UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
(Mark
One)
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2025
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from _________to_________
Commission
File Number: 001-41184
ZYVERSA
THERAPEUTICS, INC.
(Exact
name of registrant as specified in its charter)
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.0001 par value per share ZVSA *
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes: ☐ No:
☒
Indicate
by check mark if the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes: ☒ No: ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes: ☒ No: ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an 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.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes: ☐ No: ☒
If securities are registered pursuant to
Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those
error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
As of June 30, 2025, the last business day of the registrant’s most
recently completed second fiscal quarter, the aggregate market value of shares of the registrant’s common stock held by non-affiliates
of the registrant (based upon the closing sales price of $0.68 for such shares on the Nasdaq Capital Market on June 30, 2025) was approximately
$3.3 million. For purposes of calculating the aggregate market value of shares held by non-affiliates, we have assumed that all outstanding
shares are held by non-affiliates, except for shares held by each of our executive officers, directors, and 5% or greater stockholders.
In the case of 5% or greater stockholders, we have not deemed such stockholders to be affiliates unless there are facts and circumstances
which would indicate that such stockholders exercise any control over our company, or unless they hold 10% or more of our outstanding
common stock. These assumptions should not be deemed to constitute an admission that all executive officers, directors, and 5% or greater
stockholders are, in fact, affiliates of our company, or that there are not other persons who may be deemed to be affiliates of our company.
Further information concerning shareholdings of our officers, directors, and principal stockholders is included or incorporated by reference
in Part III, Item 12 of this Annual Report on Form 10-K.
As
of March 25, 2026, the number of shares outstanding of the registrant’s common stock, $0.0001
par value per share, was 8,095,921.
Page
PART I 5
1. Business 5
1A. Risk Factors 32
1B. Unresolved Staff Comments 32
1C. Cybersecurity 33
2. Properties 33
3. Legal Proceedings 33
4. Mine Safety Disclosures 33
7A. Quantitative and Qualitative Disclosures About Market Risk 43
8. Financial Statements and Supplementary Data 43
9A. Controls and Procedures 44
9B. Other Information 44
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 44
PART III 45
10. Directors, Executive Officers and Corporate Governance 45
11. Executive Compensation 48
13. Certain Relationships and Related Transactions, and Director Independence 57
14. Principal Accounting Fees and Services 58
15. Exhibits, Financial Statement Schedules 59
Signatures 62
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report on Form 10-K (this “Annual Report”) contains forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements with
respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance,
and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual
results, performance or achievements to be materially different from future results, performance or achievements expressed or implied
by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking
statements. You can identify these forward-looking statements through our use of words such as “may,” “can,”
“anticipate,” “assume,” “should,” “indicate,” “would,” “believe,”
“contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,”
“point to,” “project,” “predict,” “could,” “intend,” “target,”
“potential” and other similar words and expressions of the future.
There
are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking
statement made by us. These factors include, but are not limited to:
● our ability to continue as a going concern;
● the costs associated with our business;
● our ability to achieve and maintain profitability in the future
● our ability to effectively grow and expand operations;
● the risk of disruption to our current plans and operations;
● the impact of changes to applicable laws or regulations;
● our ability, assessment of, and strategies to compete with our competitors;
● our ability to prevent and guard against cybersecurity attacks;
● our ability to maintain and protect our brand and intellectual property; and
● other factors detailed under the section entitled “Risk Factors.”
The
foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or
risk factors that we are faced with that may cause our actual results to differ from those anticipated in such forward-looking statements.
Please see “Part I—Item 1A—Risk Factors” for additional risks which could adversely impact our business and financial
performance.
All
forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue
reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by
reference into this report. We have no obligation, and expressly disclaims any obligation, to update, revise or correct any of the forward-looking
statements, whether as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections
in good faith and believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will
result or be achieved or accomplished.
PART
I
ITEM
1. BUSINESS
All
references in this report to “ZyVersa,” the “Company,” “we,” “us,” or “our”
mean ZyVersa Therapeutics, Inc. and its subsidiaries unless we state otherwise, or the context otherwise indicates.
Company
Overview
We
are a clinical stage biopharmaceutical company leveraging proprietary technologies to develop drugs for patients with chronic renal or
inflammatory diseases with high unmet medical needs. Our mission is to develop drugs that optimize health outcomes and improve patients’
quality of life.
We
have two proprietary globally licensed drug development platforms, each of which was discovered by research scientists at the University
of Miami, Miller School of Medicine (the “University of Miami” or “University”). These development platforms
are:
We
believe that each of our product candidates has the potential to treat numerous indications in their respective therapeutic areas. Our
strategy is to focus on indication expansion to maximize commercial potential.
Our
renal pipeline is initially focused on rare, chronic glomerular diseases. Our lead indication for VAR 200 is focal segmental
glomerulosclerosis (“FSGS”). We plan to initiate a Phase 2a basket trial in FSGS and Alport syndrome patients in
Q2-2026. VAR 200 has pharmacologic proof-of-concept data in animal models representative of FSGS, Alport Syndrome, and diabetic
kidney disease.
