Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements as of December 31, 2024, included in the 2024 Annual Report filed with the SEC on March 25, 2025, and in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report.

In addition to historical information, this discussion and analysis contains forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those discussed in the section titled "Risk Factors" in our Form 10-K filed with the SEC on March 25, 2025, as supplemented by the risks and uncertainties described in "Risk Factors" Item I.A. Risk Factors in Part II of this Quarterly Report, that could cause actual results to differ materially from historical results or anticipated results. You should carefully read the information under "Cautionary Note Regarding Forward-Looking Statements" in this Quarterly Report. Unless the context otherwise requires, references in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" to "Zura," "we," "us," and "our" refer to Zura Bio Limited, a Cayman Islands exempted company formerly known as JATT Acquisition Corp, and its consolidated subsidiaries. References to JATT Acquisition Corp or "JATT" refer to the Company prior to the consummation of the Business Combination.

Overview

We are a clinical-stage, multi-asset immunology company dedicated to developing novel dual-pathway antibodies for autoimmune and inflammatory diseases with unmet needs. Leveraging the extensive experience of our team, we identify relevant diseases and develop our differentiated assets in those diseases. Our strategic focus is to harness dual-pathway biology to provide broader and deeper clinical benefits to patients with autoimmune and inflammatory diseases.

We are currently advancing one lead product candidate in ongoing Phase 2 clinical trials and are actively evaluating additional development opportunities across our pipeline of clinical-stage product candidates, prioritizing indications with unmet need and commercial potential.

Our lead product candidate, tibulizumab (ZB-106), is an immunoglobulin G ("IgG")-single-chain variable fragment ("scFv") bispecific dual-antagonist antibody engineered by the fusion of TALTZ® (ixekizumab) and tabalumab to neutralize interleukin-17A (IL-17A) and B-cell activating factor ("BAFF"). These cytokines play pivotal roles in various inflammatory and autoimmune disorders. By targeting IL-17A and BAFF, tibulizumab demonstrates potential in mitigating chronic inflammation while preserving the integrity of the immune system. Three Phase 1/1b clinical studies evaluating tibulizumab have been completed, including studies involving participants with rheumatoid arthritis and Sjögren's syndrome.

In May 2025, the Company initiated TibuSHIELD, a global Phase 2 clinical study evaluating tibulizumab in adults with moderate to severe hidradenitis suppurativa ("HS"). TibuSHIELD is a randomized, double-blind, placebo-controlled study designed to assess the safety, tolerability, and efficacy of tibulizumab in approximately 180 adults across the United States, Canada and Europe. The study will evaluate tibulizumab over a 28-week period, which includes a 16-week efficacy assessment period followed by an optional open-label extension ("OLE") and a 12-week safety follow-up. The primary endpoint of the study is the percent change from baseline in total abscess and nodule ("AN") count at week 16. Secondary endpoints include the proportion of participants achieving HiSCR50 or HiSCR75, defined as at least a 50% or 75% reduction in AN count without an increase in abscesses or draining fistulas at week 16. Key safety assessments include the assessment of tolerability, and monitoring for adverse events. Topline results are expected to be available in the third quarter of 2026. We continue to monitor timelines and evaluate strategy in light of the competitive landscape for conducting clinical trials, competition for enrollment of patients, and external events, including those potentially impacting regulatory matters and overall study execution.

In December 2024, we initiated TibuSURE, a global Phase 2 clinical study evaluating tibulizumab in adults with early diffuse cutaneous systemic sclerosis ("dcSSc"). TibuSURE is a randomized, double-blind, placebo-controlled study designed to assess the safety, tolerability, and efficacy of tibulizumab in approximately 80 participants with early diffuse cutaneous systemic sclerosis (dcSSc). The study includes a 24-week efficacy period followed by a 28-week OLE. The primary endpoint is the modified Rodnan Skin Score ("mRSS"). Key efficacy endpoints include lung disease, assessed by quantitative high-resolution computed tomography ("qHRCT") and forced vital capacity ("FVC"); physical function, measured by the Health Assessment Questionnaire-Disability Index (HAQ-DI); and the revised Combined Response Index in Systemic Sclerosis ("rCRISS"). Topline results are expected to be available in the fourth quarter of 2026. We continue to monitor timelines and evaluate strategy in light of the competitive landscape for conducting clinical

trials, competition for enrollment of patients, and external events, including those potentially impacting regulatory matters and overall study execution.

Crebankitug (ZB-168) is a fully human, high affinity monoclonal antibody that binds and neutralizes the interleukin-7 receptor (IL-7R) alpha chain. IL-7Rα sits at the nexus of two key immune pathways, IL-7 and thymic stromal lymphopoietin (TSLP), thus IL-7Rα has the potential to block activation through either of these pathways. As a result, we believe crebankitug could be therapeutically relevant in a broad set of indications where the IL-7 or TSLP pathways may be involved. Three Phase 1/1b clinical studies evaluating crebankitug have been conducted to date. We are actively assessing the competitive landscape and evaluating potential therapeutic indications for crebankitug.

