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 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. We have no intention of resuming our historical research and development activities. We expect to continue to attempt to sell or otherwise dispose of or monetize our remaining assets and pursue an orderly wind down of our remaining operations.

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 and License Agreement, dated as of January 7, 2022, or the Moderna License Agreement, with ModernaTX, Inc, or 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.

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 had 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. As part of our cash preservation plan, our board of directors determined to terminate effective as of March 31, 2025 all of our employees not deemed necessary to pursue strategic alternatives and execute an orderly wind down of our operations.

Recent Developments

Termination of Merger Agreement

As previously disclosed, 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 a 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 would 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, or the "Combined Company". Pursuant to the Merger Agreement, we were entitled to terminate the Merger Agreement if OrthoCellix failed to secure commitments for shares of our common stock from one or more investors such that as of September 15, 2025 we had not received, or at any time ceased to have, aggregate commitments equal to or in excess of the concurrent investment amount (inclusive of a $5.0 million commitment from Ocugen) equal to or in excess of $25.0 million. As previously disclosed, on August 29, 2025, Ocugen entered into a subscription agreement with us, or the Ocugen Subscription Agreement, pursuant to which Ocugen committed to purchase $5.0 million of shares of our common stock, which investment was intended to be consummated as part of a concurrent financing at or immediately following the closing of the OrthoCellix Merger.

As previously disclosed, on September 16, 2025, pursuant to Section 9.1(k) of the Merger Agreement, we delivered written notice to OrthoCellix of termination of the Merger Agreement, effective immediately, as a result of OrthoCellix's failure to secure the concurrent financing amount of at least $25.0 million as of September 15, 2025. Pursuant to Section 9.3(e) of the Merger Agreement, on or prior to September 18, 2025, OrthoCellix was required to pay us a termination fee in an amount equal to $750,000, or the Termination Fee, as a result of the termination of the Merger Agreement pursuant to Section 9.1(k). In addition, pursuant to Section 9.3(f) of the Merger Agreement, on or prior to September 18, 2025, OrthoCellix was required to reimburse us for our reasonable out-of-pocket expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby, in an amount equal to $500,000, or the Expense Reimbursement, as a result of the termination of the Merger Agreement pursuant to Section 9.1(k). To date, we have not received from Ocugen the Termination Fee or the Expense Reimbursement. OrthoCellix has not confirmed its intention to pay the Termination Fee or Expense Reimbursement. We intend to vigorously seek to enforce our right to receive such payments. We recorded a receivable of approximately $1.3 million for the Termination Fee and Expense Reimbursement which is included in prepaid expenses and other assets on our unaudited interim consolidated balance sheet and within general and administrative charges on our unaudited consolidated statements of operations and comprehensive loss as of and for the nine months ended September 30, 2025.

The Ocugen Subscription Agreement automatically terminated upon the termination of the Merger Agreement. The Support Agreements, dated June 22, 2025, by and among us, OrthoCellix, Ocugen and the other parties named therein automatically terminated upon the termination of the Merger Agreement.

As previously disclosed, in determining to terminate the Merger Agreement, we considered, among other factors, (1) the lack of sufficient funds to operate the Combined Company as a publicly-traded company and to achieve projected development milestones without significant additional committed financing, including in light of the failure by OrthoCellix to secure the concurrent financing amount of at least $25.0 million, (2) the risk that the OrthoCellix Merger would not be consummated and that we would have continued to incur costs related thereto, (3) the need for the Combined Company to satisfy the initial listing requirements of the Nasdaq Capital Market, a closing condition to the OrthoCellix Merger, (4) the preservation of our existing cash resources, (5) our right to the Termination Fee and Expense Reimbursement upon termination of the Merger Agreement, and (6) our plan to continue to pursue asset monetization transactions while preparing for an orderly wind down of our operations, including satisfaction of remaining liabilities and obligations, in the absence of a strategic transaction.

