Carisma Therapeutics Inc.
08/07/2025 | Press release | Distributed by Public on 08/07/2025 14:27
Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited interim consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth in the section titled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 and in this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated by these forward-looking statements.
Overview
We are a biotechnology company that was previously focused on applying our industry leading expertise in macrophage engineering to develop transformative therapies to treat serious diseases including liver fibrosis and cancer.
2024 Revised Operating Plans
In late March 2024, following a strategic review of our operating plan for 2024 and future periods, we approved a revised operating plan intended to balance value creation and expense management with our available cash resources. The objective of our revised operating plan was to focus our clinical development efforts on high potential value programs with meaningful near-term milestones and eliminate non-essential expenses and headcount to extend our cash runway. Under that plan, we intended to focus our ex vivo oncology clinical development efforts on our follow-on product candidate CT-0525, a CAR-Monocyte intended to treat solid tumors that over-express anti-human epidermal growth factor receptor 2, or HER2, and cease development of CT-0508, our macrophage-based product candidate, and initial lead product candidate. In addition, at that time, we decided to continue to focus on our in vivo Messenger RNA/lipid nanoparticle, or mRNA/LNP, CAR-M programs in partnership with Moderna and paused development of CT-1119, a mesothelin-targeted CAR-Monocyte, pending additional financing, reduce our workforce and decrease spending on other non-essential activities. All clinical activities of CT-0508 have ceased.
In December 2024, following another strategic review of our operating plan for 2025 and our future pipeline, we approved another revised operating plan intended to reduce monthly operating expenses, conserve cash, and refocus our efforts on strategic priorities. First, we decided to cease development of our HER2 directed autologous cell therapy platform including CT-0525. Our decision was based on an assessment of the competitive landscape in anti-HER2 treatments, including the impact of recently approved anti-HER2 therapies on HER2 antigen loss/downregulation, and the effects on the future development strategy of any anti-HER2 product. We dosed the last patient in our Phase 1 clinical trial of CT-0525, in November 2024 and all clinical activity ended in January 2025.
Further, pursuant to the December 2024 revised operating plan, we pivoted our focus to developing product candidates targeting two indications - liver fibrosis and solid tumor oncology, while retaining the potential to receive milestones and royalties from our collaboration with Moderna.
As part of our cost-reduction initiatives in 2024, we implemented workforce reductions resulting in the termination of 62 full-time employees (representing approximately 58.0% of our total workforce), across research and development and general and administrative functions. The workforce reductions resulted in $4.1 million of severance related costs. As of December 31, 2024, we accrued $2.7 million in severance costs from our workforce reduction, $2.3 million of which was paid in January 2025. We may also incur other charges or cash expenditures not currently contemplated due to events that may occur as a result of, or associated with, the 2024 reduction in workforce.
On June 26, 2024, we notified Novartis Pharmaceuticals Corporation, or Novartis, of our termination of the Manufacturing and Supply Agreement, dated March 1, 2023, relating to the manufacture of our first product candidate to enter clinical development, CT-0508, or the Manufacturing Agreement. The termination was effective July 31, 2024. As a result of the termination of the Manufacturing Agreement, we incurred a termination fee of $4.0 million, or the Termination Fee, which we paid in the third quarter of 2024. We separately agreed with Novartis that if we enter into an agreement for the tech transfer of another product, or a Substitute Product, to Novartis on or before December 31, 2024, then the Termination Fee shall be credited in full or in part against any amounts due to Novartis under such agreement relating to the Substitute Product. We did not enter into an agreement relating to the Substitute Product with Novartis and we expensed the $4.0 million prepaid asset in the fourth quarter of 2024 to research and development in the consolidated statements of operations and comprehensive loss.
2025 Cash Preservation Plan
As part of a further revised plan approved by our board of directors on March 25, 2025 to preserve our existing cash resources following our reduction in workforce, or our cash preservation plan, we have reduced our operations to those necessary to identify and explore a range of strategic alternatives to maximize value and prepare to wind down our business. We currently have no intention of resuming our historical research and development activities. As part of our cash preservation plan, our board of directors determined to terminate all of our employees not deemed necessary to pursue strategic alternatives and execute an orderly wind down of our operations.
Nasdaq Deficiencies
We are not in compliance with the listing criteria for the Nasdaq Capital Market. Following a timely request for a hearing, we presented our plan to achieve compliance with applicable Nasdaq listing criteria and requested an extension of time to do so. On June 10, 2025, The Nasdaq Stock Market, LLC, or Nasdaq, notified us that The Nasdaq Hearings Panel, or the Panel, determined to grant our request for an exception to, and an extension of time to comply with, Nasdaq listing standards. The extension of time is subject to our demonstrating compliance with Nasdaq Listing Rule 5550(a)(2), or the NCM Bid Price Rule, by evidencing a closing bid price of $1.00 or more per share for a minimum of 10 consecutive trading sessions, completing a strategic transaction and otherwise demonstrating compliance with all initial listing requirements for the Nasdaq Capital Market, in each case on or before October 7, 2025, which is the Nasdaq Compliance Date. The extension of time is further subject to our meeting an interim milestone for a strategic transaction in connection with our ongoing strategic process. The Panel has the right to reconsider its determination based on any event, condition or circumstance that exists or develops that would, in the opinion of the Panel, make continued listing of our securities inadvisable or unwarranted. The Panel does not have discretion to grant continued listing for noncompliance with Nasdaq listing standards beyond October 7, 2025. There can be no assurance that we will be able to satisfy the requirements or conditions for continued listing within the period of time granted by the Panel.
