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Core Insights - Cartesian Therapeutics announced positive initial data from the Phase 2 open-label trial of Descartes-08 in patients with systemic lupus erythematosus (SLE), showing a 100% LLDAS response rate at Month 3 follow-up [1][2][6] - The company plans to pause further development of Descartes-08 in SLE to focus on opportunities in myasthenia gravis (MG) and myositis [4][11] Group 1: Clinical Trial Results - In the ongoing Phase 2 trial, 100% of participants who reached Month 3 follow-up achieved Lupus Low Disease Activity State (LLDAS) response, indicating low disease activity [6] - Disease remission, defined by the DORIS response, was reported in 2 out of 3 patients at Month 3 [6] - Descartes-08 demonstrated a favorable safety profile, with no cases of cytokine release syndrome (CRS) or immune effector cell-associated neurotoxicity syndrome (ICANS) reported [6] Group 2: Future Development Plans - Cartesian plans to initiate a seamless adaptive clinical trial design for myositis, with a pivotal trial expected to commence in the first half of 2026 [7][8] - The upcoming myositis trial will assess Descartes-08 against placebo in patients with moderate to severe multi-refractory dermatomyositis and antisynthetase syndrome [8] - The company aims to file an investigational new drug application (IND) for the myositis trial by the end of 2025 [8] Group 3: Financial Outlook - Following the pause in development of Descartes-08 in SLE and Descartes-15 in multiple myeloma, the company expects its current cash resources to support operations through mid-2027 [11]

Revenue Performance - Total revenue for the three months ended September 30, 2025, was $452,000, compared to $387,000 for the same period in 2024, representing a 16.8% increase[19] - Total revenue for the nine months ended September 30, 2025, was $1.85 million, a significant decrease from $39.67 million in the same period of 2024[161] - Collaboration and license revenue for the nine months ended September 30, 2025, was $400,000, a significant decrease from $39,111,000 in 2024[19] - Collaboration and license revenue for the nine months ended September 30, 2025, was $400,000, down from $39.11 million in 2024[196] - Grant revenue for the nine months ended September 30, 2025, increased by 158% to $1.5 million, compared to $561,000 in 2024[197] Operating Expenses - Operating expenses for the three months ended September 30, 2025, totaled $21,518,000, up from $17,962,000 in 2024, reflecting a 8.6% increase[19] - Total operating expenses for the nine months ended September 30, 2025, were $66.6 million, a 17% increase from $56.8 million in 2024[195] - Research and development expenses increased by 21% to $13.8 million for the three months ended September 30, 2025, compared to $11.4 million in 2024[188] - Research and development expenses for the nine months ended September 30, 2025, totaled $43.3 million, a 28% increase from $33.8 million in 2024[199] - General and administrative expenses rose by 18% to $7.7 million for the three months ended September 30, 2025, up from $6.6 million in 2024[189] Net Loss - The net loss for the three months ended September 30, 2025, was $35,902,000, compared to a net loss of $24,183,000 for the same period in 2024, indicating a 48.4% increase in losses[19] - The company reported a net loss of $37.726 million for the nine months ended September 30, 2025, compared to a net loss of $67.171 million for the same period in 2024, indicating a 44% improvement in losses year-over-year[29] - For the three months ended September 30, 2025, the net loss was $35,902,000, compared to a net loss of $24,183,000 for the same period in 2024, representing a 48% increase in net loss year-over-year[61] - The net loss for the nine months ended September 30, 2025, was $37.7 million, a decrease of $29.5 million from the net loss of $67.2 million for the same period in 2024[207] Cash and Assets - Cash and cash equivalents decreased to $143,384,000 as of September 30, 2025, down from $212,610,000 at the end of 2024, a decline of 32.5%[16] - Cash, cash equivalents, and restricted cash totaled $145.1 million as of September 30, 2025, with $1.7 million classified as restricted cash related to lease commitments[209] - Total assets decreased to $372,675,000 as of September 30, 2025, from $435,023,000 at December 31, 2024, a reduction of 14.3%[16] - Total liabilities decreased to $408,519,000 as of September 30, 2025, from $441,825,000 at December 31, 2024, a decline of 7.5%[16] Stock and Equity - The company reported a total stockholders' deficit of $(35,844,000) as of September 30, 2025, compared to $(6,802,000) at December 31, 2024[16] - The company executed a 1-for-30 reverse stock split on April 4, 2024, affecting all share-related figures in the financial statements[26] - The Company approved a reverse stock split at a ratio of 1-for-30, effective April 4, 2024, impacting all share-related figures in the financial report[37] - The Company issued 149,330.115 shares of Series A Preferred Stock as part of the 2023 Private Placement, with a total non-cash settlement of $35.2 million for the remaining tranches[76] Funding and Future Outlook - The company expects to continue incurring significant expenses and operating losses for the foreseeable future as it advances its product candidates[167] - The Company currently has no source of product revenue and does not expect to generate product revenue for the foreseeable future, relying primarily on collaboration agreements for revenue[44] - The company expects to continue incurring losses and will require additional capital to fund operations, which may be raised through equity offerings, debt financings, and collaborations[208] - The Company may need to seek additional funding sooner than expected if actual results differ from management's estimates regarding its ability to fund operations[45] Agreements and Milestones - Astellas paid a $10.0 million upfront payment under the Astellas Agreement, with potential future payments of up to $340.0 million contingent on development and regulatory milestones[124] - The Company received a one-time upfront payment of $75.0 million from Sobi under the Sobi License, with potential milestone payments totaling up to $630.0 million[127] - The Sobi License agreement includes a one-time upfront payment of $75 million and potential milestone payments totaling $630 million, along with tiered royalty payments[214] - The Company is required to submit a BLA for a licensed product by the fourth quarter of 2026 and make a first commercial sale by the fourth quarter of 2028 under the NCI Agreement[147] Changes in Fair Value - The change in fair value of contingent value right liability resulted in an expense of $18.7 million for the nine months ended September 30, 2025, compared to a gain of $51.9 million in 2024[195] - For the nine months ended September 30, 2025, the company recognized $18.7 million of income from the decrease in the fair value of the CVR liability, a change of $70.6 million compared to a $51.9 million expense in the prior period[203] - The estimated fair value of the CVR liability was $369,000,000 as of September 30, 2025, with a change in fair value of $(18,746,000) during the nine months ended September 30, 2025[74]