Our
Inflammasome ASC Inhibitor IC 100 focuses on chronic inflammatory diseases. Our lead indication for IC 100 is cardiometabolic
conditions associated with obesity. IC 100’s preclinical development is nearing completion. Our focus is on advancing IC 100
toward a currently planned IND submission in Q4-2026, followed by initiation of a Phase 1 trial in healthy overweight patients
with a BMI between 27 – 30 at risk for cardiometabolic conditions. We are preparing to initiate IND-enabling preclinical
studies in an animal model of diet-induced obesity, which develops metabolic complications, and an animal model representative of an
orphan renal disease in Q2-2026.
About
Chronic Kidney Disease (CKD)
Chronic
kidney disease (“CKD”) is an increasing public health problem which affects over 750 million people worldwide, and approximately
37 million in the United States. The National Kidney Foundation estimates that approximately 80 million adults are at risk for kidney
disease in the United States. With no disease modifying drug therapies commercially available, a sizeable percentage of kidney patients
progress to end-stage renal disease (“ESRD”), requiring dialysis or transplant to survive. According to the Centers for Disease
Control and Prevention, in 2018, approximately 131,600 people in the United States started treatment for ESRD, and nearly 786,000 people
are currently living with ESRD in the United States (of those 786,000 people, approximately 71% are on dialysis, and 29% are living with
a kidney transplant). Further, the economic burden associated with chronic kidney disease is substantial, with Medicare Fee-for-Service
spending of $130 billion in 2018 according to the National Kidney Foundation. We believe the high incidence level and the steep monetary
burden caused by CKD create a need for effective, disease modifying drug therapies. We believe that VAR 200 has the potential to help
reduce the number of patients developing renal failure by mediating removal of excess renal cholesterol and lipids that contribute to
kidney damage and dysfunction,
Our
lead renal indication is FSGS, which is a progressive form of kidney disease with no approved drug therapies. Approximately 40-60% of
FSGS patients develop end stage kidney disease within 10-20 years, requiring dialysis and ultimately kidney transplant to survive. FSGS
is an orphan disease affecting approximately 40,000 people in the United States. It is characterized by injury to the kidneys’
filtration system or “glomerular podocytes” leading to scarring that is focal (i.e., affecting only some glomerulus) and
segmental (i.e., affecting only part of glomerulus). Accumulation of cholesterol and lipids in renal glomeruli, which has been associated
with structural damage and impaired kidney function, has been seen in FSGS patient biopsies and in representative FSGS animal models.
Damage to the glomeruli causes protein to leak into urine, a condition known as proteinuria. As the level of protein increases in the
urine, patients develop a specific set of symptoms known as nephrotic syndrome. Proteinuria is strongly associated with kidney disease
progression, and nephrotic syndrome is generally predictive of a poor prognosis. Approximately 70% of FSGS patients present with nephrotic
syndrome at diagnosis. By mediating removal of excess cholesterol from renal glomeruli, we believe that VAR 200 has the potential to
preserve renal structure and function and thereby reduce proteinuria that leads to FSGS progression.
About
Inflammatory Diseases
Chronic
inflammatory diseases have been recognized as one of the most significant causes of death in the world today, with more than 50% of all
deaths worldwide attributable to inflammation-related diseases such as ischemic heart disease, stroke, cancer, diabetes mellitus, chronic
kidney disease, non-alcoholic fatty liver disease (“NAFLD”), and autoimmune and neurodegenerative conditions. Excessive and
persistent activation of inflammasomes have been linked to the pathophysiology of these types of chronic diseases.
Inflammasomes
are comprised of 3 proteins: (i) one of several types of sensor molecules, (ii) an apoptosis-associated speck-like protein
containing a caspase recruitment domain (“ASC”), and (iii) proinflammatory caspase-1 (“pro-caspase-1”).
There are multiple types of inflammasomes that trigger inflammation. They are named based on their associated sensor molecule, such
as NLRP1, NLRP2, NLRP3, NLRC4, AIM2, and Pyrin. Numerous inflammatory diseases are often associated with activation of multiple
types of inflammasomes. For example, obesity is associated with activation of AIM2 and NLRP3, insulin resistance is associated with
AIM2, NLRP3, and NLRC4 and diabetic nephropathy is associated with activation of AIM2, NLRP3, and NLRC4. The ASC component of inflammasomes
is a promising drug target since it is a component of the six most common types of inflammasomes referenced above. We believe
targeting ASC is more effective than targeting a specific sensor protein such as NLRP3, that inhibits only one type of
inflammasome. In addition to its pivotal role in inflammasome formation and activation required for initiation of an inflammatory
response, ASC also plays a role in the perpetuation of inflammation associated with extracellular release of ASC specks. By
targeting ASC, we believe IC 100 has potential to effectively control inflammation in a multitude of inflammatory
diseases.
Our
Pipeline
The
goal of our pipeline is to target renal and inflammatory indications with high unmet medical needs, which we believe can be addressed
by our mechanisms of action. We intend to further enhance and expand our product portfolio through the development of multiple indications
for VAR 200 and IC 100 each, and through potential in-licensing of promising renal and anti-inflammatory product candidates.
