Cartesian Therapeutics Inc.
11/06/2025 | Press release | Distributed by Public on 11/06/2025 06:05
Quarterly Report for Quarter Ending September 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 in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, which we filed with the SEC on March 13, 2025. In addition, you should read the "Risk Factors" and "Information Regarding Forward-Looking Statements" sections of this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage biotechnology company pioneering cell therapy for the treatment of autoimmune diseases. Unlike DNA cell therapies, our cell therapy method degrades naturally over time without integrating into the cell's genetic material. Therefore, our cell therapy is distinguished by its capacity to be dosed repeatedly like conventional drugs, administered in an outpatient setting, and given without pre-treatment chemotherapy required with many conventional cell therapies. In our Phase 2b clinical trial in patients with myasthenia gravis, or MG, a chronic autoimmune disease that causes disabling muscle weakness and fatigue, we observed that our lead product candidate, Descartes-08, generated a deep and durable clinical benefit, with 83% of participants maintaining improvements in MG severity scales considered clinically meaningful by expert consensus at six months and sustained improvements in MG severity scales considered clinically meaningful by expert consensus at 12 months. Durability of response in MG is commonly measured over a period of 26 to 52 weeks, and maintenance of response over that period is considered durable.
Merger
On November 13, 2023, the Company (formerly known as Selecta Biosciences, Inc., or Selecta) merged with the private Delaware corporation which, immediately prior to the Merger (as defined below), was known as Cartesian Therapeutics, Inc., or Old Cartesian, in accordance with the terms of an Agreement and Plan of Merger, or the Merger Agreement, by and among
Selecta, Sakura Merger Sub I, Inc., a wholly owned subsidiary of Selecta, or First Merger Sub, Sakura Merger Sub II, LLC, a wholly owned subsidiary of Selecta, or Second Merger Sub, and Old Cartesian. Pursuant to the Merger Agreement, First Merger Sub merged with and into Old Cartesian, pursuant to which Old Cartesian was the surviving corporation and became a wholly owned subsidiary of Selecta, or the First Merger. Immediately following the First Merger, Old Cartesian merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity, or the Second Merger and, together with the First Merger, the Merger. In connection with the Second Merger, Old Cartesian changed its name to Cartesian Bio, LLC. In connection with the Merger and pursuant to the Merger Agreement, the Company changed its corporate name to Cartesian Therapeutics, Inc. See Note 4, "Merger" of the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information regarding the Merger.
Financial Operations
To date, we have financed our operations primarily through public offerings and private placements of our securities, funding received from research grants, collaboration and license arrangements and a credit facility. We do not have any products approved for sale and have not generated any product sales.
We have incurred significant operating losses since our inception. We incurred a net loss of $37.7 million and $67.2 million for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, we had an accumulated deficit of $729.8 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we:
•continue to advance Descartes-08 for MG through Phase 3 development;
•continue to develop our preclinical and clinical-stage product candidates;
•seek regulatory approvals for any product candidates that successfully complete clinical trials;
•maintain, expand and protect our intellectual property portfolio, including through licensing arrangements;
•hire additional staff, including clinical, scientific and management personnel; and
•incur additional costs associated with continuing to operate as a public company.
Until we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, and license and collaboration agreements. We may be unable to raise capital when needed or on
reasonable terms, if at all, which would force us to delay, limit, reduce or terminate our product development or future commercialization efforts. We will need to generate significant revenues to achieve profitability, and we may never do so.
Concurrently with the closing of the Merger, we entered into a securities purchase agreement, or the 2023 Securities Purchase Agreement, pursuant to which we agreed to issue 149,330.115 shares of Series A Non-Voting Convertible Preferred Stock, par value $0.0001 per share, or the Series A Preferred Stock, in exchange for aggregate gross proceeds of $60.25 million, or the 2023 Private Placement. We granted customary registration rights to investors in connection with the 2023 Private Placement.
On July 2, 2024, we entered into a securities purchase agreement, or the 2024 Securities Purchase Agreement, for a private investment in public equity financing, or the 2024 Private Placement, which provided for the issuance of 3,563,247 shares of common stock and 2,937,903 shares of Series B Non-Voting Convertible Preferred Stock, par value $0.0001 per share, or the Series B Preferred Stock, each at a purchase price of $20.00 per share. The 2024 Private Placement resulted in gross proceeds of approximately $130.0 million before deducting placement agent fees and other offering expenses. We granted customary registration rights to investors in connection with the 2024 Private Placement.
