalties if it fails to comply with regulatory requirements or experiences unanticipated problems with Jade’s product candidates.

Any regulatory approvals that Jade may receive for its product candidates will require the submission of reports to regulatory authorities and surveillance to monitor the safety and efficacy of the product candidate, may contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, and may include burdensome post-approval study or risk management requirements. For example, the FDA may require a REMS in order to approve Jade’s product candidates, which could entail requirements for a medication guide, physician training and communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. Comparable foreign regulatory authorities may impose similar requirements. In addition, if the FDA or comparable foreign regulatory authorities approve Jade’s product candidates, Jade’s product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale, distribution, import and export will be subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable foreign regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as on-going compliance with current cGMPs and GCPs for any clinical trials that Jade conducts following approval. In addition, manufacturers of drug products and their facilities are subject to continual review and periodic, unannounced inspections by the FDA and other regulatory authorities for compliance with cGMPs. If Jade or a regulatory authority discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facilities where the product is manufactured, a regulatory authority may impose restrictions on that product, the manufacturing facility or Jade, including requiring recall or withdrawal of the product from the market or suspension of manufacturing, delays or restrictions on Jade’s ability to conduct clinical trials or delays or refusal to grant a marketing authorization, including full or partial clinical holds on ongoing or planned trials, restrictions on the manufacturing process, warning or untitled letters, civil and criminal penalties, injunctions, product seizures, detentions or import bans, suspension, withdrawal or variation of any marketing authorization that has been granted, voluntary or mandatory publicity requirements and imposition of restrictions on operations, including costly new manufacturing requirements. Similar penalties may apply in case of failure by Jade or by any of Jade’s third-party partners, including suppliers, manufacturers and distributors to comply with FDA, EU laws and the related national laws of individual EU Member States and other applicable regulatory authorities governing the conduct of clinical trials, manufacturing approval, marketing authorization of medicinal products and marketing of such products, both before and after grant of a marketing authorization, statutory health insurance, bribery and anti-corruption or other applicable regulatory requirements may result in administrative, civil or criminal penalties. The occurrence of any event or penalty described above may inhibit Jade’s ability to commercialize its product candidates and generate revenue and could require Jade to expend significant time and resources in response and could generate negative publicity.

Disruptions at the FDA, the SEC and other government agencies and regulatory authorities caused by funding shortages or global health concerns could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of Jade’s business may rely, which could negatively impact Jade’s business.

The ability of the FDA to review regulatory filings and Jade’s ability to commence human clinical trials can be affected by a variety of factors, including government budget and funding levels, ability to hire and

 

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retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC, and other government agencies on which Jade’s operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies or comparable foreign regulatory authorities, may also slow the time necessary for the review and approval of applications for clinical trial or marketing authorization, which would adversely affect Jade’s business. For example, in recent years, including in 2018 and 2019, the U.S. government shut down several times and certain regulatory agencies, such as the FDA and the SEC, had to furlough critical employees and stop critical activities. Additionally, action by the new Trump Administration to limit federal agency budgets or personnel may result in reductions to the FDA’s budget, employees, and operations, which may lead to slower response times and longer review periods, potentially affecting our ability to progress development of Jade’s product candidates or obtain regulatory approval for Jade’s product candidates. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process Jade’s regulatory submissions, which could have a material adverse effect on Jade’s business. Further, future government shutdowns could impact Jade’s ability to access the public markets and obtain necessary capital in order to properly capitalize and continue Jade’s operations.

If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process Jade’s regulatory submissions, which could have a material adverse effect on its business.

Jade may face difficulties from healthcare and regulatory legislative reform measures.

Existing regulatory policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of Jade’s product candidates. Jade cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. For example, the Trump Administration has discussed several changes to the reach and oversight of the FDA, which could affect its relationship with the pharmaceutical industry, transparency in decision making and ultimately the cost and availability of prescription drugs. If Jade is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if Jade is not able to maintain regulatory compliance, it may lose any regulatory approval that Jade may have obtained and Jade may not achieve or sustain profitability. Please see the section titled “Jade’s Business — Government Regulation — Healthcare Reform” beginning on page 309 of this proxy statement/​prospectus for a more detailed description of healthcare reforms measures that may prevent or limit Jade’s ability to generate revenue, attain profitability, or commercialize Jade’s product candidates.

Jade’s business operations and current and future arrangements with investigators, healthcare professionals, consultants, third-party payors, patient organizations and customers will be subject to applicable healthcare regulatory laws, which could expose Jade to penalties.

Jade’s business operations and current and future arrangements with investigators, healthcare professionals, consultants, third-party payors, patient organizations and customers may expose Jade to broadly applicable fraud and abuse and other healthcare laws and regulations. These laws may constrain the business or financial arrangements and relationships through which Jade conducts its operations, including how Jade researches, markets, sells and distributes its product candidates, if approved. See the sections titled “Jade’s Business — Government Regulation — Other Healthcare Laws and Compliance Requirements” and “Jade’s Business — Government Regulation — Regulation in the European Union” beginning on pages 305 and 310, respectively, of this proxy statement/prospectus for a more detailed description of the laws that may affect Jade’s ability to operate.

Ensuring that Jade’s internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs. If Jade’s operations are found to be in violation of any of these laws or any other governmental laws and regulations that may apply to Jade, Jade may be subject to significant penalties, including civil, criminal and administrative penalties, damages,

 

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fines, exclusion from government-funded healthcare programs, integrity oversight and reporting obligations to resolve allegations of non-compliance, disgorgement, individual imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or restructuring of Jade’s operations. Further, defending against any such actions can be costly and time-consuming and may require significant personnel resources. Therefore, even if Jade is successful in defending against any such actions that may be brought against Jade, Jade’s business may be impaired.

Even if Jade is able to commercialize any product candidates, due to unfavorable pricing regulations and/or third-party coverage and reimbursement policies, Jade may not be able to offer such product candidates at competitive prices which would seriously harm Jade’s business.

Jade intends to seek approval to market its product candidates in both the United States and in selected foreign jurisdictions. If Jade obtains approval in one or more foreign jurisdictions for its product candidates, Jade will be subject to rules and regulations in those jurisdictions. Jade’s ability to successfully commercialize any product candidates that Jade may develop will depend in part on the extent to which reimbursement for these product candidates and related treatments will be available from government health administration authorities, private health insurers and other organizations. Government authorities and other third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. Government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. These entities may create preferential access policies for a competitor’s product, including a branded or generic/biosimilar product, over Jade’s products in an attempt to reduce their costs, which may reduce Jade’s commercial opportunity. See the sections titled “Jade’s Business — Government Regulation — Coverage and Reimbursement” and “Jade’s Business — Other Government Regulation Outside of the United States” beginning on pages 308 and 310, respectively, of this proxy statement/prospectus for a more detailed description of the government regulations and third-party payor practices that may affect Jade’s ability to commercialize its product candidates.

Jade is subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, and anti-money laundering laws and regulations. Jade can face criminal liability and other serious consequences for violations, which can harm Jade’s business.

Jade is subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls, the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, and other state and national anti-bribery and anti-money laundering laws in the countries in which Jade conducts activities. Governmental regulation of the import or export of Jade’s drug candidates, or Jade’s failure to obtain any required import or export authorization for Jade’s candidates, when applicable, could harm international operations. Furthermore, export control laws and economic sanctions prohibit the provision of certain items, technology, and services to countries, governments, and persons targeted by sanctions programs. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors, and other collaborators from authorizing, promising, offering, or providing, directly or indirectly, improper payments or anything else of value to or from recipients in the public or private sector. Jade may engage third parties to sell its products outside the United States, to conduct clinical trials, and/or to obtain necessary permits, licenses, patent registrations, and other regulatory approvals. Jade has direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations. Jade can be held liable for the corrupt or other illegal activities of Jade’s employees, agents, contractors, and other collaborators, even if Jade does not explicitly authorize or have actual knowledge of such activities. Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences.

Governments outside the United States tend to impose strict price controls, which may adversely affect Jade’s revenue, if any.

In some countries, particularly EU Member States, the pricing of prescription drugs is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take

 

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considerable time after receipt of regulatory approval for a therapeutic. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various EU Member States and parallel distribution, or arbitrage between low-priced and high-priced EU Member States, can further reduce prices. To obtain coverage and reimbursement or pricing approvals in some countries, Jade or future collaborators may be required to conduct a clinical trial or other studies that compare the cost-effectiveness of Jade’s product candidates to other available therapies in order to obtain or maintain reimbursement or pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If reimbursement of any product candidate approved for marketing is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, Jade’s business, financial condition, results of operations or prospects could be materially and adversely affected.

Jade may attempt to obtain accelerated approval of its product candidates. If Jade is unable to obtain accelerated approval, Jade may be required to conduct clinical trials beyond those that it contemplates, or the size and duration of Jade’s pivotal clinical trials could be greater than currently planned, which could increase the expense of obtaining, reduce the likelihood of obtaining, and/or delay the timing of obtaining necessary regulatory approvals. Even if Jade receives accelerated approval from the FDA or comparable foreign regulatory authorities, the FDA or comparable foreign regulatory authorities may require that Jade conducts confirmatory trials to verify clinical benefit. If Jade’s confirmatory trials do not verify clinical benefit, or if Jade does not comply with rigorous post-approval requirements, the FDA may seek to withdraw accelerated approval.

Jade may seek accelerated approval for Jade’s product candidates. The FDA may grant accelerated approval to a product designed to treat a serious or life-threatening condition that provides meaningful therapeutic advantage over available therapies and demonstrates an effect on a surrogate endpoint or intermediate clinical endpoint that is reasonably likely to predict clinical benefit. The FDA considers a clinical benefit to be a positive therapeutic effect that is clinically meaningful in the context of a given disease. Even if granted, there is no guarantee that receiving an accelerated approval status from the FDA will lead to a faster development or regulatory review or approval process, and such status does not increase the likelihood that Jade’s product candidates will ultimately receive marketing approval. Accelerated approval may be contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the drug’s predicted effect on irreversible morbidity or mortality or other clinical benefit. Under the Food and Drug Omnibus Reform Act of 2022, the FDA may require, as appropriate, that such studies be underway prior to approval or within a specific time period after the date of approval for a product granted accelerated approval. The FDA may require that any such confirmatory study be initiated or substantially underway prior to the submission of an application for accelerated approval. If such post-approval studies fail to confirm the drug’s clinical benefits relative to its risks, the FDA may withdraw its approval of the drug. If Jade chooses to pursue accelerated approval, there can be no assurance that the FDA will agree that Jade’s proposed primary endpoint is an appropriate surrogate endpoint. Similarly, there can be no assurance that after subsequent FDA feedback that Jade will continue to pursue accelerated approval or any other form of expedited development, review, or approval, even if Jade initially decides to do so. Furthermore, if Jade submits an application for accelerated approval, there can be no assurance that such application will be accepted or that approval will be granted on a timely basis, or at all. The FDA also could require Jade to conduct further studies or trials prior to considering Jade’s application or granting approval of any type. Jade might not be able to fulfill the FDA’s requirements in a timely manner, which would cause delays, or approval might not be granted because Jade’s submission is deemed incomplete by the FDA. Comparable considerations apply outside of the United States.

Even if Jade receives accelerated approval from the FDA, Jade will be subject to rigorous post-approval requirements, including submission to the FDA of all promotional materials prior to their dissemination. The FDA will require Jade to conduct a confirmatory study to verify the predicted clinical benefit. The FDA could withdraw accelerated approval for multiple reasons, including Jade’s failure to conduct any required post-approval study with due diligence, or the inability of such study to confirm the predicted clinical benefit. A failure to obtain accelerated approval or any other form of expedited review or approval for a product candidate could result in a longer time period prior to commercializing such product candidate, increase the cost of development of such product candidate, and harm Jade’s competitive position in the marketplace.

 

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Jade’s General Risk Factors

Jade may become exposed to costly and damaging liability claims, either when testing a product candidate in the clinical or at the commercial stage, and Jade’s product liability insurance may not cover all damages from such claims.

Jade is exposed to potential product liability and professional indemnity risks that are inherent in the research, development, manufacturing, marketing and use of pharmaceutical products. While Jade currently has no products that have been approved for commercial sale, the future use of a product candidate in clinical trials, and the sale of any approved products in the future, may expose Jade to liability claims. These claims may be made by patients that use the product, healthcare providers, pharmaceutical companies, or others selling such product. Any claims against Jade, regardless of their merit, could be difficult and costly to defend and could materially and adversely affect the market for Jade’s products or any prospects for commercialization of its products. Although Jade intends to obtain product liability insurance for its future clinical trials, it is possible that its liabilities could exceed Jade’s insurance coverage or that in the future Jade may not be able to maintain insurance coverage at a reasonable cost or obtain insurance coverage that will be adequate to satisfy any liability that may arise. If a successful product liability claim or series of claims is brought against Jade for uninsured liabilities or in excess of insured liabilities, Jade’s assets may not be sufficient to cover such claims and Jade’s business operations could be impaired.