Financial Position - As of September 30, 2025, Cartesian Therapeutics reported cash, cash equivalents, and restricted cash of $145.1 million, expected to support operations into mid-2027[1] - The total assets as of September 30, 2025, were $372.7 million, down from $435.0 million as of December 31, 2024[12] - The total stockholders' deficit increased to $35.8 million as of September 30, 2025, compared to $6.8 million as of December 31, 2024[12] Revenue and Expenses - Total revenue for the three months ended September 30, 2025, was $452,000, compared to $387,000 for the same period in 2024, representing a 16.8% increase[14] - Collaboration and license revenue for the nine months ended September 30, 2025, was $400 million, a significant increase from $39.111 million in the same period of 2024[14] - Research and development expenses for Q3 2025 were $13.8 million, up from $11.4 million in Q3 2024, primarily due to increased costs associated with the Phase 3 AURORA trial[9] - General and administrative expenses increased to $7.7 million in Q3 2025 from $6.6 million in Q3 2024, driven by higher facilities and stock-based compensation expenses[9] - Total operating expenses for the nine months ended September 30, 2025, were $66.616 million, compared to $56.838 million in 2024, marking a 17.1% increase[14] Net Loss - The net loss for Q3 2025 was $35.9 million, or $1.38 per share, compared to a net loss of $24.2 million, or $1.13 per share, in Q3 2024[9] - The net loss for the three months ended September 30, 2025, was $35.902 million, compared to a net loss of $24.183 million in the same period of 2024, indicating a 48.3% increase in losses[14] - Basic and diluted net loss per share for the three months ended September 30, 2025, was $(1.38), compared to $(1.13) for the same period in 2024[14] - The total comprehensive loss for the three months ended September 30, 2025, was $35.912 million, compared to $24.198 million in 2024, reflecting a 48.3% increase[14] Trials and Designations - The Phase 3 AURORA trial of Descartes-08 in myasthenia gravis is on track, with approximately 100 participants enrolled[3] - Preliminary data from the ongoing Phase 2 trial of Descartes-08 in systemic lupus erythematosus is expected by the end of 2025[2] - A Phase 2 pediatric basket trial of Descartes-08 in select autoimmune diseases is anticipated to initiate by the end of 2025[3] - Descartes-08 has received Orphan Drug Designation and Regenerative Medicine Advanced Therapy Designation from the FDA for the treatment of myasthenia gravis[5] Other Financial Metrics - Interest income for the three months ended September 30, 2025, was $1.548 million, down from $2.573 million in the same period of 2024, a decrease of 39.8%[14] - Grant revenue for the nine months ended September 30, 2025, was $1.450 million, compared to $561,000 in the same period of 2024, representing a 158.3% increase[14] - The weighted-average common shares outstanding for the three months ended September 30, 2025, were 26,002,892, compared to 21,471,408 in 2024, an increase of 21.0%[14]

Enrollment on track in Phase 3 AURORA trial of Descartes-08 in myasthenia gravis Preliminary data from Phase 2 trial of Descartes-08 in systemic lupus erythematosus expected by end of year Initiation of Phase 2 pediatric basket trial of Descartes-08 in select autoimmune indications expected by end of year Approximately $145.1 million cash, cash equivalents and restricted cash as of September 30, 2025, expected to support planned operations into mid-2027, including completion of ongoing Phase 3 AURORA tria ...

Core Insights - Cartesian Therapeutics, Inc. has appointed Carsten Brunn, Ph.D., as Chairman of the Board of Directors, effective October 29, 2025, succeeding Carrie S. Cox [1] - Dr. Brunn is also the President and CEO of the company, and Patrick Zenner, M.B.A., has been named as Lead Independent Director [1] - Carrie S. Cox has played a significant role in advancing the company's lead asset, Descartes-08, and is stepping down to focus on other responsibilities [2] Company Overview - Cartesian Therapeutics is a clinical-stage biotechnology company focused on cell therapy for autoimmune diseases [3] - The lead asset, Descartes-08, is in Phase 3 clinical development for generalized myasthenia gravis and Phase 2 for systemic lupus erythematosus, with plans for a Phase 2 basket trial in additional autoimmune indications [3] - The clinical pipeline also includes Descartes-15, an autologous anti-BCMA CAR-T in Phase 1 trial for multiple myeloma [3]

Core Insights - Cartesian Therapeutics, Inc. (RNAC) shares increased by 8.2% to $9.75, reversing a previous 4.6% decline over the past month, driven by high trading volume [1][2] Company Developments - The rise in stock price is linked to positive investor sentiment regarding the lead pipeline drug, Descartes-08, which is undergoing a late-stage study for myasthenia gravis and a mid-stage study for systemic lupus erythematosus, with preliminary data expected by year-end [2] - The company plans to initiate a phase II pediatric basket study for Descartes-08 in select autoimmune indications by the end of 2025 [2] Financial Expectations - Cartesian Therapeutics is projected to report a quarterly loss of $0.81 per share, reflecting a year-over-year decrease of 17.4%, with revenues expected at $0.3 million, down 23.1% from the previous year [3] - The consensus EPS estimate for the upcoming quarter has remained unchanged over the last 30 days, indicating a lack of upward earnings estimate revisions [4] Industry Context - Cartesian Therapeutics operates within the Zacks Medical - Biomedical and Genetics industry, where Alvotech (ALVO) also competes, having experienced a 1.5% decline in its last trading session [4] - Alvotech's consensus EPS estimate has remained stable at $0.08, representing a significant year-over-year decline of 57.9%, while it holds a Zacks Rank of 1 (Strong Buy) [5]

Core Insights - Several clinical-stage biotech companies experienced significant after-hours trading momentum due to anticipated trial data releases and pipeline updates [1] Company Summaries - **MBX Biosciences Inc. (MBX)**: Shares surged 33% in after-hours trading, rising from $10.00 to $13.77, following the announcement of topline results from its Phase 2 trial of Canvuparatide, expected on September 22 [2][3] - **Structure Therapeutics Inc. (GPCR)**: Stock increased 11.37% to $26.26 after closing at $23.58, driven by interest in its lead candidate aleniglipron, with topline results from two Phase 2b trials expected by the end of 2025 [4] - **Cartesian Therapeutics Inc. (RNAC)**: Shares rose 5.51% to $9.96 after a decline during the day, with preliminary data from the Phase 2 trial of Descartes-08 expected in the second half of 2025 [5][6] - **Rapport Therapeutics Inc. (RAPP)**: Stock increased 3.60% to $27.31, following positive topline results from its Phase 2a trial for RAP-219, with Phase 3 trials expected to start in 2026 [9][10] - **Rezolute Inc. (RZLT)**: Shares rose 3.77% to $7.99 after a decline during the day, with topline data from the Phase 3 sunRIZE trial for congenital hyperinsulinism expected in December 2025 [11][12]

Company Overview - Cartesian is introduced by its CEO Carsten and CMO Milos Miljkovic during a fireside chat hosted by Morgan Stanley [1][2] - The discussion aims to provide insights into Cartesian's operations and strategic direction [2] Industry Context - The event is part of a broader engagement by Morgan Stanley in the healthcare investment banking sector, indicating the importance of Cartesian within this industry [2]