At our special meeting of our stockholders held on for August 5, 2025, our stockholders approved an amendment to our certificate of incorporation to effect a reverse stock split of our issued and outstanding common stock at a ratio of not less than 1-for-10 and not greater than 1-for-50 shares, with the exact ratio to be determined by our board of directors, in its discretion, without further approval or authorization by our stockholders. The primary purpose for the reverse stock split is to increase the per-share closing bid price of our common stock so as to demonstrate compliance with the applicable NCM Bid Price Rule, and to help ensure our continued listing on Nasdaq. However, there can be no assurance that the reverse stock split, if effected, will enable us to demonstrate compliance with the NCM Bid Price Rule or that we will be able to satisfy the terms of the Panel's decision by October 7, 2025.
Current Strategy - Anticipated Merger with OrthoCellix
After a comprehensive review of strategic alternatives, on June 22, 2025, we entered into an Agreement and Plan of Merger, or the Merger Agreement, by and among us, Azalea Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of us, or Merger Sub, Ocugen, Inc., or Ocugen, a Delaware corporation, and OrthoCellix, Inc., or OrthoCellix, a Delaware corporation and wholly-owned subsidiary of Ocugen, pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into OrthoCellix, or the OrthoCellix Merger, with OrthoCellix continuing as a wholly owned subsidiary of us and the surviving company of the OrthoCellix Merger. The OrthoCellix Merger is intended to qualify for federal income tax purposes as a tax-free reorganization. Following the OrthoCellix Merger we are referred to herein as the "Combined Company." If the OrthoCellix Merger is completed, the business of OrthoCellix will continue as the business of the Combined Company. Prior to the completion of the OrthoCellix Merger, we will seek to enter into a series of transactions with certain third parties to monetize certain legacy assets, in accordance with the limitations and requirements set forth in the Merger Agreement.
Subject to the terms and conditions of the Merger Agreement, at the effective time of the OrthoCellix Merger, or the Effective Time, each share of common stock, par value $0.00001 per share, of OrthoCellix, or OrthoCellix Common Stock, issued and outstanding (other than shares of OrthoCellix Common Stock (a) held as treasury stock, (b) owned, directly or indirectly, by us or Merger Sub immediately prior to the Effective Time or (c) as to which appraisal rights have been properly exercised in accordance with Delaware law) shall be converted into and become exchangeable for the right to receive a number of shares of our common stock, based on a ratio calculated in accordance with the Merger Agreement, or the Exchange Ratio.
Immediately after the OrthoCellix Merger and the anticipated Concurrent Investment (as defined below), our securityholders as of immediately prior to the OrthoCellix Merger are expected to own approximately 10.0% of the outstanding shares of the Combined Company on a fully-diluted basis, and the sole stockholder of OrthoCellix along with the other investors in the anticipated Concurrent Investment are expected to own approximately 90.0% of the outstanding shares of the Combined Company on a fully-diluted basis, subject to certain assumptions, including, but not limited to, Carisma's net cash as of the closing of the OrthoCellix Merger being approximately $0 and the anticipated amount of the Concurrent Investment of $25.0 million.
The Exchange Ratio assumes (a) a valuation for OrthoCellix of $135.0 million (less the amount, if any, by which the actual amount of the Concurrent Investment is less than $25.0 million), and (b) a valuation for us of $15.0 million, which is subject to adjustment based on the amount by which our net cash is greater than or less than $0.
Although we have entered into the Merger Agreement and intend to consummate the OrthoCellix Merger, there is no assurance that we will be able to successfully consummate the OrthoCellix Merger on a timely basis, or at all. If, for any reason, the OrthoCellix Merger does not close, our board of directors may elect to, among other things, attempt to complete another strategic transaction like the OrthoCellix Merger, attempt to sell or otherwise dispose of our remaining assets or dissolve and liquidate our assets.
If the OrthoCellix Merger does not close, we might not have enough time or resources remaining to identify, evaluate and complete another strategic transaction before the Nasdaq Compliance Date. If the OrthoCellix Merger is not completed, our board of directors may decide that it is in the best interests of our stockholders to commence bankruptcy or liquidation and dissolution proceedings. In that event, the amount of cash available for distribution to our stockholders would depend heavily on the timing of such decision and, ultimately, such liquidation, since the amount of our cash resources continues to decrease as we continue our wind down activities and incur fees and expenses related to the OrthoCellix Merger. In addition, if our board of directors were to approve and recommend, and our stockholders were to approve, a dissolution of the company, we would be required under Delaware law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to our stockholders. As a result of this requirement, a portion of our assets may need to be reserved pending the resolution of such obligations. In addition, we may be subject to litigation or other claims related to a liquidation and dissolution of the company. If a liquidation and dissolution were pursued, our board of directors, in consultation with its advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, our stockholders could lose all or a significant portion of their investment in the event of a liquidation and dissolution of the company.
Contingent Value Rights Agreement
At or prior to the Effective Time, we will enter into a Contingent Value Rights Agreement, or the CVR Agreement, with a rights agent, or the Rights Agent, pursuant to which our pre-OrthoCellix Merger common stockholders, subject to the terms and conditions set forth in the CVR Agreement will receive one contingent value right, or a CVR, for each outstanding share of our common stock held by such stockholder on such date.
Each CVR will represent the contractual right to receive a contingent cash payment equal to (i) the Net Proceeds (as defined in the CVR Agreement) received by us to the extent such payment related to the disposition of any legacy asset of ours during the period beginning on the execution date of the Merger Agreement and ending on the second (2nd) anniversary of the closing of the OrthoCellix Merger, if any, plus (ii) the Net Proceeds received by us to the extent such payment related to any royalties, milestones or other payments received by us following the closing of the OrthoCellix Merger under certain of our existing agreements, including its collaboration and license agreement with ModernaTX, Inc., in each case subject to adjustment based on the terms and conditions set forth in the CVR Agreement. The contingent payments under the CVR Agreement, if they become payable, will become payable to the Rights Agent for subsequent distribution to the holders of the CVRs. In the event that no such proceeds are received, holders of the CVRs will not receive any payment pursuant to the CVR Agreement. There can be no assurance that any holders of CVRs will receive any payments with respect thereto.