Litigation costs and the outcome of litigation could have a material adverse effect on Jade’s business.

From time to time, Jade may be subject to litigation claims through the ordinary course of Jade’s business operations regarding, but not limited to, securities litigation, employment matters, security of patient and employee personal information, contractual relations with collaborators and licensors and intellectual property rights. Litigation to defend ourselves against claims by third parties, or to enforce any rights that Jade may have against third parties, could result in substantial costs and diversion of Jade’s resources, causing a material adverse effect on Jade’s business, financial condition, results of operations or cash flows.

Jade’s business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, public health crises, political crises, geopolitical events, or other macroeconomic conditions, which could have a material and adverse effect on Jade’s results of operations and financial condition.

The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including, among other things, diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates, and uncertainty about economic stability. Adverse macroeconomic conditions, including inflation, slower growth or recession, new or increased tariffs and other barriers to trade, especially in light of recent comments and executive orders made by the Trump Administration, changes to fiscal and monetary policy or government budget dynamics (particularly in the pharmaceutical and biotech areas), tighter credit, higher interest rates, volatility in financial markets, high unemployment, labor availability constraints, currency fluctuations and other challenges in the global economy have in the past adversely affected, and may in the future adversely affect, Jade and Jade’s business partners and suppliers. For example, the COVID-19 pandemic resulted in widespread unemployment, economic slowdown and extreme volatility in the capital markets. In addition, on February 1, 2025, the U.S. imposed a 25% tariff on imports from Canada and Mexico, which were subsequently suspended for a period of one month, and a 10% additional tariff on imports from China. Historically, tariffs have led to increased trade and political tensions. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. The Federal Reserve has raised interest rates multiple times in recent years in response to concerns about inflation and it may raise them again. High interest rates, coupled with reduced government spending and volatility in financial markets, may increase economic uncertainty and affect consumer spending. Similarly, the ongoing military conflict between Russia and Ukraine and in the Middle East and rising tensions with China have created extreme volatility in the global capital markets and may have further global economic consequences, including disruptions of the global supply chain. Any such volatility and disruptions may adversely affect Jade’s business or the third parties on whom Jade

 

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relies. If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more costly, more dilutive, or more difficult to obtain in a timely manner or on favorable terms, if at all. Increased inflation rates can adversely affect Jade by increasing Jade’s costs, including labor and employee benefit costs.

Jade may in the future experience disruptions as a result of such macroeconomic conditions, including delays or difficulties in initiating or expanding clinical trials and manufacturing sufficient quantities of materials. Any one or a combination of these events could have a material and adverse effect on Jade’s results of operations and financial condition.

Risks Related to the Nevada Redomestication

Currently, Aerovate is governed by Delaware law, but upon effectiveness of the Nevada Redomestication the Combined Company will be governed by Nevada law and the Combined Company’s articles of incorporation and bylaws, provisions of which have anti-takeover implications.

Upon effectiveness of the Nevada Redomestication, the Combined Company’s organizational documents will change and the Combined Company and its organizational documents will be governed by Nevada law rather than Delaware law. Chapter 78 of the Nevada Revised Statutes also contains provisions that may enable the Combined Company’s board of directors to discourage, delay or prevent a change in the Combined Company’s ownership or in its management. The combinations with interested stockholders provisions of the Nevada Revised Statutes, subject to certain exceptions, restrict the Combined Company’s ability to engage in any combination with an interested stockholder for two years after the date a stockholder becomes an interested stockholder, unless, prior to the stockholder becoming an interested stockholder, the Combined Company board of directors approved the combination or transaction by which stockholder first became an interested stockholder. If the combination or acquisition was not so approved prior to the stockholder becoming an interested stockholder, the interested stockholder may effect a combination after the two-year period only if either the stockholder receives approval from at least 60% of the outstanding voting power, excluding shares beneficially owned by the interested stockholder or its affiliates or associates, or the consideration to be paid by the interested stockholder exceeds certain thresholds set forth in the statute. For purposes of the foregoing provisions, “interested stockholder” means either a person, other than the Combined Company or its subsidiaries, who directly or indirectly beneficially owns 10% or more of the voting power of the Combined Company’s outstanding voting shares, or one of the Combined Company’s affiliates or associates which at any time within two years immediately before the date in question directly or indirectly beneficially owned 10% or more of the voting power of our outstanding shares.

Because the Combined Company’s articles of incorporation and bylaws limit the court in which you may bring an action against the Combined Company, you may have difficulty obtaining a more favorable judicial forum or you may incur more expense enforcing any rights which you may claim as compared to prior to the Nevada Redomestication.

The Combined Company’s charter and its bylaws provide that, to the extent permitted by law, any person who acquires equity in the Combined Company shall be deemed to have notice and consented to the forum selection provision of the Combined Company’s bylaws, which require actions to be brought only in state court in Clark County, Nevada, which may inhibit or deter stockholders’ actions (i) brought in the name of the Combined Company or on its behalf; (ii) asserting a claim for breach of any fiduciary duty owed by any director, officer, employee or agent of the Combined Company to the Combined Company or the Combined Company’s stockholders; (iii) arising or asserting a claim arising pursuant to any provision of NRS Chapters 78 or 92A or any provision of the articles of incorporation or bylaws of the Combined Company; (iv) to interpret, apply, enforce or determine the validity of any provision of the Combined Company’s articles of incorporation or bylaws; or (v) asserting a claim governed by the internal affairs doctrine. This exclusive forum provision may limit the Combined Company’s stockholders’ ability to obtain what they believe to be a favorable judicial forum for disputes with us and our officers and directors. This provision does not apply to claims brought under the Securities Act or the Exchange Act.

Any person or entity purchasing or otherwise acquiring any interest in any of the Combined Company’s securities shall be deemed to have notice of and consented to this provision. These exclusive-forum provisions

 

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may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with the Combined Company or its directors, officers, or other employees, which may discourage lawsuits against the Combined Company and its directors, officers, and other employees. If a court were to find either exclusive-forum provision in the Combined Company’s bylaws to be inapplicable or unenforceable in an action, the Combined Company may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm its results of operations.

Risks Related to the Combined Company

If any of the events described in “Risks Related to Aerovate” or “Risks Related to Jade” occur, those events could cause potential benefits of the Merger not to be realized.

Following completion of the Merger, the Combined Company will be susceptible to many of the risks described in the sections herein entitled “Risks Related to Aerovate” and “Risks Related to Jade.” To the extent any of the events in the risks described in those sections occur, the potential benefits of the Merger may not be realized and the results of operations and financial condition of the Combined Company could be adversely affected in a material way. This could cause the market price of the Combined Company’s common stock to decline.

The market price of the Combined Company’s common stock is expected to be volatile, and the market price of the common stock may drop following the Merger.

The market price of the Combined Company’s common stock following the Merger could be subject to significant fluctuations. Some of the factors that may cause the market price of the Combined Company’s common stock to fluctuate include:

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results of clinical trials and preclinical studies of the Combined Company’s product candidates, or those of the Combined Company’s competitors or the Combined Company’s existing or future collaborators;

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failure to meet or exceed financial and development projections the Combined Company may provide to the public;

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failure to meet or exceed the financial and development projections of the investment community;

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if the Combined Company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial or industry analysts;

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announcements of significant acquisitions, strategic collaborations, joint ventures or capital commitments by the Combined Company or its competitors;

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actions taken by regulatory agencies with respect to the Combined Company’s product candidates, clinical studies, manufacturing process or sales and marketing terms;

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disputes or other developments relating to proprietary rights, including patents, litigation matters, and the Combined Company’s ability to obtain patent protection for its technologies;

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additions or departures of key personnel;

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significant lawsuits, including patent or stockholder litigation;

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if securities or industry analysts do not publish research or reports about the Combined Company’s business, or if they issue adverse or misleading opinions regarding its business and stock;

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changes in the market valuations of similar companies;

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general market or macroeconomic conditions or market conditions in the pharmaceutical and biotechnology sectors;

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sales of securities by the Combined Company or its securityholders in the future;

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if the Combined Company fails to raise an adequate amount of capital to fund its operations or continued development of its product candidates;

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trading volume of the Combined Company’s common stock;

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announcements by competitors of new commercial products, clinical progress or lack thereof, significant contracts, commercial relationships or capital commitments;

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adverse publicity relating to precision medicine product candidates, including with respect to other products in such markets;

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the introduction of technological innovations or new therapies that compete with the products and services of the Combined Company; and

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period-to-period fluctuations in the Combined Company’s financial results.

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Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of the Combined Company’s common stock. In addition, a recession, depression or other sustained adverse market event could materially and adversely affect the Combined Company’s business and the value of its common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies. Furthermore, market volatility may lead to increased shareholder activism if the Combined Company experiences a market valuation that activists believe is not reflective of its intrinsic value. Activist campaigns that contest or conflict with the Combined Company’s strategic direction or seek changes in the composition of its board of directors could have an adverse effect on its operating results, financial condition and cash flows.

The Combined Company may incur losses for the foreseeable future and may never achieve profitability.

The Combined Company may never become profitable, even if it is able to complete clinical development for one or more product candidates and eventually commercialize such product candidates. The Combined Company will need to successfully complete significant research, development, testing and regulatory compliance activities that, together with projected general and administrative expenses, is expected to result in substantial increased operating losses for at least the next several years. Even if the Combined Company does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis.

If the Combined Company fails to attract and retain management and other key personnel, it may be unable to continue to successfully develop or commercialize its product candidates or otherwise implement its business plan.

The Combined Company’s ability to compete in the highly competitive pharmaceuticals industry depends on its ability to attract and retain highly qualified managerial, scientific, medical, legal, sales and marketing and other personnel. The Combined Company will be highly dependent on its management and scientific personnel. The loss of the services of any of these individuals could impede, delay, or prevent the successful development of the Combined Company’s product pipeline, completion of its planned clinical trials, commercialization of its product candidates or in-licensing or acquisition of new assets and could impact negatively its ability to implement successfully its business plan. If the Combined Company loses the services of any of these individuals, it might not be able to find suitable replacements on a timely basis or at all, and its business could be harmed as a result. The Combined Company might not be able to attract or retain qualified management and other key personnel in the future due to the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses.

The Combined Company will need to raise additional financing in the future to fund its operations, which may not be available to it on favorable terms or at all.

The Combined Company will require substantial additional funds to conduct the costly and time-consuming clinical efficacy trials necessary to pursue regulatory approval of each potential product candidate and to continue the development of JADE-001, JADE-002, JADE-003 and Jade’s future product candidates. The Combined Company’s future capital requirements will depend upon a number of factors, including: the number and timing of future product candidates in the pipeline; progress with and results from preclinical testing and clinical trials; the ability to manufacture sufficient drug supplies to complete

 

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preclinical and clinical trials; the costs involved in preparing, filing, acquiring, prosecuting, maintaining and enforcing patent and other intellectual property claims; and the time and costs involved in obtaining regulatory approvals and favorable reimbursement or formulary acceptance. Raising additional capital may be costly or difficult to obtain and could, for example, through the sale of common stock or securities convertible or exchangeable into common stock, significantly dilute the Combined Company’s stockholders’ ownership interests or inhibit the Combined Company’s ability to achieve its business objectives. If the Combined Company raises additional funds through public or private equity offerings, the terms of these securities may include liquidation or other preferences that adversely the rights of its common stockholders. In addition, any debt financing may subject the Combined Company to fixed payment obligations and covenants limiting or restricting its ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If the Combined Company raises additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, the Combined Company may have to relinquish certain valuable intellectual property or other rights to its product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to it. Even if the Combined Company were to obtain sufficient funding, there can be no assurance that it will be available on terms acceptable to the Combined Company or its stockholders.

The Combined Company will incur additional costs and increased demands upon management as a result of complying with the laws and regulations affecting public companies.

The Combined Company will incur significant legal, accounting and other expenses as a public company that Jade did not incur as a private company, including costs associated with public company reporting obligations under the Exchange Act. The Combined Company’s management team will consist of the executive officers of Jade prior to the Merger. These executive officers and other personnel will need to devote substantial time to gaining expertise related to public company reporting requirements and compliance with applicable laws and regulations to ensure that the Combined Company complies with all of these requirements. Any changes the Combined Company makes to comply with these obligations may not be sufficient to allow it to satisfy its obligations as a public company on a timely basis, or at all. These reporting requirements, rules and regulations, coupled with the increase in potential litigation exposure associated with being a public company, could also make it more difficult for the Combined Company to attract and retain qualified persons to serve on the board of directors or on board committees or to serve as executive officers, or to obtain certain types of insurance, including directors’ and officers’ insurance, on acceptable terms.