[General Information](index=1&type=section&id=General%20Information) This section provides foundational details about the company's filing, registrant status, and key corporate information [Filing Information](index=1&type=section&id=Filing%20Information) This section details the company's filing as a Form 10-Q for the quarterly period ended June 30, 2025, identifying Cartesian Therapeutics, Inc. as the registrant, incorporated in Delaware, with Commission File Number 001-37798 - The report is a Quarterly Report on Form 10-Q for the period ended June 30, 2025, filed by Cartesian Therapeutics, Inc. (formerly Selecta Biosciences, Inc.)[1](index=1&type=chunk) [Registrant Information](index=1&type=section&id=Registrant%20Information) The registrant's principal executive offices are located in Frederick, MD. The company's common stock (RNAC) is registered on The Nasdaq Stock Market LLC, and Contingent Value Rights are also registered - The principal executive offices are at 7495 New Horizon Way, Frederick, MD 21703[2](index=2&type=chunk) Registered Securities | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :-------------------------- | :---------------- | :---------------------------------------- | | Common Stock, $0.0001 par value per share | RNAC | The Nasdaq Stock Market LLC | | Contingent Value Rights | | | [Filer Status](index=1&type=section&id=Filer%20Status) The company confirms compliance with SEC filing requirements, having filed all reports and submitted Interactive Data Files. It is classified as a Non-accelerated filer and a Smaller reporting company, with 26,002,042 shares of common stock outstanding as of August 1, 2025 - The registrant has filed all required reports and submitted every Interactive Data File during the preceding 12 months[3](index=3&type=chunk) - The company is classified as a **Non-accelerated filer** and a **Smaller reporting company**[4](index=4&type=chunk) - As of August 1, 2025, **26,002,042 shares of common stock**, par value $0.0001 per share, were outstanding[5](index=5&type=chunk) [FORWARD-LOOKING STATEMENTS](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section highlights that the report contains forward-looking statements regarding future operations and financial position, which are subject to various known and unknown risks and uncertainties [Forward-Looking Statements Overview](index=4&type=section&id=Forward-Looking%20Statements%20Overview) This section outlines the forward-looking nature of the report, emphasizing that statements about future operations, financial position, business strategy, product approvals, R&D costs, and cash sufficiency are predictions subject to known and unknown risks and uncertainties. It lists numerous factors that could cause actual results to differ materially, including CVR payouts, merger benefits, market size, preclinical/clinical development, third-party dependence, product candidate efficacy/safety, regulatory approvals, macroeconomic conditions, global events, intellectual property, and personnel - The Quarterly Report contains forward-looking statements covered by safe harbor provisions, including those regarding future results of operations, financial position, business strategy, prospective products, and R&D costs[9](index=9&type=chunk) - Actual results, performance, or achievements may differ materially from forward-looking statements due to known and unknown risks, uncertainties, and other important factors[9](index=9&type=chunk) - Key factors that could cause actual results to differ include future payouts under contingent value rights (CVR), ability to achieve expected benefits from the Merger, future financial position, preclinical and clinical development activities, dependence on third parties, efficacy and safety of product candidates, timing of regulatory approvals, macroeconomic conditions, global events, intellectual property protection, and ability to obtain and retain key personnel[10](index=10&type=chunk)[13](index=13&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and management's discussion and analysis of the company's financial performance and condition [Item 1. Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited consolidated financial statements for Cartesian Therapeutics, Inc. and its subsidiaries, including the Balance Sheets, Statements of Operations and Comprehensive Income (Loss), Statements of Changes in Convertible Preferred Stock and Stockholders' Deficit, and Statements of Cash Flows, along with accompanying notes. These statements are prepared in accordance with SEC rules for interim financial reporting and U.S. GAAP [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's consolidated financial position, detailing assets, liabilities, and stockholders' deficit at specific reporting dates Consolidated Balance Sheet Summary | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Cash and cash equivalents | $160,324 | $212,610 | $(52,286) | | Total current assets | $163,395 | $216,626 | $(53,231) | | Total assets | $388,893 | $435,023 | $(46,130) | | Total current liabilities | $12,256 | $22,976 | $(10,720) | | Contingent value right liability (non-current) | $352,100 | $387,739 | $(35,639) | | Total liabilities | $391,420 | $441,825 | $(50,405) | | Total stockholders' deficit | $(2,527) | $(6,802) | $4,275 | [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) This section outlines the company's financial performance, including revenue, operating expenses, and net income or loss over specified periods Consolidated Statements of Operations and Comprehensive Income (Loss) Summary | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total revenue | $298 | $33,445 | $1,398 | $39,285 | | Total operating expenses | $22,109 | $19,688 | $45,098 | $38,876 | | Operating (loss) income | $(21,811) | $13,757 | $(43,700) | $409 | | Change in fair value of contingent value right liability | $35,300 | $2,500 | $35,646 | $(36,800) | | Net income (loss) | $15,886 | $13,836 | $(1,824) | $(42,988) | | Basic EPS | $0.51 | $0.58 | $(0.07) | $(3.88) | | Diluted EPS | $0.50 | $0.54 | $(0.07) | $(3.88) | - Collaboration and license revenue decreased by **$33.3 million (100%)** for the three months ended June 30, 2025, and by **$38.7 million (99%)** for the six months ended June 30, 2025, primarily due to a $30.0 million development milestone recognized in Q2 2024 under the Sobi License and termination of the Astellas Agreement[181](index=181&type=chunk)[192](index=192&type=chunk) - Net income for the three months ended June 30, 2025, increased by **$2.1 million (15%)** to **$15.9 million**, largely driven by a **$32.8 million increase** in income from the decrease in fair value of the CVR liability[190](index=190&type=chunk) - Net loss for the six months ended June 30, 2025, decreased by **$41.2 million (96%)** to **$1.8 million**, primarily due to income from changes in the fair value of CVR and warrant liabilities[202](index=202&type=chunk) [Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Deficit](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Deficit) This section details changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Deficit Summary | Metric (in thousands) | Balance at Dec 31, 2024 | Balance at June 30, 2025 | | :-------------------------------- | :---------------------- | :----------------------- | | Common stock (shares) | 25,767,369 | 26,000,065 | | Additional paid-in capital | $689,887 | $695,942 | | Accumulated deficit | $(692,071) | $(693,895) | | Total stockholders' deficit | $(6,802) | $(2,527) | - The company's total stockholders' deficit improved from **$(6,802) thousand** at December 31, 2024, to **$(2,527) thousand** at June 30, 2025, primarily due to net income and stock-based compensation[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Summary | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(40,629) | $(30,363) | | Net cash used in investing activities | $(3,670) | $(2,189) | | Net cash (used in) provided by financing activities | $(7,965) | $43,151 | | Net change in cash, cash equivalents, and restricted cash | $(52,220) | $10,608 | | Cash, cash equivalents, and restricted cash at end of period | $162,059 | $88,896 | - Net cash used in operating activities increased by **$10.2 million** to **$40.6 million** for the six months ended June 30, 2025, compared to $30.4 million in the prior year[225](index=225&type=chunk) - Net cash flow from financing activities shifted from a **$43.2 million provision** in 2024 to an **$8.0 million usage** in 2025, primarily due to CVR distributions in 2025 versus proceeds from the 2023 Private Placement in 2024[228](index=228&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the consolidated financial statements [Note 1. Description of the Business](index=11&type=section&id=Note%201.%20Description%20of%20the%20Business) This note describes the company's core business as a clinical-stage biotechnology firm, its merger, and key financial status - Cartesian Therapeutics, Inc. is a clinical-stage biotechnology company pioneering cell therapy for autoimmune diseases, leveraging a proprietary technology and manufacturing platform[30](index=30&type=chunk) - The company completed a merger with Old Cartesian on November 13, 2023, involving a stock-for-stock transaction and a private investment of approximately **$60.25 million**[31](index=31&type=chunk)[32](index=32&type=chunk) - Contingent Value Rights (CVRs) were distributed to eligible holders, entitling them to payments from the disposition or monetization of the company's legacy assets[33](index=33&type=chunk) - A **1-for-30 reverse stock split** was effected on April 4, 2024, impacting all share and per-share amounts presented in the report[35](index=35&type=chunk) - As of June 30, 2025, the company's cash, cash equivalents, and restricted cash totaled **$162.1 million**, expected to fund current planned operations for at least the next 12 months[43](index=43&type=chunk) - The company had an accumulated deficit of **$693.9 million** as of June 30, 2025, and anticipates continued operating losses due to research and development costs[45](index=45&type=chunk) [Note 2. Basis of Presentation](index=13&type=section&id=Note%202.%20Basis%20of%20Presentation) This note outlines the principles for preparing the consolidated financial statements, including consolidation and significant estimates - The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, with all significant intercompany accounts and transactions eliminated[46](index=46&type=chunk) - Management makes significant estimates in areas such as fair value of acquired intangible assets, CVRs, deferred income taxes, revenue recognition, accrued R&D expenses, stock-based compensation, and liability-classified warrants[47](index=47&type=chunk) - The company views its operations and manages its business in one operating segment, focused on the research and development of cell therapy product candidates[48](index=48&type=chunk) [Note 3. Summary of Significant Accounting Policies](index=13&type=section&id=Note%203.%20Summary%20of%20Significant%20Accounting%20Policies) This note summarizes the company's key accounting policies and the evaluation of new accounting pronouncements - There have been no material changes to the company's significant accounting policies during the six months ended June 30, 2025[49](index=49&type=chunk) - The company is evaluating the impact of ASU 2023-09 (Income Taxes, effective Dec 31, 2025) and ASU 2024-03 (Expense Disaggregation Disclosures, effective Dec 31, 2027) on its financial statements[50](index=50&type=chunk)[51](index=51&type=chunk) [Note 4. Goodwill and Intangible Assets](index=14&type=section&id=Note%204.%20Goodwill%20and%20Intangible%20Assets) This note details the company's goodwill and indefinite-lived intangible assets, primarily from the Old Cartesian merger - The merger with Old Cartesian on November 13, 2023, resulted in goodwill of approximately **$48.2 million**, with no changes to its carrying value during the six months ended June 30, 2025[53](index=53&type=chunk) Indefinite-Lived Intangible Assets | Indefinite-Lived Intangible Assets (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Descartes-08 for MG | $93,900 | $93,900 | | Descartes-08 for SLE | $56,700 | $56,700 | | Total in-process R&D assets | $150,600 | $150,600 | [Note 5. Investments](index=14&type=section&id=Note%205.%20Investments) This note describes the company's investment in Cyrus Biotechnology, Inc. and its accounting treatment - The company holds a **$2.0 million investment** in Cyrus Biotechnology, Inc.'s Series B Preferred Stock, recognized at cost[55](index=55&type=chunk)[57](index=57&type=chunk) - The company is not the primary beneficiary of Cyrus and therefore does not consolidate it; its maximum exposure to loss is limited to the carrying value of the investment[56](index=56&type=chunk)[57](index=57&type=chunk) [Note 6. Net Income (Loss) Per Share Allocable to Common Stockholders](index=14&type=section&id=Note%206.%20Net%20Income%20(Loss)%20Per%20Share%20Allocable%20to%20Common%20Stockholders) This note presents the basic and diluted net income or loss per common share, including the calculation of weighted-average shares Net Income (Loss) Per Share | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income (loss) allocable to common stock - basic and diluted | $13,258 | $9,628 | $(1,824) | $(42,988) | | Basic EPS | $0.51 | $0.58 | $(0.07) | $(3.88) | | Diluted EPS | $0.50 | $0.54 | $(0.07) | $(3.88) | | Weighted-average common shares outstanding - basic | 25,980,262 | 16,723,479 | 25,941,670 | 11,068,749 | | Weighted-average common shares outstanding - diluted | 26,447,251 | 17,791,143 | 25,941,670 | 11,068,749 | Potential Dilutive Shares Excluded | Potential Dilutive Shares Excluded | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Common stock options and restricted stock units | 2,336,681 | 740,211 | 3,030,053 | 2,344,017 | | Warrants to purchase common stock | 692,523 | 975,132 | 692,523 | 975,132 | | Series A Preferred Stock | 4,026,346 | 5,544,719 | 4,026,346 | 5,544,719 | | Series B Preferred Stock | 437,927 | — | 437,927 | — | | Total | 7,493,477 | 7,260,062 | 8,186,849 | 8,863,868 | [Note 7. Fair Value Measurements](index=15&type=section&id=Note%207.%20Fair%20Value%20Measurements) This note details the fair value measurements for financial assets and liabilities, particularly warrant and CVR liabilities Fair Value Assets | Fair Value Assets (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Money market funds | $39,933 | $39,088 | Fair Value Liabilities | Fair Value Liabilities (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Warrant liabilities | $1,364 | $3,836 | | Contingent value right liability | $352,100 | $395,500 | - Warrant liabilities and contingent value right (CVR) liability are classified as **Level 3 fair value measurements**, relying on significant unobservable inputs like stock price volatility, expected life, estimated cash flows, and probabilities of success[66](index=66&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk) - The CVR liability decreased by **$35.6 million** to **$352.1 million** as of June 30, 2025, primarily due to changes in the timing of anticipated payments[76](index=76&type=chunk) - The 2019 Warrants expired on December 23, 2024, and the 2022 Warrants are expected to expire on April 11, 2027[68](index=68&type=chunk)[69](index=69&type=chunk) [Note 8. Property and Equipment](index=18&type=section&id=Note%208.