UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR Table of Contents ☐ 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: 001-41859 CARGO Therapeutics, Inc. (Exact name of Registrant as specified in its Char ...

Core Insights - CARGO Therapeutics has decided to suspend the development of its CRG-023 product candidate and its allogeneic platform, while also reducing its workforce by approximately 90% to preserve cash and maximize shareholder value [2][7] - The company has appointed Anup Radhakrishnan as interim CEO to lead efforts towards a reverse merger or other business combination [2][7] - As of December 31, 2024, CARGO had cash, cash equivalents, and marketable securities totaling $368.1 million [3][7] Company Strategy - The Board of Directors concluded that ceasing development operations is in the best interests of shareholders, aiming to maximize value and find a permanent home for remaining assets [4] - The company is focused on expeditiously winding down operations while minimizing additional liabilities [8] Background Information - CARGO Therapeutics is a biotechnology company that develops next-generation cell therapies for cancer, with a focus on addressing limitations of existing therapies [5] - The company's pipeline included CRG-023, a tri-specific CAR T-cell therapy, and a novel allogeneic platform designed to enhance the durability and safety of treatments [5]

Financial Performance - The company incurred a net loss of $167.5 million and $98.1 million for the years ended December 31, 2024 and 2023, respectively, with an accumulated deficit of $312.6 million as of December 31, 2024[173]. - The company has no products approved for commercial sale and has not generated any revenue from product sales since its inception in December 2019[173]. - The company expects operating losses to continue to increase substantially as it expands research and development efforts and seeks regulatory approval for product candidates[175]. - The company will require additional funding to finance operations and may need to raise capital sooner than planned due to various factors[180]. - The company anticipates incurring significant commercialization expenses related to product manufacturing and marketing if any product candidates receive regulatory approval[182]. Research and Development - The company has devoted significant resources to building its organization and platform technologies, with a focus on clinical and preclinical development[174]. - The company is focusing its research and development efforts on engineered T cell therapy, which involves complex and novel technologies that may lead to significant delays and unexpected costs in product development[211]. - The regulatory approval process for the company's novel product candidates is expected to be more complex and expensive compared to existing therapies, with no assurance of successful outcomes in clinical trials[212]. - The company’s ability to develop product candidates depends on timely completion of clinical trials and regulatory approvals, which may be outside its control[201]. - The company may face significant delays or inability to commercialize product candidates if it does not achieve development milestones in expected timeframes[201]. Clinical Trials and Regulatory Risks - The company announced the discontinuation of the FIRCE-1 Phase 2 study of firi-cel due to results not supporting a competitive benefit-risk profile[179]. - The company has not yet completed a clinical trial for any of its product candidates, indicating limited experience in conducting such trials[257]. - Patient enrollment in clinical trials is significantly affected by the availability of eligible patients, particularly for orphan or rare diseases[266]. - Adverse side effects associated with product candidates could lead to delays in approval or even abandonment of clinical trials[271]. - The FDA has established the Office of Therapeutic Products to consolidate the review of cell therapy products, which may lengthen the regulatory review process and increase development costs[252]. Competition and Market Challenges - The company faces intense competition in the biotechnology and pharmaceutical industries, which may hinder its ability to discover and commercialize new products effectively[204]. - Any significant delays in clinical trials could shorten the exclusive commercialization period for product candidates, allowing competitors to enter the market first[265]. - The company may face challenges in recruiting patients due to competition from other pharmaceutical companies targeting the same diseases[267]. - The historical failure rate for product candidates in the industry is high, with many candidates failing in clinical trials despite promising early results[256]. - The company currently lacks marketing, sales, and supply chain infrastructure, which poses risks to the commercialization of its product candidates[222]. Financial Obligations and Funding - The company has substantial obligations from license agreements, including potential payments of up to $12.0 million in milestone payments and low single-digit percentage royalties on net sales under the agreement with Stanford University[190]. - Under the license agreement with Oxford, the company may be required to pay up to $13.8 million for certain milestones and up to $9.0 million for each additional target program, along with low single-digit percentage royalties on net sales[191]. - The company may need to issue equity or convertible debt securities to satisfy payment obligations, potentially causing dilution to stockholders[192]. - The company is obligated to pay the NCI up to $18.0 million and $17.8 million in milestone payments under recent license agreements[191]. - Future royalty obligations on sales of products may be significant, depending on the technology and intellectual property used[355]. Intellectual Property and Licensing - The company relies on intellectual property licensed from third parties, and any breach or termination of these agreements could harm its business operations[351]. - The U.S. government may retain rights to intellectual property developed with their funding, which could lead to loss of significant rights if obligations are not met[363]. - The company has claims in U.S. patents covering the composition-of-matter of product candidates expiring in 2033, with future protection dependent on pending applications[364]. - Obtaining and enforcing patents is costly and time-consuming, with potential delays due to health epidemics impacting operations[368]. - The complexity of licensing agreements may lead to increased financial obligations or reduced rights, impacting business operations[357]. Compliance and Regulatory Challenges - Regulatory compliance related to data privacy and security is complex and evolving, with potential penalties for violations, including fines and operational disruptions[243]. - The company faces increased scrutiny and potential fines under various data protection laws, such as the EU GDPR, which can impose fines of up to €20 million or 4% of annual global revenue[245]. - Compliance with various healthcare laws and regulations could increase operational costs and expose the company to significant penalties if violations occur[328]. - The company may face challenges in obtaining adequate reimbursement for companion diagnostic tests, which could limit the adoption of its therapies[315]. - The company is exposed to risks related to employee misconduct, including potential violations of FDA regulations and healthcare fraud laws, which could lead to significant penalties and reputational harm[331]. Cybersecurity and IT Risks - The company is increasingly dependent on information technology systems to operate its business, which includes the collection and transmission of confidential information[233]. - Despite security measures, the company's IT systems and those of its third-party contractors remain vulnerable to various cyber threats, including hacking and malware[234]. - The company has not experienced any material system failures or security breaches to date, but such events could disrupt development programs and business operations[236]. - Loss of clinical trial data could lead to significant delays in regulatory approval efforts and increase recovery costs[237]. - The company relies on third-party service providers for critical business systems, and any security incidents with these providers could have adverse consequences[239]. Market Access and Reimbursement - The successful commercialization of product candidates will depend on governmental authorities and health insurers establishing adequate coverage and reimbursement levels[312]. - Participation in governmental pricing programs could expose the company to ceiling prices, reducing potential revenue from products[313]. - The company faces significant uncertainty regarding coverage and reimbursement from third-party payors, including Medicare and Medicaid, which could impact the commercial viability of its products[316]. - High costs associated with CAR T-cell therapies may lead payors to impose restrictions on reimbursement, potentially limiting patient access and adoption of the company’s therapies[317]. - Legislative changes, such as the Inflation Reduction Act of 2022, may significantly impact drug pricing and reimbursement, requiring manufacturers to negotiate prices with Medicare[325].