Our
current pipeline consists of the following:
Development
Phase: Phase in which a drug formulation is developed that ensures the proper drug delivery parameters are met
Preclinical
Phase: Phase in which in vitro (laboratory) and in vivo (animal) studies are conducted to gather evidence to justify
clinical trials in humans
Phase
1: First testing in healthy humans, primarily to test safety
Phase
2: Testing in a small number of patients to assess safety, monitor how a drug is metabolized, and gather initial data on efficacy
Phase
3: Large trial in patients to test efficacy and safety that are used for regulatory approval
Business
Strategy
We
seek to be recognized as a leading biopharmaceutical company at the forefront of innovation for patients with high unmet medical needs.
We are committed to restoring health and transforming the lives of patients through development of biopharmaceutical products. Our strategy
is to:
The
dates and events reflected in the foregoing are estimates only, and there can be no assurances that the events included will be completed
on the anticipated timeline presented, or at all. Further, there can be no assurances that we will be successful in the development of
any of our product candidates, or any other products or product candidates we may develop in the future, or that any product candidate
we may develop in the future, will receive FDA approval for any indication.
Our
Product Candidates
Cholesterol
Efflux Mediator TM VAR 200 (2-hydroxypropyl-beta-cyclodextrin, 2HPβCD)
Cholesterol
Efflux Mediator VAR 200 is an injectable drug in clinical development for treatment of chronic glomerular diseases, initially focusing
on FSGS as the lead. Alport syndrome and diabetic kidney disease indications may be pursued based on our indication expansion strategy.
VAR
200 was developed to mediate removal of excess cholesterol that damages renal glomeruli, with the intent to preserve renal structure
and function and reduce proteinuria that leads to glomerular disease progression. We are planning to initiate a small Phase 2a basket
trial in FSGS and Alport syndrome patients in Q2-2026.
Role
of Cholesterol and Lipid Accumulation in Glomerular Diseases (Including FSGS, Alport Syndrome, and Diabetic Kidney Disease)
In
chronic glomerular diseases, cholesterol and lipids accumulates in glomerular podocytes, due in part to impaired transport out of the
cell, or “efflux,” resulting from reduced expression of the cholesterol transporters ABCA1 and ABCG1. Glomerular lipid accumulation
has been demonstrated in in vitro podocyte studies, human biopsy data, and in animal models of various kidney diseases, including
FSGS, Alport syndrome, and diabetic kidney disease. As shown below, the lipid accumulation causes distorted podocyte structure, damaged
podocyte foot processes, and podocyte detachment and loss, which impairs kidney filtration resulting in proteinuria and disease progression.
Preclinical animal models with VAR 200 show that reduction in podocyte cholesterol and lipids protects against ongoing kidney damage
and progression of disease, which we hypothesize will translate to patients with kidney disease and potentially reduce or delay the need
for dialysis and ultimately transplant.
VAR
200 Mechanism of Action
VAR
200’s active ingredient, 2HβCD, is comprised of seven sugar molecules bound together in a 3-D ring with a hydrophobic core
and hydrophilic exterior. VAR 200 mediates cholesterol and lipid efflux both passively and actively by interacting with hydrophilic components
of the glomerular membrane.
Passive
Cholesterol Efflux
Passive
cholesterol efflux occurs with formation of 2HPβCD dimers, which bind to the cell membrane surface and incorporate cholesterol into
its hydrophobic core as an inclusion complex. Release of the 2HPβCD/cholesterol inclusion complex from the cell membrane surface
brings the cholesterol into solution for transfer to cholesterol acceptors, such as high-density lipoprotein (“HDL”).
Active
Cholesterol Efflux
Active
cholesterol efflux occurs through mediating metabolism of free cholesterol into oxysterols. Oxysterols activate the liver X receptor
(“LXR”)-transcription factors, resulting in induction of cellular cholesterol efflux pathways, including upregulation cholesterol
efflux transporters, ABCA1 and ABCG1, which transport free cholesterol outside the cell to cholesterol acceptors, such as HDL.
Preclinical
Support for VAR 200
We
believe that VAR 200 has an established benefit/risk profile supported by IND-enabling preclinical studies demonstrating safety and proof
of concept, which led to FDA clearance to progress into Phase 2 clinical trials. Data from animal models representing FSGS, Alport Syndrome,
and diabetic kidney disease consistently demonstrate that VAR 200 promotes cholesterol and lipid removal from podocytes, protecting the
kidney’s filtration system from damage and reducing protein spillage into the urine or “proteinuria.” These types of
outcomes are thought to be key to delaying or preventing progression of kidney disease. For a detailed overview of VAR 200’s preclinical
data, refer to the VAR 200 White Paper at https://www.zyversa.com/renal-lipids/white-paper-renal-lipids-in-the-pathogenesis-of-kidney-disease.