Torudokimab (ZB-880) is a fully human, high affinity monoclonal antibody that neutralizes interleukin-33 (IL-33), thereby inhibiting ST2-dependent inflammatory signaling and potentially modulating ST2-independent pathways, such as those mediated by the RAGE. The IL-33/ST2 axis is supported by genetic evidence and is under clinical investigation as a therapeutic target in inflammatory diseases, with development programs in asthma and ongoing evaluation in COPD. Three Phase 1/2 clinical studies evaluating torudokimab have been conducted to date. We continue to monitor publicly available clinical data from other IL-33/ST2-targeted programs. To date, two companies have reported results from Phase 2b and Phase 3 trials in COPD, with some studies meeting their predefined efficacy endpoints and others not. An additional IL-33/ST2 program is expected to report results in 2026. These data, along with ongoing internal assessments and an evaluation of the competitive landscape, may inform future development plans for torudokimab.

We were incorporated as a Cayman Islands exempted company on March 10, 2021. Our wholly owned subsidiary, Zura Bio Limited was formed in the United Kingdom ("U.K.") ("Zura Bio UK"), on January 18, 2022. Prior to March 20, 2023, our operations were conducted through Zura Bio UK.

We have a limited operating history. Since our inception, our operations have focused on organizing and staffing our company, business planning, raising capital and entering into collaboration agreements for conducting manufacturing, and research and development activities. Our lead product candidate is in the clinical testing stage; however, prior to the initiation of TibuSHIELD and TibuSURE in May 2025 and December 2024, respectively, we had not conducted any clinical tests ourselves. We do not have any product candidates approved for sale and have not generated any revenue from product sales. We have funded our operations through (i) the sale of equity, raising an aggregate of $10.0 million of gross proceeds from the sale of our convertible preferred shares of Zura Bio UK through March 31, 2023; (ii) the issuance of a promissory note, receiving net proceeds of $7.6 million in December 2022; (iii) proceeds from the Business Combination of $56.7 million in March 2023; (iv) the sale of Class A Ordinary Shares and pre-funded warrants to purchase up to 3,782,000 Class A Ordinary Shares at a price of $4.249 per pre-funded warrant for an aggregate purchase price of approximately $16.1 million (the "2023 Pre-Funded Warrants") during the year ended December 31, 2023 (the "April 2023 Private Placement"), raising an aggregate of $75.8 million of net cash proceeds; (v) the sale of Class A Ordinary Shares and pre-funded warrants to purchase up to 16,102,348 Class A Ordinary Shares at a price of $3.107 per pre-funded warrant for an aggregate purchase price of $50.0 million (the "2024 Pre-Funded Warrants") in April 2024 (the "April 2024 Private Placement") raising an aggregate of $105.3 million of net cash proceeds; (vi) the sale of 1,500,000 Class A Ordinary Shares at a price of $3.80 per share under the ATM (as defined below) for net proceeds of $5.5 million, after sales agent commissions, in September 2024; and (vii) the sale of 3,000,000 Class A Ordinary Shares at a price of $1.75 per share under the ATM for net proceeds of $5.1 million, after sales agent commissions, in the first quarter of 2025.

Since our inception, we have incurred significant operating losses. Our net loss for the three and nine months ended September 30, 2025 were $18.0 million and $51.5 million, respectively. As of September 30, 2025, we had an accumulated deficit of $207.4 million. We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:

Recent Developments

On July 4, 2025, President Trump signed H.R. 1, the "One Big Beautiful Bill Act" ("OBBBA") into law. The OBBBA makes permanent many of the provisions previously enacted as part of the 2017 Tax Cut and Jobs Act that were set to expire at the end of 2025 and includes other changes to certain U.S. corporate tax provisions including (i) the restoration of immediate expensing for domestic research and development expenditures, (ii) the reinstatement of 100% bonus depreciation for qualified property and (iii) favorably modifying the section 163(j) interest limitation (similar to EBITDA). FASB Topic 740, "Income Taxes", requires the tax effects of changes in tax laws or rates be recognized in the period in which the law is enacted. The enactment of the OBBBA did not have a material impact on our effective tax rate as of September 30, 2025.

Effective July 7, 2025, Eric Hyllengren succeeded Verender Badial as Chief Financial Officer of the Company.

On October 10, 2025, we announced that Robert Lisicki, our Chief Executive Officer, commenced a medical leave of absence. Accordingly, effective October 10, 2025, our board of directors appointed Kim Davis, our Chief Operating Officer, Chief Legal Officer and Corporate Secretary, to serve as our interim Chief Executive Officer, in addition to her current duties.

Business Combination

On March 20, 2023, we consummated the previously-announced transactions contemplated by the Business Combination Agreement, dated June 16, 2022, as amended on September 20, 2022, November 14, 2022, and January 13, 2023 by and among Zura Bio Limited, a limited company incorporated under the laws of England and Wales ("Zura Bio UK"), JATT Acquisition Corp, a Cayman Islands exempted company ("JATT"), JATT Merger Sub, a Cayman Islands exempted company and wholly owned subsidiary of JATT ("Merger Sub"), JATT Merger Sub 2, a Cayman Islands exempted company and wholly owned subsidiary of JATT ("Merger Sub 2") and Zura Bio Holdings Ltd, a Cayman Islands exempted company ("Holdco"), following the approval at an extraordinary general meeting of JATT's shareholders held on March 16, 2023.On March 21, 2023, our Class A Ordinary Shares and public warrants began trading on the Nasdaq under the symbols "ZURA" and "ZURAW," respectively. As of August 27, 2024, our public warrants were no longer listed on the Nasdaq in connection with the completion of our exchange of our public warrants for shares.