%20Property%20and%20Equipment) This note provides details on the company's property and equipment, including laboratory assets and construction in process Property and Equipment | Property and Equipment (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Laboratory equipment | $8,001 | $7,295 | | Construction in process | $2,798 | $695 | | Total property and equipment, net | $12,285 | $9,912 | - Depreciation expense was **$0.6 million** for the three months ended June 30, 2025, and **$1.2 million** for the six months ended June 30, 2025[78](index=78&type=chunk) [Note 9. Accrued Expenses](index=19&type=section&id=Note%209.%20Accrued%20Expenses) This note details the components of accrued expenses, including payroll, patent fees, and R&D costs Accrued Expenses | Accrued Expenses (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Payroll and employee related expenses | $2,786 | $3,534 | | Accrued patent fees | $185 | $813 | | Accrued external R&D costs | $2,135 | $2,987 | | Accrued professional and consulting services | $1,712 | $3,674 | | Total accrued expenses | $8,012 | $12,076 | - Accrued expenses decreased from **$12.1 million** at December 31, 2024, to **$8.0 million** at June 30, 2025, primarily due to decreases in payroll, patent fees, and professional services[79](index=79&type=chunk) [Note 10. Leases](index=19&type=section&id=Note%2010.%20Leases) This note describes the company's lease agreements, including expansions and impairment charges for certain properties - The company expanded its Frederick, MD manufacturing and office space through multiple amendments, with the latest in March 2025 for an additional **6,439 square feet**, commencing September 1, 2025[80](index=80&type=chunk)[83](index=83&type=chunk)[85](index=85&type=chunk)[88](index=88&type=chunk) - The right-of-use assets and related furniture for the Watertown, MA lease were fully impaired in 2024, resulting in a **$7.6 million impairment charge**, as the company ceased use of the space[96](index=96&type=chunk)[97](index=97&type=chunk) Lease Metrics | Lease Metrics (in thousands) | June 30, 2025 | | :--------------------------- | :------------ | | Total operating lease liabilities | $13,349 | | Weighted-average remaining lease term | 4.2 years | | Weighted-average discount rate | 11.8% | [Note 11. Equity](index=22&type=section&id=Note%2011.%20Equity) This note details the company's equity transactions, including private placements, stock splits, and preferred stock - The 2024 Private Placement on July 2, 2024, issued **3,563,247 common shares** and **2,937,903 Series B Preferred Stock shares**, generating approximately **$130.0 million** in gross proceeds[101](index=101&type=chunk)[165](index=165&type=chunk) - An 'At-the-Market' offering program for up to **$100.0 million** was established in December 2024, but no shares were sold during the six months ended June 30, 2025[102](index=102&type=chunk)[103](index=103&type=chunk) - A **1-for-30 reverse stock split** was effective April 4, 2024, combining shares and adjusting per-share amounts[105](index=105&type=chunk) Preferred Stock Outstanding | Preferred Stock Outstanding (Shares) | June 30, 2025 | | :----------------------------------- | :------------ | | Series A Preferred Stock | 120,790.402 | | Series B Preferred Stock | 437,927 | | Total convertible into common stock | 4,464,273 | Reserved Shares for Future Issuance | Reserved Shares for Future Issuance (June 30, 2025) | Number of Shares | | :-------------------------------------------------- | :--------------- | | Exercise of warrants | 692,523 | | Shares available for future stock incentive awards | 4,123,417 | | Unvested restricted stock units | 533,331 | | Outstanding common stock options | 2,496,722 | | Series A Preferred Stock | 4,026,346 | | Series B Preferred Stock | 437,927 | | Total | 12,310,266 | [Note 12. Stock Incentive Plans](index=23&type=section&id=Note%2012.%20Stock%20Incentive%20Plans) This note outlines the company's stock incentive plans and related stock-based compensation expenses - The company maintains the 2016 Plan, 2018 Inducement Incentive Award Plan, and the assumed Old Cartesian Plan, with **3,582,706**, **458,737**, and **36,179 shares** available for future grant, respectively[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) Stock-Based Compensation Expense | Stock-Based Compensation Expense (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Research and development | $1,810 | $776 | $3,085 | $1,488 | | General and administrative | $1,469 | $815 | $2,702 | $1,534 | | Total stock-based compensation expense | $3,279 | $1,591 | $5,787 | $3,022 | - A separation agreement with the former Chief Technology Officer resulted in **$0.7 million** of stock-compensation expense during the three and six months ended June 30, 2025, due to accelerated vesting[114](index=114&type=chunk) - As of June 30, 2025, total unrecognized compensation expense related to unvested common stock options was **$15.6 million** (expected over 3.0 years) and for restricted stock units was **$6.6 million** (expected over 2.8 years)[117](index=117&type=chunk)[120](index=120&type=chunk) [Note 13. Revenue Arrangements](index=25&type=section&id=Note%2013.%20Revenue%20Arrangements) This note details the company's revenue sources, including collaboration, license, and grant revenues, and their changes - The Astellas Agreement, granting an exclusive license for IdeXork technology for Pompe disease, was terminated effective June 6, 2024[122](index=122&type=chunk)[123](index=123&type=chunk) - Revenue from the Sobi License, including a **$30.0 million development milestone** for SEL-212, was recognized in Q2 2024, but no revenue was recognized from this source in the three and six months ended June 30, 2025[126](index=126&type=chunk)[128](index=128&type=chunk) - Grant revenue increased to **$0.3 million** for the three months and **$1.0 million** for the six months ended June 30, 2025, due to increased reimbursable expenses under a NINDS award for RNA-based CAR-T cells[130](index=130&type=chunk)[131](index=131&type=chunk) - As of June 30, 2025, there were no unsatisfied performance obligations from contracts with customers[129](index=129&type=chunk) [Note 14. Related-Party Transactions](index=26&type=section&id=Note%2014.%20Related-Party%20Transactions) This note discloses transactions with related parties, including stock purchases and warrant exercises - Dr. Timothy A. Springer and his affiliate, TAS Partners LLC, purchased **99,140.326 shares of Series A Preferred Stock** for **$40.0 million** in Q1 2024 as part of the 2023 Private Placement[132](index=132&type=chunk)[133](index=133&type=chunk) - TAS Partners LLC exercised **65,681 Amended 2019 Warrants** for **$2.9 million** in cash on March 26, 2024, receiving common stock and CVRs[134](index=134&type=chunk) - No related-party transactions occurred during the three and six months ended June 30, 2025[134](index=134&type=chunk) [Note 15. Collaboration and License Agreements](index=26&type=section&id=Note%2015.