Inflammasome
ASC Inhibitor IC 100
IC
100 is a humanized monoclonal antibody inflammasome ASC inhibitor in preclinical development for the treatment of numerous inflammatory
diseases, with cardiometabolic conditions associated with obesity as the lead. IC 100 was developed with the intent of attenuating chronic
aberrant inflammation that is pathogenic in a multitude of inflammatory diseases by attenuating initiation and perpetuation of inflammation
to stop disease progression and improve quality of life.
Our
focus is on advancing IC 100 toward a planned IND submission in Q4-2026, following which we intend to initiate a Phase 1 trial
in healthy subjects who are overweight (BMI 27 -30) and at risk of cardiometabolic conditions. Non-GLP toxicology data with IC 100 in
mice and non-human primates (“NHP”) demonstrate no adverse effects nor anti-drug antibodies at doses as high as 300 mg/kg.
We are preparing to initiate IND-enabling preclinical studies in an animal models of diet-induced obesity that develops metabolic complications,
and an animal model representative of an orphan renal disease in Q2-2026.
Role
of Inflammasomes in Inflammatory Diseases
Excessive
and persistent activation of inflammasomes have been linked to the pathophysiology of inflammatory diseases. Inflammasomes are multiprotein
complexes that initiate an immune response to pathogens or internal danger signals. They are comprised of three basic proteins: (i) one
of several types of sensor molecules (e.g., NLRP1, NLRP2, NLRP3, NLRC4, AIM2, and Pyrin), (ii) adaptor protein, ASC, and (iii) pro-caspase
1. Each sensor molecule responds to different pathogens or internal danger signals. Inflammasomes are named by their sensor molecule
(e.g., NLRP3 inflammasome).
As
depicted below, in the presence of harmful pathogens or cell damage, an intracellular sensor molecule (e.g., NLRP3) is triggered, stimulating
recruitment of adaptor ASC, which in turn recruits pro-caspase-1 to form an inflammasome. The inflammasome is the organizing center that
recruits additional ASC and polymerizes in a prion-like structure to form a large filamentous signaling platform, known as an ASC Speck.
ASC Specks provide a scaffold for pro-caspase-1 recruitment, which triggers conversion of pro-caspase-1 to active caspase-1, which in
turn converts the cytokine pro-IL-1ß to its active form IL-1ß, initiating the inflammatory response. Activated caspase-1
also drives cleavage of Gasdermin D, which triggers pyroptosis, a form of programmed cell death, releasing active cytokines and ASC Specks
into the extracellular space, with continued activation of pro-IL-1ß, heightening and perpetuating the inflammatory response in
neighboring cells and tissues. Although inflammasome triggering of the innate immune response is essential for protection against pathogens,
persistent overactivation of inflammasomes can lead to chronic inflammation underlying a multitude of inflammatory conditions and diseases.
Numerous inflammatory diseases are associated with activation of multiple types of inflammasomes. For example, obesity is triggered by
AIM2 and NLRP3 and Parkinson’s disease is triggered by NLRP1, NLRP3, and AIM2.
Inflammasome
ASC Inhibitor IC 100 Mechanism of Action
IC
100 was designed to bind to key amino acids in adaptor protein ASC that govern ASC recruitment into the inflammasome complex and ASC
Speck formation:
Inflammasome
Activation in One Condition Can Impact Another
A
paper published in Translational Research demonstrates that inflammasome activity and signaling proteins triggered by one unique
inflammatory condition can impact and potentially interact with another. The authors provided extensive evidence that traumatic
brain injury (TBI) and Alzheimer’s disease (AD) are linked by activation of multiple types of inflammasomes (NLRP3, NLRP1, and
AIM2). In each condition, inflammasome activation leads to cell death and release of active cytokines and ASC specks to neighboring
cells allowing for one condition to potentially exacerbate the other. For example, individuals with a history of moderate TBI have a
2.3 times greater risk of developing AD. Likewise, AD pathology is potentially exacerbated by inflammasome activation in patients
with TBI through IL-18 and pathological ASC speck interactions with amyloid beta and phosphorylated tau, hallmarks of AD. The
authors reported that inflammasome ASC represents a promising therapeutic target for TBI and AD because of ASC’s unique role
in heightening and perpetuating inflammation in neighboring cells, and its pathological interactions with amyloid beta and
phosphorylated tau. In a subsequent study, also published in Translational Research by several of the same authors, researchers
evaluated if blocking inflammasome activity by inhibiting ASC with IC 100 reduces the elevated inflammatory response in AD mice
after TBI. Data demonstrated that IC 100 resulted in reduction of inflammasome-mediated cytokine IL-1β in the injured cortex of
AD mice at 1-week post-injury.
Preclinical
Support for IC 100
Non-GLP
toxicology studies in mice and non-human primates demonstrate that IC 100 has a good safety profile. There were no drug-related adverse
events at doses up to 300 mg/kg in either species. Likewise, epigenetic screening demonstrates a lower immunogenicity potential than
many biologics. Based on our preclinical study in an animal model representing MS, inflammation was attenuated without immunosuppression.