We believe that our existing cash, cash equivalents, and restricted cash as of September 30, 2025 will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of issuance of these financial statements. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
Components of our Results of Operations
Collaboration and license revenue
To date, we have not generated any revenue from product sales. Our revenue consists primarily of collaboration and license revenue, which includes amounts recognized related to upfront and milestone payments for research and development funding under collaboration and license agreements. We expect that any revenue we generate will fluctuate from quarter to quarter because of the timing and amounts of fees, research and development reimbursements and other payments from collaborators. We do not expect to generate revenue from product sales for at least the next several years. If we or our collaborators fail to complete the development of our product candidates in a timely manner or fail to obtain regulatory approval as needed, our ability to generate future revenue will be harmed, and will affect the results of our operations and financial position. For further descriptions of the agreements underlying our collaboration and license revenue, see Note 13, "Revenue Arrangements" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report.
Grant revenue
Additionally, we generate grant revenue which consists of funding received to perform specific research and development services under grant arrangements.
Research and development
Our research and development expenses consist of internal and external research and development costs, which primarily include fees paid to contract research organizations, internal manufacturing and quality related expenses, process development costs, internal research and development expenses, as well as fees paid to contract manufacturing organizations. These costs are primarily associated with compensation expenses for our research and development employees, capital equipment and supplies for our process development and manufacturing process, and other related expenses. Our internal research and development employees as well as our indirect costs are shared across multiple development programs and are not solely dedicated to individual programs.
We expense research and development costs as incurred. Conducting a significant amount of research and development is central to our business model. Product candidates in clinical development generally have higher development costs than those in earlier stages of development, primarily due to the size, duration and cost of clinical trials. The successful development of our clinical and preclinical product candidates is highly uncertain. Clinical development timelines, the probability of success and development costs can differ materially from our expectations. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those which we currently expect will be required for the completion of clinical development of a product candidate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time to complete any clinical development.
General and administrative
General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation, related to our executive, finance, business development and support functions. Other general and administrative expenses
include facility-related costs not otherwise allocated to research and development expenses, travel expenses for our general and administrative personnel and professional fees for auditing, tax and corporate legal services, including intellectual property-related legal services.
Impairment of long-lived assets
Impairment of long-lived assets consists of impairment charges on our long-lived assets.
Interest income
Interest income consists primarily of income earned on our cash, cash equivalents and marketable securities.
Other (expense) income, net
Other (expense) income, net consists of non-operating income and non-operating expenses.
Change in fair value of warrant liabilities
Common warrants classified as liabilities are remeasured quarterly at fair value with the change in fair value recognized as a component of earnings.
Change in fair value of contingent value right liability
The contingent value right liability is remeasured quarterly at fair value with the change in fair value recognized as a component of earnings.
Change in fair value of forward contract liabilities
The forward contract liabilities associated with the delayed issuance of the Series A Preferred Stock related to the Merger and 2023 Private Placement are remeasured quarterly and upon settlement at fair value with the change in fair value recognized as a component of earnings.
Results of Operations
Comparison of the Three Months Ended September 30, 2025 and 2024
| Three Months Ended September 30, | Increase (Decrease) | ||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Grant revenue | $ | 452 | $ | 387 | $ | 65 | 17 | % | |||||||||||||||
| Total revenue | 452 | 387 | 65 | 17 | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 13,802 | 11,400 | 2,402 | 21 | % | ||||||||||||||||||
| General and administrative | 7,716 | 6,562 | 1,154 | 18 | % | ||||||||||||||||||
| Total operating expenses | 21,518 | 17,962 | 3,556 | 20 | % | ||||||||||||||||||
| Operating loss | (21,066) | (17,575) | (3,491) | 20 | % | ||||||||||||||||||
| Interest income | 1,548 | 2,573 | (1,025) | (40) | % | ||||||||||||||||||
|
Gain on change in fair value of warrant liabilities
|
516 | 5,669 | (5,153) | (91) | % | ||||||||||||||||||
|
Loss on change in fair value of contingent value right liability
|
(16,900) | (15,100) | (1,800) | 12 | % | ||||||||||||||||||
|
Other income, net
|
- | 250 | (250) | (100) | % | ||||||||||||||||||
| Net loss | $ | (35,902) | $ | (24,183) | $ | (11,719) | 48 | % | |||||||||||||||
Grant revenue
During the three months ended September 30, 2025, we recognized $0.5 million of grant revenue, compared to $0.4 million for the three months ended September 30, 2024, an increase of $0.1 million. The increase was primarily due to increased expenses reimbursable under the grant from the National Institute of Neurological Disorders and Stroke of the National Institutes of Health, or NINDS, incurred during the three months ended September 30, 2025.
