UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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, 2022 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: 001-40384 TALARIS THERAPEUTICS, INC. (Exact Name of Registrant as Specified in its Charter) D ...

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, 2021 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 001-40384 TALARIS THERAPEUTICS, INC. (Exact name of Registrant as specified in its Charter) Delaware 83-2377352 (State or other jurisdict ...

FCR001 Therapy Overview - Talaris' FCR001 is a novel, single-dose, investigational cell therapy targeting solid organ transplantation and severe immune/non-malignant blood disorders[11, 63] - FCR001 aims to prevent organ rejection and the need for lifelong immunosuppression by reprogramming the recipient's immune system[8] - The therapy involves a proprietary composition of donor's CD34+ cells, Facilitating cells, and ab T-cells[17] Clinical Trial and Pipeline - FCR001 is in an open-label Phase 3 trial (FREEDOM-1) for living donor kidney transplant (LDKT) recipients, building on compelling Phase 2 data[11, 36] - Phase 2 study showed an 82% success rate (14 of last 17 patients) in weaning patients off immunosuppression after optimizing key parameters[13, 27] - Initial Phase 3 results are encouraging, with the first two patients off chronic immunosuppression with stable kidney function after 15 months follow up[11, 41] - Talaris is initiating two more Phase 2 studies in Q4 2021, including one for scleroderma (FREEDOM-3)[11, 49] - The company is also exploring FCR001's potential in deceased donor kidney transplant (DDKT), with a market opportunity of over 16,500 cases per year in the US[20, 45] Financial and Manufacturing - Talaris had approximately $255 million in cash on hand as of September 30, 2021[11, 63] - The company has a robust, reproducible, and fully in-house manufacturing process, with capacity to meet anticipated clinical needs[11, 21]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the quarterly period ended September 30, 2021 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: 001-40384 TALARIS THERAPEUTICS, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 83-2377352 ( State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 570 S. P ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited financial statements reflect significant changes post-IPO, including a substantial increase in assets and a shift to positive equity, alongside higher operating expenses and net loss [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $36,297 | $17,589 | | Marketable securities | $229,923 | $131,899 | | **Total Assets** | **$272,814** | **$152,778** | | **Liabilities & Equity** | | | | Total Liabilities | $5,461 | $4,774 | | Total convertible preferred stock | $0 | $186,151 | | **Total stockholders' equity (deficit)** | **$267,353** | **($38,147)** | - Following the IPO in May 2021, all convertible preferred stock was converted to common stock, resulting in a significant shift from a **stockholders' deficit** to a **positive stockholders' equity**[9](index=9&type=chunk)[22](index=22&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Operating Results (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $7,570 | $3,402 | $14,473 | $6,932 | | General and administrative | $3,487 | $1,335 | $5,589 | $2,779 | | **Loss from operations** | **($11,057)** | **($4,737)** | **($20,062)** | **($9,711)** | | **Net loss** | **($11,352)** | **($4,663)** | **($20,651)** | **($9,511)** | | Net loss per common share | ($0.41) | ($0.73) | ($1.19) | ($1.49) | - **Operating expenses more than doubled** for both the three and six-month periods ended June 30, 2021, compared to the same periods in 2020, driven by increased research and development activities and general and administrative costs[12](index=12&type=chunk) [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity) - In May 2021, the company completed its IPO, issuing 8,825,000 shares of common stock for net proceeds of approximately **$137.2 million**[15](index=15&type=chunk)[107](index=107&type=chunk) - Upon the IPO, all outstanding shares of convertible preferred stock were automatically converted into **24,392,498 shares** of common and non-voting common stock[15](index=15&type=chunk)[85](index=85&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($20,029) | ($8,736) | | Net cash used in investing activities | ($98,802) | ($15,889) | | Net cash provided by financing activities | $137,539 | $24 | | **Net increase (decrease) in cash** | **$18,708** | **($24,601)** | - Financing activities provided **$137.5 million** in cash during the first six months of 2021, primarily from the IPO proceeds, which more than offset cash used in operations and investments[18](index=18&type=chunk)[145](index=145&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) - The company completed its IPO on May 11, 2021, selling **8,825,000 shares** at **$17.00 per share** for gross proceeds of **$150.0 million**[22](index=22&type=chunk) - Management expects that cash, cash equivalents, and marketable securities totaling **$266.2 million** as of June 30, 2021, are sufficient to fund operating expenses and capital requirements for **more than 12 months**[23](index=23&type=chunk)[110](index=110&type=chunk) - In May 2021, the company settled its contingent stock liability with the University of Louisville Research Foundation Inc. (ULRF) by issuing **48,889 shares** of common stock and paying approximately **$0.3 million** in cash[55](index=55&type=chunk)[67](index=67&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes increased operating losses to higher R&D and G&A expenses, while the IPO significantly strengthened liquidity, expected to fund operations into 2025 Comparison of Operating Expenses (in thousands) | Expense Category | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | Change | | :--- | :--- | :--- | :--- | | Research and development | $14,473 | $6,932 | $7,541 | | General and administrative | $5,589 | $2,779 | $2,810 | | **Total operating expenses** | **$20,062** | **$9,711** | **$10,351** | - The increase in R&D expenses was primarily driven by a **$4.0 million** increase in personnel costs and a **$1.9 million** increase in FCR001 clinical program expenses related to the FREEDOM-1, FREEDOM-2, and FREEDOM-3 trials[134](index=134&type=chunk) - The company's cash, cash equivalents, and marketable securities of **$266.2 million** as of June 30, 2021, are expected to fund operations and capital expenditures **at least into 2025**[110](index=110&type=chunk)[148](index=148&type=chunk) - The COVID-19 pandemic has **adversely impacted** the screening and enrollment in the company's FREEDOM-1 Phase 3 clinical trial[113](index=113&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate sensitivity on its $266.2 million cash and marketable securities, with minimal foreign currency or inflation exposure - The company's main market risk is interest rate sensitivity on its cash and marketable securities, which totaled **$266.2 million** as of June 30, 2021[172](index=172&type=chunk) - The company has **minimal exposure** to foreign currency exchange risk as operations are located in the U.S. and contracts in foreign currencies have been minimal[173](index=173&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting - As of June 30, 2021, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective**[176](index=176&type=chunk) - There were **no changes** in internal control over financial reporting during the quarter ended June 30, 2021, that materially affected, or are reasonably likely to materially affect, internal controls[177](index=177&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) As of June 30, 2021, the company is not a party to any material legal proceedings expected to have an adverse effect on its business - The company is **not currently a party** to any material legal proceedings[180](index=180&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including a history of losses, dependence on FCR001's clinical success, manufacturing scale-up challenges, competition, and COVID-19 impacts - The company has a **history of net losses**, with an **accumulated deficit of $63.7 million** as of June 30, 2021, and anticipates **continued significant losses** for the foreseeable future[182](index=182&type=chunk) - The business is **substantially dependent** on the successful development and regulatory approval of its lead product candidate, **FCR001**, and failure to achieve this would materially harm the business[193](index=193&type=chunk) - The COVID-19 pandemic has **adversely affected** the business, including causing **delays in clinical trial initiation and patient enrollment**, and could continue to do so[378](index=378&type=chunk)[380](index=380&type=chunk) - The company operates its own manufacturing facility and faces **risks in scaling up production** for commercial needs, which is a **complex, costly, and uncertain process**[293](index=293&type=chunk)[296](index=296&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=82&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company raised $137.2 million net proceeds from its May 2021 IPO, using $5.1 million for clinical trials and corporate purposes, and also reported unregistered equity issuances - The IPO on May 11, 2021, generated net proceeds of approximately **$137.2 million** after deducting underwriting discounts and other offering expenses[432](index=432&type=chunk)[433](index=433&type=chunk) - As of June 30, 2021, the company had used approximately **$5.1 million** of the net IPO proceeds for advancing its clinical trials and for working capital[434](index=434&type=chunk) - In May 2021, the company issued **48,889 shares** of common stock to ULRF as part of a license agreement, which was exempt from registration[431](index=431&type=chunk) [Item 3. Defaults Upon Senior Securities](index=82&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities, thus this item is not applicable - **Not applicable**[436](index=436&type=chunk) [Item 4. Mine Safety Disclosures](index=82&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable as the company has no mine safety disclosures - **Not applicable**[437](index=437&type=chunk) [Item 5. Other Information](index=82&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this period - **None**[438](index=438&type=chunk) [Item 6. Exhibits](index=83&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including key corporate documents, agreements, and certifications by the CEO and CFO - The report includes **key corporate documents and agreements** as exhibits, such as the Amended and Restated Exclusive License Agreement with the University of Louisville Research Foundation, Inc[443](index=443&type=chunk) - **Certifications** of the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 are included as exhibits[443](index=443&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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, 2021 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: 001-40384 TALARIS THERAPEUTICS, INC. (Exact Name of Registrant as Specified in its Charter) D ...