Anticipated Concurrent Investment
Pursuant to the Merger Agreement, we and OrthoCellix have agreed to use commercially reasonable efforts to enter into subscription agreements with one or more investors designated by OrthoCellix, pursuant to which such investors would agree to purchase shares of our common stock for aggregate gross proceeds (inclusive of the Guarantor Investment Amount (as defined below)) at least equal to the Concurrent Investment Amount, which investment is expected to be consummated
at or immediately following the closing of the OrthoCellix Merger. We and the investors participating in the anticipated Concurrent Investment will enter into the registration rights agreement at the closing of the Concurrent Investment, pursuant to which, among other things, the Combined Company will agree to provide for the registration and resale of certain shares of our common stock that are held by the investors participating in the Concurrent Investment from time to time pursuant to Rule 415 under the Securities Act of 1933, as amended, or the Securities Act. The closing of the Concurrent Investment is conditioned upon the satisfaction or waiver of the conditions set forth in the subscription agreements and of each of the conditions to the closing of the OrthoCellix Merger.
Further, pursuant to the Merger Agreement, Ocugen has agreed to enter into a subscription agreement with us, pursuant to which Ocugen will agree to purchase $5.0 million of shares of our common stock as part of the Concurrent Investment (such investment by Ocugen, the Guarantor Investment Amount). Ocugen and OrthoCellix have informed us that Ocugen is in the process of seeking the consent of Ocugen's institutional lender prior to Ocugen's entry into such subscription agreement us for the Guarantor Investment.
Our Historical Product Candidates and Pipeline
Our liver fibrosis program is based upon the discovery of a key efferocytosis defect in the macrophages that reside within the livers of patients with fibrosis. Using a novel mRNA/LNP, approach, our product candidate aims to reverse fibrotic disease and improve the outcomes of patients with advanced liver fibrosis. In the second quarter of 2024, we achieved pre-clinical proof of concept in our liver fibrosis program, demonstrating the anti-fibrotic potential of engineered macrophages in two liver fibrosis models. Prior to pausing our research and development activities, we planned to continue to conduct pre-clinical development of our product candidate, CT-2401, sufficient to enable a regulatory submission to initiate a clinical trial.
Our oncology program leverages our considerable expertise and experience in ex vivo cell therapy. CT-1119 is designed to treat patients with advanced mesothelin-positive solid tumors, including pancreatic cancer, ovarian cancer, lung cancer, mesothelioma, and others. Prior to pausing our research and development activities, we planned to initiate a Phase 1 clinical trial of CT-1119, a mesothelin-targeted CAR-Monocyte, in combination with tislelizumab, an anti-PD-1 antibody, in adult patients with mesothelin-positive solid tumors, in China.
Our collaboration with Moderna utilizes Moderna's mRNA/LNP technology, together with our CAR-M platform technology, to create novel in vivo oncology off-the-shelf gene therapy product candidates. In June 2024, we announced that Moderna nominated the first development candidate under the collaboration and paid us a $2.0 million milestone. This development candidate targets Glypican-3, or GPC3, and is designed to treat solid tumors, including hepatocellular carcinoma. In November 2024, we announced new pre-clinical data on our anti-GPC3 in vivo CAR-M therapy for treating hepatocellular carcinoma. These pre-clinical data demonstrated robust anti-tumor activity. In February 2025, Moderna nominated ten additional oncology research targets, four of which replaced two oncology research targets and two autoimmune research targets, which Moderna concurrently ceased developing. As of February 2025, Moderna has nominated all 12 oncology research targets under the collaboration for which we have the potential to receive future milestones and royalty payments. As such, we will not be conducting any additional research activities under the collaboration agreement and we will not be receiving any further research funding from Moderna under the collaboration agreement. Moderna also agreed to terminate the in-vivo oncology field exclusivity, which would allow us to pursue in vivo CAR-M programs outside of the 12 nominated targets and product polypeptides.
To date, we have not yet commercialized any products or generated any revenue from product sales and have financed our operations primarily with proceeds from sales of our preferred stock, proceeds from our collaboration with Moderna, research tax credits, convertible debt financing, and completion of the Sesen Bio Merger and related financing. Our operations have historically been limited to organizing and staffing the company, business planning, capital raising, establishing and maintaining our intellectual property portfolio, building our pipeline of product candidates, conducting drug discovery activities, undertaking pre-clinical studies, manufacturing process development studies, conducting early-stage clinical trials, and providing general and administrative support for these operations. We have historically devoted substantially all of our financial resources and efforts to pursuing discovery, research and development of our product candidates.
Financial Operations
Our net losses were $19.0 million and $30.1 million for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, we had $2.0 million in cash and cash equivalents and an accumulated deficit of $324.6 million. Although we have reduced operations in connection with our cash preservation plan, we have incurred expenses in connection with
our evaluation of strategic alternatives. We expect to continue to incur significant expenses and operating losses in connection with consummating the OrthoCellix Merger and the ongoing process of exploring transactions with certain third parties to monetize certain legacy assets. A considerable portion of these expenses, such as legal, accounting and advisory fees and other related charges, will be incurred regardless of whether we consummate the OrthoCellix Merger or enter into a monetization transaction for legacy assets.