Research and development expenses
The following is a comparison of research and development expenses for the three months ended September 30, 2025 and 2024 (in thousands, except percentages):
| Three Months Ended September 30, | Increase (Decrease) | ||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Legacy Selecta programs | $ | - | $ | 297 | $ | (297) | (100) | % | |||||||||||||||
| Descartes-08 for MG | 5,431 | 4,377 | 1,054 | 24 | % | ||||||||||||||||||
| Early stage programs | 1,523 | 571 | 952 | 167 | % | ||||||||||||||||||
| Research and development employee expenses | 3,971 | 2,947 | 1,024 | 35 | % | ||||||||||||||||||
| Research and development stock-based compensation expense | 1,005 | 799 | 206 | 26 | % | ||||||||||||||||||
| Research and development facilities and other expenses | 1,872 | 2,409 | (537) | (22) | % | ||||||||||||||||||
| Total research and development expenses | $ | 13,802 | $ | 11,400 | $ | 2,402 | 21 | % | |||||||||||||||
For the three months ended September 30, 2025, our research and development expenses were $13.8 million, compared to $11.4 million for the three months ended September 30, 2024, an increase of $2.4 million. The increase was primarily due to an increase in expenses for Descartes-08 for MG, primarily related to the expenses for the ongoing Phase 3 AURORA trial, coupled with an increase in our research and development employee expenses and stock-based compensation expense, primarily the result of headcount growth, and an increase in expenses for early stage programs, primarily related to increased discovery expenses and manufacturing operations expenses. This increase was partially offset by a decrease in expenses for legacy Selecta programs, which were primarily related to expenses for Xork as a result of the termination of the License and Development Agreement, or the Astellas Agreement, with Audentes Therapeutics, Inc., doing business as Astellas Gene Therapies, or Astellas in 2024.
General and administrative expenses
For the three months ended September 30, 2025, our general and administrative expenses were $7.7 million, compared to $6.6 million for the three months ended September 30, 2024, an increase of $1.1 million. The increase in cost was primarily the result of increased facilities expenses and expenses incurred for stock-based compensation.
Interest income
Interest income for the three months ended September 30, 2025 was $1.5 million, compared to $2.6 million for the three months ended September 30, 2024, a decrease of $1.1 million. The decrease in interest income was due to decreased cash and cash equivalents balance.
Change in fair value of warrant liabilities
For the three months ended September 30, 2025, we recognized $0.5 million of income from the decrease in the fair value of warrant liabilities, compared to $5.7 million of income from the decrease in the fair value of warrant liabilities for the three months ended September 30, 2024, a decrease of $5.2 million. Fair value of warrant liabilities was determined utilizing the Black-Scholes valuation methodology. The decrease in warrant value was primarily driven by a decrease in the per-share price of our common stock and the expiration of the warrants we issued in 2019, or the 2019 Warrants, during the year ended December 31, 2024.
Change in fair value of contingent value right liability
For the three months ended September 30, 2025, we recognized $16.9 million of expense associated with the increase in the fair value of the CVR liability, compared to $15.1 million of expense associated with the increase in the fair value of the CVR liability for the three months ended September 30, 2024, an increase of $1.8 million. The fair value of the CVR liability was determined utilizing a Monte Carlo simulation model. The increase in both periods in the fair value of the CVR liability was primarily due to a decrease in interest rates and the passage of time.
Other income, net
During the three months ended September 30, 2025, we recognized no other income, net, compared to $0.3 million other income, net for the three months ended September 30, 2024. The decrease was primarily due to a decrease in sublease income. The terms of our subleases expired during the year ended December 31, 2024.