Upon completion of the Merger, failure by the Combined Company to comply with the initial listing standards of Nasdaq will prevent its stock from being listed on Nasdaq.

Upon completion of the Merger, Aerovate, under the new name “Jade Biosciences, Inc.” will be required to meet the initial listing requirements to maintain the listing and continued trading of its shares on Nasdaq. These initial listing requirements are more difficult to achieve than the continued listing requirements. Pursuant to the Merger Agreement, Aerovate agreed to use its commercially reasonable efforts to cause the shares of Aerovate common stock being issued in the Merger (including any common stock issuable upon conversion of the Aerovate Series A Preferred Stock and the exercise of Aerovate pre-funded warrants) to be approved for listing on Nasdaq at or prior to the effective time of the Merger. Based on information currently available to Aerovate, Aerovate anticipates that its stock will be unable to meet the $4.00 minimum bid price initial listing requirement at the Closing unless it effects a reverse stock split. Aerovate’s board of directors intends to effect a reverse stock split of the shares of Aerovate common stock at a ratio of between 20:1 to 120:1. In addition, often a reverse stock split will not result in a trading price for the affected common stock that is proportional to the ratio of the split. Following the Merger, if the Combined Company is unable to satisfy Nasdaq listing requirements, Nasdaq may notify the Combined Company that its shares of common stock will not be listed on Nasdaq.

Upon a potential delisting from Nasdaq, if the common stock of the Combined Company is not then eligible for quotation on another market or exchange, trading of the shares could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event, it is likely that there would be significantly less liquidity in

 

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the trading of the common stock of the Combined Company; decreases in institutional and other investor demand for the shares, coverage by securities analysts, market making activity and information available concerning trading prices and volume; and fewer broker dealers willing to execute trades in the common stock of the Combined Company. Also, it may be difficult for the Combined Company to raise additional capital if the Combined Company’s common stock is not listed on a major exchange. The occurrence of any of these events could result in a further decline in the market price of the common stock of the Combined Company and could have a material adverse effect on the Combined Company.

Once the Combined Company is no longer a smaller reporting company or otherwise no longer qualifies for applicable exemptions, the Combined Company will be subject to additional laws and regulations affecting public companies that will increase the Combined Company’s costs and the demands on management and could harm the Combined Company’s operating results and cash flows.

The Combined Company will be subject to the reporting requirements of the Exchange Act, which requires, among other things, that the Combined Company file with the SEC, annual, quarterly and current reports with respect to the Combined Company’s business and financial condition as well as other disclosure and corporate governance requirements. However, as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Exchange Act, in at least the near term, the Combined Company may take advantage of exemptions from disclosure requirements and reduced disclosure obligations regarding executive compensation in this proxy statement/prospectus and in the Combined Company’s periodic reports and proxy statements. In addition, if the Combined Company is a smaller reporting company with less than $100.0 million in annual revenue, it would not be required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. Once the Combined Company is no longer a smaller reporting company or otherwise no longer qualifies for these exemptions, the Combined Company will be required to comply with these additional legal and regulatory requirements applicable to public companies and will incur significant legal, accounting and other expenses to do so. If the Combined Company is not able to comply with the requirements in a timely manner or at all, the Combined Company’s financial condition or the market price of the Combined Company’s common stock may be harmed. For example, if the Combined Company or its independent auditor identifies deficiencies in the Combined Company’s internal control over financial reporting that are deemed to be material weaknesses the Combined Company could face additional costs to remedy those deficiencies, the market price of the Combined Company’s stock could decline or the Combined Company could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

If the Combined Company fails to maintain proper and effective internal controls, its ability to produce accurate financial statements on a timely basis could be impaired.

Provided the Combined Company continues to be listed on Nasdaq, the Combined Company will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of Nasdaq. The Sarbanes-Oxley Act requires, among other things, that the Combined Company maintain effective disclosure controls and procedures and internal control over financial reporting. The Combined Company must perform system and process evaluation and testing of its internal control over financial reporting to allow management to report on the effectiveness of its internal controls over financial reporting in its Annual Report on Form 10-K filing for that year, as required by Section 404 of the Sarbanes-Oxley Act. As a private company, Jade has not been required to document and test its internal controls over financial reporting nor has its management been required to certify the effectiveness of its internal controls and its auditors have not been required to opine on the effectiveness of its internal control over financial reporting. Following the Merger, the Combined Company will be required to incur substantial professional fees and internal costs to expand its accounting and finance functions and expend significant management efforts. The Combined Company may experience difficulty in meeting these reporting requirements in a timely manner.

The Combined Company may discover weaknesses in its system of internal financial and accounting controls and procedures that could result in a material misstatement of its financial statements. The Combined Company’s internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control

 

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systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

If the Combined Company is not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if it is unable to maintain proper and effective internal controls, the Combined Company may not be able to produce timely and accurate financial statements. If that were to happen, the market price of its common stock could decline and it could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities.

The unaudited pro forma condensed combined financial information for Aerovate and Jade included in this proxy statement/prospectus are preliminary, and the Combined Company’s actual financial position and operations after the Merger may differ materially from the unaudited pro forma financial information included in this proxy statement/prospectus.

The unaudited pro forma financial information for Aerovate and Jade included in this proxy statement/​prospectus are presented for illustrative purposes only and is not necessarily indicative of the Combined Company’s actual financial condition or results of operations of future periods, or the financial condition or results of operations that would have been realized had the entities been combined during the period presented. The Combined Company’s actual results and financial position after the Merger may differ materially and adversely from the unaudited pro forma financial information included in this proxy statement/​prospectus. The Exchange Ratio reflected in this proxy statement/prospectus is preliminary. The final Exchange Ratio could differ from the preliminary Exchange Ratio used to prepare the pro forma adjustments. For more information, please see the section titled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 363 of this proxy statement/prospectus.

Aerovate and Jade do not anticipate that the Combined Company will pay any cash dividends in the foreseeable future other than the Cash Dividend that Aerovate will declare and pay to the holders of record of outstanding shares of Aerovate common stock as of a record date prior to the effective time of the Merger, to be set by the Aerovate board of directors as close as reasonably practicable to (but not later than) the anticipated Closing Date.

Other than the Cash Dividend, the current expectation is that the Combined Company will retain its future earnings, if any, to fund the growth of the Combined Company’s business as opposed to paying dividends. As a result, capital appreciation, if any, of the common stock of the Combined Company will be your sole source of gain, if any, for the foreseeable future.

An active trading market for the Combined Company’s common stock may not develop and its stockholders may not be able to resell their shares of common stock for a profit, if at all.

Prior to the Merger, there had been no public market for shares of Jade capital stock. An active trading market for the Combined Company’s shares of common stock may never develop or be sustained. If an active market for the Combined Company’s common stock does not develop or is not sustained, it may be difficult for the Combined Company’s stockholders to sell their shares at an attractive price or at all.

Future sales of shares by existing stockholders could cause the Combined Company’s stock price to decline.

If existing securityholders of Aerovate and Jade sell, or indicate an intention to sell, substantial amounts of the Combined Company’s common stock in the public market after legal restrictions on resale discussed in this proxy statement/prospectus lapse, the trading price of the common stock of the Combined Company could decline. Based on shares outstanding as of March 10, 2025, after giving effect to the estimated Exchange Ratio and the shares of Jade common stock to be issued in the Jade Pre-Closing Financing and shares expected to be issued upon completion of the Merger and prior to giving effect to the anticipated Aerovate reverse stock split, the Combined Company is expected to have outstanding a total of approximately 1.125 billion shares of common stock immediately following the completion of the Merger (or approximately 1.841 billion shares of common stock after giving effect to the conversion of the Aerovate Series A Preferred Stock and the exercise of the Jade pre-funded warrants to be issued in the Jade Pre-Closing Financing). Approximately 967.5 million shares (or approximately 1.242 billion shares, if the Jade pre-funded warrants are exercised) will be freely tradeable upon completion of the Merger and approximately

 

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59.6 million shares (or approximately 501.3 million, if the Aerovate Series A Preferred Stock is converted) will become available for sale in the public market beginning 180 days after the Closing as a result of the expiration of lock-up agreements between Aerovate on the one hand and certain securityholders of Jade on the other hand (and without giving effect to any restrictions on resale under securities laws). In addition, shares of common stock that are subject to outstanding options of Jade will become eligible for sale in the public market to the extent permitted by the provisions of various vesting agreements and Rules 144 and 701 under the Securities Act. If these shares are sold, the trading price of the Combined Company’s common stock could decline.

After completion of the Merger, the Combined Company’s executive officers, directors and principal stockholders will have the ability to control or significantly influence all matters submitted to the Combined Company’s stockholders for approval.

Upon the completion of the Merger, and giving effect to the issuance of the shares of Jade common stock and the Jade pre-funded warrants prior to the Closing pursuant to the Jade Pre-Closing Financing, it is anticipated that the Combined Company’s executive officers, directors and principal stockholders will, in the aggregate, beneficially own approximately 21.43% of the Combined Company’s outstanding shares of common stock (on a fully-diluted basis), subject to beneficial ownership limitations and certain assumptions, including, but not limited to, Aerovate’s Net Cash as of Closing being $0. Aerovate management currently anticipates Aerovate’s Net Cash as of Closing will be approximately $0, after giving effect to the Cash Dividend, which is expected to be approximately $65.0 million, and the currently estimated ownership percentages reflect this projection. As a result, if these stockholders were to choose to act together, they would be able to control or significantly influence all matters submitted to the Combined Company’s stockholders for approval, as well as the Combined Company’s management and affairs. For example, these stockholders, if they choose to act together, would control or significantly influence the election of directors and approval of any merger, consolidation or sale of all or substantially all of the Combined Company’s assets. This concentration of voting power could delay or prevent an acquisition of the Combined Company on terms that other stockholders may desire.

Conflicts of interest may arise between the Combined Company and Paragon or the Combined Company and Fairmount.

Paragon is a biotechnology company that performs research and development activities to discover and engineer novel antibody candidates for various therapeutic targets. Prior to the Merger and the Jade Pre-Closing Financing, Paragon beneficially owned 9.7% of Jade’s capital stock and following the Merger and the Jade Pre-Closing Financing is expected to beneficially own 4.9% of the Combined Company’s common stock (based on the number of shares of common stock outstanding as of March 10, 2025, assuming no exercise of outstanding options). In addition, Paragon is the licensor of Jade’s lead product candidate JADE-001 and has granted Jade an exclusive option to an exclusive license to JADE-002 and JADE-003. Specifically, Jade and Paragon have entered into the JADE-001 License Agreement and Jade, Paragon and Parade, an entity formed by Paragon to hold equity in Jade and share profits with certain employees of Paragon, have entered into the Paragon Option Agreement, pursuant to which Jade has the option to acquire exclusive rights to certain antibody candidates discovered and developed by Paragon with respect to its JADE-002 and JADE-003 programs. Although Jade will have the right to control the prosecution, defense, maintenance and enforcement of the patents underlying the licenses it may obtain from Paragon after entry into the applicable license agreement and the trigger for transfer of prosecution control is met, Jade relies on Paragon to obtain, maintain and enforce such patents prior to Jade’s exercise of the option and entry into a license agreement. Jade also reimburses Paragon for certain development costs related to Jade’s selected targets and will grant Parade warrants to purchase Jade’s common stock as part of the Paragon Option Agreement. Fairmount, an investment firm that has launched and funded several biotechnology companies, including Jade, beneficially owned 77.5% of Jade’s capital stock prior to the Jade Pre-Closing Financing and the Merger, and following the Jade Pre-Closing Financing and the Merger is expected to beneficially own 9.99% of the Combined Company’s common stock assuming no conversion of the Aerovate Series A Preferred Stock, which is non-voting, into common stock, and 19.99% assuming conversion of the Aerovate Series A Preferred Stock into common stock (in each case, subject to beneficial ownership limitations and based on the number of shares of common stock outstanding as of March 10, 2025, and assuming no exercise of outstanding options). In addition, Fairmount owns approximately 95% of Paragon.