Recently Completed Asset Monetization Transactions

Patent Purchase Agreement with Resolution Therapeutics Limited

On August 18, 2025, we entered into a Patent Purchase Agreement, or the Patent Purchase Agreement, for the sale of certain of our early-stage preclinical assets to Resolution Therapeutics Limited, or Resolution. Pursuant to the Patent Purchase Agreement, we sold to Resolution all right, title and interest in and to certain patents, know-how and electronic files (each as described in the Patent Purchase Agreement) related to (a) engineered macrophages secreting fibrolytic/anti-inflammatory factors, and (b) engineered macrophages expressing cytokine switch receptors for a cash payment from Resolution of $0.5 million, recorded to other income on our unaudited consolidated statements of operations and comprehensive loss as of and for the nine months ended September 30, 2025. This sale did not include any intellectual property related to our former lead liver fibrosis program CT-2401, to which we retain all rights. This sale included all of our rights, title, and interest in all causes of action and enforcement rights for the purchased assets, including all of our rights to pursue damages, injunctive relief, and other remedies for past, current, and future infringement of the purchased assets.

Amendment to Moderna Collaboration and License Agreement

On September 16, 2025, or the Amendment Effective Date, we and Moderna entered into a First Amendment to the Collaboration and License Agreement, or the Moderna Amendment, which amends the Moderna License Agreement. Effective as of the Amendment Effective Date, in exchange for a one-time cash payment of $4.0 million payable us within 10 business days following the Amendment Effective Date, Moderna has no further obligation to make any financial payments to us under or in connection with the Moderna License Agreement, subject to certain specified exceptions. Specifically, Moderna is no longer required to pay us any development target designation, development, regulatory and commercial milestone payments, any royalties on net sales of any products that are commercialized under the Moderna License Agreement or any research costs, regardless of whether such applicable milestone event, sale of product or research cost occurs on or after the Amendment Effective Date. Effective as of the Amendment Effective Date, the royalty term for all products expired and the licenses granted to Moderna under the Moderna License Agreement became fully paid-up, perpetual, irrevocable and royalty-free.

Delisting from Nasdaq

On October 9, 2025, we received a delisting determination letter (the "Determination Letter") from Nasdaq. As a result of our previously disclosed noncompliance with the Nasdaq Listing Rules, our common stock was suspended from trading on Nasdaq effective at the open of business on October 13, 2025. The Determination Letter indicated that, after applicable appeal periods have lapsed, Nasdaq intends to file a Form 25 with the Securities and Exchange Commission, or the SEC to complete the delisting of our common stock from Nasdaq. We do not plan to appeal Nasdaq's determination.

Our common stock commenced trading on the OTCID market tier operated by the OTC Markets Group at the open of business on October 13, 2025 under our current trading symbol "CARM." There is no guarantee, however, that a broker will continue to make a market in our common stock or that trading of our common stock will continue on the OTCID market tier or otherwise or that we will continue to provide information sufficient to enable brokers to provide quotes for its common stock.

Current Strategy - Pursuit of Additional Asset Monetization Transactions and Wind Down of the Company

We have no intention of resuming our historical research and development activities. We expect to continue to attempt to sell or otherwise dispose of or monetize our remaining assets and pursue an orderly wind down of our remaining operations. As part of our wind down activities, (1) Michael Klichinsky, Pharm.D., Ph.D., our Chief Scientific Officer, was terminated without cause, effective October 15, 2025 and (2) Steven Kelly, our President and Chief Executive Officer, will terminate without cause, effective November 15, 2025. Following Mr. Kelly's termination, we expect to appoint a consultant to serve as the Company's chief executive officer and manage remaining wind down activities.

There can be no assurance that we will be able to identify and complete additional asset monetization transactions. It is unlikely that there will be a meaningful amount of cash available for distribution to stockholders in connection with a wind down of our operations or a dissolution and liquidation of the company. We also may determine, following effectiveness of the Form 25 delisting our common stock from Nasdaq, to file a Form 15 with the SEC to suspend our reporting obligations under Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended.