Net loss
Net loss for three months ended September 30, 2025 was $35.9 million as compared to net loss of $24.2 million for the three months ended September 30, 2024, an increase of $11.7 million. The increase in net loss was primarily due to lower income from the change in the fair value of the warrant liabilities, an increase in research and development expenses and higher expense from the change in the fair value of the CVR liability during the three months ended September 30, 2025.
Comparison of the Nine Months Ended September 30, 2025 and 2024
| Nine Months Ended September 30, | Increase (Decrease) | ||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Collaboration and license revenue | $ | 400 | $ | 39,111 | $ | (38,711) | (99) | % | |||||||||||||||
| Grant revenue | 1,450 | 561 | 889 | 158 | % | ||||||||||||||||||
| Total revenue | 1,850 | 39,672 | (37,822) | (95) | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 43,345 | 33,799 | 9,546 | 28 | % | ||||||||||||||||||
| General and administrative | 23,271 | 23,039 | 232 | 1 | % | ||||||||||||||||||
| Total operating expenses | 66,616 | 56,838 | 9,778 | 17 | % | ||||||||||||||||||
| Operating loss | (64,766) | (17,166) | (47,600) | 277 | % | ||||||||||||||||||
| Interest income | 5,311 | 4,932 | 379 | 8 | % | ||||||||||||||||||
|
Gain on change in fair value of warrant liabilities
|
2,988 | 2,803 | 185 | 7 | % | ||||||||||||||||||
|
Gain (loss) on change in fair value of contingent value right liability
|
18,746 | (51,900) | 70,646 | (136) | % | ||||||||||||||||||
|
Loss on change in fair value of forward contract liabilities
|
- | (6,890) | 6,890 | (100) | % | ||||||||||||||||||
| Other (expense) income, net | (5) | 1,050 | (1,055) | (100) | % | ||||||||||||||||||
| Net loss | $ | (37,726) | $ | (67,171) | $ | 29,445 | (44) | % | |||||||||||||||
Collaboration and license revenue
During the nine months ended September 30, 2025, we recognized $0.4 million of collaboration and license revenue, compared to $39.1 million for the nine months ended September 30, 2024, a decrease of $38.7 million. The decrease was primarily due to a decrease in revenue recognized under the Sobi License resulting from the $30.0 million unconstrained development milestone recognized during the nine months ended September 30, 2024 and a decrease for revenue recognized under the Astellas Agreement upon notice of termination during the nine months ended September 30, 2024.
Grant revenue
During the nine months ended September 30, 2025, we recognized $1.5 million of grant revenue, compared to $0.6 million for the nine months ended September 30, 2024, an increase of $0.9 million. The increase was primarily due to increased expenses reimbursable under the grant from NINDS incurred during the nine months ended September 30, 2025, for which we received funding approval during the nine months ended September 30, 2024.
Research and development expenses
The following is a comparison of research and development expenses for the nine months ended September 30, 2025 and 2024 (in thousands, except percentages):
| Nine Months Ended September 30, | Increase (Decrease) | ||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Legacy Selecta programs | $ | - | $ | 6,644 | $ | (6,644) | (100) | % | |||||||||||||||
| Descartes-08 for MG | 17,502 | 8,588 | 8,914 | 104 | % | ||||||||||||||||||
| Early stage programs | 4,228 | 1,226 | 3,002 | 245 | % | ||||||||||||||||||
| Research and development employee expenses | 11,927 | 8,372 | 3,555 | 42 | % | ||||||||||||||||||
| Research and development stock-based compensation expense | 4,090 | 2,287 | 1,803 | 79 | % | ||||||||||||||||||
| Research and development facilities and other expenses | 5,598 | 6,682 | (1,084) | (16) | % | ||||||||||||||||||
| Total research and development expenses | $ | 43,345 | $ | 33,799 | $ | 9,546 | 28 | % | |||||||||||||||
For the nine months ended September 30, 2025, our research and development expenses were $43.3 million, compared to $33.8 million for the nine months ended September 30, 2024, an increase of $9.5 million. The increase was primarily due to an increase in expenses for Descartes-08 for MG, primarily related to the expenses for the ongoing Phase 3 AURORA trial, coupled with an increase in our research and development employee expenses and stock-based compensation expense, primarily as the result of headcount growth, and an increase in expenses for early stage program, primarily related to increased discovery expenses and manufacturing operations expenses. These increases were partially offset by a decrease in expenses for legacy Selecta programs, primarily related to decreased expenses for Xork as a result of the termination of the Astellas Agreement in 2024.