Core Viewpoint - CARGO Therapeutics, Inc. (CRGX) has experienced a significant decline of 69.6% over the past four weeks, but is now positioned for a potential trend reversal as it is in oversold territory, supported by positive earnings forecasts from Wall Street analysts [1]. Group 1: Stock Performance and Technical Indicators - CRGX's stock has been under heavy selling pressure, indicated by an RSI reading of 24.6, suggesting that the selling may be exhausting itself and a trend reversal could be imminent [5]. - The Relative Strength Index (RSI) is a momentum oscillator that helps identify whether a stock is oversold, with readings below 30 typically indicating oversold conditions [2][3]. Group 2: Earnings Estimates and Analyst Consensus - Over the last 30 days, the consensus EPS estimate for CRGX has increased by 44.8%, indicating strong agreement among analysts that the company will report better earnings than previously predicted [6]. - CRGX holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a turnaround [7].

Core Viewpoint - CARGO Therapeutics, Inc. (CRGX) has experienced a bearish price trend recently, losing 6% over the past week, but the formation of a hammer chart pattern suggests a potential trend reversal as buying interest may be increasing [1][2]. Technical Analysis - The hammer chart pattern indicates a possible bottoming out, with selling pressure likely subsiding, which supports a bullish outlook for the stock [2][4]. - A hammer pattern forms when there is a small candle body with a long lower wick, signaling that bears may be losing control and bulls are starting to gain traction [3][4]. - This pattern can appear on various timeframes, making it relevant for both short-term and long-term investors [4]. Fundamental Analysis - There has been a notable upward trend in earnings estimate revisions for CRGX, which is a strong bullish indicator, as such trends are correlated with near-term stock price movements [6]. - The consensus EPS estimate for CRGX has increased by 44.8% over the last 30 days, indicating strong agreement among analysts regarding the company's improved earnings potential [7]. - CRGX holds a Zacks Rank of 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, which typically outperform the market [8].