IC
100 has preclinical data substantiating its mechanism of action in both CNS and Non-CNS diseases, summarized below. For a
detailed overview of IC 100’s preclinical data, refer to the IC 100 White Paper at
https://investors.zyversa.com/static-files/64964310-ab95-4a06-bc47-dd44c63dc5c7.
For a detailed overview of IC
100’s preclinical data, refer to the IC 100 White Paper at https://investors.zyversa.com/static-files/64964310-ab95-4a06-bc47-dd44c63dc5c7.
Market
and Commercial Opportunity
We
believe that each of our product candidates has potential for treatment of numerous diseases with significant unmet medical needs. VAR
200 has potential to treat Alport syndrome, diabetic nephropathy, and other glomerular diseases in addition to its lead indication, focal
segmental glomerulosclerosis (FSGS). IC 100 has potential to treat multiple and diverse inflammatory diseases, including, but not limited
to orphan renal diseases, Parkinson’s and Alzheimer’s diseases, in addition to its lead indication, cardiometabolic conditions
associated with obesity.
Cholesterol
Efflux MediatorTM VAR 200 Opportunity
According
to a report from Precedence Research, the global renal drug market was $20 billion in 2024 and projected to reach $30 billion by 2034.
There are two key drivers of this growth. The first is the significant increase in obesity and diabetes which lead to renal disease.
The second is a resurgence in development of innovative new drug therapies resulting from the increasing economic and societal burdens
of chronic kidney disease, as well as advances in technology facilitating a better understanding of the molecular mechanisms underlying
kidney disease. A more recent growth driver is data from the Parasol project supporting use of 2-year changes in proteinuria as an endpoint
for approval of FSGS drugs, that will shorten the regulatory path. The Parasol project, co-chaired by Dr. Aliza Thompson, Director of
the Cardio-Renal Division at the FDA, was prompted by the urgent need to develop safe and effective therapies for people with FSGS since
there are no approved drug therapies. The goal of Parasol was to define a traditional or reasonably likely surrogate endpoint for use
in FSGS clinical trials to enable accelerated approval of novel therapies and expedite access to effective treatments for this rare but
devastating glomerular disorder. PARASOL was a partnership among NephCure, the National Kidney Foundation, the International Society
of Glomerular Disease, and the Kidney Health Initiative, who brought together all the relevant parties - patients, clinical nephrologists,
industry sponsors, basic scientists, biostatisticians, and regulatory authorities. PARASOL’s analysis of 1600 FSGS patients found
that a reduction in proteinuria over 24 months was strongly associated with a reduced risk of kidney failure. Based on the data, Parasol
recommended proteinuria as a surrogate endpoint for full regulatory approval of FSGS drugs.
Following
is a summary of the market for VAR 200’s current pipeline.
IC
100 Opportunity
Anti-Inflammatory
Biologics Market
According
to a report from Precedence Research, the global anti-inflammatory biologics market was valued at $104.81 billion in 2024, and it is
projected to reach $185.51 billion by 2034. This growth is driven by the rising incidence of chronic inflammatory diseases associated
with population aging, lifestyle changes, and environmental factors. The growth trajectory is expected to accelerate over time with R&D
focus on use of anti-inflammatory biologics, such as inflammasome inhibitors, as add-on to GLP-1 drugs to treat the inflammatory comorbidities
of obesity. According to Morgan Stanley, global sales of GLP-1 drugs were $6 billion in 2023. With the surging demand seen in 2024, they
project global sales to reach between $105 to $144 billion by 2030. Key drivers are the unsurpassed weight loss achieved and the broadening
evidence that these drugs have potential to improve outcomes in numerous obesity-related comorbidities. Following is a summary of the
market for IC 100’s current pipeline.
Other
Development Candidates
We
continue to seek to identify and acquire commercialization rights to other technologies relating to renal and inflammatory diseases.
Strategic
Alliances and Arrangements
Unless
otherwise specifically provided herein, all share and per share information (including information relating to warrants) reflect the
1-for-35 reverse stock split and the 1-for-10 reverse stock split that we effected on December 4, 2023, and April 25, 2024, respectively.
L&F
Research LLC License Agreement
We
entered into a License Agreement with L&F Research LLC (“L&F Research”) effective December 15, 2015, as amended (the
“L&F License Agreement”), pursuant to which L&F Research granted us an exclusive, royalty-bearing, worldwide, sublicensable
license under the patent and intellectual property rights and know-how specific to and for the development and commercialization of VAR
200, for the treatment, inhibition or prevention of kidney disease in humans and symptoms thereof, including FSGS. L&F Research was
founded by the VAR 200 inventors and researchers at the University of Miami Miller School of Medicine, who licensed the intellectual
property from the University of Miami. Pursuant to the L&F License Agreement, we (i) paid L&F Research an upfront license fee
of $200,000 upon signing; (ii) agreed to make additional payments to L&F Research upon the achievement of certain development milestones
up to an aggregate maximum of $21.5 million; and (iii) agreed to pay L&F Research royalty payments on net sales of any resulting
product upon the achievement of certain net sales milestones, ranging from 5% to 10% based on certain annual net sales thresholds. In
addition, upon the signing of and pursuant to the L&F License Agreement, we issued to L&F Research four (4) warrants (the “L&F
Warrants”), of which one (1) warrant was exercised for 200 shares of common stock and the remaining three (3) warrants are exercisable
in the aggregate for 300 shares of our common stock upon certain terms and conditions set forth in the L&F License Agreement and
the L&F Warrants.