General and administrative expenses
For the nine months ended September 30, 2025, our general and administrative expenses were $23.3 million compared to $23.0 million for the nine months ended September 30, 2024, an increase of $0.3 million. The increase in cost was primarily the result of increased facilities expenses and expenses incurred for stock-based compensation, partially offset by decreased expenses incurred for personnel expenses and professional fees incurred in connection with the Merger.
Interest income
Interest income for the nine months ended September 30, 2025 was $5.3 million, compared to $4.9 million for the nine months ended September 30, 2024. The increase in interest income was due to increased cash and cash equivalents balance.
Change in fair value of warrant liabilities
For the nine months ended September 30, 2025, we recognized $3.0 million of income from the decrease in the fair value of warrant liabilities, compared to $2.8 million of income from the decrease in the fair value of warrant liabilities for the nine months ended September 30, 2024, an increase of $0.2 million. Fair value of warrant liabilities was determined utilizing the Black-Scholes valuation methodology. The decrease in warrant value was primarily driven by a decrease in the per-share price of our common stock and the expiration of the 2019 Warrants during the year ended December 31, 2024.
Change in fair value of contingent value right liability
For the nine months ended September 30, 2025, we recognized $18.7 million of income from the decrease in the fair value of the CVR liability, compared to $51.9 million of expense from the increase in the fair value of the CVR liability for the nine months ended September 30, 2024, a change of $70.6 million. The fair value of the CVR liability was determined utilizing a Monte Carlo simulation model. The decrease in the fair value of CVR liability in the current period was primarily due to changes in the timing of anticipated payments during the nine months ended September 30, 2025. The increase in the fair value of CVR liability in the prior period was primarily due to changes in the amount and timing of anticipated payments and the passage of time during the nine months ended September 30, 2024.
Change in fair value of forward contract liability
The remaining Series A Preferred Stock forward contract liability was settled during the nine months ended September 30, 2024. As such, no change in the fair value of the Series A Preferred Stock forward contract liability is reflected in our unaudited consolidated financial statements for the nine months ended September 30, 2025.
Other (expense) income, net
During the nine months ended September 30, 2025, we recognized less than $0.1 million of other expense, net, compared to $1.1 million other income, net for the nine months ended September 30, 2024, a change of $1.1 million. The change was primarily due to a decrease in sublease income. The terms of our subleases expired during the year ended December 31, 2024.
Net loss
Net loss for the nine months ended September 30, 2025 was $37.7 million as compared to net loss of $67.2 million for the nine months ended September 30, 2024, a decrease of $29.5 million. The decrease in net loss was primarily due to higher income associated with the change in the fair value of the CVR liability, partially offset by increased research and development expenses and revenue recognized under the Sobi License during the nine months September 30, 2024.
Liquidity and Capital Resources
We have incurred recurring net losses since our inception. We expect that we will continue to incur losses and that such losses will increase for the foreseeable future. We expect that our research and development and general and administrative expenses will continue to increase and, as a result, we will need additional capital to fund our operations, which we may raise through a combination of equity offerings, debt financings, third-party funding, potential royalty and/or milestone monetization transactions and other collaborations and strategic alliances.
Our cash, cash equivalents, and restricted cash were $145.1 million as of September 30, 2025, of which $1.7 million was restricted cash related to lease commitments.
In addition to our existing cash equivalents, we from time to time have received and may receive in the future research and development funding pursuant to our collaboration and license agreements. Currently, funding from payments under our collaboration agreements represent our only source of committed external funds.
The liability associated with the contingent value rights agreement, or CVR Agreement, entered into on December 6, 2023, will be settled solely through cash flow received under the Sobi License and any other Gross Proceeds (as such term is defined in the CVR Agreement) net of certain agreed deductions. Under the CVR Agreement, 100% of all milestone payments, royalties, and other amounts paid to us or our controlled entities under the Sobi License, and any other Gross Proceeds, in each case net of certain agreed deductions, will be distributed to holders of the CVRs. There is no contractual obligation for us to fund any amount related to the CVR liability.
