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Financial Statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
thousands, except share amounts)
| March 31, 2025 | December 31, 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 49,929 | $ | 69,386 | ||||
| Prepaid expenses and other current assets | 775 | 268 | ||||||
| Total current assets | 50,704 | 69,654 | ||||||
| Operating lease right-of-use asset | 765 | |||||||
| Other assets | 4,855 | 3,145 | ||||||
| Total assets | $ | 56,324 | $ | 72,799 | ||||
| Liabilities, Convertible Preferred Stock and Stockholders Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | 4,215 | 1,290 | ||||||
| Accrued expenses and other current liabilities | 2,880 | 4,125 | ||||||
| Related party accrued expenses and other current liabilities | 6,912 | 5,504 | ||||||
| Warrant liability, related party | 2,042 | 1,077 | ||||||
| Total current liabilities | 16,049 | 11,996 | ||||||
| Long-term liabilities: | ||||||||
| Convertible Notes payable (1) | 123,000 | 107,600 | ||||||
| Long-term lease liability | 783 | |||||||
| Total liabilities | 139,832 | 119,596 | ||||||
| Commitments and contingencies (Note 12) | ||||||||
| Series Seed convertible preferred stock, $0.0001 par value; 20,000,000 shares authorized as of each of March 31, 2025 and December 31, 2024; 20,000,000 shares issued and outstanding as of each of March 31, 2025 and December 31, 2024; liquidation preference of $2 as of each of March 31, 2025 and December 31, 2024 | 2 | 2 | ||||||
| Stockholders deficit: | ||||||||
| Common stock, $0.0001 par value; 40,000,000 shares authorized as of each of March 31, 2025 and December 31, 2024; 5,819,672 shares issued and outstanding as of each of March 31, 2025 and December 31, 2024 | 1 | 1 | ||||||
| Additional paid-in capital | 1,637 | 179 | ||||||
| Accumulated deficit | (85,148 | ) | (46,979 | ) | ||||
| Total stockholders deficit | (83,510 | ) | (46,799 | ) | ||||
| Total liabilities, convertible preferred stock and stockholders deficit | $ | 56,324 | $ | 72,799 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
JADE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
thousands, except share and per share amounts)
| Three Months Ended March 31, 2025 | ||||
| Operating expenses: | ||||
| Research and development (1) | $ | 20,023 | ||
| General and administrative (2) | 3,361 | |||
| Total operating expenses | 23,384 | |||
| Loss from operations | (23,384 | ) | ||
| Other income (expense): | ||||
| Interest income | 615 | |||
| Change in fair value of Convertible Notes payable (3) | (15,400 | ) | ||
| Total other expense, net | (14,785 | ) | ||
| Net loss and comprehensive loss | (38,169 | ) | ||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (12.10 | ) | |
| Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 3,155,500 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
JADE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT
thousands, except share amounts)
| Convertible Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Total Stockholders | ||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||
| Balance at December 31, 2024 | 20,000,000 | $ | 2 | 5,819,672 | $ | 1 | $ | 179 | $ | (46,979 | ) | $ | (46,799 | ) | ||||||||||||||||
| Stock-based compensation | 1,458 | 1,458 | ||||||||||||||||||||||||||||
| Net loss | (38,169 | ) | (38,169 | ) | ||||||||||||||||||||||||||
| Balance at March 31, 2025 | 20,000,000 | $ | 2 | 5,819,672 | $ | 1 | $ | 1,637 | $ | (85,148 | ) | $ | (83,510 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
JADE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
| Three months ended March 31, 2025 | ||||
| Cash flows from operating activities: | ||||
| Net loss | $ | (38,169 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Change in fair value of Convertible Notes payable | 15,400 | |||
| Stock-based compensation | 2,423 | |||
| Amortization of right-of-use asset | 8 | |||
| Changes in operating assets and liabilities: | ||||
| Prepaid expenses and other current assets | (507 | ) | ||
| Other assets | (60 | ) | ||
| Accounts payable | 2,677 | |||
| Accrued expenses and other current liabilities | (1,948 | ) | ||
| Related party accrued expenses and other current liabilities | 1,410 | |||
| Long-term lease liability | 9 | |||
| Net cash used in operating activities | (18,757 | ) | ||
| Cash flows from financing activities: | ||||
| Payment of deferred offering costs | (700 | ) | ||
| Net cash used in financing activities | (700 | ) | ||
| Net decrease in cash and cash equivalents | (19,457 | ) | ||
| Cash and cash equivalents at beginning of period | 69,386 | |||
| Cash and cash equivalents at end of period | $ | 49,929 | ||
| Supplemental disclosure of non-cash financing and investing activities: | ||||
| Purchases of property and equipment in accounts payable | $ | 5 | ||
| Deferred offering costs in accounts payable or accrued expenses and other current liabilities | $ | 1,091 | ||
| Operating lease liability arising from obtaining right-of-use asset | $ | 773 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of the Business and Basis of Presentation
Background and Basis of Presentation
Jade Biosciences, Inc. ( Jade or the Company ) was established and incorporated under the laws of the state of Delaware
on June 18, 2024. Jade is focused on developing best-in-class therapies to address critical unmet needs in autoimmune diseases. Its lead candidate, JADE101, targets
the cytokine called A PRoliferation Inducing Ligand ( APRIL ) for the treatment of immunoglobulin A nephropathy. Jade s pipeline also includes two undisclosed antibody discovery programs,
JADE-002 and JADE-003, which are currently in preclinical development. Jade was launched based on assets licensed from Paragon Therapeutics Inc. ( Paragon ),
an antibody discovery engine founded by healthcare investor Fairmount Funds Management LLC ( Fairmount ).