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 addition, if our board of directors were to approve and recommend, and our stockholders were to approve, our dissolution, we are 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.

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 utilized 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 nominated all 12 oncology research targets under the Moderna License Agreement. As such, we will not be conducting any additional research activities under the Moderna License Agreement and we will not be receiving any further research funding from Moderna under the Moderna License Agreement. Further, pursuant to the Moderna Amendment entered into in September 2025, in exchange for a one-time cash payment of $4.0 million paid to us, Moderna has no further obligation to make any financial payments to us under or in connection with the Moderna License Agreement, subject to certain specified exceptions.

To date, we have not 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 historical operations were 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 income for the nine months ended September 30, 2025 was $25.7 million. Our net income during the nine months ended September 30, 2025 was due to the revenue recognition of an upfront payment previously received in connection with the Moderna License Agreement. The upfront payment was previously included within deferred revenue on our unaudited consolidated balance sheets and was recognized in connection with the Moderna Amendment. Our net losses for the nine months ended September 30, 2024 were $42.8 million. As of September 30, 2025, we had $2.8 million in cash and cash equivalents and an accumulated deficit of $279.9 million.

Although we reduced operations in connection with our cash preservation plan, we incurred significant expenses in connection with our prior evaluation of strategic alternatives, including the evaluation and pursuit of the OrthoCellix Merger, which we terminated on

September 16, 2025. We expect to continue to incur significant expenses and operating losses in connection with the ongoing process of exploring transactions with certain third parties to monetize certain legacy assets and in connection with our ongoing pursuit of an orderly wind down of our operations. A considerable portion of these expenses, such as legal, accounting and advisory fees and other related charges, will be incurred regardless of whether we enter into a monetization transaction for legacy assets.

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.

Financial Operations Overview

Collaboration Revenues

To date, we have not generated any revenue from product sales. Our revenues to date have been generated from the Moderna License Agreement. Moderna reimbursed us for all costs incurred by it in connection with its research and development activities under the Moderna License Agreement plus a reasonable margin for the respective services performed. As of February 2025, Moderna nominated all 12 oncology research targets under the Moderna License Agreement. As such, we will not be conducting any additional research activities under the Moderna License Agreement and we will not be receiving any further research funding from Moderna under the Moderna License Agreement. To date, we received $2.0 million in milestone payments and we have not received any royalties under the Moderna License Agreement. Further, pursuant to the Moderna Amendment entered into in September 2025, in exchange for a one-time cash payment of $4.0 million paid to us, Moderna has no further obligation to make any financial payments to us under or in connection with the Moderna License Agreement, subject to certain specified exceptions. Specifically, Moderna is no longer required to pay us any development target designation, development, regulatory and commercial milestone payments, any royalties on net sales of any products that are commercialized under the Moderna License Agreement or any research costs, regardless of whether such applicable milestone event, sale of product or research cost occurs on or after the Amendment Effective Date.

Research and Development Expenses

Research and development expenses consisted primarily of costs incurred for our research activities, including discovery efforts and the development of product candidates, and included:

Research and development activities have historically been central to our business model. We have no intention of resuming our historical research and development activities. As such, we expect our research and development expenses to continue to significantly decrease for the remainder of 2025 as a result of our decision to cease our research and development activities and pursue an orderly wind down of our remaining operations. We will incur additional research and development expenses related to employee terminations and related severance costs.

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. Prior to the termination of the OrthoCellix Merger in September 2025, we incurred significant costs related to the evaluation and pursuit of the OrthoCellix Merger, including legal, accounting and advisory expenses and other related charges.

We expect that our general and administrative expenses will slightly increase for the remainder of 2025. We expect to continue to incur significant costs related to our pursuit of additional asset monetization transactions and an orderly winddown of our operations. We will incur additional general and administrative expenses related to employee terminations and related severance costs.