 

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Two of the Combined Company’s non-employee directors, Tomas Kiselak and Chris Cain, are affiliated with Fairmount. The Combined Company’s third non-employee director, Lawrence Klein, is an executive officer at Oruka Therapeutics, Inc., another entity affiliated with Fairmount and Paragon. The remaining members of the Combined Company’s board of directors are not affiliated with Fairmount or Paragon. The Combined Company’s relationship with Paragon, Parade, Fairmount and Jade’s non-employee directors may create, or may create the appearance of, conflicts of interest when the Combined Company is faced with decisions that could have different implications for Paragon or Parade than the decisions have for the Combined Company. For example, such conflicts may arise in connection with the selection of additional targets, the exercise of the remaining options under the Paragon Option Agreement, the negotiation of the terms of any future license agreements, the allocation of resources and expenses, the enforcement or defense of intellectual property rights, the pursuit of strategic partnerships or transactions, or the resolution of any disputes that may arise between the Combined Company and Paragon or Parade. Furthermore, because Paragon and Fairmount have interests in other biotechnology companies that may compete with the Combined Company or pursue similar or complementary product candidates or technologies, they may have an incentive to favor or support such other companies over the Combined Company. These potential conflicts of interest may make it more difficult for the Combined Company to favorably advance the Combined Company’s business interests and may adversely affect the Combined Company’s competitive position, business, financial condition, results of operations and prospects.

If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about the Combined Company, its business or its market, its stock price and trading volume could decline.

The trading market for the Combined Company’s common stock will be influenced by the research and reports that equity research analysts publish about it and its business. Equity research analysts may elect to not provide research coverage of the Combined Company’s common stock after the completion of the Merger, and such lack of research coverage may adversely affect the market price of its common stock. In the event it does have equity research analyst coverage, the Combined Company will not have any control over the analysts or the content and opinions included in their reports. The price of the Combined Company’s common stock could decline if one or more equity research analysts downgrade its stock or issue other unfavorable commentary or research. If one or more equity research analysts ceases coverage of the Combined Company or fails to publish reports on it regularly, demand for its common stock could decrease, which in turn could cause its stock price or trading volume to decline.

The Combined Company will have broad discretion in the use of the cash and cash equivalents of the Combined Company and the proceeds from the Jade Pre-Closing Financing and may invest or spend the proceeds in ways with which you do not agree and in ways that may not increase the value of your investment.

The Combined Company will have broad discretion over the use of the cash and cash equivalents of the Combined Company and the proceeds from the Jade Pre-Closing Financing. You may not agree with the Combined Company’s decisions, and its use of the proceeds may not yield any return on your investment. The Combined Company’s failure to apply these resources effectively could compromise its ability to pursue its growth strategy and the Combined Company might not be able to yield a significant return, if any, on its investment of these net proceeds. You will not have the opportunity to influence its decisions on how to use the Combined Company’s cash resources.

The Combined Company’s ability to use NOL carryforwards and other tax attributes may be limited, including as a result of the Merger.

As discussed above, Aerovate has incurred losses during its history, and the Combined Company does not expect to become profitable in the near future and may never achieve profitability. As of December 31, 2024, Aerovate had federal and state NOL carryforwards of approximately $95.7 million and $64.1 million, respectively. Aerovate had approximately $9.0 million and $2.2 million of federal and state research and development credits, respectively, that may be used to offset future taxable income. Under current law, Aerovate’s U.S. federal NOLs of $95.7 million incurred in tax years beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such net operating loss carryforwards is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to federal law. In addition, under Sections 382 and 383 of the Code, U.S. federal net operating loss carryforwards and other tax

 

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attributes may become subject to an annual limitation in the event of certain cumulative changes in ownership. An “ownership change” pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. The Combined Company’s ability to utilize its net operating loss carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including, as discussed above, in connection with the Merger or other transactions. Similar rules may apply under state tax laws. If the Combined Company earns taxable income, such limitations could result in increased future income tax liability to the Combined Company, and the Combined Company’s future cash flows could be adversely affected.

Unfavorable global economic conditions could adversely affect the Combined Company’s business, financial condition, results of operations or cash flows.

The Combined Company’s results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. A severe or prolonged economic downturn could result in a variety of risks to the Combined Company’s business, including, weakened demand for the Combined Company’s product candidates and the Combined Company’s ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain the Combined Company’s suppliers, possibly resulting in supply disruption, or cause the Combined Company’s customers to delay making payments for its services. Any of the foregoing could harm the Combined Company’s business and the Combined Company cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact its business.

The class structure of the Combined Company’s capital stock may limit your ability to influence corporate matters and may limit your visibility with respect to certain transactions.

The class structure of the Combined Company’s capital stock may limit your ability to influence corporate matters. Holders of the Combined Company’s common stock are entitled to one vote per share, while holders of the Aerovate Series A Preferred Stock are not entitled to any votes. Nonetheless, each share of the Aerovate Series A Preferred Stock may be converted at any time into 1,000 shares of the Combined Company’s common stock at the option of its holder by providing written notice to the Combined Company, subject to the limitations provided for in the Combined Company’s amended and restated certificate of incorporation and to requisite stockholder approval. Consequently, if holders of the Aerovate Series A Preferred Stock exercise their option to make this conversion, this will have the effect of increasing the relative voting power of those prior holders of the Aerovate Series A Preferred Stock, and correspondingly decreasing the voting power of the holders of the Combined Company’s common stock, which may limit your ability to influence corporate matters. Additionally, stockholders who hold, in the aggregate, more than 10% of the Combined Company’s common stock and Aerovate Series A Preferred Stock, but 10% or less of the Combined Company’s common stock, and are not otherwise an insider, may not be required to report changes in their ownership due to transactions in the Aerovate Series A Preferred Stock pursuant to Section 16(a) of the Exchange Act, and may not be subject to the short-swing profit provisions of Section 16(b) of the Exchange Act.

The Combined Company will be an “emerging growth company” and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make the Combined Company’s common stock less attractive to investors.

The Combined Company will be an “emerging growth company” as defined in the JOBS Act. As an emerging growth company, the Combined Company will only be required to provide two years of audited financial statements and management discussion and analysis of financial condition and results of operations disclosure. In addition, the Combined Company will not be required to obtain auditor attestation of reporting on internal control over financial reporting, will have reduced disclosure obligations regarding executive compensation and will not be required to hold non-binding advisory votes on executive compensation. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. These provisions allow an emerging growth company to delay the adoption of these accounting standards until they would

 

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otherwise apply to private companies. The Combined Company cannot predict whether investors will find the Combined Company’s common stock to be less attractive as a result of its reliance on these exemptions. If some investors find the Combined Company’s common stock to be less attractive as a result, there may be a less active trading market for the Combined Company’s common stock and the price of the common stock may be more volatile than the current trading market and price of Aerovate common stock.

The Combined Company will remain an emerging growth company until the earliest of: (i) the end of the fiscal year in which the Combined Company has total annual gross revenue of $1.235 billion; (ii) December 31, 2026; (iii) the date on which the Combined Company issues more than $1.0 billion in non-convertible debt during the preceding three-year period; or (iv) the end of the fiscal year in which the market value of the Combined Company common stock held by non-affiliates exceeds $700 million as of the last business day of the Combined Company’s most recently completed second fiscal quarter.

Further, there is no guarantee that the exemptions available under the JOBS Act will result in significant savings. To the extent that the Combined Company chooses not to use exemptions from various reporting requirements under the JOBS Act, it will incur additional compliance costs, which may impact its financial condition.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus and the documents incorporated by reference into this proxy statement/​prospectus contain forward-looking statements relating to Aerovate, Jade, the Merger and the other proposed transactions contemplated thereby.

These forward-looking statements include express or implied statements relating to Aerovate’s and Jade’s management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. 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 Aerovate, Jade or the proposed transaction will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond Aerovate’s or 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 risk that the conditions to the Closing are not satisfied, including the failure to obtain stockholder approval for the Merger; the risk that the Jade Pre-Closing Financing is not completed in a timely manner or at all; uncertainties as to the timing of the consummation of the transaction and the ability of each of Aerovate and Jade to consummate the transaction, including the Jade Pre-Closing Financing; risks related to Aerovate’s continued listing on the Nasdaq Stock Market until Closing; risks related to Aerovate’s and Jade’s ability to correctly estimate their respective operating expenses and expenses associated with the transaction, as well as uncertainties regarding the impact any delay in the Closing would have on the anticipated cash resources of the Combined Company upon Closing and other events and unanticipated spending and costs that could reduce the Combined Company’s cash resources; the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement; statements regarding the Cash Dividend that Aerovate may pay the Aerovate stockholders in connection with the completion of the Merger; the effect of the announcement or pendency of the Merger on Aerovate’s or Jade’s business relationships, operating results and business generally; costs related to the Merger; the outcome of any legal proceedings that may be instituted against Aerovate, Jade or any of their respective directors or officers related to the Merger Agreement or the transactions contemplated thereby; the ability of Jade to protect its intellectual property rights; competitive responses to the transaction; unexpected costs, charges or expenses resulting from the transaction; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transaction; adverse legislative, regulatory, political and economic developments; the risk of setbacks in Jade’s plans to develop and commercialize product candidates for the treatment of autoimmune diseases; Jade’s ability to maintain the JADE-001 License Agreement and the Paragon Option Agreement and enter into new license and collaboration agreements; delays or challenges in Jade’s ongoing and future preclinical studies and clinical trials and the reporting of data from those studies and trials; the risk that the efficacy, safety and extended half-life of Jade’s product candidates will be disappointing compared with expectations; Jade’s plans relating to the further development of its programs, including additional indications Jade may pursue; the risk that the size of the market opportunity for Jade’s programs, including Jade’s estimates of the number of patients who suffer from the diseases it is targeting may be lower than expected; Jade’s reliance on third parties to conduct additional preclinical studies and clinical trials of its programs and for the manufacture of Jade’s programs for preclinical studies and clinical trials; the risk of negative developments in the cost, timing and results of Jade’s preclinical and clinical development activities and planned clinical trials; Jade’s plans regarding, and its ability to maintain, obtain, and negotiate favorable terms of, any collaboration, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize its programs; the timing of and Jade’s ability to obtain and maintain regulatory approvals for its product candidates, as well as future product candidates. Should one or more of these risks or uncertainties materialize, or should any of Aerovate’s or Jade’s assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. There may be additional risks that Aerovate considers immaterial or which are unknown. It is not possible to predict or identify all such risks. Aerovate’s and Jade’s forward-looking statements only speak as of the date they are made, and Aerovate and

 

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Jade do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

For a discussion of the factors that may cause Aerovate, Jade or the Combined Company’s actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied in such forward-looking statements, or for a discussion of risk associated with the ability of Aerovate and Jade to complete the Merger and the effect of the Merger on the business of Aerovate, Jade and the Combined Company, please see the section titled “Risk Factors” beginning on page 27 of this proxy statement/prospectus. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in reports filed with the SEC by Aerovate and incorporated by reference herein. Please see the section titled “Where You Can Find More Information” beginning on page 403 of this proxy statement/prospectus. There can be no assurance that the Merger will be completed, or if it is completed, that it will be completed within the anticipated time period or that the expected benefits of the Merger will be realized.

If any of these risks or uncertainties materialize or any of these assumptions prove incorrect, the results of Aerovate, Jade or the Combined Company could differ materially from the forward-looking statements. All forward-looking statements in this proxy statement/prospectus are current only as of the date on which the statements were made. Aerovate and Jade do not undertake any obligation to (and expressly disclaim any such obligation to) publicly update any forward-looking statement to reflect events or circumstances after the date on which any statement is made or to reflect the occurrence of unanticipated events.

 

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THE SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF AEROVATE STOCKHOLDERS

Date, Time and Place

The Aerovate Special Meeting will be held on April 16, 2025, commencing at 9:00 a.m., Eastern Time, unless postponed or adjourned to a later date. The Aerovate Special Meeting will be held at the offices of Goodwin Procter LLP, 100 Northern Avenue, Boston, Massachusetts 02210. You will be able to attend and participate in the Aerovate Special Meeting in person where you will be able to ask questions and vote. Aerovate is sending this proxy statement/prospectus to its stockholders in connection with the solicitation of proxies by Aerovate’s board of directors for use at the Aerovate Special Meeting and any adjournments or postponements of the Aerovate Special Meeting. This proxy statement/prospectus is first being furnished to Aerovate stockholders on or about March 24, 2025.

Purposes of the Aerovate Special Meeting

The purposes of the Aerovate Special Meeting are:

1.