Shelf Registration and ATM Program

Pursuant to the shelf registration statement on Form S-3 declared effective on September 17, 2024 (the "Shelf Registration Statement"), we may offer and sell ordinary shares, preference shares, debt securities, warrants and or units having an aggregate public offering price of up to $300.0 million. In connection with the filing of the Shelf Registration Statement, we also entered into a sales agreement (the "Sales Agreement") with Leerink Partners LLC ("Leerink Partners"), relating to the sale of our Class A Ordinary Shares having an aggregate gross sales price of up to $125.0 million, from time to time through Leerink Partners, acting as sales agent (the "ATM"). In the first quarter of 2025, we sold 3,000,000 Class A Ordinary Shares at a price of $1.75 per share under the ATM, for net proceeds of $5.1 million, after sales agent commissions. There were no sales of Class A Ordinary Shares pursuant to the ATM during the second and third quarters of 2025. As of the date of this filing, we have $114.0 million of Class A Ordinary Shares remaining available for sale under the Sales Agreement.

Pre-Funded Warrant Activity

In July 2025, we issued 1,682,000 and 1,206,952 Class A Ordinary Shares in connection with the exercise of 2023 Pre-Funded Warrants and 2024 Pre-Funded Warrants, respectively. The exercise prices for such pre-funded warrants were immaterial.

In April 2025, we entered into share surrender and warrant agreements with certain affiliated shareholders (the "2025 Shareholders"), pursuant to which (i) the 2025 Shareholders surrendered an aggregate of 6,500,000 Class A Ordinary Shares owned by the 2025 Shareholders, for no consideration, which were immediately cancelled and retired, upon surrender; and (ii) we issued pre-funded warrants to purchase an aggregate of 6,500,000 Class A Ordinary Shares, with an exercise price of $0.001 per share and no expiration date (the "2025 Share Exchange Warrants). The 2025 Share Exchange Warrants are exercisable immediately and have substantially identical terms to the pre-funded warrants issued in 2024 in connection with our April 2024 subscription agreements.

2023 Lilly License

On April 26, 2023, our consolidated subsidiary ZB17 LLC ("ZB17") entered into a license agreement (the "2023 Lilly License" and, together with the 2022 Lilly License (as defined below), the "Lilly Licenses") with Lilly, for an exclusive license to develop, manufacture and commercialize a certain bispecific antibody relating to IL-17 and BAFF ("tibulizumab").

In consideration for the investment made by Stone Peach, in 2023 ZB17 granted Stone Peach the right, but not the obligation, to purchase 4.99% of the fully diluted equity of ZB17 for $1.0 million (the "Stone Peach Call Right"). The Stone Peach Call Right is not exercisable until after the last patient is dosed in any single next clinical trial with tibulizumab and expires one year from the date of first indication approval for tibulizumab by the United States Food and Drug Administration ("FDA") or European Commission. The Stone Peach Call Right represents noncontrolling interest in our consolidated subsidiary, ZB17. As of September 30, 2025 and December 31, 2024 the noncontrolling interest balance was $1.5 million in the condensed consolidated balance sheets.

As additional consideration, beginning on May 1, 2023, Stone Peach receives an annual payment of $0.6 million initially, and increasing by 10% annually, so long as we maintain our license for tibulizumab, to be paid on May 1^st of each year. We record expenses for these annual payments when they become due. An annual payment of $0.7 million was paid during each of the nine months ended September 30, 2025 and 2024. The Company recorded this payment within research and development expenses in the condensed consolidated statement of operations.

A one-time payment of $4.5 million for additional consideration due to Stone Peach upon acceptance from the FDA for our Investigational New Drug ("IND") and commencement of our clinical trial for tibulizumab was recorded in research and development in the consolidated statement of operations for the year ended December 31, 2024 and was paid in June 2025. This payment is included in accounts payable and accrued expenses in the condensed consolidated balance sheets as of December 31, 2024.

A letter agreement, dated as of April 25, 2023, by and between BAFFX17, Ltd ("BAFFX17") and the Company, and as amended by Amendment No. 1 on December 18, 2023 (the "BAFFX17 Letter Agreement"), provided that, as a finder's fee for arranging the acquisition of the 2023 Lilly License, we would be required to make a one-time milestone payment of $5.0 million to BAFFX17 upon the occurrence of either: (i) a change of control transaction, (ii) the closing of an issuance of equity or equity-linked securities by us of at least $100.0 million (iii) the consummation of a sale of assets resulting in net proceeds in excess of $100.0 million, or (iv) our fully diluted shares outstanding exceed 52,500,000 shares (on a split adjusted basis), as measured on April 24th of each year. As our fully diluted shares outstanding exceeded 52,500,000 shares prior to December 31, 2023, the $5.0 million fee was previously accounted for in research and development in the consolidated statement of operations for the year ended December 31, 2023, and is included in accounts payable and accrued expenses in the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024. On June 30, 2025, the Company received an invoice on behalf of BAFFX17 requesting a $5.0 million milestone payment (the "Milestone Payment") pursuant to the BAFFX17 Letter Agreement. The Company has not made such payment as of September 30, 2025. See "Part II - Item 1A. Risk Factors - Our business, reputation, financial condition and results of operations could be adversely affected by our ongoing internal review of certain agreements and other matters."