Collaboration and License Agreements
In-licenses
In September 2023, we entered into a non-exclusive, sublicensable, worldwide, perpetual patent license agreement, or the Biogen Agreement, with Biogen MA, Inc., or Biogen, to research, develop, make, use, offer, sell and import products or processes containing or using an engineering T-cell modified with an mRNA comprising, or encoding a protein comprising, certain sequences licensed under the Biogen Agreement for the prevention, treatment, palliation and management of autoimmune diseases and disorders, excluding cancers, neoplastic disorders, and paraneoplastic disorders. We are not obligated to pay Biogen any expenses, fees, or royalties. For further description of the Biogen Agreement, see Note 15, "Collaboration and License Agreements" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report.
Effective September 2019, we entered into a non-exclusive, worldwide license agreement, or the NCI Agreement, with the U.S. Department of Health and Human Services, represented by the National Cancer Institute of the National Institutes of Health, or NCI. Under the NCI Agreement, we were granted a license under certain NCI patents and patent applications designated in the agreement, to make, use, sell, offer and import products and processes within the scope of the patents and applications licensed under the NCI Agreement when developing and manufacturing anti-BCMA CAR-T cell products for the treatment of MG, pemphigus vulgaris, and immune thrombocytopenic purpura according to methods designated in the NCI Agreement. In connection with our entry into the NCI Agreement, we paid to NCI a one-time $0.1 million license royalty payment. Under the NCI Agreement, we are further required to pay NCI a low five-digit annual royalty. We must also pay earned royalties on net sales in a low single-digit percentage and pay up to $0.8 million in benchmark royalties upon our achievement of designated benchmarks that are based on the commercial development plan agreed between the parties. For further description of the NCI Agreement, see Note 15, "Collaboration and License Agreements" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report.
Out-licenses
In January 2023, we entered into the Astellas Agreement with Astellas. Under this agreement, Astellas obtained the sole and exclusive right to commercialize Xork for use in Pompe disease in combination with an Astellas gene therapy investigational or authorized product, with a current focus on AT845. In connection with entry into this agreement, we received a $10.0 million upfront payment and were eligible to receive $340.0 million for certain additional development and commercial milestones plus royalties on any potential commercial sales where Xork is used as a pre-treatment for AT845. As a result of the sublicense of Xork to Astellas, we made a $4.0 million payment to Genovis in February 2023. The Astellas Agreement was terminated effective June 6, 2024. For further description of the Astellas Agreement, see Note 13, "Revenue Arrangements" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report. Amounts paid and remaining obligations with regard to the Xork product candidate not reimbursed by Astellas through the Astellas Agreement were subject to potential reimbursement through deductions to CVR distributions as described in Note 7, "Fair Value Measurements" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report and were reimbursed in the March 2025 CVR distribution.
In June 2020, we entered into the Sobi License. Sobi paid us a one-time, upfront payment of $75 million, and upon the closing of a private placement of our common stock to Sobi at a price of $138.468 per share, we received an additional $25 million from Sobi. We are eligible to receive $630.0 million in milestone payments upon the achievement of various development and regulatory milestones and sales thresholds for annual net sales of SEL-212, and tiered royalty payments ranging from the low double digits on the lowest sales tier to the high teens on the highest sales tier. Sobi has agreed to fund the Phase 3 clinical program of SEL-212, which commenced in September 2020. In July 2022, we received $10.0 million for the completion of the enrollment of the DISSOLVE II trial. In July 2024, we received $30.0 million for the milestone associated with the initiation of a rolling biologics license application to the FDA for SEL-212 for the potential treatment of chronic refractory gout by Sobi. Proceeds from milestone payments and royalties on sales of SEL-212, if any, are required to be distributed, net of certain agreed deductions, to holders of the CVRs. For further description of the Sobi License, see Note 13, "Revenue Arrangements" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report.
Financings
On December 13, 2024, we and Leerink Partners LLC entered into a Sales Agreement, or the Sales Agreement. Under the Sales Agreement, we may issue and sell shares of our common stock, from time to time, through Leerink Partners LLC or aggregate gross sales proceeds of up to $100.0 million. During the nine months ended September 30, 2025, we sold no shares of our common stock pursuant to the Sales Agreement.
On July 2, 2024, we entered into the 2024 Securities Purchase Agreement for the 2024 Private Placement with certain institutional and accredited investors, or the Purchasers. In the 2024 Private Placement, we issued and sold an aggregate of 3,563,247 shares of common stock and 2,937,903 shares of Series B Preferred Stock for which we generated gross proceeds of approximately $130.0 million.