To approve the issuance of shares of common stock of Aerovate (including the shares of Aerovate common stock issuable upon conversion of the Aerovate Series A Preferred Stock and exercise of the Aerovate pre-funded warrants) to stockholders of Jade pursuant to the terms of the Agreement and Plan of Merger among Aerovate, Jade, Merger Sub I and Merger Sub II, dated as of October 30, 2024, a copy of which is attached as Annex A to the accompanying proxy statement/​prospectus, which will (i) represent more than 20% of the shares of Aerovate common stock outstanding immediately prior to the Merger under Nasdaq Listing Rule 5635(a), and (ii) result in a change of control under Nasdaq Listing Rule 5635(b) (the “Nasdaq Stock Issuance Proposal” or “Proposal No. 1”);

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2.

To approve an amendment to the amended and restated certificate of incorporation of Aerovate to effect a reverse stock split of Aerovate’s issued and outstanding common stock at a ratio determined by the Aerovate board of directors and agreed to by Jade, of one new share of Aerovate common stock for every 20 to 120 shares (or any number in between) of outstanding Aerovate common stock, in the form attached as Annex B; to the accompanying proxy statement/prospectus (the “Reverse Stock Split Proposal” or “Proposal No. 2”);

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3.

Approve an amendment to the amended and restated certificate of incorporation of Aerovate to increase the number of shares of Aerovate common stock that Aerovate is authorized to issue from 150,000,000 to 300,000,000, in the form attached as Annex C (the “Authorized Share Increase Proposal” or “Proposal No. 3”);

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4.

Approve the redomestication of Aerovate from the State of Delaware to the State of Nevada by conversion (the “Redomestication Proposal” or “Proposal No. 4”);

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5.

Approve the Jade Biosciences, Inc. 2025 Stock Incentive Plan (the “Stock Plan Proposal” or “Proposal No. 5”);

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6.

Approve the Jade Biosciences, Inc. 2025 Employee Stock Purchase Plan (the “ESPP Proposal” or “Proposal No. 6”);

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7.

Elect the three Class I directors, Mark Iwicki, Timothy P. Noyes, and Donald J. Santel, to Aerovate’s board of directors and to hold office until Aerovate’s 2028 annual meeting of stockholders and until their successor has been duly elected and qualified, or until their earlier death, resignation or removal; provided that if the Merger is consummated, the approval of Proposal No. 7 will only have an effect until the completion of the Merger because the composition of Aerovate’s board of directors will be reconstituted upon completion of the Merger, in accordance with the Merger Agreement (the “Director Election Proposal” or “Proposal No. 7”);

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Ratify the appointment of KPMG LLP as Aerovate’s independent registered public accounting firm for fiscal year ending December 31, 2025; provided that PricewaterhouseCoopers LLP is

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expected to be appointed for that fiscal year if the Merger is completed (the “Auditor Ratification Proposal” or “Proposal No. 8”);

9.

To approve an adjournment of the Aerovate Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2 and 3 (the “Adjournment Proposal” or “Proposal No. 9”); and

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To transact such other business as may properly come before the stockholders at the Aerovate Special Meeting or any adjournment or postponement thereof.

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Each of Proposal Nos. 1, 2 and 3 is a condition to completion of the Merger. The issuance of Aerovate common stock in connection with the Merger, the amendment to the amended and restated certificate of incorporation of Aerovate to effect a reverse stock split of Aerovate’s issued and outstanding common stock and the amendment to the amended and restated certificate of incorporation to increase the number of shares of Aerovate common stock that Aerovate is authorized to issue will not take place unless approved by the requisite Aerovate stockholders and the Merger is consummated. Therefore, the Merger cannot be consummated without the approval of Proposal Nos. 1, 2 and 3.

Recommendation of Aerovate’s Board of Directors

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Aerovate’s board of directors has determined and believes that the issuance of shares of Aerovate’s common stock, including shares of common stock issuable upon conversion of Aerovate Series A Preferred Stock and the exercise of Aerovate pre-funded warrants, pursuant to the Merger Agreement is fair to, in the best interests of, and advisable to, Aerovate and its stockholders and has approved such issuance. Aerovate’s board of directors unanimously recommends that Aerovate stockholders vote “FOR” Proposal No. 1 to approve the issuance of shares of Aerovate common stock pursuant to the Merger Agreement and the change of control resulting from the Merger.

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Aerovate’s board of directors has determined and believes that it is fair to, in the best interests of, and advisable to, Aerovate and its stockholders to approve the amendment to the amended and restated certificate of incorporation of Aerovate to effect the reverse stock split, as described in this proxy statement/prospectus. Aerovate’s board of directors unanimously recommends that Aerovate stockholders vote “FOR” Proposal No. 2 to approve the reverse stock split.

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Aerovate’s board of directors has determined and believes that it is fair to, in the best interests of, and advisable to, Aerovate and its stockholders to approve the amendment to the amended and restated certificate of incorporation of Aerovate to increase the number of shares of Aerovate common stock that Aerovate is authorized to issue from 150,000,000 to 300,000,000, as described in this proxy statement/prospectus. Aerovate’s board of directors unanimously recommends that Aerovate stockholders vote “FOR” Proposal No. 3 to approve the increase of authorized shares of Aerovate common stock.

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Aerovate’s board of directors has determined and believes that it is fair to, in the best interests of, and advisable to, Aerovate and its stockholders to approve the redomestication of Aerovate from the State of Delaware to the State of Nevada by conversion (the “Nevada Redomestication”), as described in this proxy statement/prospectus. Aerovate’s board of directors unanimously recommends that Aerovate stockholders vote “FOR” Proposal No. 4 to approve the Nevada Redomestication.

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Aerovate’s board of directors has determined and believes that it is fair to, in the best interests of, and advisable to, Aerovate and its stockholders to approve the Jade Biosciences, Inc. 2025 Stock Incentive Plan, as described in this proxy statement/prospectus. Aerovate’s board of directors unanimously recommends that Aerovate stockholders vote “FOR” Proposal No. 5 to approve the Jade Biosciences, Inc. 2025 Stock Incentive Plan.

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Aerovate’s board of directors has determined and believes that it is fair to, in the best interests of, and advisable to, Aerovate and its stockholders to approve the Jade Biosciences, Inc. 2025 Employee Stock Purchase Plan, as described in this proxy statement/prospectus. Aerovate’s board of directors unanimously recommends that Aerovate stockholders vote “FOR” Proposal No. 6 to approve the Jade Biosciences, Inc. 2025 Employee Stock Purchase Plan.

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Aerovate’s board of directors has determined and believes that it is fair to, in the best interests of, and advisable to, Aerovate and its stockholders to elect each of the director nominees named in the Director Election Proposal, to serve on the Aerovate board of directors in the class of directors with terms expiring at Aerovate’s 2028 annual meeting of stockholders; provided that if the Merger is consummated, the approval of Proposal No. 7 will only have an effect until the completion of the Merger because the composition of Aerovate’s board of directors will be reconstituted upon completion of the Merger, in accordance with the Merger Agreement. Aerovate’s board of directors unanimously recommends that Aerovate stockholders vote “FOR” each of the director nominees named in Proposal No. 7 to approve the election of the directors named therein.

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Aerovate’s board of directors has determined and believes that it is fair to, in the best interests of, and advisable to, Aerovate and its stockholders ratify the appointment of KPMG LLP as Aerovate’s independent registered public accounting firm for the fiscal year ending December 31, 2025; provided that PricewaterhouseCoopers LLP is expected to be appointed for that fiscal year if the Merger is completed. The Aerovate board of directors unanimously recommends that Aerovate stockholders vote “FOR” Proposal No. 8 to ratify the selection of KPMG LLP as Aerovate’s independent registered public accounting firm.

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Aerovate’s board of directors has determined and believes that adjourning the Aerovate Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2 and 3 is fair to, in the best interests of, and advisable to, Aerovate and its stockholders and has approved and adopted the proposal. Aerovate’s board of directors unanimously recommends that Aerovate stockholders vote “FOR” Proposal No. 9 to adjourn the Aerovate Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2 and 3.

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Record Date and Voting Power

Only holders of record of Aerovate common stock at the close of business on the record date March 14, 2025, are entitled to notice of, and to vote at, the Aerovate Special Meeting. At the close of business on the record date, there was one holder of record of Aerovate common stock and there were 28,985,019 shares of Aerovate common stock issued and outstanding. Each share of Aerovate common stock entitles the holder thereof to one vote on each matter submitted for stockholder approval.

Voting and Revocation of Proxies

This proxy statement/prospectus is solicited on behalf of Aerovate’s board of directors for use at the Aerovate Special Meeting.

If, as of the record date referred to above, your shares were registered directly in your name with the transfer agent for Aerovate common stock, Computershare Trust Company, N.A., then you are a stockholder of record. Whether or not you plan to attend the Aerovate Special Meeting in person, Aerovate urges you to fill out and return the proxy card or vote by proxy over the telephone or on the internet as instructed below to ensure your vote is counted, the form of which is attached hereto as Annex F.

The procedures for voting are as follows:

If you are a stockholder of record, you may vote at the Aerovate Special Meeting. Alternatively, you may vote by proxy by using the accompanying proxy card, over the internet or by telephone. Whether or not you plan to attend the Aerovate Special Meeting, Aerovate encourages you to vote by proxy to ensure your vote is counted. Even if you have submitted a proxy before the Aerovate Special Meeting, you may still attend the Aerovate Special Meeting and vote. In such case, your previously submitted proxy will be disregarded.

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To vote at the Aerovate Special Meeting, attend the Aerovate Special Meeting and vote in person.

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To vote using the proxy card, simply complete, sign and date the accompanying proxy card and return it promptly in the envelope provided. If you return your signed proxy card before the Aerovate Special Meeting, Aerovate will vote your shares in accordance with the proxy card.

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To vote by proxy over the internet, follow the instructions provided on the proxy card.

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To vote by telephone, you may vote by proxy by calling the toll-free number found on the proxy card.

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If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received voting instructions with these proxy materials from that organization rather than from Aerovate. Simply follow the voting instructions provided to ensure that your vote is counted. You may vote by telephone or over the Internet as instructed by your broker, bank or other agent. To vote in person at the Aerovate Special Meeting, you must contact your broker, bank or other agent and obtain a valid legal proxy in order to attend, participate in and vote at the Aerovate Special Meeting. Follow the voting instructions from your broker, bank or other agent, or contact your broker, bank or other agent for instructions.

Aerovate provides internet proxy voting to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers and telephone companies.

If you hold shares beneficially in street name and you do not instruct your broker, bank or other agent how to vote your shares, your broker, bank or other agent will only be able to vote your shares with respect to proposals considered to be “routine.” Your broker, bank or other agent is not entitled to vote your shares with respect to “non-routine” proposals, resulting in a “broker non-vote” with respect to such proposals. Accordingly, if you hold your shares beneficially in street name, please be sure to instruct your broker, bank or other agent how to vote to ensure that your vote is counted on each of the proposals, following the procedures provided by your broker, bank or other agent.

All properly executed proxies that are not revoked will be voted at the Aerovate Special Meeting and at any adjournments or postponements of the Aerovate Special Meeting in accordance with the instructions contained in the proxy. If a holder of Aerovate common stock executes and returns a proxy and does not specify otherwise, the shares represented by that proxy will be voted “FOR” all of the proposals in accordance with the recommendation of Aerovate’s board of directors.

If you are a stockholder of record of Aerovate and you have not executed a support agreement, you may change your vote at any time before your proxy is voted at the Aerovate Special Meeting in any one of the following ways:

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You may submit another properly completed proxy with a later date by mail or via the internet.

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You can provide your proxy instructions via telephone at a later date.

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You may send an instrument in writing revoking the proxy or another duly executed proxy bearing a later date to Aerovate’s corporate secretary. Any written notice of revocation or subsequent proxy card must be received by Aerovate’s corporate secretary prior to the taking of the vote at the Aerovate Special Meeting. Such written notice of revocation or subsequent proxy card should be sent to Aerovate’s principal executive offices at Aerovate Therapeutics, Inc., 930 Winter Street, Suite M-500, Waltham, Massachusetts 02451, Attention: Corporate Secretary.

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You may attend the Aerovate Special Meeting and vote in person, although attendance at the Aerovate Special Meeting will not, by itself, revoke and/or change your proxy.

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If your shares are held by your broker, bank or other agent, you should follow the instructions provided by them.