In addition to the consideration paid and/or earned in 2024 and 2023, we are also obligated to make payments (a) to Lilly for four (4) development milestone payments up to an aggregate of $155.0 million, and sales milestone payments up to an aggregate of $440.0 million based on respective thresholds of net sales of products developed from tibulizumab; (b) to Lilly over a multi-year period (twelve years, or upon the later expiration of regulatory exclusivity of tibulizumab in a country) for an annual earned royalty at a marginal royalty rate in the mid-single digits to low-double digits, with increasing rates depending on net sales in the respective calendar year, based on a percentage of sales within varying thresholds for a certain period of years; (c) to BAFFX17 for a fee equal to 3% of any

milestone or royalty payments due to Lilly pursuant to the terms of either the 2022 Lilly License or the 2023 Lilly License; (d) to Stone Peach for a one-time milestone payment of $25 million upon either (i) certain equity-related transactions, or (ii) the receipt of regulatory approval from the applicable regulatory authority for any new indication in the applicable jurisdiction; and (e) to Stone Peach for a royalty of 2% of the aggregate net sales of any products developed from the Compound (collectively, the "2023 Lilly Contingent Payments"). As of September 30, 2025, none of the 2023 Lilly Contingent Payments are due and accordingly will not be recorded in our financial statements until they are due.

2022 Lilly License

On December 8, 2022, our consolidated subsidiary, Z33 Bio Inc. ("Z33"), entered into a license agreement (the "2022 Lilly License") with Lilly pursuant to which Lilly granted Z33 an exclusive (even as to Lilly), royalty-bearing global license to develop, manufacture, and commercialize certain intellectual property owned by Lilly relating to its IL-33 compound.

A letter agreement dated December 8, 2022, as amended on November 21, 2023 (the "Stone Peach Letter Agreement") by and between Stone Peach and the Company, provided that, as a finder's fee for the 2022 Lilly License, Z33 issued to Stone Peach Properties, LLC ("Stone Peach") 4,900,222 shares of Z33 Series Seed Preferred Shares to Stone Peach. We and Stone Peach have the following rights, as amended, (a) we had the right, but not the obligation to purchase up to 50% of the Series Seed Preferred Shares issued to Stone Peach at a price per share of $2.448869 for a period of two years from the date of the agreement (the "Call Option"); (b) Stone Peach has the right, but not the obligation to sell up to 50% of the Series Seed Preferred Shares issued to Stone Peach to us for a price per share of $2.040724 (the "Put Option"), and (c) Stone Peach has the right, but not the obligation to sell up to 50% of the Series Seed Preferred Shares issued to Stone Peach to us in exchange for 2,000,000 Class A Ordinary Shares (the "Put Right"). Stone Peach may exercise its Put Option and Put Right at any time between April 24, 2024, and April 24, 2028. The Z33 Series Seed Preferred Shares are remeasured to the greater of the redemption value or the initial fair value, less noncontrolling shareholder's interest in net loss of Z33, at each reporting period. The Z33 Series Seed Preferred Shares represent redeemable noncontrolling interest in our consolidated subsidiary, Z33. On July 14, 2025, the Company received a request from Stone Peach to exercise the Put Option pursuant to the Stone Peach Letter Agreement pursuant to which Stone Peach would sell 50% of its Series Seed Preferred Shares in Z33 for $5.0 million. Additionally, on July 23, 2025, the Company received a further request from Stone Peach to exercise the Put Right pursuant to the Stone Peach Letter Agreement pursuant to which Stone Peach would sell 50% of its Series Seed Preferred Shares in Z33 in exchange for 2,000,000 of the Company's Class A Ordinary Shares. The Company has not effected either the Put Option or the Put Right as of September 30, 2025. See "Part II -Item 1A. Risk Factors - Our business, reputation, financial condition and results of operations could be adversely affected by our ongoing internal review of certain agreements and other matters."

In addition to the consideration paid and transferred in 2022, we are also obligated to make payments to Lilly for (a) $3.0 million upon the completion of a financing by Z33 with gross proceeds exceeding $100.0 million; (b) 10 commercial, development and regulatory milestone payments up to an aggregate of $155.0 million and sales milestone payments up to an aggregate of $440.0 million based on respective thresholds of net sales of products developed from the licensed compound, if any; and (c) an annual earned royalty at a marginal royalty rate between in the mid-single to low-double digits (less than 20%), with increasing rates based on Net Sales in the respective calendar year, based on a percentage of sales within varying thresholds for a certain period of the year, if any year (collectively, "the "2022 Lilly Contingent Payments"). We will account for these contingent milestone payments as they become due. As of September 30, 2025, none of the 2022 Lilly Contingent Payments are due and accordingly will not be recorded in our financial statements until they are due. If a financing by Z33 with gross proceeds exceeding $100.0 million and corresponding payment of $3.0 million to Lilly does not occur by December 7, 2025, Lilly may terminate the 2022 Lilly License, unless by the same date, the Company makes a $3.0 million payment. As of September 30, 2025, no such payment has been made and will not be recorded in the Company's financial statements until it is deemed probable.

Pfizer Agreement

On March 22, 2022, we entered into a license agreement and a Series A-1 Subscription and Shareholder's Agreement (collectively, the "Pfizer Agreement") with Pfizer. Under the Pfizer Agreement, we acquired a license for a compound previously developed by Pfizer.