On
December 23, 2022, we entered into a Second Amendment to Waiver of Certain Rights under License Agreement (the “Second Amendment”)
with L&F Research LLC (“L&F Research”), amending the previously disclosed Waiver of Certain Rights under License
Agreement, dated March 2, 2022, between ZyVersa Therapeutics, Inc., a Florida corporation (“Old ZyVersa”) and L&F Research,
as amended (the “Waiver Agreement”). The Second Amendment further extended to March 31, 2023, the period that L&F Research
waived its right to terminate the License Agreement and exercise any other remedies thereunder, with respect to $1,500,000 of aggregate
milestone payments due to L&F Research pursuant to the L&F License Agreement (the “Milestone Payments”).
On
February 28, 2023, we entered into an Amendment and Restatement Agreement (the “Restatement”) with L&F Research, amending
and restating the Waiver Agreement, as amended. The Restatement provides that, with respect to the Milestone Payments, L&F Research
waives its right to terminate the L&F License Agreement and exercise any other remedies thereunder, until (a) March 31, 2023, as
to $1,000,000 of such Milestone Payments (“Waiver A”), and (b) January 31, 2024, as to $500,000 of such Milestone Payments
(“Waiver B”). Waiver A is contingent upon (i) forgiveness by the Company of $351,579 in aggregate principal amount outstanding
under the previously disclosed Promissory Note, dated December 13, 2020, between L&F Research, as the borrower, and Old ZyVersa,
as the lender (the “Note”), and (ii) a cash payment by the Company to L&F Research in the amount of $648,421, in each
case, to be effectuated on or before March 31, 2023. Waiver B is contingent upon a cash payment by the Company to L&F Research in
the amount of $500,000 to be effectuated on or before the earlier of (x) January 31, 2024, and (y) ten business days from the date that
the Company receives net proceeds of at least $30,000,000 from the issuance of new equity capital. All other terms of the L&F License
Agreement remain in effect.
On
March 29, 2023, the Company paid the $648,421 of cash to L&F, thus meeting the conditions of Waiver A, which also had the effect
of canceling the Note Receivable and the Put Option.
On
January 30, 2024, the Company paid $500,000 of cash to L&F, thus meeting the conditions of Waiver B.
The
L&F License Agreement will terminate at the expiration of the last-to-expire of all royalty payment obligations under the L&F
License Agreement and we have the right to terminate the L&F License Agreement upon 60 days’ notice.
The
L&F License is terminable by either party if the other party is in material breach of the agreement, and has not cured the breach
within 60 days of notice. If we fail to make payments under the agreement, L&F Research may terminate the agreement on 10 days’
notice. Further, L&F Research has the right to terminate the L&F License Agreement immediately upon written notice to us if we
directly, or through assistance granted to a third party, commence any interference or opposition proceeding with respect to, challenges
the validity or enforceability of, or opposes any extension of or the grant of a supplementary protection certificate with respect to,
any Licensor Patent Right (as defined in the agreement).
In
the event we do not complete the Throughput Milestones by the Throughput Milestone Completion Date (as each term is defined in the agreement),
L&F Research may elect upon 90 days written notice to us to either (a) terminate the agreement in its entirety; or (b) terminate
the exclusivity provisions of the agreement and convert the license to non-exclusive. However, before L&F Research terminates the
agreement or terminates exclusivity, the parties will negotiate in good faith to agree upon a revised date for the relevant Throughput
Milestone if we fail to achieve a particular Throughput Milestone by the specified time occurs because of a Force Majeure Event or a
Significant Change (as those terms are defined in the agreement). In the event we cannot agree as to whether a Force Majeure Event or
Significant Change has occurred by the later of the date of failure to meet the original Throughput Milestone Completion Date or 15 days
after our notice that a Force Majeure Event or Significant Change has occurred, L&F Research may exercise its termination rights.