On November 13, 2023, we entered into the 2023 Securities Purchase Agreement with (i) Dr. Timothy A. Springer, a member of our Board of Directors; (ii) TAS Partners LLC, an affiliate of Dr. Springer, and (iii) Seven One Eight Three Four Irrevocable Trust, a trust associated with Dr. Murat Kalayoglu, a co-founder and the former chief executive officer of Old Cartesian, who joined our Board of Directors effective immediately after the effective time of the Merger, providing for the 2023 Private Placement. In the 2023 Private Placement, we issued and sold an aggregate of 149,330.115 shares of Series A Preferred Stock for an aggregate purchase price of $60.25 million, of which 50,189.789 shares of Series A Preferred Stock were issued and sold in the year ended December 31, 2023 for gross proceeds of $20.25 million, and 99,140.326 shares of Series A Preferred Stock were issued and sold during the three months ended March 31, 2024 for gross proceeds of $40.0 million.
Future funding requirements
As of the date of this Quarterly Report, we have not generated any revenue from product sales. We do not know when, or if, we will generate revenue from product sales. We will not generate significant revenue from product sales unless and until we obtain regulatory approval and commercialize one of our current or future product candidates. Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, laboratory and related supplies, clinical costs, legal and other regulatory expenses, milestone and royalty payments for in-licenses, and general overhead costs. We expect that we will continue to generate losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products. We are subject to risks in the development of our products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We expect that we will need substantial additional funding to support our continuing operations.
As of September 30, 2025, we had an accumulated deficit of $729.8 million. We anticipate operating losses to continue for the foreseeable future due to, among other things, costs related to research, development of our product candidates, conducting preclinical studies and clinical trials, and our administrative organization. We will require substantial additional financing to fund our operations and to continue to execute our strategy, and we will pursue a range of options to secure additional capital.
We regularly evaluate various potential sources of additional funding such as strategic collaborations, license agreements, debt issuance, potential royalty and/or milestone monetization transactions and the issuance of equity instruments to fund our operations. If we raise additional funds through strategic collaborations and alliances, which may include existing collaboration partners, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us. To the extent that we raise additional capital through the sale of equity instruments, the ownership interest of our existing stockholders will be diluted, and other preferences may be necessary that adversely affect the rights of existing stockholders.
We believe that our existing cash, cash equivalents, and restricted cash as of September 30, 2025 will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of issuance of these financial statements. We may pursue additional cash resources through public or private equity or debt financings, by establishing collaborations with other companies or through the monetization of potential royalty and/or milestone payments pursuant to our existing collaboration and license arrangements. Management's expectations with respect to our ability to fund current and long-term planned operations are based on estimates that are subject to risks and uncertainties. If actual results are different from management's estimates, we may need to seek additional strategic or financing opportunities sooner than would otherwise be expected. However, there is no guarantee that any of these strategic or financing opportunities will be executed on favorable terms, and some could be dilutive to existing stockholders. If we are unable to obtain additional funding on a timely basis, we may be forced to significantly curtail, delay, or discontinue one or more of our planned research or development programs or be unable to expand our operations, meet long-term obligations or otherwise capitalize on our commercialization of our product candidates.
Our future capital requirements will depend on many factors, including:
•the scope, progress, results and costs of our clinical trials, preclinical development, manufacturing, laboratory testing and logistics;
•the number of product candidates that we pursue and the speed with which we pursue development;
•our headcount growth and associated costs;
•the costs, timing and outcome of regulatory review of our product candidates;
•the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval;
•the revenue, if any, from commercial sales of our product candidates for which we receive marketing approval;
•the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;
•the effect of competing technological and market developments; and
•the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates.
Cash Requirements due to Contractual Obligations and Other Commitments
We are under agreement to lease approximately 32,294 square feet of laboratory and office space in Watertown, Massachusetts through May 2028. Remaining lease payments from September 30, 2025 through the end of the lease term total approximately $7.6 million. Payments made and remaining obligations on this lease liability were subject to potential reimbursement through deductions to CVR distributions as described in Note 7, "Fair Value Measurements" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report and were reimbursed in the March 2025 CVR distribution.
In November 2023, in connection with the Merger, we acquired two leases for office and laboratory space in Gaithersburg, Maryland, which expire in January 2027. Annualized rent is approximately $0.3 million and remaining lease payments from September 30, 2025 through the end of the lease term total approximately $0.4 million.