Although we believe our current cash and cash equivalents are sufficient to sustain our operating expenses and capital expenditure requirements into the fall of 2025, we do not expect that our cash and cash equivalents will support our operations for more than one year following the date of this Quarterly Report on Form 10-Q. As a result of these conditions, substantial doubt exists about our ability to continue as a going concern. We have based this estimate on assumptions that may prove to be wrong. In addition, changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more than currently expected because of circumstances beyond our control. As a result, we could deplete our capital resources sooner than we currently expect.
Our future operations are highly dependent on the success of the OrthoCellix Merger. Although we have entered into the Merger Agreement and intend to consummate the OrthoCellix Merger, there is no assurance that we will be able to successfully consummate the OrthoCellix Merger on a timely basis, or at all. If the OrthoCellix Merger does not close, we might not have enough time or resources remaining to identify, evaluate and complete another strategic transaction before the Nasdaq Compliance Date. If the OrthoCellix Merger is not completed, our board of directors may decide that it is in the best interests of our stockholders to commence bankruptcy or liquidation and dissolution proceedings.
Financial Operations Overview
Collaboration Revenues
To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products for the foreseeable future. Our revenues to date have been generated from the Moderna collaboration agreement. Moderna reimbursed us for all costs incurred by it in connection with its research and development activities under the Moderna collaboration agreement plus a reasonable margin for the respective services performed. As of February 2025, Moderna has nominated all 12 oncology research targets under collaboration agreement with Moderna, or the Moderna License Agreement. As such, we will not be conducting any additional research activities under the collaboration agreement and we will not be receiving any further research funding from Moderna under the collaboration agreement. We are eligible to receive potential milestone and royalty payments from Moderna in the future. To date, we have received $2.0 million in milestone payments and we have not received any royalties under the Moderna collaboration agreement.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including discovery efforts and the development of product candidates, and include:
•expenses incurred to conduct the necessary pre-clinical studies and clinical trials required to obtain regulatory approval;
•salaries, benefits and other related costs, including stock-based compensation expense, for personnel engaged in research and development functions;
•costs of funding research performed by third parties, including pursuant to agreements with contract research organizations, or CROs, as well as investigative sites and consultants that conduct our pre-clinical studies and clinical trials;
•expenses incurred under agreements with contract manufacturing organizations, or CMOs, including manufacturing scale-up expenses and the cost of acquiring and manufacturing pre-clinical study and clinical trial materials;
•costs of outside consultants, including their fees, stock-based compensation and related travel expenses;
•the costs of laboratory supplies and acquiring materials for pre-clinical studies;
•facility-related expenses, which include direct depreciation costs of equipment and expenses for rent and maintenance of facilities and other operating costs; and
•third-party licensing fees.
Research and development activities have historically been central to our business model. Product candidates in later stages of clinical development will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development expenses to continue to significantly decrease in 2025 as a result of our decision to pause our research and development activities as part of our cash preservation plan. We currently have no intention of resuming our historical research and development activities. If the OrthoCellix Merger is completed, the business of OrthoCellix will continue as the business of the Combined Company. If the OrthoCellix Merger is not completed and we are able to resume historical research and development activities, our research and development expenses would increase; however, any future resumption of our historical research and development activities would depend on completing a strategic transaction that would support our prior operating plans or otherwise obtaining significant additional funding.
If we were to resume our historical research and development activities, the success of any of our product candidates will depend on several factors, including the following:
•successfully completing pre-clinical studies;
•timely filing and receiving clearance of investigational new drug applications to commence clinical trials;
•successfully initiating, enrolling patients in and completing clinical trials;
•scaling up manufacturing processes and capabilities to support clinical trials of any of our product candidates;
•applying for and receiving marketing approvals from applicable regulatory authorities;
•obtaining and maintaining intellectual property protection and regulatory exclusivity for any product candidates;
•making arrangements with third-party manufacturers, or establishing commercial manufacturing capabilities, for both clinical and commercial supplies of our product candidates;
•establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others;
•acceptance of any of our product candidates, if and when approved, by patients, the medical community and third-party payors;
•effectively competing with other therapies;
•obtaining and maintaining coverage, adequate pricing and adequate reimbursement from third-party payors, including government payors;
•maintaining, enforcing, defending and protecting our rights in our intellectual property portfolio;
•not infringing, misappropriating or otherwise violating others' intellectual property or proprietary rights; and
•maintaining a continued acceptable safety profile of our products following receipt of any marketing approvals.
A change in the outcome of any of these variables with respect to the development, manufacture or commercialization activities of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive, if there are safety concerns or if we determine that the observed safety or efficacy profile would not be competitive in the marketplace, we could be required to expend significant additional financial resources and time on the completion of clinical development.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation expense for employees in executive, finance, accounting, business development and human resource functions. General and administrative expense also includes corporate facility costs, including rent, utilities, depreciation and maintenance, and costs not otherwise included in research and development expenses, legal fees related to intellectual property and corporate matters as well as fees for accounting and consulting services.
We expect that our general and administrative expenses will continue to decrease in 2025, as we have terminated all of our employees not deemed necessary to pursue strategic alternatives and execute an orderly wind down of our operations. However, we have incurred and expect to continue to incur significant costs related to the OrthoCellix Merger, including legal, accounting and advisory expenses and other related charges.
Other Income, Net
Interest income, net consists of interest earned on our excess cash, net of interest expense, and sales of supplies. Interest expense consists of interest on our finance leases.
Income Taxes
Since inception, we have incurred significant net losses. We have provided a valuation allowance against the full amount of our deferred tax assets since, in our opinion, based upon our historical and anticipated future losses, it is more likely than not that the benefits will not be realized. As of June 30, 2025, we remained in a full valuation allowance position.