2024, the Company, Aerovate Therapeutics, Inc., a Delaware corporation ( Aerovate ), Caribbean Merger Sub I, Inc., a Delaware corporation and wholly-owned subsidiary of Aerovate ( First Merger Sub ), and Caribbean Merger Sub II,
LLC, a Delaware limited liability company and wholly-owned subsidiary of Aerovate ( Second Merger Sub ), entered into an Agreement and Plan of Merger(the Merger Agreement ), pursuant to which, among other matters, on
April 28, 2025 (the Closing Date ), First Merger Sub merged with and into Jade, with Jade continuing as a wholly owned subsidiary of Aerovate and the surviving corporation of the merger (the First Merger and such time,
the First Effective Time ), and Jade merged with and into Second Merger Sub, with Second Merger Sub being the surviving entity of the merger (the Second Merger and, together with the First Merger, the Merger ). In
connection with the Merger, Second Merger Sub changed its corporate name to Jade Biosciences, LLC and Aerovate changed its name to Jade Biosciences, Inc. Subsequently, Jade Biosciences, LLC merged with and into Jade
Biosciences, Inc. The combined company following the Merger is referred to herein as the Combined Company. The Combined Company is led by pre-Merger Jade s management team and focuses on
developing differentiated biologic therapies for patients living with autoimmune diseases. See Note 15 for subsequent events related to the closing of the Merger and related transactions on April 28, 2025.
Concurrently with the execution and delivery of the Merger Agreement, certain new and existing investors of
pre-Merger Jade entered into a subscription agreement with pre-Merger Jade, pursuant to which such investors purchased, immediately prior to the Merger, 43,947,116
shares of pre-Merger Jade common stock and 12,305,898 pre-Merger Jade pre-funded warrants, for gross proceeds of approximately
$334.2 million (which reflects the conversion of the previously issued $95.0 million of Convertible Notes, plus accrued and unpaid interest thereon) (the Jade Pre-Closing Financing ). The
Convertible Notes converted into shares of pre-Merger Jade common stock equal to the principal plus accrued and unpaid interest divided by the applicable conversion price thereunder. For purposes of the Jade Pre-Closing Financing, the conversion price was equal to the price per share sold in the Jade Pre-Closing Financing multiplied by 0.80.
The shares of pre-Merger Jade common stock and the pre-Merger
Jade pre-funded warrants that were issued in the Jade Pre-Closing Financing were converted into shares of Aerovate common stock and Aerovate pre-funded warrants, respectively, in the Merger. The Aerovate pre-funded warrants have an exercise price per share equal to $0.0001 (as adjusted from time to time as provided
in the form of pre-funded warrant) and may be exercised at any time and from time to time after the original issue date. The Aerovate pre-funded warrants do not expire.
Immediately prior to the consummation of the Merger on April 28, 2025, Aerovate effected a 1-for-35 reverse stock split of its common stock (the Reverse Stock Split ). The Combined Company was re-domesticated and incorporated under the laws of the
state of Nevada on April 28, 2025.
The Company is subject to risks and uncertainties common to early-stage companies in the
biopharmaceutical industry, including, but not limited to, the ability to initiate and complete clinical trials, the ability to obtain regulatory approval for product candidates, development by competitors of new technological innovations,
dependence on key personnel, the ability to attract and retain qualified employees, reliance on third-party organizations, protection of proprietary technology, compliance with government regulations, product liability, uncertainty of market
acceptance of products and the ability to raise additional capital to fund operations.
The Company s potential product candidates
will require approval from the U.S. Federal Food and Drug Administration or comparable foreign authorities prior to the commencement of commercial sales. There can be no assurance that the Company s potential product candidates will receive all
the required approvals or any approvals. In addition, there can be no assurance that the Company s potential product candidates, if approved, will be accepted in the marketplace, that any future product candidates can be developed or
manufactured at an acceptable cost and with appropriate performance characteristics, or that such product candidates will be successfully marketed, if at all.