In February 2024, we entered into an agreement to lease approximately 19,199 square feet of integrated manufacturing and office space in Frederick, Maryland. In May 2024, we entered into an amendment to lease an additional approximately 7,842 square feet at the same site. In August 2024, we entered into a second amendment to lease an additional approximately 2,009 square feet at the same site. In March 2025, we entered into a third amendment to lease an additional approximately 6,439 square feet at the same site. The leases expire coterminously in June 2031. Annualized base rent under the leases is approximately $1.2 million and is subject to annual increases in accordance with the terms of the lease agreement. The leases provide for a tenant improvement allowance of $0.8 million. Remaining lease payments total $9.1 million through the end of the lease term.
We are also party to certain license and collaboration agreements with Biogen, NCI, and Shenyang Sunshine Pharmaceutical Co., Ltd., or 3SBio. We may be obligated to make certain future payments which are contingent upon future events such as our achievement of specified regulatory and commercial milestones, or royalties on net product sales under these agreements. As of September 30, 2025, we were unable to estimate the timing or likelihood of achieving these milestones or generating future product sales. Payments made and remaining obligations on the license agreement with 3SBio are subject to potential reimbursement through deductions to CVR distributions as described in Note 7, "Fair Value Measurements" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report.
Summary of Cash Flows
|
Nine Months Ended September 30, |
|||||||||||
| (In thousands) | 2025 | 2024 | |||||||||
| Cash (used in) provided by: | |||||||||||
| Operating activities | $ | (56,229) | $ | (16,672) | |||||||
| Investing activities | (4,962) | (8,388) | |||||||||
| Financing activities | (8,003) | 167,645 | |||||||||
| Effect of exchange rate changes on cash | 34 | (6) | |||||||||
| Net change in cash, cash equivalents, and restricted cash | $ | (69,160) | $ | 142,579 | |||||||
Operating activities
Net cash used in operating activities for the nine months ended September 30, 2025 was $56.2 million compared to $16.7 million for the nine months ended September 30, 2024. The increase in cash used in operating activities of $39.5 million was primarily due to $48.2 million of net loss, adjusted for non-cash items, and $8.0 million of cash used in changes in operating assets and liabilities, in each case during the nine months ended September 30, 2025 compared to $4.0 million of net loss, adjusted for non-cash items, and $12.7 million of cash used in changes in operating assets and liabilities during the nine months ended September 30, 2024.
Investing activities
Net cash used in investing activities for the nine months ended September 30, 2025 was $5.0 million compared to $8.4 million in the same period in 2024, a decrease of $3.4 million. The net cash used in investing activities for the nine months ended September 30, 2025 and 2024 consisted of purchases of property and equipment.
Financing activities
Net cash used in financing activities for the nine months ended September 30, 2025 was $8.0 million compared to net cash provided by financing activities of $167.6 million for the nine months ended September 30, 2024, a decrease of $175.6 million. The net cash used in financing activities in the nine months ended September 30, 2025 was primarily the result of payments for the CVR distribution. The net cash provided by financing activities in the nine months ended September 30, 2024 was primarily the result of proceeds of the 2023 Private Placement and the 2024 Private Placement.
Recent Accounting Pronouncements
For a discussion of recently adopted or issued accounting pronouncements refer to Note 3, "Summary of Significant Accounting Policies" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report.
Off-Balance Sheet Arrangements
As of September 30, 2025, we did not have any off-balance sheet arrangements as defined in the rules and regulations of the SEC.
Critical Accounting Policies and Use of Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in our consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions. During the three and nine months ended September 30, 2025, there were no material changes to our critical accounting policies from those described in our Annual Report on Form 10-K for the year ended December 31, 2024.
Smaller Reporting Company
We qualify as a "smaller reporting company" under the rules of the Securities Act and the Exchange Act. As a result, we may choose to take advantage of certain scaled disclosure requirements available specifically to smaller reporting companies. We will remain a smaller reporting company until the last day of the fiscal year in which the aggregate market value of our common stock held by non-affiliated persons and entities, or our public float, is more than $700 million as of the last business day of our most recently completed second fiscal quarter, or until the fiscal year following the year in which we have at least $100 million in revenue and at least $250 million in public float as of the last business day of our most recently completed second fiscal quarter.
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