The utilization of our net operating losses, or NOLs, may be subject to a substantial annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, or the Code, respectively, as well as similar state provisions. We have recorded a valuation allowance on all of our deferred tax assets, including deferred tax assets related to NOLs.
Results of Operations
Comparison of the Three Months Ended June 30, 2025 and 2024 (in thousands)
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Three Months Ended June 30, |
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| 2025 | 2024 | ||||||||||
| Collaboration revenues | $ | - | $ | 9,197 | |||||||
| Operating expenses: | |||||||||||
| Research and development | 2,424 | 15,307 | |||||||||
| General and administrative | 3,354 | 5,560 | |||||||||
| Total operating expenses | 5,778 | 20,867 | |||||||||
| Operating loss | (5,778) | (11,670) | |||||||||
| Loss on sale of held for sale assets | (3,539) | - | |||||||||
| Loss on abandonment of operating lease right-of-use asset | (927) | - | |||||||||
| Other income, net | 470 | 508 | |||||||||
| Pre-tax loss | (9,774) | $ | (11,162) | ||||||||
Collaboration Revenues
Collaboration revenues were zero and $9.2 million for the three months ended June 30, 2025 and 2024, respectively,related to the research and development activities completed under the Moderna License Agreement.
Research and Development Expenses
We track outsourced development, outsourced personnel costs and other external research and development costs of our CT-0508, CT-0525, and CT-1119 programs. We do not track internal research and development costs on a program-by-program basis. The following table summarizes our research and development expenses for the three months ended June
30, 2025 and 2024 (in thousands). Certain amounts related to prior period results were reclassified to conform to current period presentation. These reclassifications have not changed total research and development expenses.
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Three Months Ended June 30, |
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| 2025 | 2024 | Change | |||||||||||||||
| CT-0508 (1) | $ | 515 | $ | 2,052 | $ | (1,537) | |||||||||||
| CT-0525 (1) | 155 | 2,768 | (2,613) | ||||||||||||||
| CT-1119 (1) | - | 324 | (324) | ||||||||||||||
| Personnel costs, including stock-based compensation (2) | 445 | 5,479 | (5,034) | ||||||||||||||
| Other clinical and pre-clinical development expenses | 416 | 1,264 | (848) | ||||||||||||||
| Facilities and other expenses | 893 | 3,420 | (2,527) | ||||||||||||||
| Total research and development expenses | $ | 2,424 | $ | 15,307 | $ | (12,883) | |||||||||||
(2) Our cash preservation plan and the 2024 revised operating plans included reductions in workforce which resulted in severance costs during the three months ended June 30, 2025 and 2024.
The decrease in research and development expenses was primarily attributable to a decrease in our program expenses and personnel costs in connection with the cash preservation plan and 2024 revised operating plans.
General and Administrative Expenses
The following table summarizes our general and administrative expenses for the three months ended June 30, 2025 and 2024 (in thousands). Certain amounts related to prior period results were reclassified to conform to current period presentation. These reclassifications have not changed total general and administrative expenses.
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Three Months Ended June 30, |
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| 2025 | 2024 | Change | |||||||||||||||
| Personnel costs, including stock-based compensation (1) | $ | 784 | $ | 2,066 | $ | (1,282) | |||||||||||
| Professional fees | 2,074 | 2,010 | 64 | ||||||||||||||
| Facilities and supplies | 106 | 826 | (720) | ||||||||||||||
| Insurance, taxes, and fees | 259 | 373 | (114) | ||||||||||||||
| Other expenses | 131 | 285 | (154) | ||||||||||||||
| Total general and administrative expenses | $ | 3,354 | $ | 5,560 | $ | (2,206) | |||||||||||
(1) Our cash preservation plan and 2024 revised operating plans included reductions in workforce which resulted in severance costs during the three months ended June 30, 2025 and 2024.
The decrease in general and administrative expenses was primarily attributable to a decrease in personnel costs and facilities expense in connection with the cash preservation plan and the 2024 revised operating plans.
Loss on Sale of Held For Sale Assets
We recognized $3.5 million in losses on sale of held for sale assets during the three months ended June 30, 2025, related to the return of finance lease right-of-use, or ROU, assets and the sale of previously classified equipment. We did not incur such losses during the three months ended June 30, 2024.
Loss on Abandonment of Operating Lease Right-of-Use Asset
We recognized $0.9 million in losses related to the abandonment of operating lease space during the three months ended June 30, 2025. We did not incur such losses during the three months ended June 30, 2024.
Other Income, Net
We recognized $0.5 million in other income, net for the three months ended June 30, 2025 and 2024, which was attributable to interest earned on excess cash and sales of supplies in connection with the cash preservation plan.
Comparison of the Six Months Ended June 30, 2025 and 2024 (in thousands)
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Six Months Ended June 30, |
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| 2025 | 2024 | ||||||||||
| Collaboration revenues | $ | 3,729 | $ | 12,594 | |||||||
| Operating expenses: | |||||||||||
| Research and development | 11,580 | 32,769 | |||||||||
| General and administrative | 7,261 | 11,005 | |||||||||
| Total operating expenses | 18,841 | 43,774 | |||||||||
| Operating loss | (15,112) | (31,180) | |||||||||
| Loss on sale of held for sale assets | (3,539) | - | |||||||||
| Loss on abandonment of operating lease right-of-use asset | (927) | - | |||||||||
| Other income, net | 538 | 1,040 | |||||||||
| Pre-tax loss | (19,040) | $ | (30,140) | ||||||||
Collaboration Revenues
Collaboration revenues were $3.7 million and $12.6 million for the six months ended June 30, 2025 and 2024, respectively,related to the research and development activities completed under the Moderna License Agreement.