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 September 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, 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 September 30, 2025 and 2024 (in thousands)

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Collaboration Revenues

Collaboration revenues were $45.3 and $3.4 million for the three months ended September 30, 2025 and 2024, respectively, related to the research and development activities completed under the Moderna License Agreement. Collaboration revenues during the three months ended September 30, 2025 were due to the recognition of the remaining upfront payment previously received in connection with the Moderna License Agreement as well as a one-time cash payment of $4.0 million under the Moderna Amendment. The upfront payment under the Moderna License Agreement was previously included within deferred revenue on our unaudited consolidated balance sheets and was recognized during the three months ended September 30, 2025 in connection with the Moderna Amendment.

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 September 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.

(1)Our 2024 revised operating plans adjusted our research and development focus. For the Phase 1 clinical trial of CT-0525, the last patient was dosed in November 2024 and all clinical activity ended in January 2025. All clinical activities related to CT-0508 also ceased in 2024. In connection with our 2024 revised operating plans, we had also elected to pause further development of CT-1119, a mesothelin-targeted CAR-Monocyte, pending additional financing. We have no intention of resuming our historical research and development activities and we are in the process of pursuing an orderly wind down of our operations.

(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 September 30, 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 September 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.

(1)Our cash preservation plan and 2024 revised operating plans included reductions in workforce which resulted in severance costs during the three months ended September 30, 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.

Gain on Sale of Held For Sale Assets

We recognized $0.3 million in gains on sale of held for sale assets during the three months ended September 30, 2025, related to the termination of our finance lease and the sale of previously classified equipment. We did not incur gains or losses on sale of held for sale assets during the three months ended September 30, 2024.

Other Income, Net

We recognized $0.6 million and $0.4 million in other income, net for the three months ended September 30, 2025 and 2024, respectively, which was attributable to interest earned on excess cash and sales of supplies in connection with the cash preservation plan.

Comparison of the Nine Months Ended September 30, 2025 and 2024 (in thousands)

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Collaboration Revenues

Collaboration revenues were $49.0 million and $16.0 million for the nine months ended September 30, 2025 and 2024, respectively, related to the research and development activities completed under the Moderna License Agreement. Collaboration revenues during the nine months ended September 30, 2025 were due to the recognition of the remaining upfront payment previously received in connection with the Moderna License Agreement as well as a one-time cash payment of $4.0 million under the Moderna Amendment. The upfront payment under the Moderna License Agreement was previously included within deferred revenue on our unaudited consolidated balance sheets and was recognized during the nine months ended September 30, 2025 in connection with the Moderna Amendment.

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 nine months ended September 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.

(1)Our 2024 revised operating plans adjusted our research and development focus. For the Phase 1 clinical trial of CT-0525, the last patient was dosed in November 2024 and all clinical activity ended in January 2025. All clinical activities related to CT-0508 also ceased in 2024. In connection with our 2024 revised operating plans, we had also elected to pause further development of CT-1119, a mesothelin-targeted CAR-Monocyte, pending additional financing. We currently have no intention of resuming our historical research and development activities and we are in the process of pursuing an orderly wind down of our operations.

(2)Our cash preservation plan and the 2024 revised operating plans included reductions in workforce which resulted in severance costs during the nine months ended September 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 nine months ended September 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.

(1)Our cash preservation plan and 2024 revised operating plans included reductions in workforce which resulted in severance costs during the nine months ended September 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 $3.2 million in losses on sale of held for sale assets during the nine months ended September 30, 2025, related to the return of finance lease right-of-use (ROU) assets and the sale of previously classified equipment, and partially offset by gains associated with the termination of the finance lease. We did not incur losses or gains on sale of held for sale assets during the nine months ended September 30, 2024.

Loss on Abandonment of Operating Lease Right-of-Use Asset

We recognized $0.9 million in losses related to the abandonment of laboratory space operating lease space during the nine months ended September 30, 2025. We did not incur such losses during the nine months ended September 30, 2024.