Required Vote

The presence at the Aerovate Special Meeting of the holders of a majority of the shares of Aerovate common stock outstanding and entitled to vote at the Aerovate Special Meeting is necessary to constitute a quorum at the meeting. Abstentions and broker non-votes will be counted towards a quorum. The affirmative vote of a majority of votes cast at the Aerovate Special Meeting, assuming a quorum is present, is required for approval of Proposal Nos. 1, 5, 6, 8 and 9. The affirmative vote of the holders of a majority

 

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of the outstanding shares of Aerovate capital stock entitled to vote thereon is required for approval of Proposal Nos. 2, 3 and 4. With respect to Proposal No. 7, directors are elected by a plurality of the votes properly cast at the Aerovate Special Meeting, and the nominees for director receiving the highest number of affirmative votes properly cast will be elected. Each of Proposal Nos. 1, 2 and 3 is a condition to the completion of the Merger. Therefore, the Merger cannot be consummated without the approval of Proposal Nos. 1, 2 and 3. The issuance of Aerovate common stock in connection with the Merger and the change of control resulting from the Merger, the amendment to the amended and restated certificate of incorporation of Aerovate to effect a reverse stock split of Aerovate’s issued and outstanding common stock and the amendment to the amended and restated certificate of incorporation of Aerovate to increase the number of shares of Aerovate common stock that Aerovate is authorized to issue will not take place unless approved by the requisite Aerovate stockholders and the Merger is consummated.

Votes will be counted by the inspector of election appointed for the meeting, who will separately count “FOR,” “AGAINST” and “WITHHOLD” votes, abstentions and broker non-votes. Abstentions and broker non-votes, if any, will also be treated as shares present for the purpose of determining the presence of a quorum for the transaction of business at the special meeting. Votes withheld, abstentions and broker non-votes, if any, will have no effect on Proposal Nos. 1, 5, 6, 7, 8 and 9 and will have the effect of a vote “AGAINST” Proposal Nos. 2, 3 and 4.

As of March 10, 2025, the Aerovate stockholders that are party to a support agreement, including the directors and certain executive officers of Aerovate, owned an aggregate number of shares of Aerovate common stock representing approximately 37.7% of the outstanding shares of Aerovate common stock. Each stockholder that entered into a support agreement, including the directors and certain executive officers of Aerovate, has agreed to vote all shares of Aerovate common stock owned by him or her as of the record date in favor of Proposal Nos. 1 – 7 and against any competing “Acquisition Proposal” ​(as defined in the Merger Agreement).

Solicitation of Proxies

In addition to solicitation by mail, the directors, officers, employees and agents of Aerovate may solicit proxies from Aerovate stockholders by personal interview, telephone, email, fax or otherwise. Aerovate and Jade will share equally the costs of printing and filing this proxy statement/prospectus and proxy card. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of Aerovate common stock for the forwarding of solicitation materials to the beneficial owners of Aerovate common stock. Aerovate will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out of pocket expenses they incur in connection with the forwarding of solicitation materials. Aerovate has retained Innisfree M&A. Jade will pay the fees of Innisfree M&A, which Aerovate and Jade expect to be approximately $20,000, plus reimbursement for certain out-of-pocket expenses. Jade has agreed to indemnify Innisfree M&A and related parties against certain liabilities and expenses arising out of its services in connection with the special meeting.

As of the date of this proxy statement/prospectus, Aerovate’s board of directors does not know of any business to be presented at the Aerovate Special Meeting other than as set forth in the notice accompanying this proxy statement/prospectus. If any other matters should properly come before the Aerovate Special Meeting, it is intended that the shares represented by proxies will be voted with respect to such matters in accordance with the judgment of the persons voting the proxies.

 

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THE MERGER

This section and the section titled “The Merger Agreement” beginning on page 155 of this proxy statement/​prospectus describe the material aspects of the Merger and the Merger Agreement. While Aerovate and Jade believe that this description covers the material terms of the Merger and the Merger Agreement, it may not contain all of the information that is important to you. You should read carefully this entire proxy statement/​prospectus for a more complete understanding of the Merger and the Merger Agreement and the other documents to which you are referred in this proxy statement/prospectus. Please see the section titled “Where You Can Find More Information” beginning on page 403 of this proxy statement/prospectus.

Background of the Transaction

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement. The following chronology does not purport to catalogue every conversation among the Aerovate board of directors or committees thereof or the representatives of Aerovate and other parties.

Prior to June 2024, Aerovate was a clinical-stage biopharmaceutical company focused on developing drugs that meaningfully improve the lives of patients with rare cardiopulmonary disease. Aerovate’s initial focus was on advancing AV-101, its proprietary dry powder inhaled formulation of the drug imatinib for the treatment of patients with PAH. Aerovate’s lead clinical trial was its Inhaled iMatinib Pulmonary Arterial Hypertension Clinical Trial (“IMPAHCT”) trial, which was a randomized, double-blind, placebo-controlled, multi-national Phase 2b / Phase 3 trial of AV-101 in adults with pulmonary arterial hypertension. During this period, and in furtherance of this strategy, the Aerovate board of directors and Aerovate’s management would, from time to time, review and discuss Aerovate’s business, financial condition, operations and strategic priorities and consider various strategic business initiatives intended to strengthen Aerovate’s business and enhance stockholder value. In particular, these discussions included the exploration of strategic relationships, collaborations and partnering opportunities with respect to the advancement and development of AV-101. Aerovate’s management provided periodic updates regarding these discussions, including the discussions described below, to the Aerovate board of directors.

On June 17, 2024, following a decision by the Aerovate board of directors, Aerovate announced that the Phase 2b portion of IMPAHCT did not meet its primary endpoint for improvement in PVR compared to placebo for any of the studied doses or show meaningful improvements in the secondary endpoint of change in six minute walk distance. Aerovate also announced that, in light of the Phase 2b data and in agreement with the independent study advisor committee, it was instituting a voluntary halt to enrollment and shutting down the Phase 3 and long-term extension trials.

On June 21, 2024, the Aerovate board of directors held a meeting at which members of Aerovate’s management and representatives of Goodwin Procter LLP (“Goodwin”), Aerovate’s outside legal counsel, were present. The Aerovate board of directors and management discussed, among other things, the factors contributing to the voluntary halting of enrollment and the closing down of the Phase 3 and long-term extension trials and the strategic, financial and operational challenges associated with these decisions. The Aerovate board of directors and management also discussed potential research alternatives to the Phase 3 trial and the amount of time it would take before Aerovate could generate sufficient data with AV-101 to raise additional capital, Aerovate’s cash runway and potential financing needs and the likelihood of success in a clinical trial with AV-101 given the results of the Phase 2b trial. Following discussion, the Aerovate board of directors directed Aerovate’s management to review Aerovate’s business, including the status of its programs, resources and capabilities and prepare a recommendation for the Aerovate board of directors to consider. The Aerovate board of directors determined that, in connection with these efforts, Aerovate’s management should commence a process to evaluate business development, strategic or other transactions regarding AV-101, related assets and intellectual property (including potential partnerships, licensing transactions and asset sales) and authorized Aerovate’s management to identify and engage in discussions with various third parties. The Aerovate board of directors and management also determined that a significant reduction in force would be required as a result of the Phase 2b clinical data and the decision to shut down the Phase 3 and long-term extension trials. Following discussion, the Aerovate board of directors authorized Aerovate’s management to proceed with implementing various actions to preserve cash available, including by implementing a reduction in force intended to reduce Aerovate’s operational cash burn in an effort to maximize its strategic optionality and enhance stockholder value, on such timeline as Aerovate’s

 

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management deemed to be in Aerovate’s best interest. Following further discussion, the Aerovate board of directors determined that Aerovate should publicly announce the results of its business review and that Aerovate was reviewing strategic alternatives.

Also at the Aerovate board of directors meeting held on June 21, 2024, the Aerovate board of directors established a Strategic Transaction Committee of the Aerovate board of directors (the “Transaction Committee”), for convenience (and not because of any actual or perceived conflicts of interests), in order to assist the Aerovate board of directors, as needed, in exploring strategic alternatives, including without limitation, a sale or other divestiture, including a spin-out of all, substantially all or a material portion of Aerovate’s business or assets, a “reverse merger,” “merger of equals” or similar transaction, or a sale of control of Aerovate. The initial members of the Transaction Committee were the following independent directors, who were selected because they have significant experience with merger and acquisition transactions and/or clinical development: Allison Dorval, Joshua Resnick, M.D., David Grayzel, M.D. and Habib Dable. The Aerovate board of directors delegated authority to the Transaction Committee to, among other things: direct the process for the review and evaluation of any potential strategic transaction; provide guidance regarding a proposed strategic transaction to (a) consider and evaluate all proposals that might be received by Aerovate in connection with a possible sale or other business transaction or series of transactions involving all or substantially all of Aerovate’s equity or assets on a consolidated basis, through any form of transaction, including, without limitation, merger, stock purchase, asset purchase, recapitalization, reorganization, going-private transaction, consolidation, amalgamation, spin-out of assets, licensing, collaboration of all or certain assets, dividends or distribution of assets or rights to assets or future payments, debt or equity financing, liquidation, dissolution or other transaction, (b) participate in and direct the negotiation of the material terms and conditions of any such transaction, (c) consider any alternatives to any such transaction, including without limitation, Aerovate continuing to operate as an independent company, and (d) recommend to the Aerovate board of directors the advisability of entering into a definitive agreement (and any ancillary agreements relating thereto) with respect to any such transaction, or the advisability of pursuing any other alternative, in each case subject to applicable law. In connection with the exploration of strategic alternatives, Aerovate’s management, at the direction of the Transaction Committee, initiated a process to select a financial advisor to assist management in its review of strategic alternatives, including identifying counterparties for a possible strategic transaction.

On June 24 and 26, 2024, the Transaction Committee held meetings at which members of Aerovate’s board of directors, Aerovate management and representatives of Goodwin were present. During these meetings, representatives of Wedbush Securities Inc. (“Wedbush”) and one other financial advisory firm presented to the Transaction Committee, which presentations included reviews of their respective strategic and financial advisory expertise and experience, as well as their thoughts on potential business combination timelines, related activities, potential transaction structures and relevant precedents. The discussions covered a variety of topics, including the potential relevance of Aerovate’s net cash position, market conditions for certain business combinations, the potential criteria to be considered in selecting a potential business combination partner, certain considerations regarding asset sales in connection with or in advance of such transactions, and the role of the Transaction Committee in such process.

On June 28, 2024, the Aerovate board of directors held a meeting at which members of Aerovate’s management and representatives of Goodwin were present. At this meeting, the Aerovate board of directors considered various strategic alternatives and, with management and Goodwin, weighed the potential value that Aerovate could deliver to stockholders in the event of a possible reverse merger compared to a liquidation scenario. Following such discussion, the Aerovate board of directors determined that management should focus its efforts on pursuing a possible reverse merger and, as a parallel contingency plan, a liquidation or dissolution of Aerovate. A reverse merger, which is a transaction in which a wholly owned Aerovate subsidiary would merge with and into a privately held company with Aerovate surviving as the parent company and the privately held company continuing as a wholly owned Aerovate subsidiary, was considered to be the most desirable transaction structure to enhance stockholder value, given Aerovate’s cash position, its status as a public company, similar transactions recently completed with attractive merger partners and the termination of Aerovate’s clinical development program. The Aerovate board of directors considered the value that Aerovate’s public listing and access to public capital markets and cash might provide to a high-quality private company seeking to advance its own clinical programs or business by becoming a public company. Further, a reverse merger could provide Aerovate stockholders with a stake in a combined

 

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organization possessing both promising clinical or commercial prospects and the means to pursue them, and provide an opportunity for long-term value creation for Aerovate stockholders. Following further discussion, the Aerovate board of directors determined that Aerovate should publicly announce the results of its business review and that Aerovate was reviewing strategic alternatives. Aerovate’s management then discussed the formal engagement of Wedbush, including the terms of a proposed engagement letter between Aerovate and Wedbush, and noted Wedbush’s qualifications, professional reputation, experience and expertise as a transaction advisor for reverse mergers in the biopharmaceutical industry. The Aerovate board of directors also took into account Wedbush’s status as an internationally recognized investment banking firm that has substantial experience in transactions similar to those that the Aerovate board of directors would potentially be considering. The Aerovate board of directors reviewed and discussed the terms of the engagement letter and subsequently approved the entry into an engagement letter, dated July 4, 2024, between Aerovate and Wedbush. The engagement letter provided for a 3.0% success fee based on the valuation attributed to Aerovate in the definitive documentation related to a strategic transaction, with a minimum fee of $1,750,000.

Also on June 28, 2024, Aerovate publicly announced the implementation of its reduction in workforce plan to terminate nearly all of its workforce in the following months, beginning with notifying 39 individuals, or 78% of the Company’s workforce, of their termination.

On July 8, 2024, Aerovate announced that it would conduct a comprehensive review of strategic alternatives focused on maximizing shareholder value. Aerovate announced that, as part of the review process, Aerovate had engaged Wedbush as the company’s exclusive strategic financial advisor to assist in the process of exploring strategic alternatives, which may include but are not limited to, an acquisition, merger, reverse merger, business combination, liquidation or other transaction.