Research and Development Expenses
We track outsourced development, outsourced personnel costs and other external research and development costs of our CT-0508, CT-0525, and CT-1119 programs. We do not track internal research and development costs on a program-by-program basis. The following table summarizes our research and development expenses for the six months ended June 30,
2025 and 2024 (in thousands). Certain amounts related to prior period results were reclassified to conform to current period presentation. These reclassifications have not changed total research and development expenses.
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Six Months Ended June 30, |
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| 2025 | 2024 | Change | |||||||||||||||
| CT-0508 (1) | $ | 515 | $ | 3,202 | $ | (2,687) | |||||||||||
| CT-0525 (1) | 925 | 5,184 | (4,259) | ||||||||||||||
| CT-1119 (1) | - | 730 | (730) | ||||||||||||||
| Personnel costs, including stock-based compensation (2) | 6,496 | 10,184 | (3,688) | ||||||||||||||
| Other clinical and pre-clinical development expenses | 1,707 | 5,636 | (3,929) | ||||||||||||||
| Facilities and other expenses | 1,937 | 7,833 | (5,896) | ||||||||||||||
| Total research and development expenses | $ | 11,580 | $ | 32,769 | $ | (21,189) | |||||||||||
(2) Our cash preservation plan and the 2024 revised operating plans included reductions in workforce which resulted in severance costs during the six months ended June 30, 2025 and 2024.
The decrease in research and development expenses was primarily attributable to a decrease in our program expenses, personnel costs and other clinical and pre-clinical development expenses, and facility expenses in connection with the cash preservation plan and 2024 revised operating plans.
General and Administrative Expenses
The following table summarizes our general and administrative expenses for the six months ended June 30, 2025 and 2024 (in thousands). Certain amounts related to prior period results were reclassified to conform to current period presentation. These reclassifications have not changed total general and administrative expenses.
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Six Months Ended June 30, |
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| 2025 | 2024 | Change | |||||||||||||||
| Personnel costs, including stock-based compensation (1) | $ | 2,612 | $ | 4,486 | $ | (1,874) | |||||||||||
| Professional fees | 3,667 | 4,317 | (650) | ||||||||||||||
| Facilities and supplies | 248 | 1,038 | (790) | ||||||||||||||
| Insurance, taxes, and fees | 426 | 576 | (150) | ||||||||||||||
| Other expenses | 308 | 588 | (280) | ||||||||||||||
| Total general and administrative expenses | $ | 7,261 | $ | 11,005 | $ | (3,744) | |||||||||||
(1) Our cash preservation plan and 2024 revised operating plans included reductions in workforce which resulted in severance costs during the six months ended June 30, 2025 and 2024.
The decrease in general and administrative expenses was primarily attributable to a decrease in our personnel costs and facilities and supplies in connection with the cash preservation plan and the 2024 revised operating plans.
Loss on Sale of Held For Sale Assets
We recognized $3.5 million in losses on sale of held for sale assets during the six months ended June 30, 2025, related to the return of finance lease ROU assets and the sale of previously classified equipment. We did not incur such losses during the six months ended June 30, 2024.
Loss on Abandonment of Operating Lease Right-of-Use Asset
We recognized $0.9 million in losses related to the abandonment of operating lease space during the six months ended June 30, 2025. We did not incur such losses during the six months ended June 30, 2024.
Other Income, Net
We recognized $0.5 million and $1.0 million in other income, net for the six months ended June 30, 2025 and 2024, which was attributable to interest earned on excess cash and the sale of supplies in connection with our cash preservation plan.
Liquidity and Capital Resources
Sources of Liquidity
As of June 30, 2025, we had $2.0 million in cash and cash equivalents and an accumulated deficit of $324.6 million. To date, we have not yet commercialized any products or generated any revenue from product sales and have financed operations primarily with proceeds from sales of preferred stock, proceeds from our collaboration with Moderna, research tax credits, convertible debt financing, and completion of the Sesen Bio Merger and related financing. Through June 30, 2025, we have generated $46.2 million of collaboration revenues related to research and development services, option rights, and milestones.
After a comprehensive review of strategic alternatives, on June 22, 2025, we entered into the Merger Agreement for the contemplated OrthoCellix Merger. If the OrthoCellix Merger is completed, the business of OrthoCellix will continue as the business of the Combined Company. Although we intend to consummate the OrthoCellix Merger, there is no assurance that we will be able to successfully consummate the OrthoCellix Merger on a timely basis, or at all. Our future operations are highly dependent on the success of the OrthoCellix Merger.
We and OrthoCellix each have certain termination rights under the Merger Agreement. Upon termination of the Merger Agreement under specified circumstances, we may be required to pay OrthoCellix a termination fee of $500,000. Upon termination of the Merger Agreement upon specified circumstances, OrthoCellix may be required to pay us a termination fee of $750,000 and reimburse up to $500,000 of our fees and expenses incurred in connection with the transactions contemplated by the Merger Agreement.
Pursuant to the Merger Agreement, we and OrthoCellix have agreed to use commercially reasonable efforts to enter into subscription agreements with one or more investors designated by OrthoCellix, pursuant to which such investors would agree to purchase shares of our common stock for aggregate gross proceeds (inclusive of the Guarantor Investment Amount) at least equal to the Concurrent Investment Amount, which investment is expected to be consummated at or immediately following the closing of the OrthoCellix Merger. The closing of the Concurrent Investment is conditioned upon the satisfaction or waiver of the conditions set forth in the subscription agreements and of each of the conditions to the closing of the OrthoCellix Merger.