%20Collaboration%20and%20License%20Agreements) This note summarizes the company's key in-license and out-license agreements, including their terms and status - The Biogen Agreement grants a non-exclusive license for T-cell modified with mRNA technology for autoimmune diseases, with patents generally expiring around March 2030-2032[135](index=135&type=chunk)[138](index=138&type=chunk) - The NCI Agreement grants a license for anti-BCMA CAR-T cell products for MG, pemphigus vulgaris, and immune thrombocytopenic purpura, requiring low five-digit annual royalties and potential benchmark royalties up to **$0.8 million**[139](index=139&type=chunk)[141](index=141&type=chunk)[144](index=144&type=chunk) - The Astellas Agreement for Xork was terminated effective June 6, 2024[123](index=123&type=chunk)[209](index=209&type=chunk) - The Sobi License for SEL-212 involves potential milestone payments up to **$630.0 million** and tiered royalties, with proceeds distributed to CVR holders[125](index=125&type=chunk)[210](index=210&type=chunk) - Sobi initiated a rolling BLA for SEL-212 in June 2024, triggering a **$30.0 million payment**[126](index=126&type=chunk) - The Genovis Agreement for Xork enzyme technology was terminated effective September 13, 2024[147](index=147&type=chunk) [Note 16. Income Taxes](index=28&type=section&id=Note%2016.%20Income%20Taxes) This note discusses the company's income tax position, including the non-recognition of deferred tax benefits - As of June 30, 2025, the company has not recorded any U.S. federal or state income tax benefits for net losses or earned research and orphan drug credits due to the uncertainty of realizing a benefit from those items in the future[149](index=149&type=chunk) [Note 17. Commitments and Contingencies](index=28&type=section&id=Note%2017.%20Commitments%20and%20Contingencies) This note addresses the company's legal proceedings, indemnification obligations, and other contingent liabilities - As of June 30, 2025, the company was not a party to any litigation that could have a material adverse effect on its business, financial position, results of operations, or cash flows[150](index=150&type=chunk)[153](index=153&type=chunk) - The company indemnifies its officers, directors, consultants, and employees, and has indemnification arrangements under certain facility leases, with no material losses experienced to date[151](index=151&type=chunk)[152](index=152&type=chunk) [Note 18. Restructuring](index=29&type=section&id=Note%2018.%20Restructuring) This note details the company's restructuring plan, including headcount reductions and associated payments - In April and August 2023, the company implemented a restructuring plan, including an approximate **90% reduction in headcount**, to extend its cash runway and prioritize product development[154](index=154&type=chunk) - Payments for the restructuring plan were completed in the first quarter of 2025, with no restructuring charges recognized for the six months ended June 30, 2025[155](index=155&type=chunk) [Note 19. Segment Information](index=29&type=section&id=Note%2019.%20Segment%20Information) This note confirms the company operates as a single segment and provides a breakdown of key financial metrics by segment - The company operates as a single operating segment[156](index=156&type=chunk) Segment Financials | Segment Financials (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total revenue | $298 | $33,445 | $1,398 | $39,285 | | Research and development | $14,869 | $12,661 | $29,543 | $22,399 | | General and administrative | $7,240 | $7,027 | $15,555 | $16,477 | | Net income (loss) | $15,886 | $13,836 | $(1,824) | $(42,988) | - R&D expenses for Descartes-08 for MG increased by **71%** to **$5.0 million** for the three months and by **187%** to **$12.1 million** for the six months ended June 30, 2025, primarily due to the ongoing Phase 3 AURORA trial[156](index=156&type=chunk)[184](index=184&type=chunk)[194](index=194&type=chunk) - R&D expenses for early stage programs increased by **225%** to **$1.7 million** for the three months and by **313%** to **$2.7 million** for the six months ended June 30, 2025, due to increased discovery and manufacturing operations expenses[156](index=156&type=chunk)[184](index=184&type=chunk)[195](index=195&type=chunk) [Note 20. Subsequent Events](index=30&type=section&id=Note%2020.%20Subsequent%20Events) This note confirms that no events requiring disclosure have occurred since the financial statement date - The company has evaluated subsequent events through the date of financial statement issuance and concluded that no events have occurred that require disclosure[157](index=157&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, emphasizing its focus as a clinical-stage biotechnology company pioneering cell therapy for autoimmune diseases. It discusses the impact of the November 2023 merger, ongoing operating losses, and strategies for future funding [Overview](index=30&type=section&id=Overview) This section provides an overview of Cartesian Therapeutics as a clinical-stage biotechnology company focused on cell therapy for autoimmune diseases - Cartesian Therapeutics is a clinical-stage biotechnology company pioneering cell therapy for autoimmune diseases, characterized by repeated dosing, outpatient administration, and no pre-treatment chemotherapy[159](index=159&type=chunk) - The lead product candidate, Descartes-08, showed deep and durable clinical benefit in a Phase 2b trial for myasthenia gravis (MG), with **83% of participants** maintaining clinically meaningful improvements at six months and sustained improvements at 12 months[159](index=159&type=chunk) [Merger](index=30&type=section&id=Merger) This section details the merger of Selecta Biosciences with Old Cartesian in November 2023 and the subsequent name change - Selecta Biosciences, Inc. merged with Old Cartesian on November 13, 2023, and subsequently changed its corporate name to Cartesian Therapeutics, Inc[160](index=160&type=chunk) - The merger involved First Merger Sub merging into Old Cartesian, followed by Old Cartesian merging into Second Merger Sub, with Old Cartesian becoming Cartesian Bio, LLC[160](index=160&type=chunk) [Financial Operations](index=30&type=section&id=Financial%20Operations) This section discusses the company's financing strategies, ongoing operating losses, and future funding expectations - Operations are financed primarily through public/private equity offerings, research grants, and collaboration/license arrangements, with no product sales generated to date[161](index=161&type=chunk) - The company incurred a net loss of **$1.8 million** for the six months ended June 30, 2025, and expects continued significant operating losses due to advancing Descartes-08 for MG through Phase 3, developing other candidates, protecting IP, hiring staff, and public company costs[162](index=162&type=chunk) Research and Development Expenses | Research and Development Expenses (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Legacy Selecta programs | $0 | $3,570 | $0 | $6,347 | | Descartes-08 for MG | $5,035 | $2,945 | $12,071 | $4,211 | | Early stage programs | $1,715 | $528 | $2,705 | $655 | | Total research and development expenses | $14,869 | $12,661 | $29,543 | $22,399 | - The company believes existing cash, cash equivalents, and restricted cash of **$162.1 million** as of June 30, 2025, will