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Continued
The accompanying unaudited interim condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the United States of America ( U.S. GAAP ) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ( SEC )
regarding interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of the Company, the accompanying unaudited condensed consolidated
financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2025, and its results of operations and cash flows for the three months
ended March 31, 2025. The condensed consolidated balance sheet at December 31, 2024 was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The
accompanying condensed consolidated financial statements include accounts of the Company and its wholly owned subsidiaries Jade Biosciences Canada ULC and Jade Biosciences MA Security Corporation.
Liquidity and Going Concern
its inception, the Company has devoted substantially all of its resources to advancing the development of its portfolio of programs, organizing and staffing the Company, business planning, raising capital, and providing general and administrative
support for these operations. Current and future programs will require significant research and development efforts, including preclinical and clinical trials, and, if the Company is successful in obtaining regulatory approval for one or more
product candidates, significant commercialization efforts. Until such time as the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operating activities principally through equity offerings.
The Company has not generated any revenue from product sales or other sources and has incurred significant operating losses and negative
cash flows from operations since inception. The Company has incurred a net loss of $38.2 million for the three months ended March 31, 2025. For the three months ended March 31, 2025, the Company used net cash of $18.8 million for
its operating activities. As of March 31, 2025, the Company had cash and cash equivalents of $49.9 million.
that its research and development and general and administrative costs will continue to increase significantly, including in connection with conducting future pre-clinical activities and clinical trials and
manufacturing for its product candidates and providing general and administrative support for its operations, including the costs associated with operating as a public company. The Company expects that its existing cash and cash equivalents of
$49.9 million as of March 31, 2025 together with the proceeds from the Jade Pre-Closing Financing, will be sufficient to fund its operating expenses and capital expenditure requirements for at least
12 months from the date these unaudited condensed consolidated financial statements were issued.
2. Summary of Significant Accounting Policies
The Company s significant accounting policies are disclosed in Note 2 to its audited financial statements as of December 31,
2024 and June 18, 2024 and for the period from June 18, 2024 (inception) to December 31, 2024 and the related notes thereto in Aerovate s definitive proxy statement/prospectus filed on Form
S-4 with the SEC, most recently amended on March 24, 2025 and declared effective on March 25, 2025, beginning on page F-22. Since the date of those financial
statements, there have been no changes to its significant accounting policies except as noted below.
Comprehensive loss includes net loss as well as other changes in stockholders equity that result from transactions and economic events
other than those with stockholders. For the three months ended March 31, 2025, the Company had a comprehensive loss of $38.2 million.
JADE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Continued
Deferred Offering Costs
The Company capitalizes certain legal, professional, accounting, and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After the consummation of an equity financing, these costs are recorded as a reduction of the proceeds from the
offering, either as a reduction of the carrying value of the preferred stock or in stockholders deficit as a reduction of additional paid-in capital generated as a result of the offering. Should the in-process equity financing be abandoned, the deferred offering costs would be expensed immediately as a charge to operating expenses in the statement of operations and comprehensive loss. As of March 31, 2025,
deferred offering costs of $4.8 million were recorded as Other assets in the balance sheet.
The Company evaluates arrangements entered into to determine whether or not it includes a lease. At the lease commencement date, when control
of the underlying asset is transferred from the lessor to the Company, the Company classifies a lease as either an operating or finance lease and recognizes a
right-of-use ( ROU ) asset and a current and non-current lease liability, as applicable, in the balance sheet if the
lease has a term greater than one year. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise its option.
At the lease commencement date, operating lease liabilities and their corresponding ROU assets are recorded at the present value of future
minimum lease payments over the expected remaining lease term. The Company determines the present value of lease payments using the implicit rate, if it is readily determinable, or the incremental borrowing rate for the lease term. As the
Company s leases do not provide an implicit rate, the Company uses its incremental borrowing rate to discount lease payments. The incremental borrowing rate represents an estimated rate of interest that the Company would have to pay to borrow
equivalent funds on a collateralized basis at the lease commencement date. For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term. For finance leases, lease expense includes amortization
expense of the ROU asset recognized on a straight-line basis over the lease term and interest expense recognized on the finance lease liability. In addition, certain adjustments to the ROU asset may be required for items such as lease prepayments,
incentives received or initial direct costs. As of March 31, 2025, the Company has one operating lease and no finance leases.
Company accounts for lease and non-lease components related to operating leases as a single lease component. The Company has elected that costs associated with leases having an initial term of 12 months or
less are recognized in the condensed consolidated statement of operations and comprehensive loss on a straight-line basis over the lease term and are not recorded on its condensed consolidated balance sheets. Variable lease expense is recognized as
incurred and consists primarily of real estate taxes, utilities, and other office space related expenses.
Net Loss per Share Attributable to Common
Basic and diluted net loss attributable to stockholders per share is presented in conformity with the two-class method required for participating securities (the Series Seed Convertible Preferred Stock, par value $0.0001 per share ( Convertible Preferred Stock )). Basic earnings per share is computed by