As of February 2025, Moderna has nominated all 12 oncology research targets under the collaboration. As such, we will not be conducting any additional research activities under the collaboration agreement and we will not be receiving any further research funding from Moderna under the collaboration agreement. We received the final research and development payment of $2.9 million from Moderna in January 2025. Under the terms of the Moderna License Agreement, assuming Moderna develops and commercializes 12 products, each directed to a different development target, we are eligible to receive up to between $247.0 million and $253.0 million per product in development target designation, development, regulatory and commercial milestone payments. We are also eligible to receive tiered mid-to-high single digit royalties of net sales of any products that are commercialized under the agreement, which may be, subject to reductions.
On April 17, 2023, we filed a universal shelf registration statement on Form S-3, which was declared effective on May 2, 2023, or the Registration Statement. Under the Registration Statement, we may offer and sell up to $300.0 million of a
variety of securities, including debt securities, common stock, preferred stock, depository shares, subscription rights, warrants and units from time to time in one or more offerings at prices and on terms to be determined at the time of the offering. On May 12, 2023, we entered into an Amended and Restated Open Market Sale AgreementSM, or the Sale Agreement, with Jefferies LLC, as sales agent, pursuant to which we may offer and sell shares of our common stock with an aggregate offering price of up to $100.0 million under an "at-the-market" offering program. As of June 30, 2025, we have sold 1,362,917 shares of our common stock for net proceeds of $3.0 million.
Cash Flows
The following table shows a summary of our cash flows for the six months ended June 30, 2025 and 2024 (in thousands):
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Six Months Ended June 30, |
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| 2025 | 2024 | ||||||||||
| Cash (used in) provided by | |||||||||||
| Operating activities | $ | (15,971) | $ | (38,545) | |||||||
| Investing activities | 687 | (123) | |||||||||
| Financing activities | (626) | 1,425 | |||||||||
| Net change in cash, cash equivalents and restricted cash | $ | (15,910) | $ | (37,243) | |||||||
Cash Flows from Operating Activities
During the six months ended June 30, 2025, we used $16.0 million of net cash in operating activities. Cash used in operating activities reflected our net loss of $19.0 million and a $4.4 million net change in our operating assets and liabilities attributable to the timing in which we pay our vendors for research and development activities, partially offset by $7.4 million of non-cash charges related to depreciation and amortization expense, stock-based compensation, reductions in the operating right of use, or ROU assets, the write-off of deferred financing costs, losses on the sale of assets held for sale, gain on sale of property and equipment, and loss on abandonment of operating lease ROU asset.
During the six months ended June 30, 2024, we used $38.5 million of net cash in operating activities. Cash used in operating activities reflected our net loss of $30.1 million that was offset by $8.4 million of non-cash charges related to depreciation and amortization expense, stock-based compensation, ROU assets, and non-cash interest on the finance lease liability and a $16.8 million net change in our operating assets and liabilities attributable to the timing in which we pay our vendors for research and development activities.
Cash Flows from Investing Activities
During the six months ended June 30, 2025, we received $0.7 million of cash from investing activities related to the sale of property and equipment and assets held for sale.
During the six months ended June 30, 2024, cash used in investing activities reflected the purchases of property and equipment.
Cash Flows from Financing Activities
During the six months ended June 30, 2025, we used $0.6 million of net cash from financing activities, attributable to $0.3 million in payments of finance liability for failed-sale leaseback arrangements and $0.3 million in payments of principal related to finance lease liabilities.
During the six months ended June 30, 2024, we received $1.4 million of net cash from financing activities, primarily attributable to $2.3 million from the sale of common stock in connection with the Sale Agreement and $0.7 million in proceeds from failed-sale leaseback arrangements, partially offset by $0.9 million in payments of principal related to finance lease liabilities, and $0.6 million in payments of finance liability from failed-sale leaseback arrangements.
Funding Requirements
As of June 30, 2025, we had cash and cash equivalents of $2.0 million. Our funding requirements will depend on the outcome of the planned OrthoCellix Merger.
Although we have reduced operations in connection with our cash preservation plan, we have incurred expenses in connection with our evaluation of strategic alternatives. We expect to continue to incur significant expenses and operating losses in connection with consummating the OrthoCellix Merger and the ongoing process of exploring transactions with certain third parties to monetize certain legacy assets. A considerable portion of these expenses, such as legal, accounting and advisory fees and other related charges, will be incurred regardless of whether we consummate the OrthoCellix Merger or enter into a monetization transaction for legacy assets.
Although we believe our current cash and cash equivalents are sufficient to sustain our operating expenses and capital expenditure requirements into the fall of 2025, we do not expect that our cash and cash equivalents will support our operations for more than one year following the date of this Quarterly Report on Form 10-Q. As a result of these conditions, substantial doubt exists about our ability to continue as a going concern. We have based this estimate on assumptions that may prove to be wrong. In addition, changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more than currently expected because of circumstances beyond our control. As a result, we could deplete our capital resources sooner than we currently expect.
Our future operations are highly dependent on the success of the OrthoCellix Merger. Although we have entered into the Merger Agreement and intend to consummate the OrthoCellix Merger, there is no assurance that we will be able to successfully consummate the OrthoCellix Merger on a timely basis, or at all. If, for any reason, the OrthoCellix Merger does not close, our board of directors may elect to, among other things, attempt to complete another strategic transaction like the OrthoCellix Merger, attempt to sell or otherwise dispose of our remaining assets or dissolve and liquidate our assets.