Following the July 8, 2024 announcement through October 9, 2024, as authorized by the Aerovate board of directors and the Transaction Committee, representatives of Wedbush and Aerovate’s management contacted, or were contacted by, 245 potential counterparties regarding their interest in a potential strategic transaction with Aerovate. The companies were primarily privately-held biotechnology companies that were identified, or identified themselves, based on their need to obtain financing and/or their interest in becoming a public company with access to the public capital markets.

Of these 245 companies (including Jade), representatives of Wedbush distributed 109 process letters requesting that such potential counterparties submit non-binding indications of interest with respect to a strategic transaction with Aerovate. At the direction of the Aerovate board of directors and the Transaction Committee, members of Aerovate’s management, members of the Transaction Committee, and Aerovate’s financial and legal advisors, conducted due diligence on multiple potential counterparties, focusing on strategic, scientific and clinical diligence, as well as competitive and other business factors. Of the 109 process letters sent by Wedbush to potential counterparties, 56 counterparties submitted non-binding indications of interest, and 18 of these counterparties (including Party A, Party B, Party C, Party D, Party E, Party F and Party G) executed customary mutual confidentiality agreements with Aerovate (each of which included customary standstill provisions that automatically terminated upon Aerovate’s announcement of the transaction with Jade), and 11 of these companies held management presentations and due diligence sessions for Aerovate management, representatives of Wedbush, representatives of Goodwin, members of the Aerovate board of directors and technical expert representatives from certain of the investment funds affiliated with certain members of the Aerovate board of directors.

On July 29, 2024, the Aerovate board of directors held a meeting at which members of Aerovate’s management, representatives of Wedbush and Goodwin were present. Representatives of Wedbush reviewed the status of outreach to potential counterparties and indications of interest received thus far. The Aerovate board of directors and Aerovate’s management, together with input from Wedbush, discussed and agreed upon the proposed criteria that, along with other factors, would be used as a guide to evaluate any potential indications of interest, consisting of the following factors: the stage of development of the counterparty’s product candidates and the likelihood of success in clinical trials; the therapeutic focus of the counterparty’s product candidates; the quality of management, board and investor base; potential value inflection milestones in the relative near term, including within the anticipated cash runway period following the closing of a transaction; readiness to be a U.S. publicly traded company, including the availability of audited financial statements; commercial opportunity, including competitive differentiation, pricing,

 

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reimbursement and potential market share; intellectual property position; insider support for capitalizing the Combined Company in a concurrent financing; the Combined Company’s financing needs following the completion of a transaction with Aerovate; and the proposed relative valuations and pro forma ownership splits of the Combined Company’s equity (collectively, the “Criteria”). The Aerovate board of directors and members of Aerovate’s management, together with input from Wedbush, also discussed the status of their review of the indications of interest, both when compared to the Criteria and in light of information learned about the counterparties not included in the Criteria. After reviewing all of the submitted indications of interest, the Transaction Committee selected eight indications of interest to prioritize, including:

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The indication of interest from “Party A”, a privately held biotechnology company developing therapies to treat autoimmune and oncology diseases, which was received on July 19, 2024, and which proposed a reverse merger transaction with an ascribed valuation of Aerovate of $80 million (assuming closing net cash of $70 million) and an ascribed valuation of Party A of $200 million, with an implied ownership interest in the Combined Company of approximately 24% for existing Aerovate stockholders. Party A’s proposal also contemplated a concurrent financing of $50 million, with participation from current Party A investors.

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•

The indication of interest from “Party B”, a privately held biotechnology company developing therapies to treat cardiovascular diseases, which was received on July 22, 2024, and which proposed a reverse merger transaction with an ascribed valuation of Aerovate of $80 million (assuming closing net cash of $70 million) and an ascribed valuation of Party B of $122.5 million, with an implied ownership interest in the Combined Company of approximately 30% for existing Aerovate stockholders. Party B’s proposal also contemplated a concurrent financing of $65 million, with participation from current Party B investors and new investors.

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•

The indication of interest from “Party C”, a privately held biotechnology company developing therapies to treat fibrotic diseases, which was received on July 23, 2024, and which proposed a reverse merger transaction with an ascribed valuation of Aerovate of $80 million (assuming closing net cash of $70 million) and an ascribed valuation of Party C of $163 million, with an implied ownership interest in the Combined Company of approximately 27% for existing Aerovate stockholders. Party C’s proposal also contemplated a concurrent financing of $50 million from current Party C investors.

​

•

The indication of interest from “Party D”, a privately held biotechnology company developing medicines to treat oncology diseases, which was received on July 23, 2024, and which proposed a reverse merger transaction with an ascribed valuation of Aerovate of $80 million (assuming closing net cash of $70 million) and an ascribed valuation of Party D of $190 million, with an implied ownership interest in the Combined Company of approximately 19% for existing Aerovate stockholders. Party D’s proposal also contemplated a concurrent financing of $150 million from current Party D investors and new investors.

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•

The indication of interest from “Party E”, a privately held biotechnology company developing therapies to treat inflammatory and autoimmune diseases, which was received on July 23, 2024, and which proposed a reverse merger transaction with an ascribed valuation of Aerovate of $82 million (assuming closing net cash of $70 million) and an ascribed valuation of Party E of $230 million, with an implied ownership interest in the Combined Company of approximately 23% for existing Aerovate stockholders. Party E’s proposal also contemplated a concurrent financing of $40 million from current Party E investors and new investors.

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•

The indication of interest from “Party F”, a privately held biotechnology company developing therapies to treat autoimmune and oncology diseases, which was received on July 23, 2024, and which proposed a reverse merger transaction with an ascribed valuation of Aerovate of $85 million (assuming closing net cash of $70 million) and an ascribed valuation of Party F of $525 million, with an implied ownership interest in the Combined Company of approximately 13% for existing Aerovate stockholders. Party F’s proposal also contemplated a concurrent financing of $70 million from current Party F investors.

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•

The indication of interest from “Party G”, a privately held biotechnology company developing medicines for oncology diseases, which was received on July 24, 2024, and which proposed a reverse merger transaction with an ascribed valuation of Aerovate of $85 million (assuming closing net cash of

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$70 million) and an ascribed valuation of Party G of $590 million, with an implied ownership interest in the Combined Company of approximately 11% for existing Aerovate stockholders. Party G’s proposal also contemplated a concurrent financing of $100 million from current Party G investors and new investors.

•

The indication of interest from “Party H”, a privately held biotechnology company developing therapies to treat autoimmune and inflammatory diseases, which was received on July 24, 2024, and which proposed a reverse merger transaction with an ascribed valuation of Aerovate of $80 million (assuming closing net cash of $70 million) and an ascribed valuation of Party H of $160 million, with an implied ownership interest in the Combined Company of approximately 24% for existing Aerovate stockholders. Party H’s proposal also contemplated a concurrent financing of $100 million from current Party H investors and new investors.

​

Of these eight indications of interest the Transaction Committee selected to prioritize, the Transaction Committee further selected four potential counterparties — Party A, Party C, Party F and Party G — to invite to make corporate presentations based on the likelihood of such counterparties’ ability to meet the most number of the Criteria.

Beginning on July 29, 2024, at the direction of the Aerovate board of directors, representatives of Wedbush requested each of the four counterparties identified by the Transaction Committee to make corporate presentations to the Aerovate management, representatives of Wedbush, representatives of Goodwin, members of the Aerovate board of directors and technical expert representatives from certain of the investment funds affiliated with certain members of the Aerovate board of directors, and to otherwise be available for due diligence sessions with Wedbush, the Transaction Committee, Aerovate’s management and its legal advisors.

From July 30, 2024 through August 1, 2024, each of the four potential counterparties identified by the Aerovate board of directors (Party A, Party C, Party F and Party G) met with and presented their corporate presentation to the Aerovate board of directors, Aerovate’s management and representatives of Wedbush.

On August 1, 2024, the Aerovate board of directors held a meeting at which members of Aerovate’s management and representatives of Wedbush and Goodwin were present. During this meeting, representatives of Wedbush provided the Aerovate board of directors with customary disclosures regarding any material relationships that Wedbush had with the proposed counterparties. Representatives of Goodwin reviewed the fiduciary duties of the members of the Aerovate board of directors and the process by which any conflicted board members or advisors would be recused from certain discussions and decisions to approve a final strategic transaction in the event that a material conflict was determined to exist. Also during this meeting, the Transaction Committee and Aerovate’s management reviewed their diligence of the four prioritized counterparties, Party A, Party C, Party F and Party G, including feedback following their corporate presentations. At the direction of the Aerovate board of directors, Aerovate’s management continued to diligence and evaluate Party C, Party F and Party G following these meetings. Aerovate’s management also discussed a preliminary liquidation model with the Aerovate board of directors, noting that the estimated timing for any distributions to stockholders in a dissolution scenario would be two to three months for an initial distribution and two to three years for the final distribution.

On August 5, 2024, the Aerovate Board of directors, via unanimous written consent, for convenience (and not because of any conflicts of interest) approved the reconstitution of the Transaction Committee to be comprised of disinterested directors Ms. Dorval, Maha Katabi, Ph.D. and Mr. Noyes, who were selected because they have significant experience with merger and acquisition transactions and/or clinical development and were likely to be able to attend additional meetings throughout the remainder of the process. The delegated authority of the Transaction Committee remained the same and the members of the Transaction Committee did not receive fees for their service on the Transaction Committee. Throughout the Transaction Committee’s evaluation of a potential strategic transaction described below, the Transaction Committee conducted formal meetings, and its members were also in regular informal discussions with Aerovate’s management and legal and financial advisors and with each other.

On August 12, 2024, the Transaction Committee, additional members of the Aerovate board of directors, Aerovate’s management and representatives of Wedbush conducted additional due diligence on

 

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Party C and Party G. This additional due diligence included holding videoconferences with counterparty management, evaluating answers to submitted questions and reviewing the contents of counterparty virtual data rooms.

Also on August 12, 2024, the Aerovate board of directors held a meeting at which members of Aerovate’s management and representatives of Wedbush and Goodwin were present. During this meeting and from the beginning and throughout the strategic review processes conducted by Aerovate, the Aerovate board of directors and representatives of Goodwin reviewed potential conflicts between certain members of the Aerovate board of directors and certain of the potential counterparties to a potential strategic transaction, noting that certain of Aerovate’s directors were affiliated with various investment funds that were investors in, and in some cases had board representation on, certain of the potential counterparties. The attendees discussed that while there were not actual or existing conflicts at this time, where appropriate to avoid potential conflicts or the appearance of potential conflicts, a particular director would recuse himself or herself from meetings (or relevant portions thereof) relating to, and any deliberations or discussions regarding, a possible transaction with that potential counterparty. Further, it was noted that certain attorneys from Goodwin (although not those advising Aerovate or the Transaction Committee) had provided legal services to certain of the potential counterparties and were outside legal counsel to Party A and Party F. Also during this meeting, representatives of Wedbush reviewed the status of discussions with each of the potential counterparties that the Transaction Committee, with input from Aerovate’s management, had identified Party C, Party F and Party G as priority candidates based on the Criteria. The discussion focused on the potential counterparties’ strengths and weaknesses with respect to fundraising ability, valuations, product candidate viability, potential data readouts, competition and other Criteria. In the course of the discussion, the Transaction Committee eliminated Party F as a potential counterparty, based on the Criteria and a determination that Party F’s indication of interest was not viable. The Aerovate board of directors directed representatives of Wedbush to provide guidance to Party G that its proposed valuation of Party G, based on the Aerovate board of directors’ assessment of Party G, was not competitive and that it should consider revising its proposal.

On August 14, 2024, Dr. Katabi and Dr. Grayzel had calls with the chief executive officer of Party C to discuss diligence questions and information regarding Party C’s valuation of its business.

On August 15, 2024, the Aerovate board of directors held a meeting at which members of Aerovate’s management and representatives of Wedbush and Goodwin were present. Representatives of Wedbush provided an update on the status of discussions with each of the potential counterparties that the Transaction Committee, with input from Aerovate’s management, had identified as a priority based on the Criteria, including Party C and Party G, and the due diligence conducted on Party C and Party G. Dr. Katabi and Dr. Grayzel provided an update on the August 14 discussion she and Dr. Grayzel had with the chief executive officer of Party C. Following these discussions, the Transaction Committee directed Aerovate’s management and representatives of Wedbush and Goodwin to negotiate term sheets with each of Party C and Party G.