In addition to the consideration paid and transferred during 2022 and 2023 and the first $1.0 million development milestone paid during 2024, we are obligated to make payments to Pfizer for (a) eleven (11) remaining future development and regulatory milestone payments aggregating up to $69.0 million and sales milestone payments up to an aggregate of $525.0 million based on respective thresholds of net sales of products (developed from the licensed compound) (the "Products"), if any; and (b) an annual earned royalty at a marginal royalty rate in the mid-single digits to low double digits (less than 20%), based on thresholds of net sales of Products, if

any (collectively, the "Pfizer Contingent Payments"). Royalties are payable on a country-by-country basis for a certain period of years or upon the later expiration of regulatory exclusivity of our Products in a country.

As of September 30, 2025, no additional Pfizer Contingent Payments are due and accordingly no additional Pfizer Contingent Payments will be recorded in our financial statements until they are due.

Impact of Global Economic Trends

Macroeconomic conditions, including uncertainties associated with the changes to and by the United States federal government administration, the current U.S. government shutdown, the ongoing conflicts in the Middle East, the ongoing conflict between Ukraine and Russia, international trade policies (including tariffs, sanctions and trade barriers), economic slowdowns, public health crises, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, liquidity concerns at, and failures of, banks and other financial institutions or other disruptions in the banking system or financing markets, rising interest rates and financial and credit market fluctuations, volatility in the capital markets or other evolving macroeconomic developments, continue to have direct and indirect impacts on our business and could in the future materially impact our results of operations and financial condition. Recent tariffs and trade restrictions have increased costs and complexity for many businesses, which we expect to have an adverse impact on our business. We continue to actively monitor the impact of these macroeconomic factors on our results of operations, financial condition and cash flows. The extent of the impact of these factors on our operational performance and financial condition, including our ability to execute our business strategies and initiatives in the expected timeframe, will depend on future developments, which are uncertain and cannot be predicted; however, any continued or renewed disruption resulting from these factors could negatively impact our business.

Components of Operating Results

Operating Expenses

Research and Development Expenses

Research and development ("R&D") expenses consist of all direct and indirect operating expenses supporting the processes and manufacturing in development, including consulting fees for clinical and manufacturing advisory services, contract research organization ("CRO") costs, costs related to manufacturing material for clinical studies, payroll and benefits, which includes share-based compensation for research and development employees, licensing fees, and data and study acquisition costs. Expenses are recognized as the related goods are delivered or the services are performed.

R&D expenses include the cost of in-process research and development ("IPR&D") assets purchased in an asset acquisition transaction. IPR&D assets are expensed provided that the acquired asset did not also include processes or activities that would constitute a "business" as defined under United States Generally Accepted Accounting Principles ("U.S. GAAP"), the drug has not achieved regulatory approval for marketing and, absent obtaining such approval, has no established alternative future use. Acquired IPR&D payments, including upfront payments, transaction fees and subsequent pre-commercial milestone payments, are immediately expensed in the period in which they are incurred. Research and development costs incurred after the acquisition are expensed as incurred. R&D expenses also include the remeasurement of the research and development license consideration liability.

Research and development expenses could include:

External Expenses:

Internal Expenses:

A significant portion of our research and development costs have been external expenses. We utilize third-party contractors for our research and development activities. We track these external expenses on an individual program basis within our portfolio, when they are specific to an individual program, once a clinical product candidate or program has been identified.

We use CMOs for our manufacturing activities and we do not have our own laboratory or manufacturing facilities. Therefore, we have no material facilities expenses attributed to research and development. We track our manufacturing activities on a portfolio basis when we have multiple programs in a portfolio, but do not track these activities on a program basis within the portfolio, as these costs are deployed across multiple programs within a portfolio.

Our internal research and development costs are primarily personnel-related costs. We do not track internal costs on a portfolio or program specific basis because these costs are deployed across multiple programs and, as such, are not separately classified.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We plan to substantially increase our research and development expenses for the foreseeable future as we develop our product candidates and manufacturing processes and conduct discovery and research activities for our clinical programs. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future clinical studies of our product candidates due to the inherently unpredictable nature of clinical development. Clinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to how we pursue our product candidates and how much funding to direct to each program on an ongoing basis in response to the results of future clinical trials, regulatory developments and our ongoing assessments as to commercial potential. We will need to raise substantial additional capital in the future. Our clinical development costs are expected to increase as we commence, continue and expand our clinical trials. Our future expenses may vary significantly each period based on factors such as:

General and Administrative Expenses

General and administrative ("G&A") expenses primarily consist of professional fees for legal, accounting, and consulting costs relating to corporate matters, as well as salaries and related costs for personnel in executive and administrative functions and board of director fees, including share-based compensation.

We anticipate that our general and administrative expenses will increase in the future as we continue to support research and development activities and incur increased costs of operating as a public company. These costs include increased headcount to support expanded operations and infrastructure.

Additionally, we anticipate increased costs associated with maintaining compliance with Nasdaq rules and SEC requirements such as accounting, audit, legal and consulting services, as well as director and officer liability insurance, investor and public relations activities.

Results of Operations

Comparison of the Three months ended September 30, 2025 and 2024

The following table summarizes our results of operations for the periods presented (in thousands):

​

*Percentage change not meaningful

(1) See "-Results of Operations-Accretion and Adjustment of Redeemable Noncontrolling Interest" below.

​

Operating Expenses

Research and development expenses (in thousands):

The following table summarizes our research and development expenses for the periods presented (in thousands):

* Percentage change not meaningful

Research and development expenses increased by $5.9 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. This increase was primarily due to:

We anticipate that research and development expenses will continue to increase in the future as we conduct research and development activities.