If the OrthoCellix Merger does not close, we might not have enough time or resources remaining to identify, evaluate and complete another strategic transaction before the Nasdaq Compliance Date. If the OrthoCellix Merger is not completed, our board of directors may decide that it is in the best interests of our stockholders to commence bankruptcy or liquidation and dissolution proceedings. In that event, the amount of cash available for distribution to our stockholders would depend heavily on the timing of such decision and, ultimately, such liquidation, since the amount of our cash resources continues to decrease as we continue our wind down activities and incur fees and expenses related to the OrthoCellix Merger. In addition, if our board of directors were to approve and recommend, and our stockholders were to approve, a dissolution of the company, we would be required under Delaware law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to our stockholders. As a result of this requirement, a portion of our assets may need to be reserved pending the resolution of such obligations. In addition, we may be subject to litigation or other claims related to a liquidation and dissolution of the company. If a liquidation and dissolution were pursued, our board of directors, in consultation with its advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, our stockholders could lose all or a significant portion of their investment in the event of a liquidation and dissolution of the company.
In the event that our board of directors determines that a liquidation and dissolution of our business approved by stockholders is desirable or the best method to maximize value, we would prepare proxy materials and schedule a special meeting of our stockholders to seek approval of such a plan.
We currently have no intention of resuming our historical research and development activities. Any future resumption of our historical research and development activities would depend on completing a strategic transaction that would support our prior operating plans or otherwise obtaining significant additional funding. Significant additional financing may not be available to us on acceptable terms, or at all, and may be impacted by the economic climate and market conditions.
To the extent that we are able to raise additional capital through the public or private sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of those securities may include liquidation or other preferences that adversely affect your rights as a holder of our common stock. Debt financing and preferred equity financing, if available, would increase our fixed payment obligations and may involve agreements that include covenants limiting or restricting our operations and ability to take specific actions, such as incurring additional debt, making acquisitions, engaging in acquisition, merger or collaboration transactions, selling or licensing our assets, making capital expenditures, redeeming our stock, making certain investments, declaring dividends or other operating restrictions that could adversely impact our ability to conduct business.
If we are able to raise funds through a strategic collaboration or partnership with one or more parties, we may have to relinquish valuable rights to our intellectual property, future revenue streams, discovery programs or product candidates, grant licenses on terms that may not be favorable to us or grant rights to develop and market product candidates that we would otherwise prefer to develop and market on our own, any of which may have a material adverse effect on our business, operating results and prospects.
If we were to resume historical research and development activities, our expenses would increase and our future capital requirements would depend on many factors, including:
•the progress, costs and results of pre-clinical testing of our product candidates;
•the progress, costs and results of clinical trials of our product candidates;
•the number of and development requirements for additional indications for our product candidates;
•the success of our collaborations with Moderna or others;
•our ability to scale up our manufacturing processes and capabilities to support clinical trials of the product candidates we are developing and may develop in the future;
•the costs, timing and outcome of regulatory review of our product candidates;
•potential changes in the regulatory environment and enforcement rules;
•our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such arrangements;
•the payment of license fees and other costs of our technology license arrangements;
•the costs and timing of future commercialization activities, including product manufacturing, sales, marketing and distribution, for the product candidates we are developing and may develop in the future for which we may receive marketing approval;
•our ability to obtain and maintain acceptance of any approved products by patients, the medical community and third-party payors;
•the amount and timing of revenue, if any, received from commercial sales of the product candidates we are developing or develop in the future for which we receive marketing approval;
•potential changes in pharmaceutical pricing and reimbursement infrastructure;
•the availability of raw materials for use in production of our product candidates;
•the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending any intellectual property-related claims; and
•the extent to which we in-license or acquire additional technologies or product candidates.
Identifying potential product candidates and conducting pre-clinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success.
Contractual Obligations and Commitments
The following table summarizes our contractual obligations and commitments at June 30, 2025 (in thousands):
| Total |
Less than 1 Year |
1 to 3 Years |
4 to 5 Years |
More than 5 Years |
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| Contractual obligations: | |||||||||||||||||||||||||||||
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Operating lease commitments(1)
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$ | 1,554 | 783 | 466 | 305 | - | |||||||||||||||||||||||
| Finance lease commitments | 356 | 356 | - | - | - | ||||||||||||||||||||||||
| Total contractual obligations | $ | 1,910 | $ | 1,139 | $ | 466 | $ | 305 | $ | - | |||||||||||||||||||
(1)Reflects obligations pursuant to our office and laboratory leases in Philadelphia, Pennsylvania.
The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. Our contracts with CMOs, CROs and other third parties for the manufacture of our product candidates and to support pre-clinical research studies and clinical testing are generally cancellable by us upon prior notice and do not contain any minimum purchase commitments. Payments due upon cancellation consisting only of payments for services provided or expenses incurred, including noncancellable obligations of our service providers, up to the date of cancellation are not included in the table above as the amount and timing of such payments are not known.
The table above does not include any potential milestone or royalty payments that we may be required to make under our license agreement with Penn and under licensing agreements with other third parties not considered material. We excluded these milestone and royalty payments given that the timing and likelihood of any such payments cannot be reasonably estimated at this time.
In connection with the cash preservation plan, we incurred $4.2 million during the six months ended June 30, 2025, which primarily represents one-time employee termination benefits directly associated with the workforce reduction. We expect to pay the majority of related reduction in workforce amounts by the end of 2025.
As described above, upon termination of the Merger Agreement under specified circumstances, we may be required to pay OrthoCellix a termination fee of $500,000.
Critical Accounting Policies and Estimates
Our management's discussion and analysis of financial condition and results of operations is based on our unaudited interim consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of our unaudited interim consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our unaudited interim consolidated financial statements. We base our estimates on our limited historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
During the six months ended June 30, 2025, there were no material changes to our critical accounting policies and estimates from those described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 31, 2025.
Recent Accounting Pronouncements
See Note 3 - Recently issued accounting pronouncementsto our unaudited interim consolidated financial statements found in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements applicable to our financial statements.
Carisma Therapeutics Inc. published this content on August 07, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on August 07, 2025 at 20:27 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]