Cargo Therapeutics(CRGX) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited condensed financial statements for Q1 2025, reflecting a significant net loss due to restructuring charges Condensed Balance Sheets Total assets decreased and liabilities increased as of March 31, 2025, primarily due to operational cash use and restructuring costs Condensed Balance Sheet Comparison (in thousands) | | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $324,811 | $345,012 | | Total assets | $361,957 | $414,054 | | Total current liabilities | $51,552 | $25,027 | | Total liabilities | $79,500 | $53,825 | | Total stockholders' equity | $282,457 | $360,229 | * A new liability, Accrued restructuring costs, of $36.9 million was recorded as of March 31, 2025, which was not present at the end of 2024[13] * Property and equipment, net, decreased significantly from $11.3 million to $1.1 million, reflecting impairment charges related to the restructuring[13] Condensed Statements of Operations and Comprehensive Loss Net loss for Q1 2025 increased to $84.5 million, primarily due to a $46.3 million restructuring charge Statement of Operations Summary (in thousands, except per share data) | | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Research and development | $30,637 | $30,503 | | General and administrative | $11,508 | $10,303 | | Restructuring, impairment, and costs of suspended programs | $46,280 | $— | | Total operating expenses | $88,425 | $40,806 | | Loss from operations | ($88,425) | ($40,806) | | Interest income | $3,938 | $5,005 | | Net loss | ($84,498) | ($35,811) | | Net loss per share, basic and diluted | ($1.77) | ($0.87) | Condensed Statements of Stockholders' Equity Stockholders' equity decreased to $282.5 million by March 31, 2025, primarily due to the $84.5 million net loss for the quarter * The accumulated deficit increased from $(312.6) million at December 31, 2024, to $(397.1) million at March 31, 2025, due to the net loss of $84.5 million[19] Condensed Statements of Cash Flows Net cash used in operating activities increased to $37.7 million in Q1 2025, with overall cash decreasing by $2.6 million Cash Flow Summary (in thousands) | | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($37,693) | ($30,146) | | Net cash provided by (used in) investing activities | $35,042 | ($293,956) | | Net cash provided by (used in) financing activities | $38 | ($104) | | Net decrease in cash, cash equivalents and restricted cash | ($2,613) | ($324,206) | * Non-cash adjustments to reconcile net loss included an $8.0 million impairment of property and equipment and a $36.9 million increase in accrued restructuring costs[22] Notes to Unaudited Condensed Financial Statements The notes detail significant accounting policies and events, including the 2025 restructuring and its financial impact * In January and March 2025, the company approved a restructuring involving a workforce reduction of approximately 90% and the suspension of various development efforts, including the Phase 2 study of firi-cel[30][31] * A total restructuring charge of $46.3 million was recorded in Q1 2025, comprising $16.6 million in severance, $8.0 million in asset impairment, and $21.7 million in contract termination costs[32][117] * As of March 31, 2025, the company had cash, cash equivalents, and marketable securities of $331.3 million and believes this is sufficient to support operations for at least 12 months[35] * The company has an at-the-market equity offering program with $200.0 million of capacity available as of March 31, 2025, though no shares were sold under it during the quarter[78] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the strategic shift, major restructuring, and increased net loss in Q1 2025, with cash sufficient through mid-2028 * The company discontinued its Phase 2 study of lead program firi-cel and initiated a major restructuring, reducing its workforce by approximately 90% and suspending pipeline development efforts[133][134] * The company is exploring strategic alternatives, including reverse mergers, other business combinations, and cash sale transactions, with the help of TD Cowen as a financial advisor[134] Q1 2025 vs Q1 2024 Results of Operations (in thousands) | | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $30,637 | $30,503 | $134 | | General and administrative | $11,508 | $10,303 | $1,205 | | Restructuring, impairment, etc. | $46,280 | $— | $46,280 | | Total operating expenses | $88,425 | $40,806 | $47,619 | | Net loss | ($84,498) | ($35,811) | ($48,687) | * As of March 31, 2025, the company had $331.3 million in cash, cash equivalents, and marketable securities, with an accumulated deficit of $397.1 million; management estimates this cash position is sufficient to fund operations to mid-2028[140][162][165] * Cash used in operating activities increased to $37.7 million in Q1 2025 from $30.1 million in Q1 2024, primarily due to the higher net loss, partially offset by non-cash restructuring charges[167][168] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing market risk disclosures * As a smaller reporting company, CARGO Therapeutics is exempt from providing quantitative and qualitative disclosures about market risk[187] Controls and Procedures Disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting * The company's disclosure controls and procedures were deemed effective as of the end of the quarter, March 31, 2025[188] * No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[189] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings * As of the report date, the company is not involved in any material legal proceedings[192] Risk Factors New and heightened risks include uncertainty of strategic transactions, failure to achieve cost savings, and activist stockholder actions * There is significant risk that the company may not be able to complete a strategic transaction (e.g., reverse merger, business combination) in a timely manner or on favorable terms, which could force it to consider dissolution[195][202] * The company may not achieve the full anticipated cost reductions from its recent restructuring efforts, which could adversely affect its financial condition[203] * The company faces risks from potential activist stockholders, whose actions could interfere with the ability to conclude a corporate transaction and divert management's attention and resources[204] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities, use of proceeds, or issuer repurchases occurred during the quarter * There were no unregistered sales of equity securities, use of proceeds, or issuer repurchases of equity securities in the quarter[205] Defaults Upon Senior Securities The company reports no defaults upon senior securities * None[206] Mine Safety Disclosures This item is not applicable to the company * Not applicable[207] Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter * No director or officer adopted or terminated a Rule 10b5-1 trading plan during the quarter[208] Exhibits This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and Inline XBRL documents * The report includes required certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as Inline XBRL data files[210]