General and administrative expenses (in thousands):

General and administrative expenses decreased by $5.7 million for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The decrease was primarily due to a $5.9 million non-cash share-based compensation expense charge for the modification of awards for the former CEO during the three months ended September 30, 2024, partially offset by an increase in professional fees.

Other Expense (Income), net

Interest income

Interest income decreased by $0.9 million for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. This is primarily due to lower interest rates on our cash and cash equivalents balance during three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Change in fair value of private placement warrants

For the three months ended September 30, 2025, we did not have any private placement warrants as all private placement warrants were exchanged for Class A Ordinary Shares in August 2024. Revaluation loss on the liability-classified private placement warrants assumed in the Business Combination was $3.9 million during the three months ended September 30, 2024, prior to the exchange.

Other expense, net

Other expense, net was relatively consistent for each of the three months ended September 30, 2025 and 2024.

Accretion and Adjustment of Redeemable Noncontrolling Interest

For the three months ended September 30, 2025, there was a $0.8 million adjustment to the redeemable noncontrolling interest recognized as an adjustment to net loss attributable to Class A Ordinary shareholders of Zura as a result of the extinguishment and reclassification upon the exercise of the Put Option to an accrued expense. The redeemable noncontrolling interest balance was $8.7 million as of September 30, 2025 which represents the remaining 50% of the Z33 Series Seed Preferred Shares subject to the Put Right. Accretion of redeemable noncontrolling interest to redemption value was $2.8 million and $2.3 million for the three months ended September 30, 2025 and 2024, respectively, resulting from the remeasurement of the Z33 Series Seed Preferred Shares to redemption value, as the Z33 Series Seed Preferred Shares are recorded at the greater of the redemption value or the initial fair value, less noncontrolling shareholder's interest in net loss of Z33.

Comparison of the Nine Months Ended September 30, 2025 and 2024

The following table summarizes our results of operations for the periods presented (in thousands):

*Percentage change not meaningful

(1) See "-Results of Operations-Accretion of Redeemable Noncontrolling Interest" below.

(2) See "-Results of Operations-Adjustment of Redeemable Noncontrolling Interest" below.

Operating Expenses

Research and development expenses:

The following table summarizes our research and development expenses for the periods presented (in thousands):

* Percentage change not meaningful

Research and development expenses increased by $16.0 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This increase was primarily due to:

Costs related to our additional product candidates (crebankitug and torudokimab), remained relatively consistent for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. We anticipate that research and development expenses will continue to increase in the future as we conduct research and development activities.

General and administrative expenses (in thousands):

General and administrative expenses increased by $1.4 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The increase was primarily due to an increase in professional fees to support our growing organization as we advance our Phase 2 clinical trials evaluating tibulizumab in SSc and HS.

Other Expense (Income), net

Interest income

Interest income decreased by $0.8 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The decrease was primarily due to lower interest rates on our cash and cash equivalents balance during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

Change in fair value of private placement warrants

For the nine months ended September 30, 2025, we did not have any private placement warrants as all private placement warrants were exchanged for Class A Ordinary Shares in August 2024. Revaluation loss on the liability-classified private placement warrants assumed in the Business Combination was $5.2 million during the nine months ended September 30, 2024.

Other income, net

Other income, net increased $0.3 million for the nine months ended September 30, 2025 and compared to the nine months ended September 30, 2024 primarily due to the $0.3 million of R&D Incentive Credits received from the U.K. government (tax authority) in May 2025 for qualifying R&D expenses incurred as part of research projects.

Accretion of Redeemable Noncontrolling Interest to Redemption Value

Accretion of redeemable noncontrolling interest to redemption value was $2.8 million and $4.6 million for the nine months ended September 30, 2025 and 2024, respectively, resulting from the remeasurement of the Z33 Series Seed Preferred Shares to redemption value, as the Z33 Series Seed Preferred Shares were recorded at the greater of the redemption value or the initial fair value, less noncontrolling shareholder's interest in net loss of Z33.

Adjustment of Redeemable Noncontrolling Interest

For the nine months ended September 30, 2025, there was a $0.8 million adjustment to the redeemable noncontrolling interest recognized as an adjustment to net loss attributable to Class A Ordinary Shareholders of Zura as a result of the extinguishment of 50% of the redeemable noncontrolling interest upon the exercise of the Put Option. For the nine months ended September 30, 2024, redeemable noncontrolling interest was adjusted from its redemption value to its initial fair value, decreased for the noncontrolling shareholder's interest in net loss of Z33. This $7.0 million adjustment was the result of a decrease in the redemption price below the initial fair value, less the noncontrolling shareholder's interest in net loss of Z33 as of September 30, 2024.

Liquidity and Capital Resources

Overview

Since our inception, we have not generated any revenue and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of September 30, 2025, we had cash and cash equivalents of $139.0 million. We have funded our operations through (i) the sale of equity, raising an aggregate of $10.0 million of gross proceeds from the sale of our convertible preferred shares of Zura Bio UK through March 31, 2023; (ii) the issuance of a promissory note, receiving net proceeds of $7.6 million in December 2022; (iii) proceeds from the Business Combination of $56.7 million in March 2023; (iv) the April 2023 Private Placement, raising an aggregate of $75.8 million in net cash proceeds; (v) the April 2024 Private Placement, raising an aggregate of $105.3 million in net cash proceeds; (vi) the sale of 1,500,000 Class A Ordinary Shares at a price of $3.80 per share under the ATM for net proceeds of $5.5 million, after sales agent commissions, in September 2024; and (vii) the sale of 3,000,000 Class A Ordinary Shares at a price of $1.75 per share under the ATM for net proceeds of $5.1 million, after sales agent commissions, in the first quarter of 2025.