InflamaCORE,
LLC License Agreement
We
entered into a License Agreement with InflamaCORE, LLC (“InflamaCORE”) effective as of April 18, 2019 (the “InflamaCORE
License Agreement”), pursuant to which InflamCORE granted us an exclusive, worldwide, royalty-bearing, sublicensable license to
patents, intellectual property rights, technology, and know-how to and for the development and commercialization of IC 100, in all therapeutic
and diagnostic uses in all diseases and conditions. InflamaCORE was founded by the IC 100 inventors and researchers at the University
of Miami Miller School of Medicine, who licensed the intellectual from the University of Miami and Selexis SA, a cell line development
company in Switzerland. Pursuant to the InflamaCORE License Agreement, we (i) paid InflamaCORE an upfront license fee of $346,321.08
upon signing; (ii) agreed to make additional payments to InflamaCORE upon the achievement of certain development milestones up to an
aggregate maximum of $22.5 million; (iii) agreed to pay InflamaCORE royalty payments on net sales of certain resulting products upon
the achievement of certain net sales milestones, ranging from 5% to 10% depending on the level of net sales; (iv) agreed to pay University
of Miami royalty payments on net sales of certain resulting products upon the achievement of certain net sales milestones, ranging from
3% to 6% of net sales, depending on the level of net sales; and (v) were granted a sublicense to all third-party technologies, including
the Selexis cell line technology, and agreed to pay to InflamaCORE the obligations of their Selexis license. Pursuant to the Selexis
license, we paid an upfront license fee to Selexis of CHF 50,000. We are also obligated to pay to Selexis (through reimbursement of InflamaCORE)
(i) an annual maintenance fee of CHF 10,000, (ii) payments upon the achievement of certain development milestones up to an aggregate
maximum of approximately CHF 1.1 million, and (iii) a royalty payment on net sales equal to a low single digit. Additionally, upon the
execution of and pursuant to the InflamaCORE License Agreement, we issued (i) 114 shares of our common stock to the University of Miami,
(ii) and four (4) warrants to InflamaCORE (the “InflamaCORE Warrants”) of which one (1) warrant exercisable for 227 shares
of common stock expired in April 2024 and the remaining three (3) warrants are exercisable in the aggregate for 342 shares of our common
stock upon certain terms and conditions set forth in the InflamaCORE License Agreement and the InflamaCORE Warrants.
The
InflamaCORE License Agreement will terminate at the expiration of the last-to-expire of all royalty payment obligations under the InflamaCORE
License Agreement and we have the right to terminate the InflamaCORE License Agreement upon 60 days’ notice. The license may be
terminated by either party if the other party is in material breach of the agreement, and has not cured the breach within 60 days of
notice. If we fail to make payments under the agreement, InflamaCORE may terminate the agreement on 10 days’ notice. Further, the
agreement may be terminated by a party upon the bankruptcy or insolvency of the other party.
Upon
any termination of the InflamaCORE License Agreement, the license granted to us will automatically terminate and revert back to InflamaCORE.
Manufacturing
We
do not currently own or operate any facilities to formulate, manufacture, test, store, package or distribute VAR 200, IC 100 and any
other product candidate that we are developing or may seek to develop and do not currently have the capabilities to conduct such activities.
We currently rely on third parties to manufacture, store and test VAR 200, IC 100 and any other product candidate that we may seek to
develop. We will depend on third-party suppliers and manufacturing organizations for all our required raw materials and drug substance
and to formulate, manufacture, test, store, package and distribute clinical trial quantities of VAR 200, IC 100 and any other product
candidate that we may seek to develop. We plan to continue developing our network of third-party suppliers and manufacturing organizations,
but in the future we may decide to consider investing in our own manufacturing and supply capabilities if there is a technical need or
a strategic or financial benefit.
We
have internal personnel and utilizes consultants with extensive technical, manufacturing, analytical and quality experience to oversee
our contract manufacturing and testing activities. Manufacturing is subject to extensive regulations that impose procedural and documentation
requirements, including, but not limited to, record-keeping, manufacturing processes and controls, personnel, quality control and quality
assurance. Our systems, procedures and contractors are required to be in compliance with these regulations and are assessed through regular
monitoring and formal audits.
Research
and Development
We
spent approximately $1.1 million for the year ended December 31, 2025, and $1.8 million for the year ended December 31, 2024. For the
year ended December 31, 2025, there was an $18.6 million impairment charge related to in-process research and development (“IPR&D”),
which was recorded upon the determination that the carrying value of our IPR&D intangible asset may not be recoverable.
Sales
and Marketing
We
currently have no marketing, sales or distribution capabilities. To commercialize any product that is approved for commercial sale, we
must either develop our own sales, marketing and distribution infrastructure or collaborate with third parties that have such commercial
infrastructure and relevant marketing and sales experience. We expect to be able to build our commercial infrastructure over time in
advance of any anticipated launch of our products, and we may rely on licensing, co-sale and co-promotion agreements with strategic partners
for the commercialization of our products. If we establish the commercial infrastructure to support the potential marketing of VAR 200,
IC 100 and any other product candidate that we may seek to develop, such commercial infrastructure could be expected to include a targeted
sales force supported by sales management, internal sales support, a market access group, an internal marketing group and distribution
support. To establish the proper commercial infrastructure, we would need to invest significant financial and management resources prior
to any approval of VAR 200, IC 100 and any other product candidate that we may seek to develop.
Competition
The
pharmaceutical and biotechnology industry is highly competitive. These competitors include many public and private companies, universities,
governmental agencies and other research organizations actively engaged in the research and development of products that may be similar
to our product candidates that we seek to develop or address similar indications. Many competitors have substantially greater financial,
technical and human resources than we possess and may be better equipped to develop, manufacture and market their products. We also expect
that the number of companies seeking to develop products and therapies similar to our products may increase over time. Competitive factors
in the pharmaceutical and biotechnology industry include product efficacy, safety, ease of use, price, demonstrated cost-effectiveness,
marketing effectiveness, stakeholder support, service, reputation, and access to technical information. Any products that we develop
and seek to commercialize may not be able to compete with the products of our competitors with respect to one or more of these considerations.