Other Income, Net

We recognized $1.1 million and $1.5 million in other income, net for the nine months ended September 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 September 30, 2025, we had $2.8 million in cash and cash equivalents and an accumulated deficit of $279.9 million. To date, we have not 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 September 30, 2025, we have generated $93.4 million of collaboration revenues related to research and development services, option rights, and milestones.

As previously disclosed, on September 16, 2025, pursuant to Section 9.1(k) of the Merger Agreement, we delivered written notice to OrthoCellix of termination of the Merger Agreement, effective immediately, as a result of OrthoCellix's failure to secure the concurrent financing amount of at least $25.0 million as of September 15, 2025. Pursuant to Section 9.3(e) of the Merger Agreement, on or prior to

September 18, 2025, OrthoCellix was required to pay us a Termination Fee in an amount equal to $0.8 million as a result of the termination of the Merger Agreement pursuant to Section 9.1(k). In addition, pursuant to Section 9.3(f) of the Merger Agreement, on or prior to September 18, 2025, OrthoCellix was required to pay us an Expense Reimbursement in an amount equal to $0.5 million as a result of the termination of the Merger Agreement pursuant to Section 9.1(k). To date, we have not received from Ocugen the Termination Fee or the Expense Reimbursement. OrthoCellix has not confirmed its intention to pay the Termination Fee or Expense Reimbursement. We intend to vigorously seek to enforce our right to receive such payments. We recorded a receivable of approximately $1.3 million for the Termination Fee and Expense Reimbursement which is included in prepaid expenses and other assets on our unaudited interim consolidated balance sheet and within general and administrative charges on our unaudited consolidated statements of operations and comprehensive loss as of and for the nine months ended September 30, 2025.

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 Moderna License Agreement. We received the final research and development payment of $2.9 million from Moderna in January 2025. Pursuant to the Moderna Amendment entered into in September 2025, in exchange for a one-time cash payment of $4.0 million paid to us, Moderna has no further obligation to make any financial payments to us under or in connection with the Moderna License Agreement, subject to certain specified exceptions. Specifically, Moderna is no longer required to pay us any development target designation, development, regulatory and commercial milestone payments, any royalties on net sales of any products that are commercialized under the Moderna License Agreement or any research costs, regardless of whether such applicable milestone event, sale of product or research cost occurs on or after the Amendment Effective Date.

On August 18, 2025, we entered into the Patent Purchase Agreement for the sale of certain of our early-stage preclinical assets to Resolution. Pursuant to the Patent Purchase Agreement, we sold to Resolution all right, title and interest in and to certain patents, know-how and electronic files (each as described in the Patent Purchase Agreement) related to (a) engineered macrophages secreting fibrolytic/anti- inflammatory factors, and (b) engineered macrophages expressing cytokine switch receptors for a cash payment from Resolution of $0.5 million.

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 Agreement^SM, 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 September 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 nine months ended September 30, 2025 and 2024 (in thousands):

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Cash Flows from Operating Activities

During the nine months ended September 30, 2025, we used $14.1 million of net cash in operating activities. Cash used in operating activities reflected net income of $25.7 million and $7.5 million of non-cash charges related to depreciation and amortization expense, stock-based compensation, reductions in the operating 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. These increases in cash were offset by a $47.3 million net change in our operating assets and liabilities attributable to the timing in which we pay our vendors for research and development activities and a decrease in our deferred revenue.

During the nine months ended September 30, 2024, we used $51.6 million of net cash in operating activities. Cash used in operating activities reflected our net loss of $42.8 million that was offset by $11.2 million of non-cash charges related to depreciation and amortization expense, stock-based compensation, reductions in the operating ROU assets, and a $20.0 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 nine months ended September 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 nine months ended September 30, 2024, cash used in investing activities reflected the purchases of $0.1 million of property and equipment.

Cash Flows from Financing Activities

During the nine months ended September 30, 2025, we used $1.8 million of net cash from financing activities, attributable to $1.5 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 nine months ended September 30, 2024, we received $1.0 million of net cash from financing activities, primarily attributable to $2.4 million from the sale of common stock in connection with the Sale Agreement, net of issuance costs, and $0.7 million in proceeds from failed-sale leaseback arrangements, partially offset by $1.2 million in payments of principal related to finance lease liabilities, and $0.9 million in payments of finance liability from failed-sale leaseback arrangements.