fund its operating expenses and capital expenditure requirements into mid-2027[166](index=166&type=chunk) [Components of our Results of Operations](index=31&type=section&id=Components%20of%20our%20Results%20of%20Operations) This section defines the key components of the company's financial results, including revenue and expense categories - Revenue primarily consists of collaboration and license revenue (upfront and milestone payments) and grant revenue (funding for specific research and development services)[168](index=168&type=chunk)[169](index=169&type=chunk) - Research and development expenses include fees paid to contract research organizations, internal manufacturing and quality-related expenses, process development costs, and compensation for R&D employees, expensed as incurred[171](index=171&type=chunk)[172](index=172&type=chunk) - General and administrative expenses primarily cover salaries and benefits for executive, finance, business development, and support functions, along with facility-related costs and professional fees[173](index=173&type=chunk) - Fair value changes for warrant liabilities, contingent value right (CVR) liability, and forward contract liabilities are remeasured quarterly and recognized as components of earnings[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance over the reported periods, highlighting key changes in revenue and expenses [Comparison of the Three Months Ended June 30, 2025 and 2024](index=33&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares the company's financial results for the three-month periods ended June 30, 2025, and 2024 Three Months Ended June 30, 2025 vs 2024 | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (in thousands) | Change (%) | | :------------------------------------------ | :--------------------------- | :--------------------------- | :-------------------- | :--------- | | Total revenue | $298 | $33,445 | $(33,147) | (99)% | | Research and development | $14,869 | $12,661 | $2,208 | 17% | | General and administrative | $7,240 | $7,027 | $213 | 3% | | Operating (loss) income | $(21,811) | $13,757 | $(35,568) | (259)% | | Change in fair value of contingent value right liability | $35,300 | $2,500 | $32,800 | 1,312% | | Net income | $15,886 | $13,836 | $2,050 | 15% | - Collaboration and license revenue decreased by **$33.3 million (100%)** due to the $30.0 million Sobi development milestone recognized in Q2 2024 not recurring in Q2 2025[181](index=181&type=chunk) - Research and development expenses increased by **$2.2 million (17%)** to **$14.9 million**, driven by the ongoing Phase 3 AURORA trial for Descartes-08 for MG and increased early-stage program and employee expenses[183](index=183&type=chunk)[184](index=184&type=chunk) - Income from the change in fair value of CVR liability increased by **$32.8 million (1,312%)** to **$35.3 million**, primarily due to changes in the timing of anticipated payments[188](index=188&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=35&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares the company's financial results for the six-month periods ended June 30, 2025, and 2024 Six Months Ended June 30, 2025 vs 2024 | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (in thousands) | Change (%) | | :------------------------------------------ | :--------------------------- | :--------------------------- | :-------------------- | :--------- | | Total revenue | $1,398 | $39,285 | $(37,887) | (96)% | | Research and development | $29,543 | $22,399 | $7,144 | 32% | | General and administrative | $15,555 | $16,477 | $(922) | (6)% | | Operating (loss) income | $(43,700) | $409 | $(44,109) | (10,785)% | | Change in fair value of contingent value right liability | $35,646 | $(36,800) | $72,446 | (197)% | | Net loss | $(1,824) | $(42,988) | $41,164 | (96)% | - Collaboration and license revenue decreased by **$38.7 million (99%)** due to the Sobi development milestone and Astellas Agreement termination in 2024[192](index=192&type=chunk) - Research and development expenses increased by **$7.1 million (32%)** to **$29.5 million**, driven by the ongoing Phase 3 AURORA trial for Descartes-08 for MG and increased early-stage program and employee expenses[194](index=194&type=chunk)[195](index=195&type=chunk) - Income from the change in fair value of CVR liability increased by **$72.4 million (197%)** to **$35.6 million**, primarily due to changes in the timing of anticipated payments[199](index=199&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its short-term and long-term financial obligations and its funding sources [Collaboration and License Agreements](index=37&type=section&id=Collaboration%20and%20License%20Agreements) This section details the company's in-license and out-license agreements, which contribute to its liquidity - In-license agreements include Biogen (non-exclusive, sublicensable patent license for T-cell modified with mRNA technology) and NCI (non-exclusive, worldwide license for anti-BCMA CAR-T cell products for autoimmune diseases, with annual and benchmark royalties)[207](index=207&type=chunk)[208](index=208&type=chunk) - Out-license agreements include the terminated Astellas Agreement (June 2024) and the Sobi License for SEL-212, which provides for significant milestone and royalty payments, with proceeds distributed to CVR holders[209](index=209&type=chunk)[210](index=210&type=chunk) [Financings](index=37&type=section&id=Financings) This section outlines the company's financing activities, including equity offerings and private placements - An 'At-the-Market' equity offering program allows for sales of up to **$100.0 million** in common stock, but no shares were sold during the six months ended June 30, 2025[211](index=211&type=chunk) - The 2023 Private Placement generated **$60.25 million** from Series A Preferred Stock, with **$40.0 million** issued in Q1 2024[212](index=212&type=chunk)[213](index=213&type=chunk) - The 2024 Private Placement generated approximately **$130.0 million** in gross proceeds from the issuance of common stock and Series B Preferred Stock[214](index=214&type=chunk) [Future funding requirements](index=38&type=section&id=Future%20funding%20requirements) This section addresses the company's anticipated need for additional capital to support ongoing operations and development - The company expects continued operating losses and requires substantial additional financing to fund operations, R&D, and commercialization efforts[215](index=215&type=chunk)[216](index=216&type=chunk) - Future capital requirements depend on factors such as the scope and costs of clinical trials, preclinical development, manufacturing, regulatory review, commercialization activities, headcount growth, and intellectual property protection[219](index=219&type=chunk)[227](index=227&type=chunk) - The company evaluates various funding sources (collaborations, licenses, debt, equity), noting that equity sales would dilute existing stockholders[217](index=217&type=chunk)[218](index=218&type=chunk) [Cash Requirements due to Contractual Obligations and Other Commitments](index=39&type=section&id=Cash%20Requirements%20due%20to%20Contractual%20Obligations%20and%20Other%20Commitments) This section details the company's contractual cash obligations, including lease payments and contingent license fees - Remaining lease payments include **$8.3 million** for Watertown, MA (through May 2028), **$0.5 million** for Gaithersburg, MD (through January 2027), and **$9.4 million** for Frederick, MD (through June 2031)[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) - Contingent future payments for in-license agreements (Biogen, NCI, 3SBio) are based on regulatory and commercial milestones or royalties, but their timing and likelihood are currently unestimable[223](index=223&type=chunk) - Payments for the Watertown lease liability and 3SBio license agreement are subject to potential reimbursement through deductions to CVR distributions[220](index=220&type=chunk)[223](index=223&type=chunk) [Summary of Cash Flows](index=39&type=section&id=Summary%20of%20Cash%20Flows) This section provides a summary of the company's cash flow activities from operations, investing, and financing Summary of Cash Flows | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating activities | $(40,629) | $(30,363) | | Investing activities | $(3,670) | $(2,189) | | Financing activities | $(7,965) | $43,151 | | Net change in cash | $(52,220) | $10,608 | - Net cash used in operating activities increased by **$10.2 million** to **$40.6 million** for the six months ended June 30, 2025[225](index=225&type=chunk) - Net cash used in investing activities increased by **$1.5 million** to **$3.7 million** for the six months ended June 30, 2025, primarily due to purchases of property and equipment[226](index=226&type=chunk) - Net cash flow from financing activities shifted from a **$43.2 million provision** in 2024 to an **$8.0 million usage** in 2025, mainly due to CVR distributions in 2025 and proceeds from the 2023 Private Placement in 2024[228](index=228&type=chunk) [Recent Accounting Pronouncements](index=40&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 3 for details on recently adopted or issued accounting pronouncements - For a discussion of recently adopted or issued accounting pronouncements, refer to Note 3 to the unaudited consolidated financial statements[229](index=229&type=chunk) [Off-Balance Sheet Arrangements](index=40&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements as of the reporting date - As of June 30, 2025, the company did not have any off-balance sheet arrangements as defined in the rules and regulations of the SEC[230](index=230&type=chunk) [Critical Accounting Policies and Use of Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) This section states there were no material changes to critical accounting policies from the prior annual report - There were no material changes to the company's critical accounting policies during the three and six months ended June 30, 2025, from those described in its Annual Report on Form 10-K for the year ended December 31, 2024[231](index=231&type=chunk) [Smaller Reporting Company](index=40&type=section&id=Smaller%20Reporting%20Company) This section confirms the company's status as a smaller reporting company, allowing for scaled disclosure requirements - The company qualifies as a 'smaller reporting company' under SEC rules, allowing it to take advantage of certain scaled disclosure requirements[232](index=232&type=chunk) - The company will remain a smaller reporting company until its public float exceeds **$700 million** or it meets specific revenue and public float thresholds[232](index=232&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is interest rate sensitivity, affecting its cash, cash equivalents, and restricted cash ($162.1 million as of June 30, 2025). Due to the short-term and low-risk profile of its money market accounts and a policy to hold marketable securities to maturity, a 100 basis point change in interest rates would not materially affect the fair market value of these assets - The company's primary exposure to market risk is interest rate sensitivity, which affects its cash, cash equivalents, and restricted cash, totaling **$162.1 million** as of June 30, 2025[233](index=233&type=chunk) - Due to the short-term and low-risk profile of its money market accounts and a policy to hold marketable securities to maturity, an immediate **100 basis point change** in interest rates would not have a material effect on the fair market value of these assets[233](index=233&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level. The section acknowledges inherent limitations in any internal control system and states there were no material changes in internal control over financial reporting during the quarter - Management, with the participation of the Chief Executive Officer and Chief Financial Officer, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[234](index=234&type=chunk) - There are inherent limitations to the effectiveness of any system of internal control over financial reporting, providing only reasonable assurance and subject to risks like cost limitations, human error, and fraud[235](index=235&type=chunk) - There were no changes in internal control over financial reporting during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[236](index=236&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers miscellaneous disclosures, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings - No legal proceedings were reported[238](index=238&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) The company refers to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024, stating there have been no material changes - There have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[239](index=239&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is marked as 'Not applicable.' - This item is not applicable[240](index=240&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[241](index=241&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - No mine safety disclosures were reported[242](index=242&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) On May 15, 2025, the Chief Medical Officer, Milos Miljkovic, adopted a Rule 10b5-1(c) trading plan for the exercise of vested stock options and potential sale of up to 30,528 common shares, plus an additional 2,689 shares, until March 31, 2026. No other officers or directors reported adopting, modifying, or terminating such trading arrangements during the quarter - On May 15, 2025, the Chief Medical Officer adopted a Rule 10b5-1(c) trading plan for the exercise of vested stock options and potential sale of up to **30,528 common shares** and an additional **2,689 shares** until March 31, 2026[243](index=243&type=chunk) - No other officer or director reported adopting, modifying, or terminating any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025[244](index=244&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed with the Quarterly Report, including merger agreements, certificates of incorporation, preferred stock designations, a lease amendment, and various certifications - The exhibit index includes the Agreement and Plan of Merger, Certificates of Amendment to the Restated Certificate of Incorporation, Certificates of Designation for Series A and B Preferred Stock, a Fourth Amendment to Lease Agreement, and various certifications (e.g., Rule 13a-14(a), 18 U.S.C. Section 1350)[247](index=247&type=chunk)[248](index=248&type=chunk) [SIGNATURES](index=45&type=section&id=SIGNATURES) The report was signed by Carsten Brunn, Ph.D., President and Chief Executive Officer, and Blaine Davis, Chief Financial Officer, on August 7, 2025 - The report was signed by Carsten Brunn, Ph.D., President and Chief Executive Officer, and Blaine Davis, Chief Financial Officer, on August 7, 2025[252](index=252&type=chunk)