For
instance, there are currently several other companies with drugs in clinical development for FSGS, targeting inflammation, hypertension,
and fibrosis. Among our competitors, there are products in various phases of development, including compounds in Phase 2 and Phase 3
of development. However, we believe that VAR 200 may be the only drug currently in development that lipotoxicity. The current treatment
algorithm for renal disease includes multiple drug therapies to address the various pathways contributing to renal disease. We believe
that VAR 200 could potentially be used in combination with other treatment modalities addressing other pathogenic pathways.
Additionally,
there are a number of other companies developing drugs targeting inflammasome pathways, mainly NLRP3 inflammasome pathways, some of which
have clinical trials underway in multiple indications. Indications being evaluated in current Phase 2 clinical trials include obesity-related
cardometabolic comorbidities, obesity-related osteoarthritis, recurrent pericarditis, and Parkinson’s disease. We believe that
IC 100 may be the only monoclonal antibody targeting the ASC component of the inflammasome, which can potentially inhibit multiple types
of inflammasomes and disrupt the structure and function of ASC specks to prevent initiation and perpetuation of inflammation.
Intellectual
Property
We
seek to protect our products and technologies through a combination of patents, regulatory exclusivity, and proprietary know-how. Our
goal is to obtain, maintain, and enforce patent protection for our products, formulations, processes, methods, and other proprietary
technologies, preserve our trade secrets, and operate without infringing on the proprietary rights of other parties, both in the United
States and in other countries. Our policy is to actively seek to obtain, where appropriate, the broadest intellectual property protection
possible for our current compositions and methods and any future compositions and methods under development, proprietary information,
and proprietary technology through a combination of contractual arrangements and patents, where applicable, both in the United States
and abroad. However, even patent protection may not always afford complete protection against competitors who seek to circumvent our
patents. For additional information, see section entitled “Risk Factors — Risks Related to Our Intellectual Property.”
Pursuant
to the L&F License Agreement, we have an exclusive, sublicensable, worldwide license to the inventions relating to 2-hydroxypropyl-beta-cyclodextrin
(“2HPβCD”) for the treatment of kidney disease in humans, including FSGS, as described in certain method-of-use patents
and pending applications filed in the United States and selected foreign countries (Canada, China, Europe, Japan, and Mexico) from two
international patent applications filed pursuant to the provisions of the Patent Cooperation Treaty (“PCT”). Currently, there
are 4 issued United States patents and 12 foreign granted or allowed applications. These patents, and any patents that issue from the
pending applications, are anticipated to have a term to at least 2033, absent of any patent term adjustments or extensions.
Pursuant
to the InflamaCORE License Agreement, we have an exclusive, sublicensable, worldwide license to the inventions relating to recognition,
diagnosis, and treatment of inflammatory responses and inflammation mediated by inflammasomes and components thereof, including but not
limited to IC 100 which is a humanized IgG4 antibody directed against a specific amino acid sequence of the pyrin domain of Apoptosis-associated
speck-like protein (“ASC”). The patent portfolio for IC 100 includes 5 patent families covering composition of matter, biomarker,
and method-of-use patents and their related national stage filings in the United States and selected foreign countries (Australia, Brazil,
Canada, Chile, China, Colombia, Europe, India, Indonesia, Israel, Japan, Malaysia, Mexico, Philippines, Singapore, South Africa, South
Korea, Thailand, Vietnam). Currently, there are 6 issued United States patents, 14 foreign granted patents or allowed applications, and
59 pending applications. These patents, including composition of matter patents that have a term until December 2037, and any patents
that issue from the pending applications are anticipated to have a term until at least 2028, absent of any patent term adjustments or
extensions.
At
this time, ZyVersa has no patents or patent applications outside of those connected to the L&F or InflamaCORE License Agreements.
Even
though we have licensed issued patents, there is no guarantee that the validity of the patents will be upheld if challenged by a third
party. There can be no assurance that any of our intellectual property rights will afford us any protection from competition.
We
use the trade names Cholesterol Efflux MediatorTM and Lipid Efflux MediatorTM in association with our VAR 200 pharmaceutical
preparations and plan to seek federal trademark protection in the United States and foreign national trademark protection where available
and when appropriate. No other applications for trademark protection have been filed for any names or logos for products or technologies
in development. We intend to use these marks in connection with our pharmaceutical product candidates currently in development as added
levels of intellectual property protection for our proprietary technologies.
Regulatory
Matters
In
the United States, the FDA regulates drug products, biological products, and medical devices under the Federal Food, Drug, and Cosmetic
Act (“FDCA”), the Public Health Service Act (“PHSA”), and other federal laws and regulations. These FDA-regulated
products are also subject to state and local statutes and regulations, as well as applicable laws or regulations in foreign countries.