We have experienced operating losses and cash outflows from operations since inception and will require ongoing financing in order to continue our research and development activities. We have not earned any revenue or reached successful commercialization of our products. Our future operations are dependent upon our ability to finance our cash requirements which will allow us to continue our research and development activities and the commercialization of our products. There can be no assurance that we will be successful in continuing to finance our operations.

Capital Requirements

To date, we have not generated revenue from any source, including the commercial sale of approved drug products, and we do not expect to generate revenue for at least the next few years. If we fail to complete the development of our product candidates in a timely manner or fail to obtain their regulatory approval, our ability to generate future revenue will be adversely affected. We do not know when, or if, we will generate any revenue from our product candidates, and we do not expect to generate revenue unless and until we obtain regulatory approval of, and commercialize, our product candidates.

We expect our expenses to continue to increase in connection with our ongoing activities, particularly as we continue the research and development, and seek marketing approval for our product candidates, as well as administrative costs associated with supporting our operations. In addition, if we obtain approval for any of our product candidates, we expect to incur significant commercialization expenses related to sales, marketing, manufacturing and distribution. Furthermore, we expect to incur additional costs associated with operating as a public company.

We will also be responsible to Pfizer and Lilly for significant future contingent payments under the Pfizer Agreement and the Lilly Licenses upon the achievement of certain development, regulatory, and sales milestones, as well as ongoing royalties on net commercial sales. The size and timing of these milestone payments will vary greatly depending upon a number of factors, and it is therefore difficult to estimate the total payments that could become payable to Pfizer and Lilly and when those payments would be due. If we achieve all of the milestones, we would be obligated to pay multimillion dollar development and regulatory milestone payments and sales milestone payments. We will be required to pay certain of these milestone payments prior to the time at which we are able to generate sufficient revenue, if any, from commercial sales of any of our product candidates. In addition to milestone payments, we are also required to pay Pfizer and Lilly under the Pfizer Agreement and Lilly Licenses, respectively, ongoing royalties in the mid-single digits to low double-digits (less than 20%) percentage range based upon thresholds of net sales of products.

We intend to continue devoting most of the net proceeds from the Business Combination, the April 2023 Private Placement, the April 2024 Private Placement and sales under the ATM to the preclinical and clinical development of our product candidates, our public company compliance costs and certain milestone payments. Based on our current business plans, we believe that our existing cash, cash equivalents and investments should be sufficient to fund our operating expenses and capital requirements through 2027. Our estimate as to how long we expect our existing cash and cash equivalents to be able to fund our operating expenses and capital requirements is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Changing circumstances, some of which may be beyond our control, could result in less cash available to us or cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.

Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical drug products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of our product candidates that we do not expect to be commercially available in the near term, if at all and are subject to successful clinical development and regulatory approval. Accordingly, we may need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through securities or debt financing, the terms of these securities or this debt may restrict our ability to operate. Any financing, if available, may involve covenants limiting and restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, entering into profit-sharing or other arrangements or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise capital when needed or on acceptable terms, we could be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

Cash Flows

The following table provides cash (used in) provided by operating, investing and financing activities (in thousands):

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Cash flows from operating activities

Net cash used in operating activities increased by $25.3 million to $42.5 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This increase was primarily due to an increase in our cash net loss of $22.0 million, which is comprised of a $12.7 million increase in net loss, as adjusted for the decrease in non-cash charges of $9.3 million, for the nine months ended September 30, 2025. The decrease in non-cash charges was due to a decrease of $4.2 million for share-based compensation expense for the nine months ended September 30, 2025 and a loss from the change in fair value on the private placement warrants of $5.2 million for the nine months ended September 30, 2024. Working capital changes resulted in increased cash used in operating activities of $3.3 million, resulting from higher prepaid expenses and other current assets and an increase in cash used in paying accounts payable and accrued expenses for the nine months ended September 30, 2025.

Cash flows from investing activities

Cash used in investing activities for the nine months ended September 30, 2025 was $0.1 million related to purchase of fixed assets. Cash used in investing activities for the nine months ended September 30, 2024 was $5.0 million which primarily related to the cash consideration paid to acquire the 2023 Lilly License.

Cash flows from financing activities

Cash provided by financing activities for the nine months ended September 30, 2025 was $5.2 million, which related to net proceeds of $5.1 million, after sales agent commissions, for the sale of Class A Ordinary Shares under our ATM and $0.1 million of proceeds from the exercise of share options.

Cash provided by financing activities for the nine months ended September 30, 2024 was $110.7 million, which related to net proceeds of $5.5 million, after sales agent commissions, for the sale of Class A Ordinary Shares under our ATM, $62.4 million of gross proceeds from the issuance of Class A Ordinary Shares in connection with the April 2024 Private Placement and $50.0 million of gross proceeds from the issuance of 2024 Pre-Funded Warrants in connection with the April 2024 Private Placement, partially offset by $7.2 million of transaction costs incurred in connection with such financing.