Funding Requirements

As of September 30, 2025, we had cash and cash equivalents of $2.8 million. We have no intention of resuming our historical research and development activities. We expect to continue to attempt to sell or otherwise dispose of or monetize our remaining assets and pursue an orderly wind down of our remaining operations.

Although we reduced operations in connection with our cash preservation plan, we incurred significant expenses in connection with our evaluation of strategic alternatives, including the evaluation and pursuit of the OrthoCellix Merger, which we terminated on September 16, 2025. We expect to continue to incur significant expenses and operating losses in connection with the ongoing process of exploring transactions with certain third parties to monetize certain legacy assets and in connection with our ongoing pursuit of an orderly wind down of our operations. A considerable portion of these expenses, such as legal, accounting and advisory fees and other related charges, will be incurred regardless of whether we enter into a monetization transaction for legacy assets.

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.

There can be no assurance that we will be able to identify and complete additional asset monetization transactions. It is unlikely that there will be a meaningful amount of cash available for distribution to stockholders in connection with a wind down of our operations or a dissolution and liquidation of the company. We also may determine, following effectiveness of the Form 25 delisting our common stock from Nasdaq, to file a Form 15 with the SEC to suspend our reporting obligations under Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended. We do not expect to be able to continue to file reports with SEC, including but not limited to the Annual Report on Form 10-K for the fiscal year ending December 31, 2025.

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 addition, if our board of directors were to approve and recommend, and our stockholders were to approve, our dissolution, we are 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.

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.

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.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitments at September 30, 2025 (in thousands):

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. Any remaining 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 nine months ended September 30, 2025, which primarily represents one-time employee termination benefits directly associated with the workforce reduction. We expect to pay the majority of the related reduction in workforce amounts by the end of 2025.

Further, in connection with the terminations without cause of Mr. Kelly and Dr. Klichinsky as part of our wind down activities, we are required to pay certain termination benefits to each of them. On October 15, 2025, we entered into a Separation and Release Agreement with Mr. Kelly (the "Kelly Separation Agreement"), pursuant to which, based on his termination without cause, Mr. Kelly is entitled to receive, subject to his execution and non-revocation of a release of claims in our favor and compliance with all post-employment obligations under law or any restrictive covenant agreement with us, (1) a lump sum payment equal to twelve months of his base salary, (2) a lump sum payment equal to 100% of his target bonus for 2025 pro-rated based on his departure date of November 15, 2025, and (3) for the earlier of 12 months or until Mr. Kelly becomes eligible for health insurance benefits by a subsequent employer, a taxable monthly payment of $3,757, which he may use to cover health insurance costs or for any other purpose, in each case, minus any applicable deductions and withholdings. The Kelly Separation Agreement supersedes the Retention and Transaction Bonus Agreement, dated August 29, 2025, by and between the Company and Mr. Kelly (the "Bonus Agreement"), which Bonus Agreement will be of no further force or effect.

On October 15, 2025, we entered into a Separation and Release Agreement with Dr. Klichinsky, pursuant to which, based on his termination without cause, Dr. Klichinsky is entitled to receive, subject to his execution and non-revocation of a release of claims in our favor and compliance with all post-employment obligations under law or any restrictive covenant agreement with us, (1) twelve months of his base salary, payable in installments over 12 months in accordance with our regular payroll practices, (2) a lump sum payment equal to 100% of his target bonus for 2025 pro-rated based on his departure date of October 15, 2025, and (3) for the earlier of 12 months or until Dr. Klichinsky becomes eligible for health insurance benefits by a subsequent employer, a taxable monthly payment of $2,245, which he may use to cover health insurance costs or for any other purpose, in each case, minus any applicable deductions and withholdings.

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 nine months ended September 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 pronouncements to 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.