SCHEDULE: Fairmount Funds Boosts Stake in Jade Biosciences to 19.99%

Fairmount Funds Management and its affiliates increased their beneficial ownership in Jade Biosciences, Inc. to 19.99% through a recent $20 million private placement.

Summary

• Fairmount Funds Management LLC, along with its affiliates Fairmount Healthcare Fund II L.P., Fairmount Healthcare Co-Invest IV L.P., Peter Evan Harwin, and Tomas Kiselak, now beneficially own an aggregate of 10,353,875 shares of Jade Biosciences, Inc. Common Stock.
• This represents 19.99% of the outstanding Common Stock, calculated based on 51,795,275 shares outstanding as of October 8, 2025.
• The beneficial ownership includes 4,553,494 shares of Common Stock, Pre-Funded Warrants to purchase 46,381 shares of Common Stock, and 5,754,000 shares convertible from Series A Preferred Stock.
• On October 6, 2025, Fairmount Healthcare Fund II L.P. participated in a private investment in public equity (PIPE) transaction with Jade Biosciences, Inc.
• In the PIPE, Fund II purchased 1,333,126 shares of Common Stock at $9.14 per share and Pre-Funded Warrants to purchase 855,047 shares of Common Stock at $9.1399 per warrant, for a total aggregate purchase price of $19,999,815.72.
• The funds for this purchase were sourced from working capital.
• The exercise of Pre-Funded Warrants is subject to a beneficial ownership limitation of 9.99% of outstanding Common Stock, and the conversion of Series A Preferred Stock is subject to a 19.99% limitation, which automatically reduces to 9.99% if Fairmount and its affiliates own 9.0% or less of Common Stock.
• Jade Biosciences entered into a Registration Rights Agreement, committing to register the resale of the shares and warrant shares sold in the PIPE.

Sentiment

Score: 7

Explanation: The filing indicates a substantial new investment by a significant institutional holder, providing capital to the company and demonstrating investor confidence. The structured nature of the investment with beneficial ownership limitations and registration rights is standard for such transactions. While the need for a capital raise could be seen as a neutral point, the successful execution with a reputable investor is generally positive.

Positives

• A significant institutional investment of nearly $20 million provides Jade Biosciences with additional working capital.
• The increased beneficial ownership by Fairmount Funds Management and its affiliates to 19.99% signals strong investor confidence in Jade Biosciences.
• The Registration Rights Agreement facilitates liquidity for the PIPE investors, which can make future capital raises more attractive for the company.

Negatives

• The beneficial ownership limitations on the Pre-Funded Warrants and Series A Preferred Stock restrict the immediate full exercise or conversion of these securities by the investors.
• The necessity for a private placement indicates that Jade Biosciences required external capital, which could be for operational funding or strategic initiatives.

Risks

• Beneficial ownership limitations of 9.99% for Pre-Funded Warrants and 19.99% (potentially reducing to 9.99%) for Series A Preferred Stock may restrict the reporting persons' ability to fully exercise or convert their holdings.
• Jade Biosciences faces the risk of incurring specified penalties if it fails to timely file and achieve effectiveness for the resale registration statement as per the Registration Rights Agreement.

Future Outlook

Jade Biosciences is obligated to prepare and file a registration statement with the SEC for the resale of the Common Stock and shares underlying the Pre-Funded Warrants from the PIPE. This filing must occur no later than the earlier of 45 days following the PIPE closing or the business day after the company files its Quarterly Report on Form 10-Q for the quarter ended September 30, 2025. The company must then use reasonable best efforts to have this registration statement declared effective within 75 days thereafter, with specified penalties if timely effectiveness is not achieved.

Industry Context

This filing reflects a common strategy for growth-oriented companies to secure capital through private placements with institutional investors. The use of convertible securities like Pre-Funded Warrants and preferred stock, along with beneficial ownership limitations, is a standard mechanism to manage dilution and regulatory thresholds while attracting significant investment.

Corporate Governance

Related Party Transactions

• Fairmount Healthcare Fund II L.P., an affiliate of Fairmount Funds Management LLC (a reporting person), participated in the private placement with Jade Biosciences, Inc. This constitutes a transaction between the company and a significant beneficial owner/affiliate.

Stakeholder Impact

• **Shareholders**: Existing shareholders experience dilution from the issuance of new shares in the PIPE, but the capital raise provides funding for company operations. The registration rights agreement could lead to increased trading volume as investors gain liquidity.
• **Company (Jade Biosciences)**: Receives a significant capital injection of nearly $20 million, bolstering its working capital. Incurs obligations related to the registration rights agreement, including filing deadlines, potential penalties, and expenses.
• **Investors (Fairmount Funds)**: Increased their stake and influence in Jade Biosciences, securing registration rights for liquidity for their investment.

Next Steps

• Jade Biosciences to prepare and file a registration statement for the resale of Common Stock and shares underlying Pre-Funded Warrants within 45 days of PIPE closing or the business day after its Q3 2025 10-Q filing.
• Jade Biosciences to use reasonable best efforts to have the registration statement declared effective within 75 days of filing.

Key Dates

Recommendation

The filing reports a substantial capital injection of nearly $20 million into Jade Biosciences through a private placement, with Fairmount Funds Management and its affiliates increasing their beneficial ownership to 19.99%. This demonstrates significant institutional confidence and provides the company with crucial working capital. However, the need for a capital raise itself, while successfully executed, suggests ongoing funding requirements. The beneficial ownership limitations and the company's commitment to a registration rights agreement are standard for such transactions. Without further details on the company's operational performance, strategic plans, or valuation, this event primarily signals financial stability and investor backing rather than a definitive catalyst for a strong buy or sell. Therefore, a 'hold' recommendation is appropriate, advising investors to maintain their current positions while monitoring future developments.

Keywords

Jade Biosciences, Fairmount Funds Management, Schedule 13D, Beneficial Ownership, Private Placement, PIPE, Common Stock, Pre-Funded Warrants, Series A Preferred Stock, Registration Rights Agreement, Institutional Investment, Equity Financing, 008064206