Contractual Obligations and Other Commitments

We have or will enter into agreements in the normal course of business with contract research organizations, contract manufacturing organizations and other vendors for research and development services for operating purposes, which are generally cancelable upon written notice. Some third party CMOs have intellectual property, such as patents and/or know-how with an annual fee and royalty bearing license to its customers that forms part of the manufacturing agreement.

Lonza License

In July 2022, we entered into a license agreement (the "Lonza License") with Lonza Sales AG ("Lonza") for a worldwide non-exclusive license for Lonza's gene expression system in exchange for varying considerations depending on a number of factors such as whether we enter further into manufacturing agreements with Lonza or with a third party, and whether we enter into sublicense agreements with third parties (including up to middle six-figure annual payments per sublicense upon commencement of a sublicense, as well as royalties of up to low-single digit percentages of net sales of certain products over a commercially standard double-digit multi-year term). The Lonza License will remain in effect until terminated. We may terminate the Lonza License at any time upon 60 days' notice, with or without cause. Lonza may terminate the Lonza License for cause upon a breach by us or for other commercially standard reasons.

Pursuant to the terms of the Lonza License, we have a license fee of $0.4 million due to Lonza annually in the fourth quarter as a result of manufacturing drug substance with a third party other than Lonza since 2023. For the year ended December 31, 2024, we recorded $0.4 million for the Lonza License, which is included in accounts payable and accrued expenses in the condensed consolidated balance sheet as of September 30, 2025 and December 31, 2024.

WuXi Biologics License

In July 2023, the Company entered into a biologics master services agreement (the "WuXi Biologics MSA") with WuXi Biologics. Pursuant to the WuXi Biologics MSA, the parties enter into work orders setting forth the services and fees associated with drug substance and drug product activities and manufacturing for torudokimab, which fees are recognized as research and development expenses as incurred. Pursuant to the WuXi Biologics MSA, the Company entered into a cell line license agreement (the "Cell Line License Agreement"), which is further described below.

The Cell Line License Agreement was for certain of WuXi Biologics' know-how, cell line, and biological materials (the "WuXi Biologics Licensed Technology") to manufacture, have manufactured, use, sell and import certain products produced through the use of the cell line licensed by WuXi Biologics under the Cell Line License Agreement (the "WuXi Biologics Licensed Products"). If we manufacture all of our commercial supplies of bulk drug product for WuXi Biologics Licensed Products with a manufacturer other than WuXi Biologics or its affiliates, we are required to make royalty payments to WuXi Biologics in an amount equal to a fraction of a single digit percentage of global net sales of WuXi Biologics Licensed Products manufactured by a third-party manufacturer (the "Royalty"). If we manufacture part of our commercial supplies of the WuXi Biologics Licensed Products with WuXi Biologics or its affiliates, then the Royalty will be reduced accordingly on a pro rata basis. The Cell Line License Agreement will continue indefinitely unless terminated (i) by us upon three months' prior written notice and its payment of all undisputed amounts due to WuXi Biologics through the effective date of termination, (ii) by WuXi Biologics for a material breach by us that remains uncured for 30 days after written notice, or (iii) by WuXi Biologics if we fail to make a payment and such failure continues for 30 days after receiving notice of such failure. As of September 30, 2025, there are no payments currently due under the Cell Line License Agreement.

Critical Accounting Estimates

Management's discussion and analysis of our financial condition and results of operations is based on our unaudited interim condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP, and on a basis consistent with those accounting principles followed by us and disclosed in Note 2 to our most recent annual audited consolidated financial statements in the 2024 Annual Report. The preparation of these unaudited interim condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.

There have been no material changes to our critical accounting policies and estimates since December 31, 2024. For a description of our critical accounting policies that affect our significant judgements and estimates used in preparation of our unaudited condensed consolidated financial statements, refer to Item 7 in "Management's Discussion and Analysis of Financial Condition and Results of Operations," contained in the 2024 Annual Report.

Recent Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements located in "Part I - Financial Information, Item 1. Financial Statements" in this Quarterly Report for a description of recent accounting pronouncements applicable to our financial statements.

Emerging Growth Company and Smaller Reporting Company Status

In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended ("Securities Act") for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Upon closing of the Business Combination, we remained an emerging growth company and may elect to extend the transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.

In addition, as an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

We would cease to qualify as an emerging growth company on the date that is the earliest of: (i) December 31, 2026, (ii) the last day of the fiscal year in which we have more than $1.235 billion in total annual gross revenues, (iii) the date on which we are deemed to be a "large accelerated filer" under the rules of the SEC, which means the market value of our Class A Ordinary Shares that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, or (iv) the date on which we have issued more than $1.0 billion of non-convertible debt over the prior three-year period. We may choose to take advantage of some but not all of these reduced reporting burdens. We have taken advantage of certain reduced reporting requirements in this Quarterly Report. Accordingly, the information contained herein may be different than you might obtain from other public companies in which you hold equity interests.

We are also a "smaller reporting company" as defined under the Securities Act and Securities Exchange Act of 1934, as amended (the "Exchange Act"). We may continue to be a smaller reporting company so long as either (i) the market value of Class A Ordinary Shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of Class A Ordinary Shares held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and have reduced disclosure obligations regarding executive compensation, and, similar to emerging growth companies, if we are a smaller reporting company under the requirements of (ii) above, we would not be required to obtain an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.