On August 15, 2024, at the direction of the Transaction Committee, representatives of Wedbush sent a non-binding term sheet to Party C. The term sheet proposed a reverse merger transaction that provided an ascribed value of Party C of $145 million, with an implied ownership interest in the Combined Company of approximately 61.7% for Party C equityholders and an ascribed value of Aerovate of $90 million (assuming closing net cash of $70 million) with an implied ownership interest in the Combined Company of approximately 38.3% for existing Aerovate equityholders, in each case, prior to any concurrent financing. The Aerovate valuation was based on (i) $70 million of net cash at closing, plus (ii) a non-cash enterprise value of $20 million. The term sheet also provided for a concurrent financing at closing of no less than $90 million.

From August 15 through August 23, 2024, representatives of Aerovate and representatives of Party C discussed and negotiated the term sheet.

On August 23, 2024, the Transaction Committee held a meeting at which members of Aerovate’s management and representatives of Goodwin were present. Aerovate’s management and representatives of Goodwin provided an update on the term sheet negotiations with Party C and the anticipated timeline for a potential transaction with Party C. The Transaction Committee provided feedback and direction to Aerovate’s management and Aerovate’s advisors on these matters, and authorized Aerovate’s management to continue to negotiate and to execute the non-binding term sheet based on such feedback.

 

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On August 23, 2024, Aerovate and Party C executed the non-binding term sheet. The executed non-binding term sheet proposed a reverse merger transaction that provided an ascribed value of Party C of $145 million, with an implied ownership interest in the Combined Company of approximately 61.7% for Party C equityholders and an ascribed value of Aerovate of $90 million (assuming closing net cash of $70 million) with an implied ownership interest in the Combined Company of approximately 38.3% for existing Aerovate equityholders, in each case, prior to any concurrent financing. The Aerovate valuation was based on (i) $70 million of net cash at closing, plus (ii) a non-cash enterprise value of $20 million. The term sheet also provided for a concurrent financing at closing of no less than $90 million. The executed term sheet also provided for an exclusive negotiation period through 11:59 p.m., Eastern Time, on September 22, 2024, which would be automatically extended through 11:59 p.m., Eastern Time, on September 29, 2024 if the parties were continuing to negotiate in good faith.

On August 26, 2024, Party G provided a revised indication of interest, which proposed a reverse merger transaction with an ascribed valuation of Aerovate of $85 million (assuming closing net cash of $70 million) and an ascribed valuation of Party G of $295 million, with an implied ownership interest in the Combined Company of approximately 22% for existing Aerovate stockholders, prior to any concurrent financing. Party G’s proposal also contemplated a concurrent financing of $100 million, 40% of which would be provided by existing Aerovate investors, with the remaining 60% to be provided by existing investors in Party G and new investors. As Aerovate had entered into a mutual exclusivity period with Party C, neither Aerovate nor its advisors engaged with Party G regarding such revised indication of interest.

From August 28 through September 30, 2024, representatives of Aerovate and representatives of Party C completed confirmatory due diligence on each other and negotiated the terms of a merger agreement and the other documents contemplated by the proposed transaction. Also during this period, Party C engaged in discussions with potential investors for a concurrent financing that would close concurrently with the closing of Aerovate’s reverse merger transaction with Party C.

On August 30, 2024, Party C was provided access to an online data room containing nonpublic information regarding Aerovate.

On September 19, 2024, the Aerovate board of directors held a meeting at which members of Aerovate’s management and representatives of Wedbush and Goodwin were present. Representatives from Goodwin provided a summary of the negotiations of the merger agreement. The meeting participants discussed the status of the proposed reverse merger with Party C and its concurrent financing, noting that Party C had not yet been able to secure the proposed concurrent financing commitments from potential investors. The meeting participants discussed strategic options available to Aerovate in the event Party C was unable to complete a concurrent financing in an amount or otherwise on terms that would enable Aerovate to proceed with the proposed transaction with Party C and generate sufficient value to Aerovate stockholders. The meeting participants noted the upcoming expiration of exclusivity with Party C on September 22, 2024 or, if extended, on September 29, 2024. In anticipation of the expiration of exclusivity with Party C, the meeting participants discussed potential strategic alternatives to the transaction with Party C, including other potential reverse merger candidates, a strategic transaction with another public company for the redeployment of Aerovate’s net cash and a potential liquidation of Aerovate. Aerovate’s management presented the Aerovate board of directors with an updated analysis prepared by Aerovate’s management regarding a potential liquidation of Aerovate, including the potential timeline for liquidation and an estimate of the amount that would be distributable to Aerovate stockholders in such liquidation scenario. Aerovate’s management did not update the potential liquidation scenario or prepare any other liquidation analysis after September 19, 2024, as described in the section titled “The Merger — Aerovate Liquidation Analysis” beginning on page 126 of this proxy statement/prospectus. The Aerovate board of directors also reviewed a customary relationship disclosure letter made available by Wedbush prior to the meeting, indicating that Wedbush had not been engaged by Party C during the two-year period prior to such disclosure.

On September 23, 2024 the chief executive officer of Party C informed Mr. Noyes and representatives of Wedbush that several leading healthcare investors that Party C had expected to participate in the concurrent financing had declined interest.

On September 29, 2024, the chief executive officer of Party C informed Mr. Noyes that it was unlikely that Party C would be able to raise the required $90 million for a concurrent financing. Mr. Noyes informed the Aerovate board of directors regarding these discussions.

 

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On September 29, 2024, at 11:59 p.m., Eastern Time, the mutual exclusivity period with Party C expired pursuant to the terms of the non-binding term sheet between Aerovate and Party C.

On September 30, 2024, at the direction of the Transaction Committee and due to Party C’s inability to raise the required concurrent financing, Aerovate’s management and its advisors terminated diligence activities and discussions with Party C. No further discussions regarding a strategic transaction between Aerovate and Party C occurred after this time.

Also on September 30, 2024, Aerovate received an inbound phone call from Party B, which included information regarding Party B’s new clinical data and a revised development plan. Aerovate’s management shared this information with the Aerovate board of directors and the Aerovate board of directors provided support, via email, for Aerovate’s management and advisors to conduct additional diligence on Party B to determine whether Party B was likely to meet a sufficient number of the Criteria. Following such additional diligence, the Aerovate board of directors determined that Party B was not likely to meet a sufficient number of the Criteria.

On October 6, 2024, Dr. Katabi resigned from the Aerovate board of directors and from the Audit Committee, Compensation Committee and Transaction Committee. This departure was not the result of any disagreement with Aerovate, the Aerovate board of directors or any committee thereof on any matter relating to Aerovate’s operations, practices or policies, or strategic process.

On October 9, 2024, representatives of Wedbush introduced Mr. Noyes to Tom Frohlich, Chief Executive Officer of Jade via email.

On October 10, 2024, Mr. Noyes had an introductory call with Mr. Frohlich, during which the parties discussed Jade’s interest in a potential reverse merger transaction with Aerovate, as well as an overview of Jade’s operating strategy. During this call, the parties also discussed aspects of a potential reverse merger transaction.

On October 11, 2024, the Aerovate board of directors held a meeting at which members of Aerovate’s management and representatives of Goodwin were present. The parties discussed an upcoming meeting between the parties’ respective advisors to discuss Jade’s readiness to prepare financial statements required in a registration statement filed in connection with a potential reverse merger and inviting Jade to present their corporate presentation to the Aerovate board of directors. The Aerovate board of directors provided feedback and direction to Aerovate’s management and Aerovate’s advisors. Following discussion, the Aerovate board of directors directed Aerovate’s management and advisors to continue to diligence Jade and invite Jade to present its corporate presentation to the Aerovate board of directors, and to begin negotiations with Jade on a non-binding term sheet.

Later on October 11, 2024, as directed by the Aerovate board of directors, Wedbush informed Mr. Frohlich that the Aerovate board of directors would like to have Aerovate’s advisors talk to Jade’s advisors to understand Jade’s plan for preparing audited financial statements and to have Jade present its corporate presentation to the Aerovate board of directors.

On October 14, 2024, members of Aerovate’s management, including Mr. Noyes, had a call with members of Jade’s management, including Mr. Frohlich, at which representatives of Goodwin and Gibson, Dunn & Crutcher LLP (“Gibson”), counsel to Jade, were present. During this call, the participants discussed the proposed transaction structure and Jade’s plan for preparing the financial statements required in a registration statement filed in connection with a potential reverse merger.

On October 15, 2024, at the direction of the Aerovate board of directors, representatives of Wedbush sent a non-binding term sheet to Jade. The term sheet provided for a reverse merger transaction an ascribed value of Aerovate of $10 million, in each case, prior to any concurrent financing. The Aerovate valuation was based on (i) $0 of net cash at closing plus (ii) a non-cash enterprise value of $10 million. The term sheet also provided for a special cash dividend of 100% of Aerovate’s net cash to Aerovate stockholders prior to the closing. The term sheet also provided for a concurrent financing at closing of no less than $175 million, and a post-closing board of directors to be mutually agreed upon by Aerovate and Jade.

 

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On October 15, 2024, Mr. Noyes and Mr. Frohlich had a call during which the parties discussed Jade’s upcoming corporate presentation to the Aerovate board of directors and details regarding Jade’s operating strategy.

On October 16, 2024, Jade sent a revised draft of the non-binding term sheet to Aerovate, which provided for an ascribed value of Jade of $175 million and an ascribed value of Aerovate of $7 million (assuming closing net cash of $0), in each case, prior to any concurrent financing. The Aerovate valuation was based on (i) $0 of net cash at closing plus (ii) a non-cash enterprise value of $7 million. The term sheet also provided for a cash dividend of 100% of Aerovate’s net cash to Aerovate stockholders prior to the closing, a concurrent financing at closing of no less than $150 million, and a post-closing board of directors designated by Jade in its sole discretion.

On October 17, 2024, representatives of Jade made a corporate presentation to the Aerovate board of directors and members of Aerovate’s management. Representatives of Wedbush and Goodwin and technical expert representatives from certain of the investment funds affiliated with certain members of the Aerovate board of directors were present.

Also on October 17, 2024, following the Jade corporate presentation, the Aerovate board of directors held a meeting at which members of Aerovate’s management, representatives of Wedbush and Goodwin, and technical expert representatives from certain of the investment funds affiliated with certain members of the Aerovate board of directors were present. The participants provided feedback regarding the Jade corporate presentation and the economic terms proposed by Jade, including the potential cash dividend paid to Aerovate stockholders prior to the closing of a proposed reverse merger transaction. Representatives from Goodwin provided a summary of the terms of the October 16 draft of the non-binding term sheet. Following discussion, the Aerovate board of directors directed Aerovate’s management to provide guidance to Jade that the value ascribed to Aerovate in Jade’s proposed economic terms should be increased from $7 million to $8 million in order to be acceptable to the Aerovate board of directors, and, if such change to the proposed economic terms was accepted by Jade, directed Aerovate’s management and advisors to enter into the non-binding term sheet with Jade.

Later on October 17, 2024, Aerovate sent a revised draft of the non-binding term sheet to Jade, which provided for an ascribed value of Jade of $175 million and an ascribed value of Aerovate of $8 million (assuming closing net cash of $0), in each case, prior to any concurrent financing.

On October 18, 2024, Aerovate and Jade executed the non-binding term sheet. The executed term sheet was substantially identical to the draft term sheet Aerovate provided on October 17, 2024. The executed term sheet also provided for an exclusive negotiation period through November 8, 2024.

On October 21, 2024, Goodwin sent a first draft of the Merger Agreement to Gibson.

On October 22, 2024, Jade was provided access to an online data room containing nonpublic information regarding Aerovate. From this date through October 30, 2024, Jade and Gibson shared nonpublic information regarding Jade via e-mail with representatives of Goodwin and Aerovate’s management team.

On October 22, 2024, Mr. Noyes and Mr. Frohlich had a call, during which the parties discussed Jade’s recent research results as well as the timing for completing a potential transaction between Aerovate and Jade.

On October 25, 2024, Gibson sent a revised draft of the Merger Agreement to Goodwin.

From October 25 through October 30, 2024, representatives of Goodwin, with input from the Aerovate board of directors (including through the Transaction Committee) and Aerovate’s management, and Jade’s representatives and Gibson exchanged drafts and participated in discussions regarding the terms of the Merger Agreement and related documents. The items negotiated with respect to the Merger Agreement and related documents included, among other things: the representations and warranties to be made by the parties; the restrictions on the conduct of the parties’ businesses until completion of the transaction; the definitions of material adverse effect; the conditions to completion of the Merger; the determination of Aerovate’s net cash balance at closing; the allocation of transaction expenses; the terms of the subscription agreement for the Jade private placement and the aggregate amount of the Jade private placement proceeds to be committed

 

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