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud or unlawful business practices by CARGO Therapeutics, Inc. and its officers or directors [1] Group 1: Company Overview - CARGO Therapeutics, Inc. conducted its initial public offering on November 10, 2023, offering 18.75 million shares at a price of $15.00 per share [2] - The company announced the discontinuation of the FIRCE-1 Phase 2 clinical study for firi-cel on January 29, 2025, due to unfavorable results regarding its competitive benefit-risk profile [2] - Following the announcement, CARGO's stock price dropped by $9.80, or 74.3%, closing at $3.39 per share on January 30, 2025 [2] Group 2: Legal Context - Pomerantz LLP is recognized for its expertise in corporate, securities, and antitrust class litigation, having a history of recovering multimillion-dollar damages for victims of securities fraud and corporate misconduct [3]

Core Viewpoint - CARGO Therapeutics, Inc. (CRGX) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with stock price movements, particularly due to institutional investors' reliance on these estimates for valuation [4][6]. - CARGO Therapeutics is projected to earn -$3.75 per share for the fiscal year ending December 2024, reflecting a year-over-year change of 77.3% [8]. - Over the past three months, the Zacks Consensus Estimate for CARGO Therapeutics has increased by 44%, indicating a positive outlook for the company's earnings [8]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade to Zacks Rank 2 places CARGO Therapeutics in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10].

Core Viewpoint - The Schall Law Firm is investigating CARGO Therapeutics, Inc. for potential violations of securities laws related to misleading statements and failure to disclose critical information to investors [1][2]. Group 1: Company Actions - CARGO Therapeutics announced the discontinuation of the FIRCE-1 Phase 2 clinical study for firi-cel, a treatment for patients with large B-cell lymphoma whose disease has relapsed or is refractory to CD19 CAR T-cell therapy [2]. - The decision to discontinue the study was based on an ad hoc analysis prompted by recent safety events, leading the company to conclude that the results do not support a competitive benefit-risk profile for firi-cel in the intended patient population [2]. Group 2: Investor Implications - The Schall Law Firm is reaching out to shareholders who may have suffered losses due to the company's actions and is encouraging them to participate in the investigation [2][3].

Core Viewpoint - DJS Law Group is investigating claims against CARGO Therapeutics, Inc. for potential violations of securities laws following the discontinuation of a clinical study for its drug candidate firi-cel due to adverse patient events and unmet expectations regarding its benefit-risk profile [1][2]. Investigation Details - The investigation centers on whether CARGO issued misleading statements or failed to disclose critical information to investors [2]. - CARGO announced on January 29, 2025, that it would discontinue the FIRCE-1 Phase 2 clinical study for firi-cel, which was intended for treating large B-cell lymphoma (LBCL) [2]. - The decision to halt the study was influenced by the number of adverse events experienced by patients and the data not meeting the company's expectations for a competitive benefit-risk profile [2]. DJS Law Group's Focus - DJS Law Group aims to enhance investor returns through balanced counseling and aggressive advocacy, specializing in securities class actions, corporate governance litigation, and M&A appraisals [3]. - The firm represents some of the largest hedge funds and alternative asset managers globally, emphasizing the value of litigation claims as significant assets [3].

Core Insights - CARGO Therapeutics has decided to discontinue the FIRCE-1 Phase 2 clinical study of firi-cel for large B-cell lymphoma patients due to unsatisfactory results regarding the benefit-risk profile [1][6] - The company will implement a workforce reduction of approximately 50% to extend its cash runway and focus on advancing its CRG-023 candidate and allogeneic platform [3][6] Study Results - The FIRCE-1 study showed an overall response rate of 77% and a complete response rate of 43% among 51 patients, but the durability of complete response at three months was only 18% [2] - Safety concerns were highlighted, with 18% of patients experiencing grade 3 or higher immune effector cell-associated hemophagocytic lymphohistiocytosis-like syndrome [2][4] Financial Position - As of December 31, 2024, CARGO had preliminary cash, cash equivalents, and marketable securities totaling $368.1 million, which is expected to fund operations into mid-2028 [3][8] - The workforce reduction aims to preserve cash while continuing the development of CRG-023 and the allogeneic platform [3][6] Future Plans - CARGO intends to advance CRG-023 into a Phase 1 dose escalation study, with enrollment expected to begin in Q2 2025 [6] - The company will evaluate strategic options while continuing to collaborate with stakeholders involved in the FIRCE-1 study [4][6]